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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
WRIT PETITION Nos. 5664 & 5364 OF 2010.
.........
WRIT PETITION No. 5664 OF 2010.
M/s. Bhushan Steel Limited,
having its Registered Office at F-Block,
1st Floor, International Trade Tower
Nehru Place, New Delhi - 110019
through its Power of Attorney Holder
Mr. S.K. Agrawal. ....PETITIONER.
VERSUS
Mrs. Varsha A. Maheshwari,
Proprietor of M/s. Parijat Enterprises
through her Power of Attorney
Mr. Ajay Maheshwari, Aged abut 42 years,
Occupation - Business, r/o. A-2/41,
Vrindavan Apartment, New Hislop College,
Civil Lines, Nagpur. ....RESPONDENT
.
----------------------
Mr. S. Dewani, Advocate for Petitioner.
Mr. Ajay Maheshwari, Power of Attorney Holder for Respondent.
-----------------------
WITH
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WRIT PETITION No. 5364 OF 2010.
Mrs. Varsha A. Maheshwari,
Prop/o M/s. Parijat Enterprises
through her Power of Attorney
Mr. Ajay Maheshwari, Aged abut 42 years,
Occupation - Business, r/o. A-2/41,
Vrindavan Apartment, New Hislop College,
Civil Lines, Nagpur. ....PETITIONER.
ig VERSUS
1. M/s. Bhushan Steel Limited,
having its Registered Office at F-Block,
1st Floor, International Trade Tower
Nehru Place, New Delhi - 110019
through its M.D. Shri Neeraj Singhal
2. Mr. B.K. Sinha, G.M. Purchase Department,
Bhushan Steel Limited, r/o. Bhushan Steel Ltd,
at Narendrapur, P.O. Kusupanga,
Via Meramandali, District Dhenkanal, Orissa,
New Address :
To Mr. B.K. Sinha, General Manager,
C/o. Ispat Industries Ltd.,
6th Floor, "Nirmal" Building,
Nariman Point, Mumbai - 400 021.
Phone 022 6654222 ....RESPONDENTS
.
----------------------
Mr. Ajay Maheshwari, Power of Attorney Holder for Petitioner.
Mr. S. Dewani, Advocate for Respondent No.1.
-----------------------
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CORAM : B.P. DHARMADHIKARI, J.
Date of reserving the Judgment. - 23.12.2010
Date of Pronouncement. - 05.01.2011
JUDGEMENT.
Challenge in both these Writ Petitions filed by rival
parties against eachother is to orders dated 30.09.2010 passed by the
4th Joint Civil Judge, Senior Division, Nagpur in Civil Suit
No.70/2009. The said suit is filed by the petitioner in Writ Petition
No. 5364/2010 as Summary Suit for recovery of amount of Rs.
38,89,674.14 along with interest @ 18% jointly and severally against
the defendants therein. The dues claimed are on account of
Magnetite Powder supplied by the plaintiff to defendant no.1
Company on the strength of purchase orders placed by the defendant
no.1 Company with the plaintiff. The defendant no.2 is the General
Manager in purchase department of defendant no.1 Company. By the
impugned order passed below Exh.16 the trial Court has granted
leave to defend under Sub-rule [5] of Rule 3 of Order 37 of Code of
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Civil Procedure Code, subject to defendants depositing a sum of Rs.
34, 24,895/- in Court or then furnishing a bank guarantee for that
sum within a period of one month. The plaintiff claims in Writ
Petition that such a relief could not have been granted and a decree
for amount claimed with interest ought to have been awarded.
Defendant no.1 has filed Writ Petition No. 5664/2010, and very same
order to the extent it calls upon defendant no.1 to deposit the
amount or to furnish Bank guarantee has been assailed in it claiming
unconditional leave. In that Writ Petition on 23.11.2010 this Court
extended time to furnish bank guarantee till 30.11.2010 and
thereafter on 01.12.2010 the petitioner /defendant no.1 has
accordingly furnished the Bank guarantee in that amount to the Trial
Court.
2. Plaintiff through her Power of Attorney Holder while
assailing the order in writ Petition No. 5364/2010 has invited
attention to the purchase orders to show that the quality of powder
supplied was to be inspected by the defendants at their end and
thereafter, payment was to be released within 7 days. The material
if found inferior was to be returned within 7 days. Various terms
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and conditions of the purchase order are indicated to urge that time
has always been the essence of the contract. In view of this the
defence of defendants that material supplied was of inferior quality
is, stated to be by way of after thought and for that purpose attention
is invited to the quantity of powder asked for in each purchase orders
and how it has steadily increased. The details of bills and payments
released are also shown to this Court pointing out that except for the
entries at Sr. Nos. 37 to 44 in chart there has been no delay at all and
all payments have been released duly after inspection. It is urged
that the payments released were not in accordance with supply or
could not be co-related and hence plaintiff was required to send a
special representative to understand the accounts. For amounts
remaining outstanding e-mails were required to be forwarded, but
then it did not receive any response. When legal notice was sent on
03.03.2009, immediately within two hours reply notice was
forwarded by defendants taking a stand that the material was of
inferior quality.
3. Attention has also been invited to the alleged third party
test reports and also to the test reports conducted by the defendants
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as alleged to show how plea as raised about inferior quality of
material do not match with the said story. The Attorney of plaintiff
contends that first grievance of poor quality has been made almost
after nine months and then on the basis of the so called independent
test reports, pro-rata deductions have been effected from all supplies.
Out of total 77 trucks supplied, payments have been released for 55
trucks and there was never any complaint about remaining 22 trucks.
The establishment of defendants is stated to be very big and with
facility for stringent quality check. It is urged that in reply to the
legal notice for the first time on 03.03.2009 story of frequent break
downs in preceding one year and of alleged loss of several Crores has
been revealed & pressed into service. The letter dated 28.02.2009 is
stated to be fabricated, as plaintiff got it on 26.03.2009 after receipt
of the e-mail reply of defendants. This communication dated
28.02.2009 is also urged to be exact replica of e-mail reply, except for
addition of figure of loss therein. The test certificates placed on
record by the defendants and test certificates filed by the plaintiff
are also pointed with contention that the test certificates of
defendants are of same date i.e. of date of delivery. The learned
Attorney states that thus on the basis of immediate tests, no grievance
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was made about the inferior qualify and material was appropriated
and used for production by the defendants. After the stock supplied
was appropriated, there is no question of its rejection. It is also urged
that when the defendants allegedly felt need of impartial/ 3rd party
test, why the plaintiff was not taken into confidence by arranging for
joint sampling. It is urged that leave to defend has been sought for
without any material and service of letters upon plaintiff is alleged
through TCI Express Courier. The plaintiff states that these
documents are fabricated and when plaintiff sought information from
TCI Express Couriers, the said Courier has denied service of any such
letters on plaintiff. Effort has also been made to show that records
have been interpolated and fabricated by inviting attention to the
counter submissions filed before this Court vide Stamp No.
12432/2010. The particulars used as Courier numbers/details are
stated to be also manipulated. The effort of defendant to force
plaintiff to lift 300 M.T. Of alleged inferior quality material is also
stated to be again false in this background. It is contended that in the
face of these complaints (alleged) about quality, the contract was
never terminated and later supplies were accepted by the defendants.
Plaintiff states that denial of signature of Arvind Srivatava by
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defendant is false & an application moved by her under Section 340
of Criminal Procedure Code is very much pending.
4. Shri Dewani, learned Counsel appearing for defendants
has urged that the plaint as filed does not carry verification as
required by Order VI Rule 15(1) of Code of Civil Procedure. It is
further urged that the suit also suffers from mis-joinder, in as much
as there is no cause or contract for filing such suit against the
defendant no.2- Shri B.K. Sinha, General Manager. Specific
statement, that suit does not ask for any relief, not compatible with
Order 37 Rule 2 of Code of Civil Procedure is not contained in the
plaint, and there is also prayer to release interest @ 18%, which is
not supported by any statute or by any document. In view of these
defects, unconditional leave to defend ought to have been granted. It
is urged that as per purchase order only Court at Cuttack in State of
Orissa has territorial jurisdiction and hence, the suit as filed at
Nagpur could not have been looked into. The original documents
were not filed along with the plaint and were tendered on record on
last date behind the back of the defendants. Hence, no cognizance of
those documents could have been taken and suit could not have been
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treated as summary suit. It is urged that the application moved by
the defendant no.1 for directing plaintiff to take back 300 M.T. of
powder is still pending and has not been decided. Earlier orders
passed by this Court on 22.07.2010 in Writ Petition No. 1534/2010
are pressed into service to show how the aspect of jurisdiction and
mis-joinder of parties needed to be looked into first by the trial Court.
The learned Counsel states that in the impugned order the trial Court
has overlooked this direction and has decided all points together.
5. The balance confirmation letter on which the plaintiff has
placed reliance is stated to be false and attention is invited to
affidavit of Shri Arvind Shrivastava, alleged to be signatory to that
balance confirmation disclosing that he has not placed any such
signature. The defendant has also filed application under Section
340 of Criminal Procedure Code against the plaintiff and the same is
stated to be pending. It is urged that the plaintiff cannot chose to
rely only upon one clause of the contract and entire contract needs to
be construed together. Various judgments are relied upon to
substantiate all these aspects. The certificates of inferior quality
produced on record and also correspondence are stated to require
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trial and hence it is contended that grant of unconditional leave was
essential.
6. The attorney for plaintiff in reply has argued that there is
no defect in verification and in any case that defect is curable. He
further states that Mr. Sinha was the General Manager of defendant
no.1 Company and he has been rightly sued in that capacity. It is
further urged that the defendant no.1 has got no establishment at
Cuttack and no cause of action has accrued at Cuttack, hence the
parties by their consent cannot confer jurisdiction on that Court. It is
submited that the purchase orders are signed by defendant no.2
General Manager Shri Sinha. He has done some wrong things and
he is also party to forgery of letters, hence he has been rightly joined
as defendant no.2. Attention is invited to plaint to urge that it
contains all necessary averments. Original documents are stated to
be filed at the time of hearing and passing of the orders below
Exh.16 only to protect them and it is further argued that no
prejudice is caused to the defendants thereby.
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7. It is also argued that the defendant has not made any
reference to either Sale of Goods Act or to the Contract Act and the
plaintiff has also relied upon various judgments to show how said
provisions clinch the controversy and an inference of deemed
acceptance of material supplied needs to be drawn.
8. After hearing the respective parties, I find it first
appropriate to consider the aspect of territorial jurisdiction.
The Summary Suit is based upon purchase orders and the
said orders specifically incorporate a condition that the dispute
between the parties shall always to be deemed to have arisen at
Cuttack and only Cuttack Court will have the jurisdiction to entertain
the claims. The defendant no.1 has relied upon the judgments in
this respect to urge that the Court at Cuttack therefore would have
only jurisdiction. I do not find it necessary to refer to all those
rulings cited by both the sides as judgment of Hon’ble Supreme
Court reported at 1971 (1) SCC 286 (Hakam Singh .vs. M/s.
Gammon (India) Ltd.) clearly covers this controversy. The said
judgment states that it is not open to the parties to confer by their
agreement, jurisdiction on a court which it does not possess. When
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there are two courts possessing jurisdiction to try the suit, by
agreement between the parties that dispute may be tried in one of
such courts and such agreement is not contrary to public policy. Such
an agreement therefore does not contravene Section 28 of the
Contract Act. Here the defendant no.1 has got its registered Office at
New Delhi and plant at Narendrapur, Meramandli, District Dhenkanal
in Orissa State. There is nothing on record to show that the
defendant no.1 has got any establishment in Cuttack distict of Orissa.
Though the defendant no.1 has urged that correspondence was made
from Cuttack, again there is absolutely nothing to support this
contention. In any case when plant is not in Cuttack District and
Registered Officer is at New Delhi, it is apparent that for filing such a
suit against the defendant no.1 Company, Cuttack Court will never
have jurisdiction. I, therefore, find that the trial Court has correctly
appreciated this controversy and there is nothing wrong with the
same. The contention that this raises a disputed question of fact, is
again without any merit.
9. To urge that suit does not contain statement and
declaration as required by Order 37, and to support the argument of
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mis-joinder, defendant no.1 has relied upon the judgment of learned
Single Judge of this Court reported at 1999 [3] Mh.L.J. 64 (Mafatlal
Finance Limited Mumbai .vrs. Express Industrial Services Pvt. Ltd.
Mumbai). To point out that the affidavit in support of plaint is
defective, reliance is being placed upon the judgment reported at
(2007) 1 SCC 341 (Baldev Singh .vrs. Shinder Pal Singh and
another). Plaintiff has urged that these defects are curable and
reliance is being placed upon the judgment of Delhi High Court in
case of Khemchand and others .vrs. State and others in
F.A.O.No.241-43/2005 decided on 17.05.2010 by the learned Single
Judge. Decision in case of Kailash Singh .vrs. Hiralal Dey of Gauhati
High Court (learned Single Judge) decided on 30.03.1993 and the
judgment of Hon’ble Apex Court in case of Vidyawati Gupta and
others .vrs. Bhakti Hari Nayak and others dated 03.02.2006 where
the Hon’ble Apex Court has found that amendment to Order VI Rule
15 being procedural in nature, is directory and non-compliance with
it does not automatically render the plaint nonest are also pressed
into service.. View of Calcutta High Court to the contrary was
therefore, set aside by the Apex Court. The judgment of Hon’ble
Apex Court in Baldev Singh .vrs. Shinder Pal Singh and another
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(supra) reveals that a factual averment made cannot be both, true to
the knowledge and belief of deponent. When the plaint as filed is
perused, in this respect, after prayer clause it is directly supported by
affirmation as required by Order VI Rule 15[4] of Code of Civil
Procedure. Between prayer clause and this affirmation, verification
as contemplated by Order VI Rule 15[c] is missing. During
arguments it became clear that the representative for plaintiff did not
understand this position. But, then the affirmation filed is only with
intention to support the statement of facts made in plaint. The
affirmation does not specify separately, the facts true to personal
knowledge of the deponent and true to his belief. But these defects
are only procedural in nature and plaintiff needs to be given an
opportunity to rectify it. Accordingly, the learned Trial Court is
directed to give plaintiff before it, necessary reasonable opportunity
to rectify these defects.
10. At this stage, I find it appropriate to consider the
contentions about form of summary suit. Mafatlal Finance Limited
Mumbai .vrs. Express Industrial Services Pvt. Ltd. Mumbai (supra) is
the judgment of learned Single Judge of this Court which holds that
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when claim for interest made in summary suit is not based on any
agreement or any enactment, suit cannot be entertained as summary
suit and hence unconditional leave to defend was given to that
defendant. The observations at the end of paragraph no.4 show that
the plaintiff has to aver in plaint that no relief not falling within the
ambit of Order 37 Rule 2 is claimed by him, the learned Single Judge
found that the claim for interest in that suit was not based on any
agreement and not supported by any enactment. It is further found
that contention of plaintiff there, that provisions of Interest Act bring
the claim made therein within the four corners of Order 37 was
matter of investigation. The learned Single Judge has relied upon
Division Bench judgment reported at M/s Randerian & Singh vs.
Indian Overseas Bank and later Full Bench of this Court has not
followed this view. As the plaintiff has not touched this aspect at all &
as defendant 1 has not pointed out the Full Bench view, I am
reproducing essential observations therein. Said Full Bench also
refers to two other Division Bench views which have bearing on the
issue.
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11. In AIR 2004 Bom 186 “SICOM Ltd. v. Prashant S. Tanna” ,
( Full Bench ) controversy was :-
“2. The earlier Full Bench on 25th November, 2003,
framed, for convenience, the following four
questions of law:-
(i) Whether the provisions of Order XXIII, Rule 1 of
the Code of Civil Procedure, 1908 can be invoked
while exercising powers under Order XXXVII of the
Code of Civil Procedure and deciding a summons forjudgment/application for leave to defend a
summary suit instituted under Order XXXVII, Rule
1(2) thereof?
(ii) Whether third option of abandoning a part of
the claim in a summary suit is available to a
plaintiff at the hearing of the summons for
judgment or the options set out in two DivisionBench judgments of this Court in M/s. Randerian
and Singh v. Indian Overseas Bank and Hydraulic
and General Engineering v. UCO Bank (1998 (1) LJ
793) are exhaustive?
(iii) Whether the Division Bench decision in Ajcon
Capital Markets Limited v. Maya Rasayan Limited
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17with the summary procedure prescribed by Order
XXXVII of Code of Civil Procedure?
(iv) When at the hearing of a summons for
judgment, the Court finds that a part of the claim inthe summary suit, falls outside the scope of Order
XXXVII of the Code of Civil Procedure, 1908, what
are the options available to the plaintiff and whatpowers can the Court exercise?”
And the Hon’ble Full Bench of this Court has held :–
“12. In other words, a distinction must be drawn
between the sustainability of a claim and the
maintainability of the action as a summary suit.
The negation of the former does not entail the
negation of the latter. A suit can be said to falloutside the ambit of Order XXXVII only if the relief
claimed therein is based on an action the nature of
which does not fall within the classes specified inOrder XXXVII, Rule 1(2). A relief cannot be said to
fall outside the ambit of Order XXXVII, Rule 2
merely because the quantum thereof is excessive, so
long as the nature of the relief falls within the
clauses specified in Order XXXVII, Rule 1(2).
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13. If the quantum of the claim in suit is not
sustainable it is but a factor to be considered by the
Judge while deciding and passing an order on, the
summons for judgment. The tests for the exercise of
jurisdiction while passing an order on a summons
for judgment have been settled in a plethora of cases
including of the Apex Court. In this reference, we are
not concerned with the same.
14. We will now assume that when a part of the
claim is not warranted by a statutory provision or
by the contractual document on which the suit is
based, the suit must be one which cannot be
accepted as a summary suit as held in Randerian’s
case. Even so, we are also unable to agree with the
ratio in Randerian’s case that in such an eventuality
only one of two consequences must follow viz. either
to grant unconditional leave to defend or to permit
the plaintiff to withdraw the summons for judgment
with leave to file a fresh summons for judgment
after amending the plaint. Nor are we able to agree
with the further ratio that “Recording of a statement
to give up or accept reduced interest is not sufficient.
21. We are also in respectful agreement with the
judgment in Ajcon’s case which holds that in such a
case there are not merely two
options as held in
Randerian’s case. We are unable to see any purpose
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in driving a plaintiff to first withdraw the summons
or judgment, thereafter amend his plaint and finally
take out a fresh summons for judgment. Such a
course serves no useful purpose whatsoever. The
same result can be achieved by the plaintiff merely
making a statement at the bar. To amend the
plaint, the plaintiff would be required under the
rules to take out a chamber summons which itself
would take a few years to be decided. Thereafter, the
plaintiff would necessarily have to go through the
procedure of taking not a fresh summons for
judgment. Such a cumbersome course is not
mandated by any of the provisions of the C.P.C. The
defendant cannot possibly be prejudiced if the
plaintiff is not made to suffer such a labourious,
time-consuming and cumbersome procedure. Mr.
Zaiwalla was unable to indicate any reason why
such a course should be adopted except stating that
if it were not so it would encourage plaintiffs to take
a chance by making unsustainable claims in the first
instance. The reasoning does not appeal to us as
justifying a conclusion in law contrary to the true
construction of Order XXXVII.”
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It is also held that said Court can grant unconditional leave to
defendant for some part of claim and conditional leave for remaining
part. However, the Full Bench judgment no where expressly states
and does not notice the view of the learned Single Judge reported at
Mafatlal Finance Limited Mumbai .vrs. Express Industrial Services
Pvt. Ltd. Mumbai (supra). Conclusions of Hon’ble Full Bench are :-
“28. In the circumstances, we summarise the answer
to the reference as follows:
(1) The judgments in M/s. Randerian and Singh v.
Indian Overseas Bank and Hydraulic and GeneralEngineering v. UCO Bank (1998) 1 LJ 793 are
overruled. The suit would be maintainable as asummary suit if it falls within one of the classes of
suits enumerated in Order XXXVII, Rule 1(2) even ifthe claim made therein is not properly quantified or
is in excess of what the plaintiff is entitled to.
(2) In a summary suit filed under Order XXXVII ofthe C.P.C. the plaintiff is entitled at any time to
abandon or give up a part of the claim unilaterially.
This, the plaintiff may do by making a statement to
be recorded by the Court and without the necessity
of the plaintiff making a formal application for the
same by withdrawing the summons for judgment,::: Downloaded on – 09/06/2013 16:44:18 :::
21amending the plaint and thereafter taking out a
fresh summons for judgment or otherwise.
(3) At the hearing of the summons for judgment, it
will be open to the Court to pass a decree for a partof the claim and grant unconditional leave to
defend the suit in respect of rest of the claim.
(4) At the hearing of the summons for judgment, itis open to the Court to grant conditional leave to
defend in respect of a part of the claim andunconditional leave to defend for the remaining
part of the claim. In such an order it would followthat in the event of the Defendant failing to comply
with the condition, he would suffer the consequencesmentioned in Order XXXVII qua only that part of
the claim for which conditional leave to defend hasbeen granted and not in respect of that part of the
claim for which unconditional leave has beengranted.”
12. Thus, merely because demand for interest is not supported
either by the document or by the law, Suit here does not cease to be a
summary suit. But then the plaintiff has not made any request for
amendment either before the Trial Court or before this Court and has
not expressed readiness and willingness to abandon any part of the
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claim. Moreover, as already pointed out above, plaint as filed seeks
joint and several relief against defendant no.1 Company and
defendant no.2 Shri Sinha. Shri Sinha is stated to be its General
Manager. When purchase orders are placed by company and contract
is with Company, it is clear that there cannot be any other contract or
independent contract with Shri Sinha, General Manager. On the
strength of the contract, the relief in summary suit could have been
asked for only against defendant no.1 Company. Even if Shri Sinha is
treated as General Manager, then also relief will have to be against
the Company only. However, prayer clause in plaint expressly seeks a
joint and several decree against both the defendants. If the decree is
envisaged against only Company, it cannot be viewed as joint and
several. The representative for plaintiff and defendant no.1 have not
raised any specific contentions about this nature of relief claimed. It
is important to note that defendant no.1 alone has filed Writ Petition
No.5664/2010 and defendant no.2 Shri Sinha has not approached
this Court in the matter.
13. The defendant no.1 has relied upon judgment of learned
Single Judge of Calcutta High Court reported at AIR 1974 Cal.6
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(Madan Mohan Sureka .vrs. Bhavani Cinema and others) where view
taken is, only person whose name appears in Hundi can be sued
under Order 37 Rule 2. The Hundi there was by the Firm and one of
its partners was joined as party defendant though his name did not
figure in Hundi. Learned Single Judge found that whether such
person was or was not a partner of the Firm, is a question which
required investigation and therefore, granted unconditional leave to
defend. Here though position of defendant no.2 as General Manager
of defendant no.1 Company is not in dispute, the prayer made for
joint and several decree creates an impression that Shri Sinha is
sought to be made responsible personally. If defendant no.2 is to be
made responsible in his official capacity as General Manager, decree
could have been asked only against defendant no.1 Company and
there was no need to seek joint and several decree against both. The
addition of defendant no.2 and relief sought against him, therefore,
shows that the suit as filed is not squarely covered by Order 37 Rule 2
of Civil Procedure Code.
14. If any claim for interest was to be given up or any other
amendment in plaint was to be prayed, the request for same could
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have been made to the trial Court before it passed the impugned
order. In any case that request could have been made to this Court
when matters were heard on 21.12.2010 to 23.12.2010. There is no
such request by the plaintiff. As I have found that grant of decree in
summary suit against defendant no.2 Shri Sinha, is not possible, it is
not necessary for this court to proceed to appreciate the grievance of
plaintiff in the light of Section 55 of the Contract Act and provisions
of Sections 41 and 42 of the Sale of Goods Act. That consideration
would have been relevant only in case of entire grievance in Suit
falling under provisions of Order 37. Various judgments are cited by
the plaintiff through her authorized Attorney to substantiate that
contention. I, have only mentioned those judgments for the purpose
of record. Those judgments are –
(1) Caltex [India] Ltd. .vrs. Bhagwan Devi Marodia
(By Hon’ble Apex Court reported at
AIR 1969 SC 405)
(2) Superintending Engineer .vrs. Patibandla Radhkrishna
Murthy of Andhra Pradesh High Court reported
at 1996 [3] ALT 1137.
(3) Shah Mohanlal Manilal .vrs. Firm Running in the
Name and Style of Dhirubhau Bavajibhai by Gujarat
High Court, reported at AIR 1962 Guj. 56.
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(4) Lohmann Rausher Gmbh .vrs. Medisphere Marketing
Pvt. Ltd. by Delhi High Court reported at
117 [2004] DLT 95
Consideration of these judgments relied upon by the
plaintiff is not essential at this stage because of finding already
reached above and also to avoid any prejudice to cause/defence of
defendant no. 2 Shri Sinha. .
15. Defendant no.1 has relied upon judgment reported at AIR
1993 SC 352 (R.N. Gosain .vrs. Yashpal Dhir) to urge that plaintiff
cannot be allowed to approbate or reprobate. However, I do not find
any approbation or reprobation by plaintiff on record at-least against
the defendant no.1. Defendant no.1 has also relied upon the Division
Bench judgment of this Court reported at 2007 [3] Mh.L.J. 8 (Ravi
Prakash Khemka and another .vrs. Bank of India and others), wherein
Division Bench of this Court found that when defence raised was not
a moonshine, defendant was entitled to unconditional leave to
defend. (1998) 5 SCC 354 (Sunil Enterprises and another .vrs. SBI
Commercial and International Bank Ltd.) is the judgment of Hon’ble
Apex Court which follows the earlier judgment reported at AIR 1977
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SC 577 (Mechelec Engineers & Manufacturers .vrs. Basic Equipment
Corp.). The learned Single Judge of this Court in 2010 [4] Mh.L.J.
294 (Harilal and Co., Mumbai .vrs. Gammon India Ltd. Mumbai) has
followed this judgment of Hon’ble Apex Court.
16. The defence of defendant no.1 that material supplied to it
was of inferior quality now needs to be looked into. While
considering this defence at this stage it is necessary to remember that
joint and several decree is asked for against defendants no.1 and 2
together. Defendant no.2 with conditional leave to defend, has not
filed any proceeding against the impugned order before this Court.
Purchase orders clearly show that quality of material was to be
inspected by the defendant no.1 at it’s site at MeraMundali. Each
supply was to be accompanied by test certificate and accordingly it is
not in dispute that supply made by the plaintiff satisfied these
requirements. The first grievance authentically made by the
defendant no.1 about inferior quality of supply is 03.03.2009. There
is dispute between the parties about the earlier letter dated
28.02.2009 written in this respect by the defendant no.1 to plaintiff.
According to the plaintiff that letter is received after e-mail reply to
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notice dated 03.03.2009. Perusal of this reply dated 28.02.2009 and
reply to legal notice dated 03.03.2009 does not reveal that there is
much difference between the two. The supplies have been effected
by the plaintiff from 24.11.2007 till 09.06.2008 and that was without
any protest. First supply order was for 50 M.T. Of magnetite powder.
Second was for 100 M.T., third one as for 200 M.T., fourth one was
for 400 M.T., 5th one was for 500 M.T., while last one was of 1700
M.T. The details of compliance is also placed on record by showing
break up of each supply with bill number, bill amount, date of
payment etc. In reply to legal notice sent by the defendant no.1
under signature of defendant no.2, defence taken is supplies were
accepted on the strength of test reports given by the plaintiff.
Because of the mal-functioning in their factory, defendant no.1 was
advised to check quality of Magnetite Powder and hence
incorrectness of test reports given by the plaintiff came to light. This
reply does not give any details date wise in this respect. 3 samples
are stated to be tested and reply further shows acceptance of total bill
amount, as also total outstanding amount. Amount of Rs.
18,10,280/- is then deducted on account of poor quality and balance
of Rs. 16,17,615/- is adjusted against loss. Though in alleged
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communication dated 28.02.2009 these losses are stated to be
approximately 20 Crores, E-mail reply notice dated 3/3/2009 does
not show any adjustment or definite quantification of claim towards
damages. The test reports of defendant no.1 showing less percentage
of Magnetite and dated 12.08.2008, 20.08.2008, 01.08.2008 and
11.09.2008. When test on quality were agreed at end of defendants,
acceptance & use of material and then story of malfunctioning for
fairly long period all prima facie appear doubtful and lacking
bonafides. Deduction from all supplies on the basis of 3 such quality
checks or third party checks also creates some element of doubt.
However, this can not be finally concluded here in present facts
against defendant 2.
17. In this situation, I find that the conditional leave to defend
granted by the trial Court to defendant no.1 [petitioner in Writ
Petition No. 5664 of 2010] does not call for any interference. The
said Court has looked into the necessary aspects and objections to its
jurisdiction about mis-joinder and also about the alleged supply of
inferior quality of Magnetite Powder. I do not find any jurisdictional
error or perversity in that approach, in so far as the challenge by
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defendant no.1 is concerned. The defendant no.1 has already
furnished Bank guarantee as directed by the trial Court and in
present circumstances, the said direction cannot be viewed as
uncalled for. I do not find any substance in the effort of learned
counsel for defendant no.1 to urge that recourse to provisions [e] as
given in paragraph no.8 of the judgment of Hon’ble Apex Court in
case of Mechelec Engineers & Manufacturers .vrs. Basic Equipment
Corp. (supra) is unjustified.
18. In view of these observations and findings, both the
Petitions are dismissed. No costs.
JUDGE
Rgd.
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