Appeals by Karnataka Forest Development Corporation challenging a money-recovery decree for polythene sheet supplies and dismissal of its counter claim alleging defective gauge. Court held goods were accepted and consumed, sample testing unproven, decreed balance payable; both appeals dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 6TH DAY OF DECEMBER, 2024
BEFORE
THE HON'BLE MR. JUSTICE K. NATARAJAN
REGULAR FIRST APPEAL NO.4 OF 2015
C/W
REGULAR FIRST APPEAL NO.3 OF 2015
IN RFA NO.4/2015
BETWEEN:
CORPORATION LTD, PO BOX NO.930, KULSHEKAR POST, MANGALORE - 575 005.
CORPORATION LTD.,
A GOVERNMENT OF KARNATAKA UNDERTAKING, 'VANA VIKAS', 3RD FLOOR, 18TH CROSS, MALLESHWARAM, BANGALORE - 03.
...APPELLANTS
(BY SRI. MURUGESH V. CHARATI, ADVOCATE)
AND:
M/S MILAN POLYMERS PVT. LTD ., A COMPANY REGISTERED UNDER THE
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PROVISIONS OF THE COMPANIES ACT, 1956 AND HAVING ITS REGISTERED OFFICE AT NO.34, NADAKERAPPA INDUSTRIAL ESTATE, ANDHRAHALLI MAIN ROAD, BANGALORE-9.
REPRESENTED BY ITS EXECUTIVE MARKETING AND GENERAL POWER OF ATTORNEY HOLDER SRI.MANGILAL SONI, S/O MOTILAL SONI, AGED ABOUT 59 YEARS.
…RESPONDENT
(BY SRI. B. S. ARAVINDA BABU, ADVOCATE)
THIS RFA IS FILED U/SEC.96 R/W ORDER 41 RULE 1 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED:11.6.2014 PASSED IN O.S.NO.4299/2007 ON THE FILE OF XL ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU, DECREEING THE SUIT FOR RECOVERY OF MONEY.
IN RFA NO.3/2015
BETWEEN:
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MALLESHWARAM, BANGALORE - 03.
...APPELLANTS
(BY SRI. MURUGESH V. CHARATI, ADVOCATE)
AND:
M/S MILAN POLYMERS PVT. LTD., A COMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND HAVING ITS REGISTERED OFFICE AT NO.34, NADAKERAPPA INDUSTRIAL ESTATE, ANDHRAHALLI MAIN ROAD, BANGALORE - 9.
REPRESENTED BY ITS EXECUTIVE MARKETING AND GENERAL POWER OF ATTORNEY HOLDER SRI.MANGILAL SONI, S/O MOTILAL SONI, AGED ABOUT 59 YEARS.
…RESPONDENT
(BY SRI. B. S. ARAVINDA BABU, ADVOCATE)
THIS RFA IS FILED U/SEC.96 R/W ORDER 41 RULE 1 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED:11.6.2014 PASSED IN O.S.NO.4299/2007 ON THE FILE OF XL ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU, DECREEING THE SUIT FOR RECOVERY OF MONEY.
THESE REGULAR FIRST APPEALS HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 26.11.2024 THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:
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RESERVED FOR ORDERS ON : 26.11.2024 PRONOUNCED ON : 06.12.2024
CORAM: HON'BLE MR. JUSTICE K NATARAJAN
CAV JUDGMENT
R.F.A. No.3/2015 is filed by the appellant/defendant Nos.1
and 2 under Section 96 of CPC for setting aside the judgment and decree passed by the Additional City Civil and Sessions Judge, Bengaluru in O.S. No.4299/2007 dated 11.06.2014 for having decreed the suit of the respondent/plaintiff. Whereas, R.F.A. No.4/2015 is filed by the same appellant/defendant Nos.1 and 2 challenging the rejection of the counter claim by the same court in the aforesaid suit.
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plastic/polythene material/sheets etc. The defendant No.1 is the Executive Director of the Karnataka Forest Development Corporation Limited, Mangalore, and the 2nd defendant is the Managing Director of Karnataka Forest Development Corporation Limited, Bengaluru. In response to the tender notification dated 30.12.2005 issued by the 1st defendant for supply of 21,920 kilograms of polythene sheet - extruded out of virgin granules (250 Gauge Thickness - 45 Cms. width), the plaintiff had submitted its quote for the same and participated in the Purchase Committee Meeting held at Mangalore. Thereafter, by its letter dated 03.03.2006, the plaintiff had confirmed to the defendant No.1 that for LDPE Polythene Sheet, the rate per Kilogram would be Rs.82/-, which is inclusive of VAT @12.5%. The 1st defendant accepted the said rate vide letter dated 29.03.2006 and an agreement was entered into between the parties for the supply of goods. Accordingly, the plaintiff had supplied the polythene sheets by raising 6 invoices as under:
(i). Invoice No.008 dated 09.04.2006 for
Rs.81,975/- for supply of 999.700 kilograms to the Kallugundi Godown.
(ii). Invoice No.006 dated 09.04.2006 for Rs.98,563/- for supply of 1202 kilograms to the Kavu Godown.
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(iii). Invoice No.007 dated 09.04.2006 for
Rs.3,22,588/- for supply of 3,934.100 kilograms to the
Alvernad Godown.
(iv). Invoice No.017 dated 20.04.2006 for
Rs.4,15,118/- for supply of 5062.400 kilograms to the
Kavu Godown.
(v). Invoice No.026 dated 29.04.2006 for Rs.3,51,686/- for supply of 4288.850 kilograms to the
Kavu Godown.
(vi). Invoice No.034 dated 25.05.2006 for Rs.5,41,481/- for supply of 6,603.400 kilograms to the
Uppnagudi Godown.
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outstanding bills for Rs.6,85,828/- by cheque No.364133 on 11.05.2006 and Rs.5.00 lakhs vide cheque 371326 dated 29.05.2006. There was balance amount of Rs.6,25,583/- and Rs.89,872/- paid by the plaintiff under receipt 3077 dated 25.04.2006 towards the security deposit (EMD) which are to be paid from the 1st defendant. Referring to the telephonic order dated 09.06.2006, the 1st defendant issued another letter dated 12.06.2006 requesting the plaintiff to supply additional quantity of 7.5 metric tons of polythene sheets. The defendant had also cautioned that if the plaintiff fails to supply the material within one week, it would procure the same at the cost and risk of the plaintiff. But, the plaintiff never received any telephonic order for the supply of additional quantity of the items and the plaintiff has also not communicated to the 1st defendant regarding acceptance of the telephonic order. The plaintiff supplied the entire quantity and delivered the goods as per the agreement between the parties and the plaintiff was under no obligation to supply the material as per the telephonic order. The plaintiff is a Small Scale Industry. The outstanding amount payable by the defendant is a substantial one. Hence, the plaintiff issued a letter on 19.06.2006 and the same was served on the defendants, wherein the defendants have stated the supply additional quantity of 7.5 metric tons is cancelled and all the costs and consequences of the purchase of additional quantity
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would be on the plaintiff as per the condition No.15 of the agreement. Since the 1st defendant had not cleared the balance payment, another letter dated 21.07.2006 was sent to the defendant to release the amount. But, the plaintiff received a letter dated 19/21.07.2006 from the defendant No.1 that due to supply of polythene sheets of thicker gauge and the 1st defendant suffered financial loss and it is not in a position to settle the bill.
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interest at 14% p.a. which was also notified to the 1st defendant in the notice. But, the defendant issued an evasive and untenable reply. Hence, the claim was made by the plaintiff before the 2nd defendant on 18.05.2007 by invoking Clause-17 of the agreement, but no action was taken. Hence, the plaintiff constrained to file the aforesaid suit for recovery of the money.
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the defendants. The conversion factor of thickness, the gauge is differed. Several times, it was informed to the plaintiff, but it was not supplied. The material is required for rain guarding the rubber plantations. Therefore, the supply made by the plaintiff was shortage due to the heavy thickness and increased to the requirement of the polythene sheets. The plaintiff on 29.05.2007 assured the 2nd defendant during the discussion that he would supply the shortage of the material to the Corporation. A telephonic order was placed on 09.06.2006 followed by a written letter dated 12.06.2006 requesting to supply an additional quantity of 7.5 metric tons of the polythene sheets of the requirement specification. As the order was placed to substantiate the deficit of polythene sheets, the plaintiff did not supply the material of specified thickness of 250 gauge, but they supplied the higher gauge from 420.20 to 811.02 gauge. As a result, 7.5 metric tons of extra material was additionally required to rain guard the rubber plantations. The plaintiff was requested to supply the same as per the terms of agreement, but it was not supplied. The plaintiff admitted the letter sent by the defendant for forfeiting the security deposit. The defendants procured 7.5 metric tons of polythene sheets from the open market from one Synthetic Wraps Bangalore, on 27.06.2006. While the materials being supplied, Sri Mangilal Soni was informed over telephone regarding higher thickness of the
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material supplied, but the plaintiff did not respond the complaint. The plaintiff was given one more opportunity to attend and rectify the quality as per letter dated 25.05.2006, but the plaintiff not acted upon. The plaintiff failed to keep up their promise. As such, the defendant-Corporation, procured additional 7.5 metric tons polythene sheets from open market for Rs.6,70,275/-. As such, non settlement of bills is directly linked to the supply of materials of higher thickness by the plaintiff. Though the plaintiff undertook to supply 7.5 metric tons of polythene sheets as extra material, but not responded to the request of the Corporation. Due to the less supply, the rubber plantations could not be rapped, due to which the corporation suffered the loss of production of natural rubber in a sum of Rs.1,35,81,045/-. As the transaction is of a commercial nature, the supplier is liable to make good the loss. Therefore, the plaintiff is liable to pay Rs.6,70,275/- to the defendants towards the expenditure incurred in purchasing the extra polythene sheets. The plaintiff started issuing the legal notices and approached this Court. As such, the defendants-Corporation is left with no other option than filing a counter claim against the plaintiff and prayed for dismissing the suit and to allow the counter claim by directing the plaintiff to pay Rs.6,70,275/- with interest at rate of 18% p.a. from the date of suit till the date of payment.
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1. Whether the plaintiff is entitled for the suit claim from the defendant?
2. Whether the plaintiff is entitled for interest at 14% per annum on the suit claim?
3. Whether defendants prove that plaintiff has not supplied 250-Gauge quality of material as per the Agreement?
4. What decree or order?
Additional Issues
1. Whether 1st defendant proves that it has incurred additional expenses in purchasing extra material worth Rs.6,70,275/-as the plaintiff is liable to pay the same with interest at 18% p.a. under the circumstances pleaded in Paras-32 to 34 of the written statement?
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the material was more than 4 tons gauge up to 800 gauge thickness, due to which there was shortage of polythene sheets. Therefore, as per the Clause in the agreement-Ex.P.7, the plaintiff
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required to supply the additional requirement. Due to the shortage in supply, the same was not supplied by the plaintiff. Therefore, on the emergency of rainy season, the defendants have purchased the materials about 7.5 metric tons of polythene sheets from the open market. The said materials have been verified, the samples were collected and sent to the lab, and then, it was found that the thickness is more than specification due to which there is a short fall. It is contended that as per condition No.15 of the agreement, the plaintiff is required to supply the additional quantity of requirement, but it was not supplied. The EMD has been forfeited by the defendants due to non supply of the additional quantity. Therefore, there was huge loss caused to the defendants due to the improper supply made by the plaintiff. Therefore, the defendants are not liable to pay the amount claimed by the plaintiff. On other hand, the plaintiff is required to pay the amount for having purchased the 7.5 metric tons of polythene sheets of Rs.6,70,275/. The learned counsel also contended that the trial Court has not properly appreciated the evidence on record and wrongly decreed the suit by dismissing the counter claim filed by the appellantdefendants. The Clause in Ex.P.7 clearly reveals the violation of the conditions by the plaintiff, which was not considered by the trial Court. Hence, prayed for allowing the appeals.
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the balance consideration, at that time, a false and frivolous grounds were raised by the defendants in order to avoid the payment. The learned counsel has also contended that there is no obligation to supply additional quantity of polythene sheets. When the materials were supplied, the same was checked by the defendants, received and used the entire materials. After the consumption, it cannot be refused stating 'specification is not correct'. The learned counsel further contended that while taking the samples, the plaintiff was not called for and it was not properly mentioned that from which of the goods supplied to the godowns out of six godowns, the samples were collected for testing purpose. Therefore, it cannot be said that the samples taken by the defendants is out of the specification for the polythene sheets
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supplied by the plaintiff and it was not as per the specification. Therefore, the question of supplying the additional materials and paying the amount claimed by the defendants in the counter claim does not arise. It is also contended that when the quantity of the goods supplied by the plaintiff is more than the quantity required by the defendants, and once it was used and consumed by the defendants, it cannot be believed that the quantity was less. the learned counsel has also contended that there is no detail forthcoming as to the measurement cut and used for a single tree and how many trees were left out for shortage of polythene sheets. Therefore, the question of purchasing 7.5 metric tons in an open market by the defendants, cannot be acceptable. Even there is no witnesses examined by the defendants to prove the said contention. Therefore, prayed for dismissing the appeals.
(i) Whether the plaintiff proves that the defendants are liable to pay Rs.7,15,455/- towards the supply of polythene sheets as per the tender notification ?
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(ii) Whether the defendants prove that the plaintiff failed to supply the polythene sheets as per the specification mentioned in the agreement of tender notification due to which there was shortage of 7.5 metric tons of polythene sheets ?
(iii) Whether the defendants are entitled for recovery of Rs.6,70,275/- as claimed in the counter claim with interest towards the purchase of polythene sheets in an open market ?
(iv) Whether the judgment of the trial court calls for interference.
(v) What order ?
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admitted fact, an agreement was entered into between the parties, as per Ex.P7. Some terms and conditions were mentioned therein. Subsequently, it is also an admitted fact, the plaintiff supplied 22,101 kg of Polythene Sheets by raising 6 invoices and delivery in 6 designated godowns, as instructed by the Defendant/Corporation. It is also an admitted fact, as per the schedule, the goods were required to be supplied within 30.4.2006. It is also not in dispute, the first three consignments were delivered on 09.04.2006 in 3 different godowns namely Kallugundi godown, Kavu godown and Alvernad godown. Three consignments in 3 different places on the same day. The remaining two consignments were delivered on 20.4.2006 to Kavu godown and 29.04.2006 also to Kavu godown, which clearly reveals. though the agreement at Ex.P7 was entered into between the parties only on 26.4.2006, but four consignments were delivered prior to the agreement at Ex.P7 i.e., on 26.4.2006. The 5th consignment was on 29.4.2006 and the final consignment was only on 25.5.2006. Exs.P8 to 13 are the invoices. It is also an admitted fact, the plaintiff has deposited Rs.89,872/- towards the security deposit, which was issued by the defendant on 25.4.2006. It is also an admitted fact that between 30.04.2006 and 26.5.2006,
the defendant has made part payment of Rs.6,85,828/- on 11.5.2006 and another Rs.5,00,000/- on 29.5.2006, even though a letter has been issued by the defendant mentioning the deficiency in
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the quality and not as per the specification, a letter was issued by the defendant as per Ex.D16 dated 25.05.2006 to come and verify the specifications, and it was not mentioned by the defendants as to what was the specifications supplied by the plaintiff. The plaintiff got issued the letter for further balance payment, at that time, the defendant issued the letter stating that the quality supplied by the plaintiff is not as per the specifications and stated that the plaintiff would supply additional quantity of 7.5 metric tonne. It is also an admitted fact, the defendant Corporation has issued the entire material and prior to verifying the sample in respect of specification, it was utilized or consumed by the defendant/appellant and only after making part payment and only when the demand was made by the plaintiff for balance payment, the defendant came to the contention that the material supplied by the plaintiff was shortage and it was having more thickness than 250 gauge etc., The defendant also produced and marked documents regarding testing the sample of the Polythene Sheets as per Exs.D13, D14 and D15 that a report has been received and it was mentioned that the sample polythene sheets numbering 12 has been tested with the Central Institute of Plastics Engineering and Technology, Mysore, where it is stated that the gauge of the Polythene Sheets were found from 420.20 gauge to 811.2 gauge. Admittedly, as per the converter measurement, the 250 gauge has been converted into
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0.0635 mm. However, it is disputed by the plaintiff regarding samples sent by the defendant for testing. Admittedly, the defendant not summoned the plaintiff or representative of the plaintiff, while taking out the samples from the respective godowns for the purpose of sending to the Lab. Also has not examined any other witnesses or Godown Managers to show in which Godown the thickness of the Polythene Sheets were more. It is also not examined any other witnesses to show how much measurement of Polythene Sheets were short fall for covering the trees and for how many trees Polythene Sheets were used, which are not forthcoming.
Therefore, the very sample alleged to have been sent by the defendant to the Lab itself is doubtful, as while taking the sample, none of the representatives of plaintiff was called and the samples were not seized, in the presence of both parties. There is no Mahazar prepared to show, in which Godown these samples were taken out. Therefore, there is every possibility of fabricating the Polythene Sheets obtaining from outside and sending to the Lab, in order to deprive the right of recovering of amount by the plaintiff, is not ruled out. Therefore, the lab test report sample said to be sent, cannot be considered, without any sufficient material and proving the documents by the defendant according to the law.
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the defendant had authority to reject the goods and intimate the plaintiff to take back the goods at the cost of the plaintiff. It is worth to mention that as per Clause 7 of the agreement at Ex.P7 which reads as under;
"7. The 21920 Kgs of POLYTHENE SHEETLDPE-EXTRUDED OUT OF VIRGIN GRANULES (250 GUAGE THICKNESS-45 CMS WIDTH) supplied in each consignment will be checked for the quality stipulated. If any material is found to be not conforming to the standards specified, the CORPORATION will reject the entire consignment out right. Apart from the rejection of such consignments, the Executive Director will also impose penalties for supplying such sub-standard material. The SUPPLIER at his own cost shall take the rejected consignments back and no payment shall be made for the consignments so rejected."
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the plaintiff demanded balance amount, the defendant came up with the plea that the quantity was not in accordance with the specifications, which cannot be acceptable.
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market, due to the less supply as per the specifications, which leads to the shortage and thereby the plaintiff is required to compensate Rs.6,70,275/- to the defendant, cannot be acceptable. The defendant also failed to prove as claimed in the counter claim the above said amount from the plaintiff. Hence, I answer the point Nos.1 and 2 in favour of the plaintiff and against defendant/appellant. The trial court by considering the evidence on record and agreement, had rightly decreed the suit of the plaintiff and dismissed the counter claim of the defendant/appellant. Therefore, the judgment does not call for any interference from this Court. Hence, both the appeals are devoid of merits and are liable to be dismissed.
Accordingly, both the appeals filed by the appellant are
hereby dismissed .
Sd/(K.NATARAJAN) JUDGE
CS/AKV CT:SK
3 issues framed by the court
Whether the defendants were liable to pay Rs.7,15,455/- for the polythene sheets supplied under the tender?
Whether the plaintiff failed to supply material as per specification causing a shortage of 7.5 metric tons?
Whether the defendants were entitled to recover Rs.6,70,275/- on their counter claim?
2 provisions across 2 enactments
Executive Director, M/s Karnataka Forest Development Corporation Ltd
Managing Director, M/s Karnataka Forest Development Corporation Ltd
M/s Milan Polymers Pvt. Ltd.
K. Natarajan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
