Howrah Trading Company vs East Bengal River Steam Service

Sankar Prasad Mitra, J.—In this suit the Plaintiff, which is the owner of a workshop undertaking repairs to boats, steam launches etc., states that sometime prior to 1948 it was agreed between the Plaintiff and the Defendant that from time to time the Defendant would send its boats and steam launches to the Plaintiff''s workshop. The Plaintiff, it was further agreed, would repair those boats and steam launches and ask the Defendant to pay the Plaintiff''s usual charges for services to be rendered and the selling or market-price of the articles to be supplied as and when necessary. The case is that the agreement provided that these charges would be exclusive of any tax payable under the law.

According to the Plaintiff the Defendant represented to the Plaintiff that the jobs or works to be undertaken were exempt from sales tax under the Bengal Finance (Sales Tax) Act, 1941, and the Plaintiff should not charge any sales tax in its bills to the Defendant. The Defendant also agreed to issue declarations to the effect that these jobs and works were exempt and to reimburse or indemnify or compensate the Plaintiff in case the Sales Tax authorities did not accept the Defendant''s declarations.

It is the Plaintiff''s case that the aforesaid warranty or terms can also be implied from the course of dealings and transactions between the parties from time to time.

The Plaintiff, it is stated, relied, on the said representations and acted upon the same. The Defendant from time to time sent its boats and steam launches to the Plaintiff''s workshop. The Plaintiff from time to time submitted to the Defendant its bills in respect of the services rendered or goods supplied without charging any sales tax in the bills.

Between November 12, 1948 and April 6, 1950, the Plaintiff undertook various works of repair and supplied materials to or on account of the Defendant, inter alia, for the value of Rs. 80,095-0-6. The Plaintiff in its bills did not charge, as usual, the sales tax.

The Defendant from time to time issued declarations to the effect that these bills were exempt from sales tax under the Bengal Finance (Sales Tax) Act, 1941. The Plaintiff relied on those representations and accepted them in good faith.

The Plaintiff submitted the declarations to the Sales Tax authorities. The authorities rejected these declarations. The Commercial Tax Officer by his letter dated August 6, 1952, held that the works done and/or goods supplied which were the subject-matters of the said bills were not exempt from payment of sales tax. Consequently, the Plaintiff was assessed at the rate of nine pies per rupee for sales tax amounting to Rs. 3,754-7-3 which the Plaintiff seeks to recover in this suit.

On October 31, 1952, the Plaintiff, it is alleged, paid to the authorities the tax so assessed.

In para. 13 of the plaint there is an alternative plea on the basis of Section 70 also of the Contract Act.

The defence is that it was distinctly agreed between the Plaintiff and the Defendant that the Defendant would not be made-liable to pay sales tax. In any event, since tax upon water transport administration was imposed on April 1, 1949, it was the Plaintiffs duty to charge the tax at the time of such sale which the Plaintiff had not done.

The following issues were raised:

(1) Was there any agreement that the Plaintiff''s charges would be exclusive of sales tax and that the Defendant would be liable to pay to the Plaintiff any sales tax, if payable, as claimed in para. 2 of the plaint?

(2) (a) Did the Defendant make any representation as alleged in para. 3 of the plaint? If so, did the Plaintiff rely and act on such representation as alleged in paras. 5 and 9 of the plaint ?

(b) Did the Defendant agree to issue declaration forms and to reimburse or indemnify or compensate the Plaintiff in the circumstances claimed in paras. 3 and 4 of the plaint?

(3) Did the Defendant issue declaration forms as alleged in para. 8 of the plaint?

(4) Was the Plaintiff duly or at all assessed to sales tax as alleged in para. 10 of the plaint? If so, did the Plaintiff pay the same?

(5) Is the Defendant liable to pay to the Plaintiff the sum of Rs. 3,754-7-3 on account of sales tax as claimed in para. 13 of the plaint?

(6) Is the claim barred by limitation?

(7) To what relief, if any, is the Plaintiff entitled?

It would be convenient to take up issue No. 4 first. Let us try to find out whether any sales tax was duly assessed in the instant case. Mr. Tibrewal, learned Counsel for the Plaintiff, wants to give a restricted meaning to the expression ''duly assessed''. He thinks that the words ''duly assessed'' mean assessed according to the procedure laid down by law. The order of a competent Tribunal is a valid order until it is set aside on appeal. In this case there is no challenge to the jurisdiction of the officer who assessed. According to Mr. Tibrewal, the presumption u/s 114(e) of the Evidence Act ought to apply and it should be presumed that the judicial act of the Commissioner of Sales Tax has been regularly done. Whether or not his decision is correct is immaterial for the purpose of this suit.

On the facts and in the circumstances of this case I do not think that the expression ''duly assessed'' can be given the restricted meaning Mr. Tibrewal had suggested. That was not the purpose for which this issue was raised. And, at the time learned Counsel for the Defendant proposed this issue, the Plaintiff''s counsel did not object to its form. I understood this issue to mean that I would have to determine whether the amount of sales tax, if any, payable on the transactions in suit has been lawfully assessed, and it is on this aspect of lawful assessment that certain observations have to be made.

Let me first go into the facts of this case. In paras. 2, 3, 5 and 6 of the plaint it is alleged that the Plaintiff had undertaken, certain jobs or works of repair which involved the supply of goods and materials. This is the simple case-with which the Plaintiff has come to this Court. And this case finals support primarily in the documentary evidence as well. In Ex. A, there is a letter dated June 10, 1949, the Defendant had addressed to the Plaintiff. The first paragraph of the letter is:

As arranged with your Mr. Choudhuri, I am herewith sending our cargo boat No. 16 for necessary repair.

Ex. 1 contains the bill for Rs. 10,534-10-3 in respect of repairs to cargo boat No. 16. It appears that the sum of Rs. 10,534-10-3 has been charged as a ''lump sum''. The bill says that this is for

charges for repairing your boat No. 16, and undertaking various jobs as per your directions and instructions as detailed in the list attached herewith for your reference.

In Ex. 1, there is also another bill for the ''lump sum'' of Rs. 52,799-3-3 dated March 11, 1950,

being the charges for repairing your Sitanath flat, and undertaking various jobs as per your directions and instructions as detailed in the list attached herewith for your reference.

These documents show that these were entire contracts for ''lump sum'' to be paid for supply of labour and materials.

In the oral evidence also Satyendra Nath Choudhuri, the Plaintiff''s, manager, has stated that he was asked ''to quote the rates with materials (Q. 8). The Plaintiff carried on work in respect of the vessel Sitanath (Q. 17). He has said that unless repairs were satisfactorily effected, the Plaintiff was not entitled to payment. And upon the satisfactory completion of the repair the entire charges became due by the Defendant to the Plaintiff (Qs. 160 & 161).

This oral evidence, to my mind, only lends support to the documentary evidence on record.

I am, therefore, drawn to the conclusion that the contract suit was a composite, indivisible or entire contract for supply of labour for work and materials. Ordinarily, there is no element of sale involved in the execution of such a contract. In any event, there is no pleading of sale. On the contrary, the positive pleading is that it was a works contract. You cannot break up a work contract into component parts. You cannot say that this is a contract, (a) for sale of materials and (b) for supply of labour. If at all, materials have been supplied in the execution of a work of repair. These questions the Supreme Court had occasion to consider in the case of the The State of Madras Vs. Gannon Dunkerley and Co., (Madras) Ltd., . This was the case of a building contract. The Supreme Court in so far as it is relevant for purposes of the present suit has laid down the following propositions:

(1) The words ''sale of goods'' in entry 48 in list 2 of Schedule 7 of the Government of India Act, 1935, confer legislative powers on the State Legislature in respect of a topic relating to taxation. These words cannot be construed in the popular sense but must be interpreted in the legal sense. A power to enact a law with respect to tax on sale of goods under this entry must be intra vires the one relating to sale of goods and accordingly the Provincial Legislature cannot in the purported exercise of its power to tax sales, tax transactions which are not sales, by merely enacting that they shall be sales.

(2) In a building contract which is entire and indivisible there is no sale of goods and it is not within the competence of the Provincial Legislature under entry 48 to impose a tax on the supply of materials used in such contract treating it is a sale.

(3) The theory that a works contract can be broken up into its component parts and as regards one of them there is a sale, must fail both on the grounds that there is no agreement to sell materials as such and that property in them does not pass as moveables. Under the law there cannot be an agreement relating to one kind of property and sale as regards another. For the ''sale of goods'', there must be an agreement between the parties for the sale of the very goods in which the property eventually passes. In a building contract the agreement between the parties is that the contractor should construct a building according to the specifications contained in the agreement and in consideration thereof receive payment as provided therein. In such an agreement there is neither a contract to sell the materials used in the construction nor does the property pass therein as moveables. When work to be executed is a house the construction imbedded on the land becomes an accretion to it and it vests in the other party not as a result of the contract but as the owner of the land. Accordingly there can be no question of title to the materials as moveables passing in favour of the other party to the contract. There is no sale as such of the materials used in a building contract and the Provincial Legislature has no competence to impose a tax thereon under entry 48.

It seems to me that the above principles apply to the facts of this case. Here also there was a composite contract for work, supply of labour and materials. The property in the materials as such did not pass pursuant to any agreement for sale of the materials themselves. The property in those materials passed under a larger contract which could not be broken up into its component parts as far as I can see from the evidence on record. This contract was not a contract of sale. The materials supplied did not pass under a contract of sale.

In other words, the sales tax, if any, assessed in the instant case cannot be said to have been ''duly assessed''.

The same view, I may incidentally observe, was taken by the Supreme Court in Carl Still G.M.B.H. and Another Vs. The State of Bihar and Others, . In our Court Banerjee J. in Port Engineering Works Ltd. v. The Commercial Tax Officer, China Bazar Charge (1962) 66 C.W.N. 69 has held that agreements for repair of inland steamers, boats and flats not being contracts within the meaning of the Act and within the meaning of the Bengal Finance (Sales Tax) Act, 1941, and transfer of property in the goods involved in the execution of such agreement not being sale, the amount payable to the Petitioner company as valuable consideration for carrying out of such agreements will not be ''sale price'' within the definition of Section 2(b) of the Act. The amount received or receivable by the Petitioner company as valuable consideration for such repairs need not be included in the gross ''turn over'' for the period of assessment.

The next point is that if in spite of the fact that the contract in suit involved labour as well as supply of materials and the Sales Tax authorities had imposed tax on the entire sum which the Defendant had paid, then the whole assessment is bad.

Sinha, J., as he then was, has observed in Dukhineswar Sarkar and Brothers Ltd. Vs. Commercial Tax Officer and Others, that even if an iota of tax collected is outside the law, the whole must be invalid because under the Constitution no citizen is liable to pay tax except in accordance with law.

The Supreme Court also in Ram Narain Sons Ltd. Vs. Asst. Commissioner of Sales Tax and Others, observes that when an assessment consists of a single undivided sum in respect of the totality of the property treated as assessable, the wrongful inclusion in it of certain items of property which by virtue of a provision of law were expressly exempt from taxation renders the assessment invalid in toto.

It is admitted in this case that considerable labour was involved in the work of repair. Thereafter the entire sum paid in respect of repairs could not be taxed. As the assessment on the face of it appears to be a composite assessment, it is bad. The assessment order may be binding as between the Plaintiff and the Sales Tax authorities, but I do not see how it can bind the Defendant. The Plaintiff in this case must prove that sales tax was payable which, in my opinion, the Plaintiff has failed to do.

I now come to the second part of issue No. 4, namely, "Was the Plaintiff assessed at all?". Exhibit D, which is a document produced by the Plaintiff, I find an entry which merely suggests that the Sales Tax authorities indicated that a total sum of Rs. 97,836-15-6 would be charged to tax in full. Dhirendra Nath Bandopadhyaya, the Plaintiff''s accountant, said that the break-up of this sum of Rs. 97,836-15-6 would appear from the account books of the Plaintiff company and he can give the details only upon production of these books (Qs. 70 & 76). The document, namely, Ex. D was prepared from the books of account (Q. 87). The bill-book will show what amount of work was done on account of the East Bengal River Steam Service Co. Ltd., that is the Defendant (Q. 123). He cannot give the particulars of the sum of Rs. 97,836-15-6 from his memory (Q. 147).

It is obvious that these books of account which Dhirendra has referred to should have been disclosed in the suit and relevant entries therein tendered in evidence. Without these entries it is difficult for the Court to come to the definite conclusion that the Plaintiff paid sales tax on account of charges made to the Defendant. The Plaintiff has tendered Ex. F which is a receipt for Rs. 6,050-2-6 which the Reserve Bank of India had granted in respect of payment of sales tax for the year ending April 30, 1950. But, without the books again which would contain, I suppose, the details of this sum, I am not in a position to say that there is acceptable evidence in this case that the Plaintiff had in fact paid the sales tax.

My answer to issue No. 4, therefore, is that the Plaintiff was not duly assessed to sales tax and in the absence of further evidence I am unable to say that the Plaintiff paid sales tax in the instant case.

Having regard to my decision on issue No. 4, I need not go into the other issues at all. But for completing this judgment I would briefly discuss the arguments advanced on behalf of the Plaintiff.

Mr. Tibrewal, learned Counsel for the Plaintiff, did not dispute the aforesaid legal propositions. He urged that it was clear from the evidence that at the time the contract for repairs was entered into, the Plaintiff intended to charge sales tax. The Defendant represented to the Plaintiff that no sales tax was payable because of the exemption granted by the Act. The Defendant agreed to send certain declarations stating that sales tax was not payable. Learned Counsel says that there is direct evidence that the Defendant agreed to pay the sales tax if the authorities had rejected the declarations. In any event, the agreement to pay sales tax in the case of rejection of the declarations should be inferred from the conduct of the parties. Learned Counsel strongly contended that his witness has repeatedly stated that the contract was with Meridith of the Defendant company. In fact, this information was supplied to the Defendant in answer to the Defendant''s letter for particulars of the plaint. But no step has been taken to have the evidence of Meridith recorded to contradict the Plaintiff''s testimony. In these circumstances, the case of the Plaintiff, submits Mr. Tibrewal, ought to be accepted and the provisions of Section 124 of the Contract Act should be applied to the facts of this case. This section provides that a contract by which one party promises to save the other from loss caused to him, inter alia, by the conduct of any other person, is called a ''contract of indemnity''. Mr. Tibrewal''s contention is that the contract in the present case is a ''Contract of Indemnity'' which has been expressly pleaded in the plaint and on the basis of this contract alone the Plaintiff''s claim ought to be allowed.

My difficulty in accepting this argument is that the ''Contract of Indemnity'' pleaded in paras. 2 and 3 of the plaint has not been proved in this suit. On April 5, 1954, S.N. Choudhuri, manager of the Plaintiff, wrote to the Defendant inter alia, as follows:

We had not included the amount of sales tax in our original bills because you promised to give declarations. The declarations given by you were not accepted by the Sales Tax Officer, and thus you had induced us not to charge, sales tax by giving false declaration. You are, therefore, bound to pay sales tax and we request you to pay our above bill for the same at an early date.

Again, the same S.N. Choudhuri on May 22, 1954 (Ex. B) wrote, inter alia, as follows:

The goods supplied to you were not exempted from sales tax under the West Bengal Sales Tax Act, during the period in question, and the declarations given by you were false and had induced us not to charge sales tax from you. On the declarations given by you, you are not entitled to get exemption from sales tax and you are, therefore, bound to pay the amount of sales tax on the goods supplied to you as per our bill No. HT/13/601 dated 29.3.52 for Rs. 3,754-7-3 for sales tax charges.

These two letters which may broadly be said to contain contemporaneous evidence of the alleged express agreement definitely go against it. In these letters Choudhuri is speaking of an inducement to justify the bills presented to the Defendant without including the sales tax. Choudhuri informs the Defendant that the appropriate authorities have rejected the Defendant''s declarations and the Defendant is, therefore, bound to pay the amount of sales tax. The letters do not corroborate the Contract of Indemnity pleaded in paras. 2 and 3 of the plaint on which Mr. Tibrewal has relied. When Choudhuri came into the witness box he was confronted with these letters in Qs. 115 to 132. His answers were not at all satisfactory.

Secondly, if the parties knew that no sales tax was payable in respect of the work that was undertaken, it was unusual that a positive agreement was reached for payment of sales tax in case the Defendant''s declarations were rejected. I am making these observations because of certain answers the Plaintiff''s witnesses gave to various questions put to them. Choudhuri in Qs. 82 to 91 says that in 1948 the Plaintiff was not charging sales tax from other parties inasmuch as river transport repairs were exempt. It was common knowledge in 1948 and 1949 that sales tax was not payable on these transactions. All persons in the Plaintiff company had knowledge of these facts irrespective of any conversation that Choudhuri might have had with Meridith. I would now come to the other witness of the Plaintiff Dhirendra Nath Bandopadhyaya who is the Plaintiff''s accountant. This witness also has stated that for repairs done to the vessels of another concern named the Pioneer Transport Services, the Plaintiff claimed exemptions in 1948 and 1949 and exemptions were granted by the authorities (Qs. 104 and 105). These statements of the two witnesses show that at the time the agreement was made between the Plaintiff and the Defendant it was most unlikely that there was any talk with Meridith or anyone else for payment of sales tax.

Thirdly, there are inherent contradictions in the evidence of Choudhuri. In Qs. 72 and 73 he has said that before the Plaintiff started repairing the Defendant''s vessels he had talks with Meridith regarding sales tax. In Qs. 8, 10 and 59 he gave the impression that the talks occurred subsequent to the presentation of the first bill to the Defendant.

Next, let us examine the terms of the alleged agreement which Choudhuri has sought to establish in his oral testimony. He says that Meridith asked him to quote the rates with materials''. He says,

when I asked for the sales tax he told me that there was no sales tax for the repairing of boats, launches etc. and after that he issued certain declarations. When I submitted the bill he issued certain declarations stating that particularly for this sort of work there was exemption of a particular sales tax--then this and that thing. After that boat by boat used to come--we. did repair, charged them, sent the bill and they used to pay us. Vide Q. 8.

In Q. 10 he says,

I remember I submitted the first bill and at that time I was asked by my accounts department regarding sales tax. Then I telephoned Mr. Meridith and afterwards few letters came in, in which they confirmed that this boat repairing works had got certain exemption under certain Sales Tax Clause No.

In Q. 15 he was specifically asked in a leading form as to what would happen if the declaration forms, which were sent to the Plaintiff, the Sales Tax authorities did not accept. In answer he says,

Exactly, during the negotiation period and subsequent to it, it has always been the understanding that for this sort of job--there is no sales tax, sales tax is exempted and if it would be charged then they will pay and we will charge for that because I have not included that in my repairing cost.

In this question, he speaks not of a contract but of an understanding.

His examination-in-chief had come to an end. I felt, he had not proved the agreement alleged in the plaint and that was why I put to him Qs. 54 to 59 for satisfying myself fully as to whether or not the case made in the plaint was true. I propose to set out extensively these questions and answers which were as follows:

Q. 54. Tell me,-what precisely was the agreement between the Plaintiff and the Defendant regarding the payment of sales tax?

The sales tax was exempted at that time it had been informed by Mr. Meridith and he never asked me to include sales tax in my offer nor asked me to charge sales tax on the bill.

Q. 55. Was there any agreement between the parties regarding sales tax orally?

If sales tax is chargeable then it will be charged on the bill.

Q. 56. When was that agreement made?

At the very beginning--when the initial talks regarding the terms and conditions, the rates etc., have been finalised.

Q. 57. Who represented the Plaintiff in those talks? Myself.

Q. 58. Who represented the Defendant in this talk?

Mr. Meridith.

Q. 59. You say that the agreement was that if sales tax was payable it would be included in the bill--is that right?

At that time it had been the talk that there was no sales tax, but if sales tax was to be charged that would be charged on the bill and if sales tax declaration had to be given that would also be given. Meridith--he asked the office whether sales tax was chargeable. The office told him that there was no sales tax--it was exempted for river transport. Then the question actually did not arise. Subsequent to that from the first bill I demanded'' sales tax and that exemption certificate had been received so far I definitely remember.

This is how the contract of indemnity has been proved. It is first said that there was an understanding only that if sales tax was payable it would be charged. Then it is said that sales tax would be charged not if the declarations were rejected by the authorities but in the Kill itself.

In this state of evidence I cannot accept Mr. Tibrewal''s contention that Section 124 of the Contract Act can be applied to the facts of this case. Indeed the bills in suit (Ex. 1) themselves show that the amounts are "non-taxable vide Section 5(2)(a)(iii) of the Bengal Finance (Sales Tax) Act, 1941." Instead of charging the sales tax therefore in the bill as deposed by Choudhuri, the bills themselves give the contrary indication.

I would now come to the other question. Mr. Tibrewal had urged, namely, whether an obligation to pay sales tax on the part of the Defendant can be inferred from the conduct of the parties. In my view when evidence is led of an express term there can be no implied term contradictory to the express term. When the express term, if at all, is that the amount is chargeable on the bill, I cannot infer an implied term of chargeability after the declarations are rejected and an order for assessment is made.

I only intend in this connection to refer to an English case. It is the case of Love v. Normal Wright (Builders) Limited (1944) 1 A.E.R. 618. The Plaintiff was a manufacturer registered under the Finance (No. 2) Act, 1940, and was accountable to the Crown in respect of purchase tax. The parties entered into an agreement whereby the Plaintiff was to make and supply a number of curtains together with the necessary hooks and rails for an agreed price. No mention was made between the parties as to who was to, bear the purchase tax although the price agreed did not include the tax. The Plaintiff contended that he was entitled to be indemnified by the Defendants in respect of the purchase tax and they must pay the tax in addition to the agreed price. Lord Justice Goddard in the Court of Appeal held that the contract was for a sale of goods and where a seller offers goods for sale it is for him to quote a price which includes purchase tax if he desires to pass it on to the purchaser and if he does not do so, the seller must bear the tax. At p. 619 of this judgment it is observed:

No doubt the tax is called ''purchase'' and not ''sales'' tax and is charged on the wholesale value of chargeable goods bought under the chargeable purchases, but that cannot of itself determine the question whether in the absence of agreement on the matter the incidence of the tax is to fall on buyer or seller.

At p. 621 it is observed:

Counsel for the Plaintiff adduced one further argument which, as we understood it, was that, as tax was not paid by Government departments, the contract must be read as though there was an undertaking by the Defendants, to indemnify the Plaintiff against tax, as they could recover any tax that was paid from the War Office. Apart from the consideration that no such case was either pleaded or suggested in the Court below we can see no ground for implying any such consideration at all, and the incidence of the fax must lie where it falls. The Plaintiff is accountable for it but has shown no ground for recovering it from the Defendants.

I do not say that the facts of the above case fit in with facts here, but there is a general indication that if a purchaser is to be made liable for payment of sales tax there must be an express agreement to that effect. There is no scope even for an implied agreement. In the instant case, as I have said, no such agreement has been proved.

Assuming, however, that there was a contract of indemnity, the contract would only be to pay the sales tax payable under the law. To ask for indemnity, the Plaintiff must prove that there was a sale and, therefore, sales tax was payable. On the plaint it is admitted, and in the oral evidence also of Choudhuri it is admitted that this was a case of an entire and indivisible contract. The documentary evidence, particularly the bills, show that the contract was for a lump sum. Accordingly, as I have already held, no sales tax was payable. The Defendant consequently can have no liability under a contract of indemnity, which provides that the sales tax, if payable, would be paid by the Defendant.

Secondly, according to Mr. Tibrewal, the contract was that the liability arose upon the rejection of declaration forms. The evidence is most unsatisfactory on this point. The assessment order marked Ex. E does not show that any declaration form was rejected. Choudhuri, in his evidence (Q. 171), identified certain letters dated August 28, 1948, September 8, 1948, and again on September 8, 1948, all included in Ex. A to be the declaration forms. It is obvious that these are not declaration forms at all.

Thirdly, there is also no acceptable oral evidence that the Defendant''s dues have been subjected to tax. For the purpose of proving this fact conclusively, the Plaintiff should have disclosed its books of account and its returns, but that has not been done.

That is why I was saying that, even if there was a Contract of Indemnity, the Plaintiff was not entitled to succeed.

Then again it appears that the Plaintiff''s claim is barred by limitation. Mr. Tibrewal has relied on Article 83 of the old Limitation Act and says that the Defendant''s liability arose when in the order of assessment, the Sales Tax authorities disallowed the claim for exemption. The order of assessment is dated August 6, 1952, and the suit has been filed in February 1955. I cannot accept this contention. The evidence of Choudhuri is that sales tax was to be charged on the bills. The bills are between April 30, 1949 and April 6, 1950. Under Article 115 of the old Limitation Act, the period was three years from the date of the breach of any contract, express or implied, not in writing registered. The suit obviously was filed much beyond three years from the date of the last bill.

As no other point was raised by learned Counsel for the Plaintiff, I need not discuss the other issues in this suit.

The result, therefore, is that this suit is dismissed with costs including reserved costs.