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2018 Supreme(Mad) 784
IN THE HIGH COURT OF JUDICATURE AT MADRAS
A. SELVAM, G. JAYACHANDRAN, JJ.
M/s. International Clothing House, Rep. by its Managing Partner Vivek Anan & Another - Appellant
Versus
M/s. Gowtham Tex, Rep. by its Partner, R. Easwaramurthy & Others - Respondent
A.S No. 1094 of 2009 & M.P. No. 1 of 2009
Decided On : 14-02-2018
For the Appellants :K.V. Subramanian, Senior Counsel for R. Kannan, Advocate.
For the Respondents:T. Sundarrajan, Advocate.
The central legal point established in the judgment is the significance of documentary evidence, absence of a written contract, and the need for unassailable evidence to establish trade practices contrary to written documents in determining the terms of a contract.
Headnote:
Commission Dispute - Hosiery Garments - [Indian Contract Act, 1872 - Section 73, Section 74, Section 75], [Income Tax Act, 1961 - Section 194H], [Transfer of Property Act, 1882 - Section 106] - The court analyzed the commission dispute between the parties in the context of the Indian Contract Act, Income Tax Act, and Transfer of Property Act. It considered the admissibility of evidence, absence of a written contract, and the conduct of the parties to infer the terms of the contract. The court emphasized the importance of documentary evidence and the need for unassailable evidence to establish trade practices contrary to written documents. The interpretation of tax deduction certificates and email communications played a crucial role in the court's decision, highlighting the significance of legal provisions and their application in resolving the dispute.
Fact of the Case:
The plaintiff, a hosiery garments manufacturer, sought recovery of excess payment made to the defendant for commission. The defendant counterclaimed for outstanding commission. The trial court ruled in favor of the plaintiff, leading to the appeal.
Finding of the Court:
The court found that the plaintiff was entitled to recover the excess payment made to the defendant and rejected the defendant's counterclaim. It emphasized the importance of documentary evidence and the absence of a written contract in determining the terms of the commission agreement.
Issues: The issues included the entitlement of the plaintiff to the suit claim, the entitlement of the defendants to the counterclaim, and the relief to be granted to both parties.
Ratio Decidendi: The court's decision was based on the interpretation of documentary evidence, the absence of a written contract, and the conduct of the parties in determining the terms of the commission agreement. It emphasized the need for unassailable evidence to establish trade practices contrary to written documents.
Final Decision: The appeal suit was allowed, the judgment and decree of the trial court were set aside, and the original suit was dismissed without costs.
G. JAYACHANDRAN, J.
1. This appeal suit is directed against the judgment and decree passed by the Additional District Court-cum-Fast Track Court in O.S.No.109 of 2005. The substance of the plaint is that, the first plaintiff firm is manufacturer of Hosiery Garments. The first defendant firm represented by the second defendant used to collect orders from foreign buyers and transfer the order to the manufacturers like plaintiffs and get commission at the rate of 5% of the total value of the order placed and executed. While so, a sum of Rs.18,65,279/- had been paid over and above the commission payable to the defendant which is to be returned. When, notice was sent to the defendant to repay the money paid in excess, the defendant replied making counter claim. Therefore, the present suit for recovery of money with interest.
2. Per contra, in the written statement, it is contended by the defendants that the first defendant firm is in the trade of procuring orders from intended purchasers of Hosiery Garments outside the country. As per the trade practice, the first defendant used to procure orders for supply of Hosiery Garments from intended purchaser and transfer the purchase advice to the manufacturers like first plaintiff by way of “transfer advice”. The difference between the “Vendor price” and “buyer price” will be the remuneration/commission. The payment to the defendant will be paid by the manufacturer on realisation of the sale consideration. In this case, as per the trade practise, the plaintiffs have paid the commission after being satisfied on the debit notes raised by the defendants. As per the account maintained by the first defendant a sum of Rs.20,72,028/- is still due from the plaintiff to the first defendant. Thus, the counter claim for the said is made in the written statement.
3. Based on the pleadings, the trial Court has framed following issues;
(i). Whether the plaintiff is entitle to the suit claim?
(ii). Whether the defendants are entitled to the counter claim?
(iii). For what relief the plaintiffs and defendants are entitled?
4. To prove the case, on behalf of the plaintiffs, 2 witnesses examined and 57 exhibits marked. On behalf of the defendants, 1 witness examined and 22 Exhibits marked.
5. The trial court after considering the rival submissions has held that the plaintiff are entitled for a decree of Rs.18,65,279/- with interest at the rate of 12% from the date of the suit; till the date of realization and rejected the counter claim of the defendants.
6. In the course of the judgment, the trial Court has relied upon Ex.A.33 (TDS certificate) Form-16A, reflecting the tax deducted at the source of payment to the defendant by the plaintiff for the period of 14.04.2003 to 31.03.2004 and Ex.A.9 which is the e-mails copy addressed to the defendants wherein it is stated by the plaintiff only 3% commission is payable to the agents for canvassing orders for them. However they are ready to pay 5% on FOB value. Therefore the money paid in excess has to be refunded.
7. Aggrieved by the judgment and decree, the present appeal is preferred on the ground that the trial Court has failed to frame the vital issue, whether the commission payable by the plaintiff to the defendant is 5% of FOB value or on piece rate basis. Further, the Trial Court has come to wrong conclusion that as if trade practice prevail between manufactures and the agent to pay only 5% pro-rata commission and not at piece rate. The finding of the trial Court that the money paid over and above to the defendants is in excess and liable to be repaid is without considering the counter claim of the defendant, which is clearly established through the plaintiff documents itself. The debit notes relied by the plaintiff itself will show piece rate commission is to be paid to the defendant and same duly paid. Hence, the claim of excess payment is only an after thought, to deny the defendant his commission in the subsequent transactions. The Trial Court without p
