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2007 Supreme(Del) 179
High Court Of Delhi
GITA MITTAL
M. RAZA AND SONS - Appellant
Versus
RUGS WHOLESALE INCL. - Respondents
CS (OS) 2689 Of 1999
Decided On : 01/25/2007
B.L.Wali
The main legal point established in the judgment is the liability of the defendant no. 1 to make payment for the goods received, and the award of interest at a specified rate for the outstanding amount.
Headnote:
Recovery - Non-Payment - Foreign Trade - [Recovery] - [Foreign Trade] - [Indian Contract Act, 1872, Section 73; Code of Civil Procedure, 1908, Order 7 Rule 11] - The court found that the defendant failed to make payment for the goods received, despite confirming the quality and placing a second order. The court held the defendant liable for the outstanding amount and awarded interest at a rate of 18% per annum from the due dates till the date of decree, and at a rate of 12% from the date of decree till realization of the decretal amount. The court dismissed the suit against the defendant no. 2 and awarded costs of the suit to the plaintiff.
Fact of the Case:
The plaintiff filed a suit for recovery of Rs. 21,52,618 against the defendants for non-payment of amounts towards goods supplied. The defendant no. 1, a company incorporated in Canada, failed to make full payment for the goods received, despite confirming their quality and placing a second order. The defendant no. 3, a foreign bank, was sued as a collecting agent for the plaintiff's principal bankers.
Finding of the Court:
The court found that the defendant no. 1 failed to make payment for the goods received, despite confirming their quality and placing a second order. The court held the defendant liable for the outstanding amount and awarded interest at a rate of 18% per annum from the due dates till the date of decree, and at a rate of 12% from the date of decree till realization of the decretal amount. The suit against the defendant no. 2 was dismissed, and costs of the suit were awarded to the plaintiff.
Issues: The main issue was the non-payment of the amounts due for the goods supplied by the plaintiff to the defendant no. 1. Additionally, the court addressed the jurisdiction of the court and the claim for interest by the plaintiff.
Ratio Decidendi: The court held that the defendant no. 1 was liable to make payment for the goods received and awarded interest at a rate of 18% per annum from the due dates till the date of decree, and at a rate of 12% from the date of decree till realization of the decretal amount. The court dismissed the suit against the defendant no. 2 and awarded costs of the suit to the plaintiff.
Final Decision: The court held the defendant no. 1 liable for the outstanding amount and awarded interest at a rate of 18% per annum from the due dates till the date of decree, and at a rate of 12% from the date of decree till realization of the decretal amount. The suit against the defendant no. 2 was dismissed, and costs of the suit were awarded to the plaintiff.
GITA MITTAL, J.
( 1 ) THIS suit for recovery of Rs. 21,52,618/- has been filed by the plaintiff against the defendants on grounds of non-payment of the amounts towards goods which were supplied by the plaintiff to the defendant no. 1. The plaintiff, a registered partnership firm with its principal place of business at a-54, Nizamuddin (East), New Delhi-110013, is engaged inter alia in the business of manufacture and export of Persian-Kashmir carpets, chainstitched rugs and pashmina shawls. The plaintiff has also claimed registration under the export-import policy for registered export with the Directorate of Handicrafts of the government of Jammu and Kashmir. The plaintiff also holds a certificate of registration in its favour from the Directorate of Handicrafts of the Government of India under the import/export plicy.
( 2 ) THE defendant no. 1, a company incorporated under the laws of Canada, is carrying on business of imports and distribution in Canada. Mr. Jim oberoi/gorlal Oberoi is a director in the defendant no. 1 company,. The defendant no. 1 was conducting its affairs in India through Mr. Shrikant Saxena, the defendant no. 2, as its buying agent. Amongst the responsibilities of the defendant no. 2, he was required to place orders upon suppliers of the defendant no. 1, provide them with designs and colour combinations, follow up with the production activity and finally inspect each and every carpet, put seals of approval on every rug and thereafter issue inspection certificates to the suppliers. The defendant no. 2 has so conducted itself in the execution of the orders which were placed by the defendant no. 1 on the plaintiff which are the subject matter of the present case. The defendant no. 3, the Toronto Dominian Bank is a foreign bank who has been sued in its capacity as a collecting agent for the plaintiff's principal bankers i. e. The Punjab National Bank, Srinagar. The plaintiff has attributed non-collection of the amount of invoices from the defendant no. 1 upon the defendant no. 3 and consequently arrayed it as a party before this court.
( 3 ) SO far as the record of this court is concerned, the defendant no. 1 was served by publication of a citation in the overseas addition of 'the statesman' pursuant to orders dated 30. 5. 2002. Despite service, the defendant no. 1 did not put in appearance and also chose not to file the written statement. In these circumstances, the defendant no. 1 was directed to be proceeded ex-parte by an order passed on 27th July, 2006.
( 4 ) THE defendant no. 3 in its written statement took the stand that there was no privity of contract between it and the plaintiff; that goods were consigned to the defendant no. 3 by the plaintiff for the purposes of being delivered to defendant no. 1 upon the acceptance of the bills raised by the plaintiff in respect of the consigned goods by the defendant no. 1, without any prior agreement on the part of the defendant no. 3 bank. It is further submitted that there was no instruction to the defendant no. 3 that it was to effect delivery of documents only against payment by the defendant no. 1. The defendant no. 3 consequently complied with the instructions received by it and delivered the documents to the defendant no. 1 upon acceptance of the bills in respect of the goods in question. The defendant no. 3 contended that it was merely a collecting agent for the plaintiff's principal bank and has acted in accordance with the instructions given to it by the Punjab National Bank and consequently no liability for dues of the defendant no. 1 can be fastened on it. In the proceedings on 27. 7. 2006 it was pointed out on behalf of the plaintiff that the defendant no. 3 had caused the bills to be protested and notarised, the certificate of which has been placed before this court. In the light of these submissions the defendant no. 3 had sought deletion of its name from the array of parties. Upon consideration of these aspects of the matter, a statement was
