{"id":165587,"date":"2011-08-16T00:00:00","date_gmt":"2011-08-15T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-century-aluminium-vs-ms-goodpal-industry-limited-ors-on-16-august-2011"},"modified":"2017-11-04T22:09:13","modified_gmt":"2017-11-04T16:39:13","slug":"ms-century-aluminium-vs-ms-goodpal-industry-limited-ors-on-16-august-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-century-aluminium-vs-ms-goodpal-industry-limited-ors-on-16-august-2011","title":{"rendered":"M\/S Century Aluminium … vs M\/S Goodpal Industry Limited & Ors on 16 August, 2011"},"content":{"rendered":"
Delhi High Court<\/div>\n
M\/S Century Aluminium … vs M\/S Goodpal Industry Limited & Ors on 16 August, 2011<\/div>\n
Author: V. K. Jain<\/div>\n
         THE HIGH COURT OF DELHI AT NEW DELHI\n\n%                     Judgment Pronounced on: 16.08.2011\n\n+ CS(OS) 2151\/2010\n\n\nM\/S CENTURY ALUMINIUM MANUFACTRING CO LTD\n                                        ..... Plaintiff\n             Through: Mr R.K. Sanghi, Adv.\n\n                              versus\n\n\nM\/S GOODPAL INDUSTRY LIMITED & ORS                  .....\n                                                 Defendants\n                        Through: Mr Aaditya V.K., Adv.\n                        Mr Satya Prakash Proxy Counsel for\n                        Mr Dharamdev, Adv for D-4\n\nCORAM:-\nHON'BLE MR JUSTICE V.K. JAIN\n\n1. Whether Reporters of local papers may\n   be allowed to see the judgment?                        No.\n\n2. To be referred to the Reporter or not?                No.\n\n3. Whether the judgment should be reported                No.\n   in Digest?\n\nV.K. JAIN, J. (ORAL)\n<\/pre>\n
IA No. 17068\/2010 (O. 7 R. 11 CPC)<\/p>\n
1.          This is a suit for recovery of damages and<\/p>\n
injunctions. It is alleged in the plaint that defendant No. 1,<\/p>\n
which is a Chinese company, is carrying business in India<\/p>\n
CS(OS)No. 2151\/2010                                 Page 1 of 12<\/span>
\n through defendant No. 2, who is its Indian agent. It is<\/p>\n
further alleged that defendant No.2, on behalf of defendant<\/p>\n
No. 1 sent an Indent of the contract for and on behalf of<\/p>\n
defendant No. 1, followed by the sales confirmation issued<\/p>\n
by defendant No. 1. It is also alleged that on receipt of the<\/p>\n
offer, the plaintiff placed a purchase contract on defendants<\/p>\n
No. 1 and 2. On taking delivery of the material sent in three<\/p>\n
containers of 24 MT each, the plaintiff discovered that the<\/p>\n
goods were defective and were not as per specifications. The<\/p>\n
plaintiff informed defendants No. 1 and 2 in this regard and<\/p>\n
their representatives visited the factory of the plaintiff to<\/p>\n
verify the complaint and assured their full co-operation. The<\/p>\n
sample was sent to an independent lab M\/s Sunbeam Auto<\/p>\n
Ltd., which submitted its report confirming that the goods<\/p>\n
were not of the agreed specifications and were defective. The<\/p>\n
iron content in the material was 0.71% instead of the<\/p>\n
maximum of 0.50%, agreed under the contract. The plaintiff<\/p>\n
made a claim of US$ 87520 which comes to Rs 38,50,880\/-,<\/p>\n
for the losses\/damages suffered by it on account of defective<\/p>\n
goods supplied to it. It is also claimed that the defendants<\/p>\n
failed to take back the defective goods and compensate the<\/p>\n
plaintiff, which has led to the plaintiff claiming the aforesaid<\/p>\n
CS(OS)No. 2151\/2010                                   Page 2 of 12<\/span>
\n amount of Rs 38,50,880\/- as damages from them.<\/p>\n
2.          Another contract was executed between the parties<\/p>\n
on 09th July, 2010 for supply of 48 MT Silicon. Since the<\/p>\n
goods supplied earlier to the plaintiff were found to be of<\/p>\n
poor quality, the plaintiff requested the defendants that the<\/p>\n
sample of the material be sent to an independent agency.<\/p>\n
This request, however, was not accepted by the defendants.<\/p>\n
The plaintiff in this suit besides seeking recovery of Rs<\/p>\n
38,50,880\/- has also sought injunction, restraining the<\/p>\n
defendants from selling the goods which have been sent to it<\/p>\n
and are at present lying with Assistant Commissioner,<\/p>\n
Customs (defendant No. 3). It has also sought injunction<\/p>\n
directing defendants No. 1 and 2 to have a joint inspection<\/p>\n
of the goods lying with defendant No. 3 and sale of those<\/p>\n
goods by public auction in case they are not found to be of<\/p>\n
agreed specifications.\n<\/p>\n
3.          IA No. 17068\/2010 has been filed by defendant No.<\/p>\n
2 seeking rejection of the plaint on the ground that it<\/p>\n
discloses no cause of action against it and is also barred by<\/p>\n
law.\n<\/p>\n
4.          A perusal of the Indent dated 26th May, 2010<\/p>\n
would show that the name of the buyer is shown as Century<\/p>\n
CS(OS)No. 2151\/2010                                 Page 3 of 12<\/span>
\n NF Castings, a unit of the plaintiff-company M\/s Century<\/p>\n
Aluminium Manufactring Co. Ltd., which is also the<\/p>\n
consignee as per this Indent.            The Principal & L\/C<\/p>\n
Beneficiary       is shown as Goodpal Industry        Ltd.,    i.e.,<\/p>\n
defendant No. 1. The terms and conditions, annexed to the<\/p>\n
Indent, make it quite clear that offer was made by defendant<\/p>\n
No. 2 on behalf of defendant No. 1 and it was to become a<\/p>\n
contract only after confirmation in writing by defendant No.<\/p>\n
1. Clause 4 of the terms and conditions is important and<\/p>\n
reads as under:\n<\/p>\n
              “The transaction as contained in this
\n              indent is to be executed on Principal to
\n              Principal Basis between the buyer and
\n              seller. KPL is acting only as a facilitator
\n              in the business. In any case KPL shall not
\n              liable for any claim of any kind of loss or
\n              damage arising out of this transaction to
\n              any party of whatsoever nature.”<\/p><\/blockquote>\n
            The sale confirmation dated 26th May, 2010 would<\/p>\n
also show that defendant No. 1-company was the seller,<\/p>\n
whereas the plaintiff-company was the buyer of the goods in<\/p>\n
question.\n<\/p>\n
            The aforesaid documents filed by the plaintiff-<\/p>\n
company clearly show that the transaction for purchase of<\/p>\n
the goods was between the plaintiff and defendant No. 1, the<\/p>\n
CS(OS)No. 2151\/2010                                    Page 4 of 12<\/span>
\n applicant\/defendant      No.   2   having   acted   only   as    an<\/p>\n
facilitator. The parties had agreed, as would be evident from<\/p>\n
clause 4 of the terms and conditions, annexed to the Indent<\/p>\n
that the transaction was to be executed between defendant<\/p>\n
No. 1 and the plaintiff on a Principal to Principal Basis and<\/p>\n
in no case defendant No. 2 was to be liable for any claim of<\/p>\n
any kind of loss or damage arising out of the transaction<\/p>\n
either to the plaintiff-company or to defendant No. 1-<\/p>\n
company. The fact that defendant No. 2 was acting only as a<\/p>\n
facilitator is also evident from the e-mails filed by the<\/p>\n
plaintiff. Vide e-mail dated 1st October, 2010, Mr Mohit Jain<\/p>\n
of defendant No. 2 wrote to the plaintiff stating therein that<\/p>\n
defendant No. 2 was an Indenter\/facilitator which would<\/p>\n
put its full efforts with the supplier on their complaint, but<\/p>\n
they would have to wait for feedback from the supplier. Vide<\/p>\n
another e-mail dated 22nd September, 2010, Mr Sanjay<\/p>\n
Kaushik of defendant No. 2 had written to Mr Mohit Jain of<\/p>\n
plaintiff stating therein that defendant No. 2 had merely<\/p>\n
facilitated and hence would not be party to the deal.<\/p>\n
            It would thus be seen that as far as defendant No.<\/p>\n
2 is concerned, the parties had agreed it would not be liable<\/p>\n
for the loss\/damage alleged to have been suffered by the<\/p>\n
CS(OS)No. 2151\/2010                                    Page 5 of 12<\/span>
\n plaintiff-company.\n<\/p>\n
5.          Section 230 of Contract Act, 1872, to the extent it<\/p>\n
is relevant, provides that in the absence of any contract to<\/p>\n
that effect, an agent is not personally liable by the contracts<\/p>\n
entered into by him on behalf of his principal. It further<\/p>\n
provides that such a contract shall be presumed to exist,<\/p>\n
where the contract is made by an agent for the sale or<\/p>\n
purchase of goods for a merchant resident abroad.<\/p>\n
            In the case before this Court, the contract has<\/p>\n
been entered by defendant No. 1 and not by defendant No. 2<\/p>\n
on behalf of defendant No. 1, as is evident from the sales<\/p>\n
confirmation which purports to be signed by an authorized<\/p>\n
signatory on behalf of defendant No. 1 Goodpal Industry<\/p>\n
Ltd. This is not the case of the plaintiff that the sale<\/p>\n
confirmation is signed by defendant No. 2 on behalf of<\/p>\n
defendant No. 1. As noted earlier, it is defendant No. 1<\/p>\n
which is named as the seller in the sale confirmation as well<\/p>\n
as in the purchase contract, both of which have been relied<\/p>\n
upon and filed by the plaintiff. The plaintiff has also filed<\/p>\n
the invoice dated 11th June, 2010, issued by defendant No.<\/p>\n
1. This document also purports to be signed by the<\/p>\n
authorized signatory of defendant No. 1. Since the contract<\/p>\n
CS(OS)No. 2151\/2010                                  Page 6 of 12<\/span>
\n was not made by defendant No. 2 on behalf of defendant No.<\/p>\n
1, the presumption under Section 230 of Contract Act<\/p>\n
cannot be drawn in this case. In any case, even if such a<\/p>\n
presumption is raised, it stands fully rebutted from clause 4<\/p>\n
of the terms and conditions, annexed to the Indent.<\/p>\n
            In Midland Overseas vs. CMBT Tana & Others<\/p>\n
AIR 1999 Bom 401, defendant No. 3 was impleaded because<\/p>\n
it was acting as shipping agent for and on behalf of second<\/p>\n
defendant.            It was alleged in the plaint that the third<\/p>\n
defendant was doing business as shipping agents at<\/p>\n
Bombay for and on behalf of second defendant. It was also<\/p>\n
alleged that the goods were entrusted to the third defendant<\/p>\n
which accepted them on behalf of the second defendant. It<\/p>\n
was also alleged that the second defendant was transacting<\/p>\n
business at Bombay through defendant No. 3, which was its<\/p>\n
local agent. Relying upon Section 230 of Contract Act, the<\/p>\n
suit was dismissed against defendant No. 3<\/span><\/p>\n
6.          The learned counsel for the plaintiff has pointed<\/p>\n
out that the Indent was accepted by the plaintiff subject to<\/p>\n
the terms and conditions of the purchase contract dated<\/p>\n
26th May, 2010. A perusal of the purchase contract would<\/p>\n
show that no such term was             stipulated by the plaintiff,<\/p>\n
CS(OS)No. 2151\/2010                                      Page 7 of 12<\/span>
\n which can be construed to make defendant No. 2 liable to<\/p>\n
the plaintiff-company for the damages, alleged to have been<\/p>\n
suffered by it on account of the goods being defective or not<\/p>\n
being in accordance with the agreed specifications. Rather<\/p>\n
clause 7 of the Special Note stipulates that any loss due to<\/p>\n
less stuffing will have to be compensated by seller, which is<\/p>\n
yet another indicator that defendant No. 2 was acting only<\/p>\n
as a facilitator.\n<\/p>\n
            Since no term stipulated in the purchase contract<\/p>\n
is contrary to the terms and conditions of the Indent dated<\/p>\n
26th May, 2010, it cannot be said that clause 4 of the terms<\/p>\n
and conditions of the Indent is not binding on the parties.<\/p>\n
Since the parties have specifically agreed that defendant No.<\/p>\n
2 will not be liable for the damages, if any, suffered by the<\/p>\n
plaintiff, out of this transaction, the plaintiff-company<\/p>\n
cannot have any cause of action against defendant No. 2<\/p>\n
and in any case, the suit is in such a case would be hit by<\/p>\n
Section 230 of Contract Act, thereby attracting Order VII<\/p>\n
Rule 11(d) of the Code of Civil Procedure, besides being bad<\/p>\n
for misjoinder of defendant No. 2 which is neither a<\/p>\n
necessary nor a property party to the suit.<\/p>\n
7.          The learned counsel for the plaintiff has relied<\/p>\n
CS(OS)No. 2151\/2010                                 Page 8 of 12<\/span>
\n upon the decision of the Calcutta High Court in Alliance<\/p>\n
Mills (Lessees) Pvt. Ltd. Vs. India Cements Ltd. and Anr.<\/p>\n
AIR 1989 Calcutta 59. In the case before Calcutta High<\/p>\n
Court, the contract indicated that the name of defendant<\/p>\n
No. 2, who had filed application under Order 7 Rule 11 of<\/p>\n
CPC for rejecting the plaint, had been shown as purchaser.<\/p>\n
It was specifically stated on behalf of the plaintiff that<\/p>\n
defendant No. 2 had entered into the said contracts in the<\/p>\n
name of its firm as the purchaser and the plaintiff had<\/p>\n
agreed to sell and deliver to defendant No. 2 and defendant<\/p>\n
No. 2 had agreed to purchase the goods from the plaintiff at<\/p>\n
the rates mentioned in the contracts.              This was also the<\/p>\n
case of the plaintiff that defendant No. 2 was in any event<\/p>\n
personally       entitled   to   enforce   the    contract   and     was<\/p>\n
personally bound by it. However, in the present case, there<\/p>\n
is not an iota of allegation that defendant No. 2 had agreed<\/p>\n
to be personally bound by the contract. To the contrary, the<\/p>\n
documents filed by the plaintiff clearly show that it was<\/p>\n
defendant No. 1 alone, which was the seller of the goods and<\/p>\n
under clause 4 of the terms and conditions, annexed to the<\/p>\n
Indent, defendant No. 2 was not to be personally bound for<\/p>\n
any loss\/damage to the plaintiff                 arising   out of     the<\/p>\n
CS(OS)No. 2151\/2010                                          Page 9 of 12<\/span>
\n transaction in question by the plaintiff.         As discussed<\/p>\n
earlier, the contract was between the plaintiff and defendant<\/p>\n
No. 2, where plaintiff is the purchaser and defendant No. 1<\/p>\n
is the seller. There is no dispute that even the Letter of<\/p>\n
Credit was issued by the plaintiff in the name of defendant<\/p>\n
No. 1 alone.\n<\/p>\n
            From whatever angle I may take, defendant No. 2<\/span><\/p>\n
is not liable to the plaintiff-company to make good the loss<\/p>\n
suffered by it on account of the goods supplied by defendant<\/p>\n
No. 1 being defective or being not in accordance with the<\/p>\n
agreed specifications.\n<\/p>\n
8.          Coming to the relief of injunctions, since the goods<\/p>\n
have been sent by defendant No. 1 to the plaintiff, the<\/p>\n
ownership in the goods vests only in defendant No. 1 and<\/p>\n
defendant No. 2 does not claim any right or interest in these<\/p>\n
goods, the plaintiff can seek injunctions only against<\/p>\n
defendant No. 1 if it is otherwise made out on the strength<\/p>\n
of the case setup by it. But, neither the plaint discloses any<\/p>\n
cause of action qua defendant No. 2 in respect of the goods<\/p>\n
which are lying with defendant No.3 nor can be said that<\/p>\n
defendant No. 2 is a necessary or a property party with<\/p>\n
respect to these reliefs.\n<\/p>\n
CS(OS)No. 2151\/2010                                   Page 10 of 12<\/span>\n<\/p>\n
 9.          In the facts of the case, the Court has the options<\/p>\n
to reject the plaint qua defendant No. 2 or to delete the<\/p>\n
name of defendant No.2 from the array of defendants and<\/p>\n
dismiss the suit against defendant No.2. The learned<\/p>\n
counsel for the plaintiff states that rejection of the plaint<\/p>\n
qua one of defendants may not be a correct course of action<\/p>\n
and if the Court is of the view that defendant No. 2 is<\/p>\n
neither a necessary nor a property party to the suit, it may<\/p>\n
have to delete its name from the array of defendants. Hence,<\/p>\n
the suit against defendant No. 2 is dismissed and its name<\/p>\n
is deleted from the array of defendants. The plaintiff is<\/p>\n
directed to file an amended memo of parties after excluding<\/p>\n
the name of defendant No. 2 from the array of parties.<\/p>\n
            The application stands disposed of.\n<\/p>\n
CS(OS) 2151\/2010 and IA No. 14172\/2010 (O. 39 R.
\n1&2CPC)<\/p>\n
            The service report with respect to defendant No. 1<\/p>\n
is not on record. Mr Sanghi states that he will track the<\/p>\n
delivery report on the website of the courier and file the<\/p>\n
same along with the affidavit within two weeks.<\/p>\n
            Renotify on 29th September, 2011.\n<\/p>\n
CS(OS)No. 2151\/2010                                  Page 11 of 12<\/span>
\n             In case if it transpires that defendant No. 1 has not<\/p>\n
been served, fresh summon be issued to it through DHL<\/p>\n
courier for the date fixed above.\n<\/p>\n<\/p>\n
                                                 (V.K. JAIN)
\n                                                   JUDGE
\nAUGUST 16, 2011
\nbg<\/p>\n
CS(OS)No. 2151\/2010                                    Page 12 of 12<\/span>\n <\/p>\n","protected":false},"excerpt":{"rendered":"
Delhi High Court M\/S Century Aluminium … vs M\/S Goodpal Industry Limited & Ors on 16 August, 2011 Author: V. K. Jain THE HIGH COURT OF DELHI AT NEW DELHI % Judgment Pronounced on: 16.08.2011 + CS(OS) 2151\/2010 M\/S CENTURY ALUMINIUM MANUFACTRING CO LTD ….. Plaintiff Through: Mr R.K. Sanghi, Adv. versus M\/S GOODPAL INDUSTRY […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[14,8],"tags":[],"class_list":["post-165587","post","type-post","status-publish","format-standard","hentry","category-delhi-high-court","category-high-court"],"yoast_head":"\nM\/S Century Aluminium ... vs M\/S Goodpal Industry Limited & Ors on 16 August, 2011 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ms-century-aluminium-vs-ms-goodpal-industry-limited-ors-on-16-august-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"M\/S Century Aluminium ... vs M\/S Goodpal Industry Limited & Ors on 16 August, 2011 - 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