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Indian Biotech Company Private Limited v/s Assam State Co-Op.Marketing And Consumersfederation Limited

    Interim Application Appeal No. 8431 of 1987 Suit Appeal No. 230 of 1987
    Decided On, 12 August 1988
    At, High Court of Delhi
    For the Appearing Parties: Arun Mohan, Chetan Sharma, K.B. Soni, Manish Kochhar, S. Bhartari, S.N. Kumar, Advocates.

Judgment Text

(1) THIS order would dispose of I. A. No. 8431 of 1987 filed by the defendant under Order 37 Rule 3 (5) Civil Procedure Code seeking leave to defend the suit No. 230 of 1987 filed for recovery of Rs. 13,44,145. 00 under Order 37 Civil Procedure Code by the plaintiff. The application is opposed on behalf of the plaintiff. I have heard the learned counsel for the parties and have gone through the file and after giving my considered thought to the matter before me, I have come to the following findings : The plaintiff has filed this suit for recovery of price of wheat seed supplied to the defendant by it on the basis of agreement dated 1st October 1984. The contention of the defendant is that this court has no territorial jurisdiction to try this suit as no part of the cause of action arose at New Delhi, that the suit is not maintainable under Order 37 CPC; that the claim of the plaintiff is neither tenable nor bonafide. It has further been urged that on 26th September, 1984 the plaintiff had offered to supply 40,000 quintals of wheat seed to the defendant and the defendant had made aconditional acceptance vide letter dated 1st October, 1984 and this seed was required by the defendant for wheat Rabi crop season of 1985 and the last date for sowing seed would be 15th November, 1985 in lower Assam and 31st October, 1985 in the upper Assam and the period of 15 days to one month was required for distribution and unless the seeds reached Assam well before these dates, the seed would be almost useless. It has further been contended that the joint discussions were held on 27th February, 1985 between the parties and in consequence the matter proceeded further and later on in June, 1985 on the representation of the plaintiff that the price of wheat seeds should be raised further joint discussions were held and price was retained at Rs. 320. 00 per qtl and another Rs. 20. 00 per qtl. was made payable for cost of container, printing etc. It is then contended that even though by the end of September, 1985 a sum of Rs. 79 lakhs bad been paid by the defendant to the plaintiff but not a single particle of wheat seeds had reached Assam uptill 5th October, 1985 and the plaintiff had thus committed breach of contract and as such is not entitled to full price at the contracted rate for several reasons, primarily, incomplete and delayed delivery. It has also been urged that of the 40,000 qtls. contracted the plaintiff claims to have despatched only 34,582. 80 qtls and what actually reached there was 34,500. 76 qtls thereby showing a total shortage of 5,499. 24 qtls. from the contracted quantity and of 34,500. 76 qtls. received, 941,66 qtls were found infested with pests/sub-standard and could not be utilised at all. It is also urged that supplies which were made after 31-10-1985 could not really be fully used for distribution with the result that firstly, good portion went waste and secondly loss was incurred in non-utilisation of the wheat field for growing the crop. It has also been urged that with respect to 19,306. 80 qtis, road transport facilities had to be utilised to speed up the supplies as the plaintiff had delayed the dispatch from the rail head and therefore additional cost of road transport was to be to the plaintiff's account and in this manner a sum of Rs. 5,82,491. 44 could not be recovered by the plaintiff and it has been prayed that the defendant should be granted leave to defend the suit.

(2) THE plaintiff in its reply has reiterated the territorial jurisdiction of this court and the maintainability of the suit. It has been admitted that the main agreement is dated 1st October, 1984. It has also been admitted that the full quantity of wheat seeds could not be supplied by the plaintiff but it was due to the fault of the defendant in not paying as per contracted terms and the supplies had to be made by road at the request of the defendant and as such the plaintiff was entitled to claim Rs. 5,46,609. 00 on this scoer. It may however be mentioned here that the plaintiff has alleged that the last date for distribution for lower Assam is 15th November, 1985 and 31st October, 1985 in the Upper Assam and the goods had been dispatched with due diligence and it has been prayed that the defendant is not entitled to leave to defend.

(3) IN order to entitle leave to detend it is incumbent upon the defendant to show that it has a valid defense and triable issues are raised and its defense is bona fide and not illusory, sham or practically moonshine. Each case has to be considered on its peculiar facts and no rule of thumb can be laid down for grant of leave to defend. In the instant case the main contract is admittedly of 1st October, 1984 which has been filed on record by the plaintiffs Ex. P. 1. From the perusal thereof it is clear that the latest date of dispatch has been mentioned therein as 15th September, 1985 whereas accor- ding to para 20 of the reply of the plaintiff to this 1. A. "the entire quantity was dispatched during the period 29th September, 1985 to 6th November, 1985 some by rail and rest by load". It is common case of the parties that the agreement between the parties was for the supply of 40,000 qtls of wheat seeds and admittedly the defendant had been supplied only 34,582. 80 qtis. . as a reference to para 19 of its reply would show which prima facie shows that the plaintiff had failed to perform his part of the contract. The plaintiff is further claiming in this suit Rs. 5,46,609. 00 on account of road freight which according to the defendant is the liability of the plaintiff. According to the defendant's pleas 941. 66 qtls were found infested with pests/sub-standard and could not utilised at all. All these facts go to show that the defendant has raised a valid defense and triable issues are raised and it cannot be said that the defence sought to be raised is not bona fide, more so in view of the admission of the plaintiff itself. It also cannot be said that the defense sought to be raised in the case is illusory, sham or practically moonshine. The defendant hns urged that it is entitled to claim damages for breach of contract which also cannot be far fetched defense. In these circumstances, it would difficult to say that the defendant is not entitled to leave to defend this suit.

(4) WHEREIN asuit filed under order 37 Civil Procedure Code. the plaintiff has contracted to supply a specified quantity of goods to the defendant by a particular date schedule but actually fails to make supply of such specified quantity for whatever reasons and also fails to strict to agreed schedule of dates and further also is alleged to have supplied sub-standard and defective goods and in such circumstances also wants to encumber the defendant with extra, transportation charges, it would be difficult to say that the defendant has not raised a valid defence, triable issues and bona fide. By no stretch of imagination in such a situation it can be said that the defence sought to be raised is sham, illusory, or practically moonshine, more particularly when the defendant claims damages for breach of contract. Such is the position in this case and consequently the defendant would be entitled to leave to defend this suit.

(5) LEARNED counsel for the defendant has drawn my attention to Order 37 Rule l (2) (b) CPC where under this suit is said to have been filed and has submitted that the present suit is not a suit for recovery of liquidated demand in money payable by the defendant on a written contract and as such is not maintainable under Order 37 Civil Procedure Code. As against this my attention has been drawn by the learned counsel for the plaintiff to Gokulprasad Poddar v. Ramrikhdas Parasrampuria and Co. AIR 1955 Bombay 276 but it was a case for recovery based on hundies backed by oral agreement and consequently this ruling cannot be of any help to the plaintiff and there appears to be much weight

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in the submission of the learned counsel for the defendant in this behalf. (6) FROM whichever angle I may consider the matter before me, I am satisfied that it is a fit case in which leave to defend should be granted to the defendant. It was also urged by the learned counsel for the plaintiff that in case this court decides to grant leave to defend, it should be conditional, but I do not find myself inclined to impose any conditions upon the defendant keeping in view the disputed questions sought to be raised by the defendant and the leave to defend is granted unconditionally. (7) THE defendant is granted eight weeks time to file its written statement with advance copy to the counsel for the plaintiff to file its replication within further four weeks. To be listed before the Deputy Registrar for completion of this exercise on 7th November, 1988.