Allowed

The Chief Officer v. M/S Lakshmi Agencies

Karnataka HC22 Mar 2021RFA/696/2012

Case brief

AI extract

What is this about?

Appellant Municipal Council appeals against a decree for recovery of money. The High Court reversed the lower court decree and dismissed the suit, finding the plaintiff failed to prove supply of goods due to defective documents and violation of municipal procurement laws.

What did the court decide?

Impugned judgment and decree reversed; O.S.No.22/2003 dismissed; no order as to costs.

The Chief Officer Vs M/S Lakshmi Agencies — Contract and Commercial Disputes | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 22^ND DAY OF MARCH, 2021

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PRESENT

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THE HON’BLE MRS.JUSTICE S.SUJATHA

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AND

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THE HON’BLE MR. JUSTICE P.N.DESAI

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R.F.A.No.696/2012

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BETWEEN :

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THE CHIEF OFFICER TOWN MUNICIPAL COUNCIL KOLLEGAL-571440 CHAMARAJANAGARA DISTRICT [FORMERLY CALLED] NOW AT PRESENT CALLED: THE COMMISSIONER CITY MUNICIPAL COUNCIL KOLLEGAL-571440 CHAMARAJANAGARA DISTRICT. ...APPELLANT

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(BY SRI C.M.JAGADEESH, ADV.)

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AND :

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M/S. LAKSHMI AGENCIES BY SOLE PROPRIETOR C.N.LAKSHMINARASIMHA PRASAD DASAPPA BLOCK, BIG BAZAR STREET CHAMARAJANAGAR TOWN-571313 CHAMARAJANAGARA DISTRICT. …RESPONDENT

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(BY SRI G.BALAKRISHNA SHASTRY, ADV.)

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THIS R.F.A. IS FILED UNDER SECTION 96 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED 22.02.2011 PASSED IN O.S.No.22/2003 ON THE FILE OF THE SENIOR CIVIL JUDGE AND CJM, CHAMARAJANAGARA, PARTLY DECREEING THE SUIT FOR RECOVERY OF MONEY.

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THIS APPEAL COMING ON FOR HEARING, THIS DAY, S. SUJATHA, J ., DELIVERED THE FOLLOWING:

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J U D G M E N T

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This appeal is filed by the defendant challenging

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the judgment and decree dated 22.2.2011 passed in O.S.No.22/2003 on the file of the Senior Civil Judge & C.J.M., Chamarajanagar (‘Trial Court’ for short).

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For the sake of convenience, the parties are referred to as per their status before the Trial Court.

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The plaintiff instituted O.S.No.22/2003 seeking for the decree to recover a sum of Rs.10,50,066/- along with future interest @ 24% per annum from the date of suit till the date of realization.

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The Trial Court has decreed the suit in part with costs

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holding that the plaintiff is entitled to recover Rs.10,60,066/-along with interest @ 9% p.a. from the date of suit till the date of decree and thereafter @ 12% p.a. till the date of realization.

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The plaint averments are that the plaintiff is

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a trader engaged in the trading of water supply equipments and water supply chemicals. The plaintiff has supplied chemicals, spare parts and other consumables worth Rs.7,31,350/- for the water supply work of the defendant – Municipality vide supply indent dated 15.1.2000 as detailed in four delivery notes. The said goods were received by the defendant in good condition and has issued acknowledgements on 17.1.2000. Pre-receipted cash bills dated 17.1.2000 were issued pursuant to which defendant addressed a letter dated 17.3.2000 and 26.5.2000 acknowledging the receipt of the goods and expressed its inability to pay the amount immediately and sought for some time i.e., after receiving the grant. It is the grievance of the plaintiff that despite repeated reminders and notice issued, no payments were made by the defendant for the goods supplied. Hence, the plaintiff was constrained

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to file the suit for recovery of the amount of Rs.4,99,720/- with interest @ 2% per month amounting to Rs.10,50,066/-.

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In response to the summons issued, defendant appeared and filed the written statement totally denying the claim of the plaintiff. The primary defence set up was that no goods were supplied to the defendant as contended. The issuance of letters dated 17.3.2000 and 26.5.2000 were totally denied as false and concocted. Suit was decreed on 5.4.2007 which was challenged by the defendant in R.A.No.70/2007. The first Appellate Court allowed the appeal and remanded the matter to the Trial Court.

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On the basis of the pleadings, the following

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issues were framed:

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1. Whether the plaintiff proves that, he had supplied the goods worth of Rs.7,31,350/- to the defendant as alleged in the plaint?

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2. Whether plaintiff further proves that he is entitled the change of interest @ Rs.2% per month as averred in para 4 of the plaint?

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3. Whether the plaintiff proves that the calculation made by the plaintiff to the tune of Rs.10,50,066/- is true and correct?

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4. Whether the defendant proves that this Court has no pecuniary jurisdiction to try this suit?

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5. Whether the plaintiff is entitled for the decree for a sum of Rs.10,50,066/- with future interest at the rate of 24% per annum from the date of suit till the realization?

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6. What Order or Decree?

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Plaintiff examined himself as PW-1 and one

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more witness was examined as PW-2. Exs.P1 to P36 were got marked. The official of the defendant Municipality was examined as DW-1 and Exs.D1 to D7 were marked.

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On appreciation of oral and documentary

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evidence, issue Nos.1 and 3 were answered in the

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affirmative, issue Nos.2 and 5 were answered partly in the affirmative and issue No.4 was answered in the negative.

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Being aggrieved, the defendant has preferred

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the present appeal primarily on the ground that the documents viz., duplicate delivery notes Exs.P1 to P4 produced by the plaintiff to prove his claim that the materials against indent were supplied were concocted, denying the supply of the said goods to the defendant. Learned counsel for the defendant disputing Exs.P9 and P10 argued that no material was supplied by the plaintiff. The documents were created in collusion with the then Chief Officer of the defendant Municipality to make wrongful gain. No entries were made in the Stock Register maintained by the Municipality for the delivery of the stock by the plaintiff. Placing reliance on section 72(5) of the Karnataka Municipalities Act, 1964, learned counsel argued that no indent would have been issued

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by the Municipality without there being invitation of tenders for the purchase of materials of value more than Rs.5,000/-. The learned Trial Judge without appreciating the material irregularity and inconsistencies found in the oral and documentary evidence, decreed the suit directing the defendant to make payment of Rs.10,60,066/- along with interest @ 9% p.a. which is not in conformity with the evidence vis-à-vis the law holding the field. Hence, sought for allowing the appeal.

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Learned counsel appearing for the plaintiff supporting the impugned judgment of the Trial Court, argued that the documentary evidence as well as the oral evidence placed by the plaintiff would demonstrate that the plaintiff has supplied the material to the defendant – Municipality as per Ex.P1 to P4. Ex.P9 and P10 would substantiate the same. These documents Ex.P9 and P10 marked without any objection and the

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same not being disputed, the same cannot be ignored. It was submitted that even the DW1 in his evidence has not disputed the genuineness of Ex.P9 and P10. Ex.P5, P6 and P7 – letter of indents also supports the same. Ex.P37 and 38 would indicate that in the Execution Petition filed by the plaintiff seeking for execution of the decree impugned, the defendant has not denied any of the exhibits more particularly, Ex.P9 and P10 and merely requested the Executing Court to grant some time for the payment of the decretal amount vacating the attachment of movables. Placing reliance on Ex.P12, learned counsel argued that in view of the stock register relating to the relevant period not available in the defendant’s office, notices were issued to Sri.A.C.Aluraiah – the concerned officer who had not handed over the stock registers to the concerned officer on his transfer. This notice was issued to Sri.A.C.Aluraiah and Sri.R.Gangadhar on the request made by the plaintiff to furnish the details of the goods

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purchased from the plaintiff. These documents would establish the supply of goods made by the plaintiff pursuant to the indent/purchase order issued by the defendant – Municipality. Thus, it was submitted that on appreciation of oral and documentary evidence, the Trial Court has rightly decreed the suit with interest which deserves to be confirmed dismissing the appeal.

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Having heard the learned counsel for the parties and perusing the material on record, the points that arise for our consideration are:

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1. Whether the plaintiff has proved the supply of goods worth Rs.4,99,720/- as per Ex.P1 to P4 to the defendant?

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2. Whether the Trial Court was justified in decreeing the suit for a sum of Rs.10,50,066/- as claimed by the plaintiff along with interest at 9% p.a. from the date of the suit till the date of decree and thereafter at the rate of 12% p.a., till realization?

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Re. Point No.1:

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The entire case of the plaintiff is built upon Ex.P1 to P4 which are the duplicate delivery notes and do not contain the bill number, order number and date, mode of dispatch etc. Though the delivery note reflects the KST number and CST number and the date of delivery notes as 17.01.2000, the other required columns are left blank. Under the Sales Tax Law, delivery note is a document that lists all the goods included in a delivery sent with a shipment of goods. Under the provisions of the KST Act, which was applicable during the relevant period, register of delivery notes has to be maintained under Rule 23–B[1-A][ii]. The relevant information to be disclosed in the delivery

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note are:

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Name and complete address of the consignor.

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Registration Certificate Number of the consignor under the Karnataka Sales Tax Act, 1957, if any, A Bill No. or cash

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Memorandum No, issued by the seller in respect of the goods.

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Name and complete address of the consignee.

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Registration Certificate Number of the consignee under the Karnataka Sales Tax Act, 1957, if any.

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Destination of goods.

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Description of goods.

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Quantity of the goods.

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Name and address of the person (if any) incharge of the goods.

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Name and address of the person driving the vehicle or in-charge of an animal or other means of conveyance.

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Vehicle number, if any.

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Name of the owner of the goods.

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Signature of the owner of the goods or his authorized agent or manger.

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The complete delivery note has to be in the

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possession of the person carrying the goods. Delivery notes shall be maintained in the form of books containing 100 Forms. The Forms shall be serially

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numbered and one series number shall be adopted for each assessment year. This delivery note should contain

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the signature or thumb impression of the person transporting the goods. In case of the thumb impression of the person transporting the goods is taken, the same should be attested by seller or his agent or manager.

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The Exs.P1 to P4 do not satisfy the

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requirements of delivery note prescribed under the provisions of the Karnataka Sales Tax Act, 1957 and the Karnataka Sales Tax Rules as it stood during the relevant period. Invoice or bill under the KST Act is mandatory for proof of sale of any goods as per the provisions of the KST Act. Mere delivery note would not prove the sale of the goods for valuable consideration. In the absence of these relevant documents, the entire case built upon the duplicate delivery notes which are inchoate cannot be given any weightage and the same do not inspire confidence to accept the version of the

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plaintiff. The documents at Ex.P9 and P10 said to have been issued by the defendant indicates the total bill amount of Rs.7,31,350/- under the various bill numbers due to the plaintiff and the defendant has sought for time to make the said payment of Rs.7,31,350/- due to the financial constraints in the defendant – Municipality as no special grant was released. It was assured that on releasing of any special grant, the amount of Rs.7,31,350/- shall be paid to the plaintiff.

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In Ex.P10 – the letter dated 17.03.2000, there is a reference to the request letter of the plaintiff dated 25.02.2000 which is overwritten. Similarly, in Ex.P9, the letter dated 26.05.2000, there is a reference to the request letter dated 25.05.2000. None of these letters referred to in the said exhibits are marked. Though the said exhibits are said to have been signed by the Chief Officer, Town Municipal Council, Kollegal

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marked as Ex.D5 and D6, the same has been totally disputed by the defendant. In the cross-examination, DW1 has deposed as under:

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“ ªÁ¢AiÀÄÄ ºÉÃ½zÀAvÉ zÁªÁ D¹ÛAiÀÄ ¸ÀgÀPÀÄUÀ¼À RjÃ¢UÁV £ÀªÀÄä ¸ÀA¸ÉÜAiÀÄ°è AiÀiÁªÀÅzÉÃ £ÀqÀªÀ½PÉUÀ¼ÀÄ £ÀqÉ¢®è. ªÁ¢AiÀÄÄ ºÁdgÀÄ ¥Àr¹zÀ zÁR¯ÉUÀ¼À°è AiÀiÁªÀ zÁR¯ÉUÀ¼À£ÀÄß ¸ÀÈó¶Ö¹zÉ JAzÀgÉ, D zÁR¯ÉUÀ¼ÀÄ MAzÀPÉÆÌAzÀÄ vÁ¼ÉAiÀiÁVgÀÄªÀÅ¢®è. ¤¦-5, 6, 7, 9 ªÀÄvÀÄÛ 15UÀ¼À §gÉzÀ ¯Élgï ºÉqï ¥ÀæwªÁ¢ ¸ÀA¸ÉÜAiÀÄzÀÄ ªÀÄÄSÁå¢üPÁjUÀ¼À ¸À»AiÀÄ°è ªÀåvÁå¸À AiÀiÁªÀ jÃwAiÀÄzÀÄ JAzÀgÉ, CzÀgÀ°ègÀÄªÀ ¸À»UÀ¼ÀÄ MAzÀPÉÆÌAzÀÄ ¥ÀgÀ¸ÀàgÀ vÁ¼ÉAiÀiÁVgÀÄªÀÅ¢®è. ¥ÀæwªÁ¢AiÀÄ ¸ÀA¸ÉÜAiÀÄ ¥ÀgÀªÁV zÁR¯ÉUÀ½UÉ ªÀÄÄSÁå¢üPÁjUÀ¼ÀÄ E®èªÉÃ, D ¢£ÀzÀ ¥Àæ¨sÁgÀ ªÀÄÄSÁå¢üPÁjUÀ¼ÀÄ ¸À» ªÀiÁqÀÄvÁÛgÉ JAzÀgÉ ¤d. ¤¦-5, 6, 7, 9 ªÀÄvÀÄÛ 15gÀ°ègÀÄªÀ ¸À»UÀ¼ÀÄ AiÀiÁªÀ ªÉÄÃ¯Á¢üPÁjAiÀÄ ¸À»UÀ¼ÀÄ [ªÉÄÃ¯Á¢üPÁjAiÀÄ ºÉ¸ÀgÀÄ K£ÀÄ JAzÀgÉ] £À£ÀUÉ ¹§âA¢¬ÄAzÀ w½zÀAvÉ CzÀÄ ªÀÄÄSÁå¢üPÁjAiÀÄ ¸À»AiÀÄ®è. ªÀÄvÀÄÛ £À£Àß ¹§âA¢AiÀÄ ¸À» C®è. ¸ÀzÀj zÁR¯ÁwUÀ¼À ¸À»UÀ¼ÀÄ £ÀªÀÄä ¹§âA¢AiÀÄzÀÄ C®èªÉAzÀÄ w½zÀ £ÀAvÀgÀ K£ÀÄ PÀæªÀÄ dgÀÄV¸À¯ÁVzÉ JAzÀgÉ, £Á£ÀÄ «ZÁgÀuÉUÉ ºÁdgÁzÀ £ÀAvÀgÀªÉÃ ¸ÀzÀj zÁR¯ÉUÀ¼À §UÉÎ w½¢zÉ. ªÀÄvÀÄÛ £ÁåAiÀiÁ®AiÀÄzÀ°è «ZÁgÀuÉ EgÀÄªÀÅzÀjAzÁV £ÁªÀÅ AiÀiÁªÀÅzÉÃ PÀæªÀÄUÀ¼À£ÀÄß dgÀÄV¹®è.”

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In the cross-examination of PW1, he has

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stated that he has produced 5 cash bills but they were not marked as they were Xerox copies. He has claimed an amount of Rs.4,99,720/- plus interest at 2% compoundable monthly, the defendant has to pay Rs.10,50,066/- with future interest as per calculation made out at Ex.P11 and the same has been calculated by considering terms and conditions stipulated in the delivery notes marked at Ex.P1 to P4. He has deposed that he does not remember whether this business unit was registered under the Central Sales Tax Act and Karnataka Sales Tax Act. Nextly, he has submitted that there is document to the said effect and the same can be produced if called. The plaintiff has admitted that he has filed the returns to the Department from time to time. Documents relating to the transaction in question submitted before the Department was with him but the same has been spoiled/[ £É£ÉzÀÄ ] at home. The plaintiff has further admitted that he is oblivious of whether the

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tenders were invited for supply of goods in question but

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he volunteers that the quotations were called for. According to him, the said quotations were published by the Chief Officer of the Municipality in the notice board but he has not secured the copy of the said notification. The said notification was made during January-2000 and he had submitted the quotation in the second week of January. He has maintained the quotation book. The Xerox copies of the quotations were retained by him. The plaintiff deposes that he has handed over the quotation to the defendant but has not received any acknowledgement. The goods valued at Rs.4,90,720/were supplied to the defendant on 17.01.2000. He has denied the suggestion that the Chief Officer had no competency to purchase the said goods worth Rs.4,99,720/-. Further, the plaintiff has stated that he does not remember when the Ex.P1 to P4 delivery notes were printed. He has denied the suggestion that no delivery notes shall be printed without the permission

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from Commercial Tax Department. He has admitted that the delivery notes at Ex.P1 to P4 were not brought to the notice of the Commercial Department. The said goods were said to have been dispatched through mini lorry. The plaintiff has admitted that in Ex.P1 to P4, there is no reference to mode of transport and the details of the vehicle in which the goods are transported and there is no signature of the driver of the vehicle involved in the transportation. The plaintiff further has deposed that the said goods described in Ex.P1 to P4 were sent from Bengaluru but the same was not reflected in the delivery notes; the stock ledger maintained by him is also destroyed. He has stated that he do not remember from whom he had purchased the said goods after admitting that the plaintiff – dealer has no sister concern or branch office at Bengaluru.

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As could be seen from Ex.P12, the said notice indicates that the defendant – Municipality had

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purchased the electrical goods during 1998-99 from the plaintiff but the subject goods are water supply equipments and water supply chemicals. The stock register copy being sought by the plaintiff on verification, the same not being available in the office, as per the directions of the Deputy Commissioner, Sri.R.Gangadhar and Sri.A.S.Aluraiah who had worked during that period as the Junior Engineer and Assistant Engineer respectively, were issued with notices to hand over the documents relating to the said stock. It is specifically stated that Sri.A.S.Aluraiah, who was worked as the concerned Engineer during the relevant period has not handed over the documents relating to the stock to any officer on his transfer. This document would not inspire any confidence for the reason that as per Ex.P1 to P4, the material now said to have been supplied by the plaintiff are not electrical goods. Ex.P5, P6 and P7 said to be the indents made by the defendant – Municipality indicates only the items and the quantity

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required. No value of the goods is mentioned in the said indents. Any indent without the value of the goods is incomplete and cannot be given any credential value. Mere marking of Ex.P9 and P10 would not prove the transaction unless corroborated by substantial evidence when the same has been specifically denied by the defendant. As such, the arguments advanced by the learned counsel for the plaintiff deserves to be negated.

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Nothing positive is elicited from the mouth of the DW1. Ex.D7 is the stock register said to have maintained by the defendant – Municipality. Though certain inconsistencies were pointed out by the learned counsel for the plaintiff inasmuch as the entries found in the said stock register - Ex.D7, the plaintiff banking upon the weakness of the defendant cannot prove its case. The primary burden lies on the plaintiff to prove the supply of goods to the defendant. Thereafter, the burden shifts on the defendant to prove the defence. At the first instance, the plaintiff having utterly failed to

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establish the sale and supply of the goods towards which the claim was made, the arguments of the learned counsel for the plaintiff deserves to be negated. The entire approach of the Trial Court in decreeing the suit is erroneous and the same cannot be approved for the reasons aforesaid. In the absence of proof of supply of materials, question of payment with interest does not arise.

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In terms of the said Section 72[4] and [5] of

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the Karnataka Municipalities Act, 1964, the sanction of the municipal council is required in the case of City municipal council for purchase of movable property, or for the sale of any movable property belonging to a municipal council, if the value of the property to be sold as estimated in the municipal accounts exceeds one thousand rupees in the case of a town municipal council and two thousand rupees in the case of a city municipal council. Before any contract for the supply of

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materials or goods or for the execution of any work which will involve an expenditure exceeding five thousand rupees is entered into, tenders shall be publicly invited from persons willing to enter into such contract and when the estimated value exceeds such amount as may be prescribed no such contract shall be entered into without the previous approval of the Government or an officer duly authorized by the Government in this behalf. As such, the supply of goods exceeding Rs.5,000/- said to have been made by the plaintiff to the defendant – Municipality, as per Ex.P1 to P4 is not in accordance with law and hit by provisions of Section 72[4] and [5] of the Karnataka Municipalities Act, 1964. No weightage could be given to the said documents.

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19. On re-appreciation of oral and documentary

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evidence, we are of the considered view that the

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judgment and decree passed by the Trial Court suffers

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from infirmity and the same is not sustainable.

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Hence, the following

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ORDER

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i) The appeal is allowed. ii) The impugned judgment and decree dated 22.02.2011 passed by the Senior Civil Judge and CJM, Chamarajanagara, in O.S.No.22/2003 is reversed.

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iii) O.S.No.22/2003 filed by the plaintiff stands dismissed.

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iv) No order as to costs.

Sd/JUDGE

Sd/-

JUDGE

Dvr/NC/PMR

The Chief Officer v. M/S Lakshmi Agencies

Case brief

What is this about?

What did the court decide?

The Chief Officer v. M/S Lakshmi Agencies

Case brief

What is this about?

What did the court decide?

What the court decided

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