CS(OS) No. 2635 of 2000 Page 1 of 36 * IN THE HIGH COURT OF DELHI AT NEW DELHI + CS(OS) No.2635 of 2000 % Date of Decision: 02. 07.2010 Vasudeva Publicity Service & Another …. Plaintiffs Through Mr.Ravi Kant Chaddha, Sr. Advocate with Ms.Nidhi Lal, Advocate. Versus MRF Ltd. …. Defendant Through Mr.C.M. Oberoi with Ms.Surekha Raman, Advocates CORAM: HON’BLE MR. JUSTICE ANIL KUMAR 1. Whether reporters of Local papers may be allowed to see the judgment? YES 2. To be referred to the reporter or not? NO 3. Whether the judgment should be reported in the Digest? NO ANIL KUMAR, J. * 1. The plaintiff has filed this suit for recovery of Rs.58,43,756/- as the principal amount and Rs.20,84,176/- as interest, a total amount of Rs.79,27,932/- from the defendant on account of advertisement of defendant displayed through the plaintiff. 2. The plaintiff contended that he is engaged in the business of display of outdoor publicity/advertisements in Delhi and surrounding areas. According to the plaintiff, defendant had been availing the CS(OS) No. 2635 of 2000 Page 2 of 36 services of the plaintiff for display of his advertisements. The defendant had allegedly approached the plaintiff in January 1998 for display of advertisements on traffic islands on Bharion Marg Junction and Nehru Place Crossing and after negotiations, the plaintiff agreed to display defendants‟ advertisements at two traffic islands, Mathura Road, Bhairon Marg Junction near Pragati Maidan for one year from 15th January, 1998 to 14th January, 1999 and on four traffic islands at Nehru Place for one year from 1st February, 1998 to 31st January, 1999 at a monthly rate of Rs.50,000/- per island plus 5% service tax. 3. After settlement of all the terms for display of advertisement of the defendant and starting displaying the advertisements, plaintiff sent agreement/contract dated 2nd April, 1998 to the defendant to sign and return the same for records, as a concluded contract between the parties had already come into existence pursuant to which the plaintiff had already started displaying defendant‟s advertisements at sites. 4. The plaintiff categorically asserted that as per the practice, on oral instructions of the defendant, plaintiff used to perform work and written contract or instructions were sent later on, which was only a formality on the part of the defendant. It is contended that later on the period of contract was extended from 12 months to 19 months, i.e., CS(OS) No. 2635 of 2000 Page 3 of 36 from 15th January, 1998 to 14th August, 1998 as the first term and 15th August, 1998 to 14th August, 1999 as the second term. The terms and conditions which were agreed were specifically incorporated in the contract dated 2nd April, 1998. Since the period of contract was extended, therefore, the plaintiff send another contract form dated 21st September, 1998 for signatures and for keeping the contract in his record. 5. The plaintiff contended that his work was appreciated meetings which were held pursuant to plaintiff's letter dated 16th January, 1999. The contract was extended by the defendant till 14th January, 2000 and the monthly rent was re-negotiated at Rs.45,000/- per month per island plus service tax thereon. Consequent to modification of the rate at Rs.45,000/- per island, fresh contract forms dated 2nd February, 1999 were also sent for the signatures and for record by the plaintiff. 6. The plaintiff categorically asserted that during the period of display, the defendant was kept abreast of the same by addressing letters from time to time and also sending photographs of the display. The plaintiff also raised bills in respect of the advertisements displayed pursuant to contracts dated 2nd April, 1998; 21st September, 1998 and 2nd February, 1999. CS(OS) No. 2635 of 2000 Page 4 of 36 7. The plaintiff pleaded that in consonance with the terms and conditions already agreed and entered, the contracts dated 2nd April, 1998, 21st September, 1998 and 2nd February, 1999 were sent to the defendant for signatures and keeping the contract for the purposes of record. The defendant, however, sent a letter dated 15th March, 1999 sending the contract only for one traffic island at Nehru Place. The other contracts sent by the plaintiff incorporating the terms and conditions agreed between the parties for other islands were not sent back by the defendant, though the plaintiff had already displayed the advertisement on the sites and the defendant's office at New Delhi had also been aware of it and had not objected to the display of advertisements. 8. Since the plaintiff had already displayed the advertisements in consonance with the terms and conditions agreed and the written contracts were sent subsequently for signatures incorporating the terms and conditions were not returned duly signed, therefore, the plaintiff protested and made oral and written representations and meetings were held between the parties in which the plaintiff was assured that the matter shall be looked into. However, later on at the request of the defendant, the plaintiff discontinued and removed the display of CS(OS) No. 2635 of 2000 Page 5 of 36 defendant‟s advertisements from two traffic islands at Mathura Road and three traffic islands at Nehru Place on 20th April, 1999. The plaintiff also raised bills in respect of six sites from time to time which were received by the defendant and were also acknowledged. Since the amounts of the bills raised by the plaintiff were not paid, a notice dated 21st February, 2000 demanding an amount of Rs.58,43,756.85 paisa with interest thereon was sent. The notice was received by the defendant and was replied by reply dated 15th March, 2000 denying defendant‟s liability to pay the amount for the advertisements displayed by the plaintiff. On failure of the defendant to make the payments, the plaintiff has filed the present suit for recovery of Rs.79,27,932/-. 9. The claim of the plaintiff is contested by the defendant contending inter alia that there was no concluded contract between the parties as the defendant did not give his consent/approval for contract dated 2nd February, 1999 and the defendant did not approve the contract for six traffic islands, namely, four at Nehru Place and two at Mathura Road. It was contended that the policy and practice of the defendant in respect of display of advertisement with agencies was that the advertisements agency was to display advertisements only after prior approval of the defendant. In these circumstances, it is asserted that the defendant did not send back the fresh contract form after signing CS(OS) No. 2635 of 2000 Page 6 of 36 and when the plaintiff wrote a letter dated 6th January, 1999 seeking whether defendant was interested to retain display after 5th January, 1999, further meetings took place between the parties and duration of display was agreed to be extended for a total period of two years from15th January, 1998 to 16th January, 2000 at Rs.45,000/- per month plus 5% service charges for one site only. The defendant asserted that contract form dated 2nd February, 1999 in respect of display at Nehru Place which was signed and sent back under the cover of letter dated 15th March, 1999. 10. The defendant has contested the claim on the ground that plaintiff has no right or cause of action to maintain the suit as there was no concluded contract between the parties and the allegations regarding alleged discussions, understanding and agreement/approval of the display was denied. The contract form dated 2nd April, 1998 and 21st September, 1998 were also denied. It was pleaded that agreements/contract dated 2nd April, 1998, 21st September, 1998 were not discussed/negotiated or approved and, therefore, there was no question of extending the period of contract by a fresh contract. It was asserted that only one contract dated 2nd February, 1999 was signed in respect of one traffic island at Nehru Place crossing for two years and CS(OS) No. 2635 of 2000 Page 7 of 36 the agreement was not for four islands which was forwarded to the plaintiff on 15th March, 1999. 11. On the basis of the pleadings of the defendants accepting the agreement dated 2nd February, 1999 for display of advertisement of one traffic island at Nehru Place crossing for Rs.45,000/- per month, on an application of the plaintiff, an amount of Rs.11,10,186/- was paid to him pursuant to order dated 24th May, 2002 after deducting an amount of Rs.23,814/- towards TDS. 12. On the basis of the pleadings and the documents of the parties, the following issues were framed on 14th February, 2003:- “1. Whether the plaintiff is entitled to any amount claimed in suit and if so to what amount? OPP 2. Whether the plaintiff is entitled to interest? If so on what amount, at what rate and for what period? OPP 3. Whether there exists any concluded contract pertaining to the advertisement/displays for which amounts are being claimed by the plaintiff? Onus on parties.” 13. The plaintiffs examined Shri Satish Vasudeva, plaintiff No.2 and proprietor of plaintiff No.1 and filed his deposition on affidavit dated 19th September, 2004. Additional deposition by an additional affidavit of Shri Satish Vasudeva dated 24th February, 2005 was also filed. On CS(OS) No. 2635 of 2000 Page 8 of 36 behalf of defendant, the deposition of Mr.A. Rodricks, General Manager, was filed on affidavit dated 17th July, 2006. However, the written statement on behalf of defendant was signed and verified by Shri K. Jagdishwar Rao who was not examined by the defendant. The affidavit of Mr.Anthony Rodricks was exhibited as DW1/A. 14. Issues No.1 and 3 are `Whether the plaintiff is entitled to any amount claimed in suit and if so to what amount?‟ and `Whether there exists any concluded contract pertaining to the advertisement/displays for which amounts are being claimed by the plaintiff?‟ Both the issues are considered together. 15. Learned senior counsel, Mr.Chadha for the plaintiff, has very emphatically contended that plaintiffs have proved various facts and the documents which clearly show that as per the practice, the terms and conditions used to be settled between the parties and the advertisements were displayed and thereafter, written contract incorporating the terms and conditions for display of advertisements used to be sent to the defendant for their formal signatures and for the record of the parties. According to the plaintiffs, the defendant had been returning the signed contract later on after commencement of display of advertisement by the plaintiffs. It is asserted that no instance has been CS(OS) No. 2635 of 2000 Page 9 of 36 shown by the defendant that the advertisements were displayed only after signing of the agreements in writing. The learned counsel contended that even as per the testimony of DW1, Shri Rodricks, the DM of the defendant company (Mr. Bhattacharya), had given oral recommendations to the Head Office of his company recommending the sites. In the circumstances, it is asserted that the plea of policy and practice of prior approval for display of advertisement as has been raised by the defendant, is an afterthought only to counter the claim of the plaintiffs. The emphasis has also been laid by learned senior counsel on Exhibit P5 and PW1/64A which is a contract dated 21st April, 1992 for the period from 1st April, 1992. Similarly reliance has also been placed on Exhibit DW1/P1 and Exhibit DW1/P2 which are contracts dated 17th January, 1994 for the period 1st January, 1994 onwards which was returned after signing on 28th April, 1994 though the agreement commenced on 1st January, 1994. Reliance has also been placed on Exhibit DW1/P3 and Exhibit DW1/P6 which is the contract dated 12th August, 1992 for the period 1st September, 1992 onwards which was signed and returned on 28th April, 1993 to the plaintiff for the purposes of record. Similarly, Exhibit DW1/P4 and DW1/P7 is a contract dated 17th January, 1994 for the period 1st January, 1994 onwards which was signed and returned to the plaintiffs on 28th April, 1994. Exhibit DW1/P5 and Exhibit DW1/P8 is a contract CS(OS) No. 2635 of 2000 Page 10 of 36 dated 14th April, 1994 for the period 1st April, 1995 onwards which was signed and returned on 3rd January, 1995. 16. From these contracts of the earlier periods, it is apparent that the display of advertisements started earlier then the date on which the written contracts were signed by the defendant and returned to the plaintiffs. The defendant had made payments for these agreements. These documents belie the statement of Shri Rodricks, DW1, in his affidavit dated 20th July, 2006 that the policy and practice of the defendant was that the advertisements could be displayed after written approval/execution of agreement by the defendant from the Head Office. The said witness though has emphasized about the policy of the defendant company, however, no such policy has been produced and proved by the defendant rather DW1 in his cross-examination on 11th October, 2006 admitted that there is no written policy but it is a matter of practice. Though the said witness deposed that plaintiffs were aware of such a policy but how the plaintiff had been aware of such a policy has not been answered by the said witness of the defendant or anyone else on behalf of the defendant. The said witness did not state that he had disclosed about the said policy of the defendant to the plaintiff or to any of their representatives or even named any other person of the employee of the defendant who had disclosed the said policy of the CS(OS) No. 2635 of 2000 Page 11 of 36 defendant to the plaintiffs or to any of plaintiffs‟ representatives. He did not depose as to who had disclosed the said policy of the defendant to the plaintiffs. No documents has been produced by the defendant to show and establish that the defendant had a policy that the advertisements were not to be displayed on account of oral instructions of its employees and representative or on account of oral agreement arrived at between the plaintiffs‟ and defendant's representatives at Delhi. The defendant has not proved that the officials at the branch office were not competent to negotiate the terms and conditions for display of advertisement or that the defendants‟ officials at its branch office at Delhi exceeded their authorization or the scope of their work. The DW1 rather admitted in the cross-examination that it was the normal practice of the defendant company to make oral representations or offers to the plaintiffs through company representatives at Delhi. 17. When confronted with the letter dated 28th April, 1994 which is exhibit DW1/P1 by which the agreement for display of advertisement dated 17th January, 1994 was signed on 28th April, 1994 and other documents dated 28th April, 1993; 28th April, 1994 and 3rd July, 1994 which were exhibited DW1/P3 to DW1/P5 and documents exhibited as PW1/64A, 65A and 65B, the said witness rather admitted that it was the normal practice of the defendant company to make representations CS(OS) No. 2635 of 2000 Page 12 of 36 and offers orally. If that be so, the defendant cannot succeed in his plea that as per the policy and practice of the company prior written approval for display of advertisements was adhered to and it was the practice of the company and the plaintiffs were aware of it. Rather it has been established that plaintiffs used to commence display of advertisement much before the signing of the written contract incorporating the terms of display of advertisements on oral instruction and the terms agreed between the parties. 18. Learned counsel for the plaintiffs has relied on AIR 1968 SC 1028, Kollipara Sriramulu v. T. Aswathanarayana & Others; 79 (1999) Delhi Law Times 1, J.K. Industries Limited v. International Cooperative Alliance Domus Trust and others; 1991 (1) Arbitration Law Reporter 154, Ram Krishan Singhal v. Executive Engineer; 1986(1) Arbitration Law Reporter 428, M/s.Prahlad Singh Mulakh Raj v. Union of India & Others; AIR 1982 Calcutta 167, Nanalal madhavji Varma v. State of Andhra Pradesh; AIR 1999 SC 2544, K.S. Satyanarayana v. V.R. Narayana Rao; 2002 (3) Arbitration Law Reporter 235, Hindustan Construction Corporation v. Delhi Development Authority and another; 132 (2006) Delhi Law Times 196, Neha Bhasin v. Anand Raaj Anand & another and 73 (1997) Delhi Law Times 374, Old World Hospitality Pvt. CS(OS) No. 2635 of 2000 Page 13 of 36 Ltd. V. India Habitat Centre in support of pleas and contentions raised on behalf of plaintiff. 19. In Kollipara Sriramulu (supra), The Supreme Court while considering whether there was an oral agreement or not, had held that a mere reference to a future formal contract does not prevent the existence of a binding agreement between the parties unless reference to a future contract is made in such terms as to show that the parties did not intend to be bound until a formal contract is signed. Thus whether there had been an oral contract or not would depend upon the intention of the parties and special circumstances of each particular case. In case of plaintiffs, despite formal agreements not signed between the parties, the advertisements had been displayed which were accepted and the payments were made in previous dealings between the parties which has been established by the plaintiffs. In these circumstances continuation of same practice i.e display of advertisements pursuant to conclusion of oral agreement cannot be ruled out completely. The defendant has not established that he was not bound unless the formal contract was signed between the parties. From the evidence led by the parties, it is rather established that pursuant to oral instruction by the branch office of the defendant the advertisement were displayed. CS(OS) No. 2635 of 2000 Page 14 of 36 20. In Ram Krishan Singhal (supra), a single Judge had held that it is not necessary that a formal contract should have been signed by both the parties before a contract could be concluded, as a contract can come into existence by exchange of letters. In this matter, a tender for construction of road was accepted and general conditions of contract contained an arbitration clause and for the arbitration agreement it was held that even if it was not signed by both the parties, there was a written agreement. In M/s Prahlad Singh Mulak Raj (supra), relied on by the plaintiffs the tender had contained an arbitration clause and though no formal contract was signed, it was held that there was a concluded contract between the parties and the arbitration agreement could be filed in the Court and the disputes could be referred to the Arbitrator. In Nanalal Madhavji Varma (supra), it was held by a single Judge of Calcutta High Court that though the contract was in contravention of Article 299 (1) of the Constitution of India yet the compensation could be granted under section 70 of the Contract Act. In Neha Bhasin (supra), claimant had sung for the defendant company which songs were recorded and it was held that the claimant had not sung for the company gratuitously. The company had enjoyed the benefits of the recordings of the claimant and used the same in cassettes and CDs commercially. Despite no formal contract between CS(OS) No. 2635 of 2000 Page 15 of 36 the parties, the company had the option not to use her recordings at all. But since the company used the recordings of the claimant, quasi contract came into existence and therefore, all the ingredients of section 70 of the Contract Act were satisfied and the company became liable to compensate the claimant. 21. This has been established by the plaintiffs that they had been displaying the advertisements for the defendant company for about 10 to 12 years prior to the transaction in the dispute and the advertisements were displayed on the oral instructions of the officials of the branch office of the defendant company at Delhi and written agreements were signed later on for the purposes of record. The Plaintiff no.2 in his deposition has categorically contended that in respect of disputed advertisements the defendant had insisted for immediate display of his advertisement on the traffic islands at Mathura Road and Nehru Place in view of the Auto Expo (Exhibition) which was held at Pragati Maidan at New Delhi. The contract forms were sent to the defendant which were later on not signed by the defendant. The contract forms also stipulates specifically “To sign and return for the records”. For one site where the advertisement of defendant was displayed from 1.2.1998 along with other sites, the written approval Ex P/26 had been given on 15th March, 1999. In the circumstances, as has CS(OS) No. 2635 of 2000 Page 16 of 36 also been held earlier that the plea of the defendant of prior approval and any such practice and procedure has not been established by the defendant. 22. On the preponderance of probabilities from the evidence on the record it also cannot be inferred that the plaintiffs did not display advertisements of the defendant at all the sites and only at one site which had been admitted by the defendant later on and the amounts in respect of the same had been paid to the plaintiffs during the pendency of the present suit. From the record it is apparent that the plaintiffs had been sending letters and bills in respect of all the sites. It is not acceptable that the defendant would have received the letters and bills only in respect of one site and not in respect of other sites, as all the letters and bills had been sent by the plaintiff for all sites simultaneously. The defendant in its deposition on affidavit dated 17th July, 2009 in paragraphs 9 and 10 has admitted that certain bills were received by him in respect of advertisements displayed by the plaintiffs at the traffic crossing at Nehru Place, which were, however, not in accordance with the contract and had not been approved by the defendant. In the cross examination be defendant attempted to explain that these bills were for earlier period. This explanation of the defendant cannot be accepted because if these bills were for earlier period they CS(OS) No. 2635 of 2000 Page 17 of 36 could not be contrary to the contract as the earlier bills had been paid by the defendant. Therefore, these bills were for the period and for the advertisements which are disputed by the defendant. The plaintiffs have also produced the copies of relevant pages of the dispatch register whereas the defendant has not produced anything to rebut the documents produced by the plaintiff. If the defendant had been receiving the letters and bills for all the sites, then why no objection was raised earlier by the defendant has not been explained. The case of the defendant is not that the inspection was carried out by its officials and only one advertisement which is later on admitted by the defendant was found to be displayed, and other advertisements were not displayed. Considering the entirety of the evidence led on the record it cannot be inferred that the defendant had not received the correspondence and bills from the plaintiffs. In the circumstances, why the defendant did not object to display of other advertisements by the plaintiffs has not been explained satisfactorily. 23. The plaintiffs in the circumstances have been able to prove that that they had displayed the advertisements of the defendant on six sites. If the plaintiff had displayed the advertisements of the defendant on all the six sites, then whether the plaintiffs would be entitled to claim amounts for display of advertisement on other sites or not as for one site it is admitted by the defendant and the amount has been paid CS(OS) No. 2635 of 2000 Page 18 of 36 during the pendency of the suit. The learned counsel for the Plaintiffs has also contended that even if it is inferred that there was no concluded agreement between the parties, as it has been established that the advertisements were displayed without any objection from the defendant