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M/s. Ramesh Paper Mart v/s M/s. Matrix Global Private Limited

    CS(COMM). No. 1448 of 2016

    Decided On, 31 October 2018

    At, High Court of Delhi


    For the Plaintiff: Nikhilesh Krishnan, Advocate. For the Defendant: M.K. Verma, Advocate.

Judgment Text

1. The plaintiff has filed this suit for recovery of 2,18,66,439/- on the plea they had supplied to the defendant Maplitho paper and hard board for printing of books and it was agreed the defendant shall not make any default in payment of the said material. An order to purchase the Maplitho paper and hard board was placed on 18.10.2013 by the defendant directing the plaintiff to supply 700 MT of Maplitho paper @ 57,250 per MT along with 34 MT of cover stock @ 65,500 per MT. The purchase order dated 18.10.2013 was amended and sent via email dated 21.10.2013. The goods were supplied as per the terms and conditions. The invoices and challans to the defendant company were duly acknowledged. The details of invoices is given in para 13 of the plaint. The C-forms were sent after the receipt of the ordered goods by the defendant.

2. As per the terms and conditions of the purchase order the defendant company was obliged to make payment within 5 days from the date of the receipt of the paper by their nominated printing press. Admittedly the entire stock was received by the defendant by December 2013 however despite various requests made by the plaintiff, the defendant did not release the payment and hence this suit was filed on 17.10.2016.

3. The defendant filed its written statement on 26.04.2017 and rather raised a counter claim stating interalia they had placed an order upon the plaintiff company wherein the plaintiff had to supply the requisite paper for printing of the books within 4/5 days of the purchase order dated 18.10.2013 and even advance payment was made on 23.10.2013. It was urged the entire printing paper was to be supplied strictly as per the time schedule by 20.11.2013 but the plaintiff company though started delivering the paper from 06.11.2013 and continued till 29.11.2013 but thereafter did not supply any paper till 10.12.2013 and as there was a delay in supply of the requisite paper, the printers had further delayed the printing of books which culminated into delay in shipment of books to Ministry of Education, Government of Ethiopia. The Ministry thus retained 20% of the total contract amount and also invoked the bank guarantee furnished to them. Moreso the paper supplied was of inferior quality. Further there is a mismatch of amount as the total purchase price was only 3,45,48,391/- but the invoice for 3,65,48,391/- was raised.

4. Nonetheless the defendant admits the invocation of the bank guarantee was stayed by this Court on an application under Section 9 of the Arbitration and Conciliation Act but it is stated till date the Bank of Baroda has not released the bank guarantee and has also kept the property documents of directors of defendant company as an equitable mortgage, though the Sole arbitrator had directed the bank to release such property documents.

5. It is alleged due to delay and short supply of printing paper by the plaintiff firm and consequently withholding of 20% of invoice amount by the Ethiopian Government, the packing credit limit account of defendant company with Bank of Baroda was declared NPA, and the defendant company is facing recovery proceeding before DRT Chandigarh.

6. On 01.05.2018 the counter claim on these very grounds was filed by the defendant.

7. The question is if the counter claim is within time or beyond limitation as alleged by the learned counsel for the plaintiff. Though the learned counsel for the defendant argued the counter claim can be filed even after the filing of the written statement but it is not an issue here. The issue is if the counter claim filed on 01.05.2018 is barred by limitation. Admittedly the goods were purchased on an order dated 18.10.2013 and were supplied by 20.12.2013, i.e. beyond the date of stipulated delivery. The counter claim is thus premised on compensation for a breach of such condition of contract.

8. Article 55 of the Schedule of Limitation Act 1963 gives a period of limitation as three years from the time when such contract is broken or when the breach in respect of which the suit is instituted occurs or when it ceases.

9. Admittedly as per the defendant if there was any alleged breach of contract, it was on 20.11.2013 and hence the counter claim, if any, ought to have been filed for the losses occurs, within three years from the date when the contract was broken or the breach occurred. No doubt there arose a dispute between the defendant and Ministry of Education, Government of Ethiopia who had withheld 20% of the invoice amount and have been threatening to forfeit the bank guarantee but then the defendant had initiated arbitration against Ministry of Education, Government of Ethiopia and has obtained an award in its favour. Admittedly the bank guarantee was never invoked as there was a stay under Section 9 of the Arbitration and Conciliation Act. The plea of defendant is all this happened due to alleged breach on 20.11.2013 of the agreement by the plaintiff, hence the counter claim, if any, ought to have been filed by 19.11.2016. Filing of a counter claim on 01.05.2018 is thus hopelessly barred by time.

10. The learned counsel for the defendant, even otherwise, has not filed any correspondence between the years 2014 to 2016 wherein the plaintiff had ever conveyed to indemnify the defendant for the losses suffered by it due to such alleged breach and neither there was any serious demand of compensation for alleged damages suffered.

11. It Thomas Mathew vs. Construction Engineer, K.L.D.C. Ltd. 2016(9) SCALE 379 the Court held:

'10. Our attention has been drawn by learned Counsel for the

Appellant to Section 3(2)(b)(ii) of the Limitation Act, 1963.

Section 3 reads as follows:

3. Bar of limitation.-

(1) xxx xxx

(b) any claim by way of a set off or a counter claim, shall be treated as a separate suit and shall be deemed to have been instituted-

(ii) in the case of a counter claim, on the date on which the counter claim is made in court;

11. A perusal of the said section clearly shows that a counter claim is required to be treated as a separate suit and therefore the period of limitation would be three years from the date of accrual of the cause of action.

12. Similarly, Order VIII Rule 6-A of the Code of Civil Procedure provides that a counter claim shall be treated as a plaint and is governed by the rules applicable to plaints.

13. We may also draw attention to Jag Mohan Chawla and Anr. v. Dera Radha Swami Satsang and Ors. MANU/SC/0565/1996 : 1996 (4) SCC 699 wherein it has been held by this Court in paras 4 & 5 that the purpose of introducing Order VIII Rule 6-A was to avoid multiplicity of proceedings and a counter claim expressly is treated as a cross-suit with all the indicia of pleadings as a plaint including the duty to aver the cause of action and also payment of the requisite court fee.

14. From a reading of the decision rendered by this Court as well as the provisions of the Limitation Act and the Code of Civil Procedure, it is quite clear that in so far as the present appeal is concerned, the cause of action had accrued in favour of the Respondent on the date of the breach of contract i.e. 06.03.1

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996 or before that. For the purposes of deciding the present appeal, we are taking the later date i.e. 06.03.1996 as the date of accrual of the cause of action in favour of the Respondent. 15. That being the position, in view of the provisions of Article 55 of the Limitation Act, it appears to us that the counter claim filed by the Respondent is barred by time.' 12. Thus, in the circumstances, the counter claim filed by the defendant is clearly barred by time and is rejected. The counter claim filed by the defendant be taken off the record. 13. No order as to costs. CS(COMM) 1448/2016 14. The matter is pending before the learned local commissioner for recording the evidence. 15. List for directions before the Roster Bench on 27.11.2018.