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M/s. Galaxy Rubber Products v/s V. Janardhan Rao

    A.S. No. 3579 of 2004
    Decided On, 14 June 2022
    At, High Court of for the State of Telangana
    For the Petitioner: ------ For the Respondent: ------

Judgment Text
The appellant, which is a partnership firm, is the plaintiff. The respondent No.1 is also a firm, and the 2nd respondent is its Managing Director. The respondents are defendants in the suit.

2. The plaintiff filed suit O.S.No.340 of 1996 for recovery of an amount of Rs.1,61,299-32 ps. against the defendants on the file of I Additional Senior Civil Judge, Ranga Reddy District at L.B.Nagar.

3. The trial court vide judgment and decree dated 09.06.2003 dismissed the suit. Assailing the same, the plaintiff filed the present appeal.

4. For the sake of convenience, the parties will be referred to as per their array in the suit.

5. The case of the plaintiff is that it is engaged in the manufacture of quality tread rubber and allied products and has been supplying to various companies. It supplied material to defendant No.1 – firm starting from 6.11.1993 to 10.02.1994, and bills were raised totaling to Rs.1,17,285-70 ps. Out of the said amount, defendant No.1 paid an amount of Rs.20,390-98 ps vide two cheques on 27.12.1993 and 2.2.1994, and the outstanding balance, which is required to be paid is Rs.96,894-72 ps. But the same remained unpaid despite repeated demands. The defendant No.1 vide letter dated 28.03.1994 promised to clear the outstanding dues at the earliest. But to the surprise of the plaintiff, the defendant No.1 started sending rejection letters from 25.04.1994 stating that various material supplied by the plaintiff are defective.

6. The grievance of the plaintiff is that after a period of three months from the date of supply, the defendant No.1 has raised objection stating that the material supplied were defective, and this is only to avoid payment.

7. The plaintiff addressed a letter dated 14.05.1994 to the 1st defendant rejecting their contention, and demanding payment for the material supplied. Since there was no response, the plaintiff issued legal notice dated 08.05.1995 demanding payment, which was replied by the defendants with false contentions.

8. As per the ordinance issued by the Central Government, the plaintiff being small scale industry is entitled to interest on the delayed payment. Thus, the plaintiff is entitled to Rs.96,894-75 ps towards principle and Rs.64,404-32 ps. towards interest at the rate of 21.5% per annum.

9. With these averments, the plaintiff filed the suit for recovery of the amount.

10. Defendants filed written statement and admitted that the defendants placed purchase order with the plaintiff and the said purchase order specifically stipulated that if the material supplied is found to be defective at the time of manufacturing, the same will be rejected. It is further stated inter alia that the defendants, during the course of the use of the material supplied by the plaintiff, came across several defects and complaints from its customers, and the same was informed to the plaintiff, and though it initially agreed for the same, as a counter blast started making several unsustainable claims. Therefore, the defendants addressed letter to the plaintiff, and the plaintiff knowing fully well of the facts, refused to take delivery of the said notice and rejected the material on the ground that they are rejected at a belated stage, and issued legal notice dated 8.5.1995, making several unsustainable claims, and the same was replied stating that the material sent by the plaintiff was of poor quality and that they are willing to pay the actual dues for accepted and used material and that it is not entitled to claim Rs.1,61,299-30. The plaintiff instead of settling the matter by deliberations, approached the court claiming amounts, which are not due to it.

11. It is further stated that the quality of the material would be ascertained only at the time of usage of the same. The defendant sent RIR No.1305, dated 1.2.1994, RIR No.1290 dated 25.01.1994 and RIRF amendment Nos.408 dated 23.03.1994 and 337 dated 22.3.1994 bringing to the notice of the plaintiff about the rejection of the material sent by it.

12. That as per clause No.9 of the terms and conditions of purchaser order, the material can be rejected only after putting the same in use either by the defendant No.1, or the subsequent use at the customers’ end. As the material supplied by the plaintiff was defective, the same was rejected and such rejection is genuine and there were no mala fidies on the part of the defendants.

13. That the person who signed the plaint has no locus standi, and as per clause 10 of the Transfer and Purchaser Order, only the courts at Hyderabad have jurisdiction.

14. With these averments, the suit was sought to be dismissed.

15. Based on the above averments, the trial court framed the following issues for trial:

1. Whether the plaintiff is entitled to recover the suit claim of Rs.1,61,299-22 ps. from D-1 and D-2 as prayed for?

2. To what relief?

16. In support of the case of the plaintiff, the Managing Partner by name P.Raghu was examined as P.W.1, and Exs.A-1 to A-29 were got marked. On behalf of the defendants Managing Director of the 1st defendant was examined as D.W.1, and Exs.B-1 to B-4 were marked.

17. Appreciating the entire evidence, both oral and documentary, the trial court dismissed the suit. Assailing the same, the plaintiffs filed the present appeal.

18. Learned counsel appearing for the appellant / plaintiff submits that there is no dispute that the plaintiff had supplied the material to the defendant – firm worth Rs.1,17,285-70 during the period from 6.11.1993 to 10.02.1994 and that part payment of Rs.20,390-98 was made. That the claim of the defendants is that the material supplied was defective. If that is so, the defendant would not have made part payment, and vide letter dated 28.03.1994, which is marked as Ex.A-20, the defendant No.1 promised to make the outstanding dues, but however it failed to make the payment.

19. That the supplies were made during the period from 6.11.1993 to 10.02.1994, but the alleged complaint of the defendant No.1 that the material supplied was defective was belatedly after a period of about three months i.e., vide letter date 25.04.1994.

20. The allegation of the defendant No.1 is that the material supplied was defective. Except the allegation, the defendant has not produced any material evidence in support of the same, and further while the manufacturing process was going on, the quality department person of defendant No.1 visited the plaintiff, checked the products and submitted acceptance report to the plaintiff. These circumstances show that the allegation has been made only to deny the payments to the plaintiff.

21. The defendant promised to make the balance payment vide Ex.A-20. This Ex.A-20 has not been specifically denied by the defendant No.1 in the written statement, and only during the arguments, they have come up with the plea that the same is forged, as the same does not find reference in Exs.A-21 and A-24, which are the subsequent letter written by the plaintiff to the defendants, and the legal notice issued by the plaintiff. Learned counsel submits that when the defendant No.1 has not specifically denied Ex.A-20 in the written statement, there is no justification on the part of the trial court to undertake the exercise of comparison of signature of author in Ex.A-20 with that of in Exs.A-1 to A-9, and A-16 to A-19, which are the purchase orders of the 1st defendant.

22. With these contentions, learned counsel for the plaintiff / appellant submits that the suit is liable to be decreed and as there is delay in payment, and as the plaintiff is a small scale industry, as per Section 3 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, it is entitled to interest from the defendant No.1, which is a buyer, for the delayed payments.

23. On the other hand, learned counsel appearing for the respondents / defendants supported the impugned judgment and decree of the trial court, and sought for dismissal of the appeal.

24. Having regard to the facts and circumstances of the case and the rival submissions of the counsel, the issue that arises for consideration is, “whether the impugned order warrants any interference”?

25. The claim of the plaintiff is that it supplied material to defendant No.1 during the period from 20.09.1993 to 31.01.1994 under Exs.A-1 to A-19 and this has been testified by examining P.W.1, who is the Managing Partner of the plaintiff, and the supply of the material has also been accepted by the defendant No.1, but its complaint is that the material supplied is defective, and this has been sought to be proved by examining D.W.1, who is the Managing Director of the defendant No.1 – firm.

26. From the material evidence on record it could be seen that immediately after supply of the material under Ex.A-19 dated 31.01.1994, the defendant No.1 had sent Exs.B-1 and B-2 letters dated 22.4.1994 and 30.04.1994 respectively, informing the plaintiff that they are sending the receipt cum inspection report, and that the rejected material will be sent in a couple of days. This shows that immediately after supply under Ex.A-19 dated 31.01.1994, the defendant No.1 has complained that the material supplied was defective, and this shows that there is no delay on the part of the defendant No.1 in brining to the notice of the plaintiff about the defect in the material supplied.

27. Further as per condition No.6 of the purchaser order, the defendant is entitled to reject the material if it is not of the contracted quality, and is not in accordance with the specifications required by the company. As per condition No.9 of the terms of the purchaser order, the material can be rejected only after putting the same in use either by the defendant No.1 or the subsequent use by the customers. This shows that no time limit is prescribed. But as noted above, immediately after supply under Ex.A-19, the defendants vide letter dated 22.4.1994 and 30.04.1994 informed the plaintiff about the defect in the material supplied by it.

28. The plaintiff however replied under Ex.A-21 dated 14.05.1994 denying the allegation of the defendant, but thereafter issued legal notice only on 08.05.1995 i.e., after a period of one year.

29. The further case of the plaintiff is that defendant No.1 under Ex.A-20 letter dated 28.03.1993 promised to make the payment. Though the defendant No.1 had not specifically denied this letter in the written statement, but have stated that it is not due any amount, as the material supplied was defective. But however during the trial, it is sought to be contended that the said letter is a forged one, as it does not find reference in Ex.A-21 and A-24.

30. One A.S.R.Prasad, representing the 1st defendant - firm signed Exs.A-1 to A-9, A-16 and A-19 which are the purchase orders placed by the 1st defendant – firm, and the claim of the plaintiff is that under Ex.A-20, signed by A.S.R.Prasad, it promised to clear the outstanding arrears at the earliest. This has been denied by the defendant No.1 during the course of trial. Under Section 73 of the Indian Evidence Act, 1872, the Court is entitled to compare the disputed signature with that of the admitted signature. In light of this denial, the court has exercised its jurisdiction under Section 73 of the said Act, and compared the admitted signature of A.S.R. Prasad in purchaser orders placed by the 1st defendant under Exs.A-1 to A-9 and A-16 and A-19, with that of the signature in Ex.A-20. On such comparison, the trial court found that it is not tallying.

31. The above conclusion arrived at by the trial court is further strengthened by considering Exs.A-21 and A-24. Ex.A-21 is dated 14.05.1994 which is the letter written by the plaintiff demanding the 1st defendant to make payment.

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If really the defendant No.1 has promised to clear the outstanding dues under Ex.A-20 dated 28.03.1994, definitely the plaintiff would have referred to this letter in Ex.A-21, which is addressed subsequent to Ex.A-20, but there is no reference of this letter. The plaintiff also issued legal notice under Ex.A-24 dated 08.05.1995 and in this also, there is no reference to Ex.A-20 letter. These circumstances throw any amount of doubt on Ex.A-20 letter stated to have been addressed by defendant No.1 to the plaintiff. 32. Further, the plaintiff issued legal notice on 08.05.1995 and filed suit on 4.7.1996, which is nearly after two years, for which there is no proper explanation. 33. Considering all these facts and circumstances, the trial court by recording cogent and convincing reasons, and after considering all aspects held that the plaintiff failed to prove its claim and accordingly dismissed the suit. 34. For the foregoing reasons, I do not find any reason to interfere with the impugned order and decree passed by the trial court. The appeal is devoid of any merits and is liable to be dismissed, and the issue framed is answered accordingly. 35. In the result the appeal is dismissed. 36. Interlocutory Applications pending, if any, shall stand closed. No order as to costs.