IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF NOVEMBER 2019 BEFORE THE HON’BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY R.F.A.No.1212 OF 2014 BETWEEN:
1. M/s.Dayananda Sagar Institutions, Shavige Malleshwara Hills, Kumaraswamy Layout, Bangalore-560 078. Reptd.by its Secretary.
2. Chairman, Dayananda Sagar Institutions, Shavige Malleshwara Hills, Kumaraswamy Layout, Bangalore-560 078.
3. M/s.Dayananda Sagar Institutions, Shavige Malleshwara Hills, Kumaraswamy Layout, Bangalore-560 078, By its Manager-Purchase.
4. Mahatma Gandhi Vidya Peeta (MGVP Trust) Shavige Malleshwara Hills, Kumaraswamy Layout, Bangalore-560 078, Rep.by its Chairman Dr.D.Hemachandra Sagar. .. Appellants ( By Ms.Deepika Mahesh, Advocate For Sri Badri Vishal, Advocate ) AND:
M/s.Aishwarya Consolidates Pvt. Ltd., No.8/38, Kanakapura Road, Armugam Circle, Basavanagudi, Bangalore-560 004, Represented by its Proprietor Sri K.Srinivasan, Aged about 61 years, S/o Sri Krishnan. .. Respondent ( By Sri V.V.Gunjal, Advocate ) This Regular First Appeal is filed under Section 96 read with Order 41 Rule 1 of CPC, against the judgment and decree dated 7.4.2014, passed in O.S.No.6418/2010, on the file of the XIX Addl.City Civil and Sessions Judge (CCH-18) Bengaluru, decreeing the suit for recovery of money.
This Regular First Appeal coming on for Hearing, this day, the Court delivered the following:
JUDGMENT This is the defendants’ appeal. The present respondent, as a plaintiff, had instituted a suit against the present appellants arraigning them as defendant Nos.1 to 4 in O.S.No.6418/2010, in the Court of learned XIX Addl.City Civil & Sessions Judge, (CCH-18), Bengaluru City, (hereinafter for brevity referred to as `trial Court’), for recovery of a sum of `3,74,400/- with future interest at the rate of 24% p.a. thereupon.
2. The summary of the case of the plaintiff in the trial Court was that the plaintiff who was engaged in the business of setting up kitchen and equipments required for hotel, hostel etc., had supplied the following kitchen equipments to the defendants for their International Students Hostel, Food Court at their specific request.
PRODUCT UNIT PRICE (a) KSK 323 KS Kitchen master – Singapore – 2 group espresso coffee machine, W/timer- programmable automatic dosing system – cup holder boiler 13.5 Ltrs. – 4000 Watts.
Rs.1,45,000-00 (b) KSK 003 Coffee Grinder – w/coffee tamper & Knox box Rs. 36,000-00
GN/1/1 150 mm pan (e) HL G-12SS KS Kitchenmaster – Singapore meat mincer Capacity 120 kgs/per hour Rs. 47,000-00 (f) HCH 930 Hennu Penny – Humidified heated holding cabinet 3 Drawers w/handle Rs. 1,68,900-00 (g) KS Kitchenmaster – Singapore gas operated shawaram grill w/robox glass Capacity 45-60 Kgs.
Rs. 1,20,100-00 (h) GL7-8G+BV7-8+XGL-GC Mareno Italy gas charcoal grill W/open cabinet Complete w/2 gish grids meat frill in AISI Stainless Steel Rs. 1,99,600-00 Thus, the total amount of the goods supplied to the defendants was for a sum of `9,15,232.50 ps. The invoices were raised in that regard. Out of the said amount, the defendants had made the payment of a sum of `6,50,832/- vide Cheque No.636289, dated 29.8.2007, drawn on Vijaya Bank, Kumaraswamy Layout, Bengaluru, thus, retaining a balance sum of `2,64,400/-. After much persuasion, defendants paid another sum of `1 lakh through cheque dated 2.2.2008. However, they fail to pay the balance amount of `1,64,400/-. A notice was issued to the defendants calling upon them to pay the balance amount together with interest thereupon. Since the defendants failed to make any payment, the plaintiff was constrained to institute the suit. With this the plaintiff has prayed for recovery of a sum of `1,64,400/- as principal amount and another sum of `75,470/- as the interest at the rate of 24% p.a. thereupon with effect from 8.1.2007, thus, in total, a sum of `3,74,400/- from the defendants jointly and severally.
3. In response to the summons served upon the defendants, they appeared through their counsel and filed their written statement, wherein though they admitted the supply of the goods by the plaintiff, however, they contended that the said supply was incomplete, particularly due to non-commissioning/ non-servicing Kitchen Master Coffee Machine. Because of the non-installation of the said coffee machine, there is breach in the supply committed by the plaintiff followed by the non-installation of coffee machine, as such, the plaintiff is not entitled for the suit claim.
4. Based on the pleadings of the parties, the trial Court framed the following issues :
1. Whether the plaintiff proves that the defendants are due and liable to pay the suit claim of Rs.3,74,400/- as prayed for?
2. Whether the plaintiff proves that the defendants are also liable to pay the interest as claimed?
3. Whether the suit is bad for non-joinder and mis-joinder of necessary and proper party?
4. Whether the suit is barred by limitation?
5. Whether the plaintiff is entitled for a judgment and decree as sought for?
6. To what order or decree?
In support of its case, the plaintiff examined one Sri K.Srinivasan as PW-1 and got marked documents from Exs.P-1 to P-25. The defendants got examined one Sri Ashok Naik, its Manager-Purchase as DW-1 and got marked documents from Exs.D-1 to D-5.
After hearing both side, the trial Court by its judgment and decree dated 7.4.2014, while answering issue Nos.1, 2 and 5 partly in the affirmative and issue Nos.3 and 4 in the negative, proceeded to decree the suit of the plaintiff with cost, directing the defendants to pay the plaintiff a sum of `1,64,400/- with interest at 12% p.a. from 8.10.2007 till the date of realisation. It is against the said judgment and decree, the defendants have preferred this appeal.
5. Lower Court records were called for and the same are placed before this Court.
6. Heard the arguments of the learned counsel from both side and perused the materials placed before this Court, including the memorandum of appeal and the impugned judgment.
7. For the sake of convenience, the parties would be referred to as per their ranks before the trial Court.
8. In view of the above, the points that arise for my consideration are :
(1) Whether the plaintiff has proved that the defendants are liable to pay him the decreetal amount of a sum of `1,64,400/- with interest thereupon at 12% p.a.?
(2) Whether the judgment and decree under appeal deserves any interference at the hands of this Court?
In the pleadings of the parties, it is not in dispute that the defendants have placed the orders for supply of kitchen equipments with the plaintiff as averred in the plaint by the plaintiff. However, it is the contention of the defendants that, among the eight goods supplied to it by the plaintiff, the coffee machine was not installed or commissioned, as such, there was breach in the supply of the goods, which does not entitle the plaintiff to claim the suit claim. It is also not in dispute that the total amount of the invoices as claimed by the plaintiff, was a sum of `9,15,232.50 ps.,. Learned counsel for the appellants submitted that it is also not in dispute that out of the said amount of `9,15,232.50 ps., the appellants/defendants have paid a sum of `6,50,832/- initially and a sum of `1 lakh before the institution of the suit by the plaintiff. However, according to the learned counsel for the appellants, the dispute is only with respect to the liability of its alleged balance of `1,64,400/-. It is in this background, the evidence of the parties led in this matter and the document produced requires to be analysed.
9. PW-1 in his examination-in-chief filed in the form of affidavit evidence has reiterated the contents of the plaint averments and has stated that the plaintiff has supplied all the goods as per the orders placed by the defendants and that there is no breach of contract from the plaintiff’s side. He has stated that the defendants are liable for the suit claim which is the outstanding amount together with interest as prayed by the plaintiff.
In his support, the plaintiff got produced a document – Purchase Order dated 27.8.2007 at Ex.P-1, the Bills of Sale of different dates from Exs.P-2 to P-4, Transmittal form at Ex.P-5, Service Reports at Exs.P-6 and P-7, the copies of the letters dated 12.2.2008 and 4.4.2008 respectively at Exs.P-8 and P-9, copy of the notice dated 20.10.2008 at Ex.P-10, postal receipts and acknowledgements from Exs.P-11 to P-16, the copy of another legal notice dated 14.6.2010 at Ex.P-17 and postal receipts and acknowledgements pertaining to the said second legal notice at Exs.P-18 to P-23. He has also produced a copy of the Ledger extract at Ex.P-24.
In his cross-examination, few more details regarding supply of goods were elicited, wherein the witness has given more details as to when and in what manner they supplied the goods to the defendants. The denial suggestions made to him alleging that Espresso Coffee Machine was not working properly and that it was not installed and commissioned by the plaintiff, were not admitted as true by the witness.
10. DW-1 in his examination-in-chief filed in the form of affidavit evidence has reiterated the contentions taken up by the defendants in their defence statement. He has produced the authorisation letter at Ex.D-1, suit summons in O.S.No.6418/2010 at Ex.D-2, a copy of the plaint in the said O.S.No.6418/2010, in the Court of City Civil Judge, at Bangalore, at Ex.D-3 and a Banker’s letter dated 10.9.2013, showing the then prevailing rate of interest on Term Deposits at Ex.D-4. Later on, in his further examination, DW-1 has got produced and marked a photocopy of its letter dated 3.1.2008 at Ex.D-5.
In his cross-examination, DW-1 adhered to his pleading version and reiterated that the defendants were not at fault. However, at one juncture in his cross- examination, he after seeing Ex.P-7 stated that all the items shown in Ex.P-7 were installed and that as per Ex.P-2, all the items of equipments were delivered to the defendants on 8.10.2007.
11. Learned counsel for the appellants in her arguments submitted that the Espresso Coffee Machine though supplied to the defendants by the plaintiff, but, it was not installed and commissioned. The said aspect is made clear in the Service Report at Ex.P-6. Learned counsel further submitted that when the placement of order as per Ex.P-1 clearly mentions that the payment of the balance amount would be only on commissioning and the coffee machine was not commissioned, the question of the defendants paying the amount towards the same does not arise. However, the trial Court has not noticed the said aspect, more particularly, the condition that the payment of balance amount would be only on commissioning, but, erroneously decreed the suit as claimed. While drawing the attention of the Court to Ex.D-5, learned counsel further submitted that even in the said letter, it is made clear that the Espresso Coffee Machine was not commissioned despite furnishing all details and clarification. Therefore, the plaintiff was not entitled for the suit claim.
Learned counsel further submitted that, admittedly there is no agreement between the parties regarding the payment of interest. However, the trial Court since has awarded the rate of interest at the rate of 12% p.a. on the alleged due, the said awarding of the interest also requires to be set aside.
12. As already observed above, the defendants/ appellants in their written statement filed before the trial Court have not denied the supply of kitchen equipments by the plaintiff to them. However, the only and main contention of the defendants is about the alleged breach of the contract due to non-installation and non-commissioning of the alleged Espresso Coffee Machine, which is Item No.1 in Ex.P-1. According to the plaintiff, it has fulfilled the contract in its entirety and despite the same, the defendants have wrongfully withheld the payment which is the suit claim.
13. PW-1 in his examination-in-chief, has given a detailed account of the datewise supply of machines to the defendants. He has stated that the equipments shown in Exs.P-2 and P-3 have been supplied to the defendants on 8.10.2007. The goods shown in Ex.P-4 were supplied to the defendants on 27.10.2007. Ex.P-2 shows the equipment called KS Kitchenmaster – Singapore – 2 group Espresso Coffee Machine. There is an acknowledgement in the very same invoice about receipt of the goods. Thus, apart from the evidence of PW-1, even Ex.P-2 also shows the alleged supply of the goods of the nature Espresso Coffee Machine by the plaintiff to the defendants.
14. The defendants have not denied the alleged supply of the said goods i.e., Espresso Coffee Machine. However, their specific contention is that the same was not installed and commissioned, as such, they are not liable to make any amount towards the said goods. In that regard, when the purchase order placed by the defendants with the plaintiff, which is at Ex.P-1, is perused, it go to show that, at its end, it is mentioned that the said supply orders are subject to the terms and conditions, which includes that, payment of 80% is required to be paid as advance along with the order and the balance would be on commissioning. The total amount of the goods for which the orders were placed are also shown to be for a sum of `9,15,232.50 ps. The said document which is originated from the defendants’/appellants’ side itself, has remained undenied, the same corroborates the plaint averment that the defendants have placed the orders with the plaintiff for eight items in kitchen equipments, totaling to a sum of `9,15,232.50 ps. Undisputedly, a sum of `6,50,832/- at the first instance along with the order and subsequently another sum of `1 lakh has been paid by the defendants to the plaintiff. The defendants have also not denied that as per the invoice, the due amount would be `1,64,400/-. However, their only defence is that there was breach in the contract by virtue of the non-alleged installation and commissioning of the alleged coffee machine.
DW-1 in his evidence has reiterated the same contention. However, the said witness in his cross-
examination has clearly stated after seeing Ex.P-7 that all items mentioned in Ex.P-7 were installed. Further, after seeing Ex.P-2 – the Invoice, he has stated that all items of the equipments were supplied to them as per Ex.P-2 on 8.10.2007. As already observed, the supply of Espresso Coffee Machine is mentioned in Ex.P-2. Since DW-1 in his cross-examination has clearly stated that as per Ex.P-2, all the items of equipments at Ex.P-2 were supplied to them on 8.10.2007, the contention of the defendants that there was no supply of Espresso Coffee Machine, proves to be false. On the other hand, the plaintiff has proved the supply of the Espresso Coffee Machine to the defendants under Ex.P-2.
15. The contention of the defendants is also that the said Espresso Coffee Machine though taken to be supplied, but, it was not installed and commissioned, as such, even as per the placement of the order as per Ex.P-1, the defendants are not liable to pay the alleged balance. The same is the main crux of the argument of the learned counsel for the appellants also.
The learned counsel for the appellants drawing the attention of this Court to Ex.P-6 and more particularly, an endorsement made in the said document vehemently submits that, even according to the plaintiff, their own Service Report go to show that the Espresso Coffee Machine has not been installed. Therefore, until the said installation has been done by the plaintiff, they are not entitled for the payment.
16. The endorsement in Ex.P-6 which is a Service Report reads as below :
“ All the equipments have been installed successfully, except coffee machine which I need further clarification. – Sd/-“ Ex.P-6 cannot be isolated and read independent of other Service Reports and other documents produced by the appellants. Ex.P-7 is one more similar Service Report and dated 14.11.2007, which mentions about installation of the kitchen equipments supplied by the plaintiff to the defendants. The Service Report says that the same was with respect to installation and commissioning. The finding of the Engineer is shown that all the eight equipments were installed and commissioned. It gives the details of the equipments that were installed and commissioned which runs into eight equipments, including two group Coffee Machines. In the very same Service Report, the signature of the customer is obtained with the endorsement, which endorsement says that all the applicant installation has been done and the customer has put his signature with the date showing as 14.11.2007.
17. PW-1 in his cross-examination has stated that Hotel Manager by name Sri Masood has signed Ex.P-7. The said evidence has not been denied or disputed from the defendants’ side. On the other hand, as has been already observed above, DW-1 in his cross-examination, apart from stating that as per Ex.P-7, all items were installed, has also admitted the supply of the equipments mentioned in Ex.P-2 on 8.10.2007 itself. As already observed, the alleged Two Espresso Coffee Machines are also the part of supplies made under Ex.P-2 on 8.10.2007. Therefore, subsequent to the supply of said Expresso Coffee Machine on 8.10.2007, its installation and commissioning has taken place as per Ex.P-7 on 14.11.2007. In that regard, though Ex.P-6, which is dated 14.12.2007, would go to show that the endorsement made by the customer shows that all the equipments have been installed successfully, except coffee machine, but, the very same customer in his previous endorsement in Ex.P-7, exactly one month prior to Ex.P-6, has admitted and accepted by writing an endorsement by himself that all the applicant installation has been done. Therefore, what can be inferred by a conjoint reading of Ex.P-7 and Ex.P-6 is that all the equipments, including Espresso Coffee Machines were installed and commissioned by the plaintiff on 14.11.2007, however, in its subsequent services, which was one month thereafter, the coffee machine was found to be not operating by the customer. Interestingly, the said endorsement in Ex.P-6 is not by the plaintiff-Company, but, by the customer. Even after taking the said customer’s (defendants’) endorsement as true, still, it would not take away the value of its own endorsement in Ex.P-7 about the installation of all the eight equipments by the plaintiff. By this only an inference can be drawn is that all the eight equipments, including Espresso Coffee Machines were initially installed and commissioned on 14.11.2007 as per Ex.P-7, however, during the subsequent service, the coffee machine was not accepted as properly working by the customer i.e., the defendants. The same would not be considered as non-commissioning or non-installation of the equipments, including Espresso Coffee Machines, more particularly, in the light of the cross-examination of DW-1, where he has stated that as per Ex.P-7, all the items were installed.
18. Learned counsel for the appellants while drawing the attention of this Court to Ex.D-5, further submitted that the letter of the defendants dated 3.1.2008 makes it further clear that the coffee machine was not commissioned because of want of clarification, however, despite furnishing the details and clarifications, the plaintiff has failed to commission the coffee machine.
A perusal of the document at Ex.D-5 go to show that it is shown to be a letter by the defendants addressed to the plaintiff and dated 3.1.2008, wherein, referring to the Service Report dated 14.12.2007, the defendants have stated that despite providing details and clarifications required, the plaintiff has failed to commission the coffee machine. As already observed above, the said document was marked from the defendants’ side through DW-1 in his further examination-in-chief which took place after the completion of the cross-examination from the plaintiff’s side. However, in the further cross-examination of DW-1 from the plaintiff’s side, DW-1 has stated that he does not have any proof to show that Ex.D-5 was received by the plaintiff. When the plaintiff has not admitted the receipt of Ex.D-5 and DW-1 has also stated that defendants have no document to show that Ex.D-5 was received by the plaintiff, then, the alleged letter at Ex.D-5 would be a self-serving letter without any proof to show that the said letter was communicated to its addressee i.e., the plaintiff. Still assuming for a moment that the said letter was communicated to the plaintiff, then also, as already observed above, the said letter refers to the Service Report dated 14.12.2007 which is at Ex.P-6, but, not the Service Report at Ex.P-7, which is dated 14.11.2007. As has been observed above at more than one place, DW-1 has admitted the installation of the equipments as per Ex.P-7 and also has endorsed on Ex.P-7 about the installation of all the eight equipments by the plaintiff on 14.11.2007 itself. Therefore, as on 14.11.2007, when all the equipments, including the Espresso Coffee Machine, have already been installed and commissioned, the subsequent Service Report dated 14.12.2007 would be at the maximum falls under the Warranty period after the supply and installation of the equipments. Therefore, merely because during the service tenure after one month of the installation of the machine, the coffee machine was found to be not properly working, by that itself, it cannot be said that the defendants were right in withholding the payment towards the said Espresso Coffee Machine. Had really the said equipment was not functioning properly or has shown some defects in it, then, it was always open for the defendants to take the said issue in a proper manner before the appropriate Company/Dealer/Service Centre and get their redressal, since it appears that the same was subsequent to the installation. Thus, for the alleged breach of warranty, withholding the price of the goods, which is liable to be paid for the supply of the goods, is not justifiable.
19. In the case on hand, since the supply of equipments/goods have been admitted by the defendants, more particularly by DW-1, the reason shown for non-payment of the price towards the said equipment, which is the suit claim of `1,64,400/-, is not justifiable. As such, the only and the main argument of the learned counsel for the appellants that the alleged due amount of `1,64,400/- was not liable to be paid by the defendants because of the alleged non-installation of the coffee machine, is not acceptable.
20. The other point of argument of learned counsel for the appellants is with respect to awarding the interest at the rate of 12% p.a. by the trial Court on the decreetal amount. Learned counsel for the appellants further submitted that there are no documents evidencing the agreement between the parties regarding the payment of interest by the defendants to the plaintiff, much less, at the rate of 24% p.a. as claimed by the plaintiff.
The trial Court in the impugned judgment on the point of awarding the interest, even after observing that PW-1 in his cross-examination has admitted that there is no condition in Exs.P-2 to P-4 to pay interest at the rate of 24% p.a., but, still has awarded the interest at the rate of 12% p.a. from the date of supply of materials till the date of realisation.
21. The important document evidences the placement of order and supply of the materials between the parties, as observed above, are Exs.P-1 to P-4. Ex.P-1, which is a purchase order placed by the defendants with the plaintiff, is silent about the payment of interest on the sale of the goods to it by the plaintiff. The supply of the goods are evidenced by Exs.P-2, P-3 and P-4, which are the Invoices-cum-Delivery challans of three different dates. According to the plaintiff, it is under those three invoices, the goods were supplied to the defendants. A perusal of those three invoices shows that no where in the invoices, the supplier/plaintiff has mentioned about the liability of the defendants/purchaser to pay the interest on the invoice amount, alleged delayed payments, if any. The invoices speak about the tax liability and the percentage of the tax payable by the purchaser, but, it does not speak about the liability of the purchaser/defendants to pay interest on the amount. Though the legal notice dated 20.10.2008, which is at Ex.P-10, for the first time mentions about the liability of the defendants/customer to pay interest at the rate of 24% p.a. and the same was subsequently reiterated in the second similar legal notice, which is at Ex.P-17, but, the fact remains that the said demand for payment of interest which is made in the legal notices were not an agreed term in the transaction in question. As such, when the plaintiff has claimed a particular rate of interest which was not agreed to between the parties during the business transaction, then, it is for the plaintiff to establish with cogent evidence his entitlement for interest, more particularly, with such a rate as claimed by him.
In that regard, the plaintiff except his evidence that the defendants are also liable to pay interest as claimed by him, has no where stated as to on what basis the plaintiff is claiming interest at the rate of 24% p.a.
22. The defendants, apart from denying that they are liable to pay the interest, much less, at the rate claimed by the plaintiff, have also produced a letter at Ex.D-4, which is a certificate issued by Vijaya Bank, Kumaraswamy Layout, Bengaluru, giving the details of the base rate of the Bank interest on deposits and the loans. The said document go to show that the base rate of the Bank for the loan is at 10.25% p.a. and the rate of interest for the different periods on the deposits would vary from 4% to 9% p.a. depending upon the period of deposit.
In the instant case, admittedly the plaintiff is a business establishment. The suit transaction is a commercial transaction whereunder the plaintiff has supplied the goods/equipments to the defendants. Thus, when it is a commercial transaction and the defendants have withheld the payment due to the plaintiff for no valid reasons, needless to say that the defendants are also liable to pay interest on the outstanding amount to the plaintiff.
23. In the instant case, the plaintiff has claimed the interest at the rate of 24% p.a., however, without mentioning as to on that basis it is claiming such a rate of interest. On the other hand, the defendants themselves by producing Ex.D-4, have shown that the base rate of the Bank for the loan was 10.25% p.a.
That being the case, the outstanding liability towards a commercial establishment by the defendants in a business transaction is to be equated to a loan. As such, the minimum base rate of interest for which the plaintiff would be entitled to from the defendants would be not less than at the rate of 10.25% p.a.
24. Though the trial Court has not awarded the interest at the same rate as sought for by the plaintiff and has reduced and confined it to 12% p.a., I am of the view that, in the absence of any material to show any rate of interest that was agreed to between the parties, the maximum rate of interest for which the plaintiff would be entitled to on a sum of `1,64,400/- would be the said base rate of interest on loan, which is at 10.25% p.a. Since the rate of interest awarded by the trial Court is on marginally higher side than the rate at 10.25% p.a. it is only in modifying the said rate of interest, the judgment and decree under appeal deserves interference.
25. Accordingly, I proceed to pass the following order:
ORDER The Appeal is allowed in part. The judgment and decree dated 07.04.2014, passed by the learned XIX Addl.City Civil and Sessions Judge, (CCH-18), Bengaluru City, in O.S.No.6418/2010, is modified only to the extent that the rate of interest awarded by the trial Court at the rate of 12% p.a. is modified and confined to 10.25% p.a. The rest of the terms of the judgment and decree regarding the liability of the defendants to pay the principal amount and the period of the payment of the interest shall all remain unaltered.
Draw modified decree accordingly.
The Registry is directed to transmit a copy of this judgment along with lower Court records to the lower Court without delay.
The amount in deposit made by the appellants, if any, in this appeal in the Registry be transmitted to the trial Court. The plaintiff would be entitled to withdraw the said amount after the period of appeal and if no appeal is preferred in the matter.
Sd/- JUDGE bk/