Allowed

M/S.P.N.Bhaskaran Sons v. M/S.International Linkers

Kerala HC26 Nov 2019RFA/42/2006

Case brief

AI extract

What is this about?

In this appeal, the High Court of Kerala set aside a trial court judgment that dismissed a suit for recovery of outstanding sums for provisions supplied to a ship. The High Court held the defendants could not dispute inflated rates after accepting supplies without prior protest.

What did the court decide?

Suit allowed and decree passed for realization of Rs.2,18,675.25 with interest at 18% per annum from the date of suit.

M/S.P.N.Bhaskaran Sons Vs M/S.International Linkers — Company and Corporate | Kerala HC (2019)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MRS. JUSTICE MARY JOSEPH

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TUESDAY, THE 26TH DAY OF NOVEMBER 2019 / 5TH AGRAHAYANA, 1941

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RFA.No.42 OF 2006(E)

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AGAINST THE JUDGMENT AND DECREE IN OS 170/2004 DATED 29-10-2005 OF ADDITIONAL SUB COURT, KOCHI

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APPELLANT/PLAINTIFF IN THE LOWER COURT

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M/S.P.N.BHASKARAN SONS, SHIP CHANDLERS, MATTANCHERRY, COCHIN-2, REP. BY ITS MANAGING PARTNER, MR.ALBERT HERRIC, AGED 55 YEARS, S/O.LATE SUNNY HERRICK.

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BY ADVS.SRI.V.J.MATHEW (SR.) SRI.BIJISH B.TOM SMT.NAVEENA ANTONY SRI.P.P.RAJESH

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RESPONDENTS/DEFENDANTS IN THE LOWER COURT

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1 M/S.INTERNATIONAL LINKERS, 379/381, NARSI NATHA STREET, A.G.H.CHAMBERS, 5TH FLOOR, MUMBAI-400 009, REP. BY ITS PARTNER, MR.ZUZAR A.KATHAWALA.

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2 MR.ZUZAR A.KATHAWALA, PARTNER, M/S.INTERNATIONAL LINKERS, 379/381, NARSI NATHA STREET, A.G.H. CHAMBERS, 5TH FLOOR, MUMBAI-400 009.

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THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 26-10-2019, THE COURT ON 26-11-2019 DELIVERED THE FOLLOWING:

RFA No.42 of 2006

JUDGMENT

Dated this the 26^th day of November, 2019

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This appeal is preferred by the plaintiff in O.S.No.170 of 2004 whose claim for money of Rs.2,49,409.61 with interest at the rate of 18% per annum was declined by the Subordinate Judge's Court, Kochi by judgment dated 29.10.2005, upholding the contentions of the defendants and stating that there is no foundation for fixing such amount.

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It is contended by Sri.V.J.Mathew, the learned

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counsel for the appellant that the trial court failed to appreciate the facts, law and evidence in it's proper perspective and thereby, the judgment which is wrong in all respects was caused to be passed.

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According to him the trial court ought to have relied on Ext.A9 balance confirmation letter issued by 1^st defendant prior to the demand of money by the plaintiff which clearly acknowledges the liability of Rs.2,68,675.25 outstanding due towards the plaintiff as on 31.03.2004. When Ext.A9 is produced by the plaintiff and not opposed by

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the defendant, it was the latter's burden to establish the

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reason for not making the payment covered by that document and in the case on hand the defendants thoroughly failed to discharge the same. The defendants had never disputed Ext.A8 series of bills issued by the plaintiff to them, but only admitted in the written statement that the total bill amount is Rs.6,01,532.25. There is no reason why Ext.A8 series are not relied on by the trial court when those were duly signed and acknowledged by the defendants. Evenafter issuance of Ext.A9 on 31.03.2004, Rs.50,000/- was paid on 15.04.2004 in part payment and therefore, the balance due is only Rs.2,18,675.25. According to the learned counsel, the trial court ought to have taken for granted the claim of plaintiff that no agreement was entered on the costs of provisions to be supplied by the plaintiff to the defendants and that if one such was there, the defendants would have produced the same and marked in evidence. According to him, the defendant when examined as DW1 has categorically stated that Ext.A7 is the only document available to establish that the plaintiff had been entrusted with supply of provisions to

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them. Therefore, the trial court went wrong in holding that understanding among the parties was to supply goods at market rates with usual profits is devoid of basis. According to him, the understanding on the contrary was that once invoices were raised and received by the defendants, the latter must disburse the payments in favour of the plaintiff. Once the defendants have a case that the rates have been agreed upon, it is their burden to establish the same by producing cogent materials. The trial court ought not to have relied on the hollow contention taken by the defendants to decline the decree to the plaintiff. The trial court is perfectly unjustified in comparing Exts.B1 to B10 with Ext.A8 series especially when DW1 had stated that the price shown in those are only wholesale prices. The trial court failed to consider the factum that the provisions were supplied by the plaintiff to the defendants as part of their business and therefore, intended to earn profit out of it. According to the learned counsel, disputes regarding the costs of the provisions supplied were not there originally and that was raised only after the transaction and the trial court ought to have taken

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RFA No.42 of 2006

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that as a story cooked up with a view to evade payment. According to him, for arguments advanced as above, the impugned judgment is liable to be set aside.

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Before adverting to the grounds raised as above it is relevant to have an understanding of the factual matrix of the case. The plaintiff is a partnership firm represented in the suit by it's Managing Partner. Plaintiff is a ship chandling merchant and commission agent mainly engaged in the business of supply of goods like vegetables, provisions and other required items to ships, master and crews mainly in Cochin Port.

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The 1^st defendant is also a similar firm, engaged in export, manufacture and supply and is represented by its partner, the 2^nd defendant. Vide letter dated 15.10.2003, marked in evidence as Ext.A7, the defendants had appointed and authorised the plaintiff to supply provisions to ONGC Vessel 'Samudra Sevak' on behalf of the defendant. As per the authorisation, the plaintiff had supplied provisions to the vessel 'Samudra Sevak' as ordered from time to time. The supply was duly acknowledged by the catering manager of

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the defendants. The plaintiff had raised respective bills for each supply to the defendants and the understanding and practice was that once the invoices/bills are received, the defendants shall disburse the payments against supply of goods. Accordingly, for the period from 16.10.2003 till 21.01.2004 provisions to the cost of Rs.6,01,532.25 were supplied by the plaintiff to the ship and the defendants had paid only Rs.3,82,857/-. Therefore, balance amount of Rs.2,18,675.25 is due to be paid. Vide letter dated 17.07.2004, the defendants had acknowledged that the balance amount payable by them as on 31.03.2004 is Rs.2,68,675.25. The plaintiff contacted the defendants on several occasions on diverse ways and apprised them about his urgency to get the pending payments, settled. The defendants made Rs.50,000/- on 15.04.2004 during pendency of the suit in part payment. Therefore, the amount outstanding to be paid is Rs.2,18,675.25. The payment of

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the sum due as above was purposefully evaded by the defendants, by projecting lame excuses. The payment was demanded severally. Though payment was not made, by

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RFA No.42 of 2006

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letter dated 17.07.2004, the sum outstanding due was acknowledged by the defendants. Thereafter the plaintiff caused to issue a lawyer notice dated 08.10.2004 demanding

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the sum with interest. Defendants issued reply on 20.10.2004 alleging several false contentions to avoid payments but, expressed their readiness to settle the claim by paying Rs.75,000/-.

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A cheque for Rs.50,000/- dated 07.06.2004 was issued during the course, but was dishonoured for the reason 'exceeds arrangement'. Thereupon the plaintiff proceeded legally to realise the amount of Rs.2,18,675.25 with interest at the rate of 18% per annum from the defendants by filing the suit in question.

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The defendants filed written statement jointly, denying all the averments in the plaint. Admittedly, letter dated 15.10.2003 was issued by them to the plaintiff on a specific understanding to supply goods on behalf of the defendants and furnish bills to them. It was agreed and understood among the parties after deliberations that the rate

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of materials to be supplied should be in accordance with the

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rates prevailing at Cochin and Mumbai markets and must be at par with the rates fixed by ONGC. It was also agreed that the costs of provisions supplied will be fixed on the basis of amounts received from customers of defendants from time to time. The letter dated 15.10.2003 is only introductory in nature and not an authorisation. After the issuance of letter dated 15.10.2003 it was agreed among parties that for whatever goods supplied, bills will be raised on the 1^st defendant and the latter will make payment. The terms agreed had not been pursued with and therefore the bills could have been repudiated by the 1^st defendant. The value shown in the bills as costs of the provisions supplied was highly inflated from 25% to 62%. Therefore, the 1^st defendant started making payments 25% less than the bill amount with the knowledge and consent of the plaintiff. The defendants have never accepted the bill amounts claimed by the plaintiff and therefore the disputes needs to be sorted out finally. The difference in price of the provisions supplied as per the bills is 37% higher than the actual value of those.

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It was contended further in the written statement

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that the amount of Rs.50,000/- paid on 17.11.2004 by way

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RFA No.42 of 2006

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of demand draft was not credited to the account of the plaintiff. According to them, out of Rs.6,21,532.25, payments have been made to the tune of Rs.4,38,821/- and the balance as per the bills supplied is only Rs.1,68,711.25. If out of 37% excess costs shown in the bills, 25% of the amount is reduced (Rs.1,50,383.06), the net balance payable will only be Rs.18,328.19 and the defendants are offering a cheque dated 07.01.2005 for the said sum. The catering manager has accepted receipt of provisions as per Ext.A8 series but, not the rates shown therein against each provisions. Though it is contended that the amount claimed by the plaintiff is not liable to be paid by them, it was offered to settle the claim by paying Rs.75,000/-. Raising contentions as above, the suit was sought to be dismissed with costs.

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Evidence was adduced by both parties to the suit. On the plaintiff's side the Managing Partner was examined as PW1 and Exts.A1 to A16 were marked. On the side of the defendants a partner was examined as DW1 and Exts.B1 to B11 were marked.

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The suit was one for realisation of money that is remaining due for payment to plaintiffs from defendants being

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the costs of the provisions supplied on the basis of Ext.A7.

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The supply of provisions was not disputed by the defendants. Therefore, the prime question to be considered is the entitlement of the plaintiff to receive the money, claimed.

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As admitted by the parties to the suit, Ext.A7 is the only document to establish the transaction of supply of provisions by the plaintiff to the ship namely "Samudra Sevak' on behalf of the 1^st defendant. According to the plaintiff, it is a letter of authorisation and appointment issued by the defendants to the plaintiff to engage them in the transaction of supply of provisions to the ship, on orders. According to the defendants, it was neither a letter of authorization nor an appointment letter as claimed by the plaintiff, but only an introductory letter. In the context of the rival claims raised on the nature of Ext.A7, it is relevant to have a look at the recitals therein and therefore is extracted hereunder:

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“we “M/s International Linkers” (Authorised catering contractor of Vessel “Samudra Sevak”) do hereby authorize “M/s P N Bhaskaran & Sons”. Ship suppliers to supply provisions to ONGC Vessel “Samudra Sevak” on behalf of us”.

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RFA No.42 of 2006

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It is a letter issued by the 1^st defendant to the

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plaintiff on 15.10.2003. As the recitals make it clear that it is a letter issued by the 1^st defendant to the plaintiff authorising the latter to supply provisions to ONGC Vessel "Samudra Sevak' on behalf of them, on demand. Therefore, it is a document issued by the defendant to the plaintiff appointing or authorising the latter to supply the provisions to the vessel as ordered from time to time and on behalf of them. In that context, the contention of the defendants that it is only a letter introducing the plaintiff to the transaction is liable to be thrown out.

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According to PW1, apart from Ext.A7, other documents are not there to evidence agreement of the parties on terms of rates or on any other aspects relevant to the transaction. Though the defendants have contended in the written statement and sworn to in the proof affidavit that the provisions were agreed by the plaintiff to be supplied on market rats prevalent at Cochin or Mumbai, no documents to substantiate the same are produced. DW1 has admitted during cross examination that the supply of provisions was on

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credit basis. Therefore, it is evidenced that payments were not made by the defendants to the plaintiff, commensurate with each supply of provisions.

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According to DW1, the transaction period was from 17.10.2003 till 21.01.2004. The defendant during cross examination has admitted that apart from Ext.A7, documents are not there to establish other details of the transaction, especially on agreement to supply the goods on market rates. No challenge was also raised on the total amount claimed as per the bills. According to DW1, the amount shown in Exts.B1 to B10 are wholesale prices of the provisions. In re-examination, it was stated by DW1 that he was ready to pay 15 to 20% above the market rate of the provisions.

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Ext.A9 is relied on by the plaintiff to establish that the defendants had admitted Rs.2,18,675.25 as the liability outstanding to be discharged by them to the plaintiff. The issuance of Ext.A9 was disputed by the defendants contending that it is a concocted statement. Ext.A9 is dated 17.07.2004 and therein the liability to be discharged as on 31.03.2004 is acknowledged. On evaluating the evidence on record, it is

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RFA No.42 of 2006

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found that in Ext.A10 notice issued by the plaintiff on 08.10.2004 absolutely no reference about Ext.A9 is made. Ext.A9 is allegedly issued on 17.07.2004. Since, Ext.A9 is a letter issued by the defendants to the plaintiff on 17.07.2004, prior to issuance of Ext.A10 notice and the outstanding liability as on 31.03.2004 is acknowledged by the defendants therein, it is a crucial document and therefore reference about it ought to have been made in Ext.A10. In view of non-mentioning about Ext.A9 in Ext.A10 and non-affixture of seal by the 1^st defendant therein, some doubt on its genuineness arose and therefore, reliance is not placed on it.

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Eventhough the defendants have contended in the written statement that the bills were raised and furnished by the plaintiff on the defendants on an average of 35% higher than the actual value of materials, how such an information was derived by them is not evidenced. In the written statement it was also contended that the value of provisions supplied as per bills was inflated from 25% to 62% and the payments already made were rates reduced by 25% from the amount shown in the bill. An offer was also made to settle the claim by paying Rs.75,000/-.

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RFA No.42 of 2006 14

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But in the proof affidavit filed in lieu of examination in chief, it was stated that the bills raised were inflated from 25 to 50% higher than the actual value. It was also stated that the payments already effected were made by reducing 25% from the value shown in the bills. It is also stated by DW1 that they have not accepted the amounts shown in the bills furnished by plaintiff and the actual rate has to be sorted out. DW1 has also offered to settle his claim by paying Rs.75,000/-. During cross examination, DW1 has also admitted that no documents are there to evidence the rates at which provisions are agreed to be supplied and that no terms were agreed among the parties to supply goods at the market rates. In re-examination it was stated by DW1 that, they had agreed to pay 15% to 20% above the market rate. It is clear from the above discussion that inconsistency looms large in the versions of DW1 at different stages of examination. DW1 has turned an incredible witness not only in view of the inconsistencies in his version but also for the reason of disputing the very nature of Ext.A7 admittedly issued by them to the plaintiff by stating that it is not a letter

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RFA No.42 of 2006

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of authorisation, when it is unambiguously clear from the very reading of it's recitals that it is one of the nature.

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According to DW1 provisions as per Ext.A8 series

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have been received by the catering manager of the ship and acknowledged it's receipt by signing those and returning to the plaintiff. According to DW1, the rates shown in Ext.A8 series as costs of provisions have not been accepted by it's catering manager, but only the supply of provisions. Though it was pleaded categorically in the written statement that the parties after negotiations had agreed to supply provisions at market rates prevalent in Cochi or Mumbai, during cross examination DW1 has stated that parties had never agreed for supply of provisions at market rates. It is true that Exts.B1 to B10 are marked in evidence by defendants to establish that they had purchased provisions of the nature directly as those ordered to be supplied by plaintiff during the period of the transaction. But, admittedly, the costs reflected in Exts.B1 to B10 are wholesale rates. Even according to DW1, there was no agreement among the parties to supply provisions at market rates. According to DW1, the payments

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were already made by them after reducing 25% from the escalated rates shown in Ext.A8 series. How the percentage of escalation was worked out by the defendants especially in circumstances where documents are not available to evidence the market rates of the provisions as on date. Evenif, the defendants have succeeded in establishing that the costs shown in Ext.A8 series are 25% excess of the market rate of the provisions, that has nothing to do with the costs of provisions supplied, when DW1 has stated during cross examination that terms were not agreed among the parties to supply provisions at market rates.

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Both parties to the suit rely on Ext.A7 as the document to connect them with the transaction wherefrom

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the liability to pay the amount flowed. The supply of provisions as per Ext.A8 series was acknowledged. There were no endorsements in Ext.A8 series disputing the costs shown therein. Not even a scrap of paper is produced by defendant to show that any query on the costs furnished therein was made by any correspondence, subsequently. It is clear from the pleadings and evidence adduced on the basis

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RFA No.42 of 2006 17

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of those that, apart from the understanding among the parties to supply provisions on placement of demands as reflected from Ext.A7, there was no meeting of minds on the costs for which those are to be supplied. Ext.A8 series of bills were drawn and served on the defendants, the receipt of which was acknowledged by the latter. Payments were also commenced by the defendants without any protest being raised on costs made known to them by Ext.A8 series. Though it is contended by the defendants that the payments made were 25% less than the actual costs of provisions supplied as per Ext.A8 series, there is no evidence to show that correspondences have been made by the parties in that regard and the plaintiff had consented for payment accordingly. Even at the time of accepting the provisions supplied as per Ext.A8 series, there is nothing to evidence that a protest on the rates shown therein was made.

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This is a case wherein materials to establish any agreement on costs at which provisions are to be supplied are totally lacking. Apart from Ext.A7, no other materials are produced by either parties to the transaction to establish

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RFA No.42 of 2006

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authorisation or engagement of plaintiff in the work. Ext.A8 series of bills were drawn by the plaintiff and served on defendants after the supply of provisions. Those were acknowledged as received by the defendants. No protest was made on the rates shown in Ext.A8 series prior to commencement of payments. Payments to the tune of Rs.3,82,857/- was made without any protest being raised against escalation as pleaded in the written statement. The provisions have been supplied on different occasions. Admittedly, those were supplied on credit basis and not at market rates. If the 1^st defendant has a case that the cost of the provisions shown in Ext.A8 series are escalated ones, a protest must have been raised on the first supply of provisions itself. The acceptance of goods on successive occasions without raising a word of dispute on the rates of provisions from 16.10.2003 till 21.01.2004 shows that the defendants have no objection on rates at which the provisions were supplied. Or in otherwords, the provisions supplied at the rates shown in Ext.A8 series were accepted by the defendants.

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Admittedly payment to the tune of Rs.3,82,857/was made. Therefore, for having accepted the provisions

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supplied without protest being raised on it's costs shown in Ext.A8 series, the defendants are estoped from raising the dispute on rates afterwards. Had there been any disputes on the rates at which provisions were supplied originally, a dispute on it must have been raised on receipt of the first bill itself and negotiations must have been held to set the rates settled prior to proceeding to accept further supplies. Since that has not been evidenced as done by the defendants, they are estoped from disputing the rates of provisions shown in Ext.A8 series at this extended point of time. Moreover, it is relevant to notice that DW1 during cross examination, had also admitted the total bill amount.

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The trial court had relied on Exts.B1 to B10 to conclude that the rates shown in Ext.A8 series are escalated ones. In version of DW1 itself, the rates shown in Exts.B1 to B10 are wholesale rates of the provisions purchased by them. When the specific case of DW1 itself was that there was no agreement to supply provisions on market rates, the trial court is unjustified in comparing the rates in Ext.A8 series with those in Exts.B1 to B10, which according to the

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defendants are only wholesale rates of provisions. The trial court is highly unjustified in doing so. Undoubtedly the improper appreciation of evidence by the trial court has culminated in passing the impugned judgment and therefore, it will not sustain and deserves to be set aside.

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In the result, the appeal is allowed. The judgment and decree in O.S.No.170 of 2004 is set aside. O.S.No.170 of 2004 is allowed and the suit is decreed allowing the plaintiff

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to realise Rs.2,18,675.25. Since the transaction is a commercial one, the above sum is ordered to be realised with interest at the rate of 18% per annum from the date of suit till the date of realisation and with proportionate costs.

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Sd/- MARY JOSEPH JUDGE

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NAB/ab

M/S.P.N.Bhaskaran Sons v. M/S.International Linkers

Case brief

What is this about?

What did the court decide?

M/S.P.N.Bhaskaran Sons v. M/S.International Linkers

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

Coram

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