IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23RD DAY OF JULY, 2019 BEFORE THE HON’BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY R.F.A.No.1324 OF 2013 BETWEEN:
1. VETO Switchgears & Cables Pvt. Ltd., 230, Sindhi Colony, Raja Park, Jaipur 302 004.
Represented by its Managing Director, Mr. Vishnu Gurunani.
2. VETO Switchgears & Cables Pvt. Ltd., Also having its office at D2, 1st Floor, Malad Industries Estate, Ramchandra Lane Extn., Kanchpad, Malad (W), Mumbai – 400 064 Represented by its Managing Director, Mr. Vishnu Gurunani.
(By Sri. R.Anand Kumar, for …Appellants Sundaramurthy and Sundaramurthy, Advocates) AND:
1. Mr. Raghunath Mallar Aged about 60 years, S/o. Vaman Mallar, Proprietor, M/s. Indian Agencies, 7 Choice Tower, Beebi Alabi Road, Mangalore-1.
2. The State of Karnataka Represented by The Deputy Commissioner, D.K.Mangalore(HPO), Mangalore-575 001.
…Respondents (By Sri.G.Ravishankar Shastry, Advocate for R-1; Smt. M.Geetha, HCGP for R-2 ) **** This Regular First Appeal is filed under Section 96 of the Code of Civil Procedure, 1908, against the judgment and decree dated:26-02-2013 passed in O.S.No.57/2011 (Misc.Case No.2/11) on the file of the Principal Senior Civil Judge, Mangalore, partly decreeing the suit for recovery of money.
This Regular First Appeal coming on for Hearing this day, the Court delivered the following:
J U D G M E N T It is a defendants’ appeal. The present respondent No.1 had instituted a suit against the present appellants and present respondent No.2 – State in the Court of the learned Principal Senior Civil Judge, Mangalore (hereinafter for brevity referred to as “Trial Court”) in O.S.No.57/2011 for recovery of a total sum of `9,31,543-44 with interest at the rate of `18% per annum there upon.
2. The summary of the case of the plaintiff in the Trial Court was that, he is a proprietor of an establishment by name M/s. Indian Agencies, carrying on the business of electrical accessories. He was appointed as a ‘distributor’ of the articles by defendant Nos.1 and 2 on 30-06-2009. At that point of time, the defendant Nos.1 and 2 collected a sum of `2,50,000/- from him towards Security Deposit. However, the said amount was carrying an interest at the rate of `12% per annum. Accordingly, after appointing him as a ‘distributor’, the defendants have paid an interest as agreed upto 31-03-2010 amounting to a sum of `20,205/-.
It was the further case of the plaintiff that, from day one he was appointed as a ‘distributor’ by defendant Nos.1 and 2, they were not co-operative and were not giving good service to him to conduct his business smoothly as a ‘distributor’ of defendant Nos.1 and 2. On the other hand, one person by name Mr. Rohith Batia, National Manager of defendant Nos.1 and 2 had collected a sum of `14,000/- from the plaintiff assuring repayment of the same, however, he later disappeared.
The plaintiff also contended that he placed an order for supply of goods to him with defendant Nos.1 and 2 on 17-09-2010, but the defendants failed to dispatch the goods to him. Thus, the plaintiff being highly dissatisfied with the poor services of defendant Nos.1 and 2, decided to surrender his distributorship, in which regard, he got issued a legal notice to defendant Nos.1 and 2 on 24-11-2010. The said notice invoked no reply, as such, by his letter dated 10-12-2010, the plaintiff surrendered his distributorship with defendant Nos.1 and 2 and sought for refund of the Security deposit.
It was the further case of the plaintiff that, he had a stock lying in his godown worth `6,19,461-44 which the defendant Nos.1 and 2 have to take back and pay him an equivalent amount since he has surrendered the distributorship. However for retaining those goods in his godown even after surrendering the distributorship, he has incurred a sum of `20,694/- per month towards godown rent, salary to the staff, electricity bill, etc. which amount also the defendants 1 and 2 are liable to pay to him.
Since the plaintiff had instituted the suit claiming himself to be an indigent person, he had arraigned the State also as defendant No.3 (respondent No.2 herein).
3. In response to the summons served upon defendant Nos. 1 and 2, they appeared through their counsel and filed their Written Statement. Defendant No.3 –State remained ex-parte.
4. The defendant Nos.1 and 2 in their Written Statement though admitted that the plaintiff was appointed by them as their ‘distributor’ and that they had collected a sum of `2,50,000/- from him as Security Deposit and also had paid interest at the rate of `12% per annum, amounting to a sum of `22,500/- for the period from 01-07-2009 to 31-03-2010, but denied that, in any manner there was any lack of service from them towards the plaintiff. They contended that as a ‘distributor’, the plaintiff was fixed with a business target of `2.00 crores which business transaction he was required to give it to the defendants per year. His achievement in that regard was very poor. In the financial year 2010-11, he could place an order only for a sum of `1,21,475/-, per contra, he had availed a loan rebate and discount to a tune of `2,31,020/-. As such, the plaintiff instead of honouring his duties as a ‘distributor’, had taken advantage of his distributorship and intimated that he would surrender his distributorship.
The defendants 1 and 2 further stated that they have replied to the legal notice sent by the plaintiff and denied the claim made by the plaintiff, with which they prayed for dismissal of the suit.
5. Based on the pleadings of the parties, the Trial Court framed the following issues for its consideration:-
“1] Whether the plaintiff proves that the defendant Nos.1 and 2 are liable to refund `2,50,000/- with interest at `12% p.a.?
2] Whether plaintiff proves that the defendant Nos.1 and 2 are liable to pay `6,19,461/- towards stock lying in the godown?
3] Whether plaintiff proves that the defendant Nos.1 and 2 are liable to pay `20,694/- p.m. from October to December 2010 then clearance of the stock towards maintenance, rent, etc.?
4] Whether defendant No.1 and 2 proves that the plaintiff is responsible for the stock which are in the custody of plaintiff?
5] What order or decree?”
In support of his contention, the plaintiff got himself examined as PW-1 and got marked documents from Exhibits P-1 to P-12. The defendants neither entered the witness box nor got marked any documents as Exhibits in their favour.
6. After hearing both side, the Trial Court by its impugned judgment and decree dated 26-02-2013, partly decreed the suit of the plaintiff, holding that the defendant Nos.1 and 2 are liable to the plaintiff to pay a sum of `2,50,000/- with `12% interest per annum there upon towards refund of Security Deposit. The defendants 1 and 2 were also directed to pay a sum of `6,19,461/- to the plaintiff towards stock lying in the godown of the plaintiff subject to condition that the plaintiff shall handover the articles worth of `6,19,461/- to defendant No.1 and 2 in good condition. It was further ordered that till lifting of the materials from the godown of the plaintiff, the defendant Nos.1 and 2 were also liable to pay a sum of `6,000/- per month from October 2010 to plaintiff. It is against the said judgment and decree, the defendant Nos.1 and 2 have filed this appeal.
7. The Lower Court records were called for and the same are placed before this Court.
8. Heard the arguments of the learned counsel for appellants/defendants, learned counsel for respondent No.1/plaintiff and perused the material placed before this Court including the memorandum of appeal and the impugned judgment.
The learned High Court Government Pleader for respondent No.2 has remained absent and not addressed any arguments.
9. For the sake of convenience, the parties would be henceforth referred to with the ranks they were holding before the Trial Court respectively.
10. In the light of the materials placed before this Court and the arguments addressed by the parties, the following points arise for my consideration in this appeal:-
[i] Whether the plaintiff has proved that the defendant Nos.1 and 2 are liable for refund of `2,50,000/- to him with interest at the rate of `12% per annum from the date of the suit till its realisation?
[ii] Whether the finding of the Trial Court that the defendant Nos. 1 and 2 are liable to pay to the plaintiff a sum of `6,19,461/-, is an erroneous finding?
[iii] Whether the judgment and decree under appeal deserves any interference at the hands of this Court ?
It is an admitted fact that the plaintiff was appointed as a ‘distributor’ by defendant Nos.1 and 2 for distribution of its electrical accessories, in which regard, the defendant Nos.1 and 2 had collected a sum of `2,50,000/- from the plaintiff as a Security Deposit. The said plaint averment has been specifically admitted by defendant Nos.1 and 2 in their Written Statement. The further evidence of PW-1 in that regard, corroborated by Ex.P-2 which is a letter written by defendant Nos. 1 and 2 acknowledging the receipt of a sum of `2,50,000/- from the plaintiff, remains undenied and undisputed. Though the said document at Ex.P-2 does not speak about any rate of interest and liability on the part of defendant Nos.1 and 2 to pay any interest to the plaintiff, but the admission made in the Written Statement by defendants 1 and 2 themselves that, they had agreed to pay interest at the rate of `12% per annum to the plaintiff on the said sum of `2,50,000/- and that interest at the said rate was paid upto 31-03-2010 makes it an admitted fact on the part of the defendants. Therefore, the relationship of the plaintiff and the defendants as a ‘distributor’ and the ‘appointing Company’ stands proved.
11. The plaintiff has contended that he surrendered the distribution agency because of the alleged improper service and non-supply of the goods by defendant Nos. 1 and 2 to the plaintiff. In that regard, the averment made in the plaint has been specifically denied by the defendants in the cross- examination of PW-1. Though PW-1 has reiterated the contents of the plaint in his Examination-in-chief, but in his cross-examination, the defendant Nos.1 and 2 denied that there was any breach from their side, which lead the plaintiff to surrender the distributorship. It is in that regard, the defendants suggested to PW-1 in his cross-examination that the plaintiff had failed to meet the target of a sum of `2.00 crores per annum business transaction in favour of the defendants. However, the said suggestion was not admitted as ‘true’ by the witness.
12. Admittedly, neither of the parties has produced any documents which can be called as ‘agreement’ of distributorship. It is only the pleading of the parties and their oral evidence from which the Court has to arrive at a conclusion about the existence of ‘distributorship’ and the ‘terms of distributorship’, if any. As such, though ‘distributorship’ is established, but the ‘terms of distributorship’ have been disputed by the parties. Even with respect to the alleged surrendering of ‘distributorship’ and terms and conditions, if any, were to be there, in that regard also, neither of the parties has placed before the Court any material in the form of documents. The plaintiff has stated that he surrendered the ‘distributorship’ agency, in which regard, he has relied upon a copy of the legal notice got issued by him to defendant Nos.1 and 2, a copy of which is at Ex.P-10. The said document which is dated 10-12-2010 clearly mentions that because of the improper service given to him, the plaintiff had decided to surrender the ‘distributorship’. Accordingly, he has surrendered the ‘distributorship’. The defendants have not denied or disputed the receipt of the said letter and also not disputed that the plaintiff had surrendered his ‘distributorship’. On the other hand, the silence on the part of the defendants in that regard both in their Written Statement as well in the cross-examination of PW-1 goes to show that defendants 1 and 2 have accepted the surrendering of ‘distributorship’ by the plaintiff vide Ex.P-10.
13. The plaintiff also got issued a legal notice as per Ex.P-7 on 24-11-2010 to defendants 1 and 2 calling upon them to pay him back the Security Deposit of a sum of `2,50,000/- with `12% interest per annum there upon and also to take back the stocks which are said to be worth a sum of `6,19,461/- and pay him the said amount also. The receipt of the said legal notice has been acknowledged by defendant Nos.1 and 2 in their Written Statement. Though they do not contend that they have given a reply to the said notice, but a suggestion made in that regard to PW-1 has not been admitted by the witness as ‘true’. As such though it was required of the defendants to produce a copy of the reply notice and the document to show that such a reply was communicated to the plaintiff, but the defendant Nos. 1 and 2 have failed to do so. As such, there are no materials to believe that defendant Nos.1 and 2 have replied to the legal notice at Ex.P-7.
14. Even though the plaintiff in his evidence as PW-1 has stated that the defendants are liable to pay a sum of `6,19,461/- towards stock value which he was possessing and the defendants have not replied to the said notice, by that itself, it cannot be inferred that there was any such stock lying with the plaintiff and defendant Nos. 1 and 2 had a liability to take it back and pay an equivalent sum of it to the plaintiff. However, the admitted fact that a sum of `2,50,000/- was paid by the plaintiff to defendant Nos.1 and 2 as a Security Deposit which was carrying interest at the rate of `12% per annum since has been established by virtue of the plaintiff demanding repayment of the said amount, which has not been opposed or disputed by the defendants, either in their pleading or in the cross-examination of PW-1, the plaintiff would be entitled for refund of the said amount from defendant Nos.1 and 2 with interest there upon at the rate of `12% per annum. It is also for the reason that, through out, it is the case of both the plaintiff and also defendant Nos. 1 and 2 that, the said amount was collected by defendant Nos. 1 and 2 as a Security Deposit. Since it is a Security Deposit, once the ‘distributorship’ is terminated for no fault of the plaintiff, then, the alleged forfeiture clause though assumed to be was there, is still not applicable. In such an event, the said Security Deposit is refundable to the plaintiff with the agreed rate of interest which is `12% per annum.
15. The plaintiff neither in his plaint nor in his evidence has placed any material to show that the defendants are also liable to pay him the stock value which he claims to have been in possession with, as on the date of surrendering his ‘distributorship’. Primarily, there is no averments in the plaint to the effect that what were the terms of the distribution agency regarding supply of goods and stock, if any, to be maintained by the plaintiff in his capacity as a ‘distributor’. There are no materials to show that the plaintiff had purchased goods worth a sum of `6,19,461/- from defendant Nos. 1 and 2 by duly paying the said amount to them and had kept the goods as a stock in his godown for distributing the same to his retailers. Similarly, there is also no evidence from PW-1 on the point. Though the plaintiff has produced some computer generated printout with the name of his agency stamped, i.e. with a rubber stamp and showing those papers as stock summary, but, the same cannot be accepted as the stock that was with the plaintiff as the goods purchased by him from defendant Nos. 1 and 2 duly making payment against that particular stock. Therefore, the said computer generated printout which has not been admitted by defendants Nos. 1 and 2 as the stock supplied by them to the plaintiff, cannot be considered as the goods supplied by defendant Nos. 1 and 2 to the plaintiff for its sale in return of consideration. However, merely because of the fact that the defendants did not enter the witness box, the Trial Court was carried away with Ex.P-7 and jumped to a conclusion that the said document shows that the plaintiff had the stock of the goods worth `6,19,461/-, as such, after surrendering the ‘distributorship’, the defendants were liable to take those goods back and pay the equivalent value to the plaintiff.
16. At this juncture, it also cannot be ignored of the fact that, neither there is any pleading nor there is any evidence or proof to the effect that, there was any agreement between the parties to the effect that, once there is surrender of ‘distributorship’, the stock that will be lying with the ‘distributor’ is required to be taken back by the ‘appointing Company’ (defendant Nos. 1 and 2) and that an amount equivalent to the value of the stock is required to be paid by the Company to the ‘distributor’. In the absence of any such specific pleading and evidence, merely because the plaintiff contends that he had a stock of a particular value and defendants have to lift the said stock by paying the amount equivalent to the same, the same cannot be taken as a proof of the claim made against defendant Nos.1 and 2.
17. As such, the Trial Court’s finding that the plaintiff had proved that the defendant Nos.1 and 2 are liable to pay a sum of `6,19,641/- towards stock lying in the godown is bereft of a proper reasoning and the Trial Court appears to have arrived at such a conclusion merely because of the alleged stock summary at Ex.P-12, which was produced by the plaintiff and that the defendants did not enter the witness box. Since the said finding is erroneous, the same deserves to be set aside.
18. Thus, it is established that the plaintiff has proved that defendant Nos.1 and 2 are liable to pay him a sum of `2,50,000/- together with interest at the rate of `12% per annum from the date of the suit till the date of its realisation. However, the finding of the Trial Court that the plaintiff has proved that the defendants 1 and 2 are liable to pay a sum of `6,19,461/- being an erroneous finding and the same deserves to be set aside. Since the plaintiff has failed to establish that there was a stock of goods worth `6,19,461/- lying with him and that the defendant Nos.1 and 2 are liable to take that stock back and pay him the amount, the finding of the Trial Court that the defendant Nos.1 and 2 are liable to lift the said stock from the godown of the plaintiff, and until then, they are liable to pay a sum of `6,000/- per month from October 2010 to the plaintiff, also deserves to be set aside.
Accordingly, I proceed to pass the following:-
O R D E R [i] The appeal is allowed in part;
[ii] The judgment and decree dated 26-02-2013 passed in O.S.No.57/2011 (Misc.Case No.2/2011) by the learned Principal Senior Civil Judge, Mangalore, is hereby confirmed, only to the extent of the defendant Nos. 1 and 2 being liable to pay a sum of `2,50,000/- to the plaintiff with interest at the rate of `12% per annum from the date of the suit till realisation;
[iii] However, the impugned judgment and decree which has held defendant Nos. 1 and 2 as liable to pay a sum of `6,19,461/- to the plaintiff and the direction given to defendant Nos.1 and 2 to lift the goods from the godown of the plaintiff worth `6,19,461/- and till then, to pay a sum of `6,000/- per month from October 2010 to plaintiff, are hereby set aside.
[iv] However, the judgment and decree regarding recovery of Court Fee remains unaltered.
[v] Draw the modified decree accordingly.
Registry to transmit a copy of this judgment along with the Lower Court records to the concerned Trial Court, without delay.
Sd/- JUDGE BMV*