w w w . L a w y e r S e r v i c e s . i n


Millennium Detergents & Chemicals Sdn. Bhd., Rep. by its Power of Attorney T.R. Bhaskar, Malaysia v/s M/s. Saundarya Associates, Rep. by its Managing Partner, M. Karunanidhi, Chennai & Others

    Civil Suit No. 459 of 2016 & A. No. 3609 of 2016
    Decided On, 13 September 2022
    At, High Court of Judicature at Madras
    By, THE HONOURABLE MR. JUSTICE SENTHILKUMAR RAMAMOORTHY
    For the Plaintiff: Rajkishore Bhagwatsaran, B. Chandrasekaran, Advocates. For the Defendants: E. Om Prakash, Senior Counsel, Assisted by D1 to D3, P. Elayaraj Kumar, M/s. Ramalingam & Associates, Advocates.


Judgment Text
(Prayer: The suit is filed under Order VII Rule 1 of CPC read with Order IV Rule 1 of Original Side Rules, (i) directing the defendants 1 to 3 to jointly and severally pay to the plaintiff a sum of USD 156,473.26(United States Dollars One Hundred and Fifty Six Thousand Four hundred and Seventy Three Cents Twenty Six) with interest thereon at the rate of 12% per annum from the date of the suit till the date of realization, for the RBD Palmolein supplied directly to the first defendant by the plaintiff and invoiced directly on the first defendant; (ii) directing all the defendants 1 to 5 to jointly and severally pay the plaintiff a sum of USD 26,664.60(United States Dollars Twenty Six Thousand Six Hundred and Sixty Four Cents Sixty) with interest thereon at the rate of 12% per annum from the date of the suit till realization, for the RBD Palmolein supplied to first defendant through the fourth defendant and invoiced on the fourth defendant but undertaken to be paid by first defendant (iii) and to pay the costs of the suit.)

1. The suit was filed for recovery of a sum of US Dollars(USD) 156,473.26 jointly and severally from defendants 1 to 3 and for recovery of a sum of USD 26,664.60 from defendants 1 to 5 jointly and severally. Both monetary claims were made with interest thereon at 12% per annum from the date of suit till the date of realization.

2. The first part of the suit claim arises out of the supply of refined, bleached and deodorised (RBD) palmolein oil by the plaintiff to a partnership firm, M/s.Saundarya Associates, of which the second and third defendants are partners. The second part of the suit claim arises out of the supply of RBD palmolein oil by the plaintiff to the 4th defendant and the alleged delivery of 28.259 metric tonnes (from and out of supplies made to the fourth respondent) to the first defendant subject to the first defendant's undertaking to pay the plaintiff for the said quantity.

3. The plaintiff stated as follows in the plaint. The plaintiff supplied RBD palmolein oil to the first defendant firm under 15 invoices issued between 09.12.2013 and 17.10.2014 for an aggregate price of USD 293,904.50. The supplies were made from Malaysia and the first defendant took delivery of the same by clearing the consignments at Chennai, which is the port of discharge. As against the total amounts due and payable, the first defendant paid a total sum of USD 137,431.24 between 04.02.2014 and 26.02.2015. After giving credit to payments made by the first defendant, the balance due and payable in respect of the above transaction is USD 156,473.26. Apart from the above, the plaintiff issued two invoices to the fourth defendant, both dated 28.10.2013, for supply of 35.028 metric tonnes of palmolein oil for an aggregate sum of USD 31,525.20. By letter dated 11.01.2014, the first defendant undertook that it will pay the amounts due and payable for 28.259 metric tonnes from and out of the total quantity of 35.028 metric tonnes and, therefore, requested for and took delivery of said quantity from the plaintiff. However, the first defendant did not comply with the undertaking given in the letter dated 11.01.2014. Therefore, the plaintiff issued a notice to the fourth defendant on 14.03.2016 demanding a sum of USD 26,664.60. By reply dated 23.03.2016, the fourth defendant cited the letter of undertaking dated 11.01.2014 and stated that the fourth defendant is not liable and only defendants 1 to 3 are liable.

4. In these circumstances, the plaintiff requested the first defendant to pay the aggregate sum of USD 183,137.86 in respect of the two transactions referred to above. By email dated 11.06.2015, the second defendant, in his capacity as Managing Partner of the first defendant, sent an email to the plaintiff promising to clear the outstanding amounts within a maximum of 120 days from 11.06.2015. However, the plaintiff states that no payments were made pursuant to the said e-mail. Therefore, a notice dated 18.01.2016 was sent to the first defendant and similar notices were sent separately to the second and third defendants. In response thereto, by notice dated 11.02.2016, defendants 1 to 3 denied their liability. The suit was filed in the said facts and circumstances.

5. Defendants 1 to 3 filed a common written statement and stated as follows. The suit was filed to extort money from defendants 1 to 3 and that the plaintiff had not approached the Court with clean hands. The CEO of the plaintiff, Mr.Nadaraja Amarution, requested the second defendant to form a business entity in India to facilitate the sale of the plaintiff's goods in India. The understanding was that upon effecting such sales, the first defendant would deduct the handling, holding and other charges from the sale proceeds and remit the balance to the plaintiff in Malaysia. This was the modus operandi followed for long. Subsequently, the second defendant discovered that the CEO of the plaintiff was involved in several dubious transactions and that the second defendant's name and residential address were used in respect thereof. The second defendant also received a notice (addressed to the CEO of the plaintiff) from the Income Tax Department at his address. Therefore, the second defendant decided to terminate the relationship with Mr.Nadaraja Amarution.

6. Defendants 1 to 3 further stated as follows. The invoices and shipping documents were only issued by the plaintiff for purposes of enabling and facilitating the receipt of goods in India. Defendants 1-3 put the plaintiff to strict proof of the delivery of the said goods described in the 15 invoices forming the first part of the suit claim. The business address of the first defendant is a property purchased by the CEO of the plaintiff and the fourth defendant is a firm established by the plaintiff and the fifth defendant, who controlled the said firm, was a close relative of the plaintiff's CEO.

7. Thus, defendants 1 to 3 stated that the parties shared a close relationship; that the documents do not capture the real nature of the transactions; and that they lent their names to the business carried on by the plaintiff in India. Consequently, they asserted that they are not liable in respect of the suit claim. Defendants 1 to 3 also stated that the plaintiff agreed to pay Rs.7/- per kg of palmolein oil towards logistics cost, expenses and assured margin to these defendants. In total, 2,51,535 kg of palmolein oil were sold by the first defendant for the plaintiff in India. Since the plaintiff failed to honour the agreement to pay Rs.7/- per kg, the defendants 1 to 3 stated that they are entitled to a sum of Rs.17,60,745/-. A counter claim was filed in respect of the above sum. The sum was claimed with interest at 12% p.a. from 01.11.2011 till the date of plaint.

8. Since defendants 4 and 5 did not enter appearance in the suit in spite of receipts of suit summons, the said defendants were set ex parte by order dated 30.08.2018.

9. Based on these pleadings, the following issues were framed by the Court on 13.02.2020.

(1) Whether the plaintiff has supplied palmolein to the defendant firm for a sum of USD 2,93,904.50/- and whether the first defendant has failed to pay a sum of USD 1,56,473.26/- towards the goods sold and delivery to the first defendant?

(2) Whether the first defendant has given an undertaking letter dated 11.01.2014 to pay the plaintiff directly the value of the goods quantity amounts to USD 26,664.60/- on behalf of the 4th defendant, whose name the supplies were made under invoices dated 28.10.2013?

(3) Whether the transaction between the plaintiff and the defendants 1 to 3 is in contravention of any Indian law?

(4) Whether the plaintiff and the first defendant had any understanding that the invoices raised by the plaintiff in the name of the first defendant could be at the price determined by the first defendant and after deducting the handling, holding and other charges the sale proceeds will be sent to Malaysia and the differential amount will be set off by credit notes?

(5) Whether the plaintiff is liable to pay a sum of Rs.17,60,745/- to the defendants 1 to 3 towards the handling and other incidental expenses including the logistic costs in the invoices amount?

(6) Whether the parties are entitled for any interest for their claim and counter claim respectively?

(7) What other relief the parties are entitled for?

10. The plaintiff examined its CEO, Mr.Nadaraja Amarution, as P.W.1. In course of the examination-in-chief of P.W.1, 29 documents were exhibited as Exs.P1 to P29. P.W.1 was cross examined by learned counsel for defendants 1 to 3 and, in course thereof, Exs.D1-D12 were exhibited. The second defendant was examined as D.W.1. In course of the examination-in-chief of D.W.1, 5 documents were exhibited as Exs.D12 to D16. D.W.1 was cross examined by learned counsel for the plaintiff.

11. Oral submissions were made by Mr.Rajkishore Bhagawatsaran, learned counsel for the plaintiff, and by Mr.E.Om Prakash, learned senior counsel, assisted by Mr.P.Elayaraj Kumar, learned counsel for defendants 1 to 3.

12. Learned counsel for the plaintiff submitted that the plaintiff supplied palmolein oil to the first defendant under 15 invoices as per details set out in paragraph 4 of the plaint. The said 15 invoices were exhibited as Exs.P4 to P18. Upon receipt of palmolein oil, he submitted that the first defendant made payments on eight different dates between 04.02.2014 and 26.02.2015. The aggregate amount received was a sum of USD 137,431.24. Upon giving credit to the said receipts, an aggregate sum of USD 156,473.26 remains due and payable.

13. In addition to the above, learned counsel submitted that palmolein oil of the aggregate quantity of 35.028 metric tonnes was to be supplied to the fourth defendant under two invoices both dated 28.10.2013, which were exhibited as Exs.P1 and P2. Out of the said quantity, the first defendant requested that 28.259 metric tonnes be delivered to the said defendant instead of the fourth defendant by undertaking to pay for the same. Learned counsel relied on the letter of undertaking (Ex.P3), which is a communication from the first defendant to the fourth defendant with a copy marked to the plaintiff. In order to establish that liability was admitted by defendants 1 to 3, learned counsel referred to and relied upon Ex.P19, which is an e-mail dated 11.06.2015 from the second defendant to the plaintiff. Learned counsel pointed out that the first defendant agreed to clear the dues within a maximum of 120 days from the date of the e-mail. Thereafter, learned counsel referred to the lawyer's notices from the plaintiff to each of the defendants and the reply from the fourth defendant. He pointed out that these documents were exhibited as Exs.P22 to P28. He also submitted that the original bank statement of the plaintiff was exhibited as Ex.P29 to establish that an aggregate sum of USD 137,431.24 was received from the first defendant, thereby leaving a balance of USD 156,473.26 plus USD 26,664.60.

14. With regard to the counter claim, learned counsel submitted that there were no communications from the first defendant or the partners thereof claiming the sum of Rs.17,60,745/- prior to the institution of the suit. Therefore, he submitted that the counter claim lodged on 26.09.2019 is barred by limitation in as much as it pertains to invoices issued between 28.10.2013 and 17.10.2014. With regard to the invoices that form the basis of the suit claim, he submitted that the defendants admitted the invoices. Since the claim is based on admitted documentary evidence, he stated that no oral evidence is permissible in respect thereof as per Sections 91 and 92 of the Indian Evidence Act, 1872(The Evidence Act).

15. These contentions were refuted by Mr.E.Om Prakash, learned senior counsel for defendants 1 to 3. He submitted that the business relationship between the parties is based on a personal relationship between Mr.Nadaraja Amarution, the CEO of the plaintiff, and the second defendant, Mr.M.Karunanidhi. Arising out of this close personal relationship was the oral understanding that the plaintiff would supply palmolein oil to the first defendant for purposes of selling the same to customers in India. Upon effecting sale to customers, the first defendant was entitled to adjust logistics expenses, holding costs, etc. from and out of the sale proceeds before remitting the balance to the plaintiff. Therefore, it was submitted that the first defendant merely performed the role of a facilitator for the sale of the plaintiff's goods in India. In support of these submissions, learned senior counsel referred to questions 14 to 21; 24 to 42; and 76 to 86 during the cross examination of P.W.1 and the answers of P.W.1 in response thereto. In view of the nature of the relationship between the parties, he stated that the suit cannot be decided merely by referring to the invoices and packing lists. Instead, he contended that the oral evidence should be taken into consideration. In support of this submission, he relied upon the judgment in Nawab Major Sir Mohammad Akbar Khan v. Attar Singh and others 1936 SCC Online PC 22 (Nawab Major Akbar Khan).

16. By referring to the invoices, he submitted that the invoices contain identical payment terms. The said payment terms entail payment of 30% advance and the remaining 70% against letters of credit payable at sight. By referring to the answers of P.W.1, he pointed out that P.W.1 admitted that no payments were received in advance. He also pointed out that P.W.1 admitted that the terms of payments were not adhered to by the parties. By referring to Exs.D1 to D5, he pointed out that these documents establish the nature of the business relationship between the plaintiff and defendants 1 to 3. For instance, he pointed out that Ex.D5 contains details, including weight, of goods sold by the first defendant in India and that these details were communicated to the plaintiff. According to learned senior counsel, this shows clearly that the transaction was not by way of sale of goods by the plaintiff to the first defendant. Instead, the first defendant was a facilitator for the sale of the plaintiff's product in India and, therefore, provided details of goods sold in India by the first defendant for the plaintiff. He also referred to Ex.D6, which is a statement of account relating to 7 out of the 15 invoices which form the basis of the first part of the suit claim. With reference to Ex.D11, he pointed out that it is a quotation for undertaking repair work for an oil container and that the said quotation was approved by the plaintiff. By drawing reference to questions 61 to 72 in course of the cross examination of P.W.1, he pointed out that P.W.1 admitted that the plaintiff had not provided details of invoice-specific payments from the first defendant to the plaintiff. He further submitted that P.W.1 admitted that the amounts received from the first defendant did not match the invoice amounts but endeavoured to explain the same by stating that it was on account of fluctuation in foreign exchange rates. By drawing reference to question 122 and the answer thereto of P.W.1, he stated that P.W.1 admitted that no statement of account was filed in support of the suit claim.

17. Turning to the cross examination of D.W.1, he pointed out that D.W.1 made it clear that the invoices were only for purposes of facilitating the sale of goods by the plaintiff in India through the first defendant. With reference to question 35 and the answer thereto, he stated that D.W.1 deposed that all payments to the plaintiff were made from and out of the sale proceeds after selling the plaintiff's goods in India to customers. He also relied upon paragraph 11 of the judgment of the Hon'ble Supreme Court in Smt. Gangabai v. Smt. Chhabubai(Gangabai), 1982 (1) SCC 4 for the proposition that the bar under Section 92(1) of the Evidence Act applies only when a party admits execution of a document but adduces oral evidence to controvert the terms embedded therein. The said subsection is not attracted when a party contends that the document is a sham. He also relied upon the judgment of the Kerala High Court in Bhargavi Amma v. Parukutty Amma 1999 SCC OnLine Ker 323.

18. By way of rejoinder, learned counsel for the plaintiff stated that the defendants are conflating the plaintiff and P.W.1. The plaintiff is a limited company/distinct juristic entity and P.W.1 may be the CEO thereof but is distinct from P.W.1. He reiterated that the first defendant agreed to pay the amounts due under Ex.P19. He pointed out that Ex.P21 is the bank statement and that this document evidences receipts from the first defendant to the plaintiff. By referring to Ex.D12 series, he pointed out that the said documents indicate that the payments were part remittances by the first defendant to the plaintiff.

19. With regard to the contention that defendants 1 to 3 are entitled to the counter claim by way of facilitation costs, he stated that such defence was not raised in contemporaneous correspondence or at any time prior to the institution of the suit. With regard to the contention that the agent (power of attorney) who filed the suit on behalf of the plaintiff was not authorised, he relied on the judgment of this Court in K.Santhanam v. S.Kavitha and others 2011 (1) CTC 286, particularly paragraph 19 thereof, for the proposition that the requirements of Order VI of the CPC are procedural and the suit cannot be rejected even if there are irregularities in relation to the verification of the suit.

20. Before dealing with the issues framed by the Court, a preliminary objection by defendants 1-3 should be dealt with. The said defendants pleaded and contended that the plaintiff's agent (power of attorney) was not duly authorised. In course of cross-examination, however, D.W.1 stated as follows in this regard:

“Q. 26: Who was the power of attorney of the plaintiff?

A: Mr.T.R. Baskar

Q. 30: Do you admit that the plaintiff company has given power of attorney to Mr.T.R.Baskar to file the suit?

A: Yes.”

Apart from the above admission, which D.W.1 attempted unsuccessfully to explain in re-examination, it should be noticed that the CEO of the plaintiff and not the agent was examined as P.W.1. In the circumstances, the failure to exhibit the power of attorney is a procedural irregularity and has no bearing on the outcome of the suit.

Issue Nos.1, 3 and 4:

21. As stated earlier, the suit claim relates to two transactions. The first of the transactions is the claim relating to the supply of palmolein oil under 15 invoices. Issue Nos.1 and 4 relate to the claims under these invoices. Issue No.3 pertains to whether the transactions are in contravention of Indian law. Since these issues are inter-related, they are dealt with jointly.

22. In support of the claim for a sum of USD 156,473.26, the plaintiff exhibited the invoices under which goods were supplied to the first defendant. Exs.P4 to P18 are the 15 invoices in respect of which the suit claim is laid. The details of the invoices were also set out in paragraph 4 of the plaint. In order to establish that only USD 137,431.24 was paid by the first defendant against the total liability of USD 293,904.50, the plaintiff exhibited its bank statement as Ex.P29. Defendants 1 to 3 denied liability to pay the sum of USD 156,473.26 on the ground that the invoices were only for purposes of facilitating supply of goods from the first defendant and that the actual dues were different. Defendants 1 to 3 contended that the transaction between the parties was such that the plaintiff would supply palmolein oil to the first defendant and the first defendant would, in turn, sell the goods to customers in India. Upon such sale, defendants 1 to 3 would realise the sale proceeds, deduct holding costs, logistics costs and other expenses from such sale proceeds and remit the balance to the plaintiff. According to defendants 1 to 3, the payments reflected in the statement of account produced by the plaintiff as Ex.P29 was the amount due and payable after making such deductions.

23. Defendants 1 to 3 did not place on record documentary evidence either in the form of an agreement or in the form of correspondence to corroborate the above contention with regard to the nature of transaction between the parties. The said defendants relied on Exs.D1-D16 to contend that these documents evidence the close relationship between the parties and that such relationship is not a sellerbuyer relationship. While many of these documents evidence a relationship between the CEO of the plaintiff and the second defendant that extended beyond the subject of this suit, most of these documents are not material. However, some documents merit consideration. For instance, Ex.D5 was relied on to contend that the weight and value of goods sold in Trichy and Erode was provided to the CEO of the plaintiff and it was contended on that basis that such details would not be provided in a seller-buyer relationship. On perusal thereof, the said document does contain such details but that does not establish the version of these defendants that the invoice values forming the suit claim do not represent amounts due. Ex.D6 is the next document that warrants scrutiny. This is an email of 24.05.2014 from the second defendant to the CEO of the plaintiff and an accounts statement is attached thereto. P.W.1 identified the email but did not admit the statement of account (Q.52 and answer thereto). The said accounts statement contains details of invoices and the invoice numbers and quantities tally with Exs.P4- P10. The statement provides details of realised value and net payable value in USD, which is lower than the corresponding invoice value. However, there is no evidence that this was accepted or agreed to by the plaintiff. The other material document is Ex.D12 series, which contains the invoices exhibited by the plaintiff, and is discussed later.

24. The Defendants 1 to 3 also pointed out weaknesses in the evidence of the plaintiff. For instance, with reference to the answers of P.W.1 to questions 61 to 72 in cross-examination, it was submitted that P.W.1 was unable to correlate the amounts received against specific invoices. Questions 67, 68, 70 and 71, which are relevant in this regard, are set out below:

''Q.67: Can you point out any of these amounts specifically relating to the amounts in the invoices?

A: I cannot answer with this affidavit and I need to see my invoices.

Q. 68: Please see the invoices you have filed and answer?

A : The receipt amount is reflected in the bank statement. At times, in view of fluctuation in exchange rate, the amount changes. Sometimes, the buyer will also send based on his own view of exchange rate.

Q. 70: I put it to you that these payments are far less than the amounts reflected in the invoices. What do you say?

A : I disagree

Q. 71: Can you see para 5 and 4 and confirm whether my statement is correct or not?

A : Yes''

25. Defendants 1 to 3 also relied upon the fact that the payment terms specified in the invoices were not adhered to by parties. On this issue, learned counsel for the plaintiff relied upon questions 36 to 43 and the answers thereto of P.W.1. Questions 36 to 38 pertain to the requirement to pay 30% in advance. Since these questions and answers are relevant, they are set out below:

''Q. 36: What are the payment terms mentioned in Ex.P4?

A: It has been mentioned that 30% has to be deposited and remaining 70% is to be paid after receiving the goods.

Q. 37: When did you receive the 30%?

A: It was paid in a different mode and I accepted the mode.

Q. 38: Can you please say what is the mode?

A: I did not insist on the 30% deposit. We were liberal.''

26. Similarly, questions 41 to 43 and the answers thereto are relevant with regard to the payment of the remaining 70%. The same are set out below:

''Q. 41: In Ex.P4, is there a specific mention that the balance 70% is by irrevocable sight L/C?

A: I have already answered. We have been liberal in the terms and conditions of the payment.

Q. 42: Is it correct to state that in all the invoices filed by you in Exs.P4 to P18, the terms and conditions are the same?

A: There is a small difference. The delivery time is at times 15 days and at times 30 days.

Q. 43: Is it correct to state in respect of payments, the terms and conditions are the same in all the invoices?

A: Yes''

27. From the above oral evidence, it is evident that parties did not adhere to the terms of payment specified in the invoices which were exhibited as Exs.P4 to P18. Put differently, the first defendant did not pay 30% in advance and the remainder through at sight letters of credit as specified therein. Learned counsel for the plaintiff contended that oral evidence is not permissible with regard to matters covered by documentary evidence by relying on Sections 91 and 92 of the Evidence Act. On the contrary, learned senior counsel for defendants 1 to 3 contended that oral evidence is permissible by relying upon the judgment of the Hon'ble Supreme Court in Gangabai. The judgment of the Privy Council in Nawab Major Akbar Khan was also relied upon in this connection. The contention of learned senior counsel for defendants 1 to 3 is liable to be accepted, as regards the payment terms, because the invoices do not contain all the answers. While the invoices specified the quantity of goods supplied and the price payable in respect thereof, the invoices do not provide any information as to how payments were actually made by defendant 1 to 3. Therefore, oral evidence is admissible with regard to the manner of payment of these invoices and as to whether the payment terms stipulated in the invoices were adhered to.

28. This leads to the question whether the evidence on record warrants the inference that the invoices should be disregarded. Defendants 1 to 3 contended that the real transaction between the parties was not on the basis of these invoices and that the plaintiff would supply goods to defendants 1 to 3, sell the goods to customers in India, receive payments from such customers, deduct logistics, holding and other expenses and, thereafter, remit the remainder of the sale proceeds to the plaintiff. As stated earlier, other than the pleadings, Ex.D6 (in respect whereof, there is no proof of acceptance) and the statement of D.W.1 to such effect, there is no evidence to substantiate this contention. In addition, this contention directly contradicts the content of the invoices with regard to the specification of amounts payable under the invoices. Merely because the evidence leads to the conclusion that parties did not adhere to the payment terms specified in the invoices, it cannot be concluded that the amounts specified in the invoices are not payable by defendants 1 to 3. Upon examining Ex.P29, the said bank statement reflects tele-transfers made by the first defendant, M/s.Saundarya Associates, to the plaintiff. The first credit is on 04.02.2014 for a sum of 51,665.91 ringgits (the Malaysian currency). According to the plaintiff, this is equivalent to USD 15,756.60, which is the entry in Sl.No.1 of the table at paragraph 4(b) of the plaint. The next credit from the first defendant is for a sum of 50,902.14 ringgits, which is said to correspond to Sl.No.2 in paragraph 4(b). In this manner, the statement of account reflects all the eight receipts which are reflected under Sl.Nos.1 to 8 in paragraph 4(b) of the plaint. The conversion rate during the relevant period was in the region of 0.3007. Therefore, the amounts reflected in paragraph 4(b) in the plaint are in order. In reply to questions 16 to 25, D.W.1 admitted that the invoices filed by the plaintiff correspond to invoices filed by defendants 1 to 3 as Ex.D12 series. D.W.1 also admitted that the goods covered by these invoices were received by defendants 1 to 3. Questions 21,22, 24 and 25 are relevant in this regard and are set out below:

''Q. 21: The set of invoices raised by the plaintiff is in favour of the first defendant have also been filed by you as part of Ex.D12 series?

A: Yes

Q. 22: Do you deny your own documents?

A: I do not deny those documents. The said documents only for facilitating the sale of plaintiff's goods.

Q. 24: But you admit these 15 invoices have also been filed by you to prove the defendant's 1 to 3 case?

A: Yes as a facilitating document for a sale of goods of the plaintiff.

Q. 25: Did you receive all the goods covered under the invoices raised by the plaintiff company in the name of the first defendant?

A: Yes, goods were received by the first defendant as a facilitating company and the entire operations were being carried out including clearing and forwarding, accounting through the power of attorney of the plaintiff.''

29. From the oral evidence of D.W.1, it is abundantly clear that defendants 1 to 3 admit receipt of the 15 invoices and also the receipt of goods covered by the invoices. The defence is based on an oral agreement in contradiction of the contents of the invoices. While evidence may be recorded on matters not specified in the invoices, as contended by learned counsel for the plaintiff, the contents of the invoices cannot be controverted through oral evidence unless defendants 1 to 3 establish that the invoices are fabricated or sham. From the answers to questions 21 and 24, it is clear that defendants 1 to 3 do not dispute the genuineness of the invoices. In addition, the plaintiff relied on Ex.P19, which is an email from the second defendant, wherein it was stated that “we hereby assure you the payments which have been declared due is final and the same shall be settled within a maximum period of 120 days from this mail.” When the evidence presented by the plaintiff in the form of invoices (Ex.P4-18), the email (Ex.P19) and the bank statement (Ex.P29) is taken into consideration, the conclusion that emerges is that the plaintiff has established that a sum of USD 137,431.24 was received against the total supply value of USD 293,904.50, thereby leaving an outstanding of USD 156,473.26. Therefore, the first defendant is liable to pay this sum and the second and third defendants are also liable as partners of the first defendant.

30. The third issue pertains to whether the transaction between the plaintiff and defendants 1 to 3 is in contravention of Indian law. Defendants 1 to 3 did not substantiate that the transactions are in contravention of Indian law. Learned counsel for the plaintiff referred to documents filed by defendants 1 to 3 as part of Ex.D12 series. For instance, by drawing reference to a letter dated 30.05.2014 from the plaintiff to the Branch Manager, ICICI Bank-Main, Chennai, he pointed out that the said letter is a requisition for outward foreign remittance against imports. He also pointed out that Form A1, which is the application for remittance in foreign currency, was annexed thereto. The said form requires that the remitter indicate if the remittance is lower than the invoice value. He pointed out that the first defendant stated that it is part remittance of the invoice value. He submitted that all the A1 Forms, which were included in Ex.D12 series, contain a similar statement that it is part remittance of the invoice value. The above documents indicate that the transaction was undertaken in compliance with applicable foreign exchange law, particularly in accordance with the Foreign Exchange Management Act,1999. Issue Nos.1,3 and 4 are therefore decided in favour of the plaintiff and against defendants 1 to 3.

Issue No.2

31. Issue No.2 pertains to the second transaction for the supply of an aggregate quantity of 35.028 metric tonnes of palmolein oil under two invoices. In support of these claims, the plaintiff exhibited the relevant invoices as Exs.P1 and P2. On examining these invoices, it is clear that the invoices were raised on the fourth defendant. Each invoice is for a sum of USD 15,762.60, thereby totalling USD 31,525.20. The plaintiff also placed in evidence a letter of undertaking issued by the first defendant to the fourth defendant. This document was exhibited as Ex.P3. Under Ex.P3, the first defendant informed the plaintiff that it is purchasing 28.259 metric tonnes from the fourth defendant and that the first defendant would pay the value of the consignment to the plaintiff. The fourth defendant was further informed that the first defendant would provide an update after making payment to the plaintiff. Ex.P3 is copied to the plaintiff. Defendants 1 to 3 do not deny the execution or issuance of Ex.P3. In reply to the notice dated 14.03.2016(Ex.P27), defendants 4 and 5, by reply dated 23.03.2016 (Ex.P28), stated that the said defendants are not liable in respect of the claim of USD 26,664.60 since the quantity of 28.259 metric tonnes was delivered to the first defendant and the first defendant undertook to pay for the same. Ex.D12 series contains the two invoices by which defendant 4 sold a portion of the quantity purchased under Exs.P1 and P2 to the first defendant. D.W.1 was questioned on Ex.P3 and these invoices in course of cross-examination and replied as under:

“Q. 92:(Ex.P3 is shown to the witness) Is this your letter?

A: Yes

Q. 94: (Ex.D12 is shown to the witness) Please see page no.272,273 of Ex.D12 series, these are two VAT invoices issued by the 4th defendant to the 1st defendant for the sale of goods?

A: Yes. These invoices were raised under the instructions of the plaintiff to the 4th and 5th defendants who happened to be the plaintiff's son-inlaw, after they had a strain in their relationship.

Q.95: (Ex.P3 is shown to the witness) I put it to you that since the goods were sold by the VAT invoice from the 4th defendant to the 1st defendant you had undertaken paid to the plaintiff the value of the goods which were originally imported by the 4th defendant.

A: No. Since there was family dispute between the plaintiff and the 4th defendant, the 4th defendant denied to pay for the stocks which has been sent by the plaintiff so the plaintiff instructed me to give a letter to the 4th defendant as such the contents of the Ex.P3.”

Besides, in the proof affidavit of P.W.1, it was asserted that the first defendant took delivery of 28.259 metric tonnes of palmolein oil (from and out of the total quantity of 35.028 metric tonnes to be supplied to the fourth defendant under Exs.P1 and P2) by undertaking under Ex.P3 to pay for the same. There was no cross-examination on this aspect. Thus, Defendants 1 to 3 have been unable to effectively deny liability in respect of the quantity of 29.259 metric tonnes which was delivered to them. Therefore, Issue No.2 is decided in favour of the plaintiff and against defendants 1 to 3.

Issue No.5

32. Issue No.5 relates to the counter claim of the first defendant. The said counter claim relates to the alleged agreement or understanding between the plaintiff and defendants 1 to 3 that defendants 1 to 3 would be paid Rs.7/- per kg of palmolein oil towards logistics costs and other expenses. By asserting that the first defendant sold 2,51,535 kgs for and on behalf of the the plaintiff in India, the counter claim was made. No documentary evidence was produced by defendants 1 to 3 in support of the counter claim. The said counter claim was made in the written statement presented on 26.09.2019. Learned counsel for the plaintiff contended that the counter claim is barred by limitation since it was made for the first time on 26.09.2019. The answers of D.W.1 to Questions 54 to 58 in course of cross examination were relied upon in this connection. Questions 54 to 58 and the answers thereto are set out below:

“Q. 54: So you have made a counter claim for the first time through your written statement filed on 26.09.2019?

A: Yes

Q. 58: I put it to you that the last transaction between plaintiff

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and D1 to D3 was during October, 2014 namely approximately 5 years before you have filed a counter claim in your written statement and hence any counter claim filed by you against the plaintiff company is barred by limitation and hence the plaintiff is not liable to pay the claimed amount in your counter claim. A: I do not know the limitation period for filing my counter claim but the plaintiff was in good terms with me in various other transaction and even I was the witness the document in his purchase of property in Tamilnadu and the entire filing of the suit is a repercussion of me not co-operating with him in his activities in India.” 33. The counter claim is founded on the allegations that the parties had reached an understanding that Rs.7/- per kg would be paid by the plaintiff to the first defendant once the first defendant sells the palmolein oil received from the plaintiff to customers in India. To begin with, as stated earlier, defendants 1 to 3 failed to provide any evidence of such understanding between the parties and the said understanding is not reflected in correspondence. The limitation period for such counter claim would run from the dates on which the first defendant sold the goods to customers in India. There is no evidence on record with regard to the dates of such sale. Given the fact that supplies were made by the plaintiff to the first defendant between 28.10.2013 and 17.10.2014, it is likely that the sale by the first defendant also took place broadly within this time frame. If computed from the end of 2014, the counter claim is barred by limitation. Even otherwise, in the absence of any evidence that the plaintiff agreed to pay Rs.7/- per kg of palmolein oil as facilitation charges to the first defendant, the counter claim cannot be sustained. Issue No.5 is decided against defendants 1 to 3 and in favour of the plaintiff. Issue Nos.6 and 7: 34. Issue No.6 relates to the interest claim of parties and issue No.7 to the relief to which parties are entitled to. Since the plaintiff succeeded in the suit claim, the plaintiff is entitled to interest. No interest rate was specified in the relevant invoices or otherwise agreed to by the parties, but the transaction is undoubtedly commercial and the plaintiff is entitled to interest at commercial rates. The plaintiff has claimed interest at 12% per annum from the date of plaint until realisation. By taking into account the relatively lower interest rates in Malaysia (both at the relevant point of time and in general) and the fact that this is an international transaction entailing outflow of foreign exchange, interest is awarded at the rate of 6% per annum from the date of plaint until realisation. If conversion of currency is required at any stage in relation to amounts awarded under this judgment, such conversion shall be at the exchange rate prevailing on the date of institution of the suit. As the successful party, the plaintiff is entitled to costs. The plaintiff has paid a sum of Rs.1,29,386/- as court fees. The plaintiff is entitled to the said sum and a further sum of about Rs.1,70,000/- towards lawyer's fees and other expenses. In the aggregate, the plaintiff is entitled to a round sum of Rs.3 lakhs as costs. 35. In the result, C.S.No.459 of 2016 is decreed as follows: (i) Defendants 1 to 3 are jointly and severally directed to pay to the plaintiff a sum of USD 156,473.26 with interest thereon at the rate of 6% per annum from the date of suit till the date of realization. (ii) Defendants 1 to 3 are also jointly and severally directed to pay to the plaintiff a sum of USD 26,664.60 with interest thereon at 6% per annum from the date of suit till the date of realization. (iii) Defendants 1 to 3 are directed to pay a sum of Rs.3,00,000/- as costs to the plaintiff towards court fees, reasonable lawyer's fees and other expenses. (iv) The Counter claim of defendants 1 to 3 is dismissed. (v) Consequently, connected application is also closed.
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