M.R.F. Limited vs Punjab Tyres

Nikhil Nath Bhattacharjee J.

This is a suit for recovery of Rs. 1,19,144.71p. including interest on account of goods sold and delivered but not fully paid.

Plaintiff is a limited company carrying on business of manufacture and sale of various types of Tyres, Tubes, Flaps etc. having various Sales Offices in different parts of India including one at Calcutta. The Defendant is a proprietory concern dealing with sales of types, tubes, flaps etc. It is the Plaintiff''s case that in pursuance of verbal orders placed by the Defendant from time to time, the Plaintiff sold and delivered to the Defendant tyres, tubes and flaps during the period of 1980-81 for a total value of Rs. 4,07,090.38p. The Plaintiff also raised its Bills for the said supplies from time to time which were duly accepted by the Defendant without raising any objection. Out of the total sum of Rs. 4,07,090.38p. against supply of tyres etc. by the Plaintiff to the Defendant a sum of Rs. 1,91,094.86p. was paid by the Defendant from time to time.

The sum of Rs. 77,000.00 under R.C.S. Scheme as deposited by the Defendant under the terms of supply has been adjusted against the said outstanding dues of the Defendant by the Plaintiff and the balance sum of Rs. 1,38,995.52p. was due and payable by the Defendant to the Plaintiff. The Plaintiff served a notice of demand dated February 23, 1982 under registered post with acknowledgement due through its Advocate to the Defendant demanding payment of the said sum of Rs. 1,38,995.52p. mentioning therein that in case of failure in making such payment, appropriate legal steps would be taken by the Plaintiff against the Defendant for recovery of its lawful dues.

After receiving the notice the Defendant decided to make a settlement with the Plaintiff and for the matter of that the Defendant paid a sum of Rs. 15,000.00 to the Plaintiff and further undertook to pay the outstanding dues by monthly installments of Rs. 10,000.00 starting from the month of August, 1983 which was also confirmed by the Defendant by writing a letter dated June 15, 1983 to the Plaintiff and subsequently the Defendant also paid the sum of Rs. 10,000.00 by way of monthly installment on August 22, 1983.

But after that no amount was paid by the Defendant inspite of requests for payment of the outstanding dues amounting to Rs. 1,13,995.52p. The Defendant issued a cheque dated October 31, 1983 drawn on Syndicate Bank, Burrabazar Branch, Calcutta for a sum of Rs. 10,000.00 in favour of the Plaintiff against the said outstanding dues. But the said cheque was dishonoured due to lack of funds in the Defendant''s bank account. In the meantime the Plaintiff adjusted a sum of Rs. 11,897.10p. against the outstanding dues of the Defendant by issuing a credit note. Thus a sum of Rs. 1,02,098.42p. is still due and outstanding and payable by the Defendant to the Plaintiff.

Inspite of several requests the Defendant failed and neglected to pay the said sum or any portion thereof. The Plaintiff served another notice of demand under registered cover with acknowledgement due through its Advocate, vide letter dated May 14, 1984 to the Defendant for recovery of the said dues along with interest @ 18% per annum from the date of last payment till final payment. Instead of paying the said sum the Defendant through his Advocate served a letter dated June 1, 1984 upon the Plaintiff''s; Advocate denying liability and raising the plea for adjustment of account. The contents of Defendant''s letter dated June 1, 1984 are nothing but a plea for avoiding payment.

Hence by filing the suit the Plaintiff has claimed for recovery of Rs. 1,02,098.42p. along with interest @ 18% per annum from September 1, 1983 to August 31, 1984 amounting to Rs. 17,046.29p., the total being Rs. 1,19,144.71 p. The Plaintiff has also claimed interim interest and interest on judgment.

The Defendant contests the suit by filing a written statement denying all material allegations in the plaint. The Defendant has admitted that after receipt of the notice of demand, they paid the sums of Rs. 15,000.00 and Rs. 10,000.00 to the Plaintiff though, however, the Defendant has denied and disputed that he undertook to pay the outstanding dues by monthly instalment of Rs. 10,000.00 each by his letter dated June 15, 1983. It has been averred that in the letter dated June 15, 1983 the Defendant called upon the Plaintiff to adjust a sum of Rs. 30,000.00 and requested to consider replacement of tyres. Apart there from the Defendant is alleged to be entitled to get a credit for the sum of Rs. 30,697.00 on account of difference of price and also on account of tread rubber loss. The Defendant has thus raised a counter-claim against the Plaintiff and prayed for a set off for the sum of Rs. 94,697.00 on account of difference of price of 121 tubes at the rate of Rs. 125.00 each as stated in para. 9 of the written statement amounting to Rs. 15,125.00, compensation for tread rubber loss for 7786 kgs. @ 2 per kg. amounting to Rs. 15,572.00 and on account of non-replacement of rejected tyres amounting to Rs. 64,000.00. Necessary Court fees on account of the counter-claim and set off amounting to Rs. 94,697.00 has been paid by the Defendant.

Upon pleadings of the parties as aforesaid, the following issues have been framed:

i) Is the suit maintainable in present form ?

ii) Is the Plaintiff entitled to get a decree for Rs. 1,19,144.71p. as prayed for?

iii) Does the Defendant''s counter-claim for Rs. 94,697.00 stands out and is the Defendant entitled to have the same set off as against the Plaintiff''s claim in the suit ?

iv) Relief, if any, parties are entitled to.

Findings with Reasons Therefor:

Issue No. 1: Not pressed and answered in the affirmative. Issue No. 2 & 3: These two issues being interlinked are taken up together. Both parties have adduced oral and documentary evidence. Ext,-B is the demand notice dated February 23, 1983 served upon the Defendant by Plaintiff''s advocate claiming payment of Rs. 1,38,995.52p. being the outstanding amount after adjustment of payment of Rs. 1,91,094.86p. as; also the deposit made by the Defendant under R.C.S. Scheme amounting to Rs. 77,000.00. It was stated that if the said outstanding dues was not paid within 15 days from the date of receipt of the notice, appropriate legal steps for recovery of lawful dues by proceeding to a Court of competent jurisdiction would be taken.

Ext.-C is the letter dated June 15, 1983 written by the Defendant addressed to the Plaintiff''s District Manager at Calcutta wherein it was categorically stated that as per records of the Defendant Rs. 1,38,995.52p. was due and payable by the Defendant to the Plaintiff.

Thus Plaintiff''s claim as outstanding and as demanded by lawyer''s notice was admitted by the Defendant. However, the Defendant stated in the said letter, ''some amounts/claims are to be finalised by your side approximately totaling Rs. 30,000.00 which we had discussed with your sales Manager previously and can be explained again in person if necessary or consideration. We request you to consider this amount so that the total outstanding will be less which will be paid to you in installments of Rs. 10,000.00 until the total amount is cleared by April 1984. As the first payment we enclosed a cheque No. 386236 of June 15, 1983 for Rs. 15,000.00 on Syndicate Bank, Burrabazar, Calcutta which kindly deposit on July 5, 1983 for clearance. Thereafter every month we shall deposit cheque for an amount of Rs. 10,000.00''.

It is Plaintiff''s case that the Defendant also paid by way of monthly instalment a sum of Rs. 10,000.00 on August 22, 1983 and thereafter issued a cheque being No. 403443 dated October 31, 1983 drawn on Syndicate Bank, Burrabazar, Calcutta for a sum of Rs. 10,000.00 in favour of the Plaintiff against the outstanding dues but the said cheque was dishonoured due to lack of requisite funds in the Defendant''s Bank Account. Ext.-E collectively shows the said cheque No. 403443 dated October 31, 1983 which was refused by the Syndicate Bank, Burrabazar Branch by its intimation dated March 15, 1984 on the ground, ''Exceeds arrangement''. The payments of Rs. 15,000.00 and Rs. 10,000.00 by cheques which were duly encashed if adjusted, Plaintiff''s claim comes down to Rs. 1,13,995.52p. The Plaintiff further adjusted a sum of Rs. 11,897.10p. and Plaintiff''s whole claim against the Defendant stands at Rs. 1,02,098.42p. which is the amount pleaded in the plaint.

In the letter dated June 15, 1983 (Ext.-C) the Plaintiff claimed an adjustment of about Rs. 30,000.00 which was stated to have been discussed with the sales manager and could be explained in person, if necessary for consideration.

No correspondence followed in the matter regarding the alleged adjustment of about Rs. 30,000.00 till, however, the Plaintiff served the further demand notice dated May 14, 1984 being Ext.-A to which the Defendant by their Advocate''s letter dated June 1, 1984 (Ext.-D) again requested for adjustment of Rs. 30,687.00.

So what was about Rs. 30,000.00 on June 5, 1983 (Ext.-C) has now become quantified as Rs. 30,687.00 (Ext.-D).

Plaintiff''s claim relates to supply of goods effected during the year 1980-81 which is not disputed by the Defendant. However, for the first time by filing the written statement on September 25, 1984 the Defendant made the counter-claim and set off of Rs. 94,697.00 on the following heads:

i) Difference of price of 121 tyres @ Rs.125.00 each as stated in para. 9 of the written statement which relates to the period between November 1978 and September 1979, ..... Rs. 16,125.00.

ii) Compensation for tread rubber loss for 7786 kgs. at the rate of Rs. 2.00 per kg. as the said quantity were purchased by the Defendant during the period between November, 1978 and September 1980 as stated in para. 9 ..... Rs. 15,672.00

iii) On account of non-replacement of rejected tyres as claimed in para. 10 of the written {statement. Rs.64,000.00 Total Rs. 94,697.00.

The said sum of Rs. 94,697.00 represents Defendant''s claim for set off by way of counter-claim. Needless to point out that in none of the earlier correspondence of the Defendant in the matter dated June 15, 1983 and June 1, 1984 being E-xt.-C & D respectively even a whisper was uttered regarding difference in price of 121 tyres, compensation for tread rubber loss and on account of non-replacement of tyres. What was hinted in the letter Ext.-C was a possible claim for consideration and in Ext.-D the sum of Rs. 30,687.00 as said to have been written by the Defendant by a letter dated October 24, 1983. The alleged letter dated October 24, 1983 has not been exhibited. There is no demand notice in respect of Defendant''s counter-claim of Rs. 94,697.00

It goes without saying that the Defendant''s counter-claim having arisen for supply and delivery of goods prior to expiry of 1981, the counter-claim made for the first time on September 25, 1984 with the filing of the written statement is barred by the law of limitation, particularly when there has been no demand by a lawyer''s notice or otherwise making the said claim.

Then again as already pointed out, the claim was around Rs. 30,000.00 which was for consideration of the Plaintiff and became Rs. 36,687.00 just after one year and now it is Rs. 94,697.00 on three different heads without production of any cogent or material documentary evidence in support thereof. In answer to question Nos. 110, 111, 112, 113 etc. in cross-examination the Defendant Harcharan Sing has categorically stated that there is no written document in support of the alleged claim of the Defendant under the heads in difference in price of tyres or compensation for tread rubber loss and non-replacement of rejected tyres. Also the manner of maintaining accounts in respect of the counter-claim, which the Defendant adopted to project the claim, does not also inspire confidence, particularly in absence of the cash book and accounts having been audited pay a competent chartered accountant. In my view, not only the counter-claim is barred by limitation but is also not substantiated by cogent documentary evidence. Clearly this has been raised as a counterblast to Plaintiff''s claim to frustrate the Plaintiff''s claim. The counter-claim is clearly fictitious and should be rejected.

The learned Advocate appearing for the Defendant drawing my attention to the fact that against Defendant''s counter-claim and set off. Plaintiff has not filed any written statement, urged that under the rules of pleading the counter-claim should be taken to have been admitted and accordingly should be decreed by the Court. A number of decisions have also been cited on this point. But the settled principle of law is that Plaintiff stands or falls on the strength of his own case and even in an ex-parte hearing Plaintiff has to make out his own case convincingly. In respect of the instant counter-claim, the Defendant must also stand or fall on the strength of his own case. As I have already shown that the Defendant''s counter claim has no merit, and so the question of granting a decree for the counter-claim merely on the ground that no written statement has been filed by the Plaintiff against the same, does not arise and, accordingly, the argument falls through.

In the result, Issue No. 2 is answered in the affirmative, the claim on account of interest being not unreasonable and Issue No. 3 in the negative.

Issue No. 4: The Plaintiff is entitled to get a decree for Rs. 1,19,144.71p. with interim interest and future interest. Defendant''s counter-claim stands rejected. Court fees paid on the plaint and counter-claim are sufficient. Therefore, it is Ordered.

that the suit be decreed on contest with cost for Rs. 1,19,144.71 p. The Defendant''s counter-claim is rejected. Let the Defendant satisfy the decree within three months from the date of the decree. In default, the decretal dues shall carry interest at 15% per annum for the period of pendency of the suit as also till the same is satisfied.

After the judgment is pronounced, the learned Advocate appearing for the Defendant prays for stay of operation of this order. Stay is, accordingly, granted for a period of two weeks from today.