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2018 Supreme(Del) 1407
IN THE HIGH COURT OF DELHI AT NEW DELHI
RAJIV SAHAI ENDLAW, J.
Liugong India Pvt. Ltd. – Plaintiff
Versus
Yograj Infrastructure Ltd. & Ors. – Defendants
CS(OS) 3318 of 2012
Decided On : 08-02-2018
For the Plaintiff : Mr. Gulshan Chawla
For the Defendants : Mr. Faisal Zafar, Adil Khan, Mr. Vikas Sharma
The central legal point established in the judgment is the determination of liability for unpaid machinery price, the interpretation of installment payment agreements, and the application of interest rates in commercial transactions.
Headnote:
Recovery of Unpaid Machinery Price - Sale of Machines - Recovery of Principal Amount - Interest - Machinery Quality - Payment Plan Agreement - Corporate Veil - Interest Rate - Decree
Fact of the Case:
The plaintiff sued for the recovery of the unpaid price of machinery supplied to the defendant, along with interest. The defendant contested the suit, claiming inferior machinery quality and an agreement for installment payments without interest. The plaintiff proved the sale and supply of machines and the unpaid balance. The court found in favor of the plaintiff on the quality and payment issues but dismissed the claim against the defendant's directors. The court also ruled on the interest rate and issued a decree in favor of the plaintiff against the defendant for the principal amount and interest.
Finding of the Court:
The court found in favor of the plaintiff on the quality and payment issues, dismissing the claim against the defendant's directors. The court ruled on the interest rate and issued a decree in favor of the plaintiff against the defendant for the principal amount and interest.
Issues: The issues included the quality of the machinery, installment payment agreement, liability of the defendant's directors, and the entitlement of the plaintiff to interest.
Ratio Decidendi: The court held that the defendant failed to prove claims of inferior machinery quality and installment payment agreement. It also ruled that the defendant's directors were not personally liable for the debts of the defendant. The court determined the interest rate based on the contractual clause and prevailing rates, issuing a decree in favor of the plaintiff for the principal amount and interest.
Final Decision: The court issued a decree in favor of the plaintiff against the defendant for the recovery of the principal amount with interest, while dismissing the claim against the defendant's directors.
1. The plaintiff has instituted this suit for recovery of principal amount of Rs.1,03,50,000/-, being the unpaid price of the machinery supplied by the plaintiff to the defendant no.1 and of which defendants no.2 to 4 namely Yogendra Singh, Ritu Singh and Ram Lal Jharia are described in the memo of parties and in the plaint as Directors. The plaintiff, in accordance with the clause on the invoices raised on the defendant no.1, has also claimed interest @ 24% per annum for the period prior to the institution of the suit, from the date of the invoices till the date of institution of the suit. Hence the suit for recovery of Rs.1,56,48,380/- with future interest and costs.
2. Only the defendants no.1 to 3 contested the suit by filing a written statement and to which a replication was filed by the plaintiff. None appeared for defendant no.4 Ram Lal Jharia. The counsels, on enquiry state that the defendant no.4 was sought to be served at the address of the defendant no.1 only and the defendant no.1 has filed an affidavit to the effect that the defendant no.4 ceased to be a Director of the defendant no.1 in the year 2007 i.e. much prior to the dates when the transaction subject matter of the suit took place. The counsels on further enquiry also state that there is no order proceeding ex parte against the defendant no.4 till now.
3. On the pleadings of the plaintiff and the defendants no.1 to 3, the following issues were framed in the suit on 22nd July, 2014:-
“1. Whether the machinery supplied by the Plaintiff was of inferior quality as claimed by the Defendants? If so, what was its effect? OPD.
2. Whether the Plaintiff agreed to receive the amount due to the Plaintiff in instalments without interest as claimed by the Defendants? OPD.
3. Whether the Defendants No.2 to 4 are jointly or severally liable to pay the amount?
4. To what amount, if any, the Plaintiff is entitled to recover from the Defendants? If so, whether the Plaintiff is entitled to any interest and what interest?
5. Relief:”
4. The parties have led their evidence, with each of the parties having examined one witness and the suit is ripe for final hearing.
5. The counsel for the plaintiff and the counsel for the defendants no.1 to 3 have been heard.
6. The plaintiff, on the evidence led, has proved sale and supply of machines of the total value of Rs.1,56,57,000/- to the defendant no.1 and sale, supply and delivery whereof is supported by ‘C’ Form under the erstwhile Sales Tax law issued by the defendant no.1 to the plaintiff. It is also not in dispute that the defendant no.1 has paid only a sum of Rs.53,07,000/- leaving the balance of Rs.1,03,50,000/-.
7. I have thus asked the counsel for the defendants no.1 to 3, what is the defence in this respect.
8. The counsel for defendants no.1 to 3 has drawn attention to the pleas taken in the written statement and on which issues aforesaid were framed but which as aforesaid are found to have been proved in favour of the plaintiff. Though the defendants took a plea of the machinery being of inferior quality and of an Agreement with the plaintiff of payment of price thereof in instalments, but have utterly failed to prove the same and the said pleas are found to be falsified from the contemporaneous conduct of issuance of cheques and confirmation of balance.
9. Issues no.1 & 2 aforesaid are thus decided in favour of the plaintiff and against the defendants.
10. However, with respect to issue no.3, the counsel for the defendants no.1 to 3 has argued that the defendants no.2 to 4, merely on account of being the Directors of the defendant no.1 which is a juristic entity and a body corporate, do not become personally liable for the debts of the defendant no.1. On enquiry, it is stated that there is no case pleaded or proved of piercing of corporate veil of the defendant no.1.
11. The counsel for the plaintiff also on enquiry merely states that the defendant no.2 was signing all documents and dealing with the plaintiff and the said fact i
