THE HON’BLE SRI JUSTICE N.R.L.NAGESWARA RAO C.C.C.A.73 OF 2001 JUDGMENT: The defendant in O.S.No.594 of 1993 on the file of the court of VII Senior Civil Judge, City Civil Court, Hyderabad is the appellant herein. The suit was filed for recovery of a sum of Rs.2,18,200/- with interest and for the relief of permanent injunction restraining the defendant from running the unit without installation of a Programmable Temperature Controller(PTC). The allegations in para.3 of the plaint as under:- “The plaintiff is a firm carrying on business of manufacture and sale of electrically heated shuttle kilns. The defendant approached the plaintiff for supply of 2 electrically heated shuttle kilns. The defendant placed an order dated 8-8- 91 and 20-8-91 on the plaintiff for supply of the above equipment. The above order was based on the offer given by the plaintiff to the defendant on 4-7-1991. Subsequent to the offer, the defendant and the plaintiff had repeated discussions and ultimately the order dated 8-8-91 and 20-8-91 was placed by the defendant on the plaintiff. At the time of the offer, the plaintiff had indicated two alternatives for temperature control viz., Blind controller (a) with excess temperature control or (b) with a programmable temperature controller. After studying the proposed working of the Kilns the defendant decided to go in for the 2nd alternative viz., Blind Controller with a Programmable Temperature Controller. The defendant placed an order for supply of PTC directly on a third party viz., M/s.A-1 Electronics at Bangalore and paid an advance. Accordingly the plaintiff reduced his cost of supply of machinery as per the order by Rs.15000/- being the cost of the excess Temperature controller which was originally to have been supplied by the plaintiff. The plaintiff completed the erection of the shuttle kiln and the laboratory kiln and the plaintiff has been repeatedly attending to the minor complaints made by the defendant in respect of the working of the equipment. The defendant for reasons best known has not acquired the PTC as originally decided. Any effort made by the plaintiff to impress upon the defendant that the working of the equipment without the PTC could cause havoc to the machine causing short-circuit blow off and damage the costly equipment, has proved of no avail. Even the supplier of the said PTC has informed the defendant under advice to the plaintiff that working of the equipment without the PTC would not only damage the costly equipment causing short- circuit/blow off but also create erratic results, since there is no proper control on the equipment. It is needless to say that the Kiln is supposed to work at 1200 C and any working without proper temperature controller may lead to not only haphazard results but also create damage to the machine. The plaintiff has demonstrated to the defendant to the satisfaction of the defendant and the APSFC which is the Financier of the project that the equipment is working well. This demonstration has been made on several occasions by way of trial runs which have been taken up without the PTC, as they are merely trial runs. Out of the total cost of the equipment as per the order placed, the defendant is still due and payable a sum of Rs.2,18,200/- to the plaintiff. The defendant with a view to avoid payment of this amount to the plaintiff has taken all sorts of untenable and irrational pleas. The plaintiff has been repeatedly explaining to the defendant that non-installation of PTC would yield erratic results and also cause damage as stated above to the costly equipment; but the defendant is not taking due attention to this and is harping repeatedly on the issue that the plaintiff has not completed his obligations under the contract. Plaintiff submits that all obligations on his side in the said contract have been completed. In fact, earlier the plaintiff had visited the factory of the said A-1 Electronics for inspection of the PTC. The plaintiff made modifications to his equipment to ensure that the PTC and the Kilns Synchronise with each other.” In spite of demand, the defendant has not paid the amount. The substance of the claim of the defendant is that the contract was not performed within time. Equipment always supplied was not of standard quality and they did not function properly and thereby the defendant was put to loss. Inspite of repeated demands, the plaintiff has not complied with the conditions of contract. Several letters were written without any proper response from the plaintiff. These installations fail because of the fault of the plaintiff and the lack of efficiency on the part of the plaintiff. The plaintiff has also failed to provide the bank guarantee as agreed upon. It was further pleaded that the temperature control system was not installed and thereby the defects occurred. The defendant has to purchase PTC from A-1 Electronics, Bangalore by paying Rs.15,000/-. The defendant is entitled to deduct the money and therefore the suit is liable to be dismissed. There are several allegations which are not very much relevant for the purpose of decision in the suit. On the basis of the above pleadings, the following issues have been framed for trial:- 1. Whether the plaintiff is not entitled to the suit amount unless the plaintiff completes the contractual obligations mentioned in the written statement? 2. Whether the plaintiff is entitled to claim interest? 3. Whether the defendant is entitled to exemplary costs? 4. To what relief? On behalf of the plaintiff, PW.1 was examined and marked Exs.A-1 to A-47. On behalf of the defendant DW.1 was examined and marked Exs.B-1 to B-48. After considering the evidence on record, the learned Senior Civil Judge decreed the suit of the plaintiff for recovery of Rs.2,18,200/- and aggrieved by the said judgment the present appeal is filed. Now the points that arise for consideration are:- 1. Whether the plaintiff is entitled for the suit amount as granted by the lower court? 2. Whether the suit is not maintainable? 3. Whether the judgment and decree passed by the lower court is legal and sustainable? POINTS:- The learned counsel for the appellant contends that there was delay on the part of the plaintiff in commissioning of the unit and the equipment supplied was not proper and the Kilns did not function properly and the plaintiff has failed to give the promised bank guarantee and inspite of repeated demands, did not attend to the functioning of the installation and therefore the plaintiff is not entitled for the suit amount. It is also further pleaded that since the plaintiff is a registered firm, the suit is not maintainable under Section 69(3) of the Partnership Act. On the other hand, the learned counsel for the respondent contends that none of the contentions raised by the appellant are not tenable and the judgment of the lower court is legal and sustainable. It is to be noted that there is no dispute between the parties that there was a contract for supply of the machinery to the defendant and it is also not in dispute that the goods worth Rs.11,06,250/- were supplied and the balance amount claimed in the suit was detained by the defendant. The contention of the defendant is that there were defects in the goods and the working condition of the machinery was not proper and the plaintiff has failed to supply “P.T.C” and there was discrepancy for the working of the system. The learned Senior Civil Judge considered Ex.A- 6, which is the acceptance given by the plaintiff containing the specifications of the material and also subsequent letters Exs.A-1, 3 and A-4, which clearly shows that the cost of the “P.T.C” shall be extra. Even as per the evidence of PW.1 and the contract, two (2) alternatives were given for control of the temperature. Evidently the defendant claims to have purchased “P.T.C” from A-1 Electronics, Bangalore for a cost of Rs.15,000/-. When this item is not the part of the contract, the plaintiff cannot be blamed for non-supply of the same. The learned Senior Civil Judge after considering the document and Ex.B-3 found that there is no liability for the plaintiff to supply “P.T.C”. Sofar as functioning of the unit is concerned, evidently when a new installation was made, there are bound to be some failures and defects and they are being rectified from time to time by the plaintiff. There is no proof on the side of the defendant that they have suffered loss due to the contract of the plaintiff. Evidently there was no term in the contract whereunder for any loss for delays caused by the plaintiff, the defendant is to be compensated. Further more the defendant has not returned any goods on the ground that they are defective. At the time of installation also the defendant is watching the process and the quality of the fabricated material or the deficiency of any other material, the defendant did not raise any objection. At no point of time the defendant has raised claim for damages or pleaded for cancellation of the contract for the un-due delays on the part of the plaintiff. In order to retain the money payable to the plaintiff the defendant has to prove the loss. In this case except alleging that there was a delay, there is no proof that the defendant suffered any loss. There is also no material on record to show that even after the installation and commissioning of the unit, the defendant could not do any business and that the business has to be stopped. Mere breach of contract does not give raise for compensation or damages unless loss in one way or the other is proved, which is directly attributable to the plaintiff. In this case there is absolutely no material on this aspect. On the other hand, even if there are any snags in the installation which are bound to occur in new installation they have been rectified. There is no material to show that there was any intentional delay on the part of the plaintiff. Therefore, the withholding of the money payable to the plaintiff towards the goods supplied is not legal when it is not authorised and when there is no claim for compensation for breach of the contract. Sofar as failure to give bank guarantee is concerned, evidently at no point of time the defendant has taken a serious view of the failure and did not insist for bank guarantee. There is nothing on record to show that failure to give bank guarantee has vitiated the contract. On the other hand the plaintiff has supplied all the material as per the contract and there is no breach proved by the defendant. As such the defendant cannot deny the liability. The learned counsel for the appellant contended that the plaintiff is a partnership firm and there is no proof that it was registered and in the absence of such material the suit is not maintainable. He relied on a decision reported in Sadaram Visweswara Rao Vs. Malla Seetha Ratnam([1]) . Evidently, the said plea was not taken in the written statement and it is a question of fact and law and without such a plea being taken, the defendant cannot be allowed to raise on this aspect at this stage. The lower court has also not granted any interest on the principal amount found due. I therefore find no ground to interfere with the judgment and decree of the lower court as the defendant has not paid the amount for the goods supplied and received and also as the defendant has failed to prove the breach of contract or loss and damages consequently. Accordingly, the points are answered. Therefore, the City Civil Court Appeal is liable to be dismissed with costs. In the result the City Civil Court Appeal is dismissed with costs. _______________________ N.R.L.NAGESWARA RAO,J 28-03-2011 TSNR [1] 2010(5) ALD 578