Back
2024 Supreme(Cal) 1020
IN THE HIGH COURT AT CALCUTTA
KRISHNA RAO, J.
Skipper Limited - Petitioner
Versus
Power Grid Corporation of India Limited & Anr. - Respondents
GA (COM) No. 1 of 2024 And GA (COM) No. 2 of 2024 In CS (COM) No. 14 of 2024
Decided On : 20-08-2024
For the Plaintiff : Mr. Sabyasachi Choudhury, Mr. Shounak Mukhopadhyay, Ms. Manisha Das, Mr. Sayantan Bose, Ms. Ankita Choudhury.
For the Defendants : Mr. Abhrajit Mitra, Sr. Adv. Mr. Aritra Basu, Mr. Uttam Kumar Mondal, Ms. Maitree Roy, Mr. Abhimanyu Banerjee, Mr. Anirban Basak, Mr. Arnab Saha.
IMPORTANT POINT
A comfort letter with conditional terms does not constitute an unequivocal admission of liability unless the conditions are fulfilled.
Headnote:
Comfort Letter - Payment Obligation - Letters Patent, 1865; Code of Civil Procedure, 1908 - The court analyzed the comfort letter and email correspondence to determine if they constituted an unequivocal admission of liability by the defendant, ultimately concluding that the conditions attached to the comfort letter were not fulfilled, thus denying the plaintiff's claim.
Fact of the Case:
The plaintiff sought a decree for payment based on a comfort letter issued by the defendant, which was conditional upon the fulfillment of certain terms. The defendant contested the claim, arguing that the comfort letter did not constitute a guarantee and that the plaintiff had not met the necessary conditions.
Issues: Whether the comfort letter and subsequent email constituted a clear and unconditional admission of liability by the defendant, and whether the court had jurisdiction to entertain the suit.
Ratio Decidendi: A judgment on admission can only be granted if the admission is clear, unambiguous, and unconditional. The comfort letter's conditions were not met, thus the plaintiff's claim could not be upheld.
Result: The applications G.A. (Com) No. 1 of 2024 and G.A. (Com) No. 2 of 2024 are dismissed.
JUDGMENT :
Krishna Rao, J.
1. The plaintiff has filed the an application being G.A. (Com) No. 1 of 2024 praying for judgment and decree on admission for the principal sum of Rs.1,54,97,964/- against the defendant no.1 and interest at the rate of 24% per annum till the realization of the total amount. The defendant No.1 has filed an application being G.A. (Com) No. 2 of 2024 for revocation of leave granted under Clause 12 of the Letters Patent, 1865 and for return of plaint under Order 7, Rule 10 of the Code of Civil Procedure, 1908.
2. The plaintiff has filed the suit for decree of Rs.2,01,14,234/- along with interest at the rate of 24% per annum. The plaintiff carries on business of galvanized steel tubular poles and associated accessories. The defendant no.1 carries various infrastructure projects in relation to transmission, supply and distribution of power.
3. The defendant no.1 undertook a project of comprehensive scheme for strengthening of transmission and distribution system in the State of Arunachal Pradesh. In order to give effect to the said scheme or carryout diverse works in relation thereto, supply of galvanize steel tubular poles of 12 meters and 14.5 meters were required. The defendant no.1 in order to give effect to the said scheme entered into a contract with the defendant no. 2 on 1st October, 2021.
4. The defendant no.2, in turn placed two purchase orders to the plaintiff on 1st November, 2021 and 31st January, 2022 for supply of galvanized steel tubular poles of 12 meters and 14.5 meters. The purchase orders contained an arbitration clause and a forum selection clause, conferring exclusive jurisdiction upon “Hyderabad courts”. The plaintiff has delivered goods at the site of the defendant no.1 at Yingkiong, Upper Siang, Arunachal Pradesh.
5. On 5th February, 2022, the defendant no.1 has issued a ”Comfort Letter” in favour of the plaintiff stating that as requested by the defendant no. 2, the defendant no.1 will release direct payment after receipt of materials /equipment at site to the plaintiff within 30 days as per terms and conditions with the defendant no. 2.
6. Mr. Choudhury submitted that by a letter dated 8th August, 2022, the defendant no.2 has admitted that an amount of Rs. 251.78 lacs is due and payable to the plaintiff by the defendant no. 2. The defendant no. 2 by an email dated 9th August, 2022 forwarded the payment schedule to the defendant no.1 submitted to the plaintiff. He submits that by an email dated 10th August, 2022, the defendant no. 1 extended the time of comfort letter by agreeing to pay the dues of the plaintiff if the defendant no. 2 failed to make payment to the plaintiff within 7 days.
7. Mr. Choudhury submitted that though the validity period of the comfort letter was initially for a period of two months, the validity was extended by mutual consent of the plaintiff and the defendant no. 1 as per the correspondences exchanged between the parties. He submits that it is admitted position that all the goods were duly received by the defendant no. 1. He submits that in terms of the comfort letter dated 5th February, 2022, the defendant no. 1 had an obligation to release direct payment to the plaintiff against the supplies within 30 days but the defendant no. 1 failed and neglected to release any payment to the plaintiff.
8. Mr. Choudhury submitted that the email dated 10th August, 2022, is not only an unequivocal admission of the liability of the defendant no. 1 but also an expressed and implied extension of the comfort letter and its obligation contained therein. He submits that the obligation of the defendant no. 1 is to make direct payment to the plaintiff and such obligation is not only a part of the payment terms of the contract entered between the defendant no. 2 and the plaintiff but also otherwise confirmed and acknowledged by the defendant no. 1, not only by comfort letter dated 5th February, 2022 but also by its email dated 10th August, 2022.
9. Mr. Choudhury submitted that during
