1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUMMONS FOR JUDGMENT NO.138 OF 2009 IN SUMMARY SUIT NO.100 OF 2009 Heavy Chemicals Corporation .. Plaintiff V/s Amar Remedies Ltd. .. Defendant Ms.Sneha Phene with Ms.Nandini Mayekar i/by M/s.Little & Co.for the Plaintiff. Ms.Anvee Mehta with Ms.Sanchari Nandi i/by M/s.Yusuf & Associates for Defendant. CORAM : R.G.KETKAR, J. DATE : 25th September, 2009. JUDGMENT: 1. The plaintiff has taken out this Summons for Judgment in Summary Suit No.100 of 2009 praying that the judgment be entered for the plaintiff in the suit against the defendant for Rs.13,43,312/- as set out in the plaint and for interest and costs. 2. The plaintiff instituted summary suit No.100 of 2009 under Order XXXVII of the Code of Civil Procedure, 1908 (for short CPC). The plaintiff is a proprietory concern carrying on business interalia of trading and importing variety of chemicals. The defendant is a 2 company incorporated under the provisions of the Companies Act, 1956 and its registered office is situate on S.V.Savarkar Marg, Praphadevi, Mumbai – 400 025. The plaintiff claims that the defendant had placed purchase orders for the supply of voltas CMC (Blasnose-9M-31-XF Grade), (for short the “said goods”), details whereof are as under:- Sr.No. Date Purchase Order No. Quantity (in Kgs) 1. 08.01.2007 ARL/HCC/RM/PO/392 1500 2. 12.02.2007 ARL/HCC/RM/PO/445 1500 3. 07.03.2007 ARL/HCC/RM/PO/469 2000 3. In the purchase orders, the defendant expressly specified that the delivery of the said goods was to be effected upon the defendant’s factory at Daman (UT) through Shree Hans Road Ways. Copies of the purchase orders are annexed at Exhibits A1 to A3 to the plaint. 4. Pursuant to the purchase orders, the plaintiff had supplied the said goods to the defendant. In support of this assertion the plaintiff has annexed copies of the Lorry Receipts issued by Shree Hans Road Ways which are at Exh.B1 to B4 to the Plaint. The plaintiff raised invoices for the goods supplied, upon the defendant. Said invoices were sent to the defendant and aggregate value of the invoices was to the tune of Rs.11,41,712/-, details whereof are as under:- 3 Sr.No. Date Invoice No. Quantity (in Kgs) Amount (Rs.) 1. 06.02.2007 01545 1000 266,760/- 2. 14.02.2007 01583 650 173,368/- 3 . 15.02.2007 01590 850 226,824/- 4. 12.03.2007 01673 2000 474,760/- 5. The plaintiff has annexed these invoices at Exh.C1 to C4 of the plaint. It is the case of the plaintiff that the defendant accepted delivery of the said goods supplied from time to time under the purchase orders. The defendant did not raise any dispute with regard to the delivery, sale price, quality and/or quantity of the supplies made under the said purchase orders. It is the case of the plaintiff that the said goods were retained by the defendant and utilised in the manufacture of the defendant’s final products. After several requests, the defendant issued cheque bearing No.001412 dated March 17, 2007 and paid a sum of Rs.2,66,760/-. Out of this amount, Rs.1,47,790/- was adjusted towards earlier outstanding bills and Rs.1,25,970/- was appropriated towards the invoice No.1545 at annexure C1. It is the case of the plaintiff that by letters dated March 22, 2007 and April 16, 2007, the plaintiff called upon the defendant to pay outstanding sum of Rs. 10,15,742/- towards the invoices raised on account of supply of the goods. Copies of those letters are annexed at Exhibits D and E to the plaint. Despite sending several reminders including the aforesaid 4 letters, the defendant neither replied the said letters nor paid the amount claimed by the plaintiff. Ultimately, the plaintiff caused to issue notice on June 27, 2007 calling upon the Defendant to pay Rs. 10,15,742/- together with interest thereon at the rate of 24% p.a.till payment. The copy of the notice dated June 27, 2007 is annexed at Exh.F to the plaint. Though the defendant received the said notice, the defendant did not give any reply to the said notice. The Plaintiff therefore instituted summary suit in this court on August 22, 2008. The particulars of the claim are set out at Exh.G to the plaint. The Plaintiff therefore prayed that the defendant be ordered and decreed to pay to the plaintiff a sum of Rs.13,43,312/- as per the particulars of claim set out in Exh.G with further interest at the rate of 24% p.a.from the date of the suit till payment, as also costs of the suit. 6. The summons for judgment issued by this Court on February 16, 2009 was received by the Sheriff of Mumbai on February 21, 2009. Summons was served on the Defendant on February 25, 2009 and on behalf of the Defendant, appearance was entered on March 3, 2009 i.e.within time. 7. The Defendant filed affidavit in support of leave to defend dated August 7, 2009 of Shri.Jagdish Nagpal, duly authorised representative of the defendant. The Defendant contended that the summons for judgment as well as the suit are false, frivolous, vexatious and 5 malafide exercise by the plaintiff with ulterior motive. The proceedings are initiated with a view to extorting huge sums of money from the defendant. The Defendant alleged that the plaintiff did not come to the court with clean hands and has sought to mislead and misguide the court in respect of the matters of vital importance. The defendant alleged that the plaintiff has misused and abused the process of court for its own gain. It was therefore submitted that summons for judgment deserves to be dismissed and unconditional leave to defend the suit deserves to be granted to the defendant. 8. The Defendant further contended that the said goods were dispatched from Bhiwandi to the defendant’s factory at Daman. The said goods were not dispatched from Mumbai to Daman as would be evident from the Lorry Receipts at Exh.B1 to B4 annexed to the plaint. It was therefore contended that this court has no jurisdiction to entertain and try the suit and the preliminary issue under section 9A of the CPC be framed, and the preliminary issue may be decided at the outset. It is further contended that from the assertions made in the plaint in general and Particulars of Claim in particular, clearly show that the claim is not based on (i) any written contract between the plaintiff and defendant (ii) any enactment for recovery of fixed sum of money in the nature of debt, (iii) a guarantee, (iv) any negotiable instrument. The suit is not for recovery of debt or liquidated damages. Thus the suit is not covered by any of the categories under Order XXXVII Rule 6 2 (a) and (b) of the CPC. It is further alleged by the defendant that the claim of the plaintiff is based merely on invoices at Exh.C1 to C4 to the plaint which have been raised arbitrarily and not as per the purchase orders placed by the defendant. The defendant asserted that it is not the case of the plaintiff that the defendant accepted the said invoices. The plaintiff will have to prove its claim based on the invoices and the said issue can be decided only after the plaintiff leading evidence. In substance the defendant contended that the suit is not covered under Order XXXVII Rule 2 of the CPC and consequently, the defendant is entitled to unconditional leave to defend the suit and the summons for judgment deserves to be dismissed. 9. The defendant has also submitted that the assertions made by the plaintiff themselves give rise to the several triable issues. Consequently, the defendant is entitled to grant of unconditional leave to defend and the suit requires to be transferred to the list of commercial causes as per Rule 231 of the High Court (Original Side) Rules. 10.The defendant further contended that whereas it is claimed by the plaintiff that the defendant had placed purchase orders amounting to total sum of Rs.13,31,200/-, on the other hand plaintiff had supplied goods worth Rs.11,41,712/- which is not in conformity with the 7 purchase orders placed by the defendant. Obviously there is discrepancy between what had been ordered by the defendant and what had been supplied by the plaintiff to the defendant. Since the plaintiff did not supply the goods as per the purchase orders, the defendants suffered huge losses on account of failure of the plaintiff in not complying with the contractual obligations. The defendant therefore reserved the right to raise counter claim in that behalf. 11.The Defendant also contended that the plaintiff admitted receipt of Rs.2,66,760/- from the defendant, out of which the plaintiff unilaterally adjusted a sum of Rs.1,40,790/- towards the purported earlier outstanding bills without furnishing any details in respect thereof. The defendant therefore submitted that the dispute arose between the plaintiff and the defendant as regards the quantity of the goods supplied and adjustment of amount paid by the defendant and consequently, the dispute is of commercial nature. The suit would be on the basis of running account and not of a summary nature. Finally the defendant contended that there is contradiction and inconsistency with regards to the contents of paragraph 7 on one hand and paragraphs 11 & 12 on the other hand of the plaint. On these among other grounds, defendant resisted the summons for judgment. 12.Considering the rival pleadings of the parties, following issues arise for my determination: 8 (1)Whether this court has jurisdiction to entertain and try the suit as contended by the defendant? (2)Whether the suit falls under Order XXXVII Rule 2 of the CPC? (3)If answer to Issue No.2 is in the affirmative, whether the plaintiff is entitled to leave to sign the judgment? (4)Whether the defendant is entitled to leave to defend unconditionally or subject to conditions as to payment in the court or furnishing security? (5)To what rate of interest the plaintiff is entitled to in the event of passing of decree? (6)What order? My findings thereon are as under:- (1) In the affirmative (2) In the affirmative (3) In the affirmative (4) In the negative (5) 24% being the contractual rate of interest 9 (6) As per the final order. 13.Issue No.1. Ms.Mehta, learned counsel for the defendant submitted that from the perusal of the Lorry Receipts at Exh.B1 to B4 it is abundantly clear that the said goods were supplied from Bhiwandi to the factory of the defendant at Daman. The said goods were not dispatched from Mumbai to Daman as falsely claimed in paragraph 14 of the plaint so as to give rise to any cause of action to the plaintiff to institute the suit in this court. On the other hand Ms.Phene, learned counsel for the plaintiff submitted that the purchse orders at Exh.A1 to A3 were placed by the defendant from its office situate at Prabhadevi, Mumbai to the plaintiff having its office at Chandan Street, Mumbai 400 003. She invited my attention to the invoices at Exh.C1 to C4 which are subject to Mumbai jurisdiction. She further submitted that the cause of action partly arose within the territorial jurisdiction of this court and therefore this court has jurisdiction to entertain and try the suit. . Having considered the rival submission, I am of the opinion that the submissions on behalf of the plaintiff deserve acceptance. In the first place, the purchase orders were placed by the defendant from Mumbai office to the plaintiff having office at Mumbai. Apart from this, the suit is based upon the invoices which are at Exh.C1 to C4, which clearly stipulate that any dispute is subject to the Mumbai 10 jurisdiction. The defendant has accepted delivery of the goods and in fact it made the part payment. It is too late in the day now to contend that this court has no jurisdiction to entertain and try the suit. The submission of the defendant that this court does not have jurisdiction to entertain and try the suit is devoid of substance and deserves to be rejected. Accordingly, I answer the Issue No.1 and hold that this court has jurisdiction to entertain and try the suit. 14.Issue No.2: . Ms.Mehta, learned counsel for the defendant submitted that the suit does not fall under Order XXXVII Rule 2 of the CPC, as the claim is not based on (i) any written contract between the plaintiff and defendant (ii) any enactment for recovery of fixed sum of monay in the nature of debt, (iii) the suit is not based on a guarantee, (iv) the suit is not for recovery of debt or liquidated payment (v) the suit is not based on any negotiable instrument. Thus the suit is not covered by any of the categories under Order XXXVII Rule 2 (a) and (b) of the CPC. On the other hand Ms.Phene, learned counsel for the plaintiff invited my attention to the following judgments:- (i) Lucky Electric Stores V/s.Ramesh Steel House, 1988 Madras Law Journal Reporter 187, 11 (ii)Jotsna K.Valia V/s.T.S.Parekh and Co., 2007 (3) Bombay Cases Reporter 772 (F.B.), (iii)Jatin Koticha V/s.VFC Industries Private Limited, 2008(2) Bombay Cases Reporter 155. . In the case of Lucky Electric Stores (supra), the learned Chief Justice Shri.M.N.Chandurkar, while considering the submissions made on behalf of the defendant that the plaintiff was required to be put to strict proof of the fact that the suit was based on a written contract and invoices by itself was not a contract, observed in paragraph No.12 that it would be too superficial view to hold that no written contract exists in the instant case. After quoting relevant part of Order XXXVII of the CPC, the learned C.J., observed as under: “Under Cl.(b), under Rule 1(2), a summary suit can be filed to recover a liquidated demand in money payable by the defendant, arising on a written contract. What is necessary for the purposes of this case is that a liquidated demand in money must arise on a written contract. A written contract or a contract in writing need not always be a contract signed by both parties. The Court of Appeal in T.A.RUF AND COMPANY LTD.v.PAUWELS, (1919) 1 K.B. 660 was called upon to construe the words “contract in writing”. The facts of that case were that by contract dated 28th February, 1918 Pauwels had sold to Ruf & Company a quantity of soap. The terms of the contract were contained in a sold note signed only by Pauwels. At the foot of the sold note were the words “Please confirm the above”. A dispute arose under the contract as to non- 12 delivery of part of the soap and was referred to arbitration in accordance with the clause contained in the note. In the award made by the arbitrators there was a recital that “by a contract in writing made by Alphonse Pauwela with T.A.Ruf & Co.Ltd., dated the 28th day of February, 1918, Alphonse Pauwels contracted to sell and deliver a certain quantity of soap to Ruf & Co., at a certain price and that a dispute had arisen which was referred to arbitration. By the award which was against the purchasers the purchasers were directed “to pay the costs of the reference, arbitration and award, including 361.15s.our fees and expenses in regard to the said arbitration, as we consider that their conduct in not confirming in writing the contract was probably the cause of the dispute”. This award was sought to be set aside on the ground that “It is bad in law and shows error on its face and shows further that there was no legal contract binding on the parties”. The Divisional Court ordered the award to be set aside on the ground that on the face of the award the arbitrators had treated as a contract in writing binding upon both parties that which was signed by one of the parties only and was therefore not a contract in writing. Ruf & Company appealed against this Judgment. Warrington, L.J.in his judgment referred to the fact that though written confirmation was not sent by the purchasers, the arbitrators had come to the conclusion that there was a parol acceptance by Ruf and Co.of the terms of the sold note, and observed as follows:- “Taken in conjunction with the rest of the award they seem to me to indicate that the arbitrators found that Ruf & Co., had confirmed the contract though not in writing, and if so they may quite properly refer to the contract as a “contract in writing”. Although the memorandum of it was signed by one party only”. Duke, L.J.in a separate judgment observed at page 670:- “As to the suggestion which was made that the words “contract in writing” import a contract made by means of a writing or writings signed by both parties, I do not think the words 13 necessarily have that meaning. A document purporting to be an agreement may be an agreement in writing sufficient to satisfy the requirements of an Act of Parliament though it is only verified by the signature of one of the parties: IN RE JONES (1895) 2 Ch.719. Here the question is one of a bargain for the sale of goods. I doubt whether the objection which is here set up to avoid a business transaction would have been sufficient to support a special demurrer before the passing of the Common Law Procedure Acts”. The appeal was allowed and the award was restored. There is, therefore, sufficient authority to indicate that even though the invoice of the bill is not signed by the other party to the contract, as a result of the acceptance of the goods delivered in pursuance of the invoice the demand for the price of goods admittedly received by the purchaser on the basis of the invoice must be held to arise on “written contract”. . The judgment of Lucky Electric (supra) was considered by the Full Bench of this Court in the case of Jyotsna K.Valia (supra). In paragraph No.16 of the Full Bench decision, section 10 of the Indian Contract Act, 1872 and meaning of “written contract” in Black’s Law Disctionary (8th Edition) was considered. After considering the said judgment, it was observed as under:- “A written contract therefore need not be evidenced n a single document written by the parties since the written document can be by exchange of documents in writing between the parties. On the other hand an implied contract would arise by the acts of parties to indicate an implied contract. A written contract, contemplated under Order XXXVII need not be necessarily signed by both the parties. However, the writing must be such to arrive at a 14 conclusion that an agreement certainly has been brought into existence and that the claim made under such an agreement ought to be indisputable. In (Jugal Kshore Rameshwardas Vs.Mrs.Goolbai Hormusji), AIR 1955, Supreme Court, 812, while construing section 2(a) of the Arbitration Act, 1940, the Supreme Court observed that it is well settled law that to constitute an arbitration agreement in writing it is not necessary that it should be signed by the parties and it is sufficient if the terms are reduced to writing and the agreement of the parties is established. In the Arbitration Act of 1966, section 7 specifically provides that the arbitration agreement shall be in writing.” . The Full Bench also considered the decision of the learned Single Judge of this Court in Jayashree Chemicals V/s.Esskay Dying and Printing Works in Summons for Judgment No.23 of 1976 in Suit No. 1405 of 1975 decided on April 19, 1976. . In the case of Jatin Koticha the learned Single Judge considered the judgment of Lucky Eletric (supra) and unreported judgment of the learned Single Judge in the case of Jayashree Chemicals (supra), as also the judgment of the learned Single Judge in the case of J.K.Enterprises V/s/Pruthviraj Ratanchand Mehta and Anr., 1990 Mh.L.J.1329. The learned Single Judge also referred to section 70 of the Contract Act and held that, in that case it clearly showed that the goods were delivered by the plaintiff to the defendants and defendants enjoyed the benefit of that, and therefore, were liable under Section 70 of the Contract Act to pay compensation in respect 15 of the goods to the plaintiff. Thus the suit must be treated as summary suit since it is based on an enactment. . Coming to the facts in the present case, it is not disputed that the plaintiff supplied goods to the defendant. The goods were received by the defendant. The Defendant never raised any dispute with regard to the delivery, sale price, quality and/or quantity of the supplies made under various purchase orders. In fact one of the terms and conditions of the invoices viz.No.6 was to the following effect:- “Objection if any should be raised within two days from the receipt of this invoice otherwise it will be considered as accepted by you.” . The goods supplied by the plaintiff were retained by the defendant. Not only that the defendant did not give any reply to the communications dated March 22, 2007 and April 16, 2007. The defendant also did not reply to the notice caused to be issued by the plaintiff through the Advocate on June 27, 2007. The suit is based upon invoices at Exh.C1 to C4. There was a parole acceptance by the defendant of the terms and conditions of the invoices. The plaintiff delivered the goods to the defendant not intending to do so gratuitously and the defendant enjoyed the benefit thereof. The defendant is bound to make compensation to the plaintiff in respect of the goods so delivered. Thus the law casts obligation on the defendant 16 enjoying the benefit of non gratuitous act as contemplated under Section 70 of the Indian Contract Act. In the light of the aforesaid discussion, my answer to Issue No.2 is in the affirmative and the suit clearly falls under Order XXXVII Rule 2 of the CPC. 15.Issue Nos.3 and 4: . Issue Nos.3 and 4 can conveniently be decided together. While answering these issues, one has to bear in mind as to whether the defendant has disclosed such facts that are sufficient to entitle him to defend. If the defendant makes out such facts the next question is whether he should be granted leave to defend unconditionally or upon such terms as may appear to the court to be just. One has to further examine whether the facts disclosed by the defendant indicate that he has substantial defence to raise or that defence intended to be put up by the defendant is frivolous and vexatious and finally whether the plaintiff should be permitted to defend as to the whole or any part of the claim as contemplated under Order XXXVII Rule 3 (5) & (6) of the CPC. In my opinion, the only dispute raised by the defendant is in paragraphs 7 and 9 of the affidavit as to failure of the plaintiff to furnish any details with respect to adjusting Rs.1,47,190/- out of the sum of Rs.2,66,760/-. It is relevant to note that by notice dated June 27, 2007 the plaintiff after setting out four invoices in question stated that the sum of Rs.1,25,970/- was paid to the plaintiff and the amount 17 of Rs.10,15,742/- remained outstanding. Though the defendant received this notice, no reply was given disputing the correctness of the statements made therein. The present suit is instituted for recovery of Rs.10,15,742 and the interest thereon at the rate of 24% p.a.on the basis of invoices issued by the plaintiff and duly accepted by the defendant. In the case of Kiranmoyee Dassi and Another V/s.Dr.J.Chatterjee, AIR (36) 1949 Cal.479, the suit was for ejectment, arrears of rent and mesne profits until the delivery of possession of the premises. One Bibhuti Bibhusan Mukherjee, since deceased, was the owner of a half share in premises No.17, Adwaitya Mullick Lane, having purchased the same under a deed of conveyance dated June 16, 1937. The plaintiff Kiranmoyee Dassee became the owner of