1 rng IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION SUIT SUIT SUIT NO.961 OF 1989 NO.961 OF 1989 NO.961 OF 1989 Yogesh Gunvatlal Shah and another.. Plaintiffs Vs. M/s Zaveri Jitendra Ramniklal & anr .. Defendants Mr.Arshad Haindaday a/w Ms Nippa Shah for Plaintiff None for Defendants CORAM CORAM CORAM : A.S.OKA, J : A.S.OKA, J : A.S.OKA, J DATE DATE DATE : 20TH : 20TH : 20TH OCTOBER, 2008 OCTOBER, 2008 OCTOBER, 2008 JUDGMENT JUDGMENT JUDGMENT 1. Heard the learned counsel appearing for the plaintiff. He states that notice has been duly served to the Court Receiver (2nd defendant) of the date fixed for hearing of arguments. 2. The original plaintiff was the sole proprietor of M/s Ravindra Gunwant Shah carrying on business as exporter and importer of diamonds and gold jewellery. The 1st defendant at the relevant time was engaged in selling, purchasing and manufacture of diamonds and gold ornaments. According to the case of the original plaintiff, he obtained an 2 order for export of gold ornaments worth 4000 grams. The original plaintiff appointed one Jitendra Ramniklal Zaveri, a partner of the 1st defendant firm as his Constituted Attorney authorising him to take delivery of gold from the State Bank of India or any other Bank authorised by the government of India and to open and operate banking account on behalf of the original plaintiff. It is the case of the original plaintiff that he had entrusted the work of preparing necessary ornaments in accordance with an order for export received by him and for that purpose he had authorised the 1st defendant to receive 5600 grams of 24 carat purity gold from the State Bank of India, Overseas Branch. According to the case of the original plaintiff, the 1st defendant obtained the delivery of 5600 grams gold from the State Bank of India on 5th June, 1986. Out of the said quantity, 1400 grams of gold was sold by the original plaintiff to the 1st defendant and gold worth of 4200 grams was retained by the 1st defendant for manufacturing the ornaments for the original plaintiff for the purpose of export. 3. According to the case of the original 3 plaintiff, after he had procured the order for export of ornaments, he availed Export Packing Credit facility from the Bank of India, Bhadra, Ahmedabad. It is stated that as per the terms and conditions of the loan, the original plaintiff was required to execute the export order within a period of 180 days so as to take advantage of concessional rate of interest. Therefore, the original plaintiff had directed the 1st defendant to manufacture ornaments from gold as expeditiously as possible. It is alleged that the 1st defendant had agreed to do so to enable the original plaintiff to take delivery of the gold at concessional rate of interest. 4. The specific case of the original plaintiff is that by a letter dated 9th August, 1986, the 1st defendant informed that the necessary ornaments were ready for delivery. It is alleged that though the orignial plaintiff had made arrangements for taking the delivery of the gold, the 1st defendant did not give delivery of the ornaments. Notwithstanding repeated requests made by the original plaintiff, the 1st defendant did not deliver the ornaments. As a result of the failure of the defendant to deliver the ornaments 4 within a period of 180 days, the original plaintiff was denied the benefit of concessional rate of interest as the original plaintiff could not export the ornaments within the stipulated time. It is contended that due to the said default on the part of the 1st defendant the original plaintiff was required to pay interest of Rs.5,40,750.93 up to 31st October, 1988. 5. According to the case of the original plaintiff, the 1st defendant was asked to prepare the ornaments having weight of 4000 grams of gold and return the balance quantity of 200 grams to the original plaintiff. The further case further is that the 1st defendant failed and neglected to deliver the ornaments of 21 and 22 carat purity and balance quantity of gold weighing 200 gms of 24 caret gold. The original plaintiff by his letter dated 1st August 1988 called upon the 1st defendant to arrange for despatch of the ornaments However, there was no response from the 1st defendant. Therefore, a legal notice was issued by the original plaintiff to the 1st defendant. The case of the original plaintiff is that notwithstanding receipt of the said notice, the 1st defendant not only failed to deliver the 5 ornaments and the gold but, failed to compensate the original plaintiff by paying the interest which the plaintiff was forced to pay. 6. Therefore, the suit has been filed praying for the following reliefs : (a) This Hon’ble Court will be pleased to pass an order and decree directing the defendant to pay an amount of Rs.7,21,195 being the amount of loss of interest as per the particulars of claim at Exhibit A hereto. (b) that the defendant be ordered and decreed to deliver to the plaintiff 4200 grams of gold opf 24 carat purity and 2429.25 grams of gold of 22 carat purity or in the alternative thereof an amount of Rs.21,05,467 being the value thereof at the market rate prevailing on the date of the suit or the value of the gold at the rate prevailing on the date of the decree whichever is higher . (c) The defendant be ordered and decreed to pay to the plaintiff interest at the rate of 21 % p.a. on the aforesaid amount of interest till realisation. 7. The suit was contested by the defendant. The 1st defendant did not dispute the averments that the original plaintiff had appointed one Jitendra Zhaveri a partner of the 1st defendant to take delivery of the gold from the Bank and to open and operate bank account on behalf of the plaintiff. However, it was contended that the 1st defendant 6 had agreed to help the plaintiff and therefore, some of the orders were routed through the plaintiff. The 1st defendant denied to have taken delivery of the quantity of 5600 grams of gold. 8. The case made out by the 1st defendant is that though 1400 grams of gold was purchased by the 1st defendant from the plaintiff, it was not correct that gold weighing 4200 grams was retained by the 1st defendant for manfacuture of the ornaments for export purpose. The specific case made out by the 1st defendant is that the 1st defendant had agreed to prepare the ornaments and had informed the original plaintiff by a letter dated 9th August, 1986 that the ornaments were ready. It is contended that as the export order received by the original plaintiff was cancelled he did not take delivery of the ornaments. It is contended that some time in the year 1987, the plaintiff authorised the 1st defendant to dispose of the ornaments as he was not in a position to sell the ornaments. It is alleged that the original plaintiff instructed the 1st defendant to adjust the proceedings of the sale against his dues pertaining to diamond jewellery business. The 1st defendant denied the case made out by the 7 plaintiff regarding availing loan from the bank at concessional rate of interest. The defendant submitted that suit of the plaintiff be dismissed. 9. On 2nd August 2006 issues were settled. The settled issues read thus: 1. Whether the plaintiff proves that he has obtained an order for export of gold ornaments weighing about 4000 gms ? 2. Whether the plaintiffs proves that he appointed Shri Jitendra Ramniklal Zaveri as his Power of Attorney to take delivery of gold from state Bank of India and to operate the bank acocunt on behalf of the plaintiff’s firm ? 3. Whether the plaintiff proves that he authorised defendants to receive 5600 gms of 24 caret gold from the State Bank of India and the defendants took delivery of the said gold from the State Bank of India ? 4. Whether the plaintiff prove that the defendants agreed to manufacture necessary ornaments to complete and fulfil the Export Order ? 5. Whether the plaintiff proves that the plaintiff has availed of the exports packing credit facilities from the Bank of India Bhadra Branch Ahmedabad ? 6. Does the plaintiff proves that export packing credit facility was in respect of the contract allegedly entered into with the defendant ? 7. Whether the plaintiff proves that a concessional rate of interest had been offered by the plaintiffs bankers to the plaintiffs ? 8. Whether the plaintiff proves that he 8 was required to execute the export order within a period of 80 days ? 9. Whether the plaintiff proves that the defendants agreed to manufacture the ornaments within stipulated period in order to take advantage of concessional rate of interest ? 10. Whether the defendant manufactured the necessary ornaments as agreed within the stipulated period ? 11. Whether the plaintiffs proves that the defendants failed and neglected to delivery the ornaments as agreed ? 12. Whether on account of non delivery of ornaments by the defendants the plaintiff could not export the ornaments and were denied benefit of concessional rate of interest ? 13. Whether the plaintiff proves that he was required to pay higher rate of interest amounting to Rs.5,40,750.93 ? 14. Does plaintiff prove that they had paid at enhanced rate of interest and that amount comes to Rs.7,21,195.00 as alleged ? 15. Does plaintiffs prove that the defendants failed and neglected to manufacture the ornaments out of 2429.250 gms gold as agreed in para 10 of the plaint? 16. Whether the plaintiff handed over to the defendants 2,129.250 gms gold of 22 caret purity as alleged in para 10 ? 17. Does plaintiffs prove that the defendants failed and neglected to manufacture ornaments from 4000 gms of gold and deliver them to the plaintiffs and to return the balance quantity of 200 gms as alleged in para 1 of the plaint ? 18. Whether the plaintiff is entitled to an amount of Rs.7,21,195.00 being the amount of interest ? 9 19. Whether the defendants are liable to delivery 4200 gms of gold of 24 carets purity and 2429.250 gms of gold of 22 carat purity to the plaintiffs ? 20. Whether the cost of the total quantity of gold mentioned in question 19 above was Rs.21,05,467/- on the date of the filing of the suit ? 21. Whether the plaintiff is entitled to decree as per the prayer clause (A) to (D) to the plaint ? 22 (a) Whether the defendants prove that the defendants were required to dispose of the ornaments in their shop and to adjust the proceeds against the dues ? 22 (b) Whether the defendants prove that the Export Order of the plaintiff was cancelled by the importer and hence plaintiff did not take delivery ? 23. Whether the defendants prove that the suit is not filed within the period of limitation ? 24. What order and what relief ? 10. Initially, an affidavit of examination-in- chief of the original plaintiff was filed before recording of evidence, he died on 8th January 2007. Thereafter the 1st plaintiff a legal representative of the original plaintiff filed an affidavit in lieu of examination-in-chief. His formal examination-in-chief was recorded in the Court on 12th June 2008. However, the cross examination could not be made as none appeared for the defendants. On 5th August, 2008 as none 10 appeared for the defendants, cross examination of the legal representative of the original plaintif was treated as closed. Thereafter, the defendants have never appeared to adduce evidence. 11. The learned counsel appearing for the plaintiff has taken me through the averments made in the plaint and the written statement as well as the evidence and the exhibited documents on record. He submitted that the evidence of the legal representative of the original plaintiff has gone unchallenged. In view of the exhibited documents on record, he submitted that a case is made out for passing a decree in terms of prayer clause (a) and a decree in terms of prayer in prayer (b) made in the alternative. 12. It will be necessary to refer to the documents brought on record. Exhibit P-1 is letter dated 9th August, 1986 sent by the 1st defendant to the original plaintiff. In the said letter it is clearly recorded that balance gold weighing 4000 grams was received from the original plaintiff for making gold ornaments. The letter recorded that the gold ornaments were ready with the 1st defendant. The letter dated 27th 11 September 1988 Exhibit P-2 sent by the 1st defendant records that there was a credit balance of the original plaintiff was of 4373.95 grams of 21 carat gold as of that day. By a letter dated 27th September 1988 (Exhibit P-3) the defendant no.1 wrote to the original plaintiff recording that there was a credit balance of 22 carat gold of the plaintiff of 2429.250 grams. Reliance is placed on a letter dated 6th January 1988 (Exhibit P-9) issued to the original plaintiff by the Bank of India. The statements of the legal representative of the original plaintiff in the examination-in-chief have gone unchallenged. The letter dated 9th August 1986 sent by the 1st defendant to the original plaintiff itself contains the admission of fact that the gold was received from the plaintiff by the defendant for making gold ornaments. The case made out by the 1st defendant in the written statement was that the plaintiff was not interested in taking delivery of the gold as the export order was no longer in existence. The 1st defendant has come out with a case that the original plaintiff had instructed him to sell the ornaments. Burden of establishing this case was on the 1st defendant. However, the 1st defendant has neither cross 12 examined the legal representative of the original plaintff nor has stepped into witness box to adduce evidence. The document at Exhibit P-2 and P-3 are the letters sent by the 1st defendant to the plaintiff admitting credit balance of gold of 21 and 22 carat of the original plaintiff. Thus the fact that gold was entrusted to the 1st defendant for preparation of ornaments has been duly proved. There is no evidence adduced by the 1st defendant to show that the plaintiff was not interested in taking delivery of the ornaments as the export order was cancelled and that the original plaintiff had authorised the 1st defendant to sell the gold. Even in paragraph 6 of the written statement, the 1st defendant has come out with a case that gold ornaments were manufactured by the 1st defendant and he had informed the plaintiff that the ornaments were ready for delivery. There is no evidence adduced by the 1st defendant to show that any time thereafter delivery of the ornaments was taken by the original plaintiff or at any time the ornaments of gold were returned by the 1st defendant to the original plaintiff. In the circumstances, the plaintiffs have established that gold entrusted to the 1st defendant for 13 manfacturing of ornaments was never returned to the original plaintiff. There is no material placed on record to show that the ornaments allegedly kept ready by the 1st defendant on 9th September 1986 are in existence till today. Therefore, the prayer made in the alternative in prayer clause (b) as regards the payment of cost of the gold will have to be considered. 13. From the written statement, it appears that there is no dispute raised about cost of the gold. In paragraph 23 of the affidavit of examination-in-chief, the legal representative of the plaintiff has stated thus : " I say that as per market rate prevailing on 31/3/88 the uniform value of 4200 gms of gold 24 caret of purity and 2429.28 gms of gold of 22 caret comes to Rs.21,05,467/- as the rate of Rs.3,095/- per gms. " This statement on oath has not been disputed by the 1st defendant or by any one on his behalf. Therefore, the plaintiff is entitled to a decree in the sum of Rs.21,65,467 being the market value of the gold till the disposal of the suit. There is no agreement pleaded as regards the rate of interest. Notice dated 7th November, 1988 was 14 issued prior to institution of the suit. In the said notice, there is no specific demand made as regards payment of interest on the cost of the gold. In the circumstances, interest will have to be fixed at 6 % p.a. 14. Now this takes me to the other claim made by the plaintiff. The case of the plaintiff is that after receiving the export order for which order was placed for manufacture of ornaments to the 1st defendant he availed Export Packing Credit from Bank of India and as that the plaintiff could not complete the export within 180 days, he could not get the benefit of concessional rate of interest while repaying the loan to the bank. As far as the documentary evidence is concerned, only document brought by the plaintiff on record is the certificate dated 2nd November, 1988 at Exhibit P-9. Firstly, there is no evidence to show that the Export Packing credit referred to by the Bank in the document at Exhibit P-9 has any relation with the facility obtained by the planitiff from the bank in relation to the export order received by the plaintiff. Importantly, the agreement between the original plaintiff and the bank or any other evidence to show that the original plaintiff 15 was entitled to a concessional rate of interest has not been produced. In the absence of any cogent evidence, the claim of interest made by the plaintiff in terms of prayer clause (a) cannot be decreed. Hence, I pass the following order : ORDER ORDER ORDER (1) Suit is partly decreed. (2) The 1st defendant is ordered and decreed to pay a sum of Rs.21,05,467/- to the plaintiff together with interest thereon at 6 % p.a. from the date of the institution of the suit till realisation or payment. (3) Suit in relation to prayer clause (a) stands dismissed. Theplaintiff will be entitled to proportionate cost of the suit from the 1st defendant. Certified copy is expedited. 16 { A.S.Oka, J } A.S.Oka, J } A.S.Oka, J }