THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Pronounced on: 17.08.2011
+ CS(OS) 712/2006
M/S CENTURY PULP AND PAPER & ANR...... PLAINTIFFS
Through: Mr A.K. Singla, Sr. Adv with
Mr. J.K. Sharma, Adv.
VERSUS
M/S SHIV GANGA PAPER ..... DEFENDANT
Through: Mr Manish K. Saryal, Adv. for
D-4
CORAM:-
HON'BLE MR JUSTICE V.K. JAIN
1. Whether Reporters of local papers may
be allowed to see the judgment?
2. To be referred to the Reporter or not?
3. Whether the judgment should be reported
in Digest?
V.K. JAIN, J. (ORAL)
1. The learned Senior Counsel appearing for the
plaintiffs states that he will file an amended memo of parties
giving the name of plaintiff No. 1 as M/s Century Textiles
and Industries Limited. The Registry will take the amended
memo of parties on record.
CS(OS)No. 712/2006 Page 1 of 9
2. This is a suit for recovery of Rs 1,90,07,000/-.
Plaintiff No. 1 is a leading manufacturer of Paper and Pulp,
whereas plaintiff No. 2 is one of its authorized dealers.
Under an arrangement between the plaintiffs, plaintiff No. 1
used to execute the sale orders negotiated by plaintiff No. 2,
by delivering the same to the purchaser, identified by
plaintiff No. 2. The sale consideration used to be paid by
the purchaser to either of the plaintiffs. The case of the
plaintiffs is that in April, 2004, defendant No. 4 (whose
name has since been deleted from the array of defendants)
Shri Prashant Jhunjhunwala negotiated the Paper Rate and
Supply Terms Agreement, on behalf of defendant No. 1 Shiv
Ganga Paper Converters P. Ltd. for the year 2005-2006 at
Delhi. The agreement envisaged lifting of a minimum
quantity of 4000 MT +/- 5% bagasse & wood based paper
during the period 01.04.2005 to 31.03.2006. The agreement
stipulated a special discount called “Shiv Ganga
Discount/Contractual Discount” of Rs 750/- per MT, which
was reversible in the event of either non-liftment of the
contracted quantity of 4000 MT +/-5% or breach of contract
by any means. The amount of the invoice was to be paid
within 30 days and overdue payments attracted interest at
CS(OS)No. 712/2006 Page 2 of 9
the rate of 18% per annum from 31st day, till payment. The
supplies were effected to defendant No. 1-company in terms
of the above-mentioned agreement. A separate account was
maintained with respect to the supplies made to the
defendant-company and the payment received from it. The
plaintiffs were receiving payments without delay until
November-December, 2005. However, difficulties surfaced
thereafter since the first week of January, 2006 when the
defendant represented to the plaintiffs that payment of Rs
12,57,636/- was sent by them to Kota branch of
Corporation bank, whereas only one cheque of Rs
5,70,722/- was deposited by it. Last supply of the paper
was made to the defendant-company vide invoice dated 22st
January, 2006. At that time, the amount outstanding
against the defendant-company was Rs 2,88,77,705/-. This
amount represented the supplies made to the units of
company to four separate units of defendant-company.
Realizing the liquidity crunch faced by it, the defendant-
company desired the plaintiffs to take back the material
lying at their various establishments. The plaintiffs in terms
of the authorization from the defendant-company lifted
101.034 MT of the paper form Daman Unit on 02nd
CS(OS)No. 712/2006 Page 3 of 9
February, 2006 and 64.363 MT of paper from Rudrapur
Unit on 08th February, 2006, valued in aggregate at Rs
58,26,428/-.
3. The defendant-company made payments of Rs 20
lakh, Rs 10 lakh vide cheque dated 31.01.2006 and another
Rs 10 lakh vide cheque dated 02.02.2006 against the
supplies of Rs 2,88,77,705/- made up to 22nd January,
2006. Goods worth Rs 68,69,018/- were also seized from
the premises of the defendant-company pursuant to an
order dated 08th February, 2006 passed by the Court on the
complaint of plaintiffs. After giving credit for the payments,
Rs 58,26,428/- for the material lifted from Rudrapur and
Daman Units and Rs 68,69,018/- for the material received
in proceedings initiated before Chief Judicial Magistrate,
Daman, a sum of Rs 1,41,82,259/- is stated to be due to
the plaintiffs from the defendant-company towards unpaid
price of goods supplied to it. Since the defendant-company
committed breach of clause 3.5 of the agreement by not
lifting contracted quantity of 4000 MT and also failed to
make payment in terms of the contract between the parties,
the discount of Rs 750 per MT tones, which had already
been passed on to the defendant in the invoices, was
CS(OS)No. 712/2006 Page 4 of 9
reversed by the plaintiff. The amount of discount reversed
in the account of defendant-company comes to Rs
18,71,738/-. The plaintiff also claims to have incurred
expenditure of Rs 13,74,697/- in defending various legal
proceedings filed by the defendants against it in Courts at
Daman. The total amount claimed by the plaintiff from the
defendant-company thus comes to Rs 1,90,06,609.00/-
(rounded off to Rs 1,90,07,000/-), which includes Rs
15,77,915 towards interest at the rate of 18% per annum.
4. The defendant-company was proceeded ex parte on
26th May, 2011.
5. The plaintiffs have filed affidavit of Mr K.K. Bagla,
constituted attorney of plaintiff No.1 by way of ex parte
evidence. In his affidavit by way of evidence, Mr Bagla has
supported, on oath, the case setup in the plaint and has
stated that the plaintiff No. 1 maintains account of supplies
made by it. According to him, plaintiff No. 2 was also
maintaining similar account. He has further stated that
amounts received from defendant-company, whether direct
or through plaintiff No. 2, were credited in the account and
the last payment from the defendant-company was received
vide letter dated 31st January, 2006. He has further stated
CS(OS)No. 712/2006 Page 5 of 9
that credit was given to the defendant-company in respect of
the goods lifted by the plaintiffs pursuant to the request
received from the defendant.
6. Ex. PW-1/6 is an affidavit filed by Mr Arun Kumar
Kejriwal, Director of the defendant-company. In his affidavit,
he has stated that the letter dated 27th November, 2006 was
sent by him in the name of defendant-company and was
faxed to the plaintiffs on the same date. He has further
stated that defendant-company admits liability to the extent
of amount stated in the letter dated 27th November, 2006
and has no objection, if part decree for the aforesaid
amount is passed in favour of plaintiff No. 1 and against the
defendant-company.
7. Ex. PW-1/5 is the agreement between plaintiff No.
1 and defendant-company for supply of 4000 MT +/- 5%
bagasse & wood based paper except copier paper. Clause
3.5 of the agreement which deals with the discount reads as
under:
“As narrated above at point No. 3.1, Shiv
Ganga discount/contractual discount of
Rs 750/- PMT will be passed in the
invoice. However, in the event of non
liftment of contractual quantity of 4000
MT +/- 5% by Shiv Ganga during the
contractual period or by breach ofCS(OS)No. 712/2006 Page 6 of 9
contract by any means, Century will
reverse the entire Shiv
Ganga/Contractual Discount @ Rs 750/-
PMT already passed in the invoices.”
8. Clause 7 of the agreement deals with the terms of
the payment and it provides that if payment is not made
within 30 days, interest at the rate of 18% per annum will
be charged from 31st day till the date of payment.
9. Ex.PW-1/6 is the statement of account which
shows that as on 09 th November, 2005, a sum of Rs
5,56,766.00/- was due to the plaintiff No. 1 from the
defendant-company. Separate bill-wise details in respect of
the papers supplied to various units of the defendant-
company forms part of this statement of account. A sum of
Rs 2,67,66,779.00/- was due to the plaintiff No. 1 from the
defendant as on 31st January, 2006, in respect of Daman
Unit-I. Rs 11,38,407.00 in respect of Daman-II Unit, Rs
4,44,444/- in respect of Rudrapur Unit, Rs 5,28,075/- in
respect of Kota unit, making a total of Rs 2,88,77,705/-.
Two payments of Rs 10 lakh were received by plaintiff No. 1
vide cheques, copies of which are Ex.PW-1/7. Ex.PW-1/13
and Ex.PW-1/14 are the credit note of Rs 58,26,428/- in
respect of the material lifted by the plaintiffs from Daman
CS(OS)No. 712/2006 Page 7 of 9
and Rudrapur Units. After giving benefit for the aforesaid
amount and benefit of Rs 92,30,210/- towards price of the
material received by the plaintiff in judicial proceedings, the
balance amount comes to Rs 1,41,82,259/-. Since the
defendant-company defaulted in lifting the contracted
quantity of 4000 MT +/- 5% of the paper, the plaintiff was
entitled, in terms of the agreement, to reverse the discount
of 750 per MT tones which it had given in the invoices. The
amount of discount reversed in this manner comes to Rs
18,71,738/-. The plaintiff is, therefore, entitled to recover of
a sum of Rs 1,60,53,997/- towards price of the goods sold
by it to the defendant-company, after reversal of the
discount.
10. The learned Counsel for the plaintiffs state that
they are not pressing the claim for Rs.13,74,697/- towards
litigation expenses.
11. The learned counsel for the plaintiff states that the
interest amount of Rs 15,77,915/- has been claimed by the
plaintiff only on the principal sum of Rs 1,41,82,259/- at
the agreed rate of 18% per annum. The plaintiff, therefore,
is entitled to recovery of Rs 1,76,31,912/- from the
defendant-company.
CS(OS)No. 712/2006 Page 8 of 9
12. During pendency of the suit, a sum of Rs 40 lakh
was paid by the defendants No. 2 and 3 to the plaintiffs
towards discharge of the liability of the defendant-company;
adjustment of that amount needs to be given to the
defendant.
ORDER
For the reasons given in the preceding paragraphs,
a decree for recovery of Rs.1,36,31,912/- with proportionate
costs on Rs.1,76,31,912/-, interest @ 12% p.a. on
Rs.1,76,31,912/- from the date of filing of the suit till 18th
January, 2011 and interest on Rs.1,36,31,912/- w.e.f. 19th
January, 2011 till realization is hereby passed in favour of
plaintiff No.1 and against the defendant.
Decree sheet be drawn accordingly.
(V.K. JAIN)
JUDGE
AUGUST 17, 2011
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CS(OS)No. 712/2006 Page 9 of 9