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2022 Supreme(Mad) 1817
IN THE HIGH COURT OF JUDICATURE AT MADRAS
SENTHILKUMAR RAMAMOORTHY, J.
Sivakumar - Appellant
Versus
Surya Exports & Imports A firm Rep. by its Proprietor Mr.N. Surya Srinivas & Others - Respondent
Civil Suit(Comm.Div). No. 591 of 2018
Decided On : 09-06-2022
For the Plaintiff:Sharath Chandran for M/s. Govind Chandrasekar, Advocates. For the Defendants:D1, M/s. J. Manikandan, D2, E. OM. Prakash Senior Advocate for M/s. Ramalingam & Associates, D3, V. Kalyanaraman for M/s. Aiyar & Dolia, Advocates.
The main legal point established in the judgment is the joint and several liability of the first and second Defendants in respect of the claim arising from a bill of exchange, as analyzed under the provisions of the Negotiable Instruments Act.
Headnote:
Bill of Exchange - Recovery of Amount - Negotiable Instruments Act,1882, Section 37, Section 33 - The court analyzed the liability of the first and second Defendants in respect of the suit claim arising from a bill of exchange. The court examined the provisions of the Negotiable Instruments Act, including Section 37, and concluded that both the first and second Defendants are jointly and severally liable in respect of the claim of Rs.1,02,49,709/- along with penal interest. The court also awarded interest at the rate of 9% per annum on the suit claim from the date of claim and directed the first and second Defendants to pay costs to the Plaintiff.
Fact of the Case:
The Plaintiff filed a suit seeking to recover a sum of Rs.1,15,09,628/- jointly and severally from the first and second Defendants, along with interest at 18% per annum on the principal sum of Rs.1,06,33,863/- from the date of plaint till the date of realization. The suit arose from the supply of TMT bars to the first Defendant and the subsequent refusal by the Defendants to honor the bill of exchange.
Finding of the Court:
The court found that both the first and second Defendants are jointly and severally liable in respect of the claim of Rs.1,02,49,709/- along with penal interest. The court also awarded interest at the rate of 9% per annum on the suit claim from the date of claim and directed the first and second Defendants to pay costs to the Plaintiff.
Issues: The principal questions related to the liability of the first and second Defendants in respect of the suit claim, the acceptance of the bill of exchange, and the contractual obligations between the parties.
Ratio Decidendi: The court analyzed the provisions of the Negotiable Instruments Act, including Section 37 and Section 33, and concluded that both the first and second Defendants are jointly and severally liable in respect of the claim of Rs.1,02,49,709/- along with penal interest. The court also considered the evidence on acceptance and the trade practice between the parties to validate the co-acceptance without making an endorsement on the bill.
Final Decision: The suit is decreed by directing the first and second Defendants to pay the Plaintiff, jointly and severally, a sum of Rs.1,06,33,863/- along with interest at the rate of 9% per annum from 07.11.2017 till the date of realization. The first and second Defendants shall also pay the plaintiff a sum of Rs.3,00,000/- as costs, which includes the court fee of Rs.1,18,629/-, lawyer's fees and other expenses.
JUDGMENT
(Prayer: The suit is filed under Order VI Rule 1 of O.S. Rules r/w Order VII Rule 1 of CPC to direct the first and second Defendants to pay to the Plaintiff, either jointly or severally, a sum of Rs.1,15,09,628/- ( Rupees one crore fifteen lakhs nine thousand six hundred and twenty eight only) due under the Bill No.0058817OC0000012 together with interest at 18% per annum, principal amount of Rs.1,06,33,863/-, from the date of plaint till the date of realization.)
1. The suit was filed by a seller of goods to the first Defendant seeking to recover the sum of Rs.1,15,09,628/-, jointly and severally, from the first and second Defendants together with interest at 18% per annum on the principal sum of Rs.1,06,33,863/- from the date of plaint till the date of realization.
2. The Plaintiff is a proprietary concern, represented by Mr.Sivakumar, Proprietor. The Plaintiff is engaged in the business of selling construction materials, including ferrous and non-ferrous metal products, wood scrap, rubber waste, etc. The first Defendant requested the Plaintiff to supply thermo-mechanically treated (TMT) bars. Based on such request, the Plaintiff supplied TMT bars to the first Defendant from time to time and received payments in respect thereof. Upon receipt of the proforma invoice dated 22.05.2017 from the Plaintiff offering to supply TMT bars at Rs.38.20 per kg., the first Defendant issued the purchase order dated 23.05.2017 (PO No.006-5/170523/05-006/M-AJAY/TMT). The purchase order mandated that the payment for the consignment was to be made on a bill of exchange payable 90 days after the date of acceptance(at sight) by the first Defendant's banker, the second Defendant herein. Pursuant thereto, the goods were dispatched and delivered to the first Defendant under Invoice Nos.139 to 150 for an aggregate sum of Rs.1,02,49,709/-. According to the Plaintiff, the bill of exchange dated 24.05.2017 was also accepted for payment by the first Defendant and co-accepted by his banker, the second Defendant herein, albeit without making endorsements thereon. The Plaintiff had discounted the bill with his banker, the third Defendant herein and, therefore, the third Defendant, by a collection bill dated 24.05.2017, requested the second Defendant to convey its acceptance through the Structured Financial Messaging System (SFMS) and requested payment on the bill of exchange upon its maturity.
3. In response thereto, the Plaintiff stated that the second Defendant, by a SFMS message dated 29.05.2017, accepted the bill of exchange. According to the Plaintiff, the message was a ''IFN754'' message, which is used to indicate that the accepting bank unconditionally undertakes to make payments. The Plaintiff asserted that the undertaking by the second Defendant is on the strength of a letter of credit in favour of the first Defendant. The Plaintiff stated that both the first and second Defendants failed to honour the bill of exchange, subsequently, on the false pretext that the goods were returned by the buyer/first Defendant on account of quality issues. The Plaintiff stated that the buyer not only took delivery of the goods but sold the same to third parties. The Plaintiff further stated that no quality related issues were raised contemporaneously or otherwise by the first Defendant. On account of the refusal by the first and second Defendants to honour the bill of exchange, the third Defendant debited the account of the Plaintiff for a sum of Rs.1,02,49,709/- along with penal interest (until 06.11.2017) of Rs.3,84,154/-. Thus, the Plaintiff stated that it had to pay the third Defendant for goods sold by it to the first Defendant.
4. The Plaintiff alleged that the first Defendant repeatedly engaged in fraudulent activities by taking delivery of goods and not paying for the same. In such circumstances, the Plaintiff had previously filed C.S.No.69 of 2018 before this Court. The Plaintiff also stated that the second Defendant's obligation to pay for the goods fl
