THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR A.S. Nos. 2786 of 2001 and 375 of 2002 Common Judgment: Since both these appeals pertain to the same parties and arise out of the common judgment, they are being disposed of by this common judgment. A.S. No.2786 of 2001 has been filed challenging the judgment and decree dated 05.11.2001 passed in O.S. No.97 of 1998 and A.S. No.375 of 2002 has been filed challenging the judgment and decree dated 05.11.2001 passed in O.S. No.151 of 2000 by the Principal Senior Civil Judge, Kurnool. The respondent herein is the plaintiff in O.S. No.97 of 1998 and the appellant herein is the plaintiff in O.S. No.151 of 2000. Since the suit filed by the respondent herein in O.S. No.97 of 1998 has been decreed and the suit filed by the appellant herein in O.S. No.151 of 2000 has been dismissed by a common judgment dated 05.11.2001, these two appeals have been filed. Hereinafter, the parties will be referred to as they are arrayed in O.S. No.97 of 1998 for the sake of convenience. The plaintiff is a Company registered under the Companies Act. The defendant is a registered firm doing business in manufacture and sale of hydraulic power packs and cylinders. The case of the plaintiff is that it placed a purchase order with the defendant on 12.11.1994 for supply of certain machinery equipment. The defendant accepted the purchase order and agreed to supply those equipment within 8 to 12 weeks. The plaintiff paid an advance of Rs.49,500/- vide cheque dated 22.11.1994. The plaintiff also paid the balance amount of Rs.1,32,000/- , as per the invoice dated 19.05.1995 of the defendant, vide cheque dated 28.10.1995. The defendant, having received the amount, failed to supply the equipment as undertaken and committed breach of terms of purchase order. As there was delay in supply of equipment, the plaintiff purchased the equipment from Italy and incurred extra cost of Rs.18,00,000/-. It is also the case of the plaintiff that the defendant falsely claimed storage charges and interest which is more than the cost of equipment itself. Hence, the plaintiff filed the suit for recovery of Rs.3,24,425/- from the defendant i.e., for refund of the amount of Rs.1,81,500/- paid by it with interest at 24% p.a., and Rs.5,445/- towards liquidated damages @ 3% on the amount paid. As seen from the case of the defendant, it is not in dispute that the plaintiff had sent a purchase order dated 12.11.1994 and paid an advance of Rs.49,500/- through cheque and subsequently paid the remaining amount of Rs.1,32,000/- through cheque dated 28.10.1995. The specific case of the defendant is that though the delivery period was 12 weeks from the date of receipt of the advance, as the plaintiff wanted the equipment urgently it made the equipment ready and also accordingly informed by a letter TA/SRAAC/C-01/1790 that the equipment was ready and requested the plaintiff to inspect the equipment and collect the same. Their further case is that though the plaintiff received the said letter, it did not inspect the equipment and taken delivery of the same. The further case of the defendant is that again on 18.07.1995, vide letter TA/SRAAC/C-01/2042, the plaintiff was informed about the inordinate delay in taking the equipment and it was further specifically informed that the plaintiff had to pay storage charges for the equipment @ Rs.200/- per day and also interest on the balance of sale price at 24% p.a., from 01.02.1995. The defendant also informed the plaintiff that the interest and storage charges would be waived if the payment is made immediately and the delivery of equipment was taken. The further case of the defendant is that though the plaintiff received the said letter, there was no response from the plaintiff. The defendant, after receipt of the cheque dated 28.10.1995 for Rs.1,32,000/-, informed the plaintiff to take delivery of the material against the payment of Rs.30,687/- towards storage charges and interest from 31.07.1996 till 15.11.1996. Then the plaintiff informed the defendant that it shall review the payment of storage charges and interest after delivery of machinery as there was delay in delivery of equipment. The further case of the defendant is that they addressed a letter dated 28.01.1996 informing the plaintiff that it had to pay storage charges @ Rs.300/- per day. The defendant again informed the plaintiff through letter dated 29.05.1996 to pay storage charges and interest and again addressed another letter dated 02.06.1997 for the same purpose. Thus, the specific case of the defendant is that though the plaintiff had placed the order but failed to take delivery of the equipment for a period of more than 3 ½ years and, therefore, it was liable to pay an amount of Rs.70,000/- towards storage charges and interest thereon from 29.05.1996 at the rate of 24% p.a. Thus, according to the defendant, the plaintiff was liable to pay total amount of Rs.3,40,738/- as on 08.07.1998 and after adjusting the amount of Rs.1,81,500/- paid by the plaintiff, filed the suit directing the plaintiff to pay an amount of Rs.2,03,638/-. Both the parties had filed separate written statements in the above suits and denied the material averments made by the plaintiffs in those respective suits. The trial Court framed the necessary issues in both the suits. Joint trial was conducted and on behalf of the plaintiff PW.1 was examined and Exs.A1 to A7 and Ex.C1 were marked. On behalf of the defendant DW.1 was examined and Exs.B1 to B22 were marked. As referred supra, the trial Court decreed the suit in O.S. No.97 of 1998 and dismissed the suit in O.S. No.151 of 2000. The learned counsel for the defendant submitted that though the defendant had to deliver the equipment in February 1995, but the defendant made the machinery ready in January 1995 itself and informed the plaintiff accordingly by letter dated 31.01.1995 in Ex.B17. His further submission is that there was no response from the plaintiff and again the defendant had addressed another letter in Ex.B4 on 30th April 1995 and then the defendant had sent a revised invoice in Ex.B1 and addressed Ex.B18 letter and sent it through registered post. It is also his case that though the defendant had been informing the plaintiff that the equipment was ready and the plaintiff may come at ay time to inspect the machinery and take delivery of the same, there was no response from the plaintiff. It is further argued that the contention of the plaintiff that the defendant failed to dispose of the equipment is not correct, since it is for the plaintiff to make inspection of the machinery and then seek delivery of the same. It is also the contention of the learned counsel for the defendant that there was no delay on the part of the defendant and the contents of Ex.A3 go to show that the delivery is specifically shown as Ex-GDN, Secunderabad. The lower Court committed a manifest error in holding that the defendant did not produce any record to show that the defendant manufactured the equipment. It is further contended that it is not the case of the plaintiff that the defendant did not make the equipment ready or that the defendant failed to show the material when the staff of the plaintiff came for inspection. It is also submitted that only after May 1995, the defendant claimed storage charges, since the equipment occupied lot of space. It is further submitted that the findings of the lower Court are based on surmises and conjectures. He has also relied on a judgment reported in Bachhaj Nahar v. Nilima Mandal[1], in support of his contention that when finding is given on an issue not pleaded by the parties such finding cannot stand to scrutiny, since the defendant had no opportunity to adduce evidence on issue which was not pleaded by the plaintiff. On the other hand, learned counsel for the plaintiff submitted that Ex.A3 is the purchase order and that all conditions had been specifically mentioned in the overleaf of Ex.A3 and all those conditions specifically would show that the defendant had to transport the equipment to the plaintiff since the plaintiff agreed to bear the transport charges. It is also his submission that it is for the defendant to inspect the machinery to be delivered and Ex.A3 does not contain that the plaintiff should inspect the machinery before delivery. It is also his submission that though the plaintiff had paid the entire amount, it is the defendant who did not manufacture the equipment and who failed to transport the same as per the terms of Ex.A3. It is also submitted that Ex.A3 does not contain about the payment of any storage charges or any interest on such charges. It is further submitted that since the defendant, having received the entire amount from the plaintiff, failed to transport the machinery, the defendant is liable to return the amounts paid by the plaintiff and, in the circumstances, the findings of the lower Court are based on record and there is nothing to interfere with the same. The points that arise for consideration are; (1) whether there was any delay in manufacturing the equipment and whether there are any laches on the part of the defendant in making inspection of the equipment and (2) whether the defendant failed to transport the machinery and whether there was any delay on the part of the plaintiff in paying the amount to the defendant as per the invoice. According to PW.1, he has been working as Senior Vice-President of the plaintiff’s company and that they booked order for the equipment i.e., hydraulic power pack and cylinders with the defendant through the agent of the defendant and that Ex.A3 is the purchase order which is on a printed form. His specific case is that as per the terms and conditions mentioned in Ex.A3 the mode of delivery of equipment is by road and that the defendant has to deliver the equipment at the factory of the plaintiff within 8 to 12 weeks from the date of the purchase order. According to him, such short period was fixed for delivery of equipment as the plaintiff had urgently needed the machinery. His further case is that whenever the equipment comes to the plaintiff’s factory they would inspect the same before taking delivery. According to him, the defendant did not supply the machinery in spite of receiving 30% advance, but subsequently sent an invoice dated 19.05.1995 and that no letter was received along with the said invoice and they had sent balance of Rs.1,32,000/-, vide cheque dated 28.10.1995. According to PW.1, thus they had paid the total amount towards purchasing of the machinery but it is the defendant who failed to deliver the equipment to the plaintiff. According to PW.1, their people went and verified in the defendant company and noticed that there was no equipment to be supplied to the plaintiff’s company and because of the urgency they got the equipment imported from Italy. According to him, one Hemchandar was the agent and he came into picture in the month of April 1995. PW.1 admitted that the defendant sent a revised enhanced invoice dated 19.09.1995 claiming the amount in view of increase in the rates of local sales tax and further informed the plaintiff that in view of the inordinate delay in taking delivery of equipment the plaintiff was liable to pay storage charges at the rate of Rs.200/- per day and also interest at 24% p.a., vide Ex.B2. He had also admitted that in Ex.B2 letter there is a reference about the letters dated 31.01.1995 and 19.05.1995. He had also admitted that there was no specific denial about the receipt of the letter dated 31.01.1995. It is also admitted by PW.1 that in Ex.B5 letter the defendant requested to arrange inspection of machinery. He had also admitted about the receipt of the letters in Exs.B6, B8, B10 and B12. He had also admitted that they did not give any reply to Exs.B6, B8, B10 and B12 letters. He had also admitted that they did not inform the defendant that they imported the equipment from Italy and that they have not filed any document to show that they purchased the equipment worth of Rs.18,00,000/- from Italy. He had also admitted that they did not address any letters to the defendant that on account of delay in delivery of equipment they sustained loss and the defendant is liable to pay such loss. He had also admitted that in Ex.A3 purchase order it was mentioned that the plaintiff had to pay 70% of the balance sale price while inspection and collection of the material. According to DW.1, negotiations were taken place on 09.11.1994 through the agent of the plaintiff namely Hemchander at the office of the defendant and the total price was fixed at Rs.1,65,000/- excluding local taxes etc. He had also admitted that the agreed delivery period was 8 to 12 weeks from the date of receipt of advance i.e., 30% of the total sale price. His specific case is that the plaintiff had to collect the equipment from their godown at Secunderabad. His specific case is that though the delivery date was due by March 1995, due to the urgency of the plaintiff the material was made ready by the end of January 1995 and the same was informed to the plaintiff by Ex.B17 letter, dated 31.01.1995. It is also his case that since there was increase in the local sales taxes they contacted Hemchander representative of the plaintiff and that the said Hemchander inspected the material in their godown at Secunderabad and then they addressed a letter dated 19.05.1995 intimating the plaintiff to arrange to send the balance payment of Rs.1,32,000/-. The specific case of DW.1 is that though he contacted the General Manager of the plaintiff firm, there was no response from him and that in spite of addressing a letter dated 18.07.1995 in Ex.B2 the plaintiff failed to collect the material. However, DW.1 admitted that they received the balance amount through Hemchander on 15.10.1995, but he deposed that he again informed that the plaintiff should collect the material by paying the remaining balance of Rs.30,687/- which was the cost of storage charges. According to DW.1, they received a letter from N. Rangaswamy, the then General Manager of the plaintiff company who promised to send their staff for inspection. His further evidence is that then another Senior General Manager of the plaintiff came and inspected the material and promised to send a cheque for Rs.30,687/- and to take delivery of the material. According to him, on 02.06.1997 they addressed another letter to the plaintiff in Ex.B12 asking them to pay Rs.70,000/- towards storage charges and interest and collect the material against payment. DW.1, however, admitted that Ex.A7 is the office copy of the letter addressed by the plaintiff dated 04.12.1995 stating that there was delay on the part of the defendant. He has denied the suggestion that as a pre-planned manner and to set up their defence he has created Ex.B17 letter. Now we have to see what are the terms and conditions between the parties as per Ex.A3 and which party is at fault. Admittedly, Ex.A3 is the purchase order dated 12.11.1994. It also shows that the terms and conditions have been mentioned overleaf. However, against delivery column it is noted as Ex-GDN, Secunderabad, that means the godown of the defendant at Secunderabad, and against the column payment terms - 30% advance and balance against inspection and collection of material is noted. However, it is also mentioned that the mode of delivery is by road and the delivery period is 8 to 12 weeks and transport charges are extra. Condition No.4 of the purchase order is as follows. “All articles should be dispatched before the time specified in the order, otherwise the order will be cancelled unless the extension of time is given.” Condition No.9 is as follows. “Inspection and Test: The materials should be duly inspected and tested to the maximum condition of service at the maker’s works before dispatch unless otherwise agreed to. In the case of materials which form part of an equipment and such an equipment is not tested after assembly by the supplier before dispatch the material will be accepted subject to the test result being satisfactory when installed in our factory: in the former case the necessary test certificate should be furnished with invoice.” Thus the condition No.9 shows that the material should be duly inspected and tested to the maximum condition of service at the maker’s works place before dispatch unless otherwise agreed to. The words unless and otherwise agreed to reveal that the material should be inspected at the makers works place and in case if the material is not tested after assembly by the supplier before dispatch, the material would be accepted subject to the test result being satisfactory when installed in their factory. Of course the words mode of delivery by road and transport charges extra and delivery within 8 to 12 weeks reveal that it is the duty of the defendant to transport the equipment. However, the words “Ex-GDN, Secunderabad” and “balance against inspection and collection of material” reveal that the plaintiff had to inspect the material and pay the balance of amount after collection of the material. It is mentioned in Ex.A3 that the material should be inspected and tested at the maker’s work place, but who had to inspect and test is not clear. When the terms and conditions are not clear we have to necessarily consider the other circumstances and the correspondence between the parties. The correspondence between the parties reveals that the defendant had sent Ex.B1 pro-forma invoice dated 19.05.1995. PW.1 admitted the receipt of Ex.B1 letter. He had also admitted the receipt of Ex.B2 notice dated 18.07.1995. He had admitted that there was no response from them to Ex.B2 letter. It has to be seen that Ex.B2 letter refers to the letter in TA/SRAAC/C-01/1790, dated 31.01.1995 and also Ex.B18 letter dated 19.05.1995. The contents of Ex.B2 are crucial. It says that in their letter dated 31.01.1995 they had informed the plaintiff that the material was ready awaiting inspection and collection against payment. It also refers that the equipment was lying ready at their works occupying space and incurring interest on investment. It also shows that the plaintiff was specifically informed to arrange for inspection and collection of the material on or before 31.07.1995, failing which the defendant would charge interest at 24% p.a., on Rs.1,32,000/- and space charges at Rs.200/- per day. Thus, according to the case of the defendant they did not intend to charge any space charges or interest till 31.01.1995. Admittedly, vide Ex.B4, the plaintiff had sent a cheque dated 28.10.1995for Rs.1,32,000/- and it specifically refers to the pro-forma invoice dated 19.05.1995. It also refers as follows. Meanwhile our Manager (Mechanical) will be approaching you for inspection of Gasket Die. Kindly extend your full cooperation to him. Ex.B5 is the another letter from the defendant showing the acknowledgment of receipt of cheque for Rs.1,32,000/- dated 28.10.1995. In this letter also the defendant had categorically informed that in their earlier letter dated 18.07.1995 itself they had informed that the material was lying at their works occupying space and incurring interest on investment and that they would absorb the interest and space charges only till 31.07.1995, failing which they would charge interest at 24% p.a., and space charges at Rs.200/- per day. It further shows that they had received Rs.1,32,000/- without adding interest and space charges as stipulated and, therefore, additional amount of Rs.30,687/- was payable by the plaintiff calculating interest on Rs.1,32,000/- from 31.07.1995 to 15.11.1995 i.e., for 107 days and space charges for 107 days at Rs.200/- per day. Ex.B6 is the letter dated 15.12.1995. It also shows that the defendant requested the plaintiff to arrange for immediate inspection and collection of the material from their premises against the payment of Rs.30,687/-. It has to be seen that there was not a single letter from the plaintiff to the defendant after 12.11.1994 till 04.12.1995. After receiving Ex.B5 letter dated 22.11.1995 from the defendant, the plaintiff had addressed a letter in Ex.A7. It only shows that with reference to the letter dated 22.11.1995 which is Ex.B5 the plaintiff informed the defendant that there was lot of delay for completion of job at the site of the defendant and therefore they would review only after delivery of the equipment. Though for the first time the issue of delay in completion of the job was raised by the plaintiff on 04.12.1995 when the defendant in their letters Ex.B2 dated 18.07.1995 and in Ex.B5 dated 22.11.1995 had categorically mentioned that the equipment was lying ready occupying space and incurring interest on their investment and that the plaintiff should pay the balance on or before 31.07.1995, failing which they have to charge interest @ 24% p.a., on Rs.1,32,000/- and space charges at Rs.200/- per day, nothing prevented the plaintiff from giving a reply to Ex.B2 and to deny the contents therein. It has to be seen that admittedly on 19.05.1995 the defendant had sent Ex.B1 directing the plaintiff to pay Rs.1,32,000/-. Admittedly, the plaintiff had sent a cheque for Rs.1,32,000/- on 28.10.1995. Admittedly, there was a delay of more than 5 months in sending the cheque for Rs.1,32,000/-. Admittedly, the defendant had already informed the plaintiff that the equipment was ready and requested the plaintiff to inspect the same. In the above circumstances, it is clear that the defendant had already requested the plaintiff to inspect the material but it is the plaintiff who failed to inspect the material and who did not give any reply to the letter Ex.B2. It has to be seen that by the date of Ex.A7 i.e., by 04.12.1995 already a period of more than 5 months elapsed after the plaintiff was specifically informed vide Ex.B2 that the material was ready awaiting inspection. However, vide Ex.B6 the defendant reiterated its claim for Rs.30,687/- i.e., interest on Rs.1,32,000/- and space charges. Ex.B8 dated 28.01.1996 also reveals that the defendant had reiterated the payment of Rs.30,687/- and further informed that if the material is not collected by 15.02.1996 the plaintiff had to pay Rs.300/- per day towards storage charges. It is not in dispute that the plaintiff had received Ex.B10 and Ex.B12 letters. Ex.B12 letter reveals that the defendant informed the plaintiff that their representative Mr. Sayed Pasha visited the works on 19.05.1997 and inspected the equipment and found the same to be in good condition. It also shows that the plaintiff was requested to collect the material after payment of Rs.70,000/- towards interest and space charges. It is an old saying that men may lie but the circumstances will not lie. The above referred correspondence clinchingly establish that there was delay on the part of the plaintiff in paying Rs.1,32,000/- and that the defendant had specifically informed the plaintiff that the material was ready at their works and requested the plaintiff to send their representatives for inspection and that it is the plaintiff who failed to send any person for inspection and for the first time the plaintiff appears to have sent one Sayed Pasha on 19.05.1997 and by that time the defendant demanded the plaintiff to pay total amount of Rs.70,000/- towards interest and space charges. In the circumstances, it appears that the defendant had already made the equipment ready and in view of the facts and circumstances of the case it cannot be said that the defendant was obliged to transport the material before inspection. In the above facts and circumstances, it is clear that there was delay in taking delivery of the equipment and more over there was delay of five months in payment of Rs.1,32,000/- by the plaintiff. Therefore, the findings of the Court below appears to be not correct and liable to be set aside. As seen from the evidence of DW.1, on 28.01.1996