IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 11-9-2008 CORAM THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM AND THE HONOURABLE MR.JUSTICE M.VENUGOPAL O.S.A.No.471 of 2002 1.M/s.Technis Industries a firm rep. By its Partner K.S.Prabhu Plot No.A-27/E, Doonar Village Road Deonar, Mumbai 400 088. 2.K.S.Prabhu 3.Ganesh Anand Kamath .. Appellants vs M/s.Star Trading Company rep. By its Proprietor H.M.Khan, having its business at No.7/C, Meenambal Salai Kaviarasu Kannadasan Nagar Chennai 600 118. .. Respondent Original side appeal preferred under Order 36 Rule 1 of O.S. Rules and Clause 15 of Letters Patent against the judgment and decree dated 22.2.2002 passed in C.S.No.623 of 1998. For Appellants : M/s.Sampathkumar Associates for appellants 1 & 3 Mr.T.V.Badrinarayanan for 2nd appellant For Respondent : Mr.H.M.Khan party in person JUDGMENT (Judgment of the Court was delivered by M.CHOCKALINGAM, J.) This appeal is directed against the judgment of the learned Single Judge of this Court made in C.S.No.623 of 1998. 2.The case of the respondent/plaintiff, as could be seen from the plaint averments, is as follows: https://hcservices.ecourts.gov.in/hcservices/ (a) The plaintiff was appointed by the defendants as a sole distributor for marketing and selling their products namely "Technis Hacksaw Blades". The plaintiff accepted the offer. The plaintiff was under the bonafide belief that the first defendant is acting in a fair manner in consonance with the trade practice which was subsequently found to be untrue. The last understanding was recorded in the form of minutes on 19.1.1997. Contrary to the understanding, the consignments were sent by the defendants at a higher rate, and upon verification of this change in attitude, the first defendant partner directed the plaintiff to clear the consignment with an assurance that the rates will be calculated as per the understanding dated 19.1.1997. One of the defendants has made the plaintiff to suffer huge loss by using deceptive methods, and the plaintiff had written letters. The defendants have also replied and have further informed that the defendants are not interested to supply any more materials to the plaintiff. As the letter of appointing the plaintiff as the sole distributor was issued by the defendants, they are estopped from discontinuing the supply to the plaintiff. The plaintiff was also shocked to notice that the first defendant has supplied materials at a lesser cost and has charged the plaintiff at a higher costs in respect of the same material. The plaintiff is claiming Rs.5 lakhs towards damages. (b) The defendants attempted to play fraud on the plaintiff using the defendants' men and money. Hence the defendants are liable to pay Rs.2 lakhs towards damages. The plaintiff suffered a loss to the tune of Rs.89,000/- in clearing the consignment at the rate of Rs.145 to 165/- even though the rate agreed in the said understanding was Rs.115/-. The defendants are bound to compensate the plaintiff in this regard. (c) The defendants also stopped supplying materials pursuant to the understanding dated 19.1.1997. The plaintiff issued a notice dated 16.7.1997. The first defendant sent a reply. The defendants demanded Rs.3,12,952/-. The plaintiff is not liable to pay any amount to them. The defendants are liable to pay Rs.11 lakhs towards damages along with interest at 18%. The termination of the distributorship has also resulted in the plaintiff to suffer loss of its market and reputation, for which the defendants are liable to pay a sum of Rs.1,11,000/-. The plaintiff filed a suit in C.S.No.503/97 on 21.8.1997. Thereafter, a memorandum of understanding was arrived at on 3.1.1998, between the plaintiff and the defendants. As per the said MOU, the firm "Technis Industries" will supply to M/s.Star Trading Company 1500 cases of hacksaw blades at the rate of Rs.110/-. The plaintiff issued a notice dated 3.7.1998, stating that "Technis Industries" had supplied only 475 cases of hacksaw blades during the period of six months and failed to supply the full quantity. Under the circumstances, the defendants are liable to compensate for the balance of 1025 cases at the rate of Rs.500/- per case plus taxes. The defendants are trying to play fraud to time bar the MOU. In view of the above facts, the defendants are liable to pay damages to the tune of Rs.5,12,500/- as per clause 12 of the MOU, and they are also liable to pay Rs.1,26,057/- towards excess price. Further, they are liable to pay Rs.2 lakhs towards damages and Rs.1,50,000/- towards goodwill. https://hcservices.ecourts.gov.in/hcservices/ 3.The suit was resisted by the defendants by filing a written statement stating that the present suit cannot be proceeded unless the suit filed by the defendants in Mumbai High Court in No.3476 of 1998 is heard; that the plaintiff failed to take delivery of 1500 cases from 3.1.1998; that till date, he has taken only 425 cases; that apart from that, the plaintiff failed to honour invoices numbering four; that further, he has defaulted in payment of the cost of each installment of supply before taking delivery of the next; that the plaintiff by a letter to his banker caused to dishonour the bills relating to the above invoices unilaterally; that because of the non-clearance of the bills, the defendants did not make further supplies; that the suit is nothing but a counter blast to the suit filed by the defendants in Mumbai, and hence the suit was to be dismissed. 4.The plaintiff filed a reply statement stating that there is no default on the part of the plaintiff; that there is no breach of the terms of MOU by the plaintiff; that as regards the Mumbai suit, it is only due to negligence and breach of the contract committed by the defendants, loss has been caused to the plaintiff and there is no loss to the defendants; and that the allegation that this suit is a counter blast to the Mumbai suit is false. 5.On the above pleadings, the trial Court framed four issues, and the parties went on trial. The plaintiff examined himself as P.W.1 and marked 70 documents. On the side of the defendants, the second defendant was examined as D.W.1 and one document was marked. The learned trial Judge after hearing the submissions of either side, granted a decree for a sum of Rs.2,14,783/- with pro-costs and with interest at 18% from the date of plaint till realisation. 6.The learned Counsel appearing for the appellants would submit that it is pertinent to point out that because of the failure on the part of the plaintiff to issue credit notes, further supply was not made, and therefore the award of Rs.1,02,033/- lacks basis; that in the instant case, the defendants have been always ready and willing to supply the contractual quantum of goods which was available in stock; that in fact, the plaintiff has defaulted in lifting the cases; that there was no time limit nor specificity of size; that under the circumstances, the plaintiff is not entitled to any money decree; that it is pertinent to note that the burden of proof in respect of Ex.P36, lies on the plaintiff; that the documents filed by the plaintiff were bogus, and the defendants questioned their genuineness; that the defendants took an application to summon authors of Ex.P36 series; that the learned trial Judge was not correct in granting a decree, and hence the judgment of the trial Court has got to be set aside. 7.The Court heard the plaintiff who appeared in person, on the above contentions. 8.As could be seen above, the respondent/plaintiff filed the said suit for recovery of Rs.11,03,557/- on five heads namely (1) in breach of clause 12 of Ex.P5, the defendants supplied only 475 cases https://hcservices.ecourts.gov.in/hcservices/ of Hacksaw Blades instead of 1025 cases, and hence towards compensation, they are liable to pay Rs.5,12,500/-; (2) by excess pricing towards supplied materials namely the said 475 cases of hacksaw blades over and above the price agreed, the defendants should pay Rs.1,26,057/-; (3) towards damages, they are liable to pay Rs.2 lakhs; (4) towards supply of hacksaw blades with poor quality and thereby spoiling the goodwill, the defendants should pay Rs.1.50 lakhs and (5) for the supply of the materials to third parties in violation of the memorandum of understanding, the defendants should pay Rs.1.15 lakhs. The learned Single Judge after consideration of the entire materials, has granted a decree for a sum of Rs.1,12,750/- towards compensation for the non-supply of the materials and also a sum of Rs.1,02,033/- towards the excess pricing in respect of 475 cases of hacksaw blades supplied also. For the above total sum of Rs.2,14,783/-, an interest at the rate of 18% has been awarded. The remaining part of the claim out of Rs.11 lakhs, the suit has been dismissed; but, the plaintiff has not challenged that part of the judgment. 9.The learned Counsel for the appellants fairly conceded that in respect of the decree for a sum of Rs.1,02,033/- which would represent the excess pricing in respect of 475 cases of hacksaw blades supplied, is not challenged. Hence the scope of appeal would be only in respect of compensation of Rs.1,12,750/- awarded in respect of the non-supply of the materials and also the interest awarded by the trial Court. 10.Both the parties have entered into Ex.P5, the memorandum of understanding, wherein Clause 12 reads as follows: "This MOU valid till the completion of supply of 1500 Cases as agreed in case if Technis fails to supply the material, then Technis will compensate Rs.500/- (Rupees Five Hundred Only) per case of not supply of the above material or on any balance of material as agreed to supply under this agreement and in the event of making direct sales to Tamilnadu and Pondicherry contrary to the terms of this Distributorship." 11.It could be seen from Clause 3 that after a period of six months from the date of the MOU, the first appellant company M/s.Technis Industries was not under any obligation to supply the materials to the plaintiff company. Out of this agreed 1500 cases, it is admitted by the plaintiff that 475 cases were supplied, and in respect of 1025 cases which were not supplied, the plaintiff has got to be compensated. According to the plaintiff, the defendants company should compensate the plaintiff since there was violation, and then and there, there was a breach of the above said MOU. Sufficient materials were noticed by the learned trial Judge indicating as contended by the plaintiff, that only 475 cases were supplied, and 1025 cases were not supplied. It is also not in controversy that Ex.P5, MOU, was entered into in view of the complaint made by the plaintiff that the defendants have already caused loss in the earlier transactions. According to the second https://hcservices.ecourts.gov.in/hcservices/ defendant examined as D.W.1, after August 1988, their Bombay agents were marketing several products in Tamilnadu since they stopped selling their products directly in Tamilnadu. Though the MOU under Ex.P5 was breached by both the parties, the trial Court has pointed out that the defendants have failed to supply 1025 cases. The last supply was made on 5.5.1998 under Ex.P9. From the month of April 1998, there was no supply according to the plaintiff. 12.It was contended by the defendants that the plaintiff did not honour the invoices and also refused to take delivery of the materials supplied. Contrary to the above, it is contended by the plaintiff that the materials were not supplied as per the specifications, and thus, a loss has also been caused. At this juncture, it is pertinent to point out that Ex.P5 does not give any specification as to the size and varieties. For a period of six months as agreed by the parties, the defendants should have supplied 1500 cases. It is an admitted position that the supply was only to the extent of 475 cases. Ex.P36 series of letters by third party dealers, was relied on by the plaintiff to indicate that requests were made to the plaintiff to supply hacksaw blades during the relevant period. Much comment was made by the learned Counsel for the appellants that Ex.P36 should not be relied, and no evidentiary value could be attached to the same, and they were all forged documents. It remains to be stated that an application was filed for issue of subpoena, and the same was also subsequently not pressed. Apart from that, the plaintiff was examined as P.W.1, through whom Ex.P36 series of letters were marked. The genuineness of the said letters under Ex.P36 was not challenged at the time of the cross- examination, and hence the evidence of P.W.1 was in tact in that regard. Therefore the learned trial Judge was perfectly correct in placing reliance on those documents. 13.At this juncture, the learned Counsel for the appellants would submit that even if at all the plaintiff could claim any compensation in that regard, he could claim only the profit which he could have made for 1025 cases; that the rate at which it was supplied was for Rs.110/- per case; that he could have sold for Rs.120/- per case; and that under the circumstances, the compensation could be paid at the rate of Rs.10/- per case for 1025 cases namely Rs.10250/- and nothing more. But, this contention cannot be accepted. On the contrary, the plaintiff would submit that as per the MOU, for the non-supply, the defendants were liable to pay at the rate of Rs.500/- per case, and if it is calculated, they are liable to pay a larger sum. The learned trial Judge after putting forth the reasons that major part of the clauses under the MOU was in breach, was inclined grant compensation at the rate of Rs.110/- namely the price of each case. In the opinion of the Court, what has been done by the learned Single Judge was just and reasonable, and hence this Court is unable to see any reason to interfere in that part of the judgment. 14.As far as the contention as to the question of interest is concerned, the learned Counsel for the appellants relied on two decisions one reported in (1961) 3 SUPREME COURT REPORTS 639 (MAHABIR https://hcservices.ecourts.gov.in/hcservices/ PRASHAD RUNGTA V. DURGA DATT) and the other reported in AIR 2004 MADRAS 294 (M/S.NEW HOWRAH TRANSPORT COMPANY V. METAL BOX INDIA LTD. AND ANOTHER). According to the learned Counsel, the interest awarded by the trial Court, was not only excessive, but also exorbitant since it is a case where he has claimed compensation and damages. The Court heard the plaintiff on the above contentions. Taking into consideration the facts and circumstances of the case, this Court feels that 9% would be reasonable rate of interest which could be awarded from the date of plaint till realisation. 15.For the reasons stated above, the judgment of the trial Court granting a decree for Rs.2,14,783/- is affirmed. As far as the interest awarded by the trial Court, is concerned, the same is reduced from 18% to 9% from the date of plaint till realisation. In all other respects, the judgment of the trial Court is affirmed. Accordingly, this original side appeal is disposed of leaving the parties to bear their costs. Sd/- Asst. Registrar. /true copy/ Sub Asst. Registrar. Nsv/ To The Sub Asst.Registrar, (Original Side) High Court, Madras. + 1 CC To Mr.T.V.Badrinarayanan, Advocate SR NO.51759 + 3 CC To Mr.H.M.Khan, Party in person, SR NO.51654 OSA No.471 of 2002 SSV {CO} TP/30.9.08 https://hcservices.ecourts.gov.in/hcservices/