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High Court Of Delhi|01 November, 2012


1. Discussions as per letter dated October 19, 1995, Ex.PW-1/3 and letter dated October 20, 1995, Ex.P-1/D1-D4 between the appellant and the respondent fructified in the terms of the contract pertaining to respondent manufacturing and supplying to the appellant 1,00,000 litres of 2,4-D Ethyl Easter – 38% as per Ex.PW-1/4.
2. Under cover of Ex.PW-1/4 the respondent intimated appellant that the contract was firmed up at the agreed rate of `96.80 per litre with local/CST @2% extra. The letter also acknowledged respondent having received `2,00,000/- from the appellant as advance payment.
3. Ex.PW-1/4 has a clause which reads as under:-
“As regards the quantum of compensation for non- supply/non-lifting by either of parties in any unlikely event, we would suggest that the amount should be fixed at initial stage to avoid any confusion / misunderstanding. We would suggest the compensation amount be fixed `20.00 per ltr. by either side, which is the minimum carrying cost of holding stocks till next season besides blockade of funds. Please let us know your view in the matter.”
4. As per the respondent it supplied 7000 litres of the chemical agreed to be supplied to the appellant for which invoices Ex.PW-1/16 and Ex.PW-1/17 were raised and delivery was effected through Meena Transport Company as per goods receipt Ex.PW-1/5. Respondent claims that since it had received `4 lakhs as advance payment and `2,91,152/- remained due and pending for the supply effected it wrote letter Ex.PW-1/18 dated November 20, 1995 and sent the same through courier receipt being Ex.PW-1/19. Another reminder, Ex.PW-1/20 dated November 29, 1995, was sent by hand and in proof of acknowledgment, with the stamp embossed thereon the signatures of the receipt clerk were obtained. Payment not being forthcoming a third reminder Ex.PW-1/21 dated December 23, 1995 was sent through Registered A.D. Post, receipt Ex.PW-1/22, and acknowledgment card Ex.PW-1/23, which bears the stamp of the appellant was received.
5. Pleading that `4,91,152/- (and somewhere pleading that `2,91,152/-) remained the balance outstanding payment and alleging default for the appellant for not lifting the remainder 93,000 litres of the chemical and alleging having manufactured the same damages @ `20 per litre i.e. as envisaged by Ex.PW-1/4 were claimed along with pre-suit interest.
6. The case of the appellant as per the written statement was that no supply whatsoever was effected by the respondent. Admitting contract having been entered into between the parties, appellant denied having received Ex.PW-1/18, Ex.PW-1/20 or Ex.PW-1/21.
7. Vide impugned judgment and decree dated May 13, 2011 suit has been decreed in sum of `12,70,647/- with pendente lite and future interest @12% per annum.
8. There are typographic errors which are hand-corrected at some places in the impugned judgment and lest there be any confusion, we may note that the decretal amount is as under:-
(a) `9,30,000/- being damages @`10/- per litre for quantity not lifted.
(b) `2,91,152/- being the balance amount due for 7,000 litres of chemical supplied.
(c) `49,495/- towards pre-suit interest.
9. The learned Single Judge has held that the goods receipt Ex.PW-1/5, as deposed to by the witness of the respondent Mr.Ashok Dungar, bears the signatures of Mr.Vishesh Jain, a director of the appellant. Holding that the appellant has withheld examining its director, the learned Single Judge has concluded that delivery of the goods as per Ex.PW-1/5 has been proved because the appellant had withheld a vital witness.
10. Having perused the examination-in-chief of Shri Ashok Dungar we find he not having deposed that the signatures at the rear of Ex.PW-1/5 are those of Mr.Vishesh Jain, and thus we conclude that the reasoning of the learned Single Judge with respect to Mr.Vishesh Jain not being examined is wrong and thus no adverse inference can be drawn against the appellant by not examining Mr.Vishesh Jain. We note that the goods receipt Ex.PW-1/5 bears the name of the appellant as that of the consignor as also the consignee.
11. But, that would not mean that the appellant succeeds on the subject of goods being not delivered.
12. Ex.PW-1/18, Ex.PW-1/20 and Ex.PW-1/21 have admittedly not been responded to by the appellant.
13. Holding that delivery of said three letters upon the appellant was proved, in which for the 7,000 litres supply effected, the respondent had been claiming balance payment of `2,91,152/- and there being no response the learned Single Judge has opined that if appellant had not received the goods the natural conduct would be to have refuted the demand made in the said three letters.
14. With respect to Ex.PW-1/18 we find that the courier receipt Ex.PW- 1/19 does not bear the signatures of the addressee and we further find that the address of the appellant/addressee is not written on the receipt. Thus, we hold that the respondent has not proved having delivered the letter Ex.PW- 1/18. But, Ex.PW-1/20 bears the stamp of the appellant with some illegible signatures thereon, and it is not the case of the appellant that the rubber stamp affixed is not that of the appellant. Further, Ex.PW-1/21 sent through Registered A.D.Post as per receipt Ex.PW-1/22 has been proved to have been received by the appellant evidenced by the Acknowledgment Card Ex.PW-1/23 which also bears the rubber stamp of the appellant embossed with somebody’s signatures scribbled thereon. Thus, Ex.PW-1/20 and Ex.PW-1/21 have been proved to have been received by the appellant and no response thereto by way of denial of 7,000 litres goods being received requires an adverse inference to be drawn against the appellant i.e. that the appellant had received the goods. There is another additional reason to opine so against the appellant. Admittedly, the appellant had paid `4 lakhs as advance for supply of 7,000 litres of goods at the first instance. No document has been proved by the appellant evidencing the appellant making a grievance for goods not being supplied or requesting that since goods were not supplied the advance payment be returned. No counter claim was raised when the respondent filed the suit praying a decree against the respondent in sum of `4 lakhs. It is to be therefore inferred that the appellant had received 7,000 litres chemical and this is the reason why it never protested with reference to `4 lakhs advance payment made by it.
15. As noted, the appellant had claimed liquidated damages as per clause envisaged in Ex.PW-1/4 @`20/- per litre for 93,000 litres chemical not being supplied. Holding that the clause was not a reasonable pre-estimate of the damages, the learned Single Judge has denied said payment but has opined that some damages must have been suffered (refer para 21 of the impugned decision). On a reasoning which is not clear the learned Single Judge has opined that `10/- per litre could be presumed as reasonable damage.
16. Now, the goods in question are chemical and there is no proof by way of any documentary evidence that the respondent had manufactured or procured 93,000 litres of the chemical to be supplied. No evidence has been led as to what was the market price of the goods when the appellant refused to receive the balance quantity. Assuming that the respondent had manufactured or procured the chemical, as per the proviso to Section 73 of the Contract Act it had to prove steps taken by it to mitigate the loss. There is just no evidence on either count i.e. the respondent having manufactured or procured the chemical, its price on subsequent dates or the steps taken to mitigate the loss. The figure of `10/- per litre has been pulled out of the hat by the learned Single Judge.
17. Once the learned Single Judge held that no liquidated damages were payable, unless loss was proved and quantified, the learned Single Judge could not have awarded any damages on guesswork. In fact, we find that in para 21 of the impugned decision the learned Single Judge has held, and we quote: ‘No evidence has been led by defendant No.1 to prove that either on account of increase in price of raw material/finished goods or for some other reason the plaintiff company did not suffer any loss’. The negative reasoning is not acceptable to law. Onus lies on the party pleading loss to prove the same and not for the opposite party to prove to the contrary. We find that in the same paragraph i.e. para 21, the learned Single Judge has noted, and we quote : ‘The plaintiff company has not proved the actual damage suffered by it on account of breach of contract by defendant No.1’.
18. On the reasoning of the learned Single Judge, the impugned decree to the extent it has decreed the suit filed by the respondent in sum of `9,30,000/- cannot be sustained and is hereby set aside.
19. Since none appears for the respondent to argue the cross-objections, as per which we note, the respondent seeks a decree towards damages being the liquidated damages amount, we dismiss CM No.1067/2012 for non- prosecution.
20. The appeal stands disposed of modifying the impugned judgment and decree; the suit filed by the respondent against the appellant is decreed in sum of `2,91,152/- with pre-suit simple interest @9% per annum from the date the respondent served the legal notice dated March 29, 1996 till when the suit was instituted and pendente lite and future interest at the same rate on the said sum i.e. `2,91,152/- till realization with proportionate costs against the appellant and in favour of the respondent; parties to bear their own costs in the appeal.
NOVEMBER 01, 2012/dk
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High Court Of Delhi

01 November, 2012
  • Pradeep Nandrajog