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 SUMMONS SUMMONS SUMMONS FOR JUDGMENT NO.214 OF 2008 FOR JUDGMENT NO.214 OF 2008 FOR JUDGMENT NO.214 OF 2008 in in in SUMMARY SUMMARY SUMMARY SUIT NO.1533 OF 2008 SUIT NO.1533 OF 2008 SUIT NO.1533 OF 2008 M/s M.S.Ship Breaking Pvt.Ltd .. Plaintiff Vs. M/s Areeb Rolling Mills Pvt.Ltd.. Defendants Mr.Cyrus Bharucha i.b Jayakars for Plaintiff Mr.V.S.Kapse 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. The submissions of the learned counsel for the appearing for the parties were heard on the last date. 2. The plaintiffs are seeking a money decree in the sum of Rs.33,98,998/- together with interest thereon at 24% p.a. from the date of the respective invoices till the filing of the suit. A further interest at the rate of 24 % p.a. is prayed for. 3. The plaintiffs carry on the business of ship breaking and are also traders in iron and steel 2 scrap. According to the case of the plaintiffs in the course of their business from time to time they sold to the defendants various quantities of Pi/Steel Scrap Fines and Chips of M.S. Reliance is placed on 8 invoices raised by the plaintiffs upon the defendants in respect of the aforesaid goods sold to the defendants. Particulars of the invoices have been set out in paragraph 3 of the plaint. According to the plaintiffs, in each invoice there is a stipulation for the payment of interest at the rate of 24% p.a. on the outstanding amount after the respective due dates. 4. According to the plaintiffs, the defendants received the goods without any demur as to its quality and quantity. However, in respect of invoice No.196 dated 11th March 2007 an objection was raised by the defendants as regards short supply to the extent of .205 metric tones. Reliance is placed on the receipts of acceptance of goods issued by the defendants against each invoice. It is stated that in case of invoice No.196 the defendants paid a sum of Rs.3,83,777/- as against invoice value of Rs.3,86,721/-. For the balance consideration payable to the 3 plaintiffs, the defendants issued separate cheques. Particulars of the said cheques have been set out in paragraph 6 of the plaint. According to the plaintiffs, the said cheques have been dishonoured and complaints under section 138 of the Negotiable Instrument Act, 1881 have been already filed. The plaintiffs have referred to the Company Petition No.55 of 2008 filed by them for winding up of the defendant company. The plaintiff pointed out that in the said Company Petition that the defendants claimed that they had addressed letters dated 20th April 2007, 23rd April 2007, 28th April 2007 and 22nd June 2007 to the plaintiffs stating therein that the goods were of sub standard quality and directed the plaintiffs not to deposit the said cheques. The case made out by the plaintiffs is that the said letters were not received by them. The plaintiffs contended that the courier receipts of the said the letters of the defendants produced in Company Petition show that the full postal address of the plaintiffs was not mentioned therein and the receipts did not bear the stamp of the plaintiffs evidencing the receipt of the said letters. 5. The learned counsel appearing for the 4 plaintiffs has taken me through the plaint and its annexures and the reply filed by the defendants. He pointed out that the Company Petition for winding up filed by the plaintiffs has been dismissed by this Court by an order dated 11th September 2008 and the plaintiffs have preferred an appeal against the said order. He submitted that the order passed in Company Petition will have no bearing on the decision of the Summons for Judgment. He pointed out that the observations made in the said order are for the limited purpose of considering the merits of the Company Petition. He submitted that the case made out by the defendants regarding the alleged sub standard quality of the goods is nothing but an after-thought. He submitted that even in the letters allegedly sent by the defendants, no details of the alleged sub- standard quality have been set out by the defendants. He pointed out that the case made out by the defendants of the blast at their furnace on 10th June 2007 has no relevance in as much as there is nothing on record to show that the blast was due to the use of the goods supplied by the plaintiffs to the defendants. Relying upon certain documents, he submitted that only with a view to accommodate the 5 defendants considering their precarious financial condition, the cheques were not immediately deposited by the plaintiffs. He submitted that the cheques were deposited by the plaintiffs only when the same were on the verge of getting time barred. He submitted that the defendants have no defence. 6. Learned counsel appearing for the defendants has invited my attention to order dated 11th September 2008 passed in Company Petition filed by the plaintiffs praying for winding up of the defendants. He submitted that this Court has recorded a finding that acknowledgments produced by the defendants of letters dated 20th April 2007, 23rd April 2007, 28th April 2007 and 22nd June 2007 show that the said letters were received by the plaintiffs. He submitted that there is a clear finding recorded that the acknowledgments on courier receipts suggest that the said letters were received by the plaintiffs. He submitted that the Company Court has observed that there is a bonafide dispute between the parties. He submitted that the cheques on which reliance was placed by the plaintiffs were presented by them to their bank nearly six months after receipt of the 6 same. He invited my attention to a letter dated 22nd June 2007 sent by the defendants to the plaintiffs. He submitted that the sub- standard quality of the material supplied by the plaintiffs resulted in blast in the factory premises of the defendants. The laboratory report received from the Industrial Metal Testing Laboratory shows that the goods supplied by the plaintiffs were of highly sub standard quality. He submitted that the said fact was brought to the notice of the plaintiffs by letter dated 22nd June 2007 and the cheques were deposited by long thereafter. He submitted that by letter dated 28th April 2007 the plaintiffs were informed that the defendants had stopped the payment of the cheques in dispute. He submitted that there is a valid and strong defence available to the defendants as it is the consistent case of the defendants that the goods were of sub standard quality and the same caused a blast in the furnace of the defendants. He submitted that there was a good defence available to the defendants and they are entitled to unconditional leave to defend the suit. 7. I have carefully considered the submissions. The perusal of the reply of the defendants shows 7 that there is no dispute regarding the receipt of the goods covered by the eight invoices relied upon by the plaintiffs. In respect of invoice no.196 dated 11th March 2007 it is alleged that there was a short supply of .215 metric tonnes. There is no dispute that eight cheques were issued by the defendants towards the amounts payable under the invoices and the said cheques have been dishonoured. Reliance is placed by the defendants on their letters dated 20th April 2007, 23rd April 2007, 28th April 2007 and 22nd June, 2007 sent to the plaintiffs. The contention of the plaintiffs is that the said letters were not received by them. Reliance was placed by the defendants on order dated 11th September 2008 passed in Company Petition filed by the plaintiffs in which it is observed that the courier receipts show that letters were received by the plaintiffs. However, in the said order it is clearly stated that the finding regarding receipt of the said letters has been recorded only for the purpose of Company Petition and the plaintiffs will be free to challenge the veracity of the courier receipts in appropriate proceedings. Therefore, the aforesaid finding recorded in the Company Petition would not help the defendants. 8 8. The courier receipts produced by the plaintiffs show that the same do not incorporate the postal address of the plaintiffs. There is a signature appearing in the acknowledgment column but it does not bear the rubber stamp or seal of the plaintiffs. There is no affidavit filed of the person who delivered the letters. A perusal of the letters dated 20th April 2007 and 23rd April 2007 allegedly sent by the defendants to the plaintiffs show that there is only a bald statement that the goods covered by invoice No.196, 198 and 202 were defective and disputed. Except for this bald statement, no particulars of the nature of the defects in the goods have been mentioned. Letter dated 28th April 2007 sent by the defendants simply alleges that the goods were of inferior quality. Reliance has been placed on letter dated 22nd June 2007 by the defendants. The relevant paragraph of the said letter reads thus : " Relying patiently on your assurances that the good material was on its way to reach our factory we waited hopefully for almost a month before tragically discovering that you had actually diverted the incoming goods towards another buyer of yours instead of sending it as promised to our unit at Murbad. 9 We are further shocked to check our laboratory report from Industrial Metal Test Lab that hinted at the partial contents of highly sub-standard quality and explosive nature that had resulted in the dangerous blast at our furnace on 10.6.07. You are entirely responsible for the great loss and tragedy inflicted on us because you neither supplied us the good material in time to keep our factory running nor did you bother about the usable good quality of the material that we need. " 9. At this stage, it must be stated that there is no documentary evidence on record to show that the alleged defective goods supplied by the plaintiffs were the cause of the alleged blast in June 2007. The goods were supplied to the defendants admittedly in April and May 2007. In the affidavit-in- reply, reliance has been placed on the test certificate dated 28th June 2007. From the perusal of the test certificate, at this stage, it is not possible to accept that the said test certificate relates to the goods supplied by the plaintiffs. The description of the sample in the said test certificate is " Burn and Waste Fires and Chips of M.S.Skull." Prima facie, it is very difficult to believe that the sample of the goods supplied by the plaintiffs was sent to the Laboratory. In any case there is nothing on record to show that the sample was collected in 10 presence of the representatives of the plaintiffs after notice to the plaintiffs. Therefore, the defence raised of sub-standard quality of goods has no merit. 10. Learned counsel for the defendants submitted that there were earlier transactions between the parties and in respect of those transactions the cheques received from the plaintiffs were presented for payment by the plaintiffs within a few days of the receipt of the same and in the present case the plaintiffs deposited the cheques long after the same was received and the cheques were deposited though the plaintiffs received letters from the defendants recording that the payment under the cheques was stopped by the defendants. It must be said here that there is no material on record to accept that any of the letters on which reliance had been placed by the defendants were received by the plaintiffs. 11. Reliance was sought to be placed by the defendants that the observations made in paragraph 3 of the order passed by this Court in Company Petition No.55 of 2008. It is obvious that the said observations are in the context of the merits 11 of the Company Petition and the same cannot be conclusive while deciding the Summons for Judgment on its own merits. 12. The receipt of goods by the defendant from the plaintiffs is admitted. The only defence is that the goods were of sub-standard quality. From the aforesaid discussion, it appears that the aforesaid defence is practicaly moonshine. However, this is a case where the defendants can be given an opportunity to prove the defence subject to condition of deposit of the principal amount. Therefore, this is a case where a conditional leave to defend the suit deserves to be granted in favour of the defendants. Conditional leave will have to be granted subject to the defendants depositing a sum of Rs.33,98,998/- in this Court within 12 weeks from today. 13. Hence, Summons for Judgment is disposed of by passing the following order : ORDER ORDER ORDER (1) Leave to defend the suit is granted to 12 the defendants subject to the defendants depositing in this Court a sum of Rs.33,98,998/- within a period of 12 weeks from today. (2) On the failure of the defendants to deposit the said amount within the stipulated period, the suit will stand decreed as prayed for in the Summons for Judgment. (3) If the amount is deposited within the stipulated time, the suit shall stand transferred to the list of commercial causes. Parties shall act on an authenticated copy of this Judgment. { A.S.Oka, J } A.S.Oka, J } A.S.Oka, J }