Allowed

M/S Ultra Distributors Pvt.Ltd. v. M/S Viacom Electronics (P) Ltd. and Ors.

Bombay HC29 Jul 2013S/1624/2004

Case brief

AI extract

What is this about?

This unopposed suit for recovery of dues for supply of VCDs was decreed on plaintiff's affidavit evidence. The court reduced the prayed interest from 18% to 10% p.a.

What did the court decide?

Decree for Rs.1,21,53,900/- with interest at 10% p.a. granted.

What the court decided

M/S Ultra Distributors Pvt.Ltd. Vs M/S… — Contract and Commercial Disputes | Bombay HC (2013)

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s-1624.04.doc

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ppn 1

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

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SUIT NO.1624 OF 2004

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M/s. Ultra Distributors Private Limited (formerly known as M/s. Jabsons Tradex Pvt. Ltd.

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.. Plaintiff

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Vs.

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M/s. Viacom Electronics (P) Ltd. & Ors.

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.. Defendants

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Mr. Rashmin Khandekar i/by Mr. Surya Narayan Panda for the plaintiff. None for the defendants.

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Mr. Neelkanth Banarjee, authorised representative of the plaintiff.

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CORAM : N.M. JAMDAR, J. DATE : 29 JULY 2013

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P.C. :

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. By this suit, the plaintiff prays that a decree for the sum of Rs.1,86,03,125/- together with interest on Rs.1,21,53,900/- @18% p.a. from defendant nos. 1 to 6.

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The plaintiff is a private limited company carrying on business of production and distribution of VCD’s and DVD’s of English, Marathi, Gujarathi and other regional language films, after acquisition of the video copyrights in respect of the same. Defendant nos.1, 2 & 3 are the companies incorporated under the provisions of the Companies Act, 1956 and these companies are group of sister concerns. Defendant no. 1 is a nominee and front sister concern of the Defendant nos.2 & 3. The defendant nos.4 to 6 are the Directors and responsible Officers of defendant no.1, 2 & 3 who signed the agreements on behalf of the defendants and gave promises and understandings on their behalf. The defendant no.7 is a formal party.

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ppn 2

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s-1624.04.doc

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By order passed on 14 January 2009, the suit was transferred to the category of “Undefended Suits” as none of the defendants have filed written statement. Advocate appearing for defendant nos. 1 to 6 earlier sought discharge. Thereafter, none has appeared on behalf of the defendants.

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The plaintiff has filed an affidavit in examination-in-chief dated 22 July 2013 placing on record the fact that there was a BIFR reference filed by defendant no.1 bearing No.309 of 2003 which was dismissed as not maintainable on 18 May 2006. It is placed on record that the plaintiff deputed an advocate to make inquiries at the BIFR and a communication received from the advocate informing the plaintiff that the reference is dismissed on 18 May 2006. The communication is placed on record by way of the affidavit. Considering the statements made on oath by the plaintiff, it appears that there is no impediment to proceed with the suit.

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Perusal of the plaint shows that the plaintiff that sometime in September 1998, the defendant no.4 along with the defendant no.5 approached the plaintiff and informed that there is a scheme as regards to improve the sales and distribution of Television and video systems by offering exchange free gifts of CDs and VCDs in English and other regional languages. Defendant nos.4 & 5 initiated talks with the plaintiff to purchase the goods in bulk quantity. Accordingly, a Memorandum of Understanding (MOU) was executed on 18 September 1998 between the plaintiff and the defendant nos.2 & 3. It was agreed to grant license to defendant nos. 2 & 3 as a representative of AKAI and AIWA to get

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ppn 3 s-1624.04.doc

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the VCD’s manufactured of various films to be given free/complimentary to the buyers of the AKAI and AIWA products. It was agreed that 26,666 sets of 30 titles each of the movie title would be given at a lump sum royalty of Rs.1450/- per set towards license fees excluding replication charges of the defendant no.7. Pursuant to the MOU, defendant nos. 2 &3 from time to time to place orders with the plaintiff. Though the MOU was for a period of six months, it was orally extended from time to time on the same terms and conditions.

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Some time in October/November 2000, defendant nos.4 & 5 approached the plaintiff in respect of the products of TCL. It was also represented to the plaintiff that they intended to introduce defendant no.1 as a front sister concern of the company as an internal arrangement for the purpose of tax benefits. The business was routed through defendant no.1. It was assured by defendant nos. 4 & 5 that they would be fully responsible for payment of the dues of the plaintiff. According to the plaintiff, in pursuance of this representation, an oral agreement was entered into with the defendant no.1 also. Pursuant to the arrangement, further orders were placed with the plaintiff through defendant no.1 and the goods were supplied amounting to 44,407 packs containing 20 VCD’s between the period from November 2000 to April 2001. The goods were supplied and the invoices were raised on defendant no.1 by the plaintiff to the tune of Rs.1,70,42,000/-. The defendant no.1 paid an amount of Rs.40,88,100/- with balance of Rs.1,21,53,900/-. The defendant no.1 issued eleven post dated cheques from dated 3 May 2001 to 17 May 2001. The cheques deposited were dishonoured. Upon redepositing, the cheques again were dishounoured. The plaintiff

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ppn 4

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s-1624.04.doc

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informed these facts to defendant nos. 4 & 5 to assure that outstanding dues will be paid.

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In first week of July 2001, the plaintiff received a letter from defendant no.1 requesting to return the cheques as there was some problem with the bankers and the new cheques would be given. Accordingly, the plaintiff with a covering letter dated 7 July 2001 returned the cheques and forwarded a statement of account of balance outstanding amount. The defendant nos.1 to 5 failed to replace the cheques and thereafter, the plaintiff through its advocate sent a legal notice on 10 March 2003. The plaintiff also filed a complaint with the Additional Commissioner of Police, Crime Branch against defendant nos. 4, 5 & 6 for cheating and criminal breach of trust. The defendants replied to the notice by letter dated 15 January 2004 and stated that defendant nos.1, 2 & 3 are separate entities. It was also pointed out that defendant no.1 has approached the BIFR. Thereafter, the present suit has been filed.

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The learned Counsel for the plaintiff submitted that the goods were supplied as per the request made by defendant nos.4, 5 & 6 upon their assurance that defendant nos.1, 2 & 3 who are sister concern would pay the amount. The learned Counsel submitted that defendant no.1 in fact issued post dated cheques which were dishonoured. The learned Counsel submitted that invoices were duly raised and if defendant no.1 had no concern with defendant nos. 2 & 3, the defendant no.1 would not have issued post dated cheques and also made part payment. The learned Counsel submitted that inspite of service, none has come forward to controvert the assertion made by the plaintiff and

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s-1624.04.doc

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ppn 5

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and decree be passed in favour of the plaintiff.

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As stated earlier no written statement is filed. None appears on behalf of the defendants. It is placed on record by way of affidavit that the BIFR reference is rejected in the year 2006. The plaintiff has placed on record the MOU with defendant nos.2 & 3 and has also placed on record the invoices raised by the plaintiff. The invoices were raised on defendant no.1. The learned Counsel placed on record the ledger accounts of defendant no.1. The part of the payment has been made by defendant no.1. The cheques were issued by defendant no.1. Therefore, the contention raised by the defendants in the reply that the defendant nos.1,2 & 3 are separate entities cannot be accepted. In any case, the assertion made by the plaintiff that the defendant nos.1,2 & 3 are all sister concern and defendant nos.4 to 6 represented through the plaintiff on their behalf has gone uncontroverted. This is a case where the goods are supplied and as stated by the plaintiff, by way of internal arrangement, the defendant no.1 was to pay the amount to the plaintiff. In the circumstances, a case is made out for grant of decree as prayed for.

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The plaintiff has prayed for award of interest @ 18% p.a. The MOU as well as invoices do not specify any rate of interest. Considering the facts and circumstances of the case, I find that the interest @ 10% p.a. is appropriate.

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Accordingly, the suit is decreed in terms of paragraph 34 of the plaint.

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ppn 6 s-1624.04.doc 12. Refund of Court fees as per rules.

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After the true copies of the documents are placed on record to the satisfaction of the office, the original documents to be returned to the plaintiff.

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N.M. JAMDAR, J.

M/S Ultra Distributors Pvt.Ltd. v. M/S Viacom Electronics (P) Ltd. and Ors.

Case brief

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What the court decided

M/S Ultra Distributors Pvt.Ltd. v. M/S Viacom Electronics (P) Ltd. and Ors.

Case brief

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What did the court decide?

What the court decided

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