Allowed

Good Earth Minerals Pvt. Ltd. v. Gannon Ddunkerly and Co. Ltd.

Bombay HC21 Jun 2012SJ/238/2010

Case brief

AI extract

What is this about?

A company appealed an order granting unconditional leave to defend a summary suit for recovery of construction dues. The single judge found the defence frivolous and untenable. Leave to defend was refused, Summons for Judgment was made absolute, and the suit was decreed.

What did the court decide?

Unconditional leave to defend refused; Summons for Judgment made absolute; Suit decreed; Interest rate fixed at 18% per annum.

Good Earth Minerals Pvt. Ltd. Vs Gannon… — Contract and Commercial Disputes | Bombay HC (2012)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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SUMMONS FOR JUDGMENT NO. 238 OF 2010 IN

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SUMMARY SUIT NO. 1305 OF 2010 (UNDER ORDER XXXVII OF THE CODE OF CIVIL PROCEDURE, 1908)

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M/s.Good Earth Minerals Private ) Limited, a Company registered under the) provisions of the Companies Act, 1956 ) and having their registered Office 207, ) Ruby Industrial Estate, Chincholi Bunder ) Road, Malad (West), Mumbai – 400 064 )

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..... Plaintiffs

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VERSUS

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Gannon Dunkerley & CO. Ltd., a company) incorporated under the provisions of ) Companies Act, 1956, having its office ) at New Excelsior Bldg. (3^rd Floor), ) A.K.Nayak Marg, Fort, Mumbai – 400 001) ..... Defendants

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Mr.Sharan Jagtiani with Mr.Basant Trilokani, i/b. Jhangiani Narula & Associates for the Plaintiffs.

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Mr.Shailesh Shah, Senior Advocate with Mr.D.Banerjee, i/b. M/s.Mahesh Jani & Co. for the Defendants.

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CORAM : R.D. DHANUKA, J.

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DATE : 21st JUNE, 2012.

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ORAL JUDGMENT :

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The Plaintiffs have filed this suit for recovery of a sum of Rs.18,08,463.02

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with further interest on Rs.10,19,097/- at the rate of 24% per annum from the date of the suit till payment.

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The Defendants were carrying out construction work for a construction company known as Raymond Zambaiti Pvt. Ltd. at Kolhapur. On 21^st December, 2005, the Defendants placed a Work Order upon the Plaintiffs for providing and fixing acid resistant tiles at the factory premises of Raymond Zambaiti Pvt. Ltd. situate at Kolhapur. The said work order dated 21^st December, 2005 was subsequently modified with two separate Work Orders, both dated 20^th March, 2006.

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It is the case of the Plaintiffs that the Plaintiffs supplied the requisite material and executed the works as per the said Work Order and raised running bills upon the Defendants from time to time. There is no dispute in respect of the payment for the work done prior to the Invoices dated 21^st January, 2007 and 25^th January, 2007.

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It is the case of the Plaintiffs that in December, 2006, the work awarded to the Plaintiffs by the Defendants was completed. The Plaintiffs accordingly submitted their final invoices dated 21^st January, 2007 for the sum of Rs. 7,69,343/- and invoice dated 25^th January, 2007 for the sum of Rs.12,96,795/-. It is the case of the Plaintiffs that the Defendants made payments from time to time aggregating to Rs.10,47,041/- leaving an outstanding principal amount of Rs. 10,19,097/- towards the second invoice dated 25^th January, 2007 for Rs.

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12,96,795/-. The Plaintiffs received last payment of Rs.1,00,000/- from the Defendants vide Defendants’ cheque dated 20^th April, 2007. It is the case of the Plaintiff that the Plaintiff appropriated the said part payment of Rs.1,00,000/towards invoice dated 25^th January, 2007.

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The Plaintiffs thereafter issued a notice on 20^th February, 2010 calling upon the Defendants to pay the sum of Rs.10,19,097/- with interest at the rate of 24% per annum. The said notice issued by the Plaintiffs through their Solicitors was in respect of five sites including the said site viz. site of Raymond Zambaiti Pvt. Ltd., Kolhapur which is the subject matter of this suit. In so far as the site in question is concerned, the Plaintiffs in the said notice referred to the Work Order as well as final invoices dated 21^st January, 2007 and 25^th January, 2007 for the sum of Rs. 7,69,343/- and Rs.12,96,795/- respectively.

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The Defendants through their advocates’ reply dated 4^th March, 2010 informed the Plaintiffs that their Solicitor was going out of Mumbai for about two weeks and the Defendants were verifying the purported alleged claim made by the Plaintiffs and shall revert back with the detailed instructions in the matter to deal with the notice issued by the Plaintiffs. In the meanwhile the Defendants denied the allegations made therein. In para (4) of the said reply, the Solicitors of

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the Defendants informed that they shall revert back to the Plaintiffs after obtaining detailed instructions from the Defendants which would be from the

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week starting from 17^th March, 2010. It is a matter of record that there is no other reply given by the Defendants to the said demand notice dated 20^th February, 2010. The Plaintiffs thereafter filed the company petition bearing No. 129 of 2010 in this court for winding up of the Defendant company. The said company petition was in respect of four sites. It was brought to the notice of the Company Judge that this summary suit filed by the Plaintiffs was pending and Summons for Judgment had been already taken out by the Plaintiffs. By an Order dated 30^th September, 2010 S.J.Kathawala, J clarified that in respect of the work in question, since Summary Suit filed by the Plaintiffs was already pending and Summons for Judgment had been taken out, all rights and contentions of the respective parties in the said suit and summons for judgments were kept open.

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The Plaintiff has sought to rely upon the said Company Petition annexed by the Defendants in the present proceedings.

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The Defendants have filed affidavit in reply in the present proceedings on 8^th September, 2011 seeking unconditional leave to defend. In para (5) of the affidavit in reply, the Defendants have pleaded that since work was carried out at Kolhapur, this court has no jurisdiction to entertain and try the summary suit.

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The Learned Counsel appearing for the Plaintiffs invited my attention to the fact that the Defendant Company is having its registered office at Mumbai and even

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the work order dated 21^st December, 2005 was issued by the Defendants in favour of the Plaintiffs at Mumbai. In view of the fact that Defendants are carrying on business in Mumbai and since work order was issued in Mumbai, this Court has jurisdiction to entertain and try this suit. I, therefore, don’t find any substance in the defence raised by the Defendants that this court has no jurisdiction.

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In paragraphs 6 (II), (III), (IV), (V) and (VI) the Defendants have raised following pleas :-

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(i)Mr.Bhagwati was acting as a consultant for the Plaintiffs. The Defendants had received e-mail from their principal employer Raymond Zambaiti Pvt. Ltd. dated 15^th April, 2006 complaining about the bad quality of work carried out by the Plaintiffs. The said e-mail dated 15^th April, 2006 was forwarded to Mr.Bhagwati on 15^th April, 2006.

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(ii) Whatever work has been carried out by the Plaintiff was not in proper manner and was faulty and not as per procedure specified in the work out.

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(iii) The Defendants have raised Debit Note of Rs.9,09,944.90 upon the Plaintiffs due to such bad quality of work carried out by the Plaintiffs.

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(iv) Certification of bills/invoices including final

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invoice by the engineer of the Defendants or of the clients was mandatory for release of payment.

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(v) The Invoices dated 21^st January, 2007 and 25^th January, 2007 annexed to the plaint however have not been verified or certified by the engineer of the Defendants or by the clients’ engineers. Such invoices raised by the Plaintiffs are bogus and are not received by the Defendants.

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(vi) The various statements such as final job completion certificate, PF clearance certificate, material reconciliation statement with measurement sheet not submitted by the Plaintiffs.

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As far as e-mail dated 15th April, 2006 strongly relied upon by the Defendants is concerned, it is alleged to have been sent by one Mr.Rajendra Saboo representing Raymond Zambaiti Pvt. Ltd. to the Defendants. Copy thereof is alleged to have been forwarded at three e-mail addresses including e-mail address [email protected]. It is the case of the Defendants that this e-mail dated 15^th April, 2006 was forwarded to Mr.Bhagwati on 15^th April, 2006 complaining about the sub-standard work of the Plaintiffs. Relying upon this e- mail, the Learned Senior Counsel appearing for the Defendants submitted that the quality of work carried out by the Plaintiffs was bad and therefore Plaintiffs were not entitled to recover any such amount from the Defendants. On the other hand,

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the Learned Counsel appearing for the Plaintiffs invited my attention to the letter dated 20^th August, 2010 from the solicitors of the Defendants to the solicitors of the Plaintiffs. The Defendants through their solicitors in the said letter clarified to the Plaintiffs’ solicitor that the e-mail particularly e-mail referred in para (14) of letter dated 18^th August, 2010 was though dated 15^th April, 2006, the same was actually received by the Defendants on 28^th September, 2006. The Learned Counsel submitted that the Plaintiffs did not receive any such e-mail. It is not even pleaded by the Defendants that copy of any such e-mail was forwarded to the Plaintiffs. It is the case of the Plaintiffs that Mr.Bhagwati whose name is mentioned in the said e-mail was not consultant of the Plaintiffs. The Learned Counsel also invited my attention to the chart annexed to the affidavit in rejoinder downloaded by the Plaintiffs from the website of the Defendants, showing the work executed by the Defendants during the last five years. Serial No.9 thereof refers to the work in question. In the third column which provides for ‘Postal Address of Consultant’, the name of M/s.Bhagwati Design Pvt. Ltd., consulting engineers and architects has been mentioned. The month of completion mentioned is December, 2005. Relying upon this Chart, the Learned Counsel for the Plaintiffs submitted that it is clear from the chart that M/s.Bhagwati Design Pvt. Ltd. was not the consulting engineer of the Plaintiffs but were consulting engineer of the Defendants.

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In view of the fact that the Defendants through their advocates’ letter has clarified that the said alleged e-mail dated 15^th April, 2006 which was alleged to have been forwarded to Mr.Bhagwati itself was received on 28^th September, 2006, the question of forwarding the said e-mail to Mr.Bhagwati on 15^th April, 2006 did not arise. In my opinion an incorrect statement has been made by the Defendants in their affidavit in reply that the said e-mail was forwarded to Mr.Bhagwati on 15^th April, 2006. In any event, it is not the case of the Defendants that any such e- mail was sent to the Plaintiffs. Even on bear perusal of the said e-mail dated 15^th April, 2006, it does not reflect any bad quality of work in respect of the site in question. I am, therefore, not inclined to accept the submission made by the Learned Senior Counsel appearing for the Defendants that there was complaint received in respect of the alleged bad quality of work in respect of the site in question and that the same was conveyed to the Plaintiffs.

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As far as Debit Note dated 31^st March, 2008 of Rs.9,09,944.90 is concerned, no reliance thereon was placed in the company proceedings by the Defendants. The said documents annexed at Ex.`B’ to the affidavit in reply has not been signed by either party. The Defendants are not in a position to prove the delivery of the said Debit Note to the Plaintiffs. Therefore in my opinion, no reliance thereon therefore can be placed by the Defendants. The Learned Counsel for the Plaintiffs is right in his submission that even if the said Debit Note is considered

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by me to test the veracity of the defence raised by the Defendants, admittedly the work was completed in the month of December 2006, defect liability period under the said work order was 12 months from the completion of the work. 12 months expired in the month of December 2007. Prior to the date of the said alleged Debit Note, there was no complaint made by the Defendants in respect of the alleged bad quality of work in respect of the work in question. I am therefore not inclined to accept the submission of the Learned Senior Counsel appearing for the Defendants that any such debit note was ever served upon the Plaintiffs by the Defendants.

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As far as invoices dated dated 21^st January, 2007 and 25^th January, 2007 which are final invoices according to the Plaintiffs are concerned, defence of the Defendants is two fold (1) these invoices were bogus and were not received by the Defendants and (2) even if it was considered as final invoices, it was required to be verified and certified by the engineers of the Defendants or their clients’ engineers. It is submitted that no final measurement has been taken and therefore the question of any default on the part of the Defendants did not arise. The Learned Counsel appearing for the Plaintiffs on the other hand invited my attention to the notice of demand dated 20^th February, 2010 addressed by their solicitors to the Defendants company in which these two final invoices were specifically referred. Though the Defendants replied to the said notice, it was not

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alleged that no such invoices were received by the Plaintiffs. The Learned Counsel also referred to the averments made in the company petition in which there was a reference to the said two invoices on the basis of which company petition came to be filed. He also drew my attention to the affidavit in reply filed in the company petition in which there was no such plea raised by the Defendants company. On the contrary in para (11) to the reply to the company petition, it is alleged that all the bills annexed to the petition were disputed, incorrect, time barred and not payable. In my opinion, the Learned Counsel for the Plaintiffs rightly submitted that this plea raised by the Defendants in reply to the company petition demonstrates the factum of receipt of bills and cannot be now disputed. The Respondents made payment of Rs.1 lacs after completion of the work after these two bills came to be issued. I am, therefore, not inclined to accept this plea raised by the Defendants that these two invoices were bogus and were not received by the Defendants.

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In so far as certification of these two bills by the engineers of the Defendants or their clients is concerned, the Learned Counsel appearing for the Plaintiffs invited my attention to the work orders which provided for payment of monthly bills within 30 days from the certification of the bills by their site office. The said work orders did not provide that final bill is also required to be certified by the site engineer of the Defendants or engineers of their clients. The Learned

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Senior Counsel appearing for the Defendants also placed reliance upon two documents annexed at Ex.`C’ at pages 17 and 18 of the affidavit in reply to the Summons for Judgment in support of his submission that RA Bill No. 9 for the month of July 2006 was certified by the accountant and Site-In-Charge and it demonstrates that certification before release of payment was mandatory. In my opinion, from the perusal of the said certificate, it does not show that the said bill form was submitted by the Plaintiffs. Though on the said Bill Form, there is column for signature of the Petty Contractor admittedly no such signature of Plaintiffs exists on the said bill relied upon by the Defendants.

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During the course of the submission being made by the Learned Senior Counsel on behalf of the Defendants, I enquired whether Defendants had raised any bill upon their client M/s. Raymond Zambaiti Pvt. Ltd. in respect of the amount claimed in the present proceedings by the Plaintiffs for the work done after completion of the work. The Learned Senior Counsel after taking instructions from the representative of the Defendants who was present in the court fairly admitted that the quantity of work referred in the two invoices claimed by the Plaintiffs are also claimed by the Defendants in their final bill raised by the Defendants on M/s.Raymond Zambaiti Pvt. Ltd. It is, however, submitted that though the Defendants had submitted a bill for other sites also and for larger amount, M/s.Raymond Zambaiti Pvt. Ltd. had not made the entire

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payment. In support of this plea, the Learned Senior Counsel relied upon the certificate dated 21^st April, 2012 from the Chartered Accountant certifying the payment received from Raymond Zambaiti Pvt. Ltd. and total expenditure incurred by the Defendants on the said work. The Learned Counsel submitted that the said certificate shows that there was loss suffered by the Defendants in respect of the said work of Raymond Zambaiti Pvt. Ltd.. On the other hand, the Learned Counsel appearing for the Plaintiffs submitted that even if the amount mentioned in the said certificate are considered as correct, it does not reflect any alleged bad quality of work or that any payment was withheld by the client of the Defendants due to any alleged bad quality of work by the Defendants. In my opinion, the said certificate relied upon by the Learned Senior counsel does not assist his clients to show that the quality of work carried out by the Plaintiffs was bad or not as per specification.

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In view of the fact that the Defendants have already included the claim made by the Plaintiffs reflected in the said two invoices as part of work done by Defendants to M/s.Raymond Zambaiti Pvt. Ltd. showing the same quantity, in my opinion, the defence raised by the Defendants that there was no joint measurement done or the same required verification or certification by the engineer of the Defendants or by the clients’ engineers or that the said two invoices were not received by the Defendants from the Plaintiffs is totally frivolous, moon shine and untenable.

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I am of the opinion that no issue has been raised by the Defendants which

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can be considered as a triable issue. Since defence raised by the Defendants is wholly untenable, unconditional leave to the Defendants to defend the suit cannot be granted. The Plaintiffs are, therefore, entitle to the reliefs claimed in the Summons for Judgment. Summons for Judgment is therefore made absolute. However, it is clarified that the Plaintiffs would be entitle to further interest at the rate of 18% par annum on the principal amount from the date of filing of the suit till realization.

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Suit is decreed accordingly.

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Refund of court fees as per Rules.

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The Learned Senior Counsel appearing for the Defendants seek stay of the operative part of this order for a period of four weeks. The Learned Counsel appearing for the Plaintiffs strongly opposes this application. Stay refused.

Good Earth Minerals Pvt. Ltd. v. Gannon Ddunkerly and Co. Ltd.

Case brief

What is this about?

What did the court decide?

Good Earth Minerals Pvt. Ltd. v. Gannon Ddunkerly and Co. Ltd.

Case brief

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What did the court decide?

What the court decided

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