M/S S.A.L. Steel Limited vs M/S. Sreenidhi Trading Company

RFA. NO.100242/2017 1

IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 20TH DAY OF FEBRUARY, 2024 PRESENT THE HON'BLE MR JUSTICE ASHOK S. KINAGI AND THE HON'BLE MR JUSTICE VENKATESH NAIK T REGULAR FIRST APPEAL NO. 100242 OF 2017

BETWEEN:

M/S. S.A.L.STEEL LIMITED, REGISTERED OFFICE NO.5/1, SHREEJI HOUSE, 5TH FLOOR, B.H.M.LIBRARY, ASHRAM ROAD, AHMEDABAD.(GUJARAT STATE) REPRESENTED BY ITS AUTHORISED SIGNATORY.

...APPELLANT

(BY SRI.S.S.NAGANANDA SENIOR COUNSEL FOR SRI.MRUTYUNJAYA S. HALLIKERI)

AND:

1. M/S. SREENIDHI TRADING COMPANY THROUGH ITS PROPRIETOR SHRI. BADRINARAYAN NANDKISHOR LADDA, Digitally signed by VIJAYALAKSHMI VIJAYALAKSHMI M KANKUPPI M KANKUPPI AGED: 48 YEARS, OCC: BUSINESS, Date: 2024.03.16 11:34:45 +0530 R/O. R.NO.345, KIRAN NIWAS, OPP. ALL INDIA RADIO STATION, HOSPET.

2. SHRI. RAJENDRA V. SHAH, MAJOR, OCC. BUSINESS, CHAIRMAN OF S.A.L. STEEL LIMITED, R/O. ADMINISTRATION OFFICE, 9TH FLOOR, GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054.

3. SHRI. RAJENDRA ARORA, MAJOR, OCC: BUSINESS, M.D. S.A.L. STEEL LTD., 9TH FLOOR, GNFC INFO. TOWER, RFA. NO.100242/2017 2

SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054.

4. SHRI. SUJAL A.SHAH, MAJOR, OCC: BUSINESS, DIRECTOR(PURCHASE), R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR, GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054.

5. SHRI. RAKESH RANJAN, MAJOR, OCC: BUSINESS, SENIOR ASSISTANT GENERAL MANAGER (PURCHASE), R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR, GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054.

6. SHRI. DEEPAK KUBERDAS SHAH, MAJOR, OCC: BUSINESS, DIRECTOR, S.A.L. STEEL LIMITED, R/O. PLOT NO.55, WARD NO.10A, OPP.IFFCO COLONY, GANDHIDHAM, GUJARAT-370201.

7. SHRI. DYNANSHANKAR G.PANDEY, MAJOR, OCC.BUSINESS EXECUTIVE DIRECTOR, R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR, GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054.

8. SHRI. SURESH D. SHAH, MAJOR, OCC: BUSINESS, DIRECTOR, R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR, GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054.

9. SHRI. BABULAL M.SINGHAL, MAJOR, OCC: BUSINESS, DIRECTOR(COMMERCIAL), R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR, GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054. RFA. NO.100242/2017 3

10. SHRI. AMBALAL C. PATEL, MAJOR, OCC. BUSINESS, DIRECTOR, R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR, GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054.

11. SHRI. GULAM HUSSAIN MOHAMMED SHAIKH, MAJOR, OCC: BUSINESS, DIRECTOR, R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR, GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054.

12. SHRI. HARASAD SHAH, MAJOR, OCC: BUSINESS, DIRECTOR, R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR, GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054.

13. SHRI. JETHABHAI M.SHAH, MAJOR, OCC: BUSINESS, DIRECTOR, R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR, GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054.

14. SHRI. TEJPAL S.SHAH, MAJOR, OCC: BUSINESS, DIRECTOR, R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR, GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054.

15. SHRI. UMESH YADAV, MAJOR, OCC: BUSINESS, CHIEF CHEMIST and INCHARGE, HOSPET SECTION OF SAL STEEL LIMITED, R/O. ADMINISTRATIVE OFFICE, 9TH FLOOR, GNFC INFO. TOWER, SARKHEJ-GANDHINAGAR-HIGHWAY, BODAKDEV, AHMEDABAD-380054.

....RESPONDENTS

(BY SRI.S.A.SONDUR AND SRI. K.L.PATIL, ADV. FOR R1; NOTICE TO R2 TO R15 ARE DISPENSED WITH). RFA. NO.100242/2017 4

THIS RFA IS FILED UNDER SEC. 96 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED: 26.04.2017 PASSED IN O.S. NO. 22/2009 ON THE FILE OF THE PRINCIPAL SENIOR CIVIL JUDGE AND JUDICIAL MAGISTRATE FIRST CLASS, HOSAPETE, PARTLY DECREEING THE SUIT FILED FOR RECOVERY OF MONEY.

THIS RFA HAVING BEEN HEARD AND RESERVED FOR JUDGMENT ON 13.02.2024, COMING ON FOR PRONOUNCEMENT THIS DAY, ASHOK S. KINAGI, J., DELIVERED THE FOLLOWING:

JUDGMENT

This appeal is filed by the appellant challenging the

judgment and decree dated 26.04.2017, passed in favour of

plaintiff and also dismissal of counter claim of defendant No.1

in O.S.No.22/2009 by the Principal Senior Civil Judge and

JMFC, Hospet.

2. For the sake of convenience, the parties are

referred to as per their ranking before the trial Court.

Appellant is defendant No.1, respondent No.1 is the plaintiff

and respondent Nos.2 to 15 are defendant Nos.2 to 15.

3. Brief facts leading rise to filing of this appeal are

as under:

RFA. NO.100242/2017 5

Plaintiff filed a suit for recovery of money. It is the case

of the plaintiff that, plaintiff Sreenidhi Trading Company runs

its business in mines and mineral traders in proprietary

concern and it's proprietor is Badrinarayan, S/o Nandkishor

Ladda. plaintiff is dealing with mines and minerals, more

particularly in purchasing and selling of Iron Ore to it's

various customers all over country at the rate and quality

agreed to. Defendant No.1-S.A.L. Steel Limited, Ahmedabad

is a company incorporated and registered under the

provisions of the Companies Act having it's office at Ashram

Road, Ahemadabad. Defendant No.2 is the Chairman of

defendant No.1 - company, defendant No.3 is the Managing

Director of defendant No.1 - Company, defendant No.4 is the

Director (Purchase) of defendant No.1 - company, defendant

No.5 is Assistant General Manager (Purchase) of defendant

No.1 - company, defendant No.7 is Executive Director of

defendant No.1 - company, defendant No.9 is Director

(Commercial) of defendant No.1 company, defendant

Nos.6,7 and defendant Nos.10 to 14 are the directors of the RFA. NO.100242/2017 6

defendant No. 1 - company and defendant No.15 is the Chief

Chemist and In charge of Hospet Sector of defendant No.1 -

company.

4. The defendants are engaged in manufacturing and

production of steel in their factory for which they require Iron

Ore as a raw material for the production of steel. Mr. Harsh

Maheshwari, native of Ahemdabad (State - Gujarat) runs

business in textile at Ichalkaranji, Dist. Kolhapur (State of

Maharashtra) is well known to the plaintiff and defendants

and said Harsh Maheshwari introduced plaintiff and

defendants to each other, informed business of plaintiff and

defendants and also disclosed the nature of business of the

plaintiff and defendants and disclosed the needs of

defendants. Defendant Nos. 5 and 12 along with Mr. Harsh

Maheshwari and other persons of defendants' sector at

Hospet, had visited the office premises of plaintiff at Hospet

in the month of May 2006 and introduced each other and

their business etc. The defendant No.2 at the instigation of

remaining defendants, with pre-dedicated mind of RFA. NO.100242/2017 7

committing mischief to the plaintiff, persuaded the plaintiff to

have business relationship with the defendants. The

defendants succeeded in convincing the plaintiff. After the

introduction by Harsh Maheshwari, it was agreed between

the plaintiff and defendants that, defendants regularly

purchase Iron Ore from the plaintiff by opening and keeping

continuous account with the plaintiff, as and when required

on credit and defendants agreed to deposit an amount of

Rs.5,00,000/- as security by cheque. It was also agreed by

the defendants that, they will bare the transporting charges

from placing of loading i.e., from mining plot or crusher plot

and it was also agreed that the defendants' person will be

present to ascertain the quality of goods and after approval

of the quality and quantity of the material the goods is

required to be sent and also after the satisfaction of person

of defendants the goods/material/Iron Ore would be loaded

and thereafter plaintiff is suppose to send the bills and after

receipt of the bills, defendants immediately would pay the

amount to the plaintiff. It is also agreed that payment would RFA. NO.100242/2017 8

be made at business place of the plaintiff i.e. at Hospet and

also agreed that if the payment is not made within a

particular period, interest at the rate of 24% per annum by

way of compensation, would be charged on the amount due,

as prevailing custom in the traders community. It is also

settled between the plaintiff and defendants that a written

order is required to be placed with the plaintiff and after the

satisfaction of the defendants in respect of the quality of

goods, quantity of goods and after overall satisfaction by the

defendants, the material would be loaded and all sort

transporting charges would be at the cost of defendants.

5. In the month of June 2006, plaintiff received a

purchase order from defendant bearing P.O.SSL/A-

0049/2006-2007/1853 dated 25/05/2006 along with

covering letter. The purchase order is signed by authorized

signatory and the covering letter is signed by defendant

No.5-Rakesh Ranjan. After receipt of the said purchase

order, plaintiff issued a cheque of Rs.5,00,000/- in the name

of defendant No.1 as security and delivered the same to the RFA. NO.100242/2017 9

defendants' person, namely, Ashok Jain at Hospet.

Thereafter, on 15th June 2006, defendants' person who was

working at Hospet section had been to the office of plaintiff

at Hospet and informed the plaintiff that an amount of

Rs.5,00,000/- is transferred by the defendant to the

plaintiff's account in ING Vaishya Bank, Hospet Branch. After

ascertaining that the amount of court Rs.5,00,000/- has

been transferred to the plaintiff on 17/06/2006, in presence

of the person and representative of defendants loaded an

Iron Ore under various different invoices to the tune of

Rs.5,80,476/-. At the time of delivering the said material, the

concerned bills, permit, weight slip, etc., were sent along

with the material and the same were hand-over to the

person and representative of the defendants who were

present at the time of loading. It is the practice of the

plaintiff that bills were prepared in 4 + 1 and like manner

and on 19/06/2006, the plaintiff sent a letter to the

defendants regarding statement of supply of Iron Ore to the

defendants. In this fashion, the plaintiff was supplying the RFA. NO.100242/2017 10

material i.e., Iron Ore often as per the orders of the

defendants and on 20/06/2006 an amount of Rs.10,00,000/-

was received by the plaintiff. In between 16/06/2006 to

19/01/2008, plaintiff sent and loaded the Iron Ore as per the

orders and quality booked by defendants on various

occasions. Defendants also made payment against the said

transactions on various occasions. Taking into consideration

the price of goods i.e. Iron Ore delivered by the plaintiff to

the defendants and the amount received by the plaintiff from

the defendants, the total balance amount to the tune of

Rs.3,42,66,961.98 Paise (Rupees Three Crore Forty Two

Lakh Sixty Six Thousand Nine Hundred Ninety One and Ninty

Eight Paise only), including charges of local transportation for

rack, rack charges and D.D. paid by the plaintiff for the rack

purpose etc., are shown in the Khata Extract. The accounts

are maintained by the plaintiff regularly on day-to-day basis

as per the occurrence of the transaction between the plaintiff

and defendants.

RFA. NO.100242/2017 11

6. Sometimes as per the request and assurance of

repayment of the same by the defendants, plaintiff paid

transporting rack charges, railway freight charges, etc. The

statement from 16/06/2006 to 21/01/2008 containing all

better particulars of transactions regarding serial number,

date, supply value, freight charges, payment received, the

total amount due etc., by the defendants was maintained,

made and copy of the same were sent to the defendants. In

this context, the plaintiff submits that, the defendants'

representative was stationed in PAI Hotel at Hospet for the

purpose of verifying the quantity that is meant for the

movement of the ore pertaining to the loading into the lorries

or the railway wagons and also to note down the expenses

incurred by wagons and also to note down the expenses

incurred by the plaintiff regarding the same, since

defendants assured to reimburse the same.

7. Since no further purchase order was placed and

the heavy dues by the defendants remained unpaid, the

plaintiff personally went to Ahemadabad, met the Chairman RFA. NO.100242/2017 12

and the concerned officials. He contacted the Managing

Director at Gandhi Dham, Kutch District, and requested for

payment of dues which has been held up for long cupping

loss to the plaintiff. The said persons assured on behalf of

the company to make payments as early as possible. But no

amount was paid. On 21st January, 2008 plaintiff received 2

cheques bearing cheque No.166541 and 166542 towards the

amount due to the plaintiff against the internal rack loading

and other expenses incurred by the plaintiff in connection

with the dispatch in respect of the dispatched railway racks

10 (Ten racks).

8. The said cheques were issued by the

representative Mr. Umesh Yadav, Hopset and handed over

the same only on 21/01/2008 to the plaintiff, requesting not

to present till 23/02/2008. Further, since for a long time no

instructions were received regarding the presentation of the

said cheques, the plaintiff presented the said cheques on

11.03.2008 and 12.03.2008, respectively in the plaintiff's

Bank namely Andhra Bank, Hospet Branch. However they RFA. NO.100242/2017 13

were returned dishonoured on the ground of ''Insufficient

Funds".

9. As such, the plaintiff was constrained to issue

legal notice calling upon the defendants to pay the amount

within 15 days as contemplated under Section 138 of the

amended Negotiable Instrument Act. Since the defendant

did not pay, the plaintiff was compelled to file a complaint

against all the Directors of the defendants' Company as well

as some other staff connected there with pertaining to the

bouncing of the cheques under Sections 405, 415, 420 of IPC

read with Sections 109 and 105 of Cr.P.C., before the

Additional Civil Judge (Jr.Dn.) and J.M.F.C., Hospet, and the

matter was referred to the Police under Section 156 (3) of

the CrP.C. There upon, the Police investigated the matter and

submitted a charge-sheet dated 05/05/2008 in

C.C.No.1180/2008 for which summons have been ordered by

the Hon'ble Court and the same were served.

RFA. NO.100242/2017 14

10. In response to plaintiff's letter dated 23/01/2008,

the representative of the defendants Mr. Umesh Yadav,

stationed at Hospet by letter dated 02/02/2008, has stated

that the company is satisfied with the quality and quantity of

the material supplied by the plaintiff and in particular

mentioning that, Sujal A. Shah, the Purchase Officer

Sri.Rakesh Ranjan has expressed their satisfaction over the

quality and quantity of the material supplied by the plaintiff.

He also enclosed statement of the supply of Iron Ore by the

plaintiff giving the particulars of dates, invoices numbers

quantity and other details and total value made of transport,

etc. The said statement and the letter as well as the

available purchase orders are produced. It is contended that

then the defendants' company became due in the amount of

Rs.3,42,66,961-98 paise, less Rs.60,00,000/- subsequently

received against the two cheques given after the issue of

notice by the plaintiff, hence the balance amount comes to

Rs.2,82,66,691-98 which the defendant No.1 and its

Directors are liable to pay, and the plaintiff further submits RFA. NO.100242/2017 15

that the defendant No.1 and its directors are liable to pay the

interest thereon in view of withholding the amount

wrongfully causing mental agony and loss to the plaintiff.

Further, in law the defendants cannot be permitted to have

unjust and wrongful gain at the cost of the plaintiff, the

benefit of which they have enjoyed. Hence the plaintiff claims

interest at 24% per annum by way of compensation as

agreed by the defendants and as per the custom prevailing in

trade community. The defendants being a well known

producer of Steel can afford to pay the interest and cannot

be allowed to enjoy others money.

11. Hence it is contended that, the plaintiff is entitled

to get the balance amount of Rs.2,82,66,961.98 (Rupees

Two Crore Eighty Two Lakh Sixty Six Thousand Nine Hundred

Sixty One and Ninety Eight Paise only) plus interest by way

of damages at the rate of 24% p.a. [from 05.05.2008 till

29.09.2008]. Thus, in all, the defendants and its directors

are liable to pay Rs.3,12,96,560-75 paise, jointly and

severally to the plaintiff.

RFA. NO.100242/2017 16

12. It is further stated, the cause of action for the suit

arose on 25/05/2006 when the defendant sent a purchase

order signed by Mr. Rakesh Ranjan A.G.M., Purchaser

Director, requesting for the supply of Iron Ore and on

16/06/2006 when the defendant No.1 - Company paid an

advance of Rs.5,00,000/- and subsequently on various dates

when they sent the purchases orders and the plaintiff

dispatched the Iron Ore by road and rail as requested by the

defendants from time to time, on various dates, verified by

the representative when the defendant made payments; on

23/01/2008 when the plaintiff sent the statement of running

account requesting to pay the said outstanding amount and

on oral requests and demands; when statement is sent which

is acknowledged by the defendants on 21/01/2008; when the

defendants' representative at Hospet Mr. Umesh Yadav gave

two cheques sent by the defendants towards dues which

bounced when presented on 23/03/2008; when the legal

notice dated 05.04.2008 was issued calling upon the

defendants to pay the amount covered under Section 138 of RFA. NO.100242/2017 17

the N.I.Act; when Rs.60,00,000/- was paid subsequently

when C. C. No. 1180 of 2008 was filed in the Court of the

A.C.J. (Jr.Dn.) & JMFC, Hospet, for the offences punishable

under several sections of I.P.C. The defendants have failed to

pay the amount due by them to the plaintiff at Hospet, within

the Jurisdiction of this Honorable Court. Hence, cause of

action arose for the plaintiff to file the present suit.

13. Defendant No.1 filed written statement and

contended that defendant No.1 is a Company incorporated

under the provisions of the Companies Act, 1956, having its

registered office at 5/1, Shreeji House, 5th Floor, B/h. M.J.

Library, Ashram Road, Ahmedabad and its manufacturing

unit in Taluka Gandhidham, Dist. Kutch in the State of

Gujarat. Defendant No.1 is engaged in the business of

manufacturing sponge iron and Ferro alloys at its

manufacturing unit. Defendant No.1 denies all statements,

averments, contentions and allegations made in the plaint as

if the same are set out herein and traversed, unless the

same are specifically admitted to be true. Defendant No.1 RFA. NO.100242/2017 18

denies that it is liable to make any payment to the plaintiff

much less Rs.3,12,96,560.75 as claimed in the plaint.

14. The 1st defendant submits that the contract of

purchase of iron ore between the plaintiff and the 1st

defendant, on the basis of which the plaintiff had allegedly

sold and dispatched iron ore to the 1st defendant came to be

constituted under the purchase orders that were issued by

the answering defendant from time to time which are also

produced on record by the plaintiff. The answering defendant

submits that under Clause 19(J) and Clause 20 of the said

Purchase Order, any dispute arising between the parties in

respect of the issues covered under the said purchase order

that is quantity, quality, delivery and payment, etc., would

be decided by competent Courts at Ahmedabad and shall be

subject to the jurisdiction of Ahmedabad Courts only. The

said conditions are mentioned overleaf the said Purchase

Order and specific attention to the said condition is drawn on

the main page of the said Purchase Order. The applicant

submits that the plaintiff has at all times been aware of the RFA. NO.100242/2017 19

said terms and has at no point of time raised any objections

whatsoever to the said term. The plaintiff has without demur

acted on the said Purchase Order. In the circumstances, the

court does not have territorial jurisdiction to entertain and

try the Suit.

15. The answering defendant states that the plaintiff

has wrongly arrayed defendants Nos. 2 to 15 as parties in

the suit. The defendants Nos. 2 to 15 are individual Directors

of the 1st defendant-company herein and as such they cannot

be made liable in their personal capacity for the alleged

contract entered into by the 1st defendant-company. The

defendant Nos. 2 to 15 in no circumstances can be made

liable for any alleged claim of the plaintiff and as such they

are neither necessary nor proper parties.

16. It is denied that the answering defendant is

engaged in the manufacture and production of steel or that

iron ore is a raw material for production of steel by the

answering defendant as alleged. The answering defendant RFA. NO.100242/2017 20

does not admit that Mr. Harsh Maheshwari is a native of

Ahmedabad or runs business in textile at Ichalkaranji,

District Kolhapur and denies that the said Mr. Harsh

Maheshwari is well known to defendant No.1, as alleged or

otherwise. It is not admitted that the said Mr. Maheshwari

introduced the answering defendant to the plaintiff or

disclosed any information in respect of the answering

defendant or that the defendant Nos. 5 and 12 visited the

office of the plaintiff in the month of May 2006 with Mr.

Maheshwari and the plaintiff and the same is put to strict

proof thereof. It is denied that the answering defendant or

the defendant No.2 were introduced to the plaintiff with any

alleged pre-decided mind of committing mischief or

persuaded the plaintiff who have business relationship with

the answering defendant, as alleged. It is denied that there

was any agreement between the plaintiff and the answering

defendant, oral or otherwise, that the answering defendant

will regularly purchase iron ore from the plaintiff or that the

same would be done by the plaintiff by opening and keeping RFA. NO.100242/2017 21

a continuing account, as alleged. It is denied that an amount

of Rs.5,00,000/- was deposited as security for the aforesaid

arrangement, as alleged. The usual methodology of

conducting purchase adopted by the answering defendant is

to raise a purchase order on a party containing all relevant

and agreed terms and conditions for each transaction. It is

possible that an advance may be paid by the answering

defendant in respect of a transaction agreed upon in a

purchase order. The answering defendant however has not

made any security deposit with the plaintiff. It is denied that

there was any agreement for borrowing transporting

charges, as alleged. It is denied that there was any

agreement that the answering defendant's representative will

ascertain the quality and quantity of the material or that only

after such approval/ ascertainment the material would be

loaded for being dispatched, as alleged. The answering

defendant states that ascertainment of quality of material at

the time of loading is practically impossible. The said

averment in the paragraph under reply is false and contrary RFA. NO.100242/2017 22

to record since the relevant purchase orders clearly state

that the inspection of the material will be at the consignee's

end. It is denied that payment in respect of the bill issued by

the plaintiff was to be made immediately or that any delay

would attract interest @ 24% p.a. as alleged. It is denied

that any agreement, oral or otherwise was entered into

between the plaintiff and the answering defendant stipulating

that material would be loaded only after overall satisfaction

of the answering defendant, as alleged.

17. It is further stated that, it is evident from the

contents thereof that the amount of Rs.5,00,000/- was paid

as security only after issuance of purchase order dated

25.5.2006. While it is true that the answering defendant

placed several purchase orders upon the plaintiff and the

plaintiff dispatched material allegedly in compliance of the

said purchase orders, when the material was received by the

answering defendant, it transpired that the same was short

of the quantity that was stated in the relevant purchase

orders, the bills raised by the plaintiff and the delivery RFA. NO.100242/2017 23

receipt that were issued by the Railway Authority or the

carrier. The answering defendant states that in addition to

the discrepancy in quantity, when the material dispatched by

the plaintiff was sent for inspection and testing to an

independent laboratory it transpired that the said material

was not of the quality that was specified in the concerned

purchase orders but was of an inferior quality. The 1st

defendant states that the value of the material short received

and excess payment was made by the answering defendant

to the plaintiff for higher quality material, but the plaintiff

fraudulently and with mala fide intention dispatched inferior

quality material. In view of the above fraudulent acts of the

plaintiff, the answering defendant had to suffer losses on

account of procuring better quality material at higher rates

from other sources and also, at times manufacturing final

product of inferior quality, for which the answering defendant

could fetch a far lower price than the usual price charged by

the answering defendant to its buyers. The said consequence

has also entailed into loss of profit and reputation of the RFA. NO.100242/2017 24

answering defendant amongst its buyers and business

community. The answering defendant also had to procure

material of requisite quality from other sources at higher

price to the tune of Rs.45,19,901/- in order to enhance the

quality of its goods. The answering defendant has a counter

claim in which he would also be entitled to set off to the tune

of Rs.45,19,901/- in the unlikely event that the claim of the

plaintiff is decreed by this Hon'ble Court. It is denied that the

answering defendant is required to make any payment to the

plaintiff or that any alleged balance, much less balance

amount of Rs.3,42,66,961.98 is pending payment by the

answering defendant. The answering defendant does not

admit the statements of accounts of the plaintiff and puts the

plaintiff the strict proof of each and every item and the

particulars stated therein.

18. It is denied that the answering defendant has

requested the plaintiff to pay transporting rake charges or

railway freight charges etc, as alleged. The answering

defendant denies the contents of the statement for the RFA. NO.100242/2017 25

period 16.6.2006 to 21.1.2008 and puts the plaintiff to the

strict proof of the particulars stated therein. With reference

to the contents of paragraph No.6, it is denied that any

representative of the 1st defendant at Hospet was stationed

for the purpose of verifying the quantity, as alleged or that

the said representative noted the quantity loaded and the

alleged expenses incurred by the plaintiff regarding the

same, as alleged. It is denied that any dues remained unpaid

by the 1st defendant or that any alleged assurance was given

by the Chairman, Managing Director or other officers for

making early payments as alleged. In so far as the dishonour

of two cheques is concerned the answering defendant has, as

admitted by the plaintiff, made payment of the amount

covered under the said cheques. In so far as Criminal

Complaint No. 1180 of 2008 is concerned the same being

wholly vexatious and untenable on facts and in law, the

answering defendant and other accused have filed a petition

under Section 482 of the Code of Criminal Procedure, 1973

and the Hon'ble High Court of Karnataka Circuit Bench at RFA. NO.100242/2017 26

Dharwad has vide order dated 29th October 2009 stayed

proceedings of the said Criminal Complaint, till 21.06.2010

giving other directions, in compliance of which the plaintiff is

filing this written statement. It is denied that Shri. Rakesh

Ranjan expressed any satisfaction in respect of quantity or

quality of the material dispatched by the plaintiff as alleged.

The contents of letter dated 2.2.2008 allegedly written by the

Mr. Umesh Yadav are denied. The said Mr. Yadav had no

authority to issue any letter on behalf of the answering

defendant and it appears that the said letter dated 2.2.2008

has been procured by the plaintiff from Shri. Umesh Yadav

fraudulently and by illegal means only to create and fabricate

evidence against the answering defendant. The answering

defendant is not aware of the alleged enclosures allegedly

tendered by Shri. Yadav along with the said letter dated

2.2.2008 and does not admit the contents thereof. The

plaintiff is put to the strict proof thereof and also of the

particulars stated in the said alleged statement. It is denied

that the answering defendant became due to the tune RFA. NO.100242/2017 27

Rs.2,82,66,691-98 alleged. It is denied that the answering

defendant or its Directors are liable to pay any amount much

less an amount of Rs.2,82,66,691-98 to the plaintiff or are

liable to pay any interest thereon, as alleged. It is denied

that the answering defendant has had any unjust or wrongful

gain at the cost of the plaintiff, as alleged or that the plaintiff

is entitled to claim interest @ 24% p.a., as alleged, or that

the same has been agreed by the answering defendant or is

as per the custom prevailing in trade community. It is denied

that the answering defendant has enjoyed others' money as

alleged.

19. It is denied that the plaintiff is entitled to any sum

much less a sum of Rs. 2,82,66,691.98 or any interest, much

less interest @ 24% p.a. from 5.5.2008 till 29.9.2008 or any

aggregate amount of Rs.3,12,96,560-75 as claimed in the

plaint. It is submitted that the plaintiff cannot be permitted

to file photocopies of the documents upon which he seeks to

rely in the present suit and the documents produced by the

plaintiff cannot be and ought not be taken on record. The RFA. NO.100242/2017 28

plaintiff has no cause of action for filing the present suit and

has also failed to plead any cause of action in the plaint so as

to maintain a suit against the answering defendant.

Therefore, it is humbly prayed that this Hon'ble Court be

pleased to dismiss the suit with exemplary costs under

Sec.35A of the Code of Civil Procedure.

20. Counter Claim is filed by the answering defendant

No.1 under order VIII Rule 6-A of the Code of Civil

Procedure. The 1st Defendant states that it is engaged in the

business of manufacturing Ferro Alloys and Sponge Iron at

its unit located in District Kutch, Gujarat. Ferro Alloys and

Sponge Iron are manufactured by heating Chrome

Ore/Manganese Ore and Iron Ore, respectively with

Coal/Lignite in a kiln at high temperatures. The said process

removes impurities and gives Ferro Alloys like Ferro

Chrome/Ferro Manganese and Sponge Iron. For

manufacturing Sponge Iron, Iron Ore is a major ingredient

for the 1st Defendant. In order to fulfill its requirement of

Iron Ore, which is not available in Gujarat, the 1st Defendant RFA. NO.100242/2017 29

sources the same from suppliers in the states of Orissa and

Karnataka. Since many steel units are established in Kutch

district of Gujarat, suppliers of Iron Ore in the states of

Orissa and Karnataka keep approaching the units and their

representatives. The plaintiff had also approached the 1st

answering defendant for supplying Iron Ore. Pursuant to

negotiations, the 1st answering defendant agreed to

purchase Iron Ore from the plaintiffs. The agreed mode was

that the 1st answering defendant would raise a purchase

order containing price and other terms, including the terms

stated overleaf the Purchase order, on the basis of which the

plaintiff would supply the Iron ore to the 1st answering

defendant. The 1st answering defendant states that

accordingly it began raising Purchase Orders, containing the

agreed price, quality and other terms upon the plaintiffs, who

thereupon used to Supply Iron Ore by, rail and road to the

1st answering defendant with clear understanding and

representation that the material supplied is of the requisite

quantity and quality and raised bills with necessary RFA. NO.100242/2017 30

enclosures. The 1st answering defendant would make

payment for the same. Since the purchase Order quantity

were large, the plaintiffs were required to satisfy the said

quantity in more than one delivery / dispatch and were

therefore required to maintain clear records so as to ensure

that each bill pertains to the relevant purchase order. This

was significant since each purchase order had different

prices. It is however transpired that the plaintiffs adopted a

practice of not mentioning the Purchase order numbers in the

bills raised by them which created confusion as to the

quantity and price payable for the delivery so made and

began raising bills for higher price of another purchase order,

despite the fact that it had not satisfied the prior purchase

order. On this fraudulent practice coming to notice, the 1st

answering defendant made several requests to the plaintiffs

to rectify the bills and state clearly as to what quantity

pertains to which purchase order. The plaintiffs however,

maintained a stoic silence and went on furthering their illegal

gains. The 1st answering defendant was, therefore, RFA. NO.100242/2017 31

constrained to clear bills after rationalizing the same to the

delivery against the concerned purchase orders and on the

price of the purchase order whose quantity was to be

completed. Assuming while denying that any payment is not

made by the 1st Defendant, the alleged non payment was

the only method of checking that the plaintiff does not

continue to make illegal gains. In fact, the plaintiff had, in its

malafide and ingenious manner over billed the 1st answering

defendant and is not entitled to make any claim upon the 1st

Defendant.

21. In addition to what is stated hereinabove, the

plaintiff also devised an ingenious method of profiteering at

the cost of the 1st answering defendant by dispatching less

quantity of Iron Ore by making false and fabricated

statements in its bills and making false entries in the

Railways receipt, more so when the plaintiff has itself

claimed that it caused the material to be dispatched. The

said discrepancy came to light on weighment at the

unloading station. Whether the table of short shipment is RFA. NO.100242/2017 32

required? The 1st Defendant is thus entitled to claim Rs.

33,56,569 with interest @ 24% per annum from the plaintiff.

Apart from the above discrepancies, the 1st Defendant used

to get the material received at Gandhidham by an

independent laboratory, namely SGS Laboratory, Mumbai,

which is a renowned laboratory in India and Abroad. For the

following quantity received, the 'Fe' content in the Iron Ore

was much less. In certain dispatches, the Iron Ore lumps

were over sized and/or undersized as distinguished from the

purchase orders, due to which the 1st Defendant was unable

to procure the requisite yield in the kiln, thereby increasing

cost of production. The plaintiff supplied 14,621.04 MT of

Iron Ore during Sept 07 to January, 2008, with low 'Fe'

Content, as certified by SGS. Laboratory, Mumbai, the value

of which was far lower than the Purchase Order value,

thereby causing a loss on account of excess price paid of

Rs.3,11,79,368.00.

22. The 1st answering defendant is accordingly

entitled to claim Rs.3,11,79,368.00 from the plaintiff. The 1st RFA. NO.100242/2017 33

answering defendant further states that the loss incurred by

it due to low yield on account of over sized / undersized

material comes to Rs.88,70,505/-. Considering the poor

quality of material received, the 1st Defendant was

constrained to buy better quality Iron Ore from other sources

at higher rates, in order to ensure that the Sponge iron is of

the quality for which the 1st defendant was contractually

bound to its customers. The plaintiff thus procured 14,621.04

MT i.e., the quantity with inferior quality, of Iron Ore from

3rd parties at varying rates, causing additional loss of Rs.

45,17,901.

23. The answering defendant is thus entitled to be

compensated for Short shipment and freight paid for short

quantity to the tune of Rs. 33,56,569/- for excess payment

on account of inferior quality in respect of 14,621.04 MT iron

ore to the tune of Rs.3,11,79,368/ for loss incurred due to

low yield on account of oversized / undersized iron ore lumps

to the tune of Rs.88,70,505/- and procurement of 14,621.04

MT iron ore of the quality that was to be delivered by the RFA. NO.100242/2017 34

plaintiff, from 3rd parties to the tune of Rs.45,17,901/-

totaling to Rs.4,79,24,343/- with interest @ 24% per annum

from the date of suit till actual payment by the plaintiff The

aforesaid Claims are stated with particulars in the statement

of claims appended to the Counter claim.

24. The 1st answering defendant states that while this

Court does not have territorial jurisdiction to entertain the

suit filed by the plaintiff, in respect of which the 1st

Defendant has filed a separate application under Order VII

Rule 11 of the CPC Code of Civil Procedure 1908, and

preliminary issue is also raised in the written statement, the

1st defendant is filing its Counter claim at the first given

opportunity without prejudice to its contention that both,

present suit and the counter claim ought to be tried by

Courts in Ahmedabad, as contractually agreed by the parties.

The 1st defendant states that no claim made by it is barred

by the law of limitation and this Court has the pecuniary

jurisdiction to try and entertain the present counter claim. RFA. NO.100242/2017 35

25. The Counter claim is valued at Rs. 4,79,24,343/-

and appropriate Court Fee of Rs.4,46,747/- is herewith paid

by the 1 Defendant on the Counter Claim under Sec.21 of the

Karnataka Court Fees and Suits Valuation Act, 1958. The 1st

Defendant craves leave to produce documents relied upon by

way of a separate list at the appropriate time. The 1st

Defendant therefore prays that the Court be pleased to pass

a decree in the sum of Rs.4,79,24,343/- in favour of the 1st

Defendant and against the plaintiff and holding that the

plaintiff is liable for the short delivery of Iron ore to the 1st

Defendant, supply of inferior quality of iron ore to the 1st

Defendant, loss caused due to low yield on account of supply

of improper size of lumps by the plaintiff to the 1st

Defendant and loss caused in procuring requisite quality

material by the 1st Defendant from 3rd parties; and interest

@ 24% per annum be awarded from the date of suit till

realization by the 1st Defendant.

26. On the basis of the pleadings of the parties, the

trial Court framed following issues and additional issues: RFA. NO.100242/2017 36

1) Whether the plaintiff proves that he has supplied

iron ore materials to the defendant No.1/company

as per various purchase orders and quality booked

by the defendants on various occasions between

16.6.2006 and 19.1.2008 and the defendant

No.1/company failed to pay entire sale price and

other incidental charges and become due an

amount of Rs.2,82,66,691-98 as pleaded in the

plaint?

2) What is the current and future rate of interest to

which the plaintiff is entitled?

3) Whether the plaintiff proves that he is entitled to

recover an amount of Rs.2,82,66,691-98 with

interest an amount of Rs.30,29,596-79 in total an

amount of Rs.3,12,96,560-75 from the defendants

as sought for?

4) Whether the defendants prove that suit of the

plaintiff is barred by limitation?

RFA. NO.100242/2017 37

5) Whether defendants prove that this court has no

territorial jurisdiction to entertain the suit and suit

is not maintainable?

6) Whether the defendant No.1 company proves that

the company is entitled to an amount of

Rs.4,79,24,343/- from the plaintiff by way of

counter as pleaded in the written statement?

7) To what reliefs the parties are entitled?

8) What order or decree?

Note: Issue No.5 is treated as preliminary issue.

Additional issues:

1) Whether the defendant No.1 company proves that

the plaintiff has supplied 14,621.04 METRIC TONE

of Iron ore during September, 2007 to January

2008 with low Fe contents as pleaded in the

written statement?

RFA. NO.100242/2017 38

2) Does the 1st defendant proves that on 3.3.2007,

the plaintiff has accepted to receive a sum of

Rs.7,50,000/- from the 1st defendant towards full

and final settlement of all dues payable to the

plaintiff till that day as stated in para No.4.4(A) of

written statement?

27. In order to prove the case, plaintiff company

examined its proprietor as P.W.1 and two witnesses were

examined as P.Ws.2 and 3 and got marked 1784 documents

as Exs.P1 to P.1784. Defendant No.1 company examined its

vice president as D.W.1 and its Lab Chemist examined as

D.W.2 and got marked 126 documents as Exs.D1 to D.126.

Court Commissioner was examined as C.W.1 and got marked

20 documents as Exs.C1 to C20. The trial Court after hearing

the learned counsel for the parties and considering the oral

and documentary evidence answered issue No.1 in the

affirmative, issue Nos.2, 3 and 7 partly in the affirmative and

issue Nos.4, 6 in the negative, additional issue Nos.1 and 2

in the negative and consequently, decreed the suit of the RFA. NO.100242/2017 39

plaintiff in part with costs. It is ordered and decreed that

plaintiff is entitled for due amount of Rs.2,82,66,691-98

(Rupees Two Crore eighty two lakh sixty six thousand six

hundred ninety one and paise ninety eight only) with interest

at the rate of 12% p.a. on the above said balance due

amount from May 2008 to till its realization. It is further

ordered and decreed that defendant No.1 company is hereby

directed to pay due amount of Rs.2,82,66,691-98 with

interest as ordered above. Being aggrieved by the judgment

and decree passed by the trial Court, defendant No.1 has

filed this appeal.

28. Heard the learned senior counsel

Sri.S.S.Nagananda for Sri.Mrutyunjaya S.Hallikeri for

defendant No.1/appellant and learned counsel Sri.S.A.Sondur

and learned counsel Sri.K.L.Patil for the plaintiff.

29. Learned senior counsel Sri.S.S.Nagananda for the

defendant No.1 submits that suit filed by the plaintiff is not

maintainable on the ground that any person carrying on RFA. NO.100242/2017 40

business other than his own name may be sued in such a

name or style as if it was a firms name and the said benefit

is not extended to the plaintiff filing suit in the name other

than his own. It is contended that suit is filed by M/s

Sreenidhi Trading Company. Admittedly, plaintiff is a

proprietorship concern is not a legal entity and is not a

competent to maintain a suit and is not legal entity cannot

sue in its own name. The plaintiff neither sought liberty to

amend its name in the cause title nor has it explained this

apparent mis-description. In support of his arguments, he

has placed reliance on the judgment in the case of Svapn

Construction Vs. IDPL Employees Co-Operative Group

Housing Society Ltd. reported in (2006) 127 DLT, 80 and

in the case of M/s Arora Enterprises Vs. M/s Vijay

Power Generator Ltd., reported in 2015 SCC Online Del

9644.

30. Learned senior counsel further submits that

defendant has raised a defence that trial Court has no

territorial jurisdiction. The trial Court on the basis of the RFA. NO.100242/2017 41

pleadings of the parties framed issues and issue No.5 was

framed relating to territorial jurisdiction and the same was

tried as a preliminary issue. He submits that as per Clauses

19(j) and 20 purchase order that if any dispute arises

between the parties, the court have any dispute relating to

the transaction, then the court in Ahmedabad would have

jurisdiction only. The said Clauses 19(j) and 20 were not

considered by the trial Court and proceeded to answer issue

No.5 in the negative. He submits that appellate Court can

consider the correctness of the order on issue No.5 in the

present appeal. In support of his contention, he has placed

reliance on the judgment of the Hon'ble Apex Court in the

case of Satyadhyan Ghosal and others Vs. Smt. Deorajin

Debi and another reported in AIR 1960 SC 941 and in the

case of ABC Laminart Pvt. Ltd. and another Vs. AP

Agencies, Salem reported in (1989) 2 SCC 163.

31. He submits that there was settlement between

plaintiff and defendant company and accordingly a

settlement deed came to be executed in between the parties RFA. NO.100242/2017 42

as per Ex.D78. The plaintiff has denied his signature on the

said Ex.D78. He submits that plaintiff has not written any

letter seeking payment of outstanding dues and no orders

have been placed by the defendant after Feb 2007 to July

2007. He submits that even if Ex.D78 presumed to be

fabricated, the financial statement for the year ending

31.03.2007 produced by the plaintiff indicates that defendant

is not in the list of plaintiff's list of sundry debtors. This

indicates that as on the end of financial year, the plaintiff had

treated the receipt of Rs.7,50,000/- as a final settlement of

all dues. Further Ex.D122 sundry creditor's list for the year

2007-08 maintained by the defendant discloses a due

amount of Rs.1,54,41,110/-. Similarly, the defendant had

produced Ex.D123, a list of sundry creditors as on

31.03.2009 wherein Rs.94,41,110/- is reflected against the

name of plaintiff. Similarly, Exs.D124 and 125 were also

produced. These apparent inconsistencies would only

demonstrate there was no proof to indicate with exactitude

the claim amount of the plaintiff. Further, plaintiff addressed RFA. NO.100242/2017 43

letters to the defendant after the date of settlement also do

not indicate any request being made for payment of

outstanding dues. The plaintiff requested for issuance of

purchase orders in its favour without any request for

clearance of dues. He submits that the materials supplied by

the plaintiff was of inferior grade. In this regard, the

defendant placed reliance on the inspection reports at

Exs.D109 to 114. The trial Court has not properly considered

Exs.P109 to 114 to show that materials supplied by the

plaintiff was of inferior grade and the said reports are

inclusive of contamination, they cannot be accepted. He

further submits that Exs.D109 to 114 does not indicate

supplier's name, but these reports make a reference to

quantity and rake number. The trial Court has failed to

consider plaintiff's own document. Ex.P1065 is the letter

dated 15.01.2008 wherein the plaintiff has requested the

defendant to reconsider the decision of cancellation of rake

Nos.6 and 7.

RFA. NO.100242/2017 44

32. He further submits that trial Court has recorded a

finding that defendant company had not communicated its

dissatisfaction and said finding is contrary to the records. He

submits that C forms are the declarations give by the register

purchaser to the registered seller of another State under

Rule 12(1) of the Central Sales Tax (Registration and

Turnover) Rules, 1957 to certify the value and quantity of

goods received. There is no provision in C form for certifying

the quality of products received. Hence, mere issuance of C

form by the defendant company could not have been relied

upon the trial Court for the purpose of certifying the quality

of products received. He submits that issue of quality was

raised way back in the year 2006-07. To sort out these

disputes, P.W.1 had visited the office of the defendant

company in Ahmedabad and accepted an amount of Rs.7.5

lakhs i.e., at a lesser price in view of the substandard quality

of Iron Ore supplied to the defendant company, as full and

final settlement. He submits that trial Court has failed to

notice that burden is upon the plaintiff to prove the said RFA. NO.100242/2017 45

factual assertion and the plaintiff has also failed to produce

any material to prove that ore was of good quality. In

support of his contention he placed reliance on the judgment

of the Hon'ble Apex Court in the case of Mohd. Abdullah

Azam Khan Vs Nawab Kazim Ali Khan reported in 2022

SCC Online SC 1544.

33. He further submits that trial Court has recorded a

finding against the defendant that defendant has not been

able to prove that the SAL Lab in Hospet was functioning

only till Jan 2007. He submits that trial Court has misread

Ex.D115 which is a list of employees of the defendant

company. Wherein the said list the name of Umesh Yadav

was shown as employee for the defendant company from

05.01.2006 to 21.04.2009. He submits that trial Court has

failed to consider the contention of D.W.1 that said Lab was

not in existence beyond January, 2007 and the same was

permanently closed. He submits that trial Court has failed to

consider Ex.P.1236, letter dated 23.07.2007, wherein

plaintiff requested the defendant to arrange its chemist in RFA. NO.100242/2017 46

Hospet as it would be convenient for the regular supply of

iron ore. It is submitted that there was no chemist was

appointed by the defendant company in Hospet and further

submitted that Umesh Yadav had no authorization of the

company to write the said letter. Ex.P.1070 is not even on

the company letter head and D.W.1 has denied the contents

of Ex.P.1070. The trial Court has failed to examined the said

aspect. He further submits that plaintiff has failed to examine

Umesh Yadav as a witness, the trial Court could have drawn

adverse inference against the plaintiff under Section 114(g)

of the Indian Evidence Act. He submits that IT returns

submitted by the plaintiff are of different financial years and

different proprietary concern and the financial statements of

the plaintiff are not furnished. He submits that mere

production of books of accounts is not sufficient to prove

debts. In this regard, he has placed reliance on the judgment

of the Hon'ble Apex Court in the case of Central Bureau of

Investigation Vs. V.C. Shukla and Others reported in (1998)

3 SCC 410, the judgment of the co-ordinate bench of this RFA. NO.100242/2017 47

Court, in the case of Hegde and Golay Limited Vs. State Bank

of India reported in ILR 1987 Kar 2673 and the judgment of

the Hon'ble Apex Court in the case of M/s Halawagalu Adikar

Channappa Proprietorship Firm Vs. Vastrada Shivamurthappa

reported in 2014 SCC Online Kar 8614. He submits that

plaintiff has fabricated the records and furnished the

statements.

34. He further submitted that defendant company had

never agreed for payment of transportation charges. plaintiff

has neither produced any agreement nor has produced any

letter/communication addressed by the defendant agreeing

to pay the transportation charges. He further submits that

trial Court has placed reliance on Ex.P.1066 to grant claim in

entirety is incorrect and the said document indicates that

demand draft was for the purposes of railway freight charges

and the demand draft is drawn in favour of South Western

Railway. He further submits that defendant's company

communication at Ex.D80 clearly reflects the intention to

bear the railway freight charges only. He submits that RFA. NO.100242/2017 48

plaintiff has made claim for transportation charges for the

first time as per Ex.P956 and the plaintiff has sought for

reimbursement towards payment made to South Western

Railway.

35. Learned senior counsel for the defendant company

further submits that sampling refers to the process of

drawing samples from the rake before it leaves the point of

loading towards the destination. Testing refers to the act of

subjecting the samples drawn for chemical analysis to

determine the quality of the product and the trial Court has

misdirected itself to believe that drawing of samples at

Hospet as testing at Hospet. The defendant had produced the

certified copies of railway receipts and wagon loading

particulars issued by the railway authorities which clearly

demonstrates the baseless claims of the plaintiff. The

defendant had also produced the bills raised by the CTA

Logistic Company which has transported the iron ore from

Gandhidham Railway Yard to the defendant company in

Bharapur. The quantity claimed to have been supplied by the RFA. NO.100242/2017 49

plaintiff does not tally with the aforesaid bill raised by the

CTA Logistic Company as different quantity is transported.

The documents produced by the plaintiff in regard to quantity

alleged to have been supplied by the plaintiff is contrary to

the actual quantity received. He further submitted that the

trial Court committed an error in granting interest at the rate

of 12% p.a. on Rs.2,82,66,691-98 from May 2008 till its

realization. Hence, on these grounds he prays to allow the

appeal.

36. In support of his contention, learned senior

counsel for the defendant has placed reliance on the

following judgments.

1. Padum Kumar v. State of Uttar Pradesh,reported in (2020) 3 SCC 35.

2. Murari Lal v. State of Madhya Pradesh, reported in (1980) 1 SCC 704.

3. Central Bureau of Investigation v. V.C. Shukla and Others, reported in (1998) 3 SCC 410.

4. Hegde and Golay Limited v. State Bank of India, reported in ILR 1987 Kar 2673.

RFA. NO.100242/2017 50

5. M/S Halawagalu Adikar Channappa Proprietorship Firm v. Vastrada Shivamurthappa, reported in 2014 SCC OnLine Kar 8614.

6. Bank of Baroda, Chickmagalur v. M. N. Somashekar, reported in (2000) 7 Kant LJ 329.

7. R.M.Sundaram alias Meenakshisundaram v. Sri Kayarohanasamy and Neelayadhakshi Amman Temple, Nagapattanam, Tamil Nadu, reported in 2022 SCC OnLine SC 888.

8. Bachhaj Nahar v. Nilima Mandal and Another, reported in (2008) 17 SCC 491

9. Union of India v. Ibrahim Uddin and Another, reported in (2012) 8 SCC 148.

10. Svapn Constructions v. IDPL Employees Co- Operative Group Housing Society Ltd., (2006) 126 DLT 80. (2006) 127 DLT 80

11. M/s Arora Enterprises v. M/s Vijay Power Generator Ltd., 2015 SCC Online Del 9644.

12. Satyadhyan Ghosal and others v. Smt. Deorajin Debi and another, AIR 1960 SC 941.

13. Mohd. Abdullah Azam Khan v. Nawab Kazim Ali Khan, 2022 SCC OnLine SC 1544.

14. N.G. Dastane (Dr) v. S. Dastane, (1975) 2 SCC

326.

15. Delta Distilleries Ltd. v. United Spirits Ltd., & another (2014) 1 SCC 113.

RFA. NO.100242/2017 51

16. Murugesam Pillai v. Manickavasaka Pandara and another, (1916-17) 44 IA 98.

17. M.N. Rajan v. Konnali Khalid Haji and another, ILR 2004 KAR 3731.

18. Fabril Gasosa v. Labour Commissioner, (1997) 3 SCC 150.

19. S. Saktivel v. M. Venugopal Pillai, (2000) 7 SCC

104.

20. Jayesh Tanna v. Radha Arakkal, (2022) 5 MahLJ

337.

21. KPTCL v. JSW Energy Ltd., (2023) 5 SCC 541.

22. Union of India and another v. N. Murugesan and others (2022) 2 SCC 25.

23. Kailash Nath Associates v. Delhi Development Authority and another, (2015) 4 SCC 136.

37. Learned counsel for the plaintiff submits that

insofar as jurisdiction is concerned, the trial Court has

already passed an order on preliminary issue and the

defendant No.1 has no right to raise such a ground in the

appeal. He submits that the order passed on the preliminary

issue No.5 has attained finality. He submits that the RFA. NO.100242/2017 52

revisional jurisdiction is part and parcel of appellate

jurisdiction and basically and fundamentally it is the

appellate jurisdiction which is being exercised by the High

Court while examining the correctness of an order under

Section 115 of CPC and the defendant No.1 has miserably

failed in establishing the said contention and the defendant

company cannot re-adjudicate the said issue in the present

appeal. In support of his contention he has placed reliance

on the judgment of the Hon'ble Apex Court reported in (AIR

1970 SC 1) Shankar Ramachandra Abhyankar v.

Krishnagiri Dattatreya Bagat.

38. Regarding quantity and quality of iron ores

supplied by the plaintiff to defendant No.1, the defendant

company has seriously disputed the quantity and quality of

iron ore supplied by the plaintiff, but there is absolutely no

material placed on record to show that any time before

issuance of notice by the plaintiff, any such dispute was ever

raised or communicated. Further he has placed reliance on

Ex.P1038 dated 25.05.2006. The said document is a RFA. NO.100242/2017 53

clarification issued by the defendant company on their

purchase order wherein it has been categorically stated by

the defendant that (1) their purchase order will be in

standard format (2) analysis and sampling will be done by

the defendant at Hospet at their own cost and it will be final

for the payment and (3) that their SAL Steel representative

will be present at the time of loading and dispatch. The said

document was confronted to DW-1 and DW-1 admitted the

conditions mentioned in the aforesaid exhibit. Further,

Ex.P.1072 reveals that Senior Chemist by name Umesh

Yadav gave a letter to the defendant stating that the

defendant Company is satisfied with the quality and quantity

of the material supplied by the plaintiff. He further submits

that Umesh Yadav is the employee of defendant No.1

Company and defendant No.1 has not examined Umesh

Yadav. He submits that the defendant No.1 cannot expect

the plaintiff to examine Umesh Yadav as a plaintiff witness

and further he was arrayed as defendant No.13. He was the

competent person to opine on the quality and quantity of the RFA. NO.100242/2017 54

material supplied by the plaintiff to defendant No.1 and

further no material are placed on record by defendant No.1

to show that any action is initiated against Umesh Yadav. He

submits that defendant No.1 could have examined Umesh

Yadav. The defendant No.1 withheld the material witness

and an adverse inference has to be drawn against defendant

No.1 under Section 114(g) of the Indian Evidence Act for

non-examination of Umesh Yadav. Insofar as discrepancy in

total weight mentioned in Ex.D.90 to Ex.D.96 which are

Railway Weighment Receipts at a loading point, the

defendant company has not produced any records to show

that there is a discrepancy in the weight at unloading point.

It is submitted that DW-1 admitted in the course of cross-

examination that defendant No.1 received excess than what

order was actually placed by them. Hence the contention of

the learned counsel for defendant No.1 that there is a

discrepancy at the loading and unloading points is incorrect.

39. Regarding quality, the learned counsel for plaintiff

further submits that DW-1 admitted that they used to RFA. NO.100242/2017 55

receive samplings report from their chemist at Hospet and

thereafter they used to lift the material and also admitted

that they never lifted any material without sampling. Though

defendant company has produced lab reports at Exs.P.1041

to P.1060 and contended that the quality of material supplied

by the plaintiff is inferior in nature, but DW-1 in the course of

cross-examination admitted that the material can be said to

be contaminated if there are foreign particles present in the

material, apart from those which are inherent materials. He

submits that from the perusal of the lab report, it clearly

shows that there was no presence of foreign particles and he

also admitted that contamination upto 5% was allowed by

defendant for the purpose of procurement. He submits that

the author of Exs.P.1754 to P.1757 has not been examined

and in the absence of evidence of author of Exs.P1754 to

P.1757, no reliance can be placed upon them to conclude

that the reports relate to the materials supplied by the

plaintiff. He submits that the entire responsibility as to the

sampling and analysis was taken up by the defendant and RFA. NO.100242/2017 56

not by the plaintiffs. He further submits that as per proviso

of Section 16(2) of the Sales of Goods Act, if the buyer has

examined the goods, there shall be no implied condition as

regards defect which such examination ought to have

revealed. He further submits that if really the plaintiff has

supplied inferior quality material, the defendant No.1 could

have returned the material, on the contrary, DW-1 admitted

that the said material has been utilized by them and further

he places reliance on Section 24 of the Sales of Goods Act.

40. Plaintiff produced Exs.P1318 and P1319, i.e.,

statement for the financial year which discloses that there is

a discrepancy in Exs.P.1318 and P.1319 in regard to the loss

and profit. He submits that as per Section 139(5) of the

Income Tax Act, revised returns can be filed within one and

the same financial year and as per Section 139(5), the

plaintiff has filed revised returns and the same was accepted

by the Income Tax authorities and the said document being a

public document. Though in Ex.P.1318 name of defendant

company was not shown in the list of sundry debtors, RFA. NO.100242/2017 57

subsequently shown in Ex.P.1319. The defendant produced

Exs.D.116 to D.119, the list of sundry creditors of defendant

Company for various financial years including 2009-10. In

the said exhibits, name of the plaintiff appears at various

places. But DW-1 admitted that for effecting such entries,

the defendant has not considered the quality and quantity of

materials supplied by the plaintiff. Further he has placed

reliance on the judgment of the Hon'ble Apex Court reported

in (AIR 2021 SC 5249) Asset Reconstruction Co.

(India) Ltd., v. Bishal Jaiswal.

41. Regarding transportation cost to be bound by the

plaintiff: The plaintiff has placed reliance on Ex.P1038

wherein condition Nos.4, 5 and 6 clearly reveals that in case

of railway transport, defendant was to arrange for delivery of

materials to the railway plot, transporting vehicles will be

arranged by the defendants, railway rake charges and other

incidental charges will be borne by the defendant No.1. He

submits that the said condition has not been disputed by

defendant No.1.

RFA. NO.100242/2017 58

42. Insofar as alleged settlement between plaintiff

and defendant No.1, it is the case of the defendants that the

settlement was arrived in between the plaintiff and defendant

No.1. In the said settlement, it was settled for a sum of

Rs.7,50,000/- which is alleged to have been paid by way of

cheque. The said settlement has been seriously disputed by

the plaintiff. Further the plaintiff has also denied the

signature on Ex.D.74 and submits that the burden is on the

defendant company to prove the alleged settlement. He

submits that the defendant company failed to prove the

alleged settlement.

43. The plaintiff filed a suit for recovery of money.

Defendant company made a counter claim in the written

statement. The trial Court decreed the suit filed by the

plaintiff and dismissed the counter claim. He submits that

the defendant company filed a composite appeal challenging

the decreetal of suit and dismissal of counter claim as not

maintainable. In support of his argument he has placed

reliance on the judgment of this Court in the case of Ramesh RFA. NO.100242/2017 59

Chand vs. Omraj and Ors., in RSA No.57/2017. Hence on

these grounds pray to dismiss the appeal.

44. Perused the records and considered the

submissions of the learned counsel for the parties.

45. The points that arise for our consideration are:

1) Whether the defendant proves that trial Court has no territorial jurisdiction to entertain the suit in view of Clause 19(j) and 20 mentioned in the purchase order?

2) Whether the plaintiff proves that plaintiff has supplied iron ore to the defendant company as per purchase order and quality booked by the defendant on various occasions between 16.06.2006 and 19.01.2008 and the defendant company failed to pay entire sale price and other incidental charges and become due an amount of Rs.2,82,66,691-98?

3) Whether defendant No.1 proves that on 03.03.2007 the plaintiff has accepted to receive a sum of Rs.7,50,000/- from defendant No.1 towards full and final settlement of all dues payable to the plaintiff till that day?

RFA. NO.100242/2017 60

4) Whether defendant No.1 company proves that plaintiff has supplied iron ore during September 2007 to January 2008 with low 'Fe' contents as pleaded in the written statement?

5) Whether appeal filed by the defendant No.1 challenging the judgment and decree and dismissal of counter claim in single appeal is maintainable?

6) Whether defendant proves that judgment and decree passed by the trial Court is arbitrary and erroneous and calls for interference by this court?

7) What order or decree?

46. Point No.1: The plaintiff has filed a suit for

recovery of money against the defendants before the

Principal Senior Civil Judge and JMFC, Hospet. Defendant

No.1 has taken a specific defence in the written statement

that as per purchase orders, any dispute arise between the

parties, the same would be decided by competent court at

Ahmedabad and the trial Court has no jurisdiction to

entertain the suit. The trial Court on the basis of pleadings of

the parties framed issues and issue No.5 reads as under: RFA. NO.100242/2017 61

"5. Whether the defendants prove that this Court has no territorial jurisdiction to entertain the suit and suit is not maintainable?"

47. The said issue was treated as a preliminary issue

and answered in the negative vide order dated 08.02.2010.

Defendant No.1 being aggrieved by order passed on

preliminary issue No.5 preferred CRP No.1019/2010 before

this court and this court dismissed the petition vide order

dated 04.02.2011. Against the said order, defendant No.1

preferred SLP No.10926/2011 before the Hon'ble Apex Court.

The Hon'ble Apex Court dismissed the SLP vide order dated

09.05.2011. Learned senior counsel for the defendant No.1

submits that there is no bar for this Court to consider the

correctness of the order on Issue No.5 in the present appeal.

To buttress his argument, he has placed reliance on the

judgment of the Hon'ble Apex Court in AIR 1960 SC 941

Satyadhyan Ghoshal v. Smt. Deprajin Debi. We have

perused the aforesaid judgment. In the said judgment, the

question was raised before the Hon'ble Apex Court that

"because at an earlier stage of litigation a Court has decided RFA. NO.100242/2017 62

an interlocutory matter in one way and no appeal has been

taken thereof, or no appeal did lie, higher Court cannot at a

later stage of the same litigation consider the matter again"

In the instant case, as observed above, the trial Court has

framed issue No.5 and answered the same in negative

holding that the trial Court has got jurisdiction to entertain

the suit and the said order was challenged by defendant No.1

in CRP No.1019/2010 which came to be dismissed by this

Court and the said order was challenged in SLP

No.10926/2011. The said finding has attained finality. The

Hon'ble Apex Court in the case of SHANKAR RAMACHANDRA

ABHYANKAR VS. KRISHNAJI DATTATREYA BAPAT reported in

AIR 1970 SC 1, wherein it is held that even on the

assumption that the order of the Appellate Court had merged

in the order of Single Judge who had disposed of the Revision

Petition, we are of a view that the writ petition ought not to

have been entertained by the High Court when the

respondent had already chosen the remedy under Section

115 of the Code of Civil Procedure. If there are two modes RFA. NO.100242/2017 63

of invoking the jurisdiction of the High Court and one of

those modes has been chosen and exhausted, it would not

be a proper and sound exercise of discretion to grant a relief

in the other set of proceedings in respect of the same order

of sub-ordinate Court. The refusal to grant a relief in such

circumstances, would be in consonance with anxiety of the

Court to prevent abuse of process as also to respect and

accord finality to its own decision. As observed above, the

findings on issue No.5 has attained the finality. Hence

defendant cannot re-agitate the said issue in the instant

appeal. In view of the above discussion, we answer point

No.1 in the negative.

48. Point Nos.2 and 4 are taken together for

common discussion as they are interlinked: The

defendant used to place the purchase orders for purchasing

iron ore from the plaintiff. The plaintiff on the basis of the

purchase order placed by the representatives of defendant

No.1 used to supply the iron ore to defendant No.1. In order

to establish that plaintiff had supplied iron ore to defendant RFA. NO.100242/2017 64

No.1, plaintiff has produced Exs.P1 to P18. The said fact has

not been disputed by the defendant No.1. The only dispute

raised by defendant No.1 is that the materials supplied by

the plaintiff is of inferior quality and also there is discrepancy

in regard to the quantity supplied by the plaintiff. The

plaintiff in order to prove its case, examined its Proprietor as

PW-1 and he has reiterated the plaint averments in his

examination-in-chief. He has stated that the defendant

Company used to request orally to supply iron ores. The

plaintiff used to supply the iron ores to the defendant

Company on the basis of oral instructions and only after

satisfaction of quality and quantity of the material supplied

by the plaintiff, the representatives of defendant No.1 issued

cheques on several occasions. Thus the defendant company

has paid a total sum of Rs.73,50,000/- from 29.09.2006 to

09.03.2007. The defendant Company is liable to pay the

balance amount of Rs.3,42,66,691.98 including local

transportation charges. The plaintiff has maintained the

accounts regularly and he has stated that sometimes at the RFA. NO.100242/2017 65

request of the defendant and with the assurance of

repayment, he paid transporting, rake charges, etc. Further

Umesh Yadav, the representative of the defendant Company

issued cheques only after 23.02.2008. The said cheques

were presented and same were dishonoured and returned for

insufficient funds. The plaintiff issued legal notice on

05.04.2008 calling upon the defendants Nos.1 to 3 to pay

the amount. Notice was served on the defendants. The

defendants Nos.1 to 3 did not reply to the legal notice. In

compliance of the notice, defendant Company sent two

demand drafts for Rs.30,00,000/- each. After deduction in

the suit claim, the plaintiff filed a private complaint for

recovery of suit amount. In the course of cross-examination,

he has denied the short and low quality materials supplied by

the plaintiff to defendant No.1. He admitted that to discuss

the quality of the material, he went to Ahmedabad on

05.01.2007 and 06.01.2007 and he assured defendant No.1

Company that he would supply the quality materials and

wrote a letter to defendant No.1 Company in assurance to RFA. NO.100242/2017 66

the supply of good quality material. He denied that there

was no oral agreement between the plaintiff and defendant

Company. It is elicited in Exs.P1 to P8, P15 to P18, that the

weighment at Hospet shall be final. He admitted about

issuing a communication at Ex.P1086. He denies that

plaintiff has got created the documents to extract money

from the defendant Company.

49. Plaintiff also examined one witness Sri. M.

Krishnakumar as PW-2 who has deposed about Ex.P1094 to

P1098. The plaintiff also examined one Mr. Muralidhar as

PW.3, who is the Financial Advisor to the plaintiff. He has

deposed that he is assisting the plaintiff in his day to day

transaction. He has deposed that the plaintiff has supplied

iron ore materials to the defendants. As per the instructions

of the plaintiff he has prepared the bills and covering letters

during the delivery and dispatch of iron ore materials to the

defendants during the years 2006 to 2008. Whenever the

materials were supplied to the defendant company is the

authorized representatives of defendant No.1-Company at RFA. NO.100242/2017 67

Hospet to visit the office of the plaintiff and collect the iron

ore materials supply bills along with covering letter with

necessary enclosures. He also deposed that he knows some

of the responsible officers of defendant No.1 - Company like

Ashok Jain, Bavin Bhai, Srinivas, Umesh Yadav, Milend,

Soudagar and other officers and Chemists of defendant No.1

- Company. They used to visit the office of the plaintiff -

Company and they used to attend all the correspondences of

the plaintiff and of the defendants many times. In the course

of cross-examination he has stated that he is not the

employee of the plaintiff company. He was just assisting the

plaintiff in his business as a part time worker and he also

stated that from one Raghunandan and Shetty Shaphi, the

plaintiff was taking the assistance to prepare the bills, books

of accounts and ledger etc., documents pertaining to the

plaintiff - Company. He has stated that he has prepared

Exs.P.812, 816, 818, 820, 822 and 824 which are the letters

written by the plaintiff to the defendant - Company and the RFA. NO.100242/2017 68

said exhibits discloses that the information about the supply

of goods, quantity, price and details of debits.

50. Defendant No.1 - Company examined its Vice

President by name Rakesh Ranjan who is defendant No.5 as

DW.1 and he has reiterated the written statement averments

in the examination-in-chief. He has stated that the plaintiff -

Company supplied the materials and the defendant -

Company had purchased the materials from the plaintiff. He

has stated that defendant No.1 Laboratory was functioning at

Hospet up to January 2007. Later on, it was closed. It is

stated that the plaintiff has not supplied proper grade

materials, his company stopped the transaction. Later on,

the plaintiff requested and wrote a letter to the defendant -

Company to send purchase orders and the plaintiff has

assured the defendant - Officer that he would strictly adhere

to the quality and quantity, specifications and send proper

grade materials as required, However the materials supplied

by the plaintiff is less and low quality material. During the

months of November 2007 and January 2008 during the RFA. NO.100242/2017 69

period the plaintiff supplied the materials in six rakes, and

came to know that there is a less quantity materials and also

low quality materials. The defendant - Company tested the

materials supplied by the plaintiff in six rates through SGS

India Pvt. Ltd. As per the reports of the said sampling

company the material supplied by the plaintiff was not in

proper grade and got marked the reports issued by SGS

company. He has deposed that there was a transaction

dispute between the plaintiff and the defendants and

negotiation was held between the plaintiff and officials of

defendant No.1. He has stated that the plaintiff is liable to

pay a sum of Rs.45,17,901/- and prayed to dismiss the suit

an decree counter claim. In the course of cross-examination

he has admitted that there was a dispute only with respect of

purchase orders dated 02.11.2007, 21.11.2007 under which

the materials supplied from 05.11.2007 to 19.01.2008 in six

rakes. It is stated that they had a SAL Laboratory near Sai

Baba Temple at Hosapete during that period. He also stated

that one Gururaj Deshpande was the owner of that building RFA. NO.100242/2017 70

and defendant No.1 had taken the said premises on lease

agreement from Gururaj Deshpande under an agreement and

he used to pay rent of Rs.4,000/- per month to the premises

and paid advance Rs.50,000/-. The said agreement was

confronted to DW.1 and he has admitted the said agreement

and marked as Ex.P.1096 and it is signed by one

Ramakrishna on behalf of the defendant. Further said that he

was the Chemist and he was authorised by the company

entering into an agreement. He has stated that he is not

aware of the fact that the Court has directed the defendant

to produce the original of Ex.P.1096 as per the order on

I.A.No.11 dated 20.11.2010 and he has stated that he was

not aware that inspite of direction defendant No.1 -

Company has not produced document within prescribed

period. He admits that Mr. Milind was Chemist and he was

working at Hosapete during that period and he also admits

that in the written statement they would denied that we had

no such laboratory and now stated in para No.21 of

examination-in-chief that we had laboratory here. Ex.P2 was RFA. NO.100242/2017 71

confronted to DW.1 and he admits that it is issued by

defendant No.1-Company and signed by defendant No.4 and

himself. The signature of DW.1 and signature of defendant

No.4 are not disputed by this witness. Exs.P.214 and 218 are

the purchase orders issued by one company and it is signed

by Sujal Shah and himself and his signature can be seen in

all these exhibits. He admits his signature of Ex.P.1127 and

his signature was marked as Ex.P.1127(a). It is stated that

Ashok Jain was the employee of defendant No.1. His duty

was to Co-ordinate defendant No.1 - Company with any

suppliers. Ex.P162 was confronted to DW.1. He admits that it

bares the signature of Ashok Jain, but it is not sure about

Exs.P.702, 705, 735, 736, 752, 755, 777, 800, 1084, 1085,

1088, 1105, 1106, 1108 to 1112, 1118 are signed by Ashok

Jain. It is stated that Harshad Shah was also one of the

Director of the defendant No.1 - Company and at present he

is not in the Board of Directors. It is elicited that he is not

aware that Harshad Shah was staying at Hosapete for

looking after defendant No.1 - Company and he cannot RFA. NO.100242/2017 72

identify the signature of Harshad Shah. Exs.P.2, 3, 4, 8, 10,

11, 14, 15, 16, 17, 18 were confronted to DW.1 wherein

Rakesh Suthariya has affixed his signatures. Ex.P3(a) is the

signature of Rakesh Suthariya and signature of Bhavin

Bhavasar, is marked as Ex.P.1225(a). Both of them are the

employee of defendant No.1 - Company and he was also

office purchaser purchased in Ex.P.1225 is signed by Mr.

Bhavin Bhavsar and DW.1 identify his signature and marked

as Ex.P.1225(a). Exs.P.902, 906, 908, 942 are also singed

by Mr. Bhavin Bhavsar. It is stated that Ex.P.1084 contends

the signature of Ashok Jain. It is stated that he has gone

through the most of the documents filed by plaintiff in the

case. Ex.P.104 is the covering letter and Exs.P95 to 108 are

the bills enclosed at Exs.P.94. It is stated that he is not

denying receipts of these documents. It is stated that

Ex.P.109 to Ex.P.123 are received by defendant No.1 -

Company. Similarly Ex.P.124 is the covering letter and bills

as Exs.P.125 to 136 and they received such documents.

Ex.P.137 is the covering letter. Exs.P.138 to P.161 are the RFA. NO.100242/2017 73

bills received by defendant No.1 - Company. Ex.P.163 is the

covering letter. Exs.P.164 to P.176 are bills which are

received by defendant No.1 - Company. Ex.P.177 covering

letter and Exs.P.178 to P.185 are the bills received by

defendant No.1 - Company. He admits that the Exs.P.186 to

P.927 are the covering letters and the bills and they are

received at end of defendant No.1 - Company and also

admits that similarly defendant No.1 - Company received

Ex.P.929 to Ex.P.1035 along with its enclosures. He further

stated that he cannot say that who has filed the written

statement and he is unable to say that Yogesh talker has a

personal knowledge in the case or not. He further stated that

he is not aware about the documents produced by the

Company. He has voluntarily stated that Vinod kumar shah

was director of the company during 2006 to 2008 and he has

filed the application as per the instructions given by the

management . He admits his signature on Ex.P.1127 and his

signature was marked as Ex.P.1127(a). He admits that Ashok

jain was staying at Hospet and he was the employee and his RFA. NO.100242/2017 74

duty was to co-ordinate the defendant No.1 company with

the suppliers. Ex.P.162 was confronted to DW.1 to confirm

the signature of Mr.Ashok Jain, but he has stated he is not

sure about the exhibits signed by Ashok Jain. He has stated

that Ashok jain is not in the Board of Directors. Harshad shah

was one of the directors of the defendant Company and he

was not aware that Harshad shah was staying at the Hosmat

for looking over the company. He has not seen the signature

of Harshad shah. One Bhavin Bhavsar was an employee in

the company, but now he is not with the company, he was

also office purchaser in the company and he has signed on

Ex.P.1225 and he has also signed on Exs.P.902, 906, 908

and 942 . He admits the signature of Ashok Jain on

Ex.P.1084. He admits that he has received the documents

which are marked as Ex.P.928 along with the 13 bills

enclosed to that letter. Similarly he has received Exs.P.929

to Ex.P.1035. He admit that after receiving the cheque from

the plaintiff for the purpose of security they used to release

the amount towards the material costs and that on RFA. NO.100242/2017 75

15.06.2006, the defendant made a payment as per

Ex.P.1302. Ex.P.1129 was confronted to DW.1. He states

that he has not received the cheque stated in the letter. He

admits that Harshad Shah is also a Director of the Company

and he was not informed about Ex.P.1129 or about the

cheque mentioned in the said document. He has stated that

after filing of suit he has never received any phone calls from

the plaintiff and the plaintiff never threatened him directly

over telephone or in any manner.

51. He admits that after receiving the sampling report

from the Chemist from their laboratory by way of FAX,

telephonic discussions, letters etc., whenever the supply of

material is due then they used to get a report from their

Chemist about the materials sampling details and he do not

know whether a copy of such sampling report was given to

the plaintiff. Ex.P.1039 was confronted to the witness, the

witness admits that it is a report of Chemist of defendant

No.1 and one more sampling report dated 26.06.2006

written by Ashok Jain and Milin. Further, the said document RFA. NO.100242/2017 76

is marked as Ex.P.1781 and the said exhibit was signed by

way of facts and the same was accepted by the defendant

and intimated about the release of payment of dispatch of

rake of iron ore . He admits that contents of Ex.P.3(a) and

the said Ex.P.3(a) was prepared by the defendant company

laboratory at Hospet and he admits that Chemist used to

analyze sample in the laboratory at Hospet and they used to

send analysis report to him or Ashok Jain and after approval

by Ashok Jain defendant company used to take material from

Hospet to their place and he further admits that whenever

materials are loaded at that time samples have to be tested

and in the case of other suppliers they used to follow the

same procedure. Sometimes, with the mutual consent and

agreement they used to pay sampling. Whenever the

material is loaded, the samples are collected and after the

examination of sample they used to receive the report and

the materials are loaded to the rake and sample report was

received subsequently. The defendant company never lifted

any material without sampling. A question was put to DW.1 RFA. NO.100242/2017 77

as to who was collecting sample on behalf of defendant No.1-

company, witness states that it depends on purchase order

and terms and conditions and mutual consent. That one

Umesh Yadav has issued a letter as per Ex.P.1072 to the

defendant - Company wherein he has clearly stated that the

defendant - Company is satisfied with the quality and

quantity of the material supplied by the plaintiff . Further the

defendant company has not examined Umesh Yadav, who is

the employee of the defendant - Company. Though Umesh

Yadav was arrayed as defendant No.13 and further Umesh

Yadav was a senior chemist in the defendant -Company and

he was stationed at Hospet during in which the transaction

took place. It is the case of the defendant that Umesh Yadav

had no authority to issue Ex.P.1072 If at all Umesh Yadav

has issued Ex.P.1072 without any authority, the defendant

company ought to have taken action against Umesh Yadav.

The defendant - Company has not produced any records to

establish that an action was taken against Umesh Yadav.

Further the defendant-company produced Exs.D.92 to D.96 RFA. NO.100242/2017 78

which are the Railway weighment receipts at the loading

point and contended that there are discrepancies in the total

weight mentioned in the said receipt. In order to show that

there was discrepancy in the weight, the weighment at

unloading point is not placed on record to show that what

was received is less than what was loaded into the wagon.

From the perusal of evidence of DW.1, admitted that they

have received the excess material what was actual asked for

by them.

52. It is the case of the defendant that plaintiff has

supplied the materials of inferior quality to them. The

defendant- Company before loading the materials they used

to collect the samples and they used to test it in their

laboratory at Hospet and the plaintiff has produced the test

reports, lab reports marked as Exs.P.1666, 1667 and 1770.

Further, DW.1 clearly admitted that defendant- Company

never let the material without sampling. Further the

defendant has placed the reliance on Ex.P.1041 to 1060 and

contended that the quality of the materials supplied by the RFA. NO.100242/2017 79

plaintiff is inferior in nature, but DW.1 in the course of cross

examination admitted that material can be contaminated if

there are foreign particles present in the materials apart from

those which are inherent materials. The defendant placed a

reliance on the lab reports issued by SGS laboratories. In

order to prove the contents of lab reports, the defendant

examined DW.2 official of SGS Lab. In the course of cross

examination, he has categorically admitted that usual

procedure for drawing samples is to draw it in the presence

of vendor and purchaser and signature of both the parties

will be obtained while taking such samples.

53. The defendant has failed to establish that the

plaintiff has supplied inferior quality of iron ore. The plaintiff

has produced the records to show that the plaintiff has

supplied iron ore to the defendant - Company as per the

purchase order and quality booked by the defendant on

various occasions between 16.06.2006 and 19.01.2008. The

defendant - Company has not produced any records to show

that the defendant - Company has paid the entire sale price RFA. NO.100242/2017 80

and other incidental charges. The case of the defendant No.1

there is shortage of goods when it was received. In order to

consider the same the purchases orders which are as under:

Ex.P series Total Supplied Qty

P.O.No.27 859 1441.6 895 121.31 931 87.34 937 555.45 993 294.17 995 787.16 1001 427.55 1005 356.49 1013 231.61 1029 423.49 Total 4726.17 MT

Ex.P Series Total Supplied quantity

PO No. 32 1031 365.45 863 208.89 877 163 893 925.24 897 223.1 899 124.57 905 487.81 913 495.46 917 720 925 135.38 929 372.98 941 434.1 981 680.96 999 327.52 1023 59.37 1035 70.53 Total 5794.36 MT RFA. NO.100242/2017 81

54. From the perusal of the tabular column defendant

No.1 has received the goods at unloading point. There is an

discrepancy in the supply of materials. There is a difference

of 1246.9 MT. Thus, the plaintiff is not entitled to claim

amount for 1246.9 MT. Insofar as interest is concerned the

Trial Court discussed in para 69 of the impugned judgment.

The Trial Court has assigned detailed reasons in awarding

interest. As the suit transaction is a commercial transaction,

the Trial Court was justified in awarding interest at the rate

of 12% p.a. In view of the above discussions, we answer

point No.2 in the affirmative and point No.4 in the negative.

Point No.3: It is the case of the defendant No.1 that

on 03.03.2007 the plaintiff accepted to receive an amount of

Rs.7,75,000/- from defendant No.1 towards full and final

settlement of dues payable to the plaintiff. Further, the

defendant has produced the letter marked as Ex.D.74,

wherein the entire dispute of payment was settled for a sum

of Rs.7,50,000/ which is paid by way of cheque. The said

letter has disputed by the plaintiff and also signature RFA. NO.100242/2017 82

appearing on Ex.D.74. The said document was sent to

experts for examination. The Commissioner submitted a

report opining that the admitted signature and disputed

signatures are not matching. The Commissioner was

examined as CW.1 and he has deposed that he has

compared the admitted signature and disputed signature

sent to her and submitted certificate of examination marked

as Ex.C.1, Ex.C.2, which is the handwriting expert opinion,

Ex.C.3 to 20 enlarged prints of admitted and disputed

signatures of the plaintiff. In the course of cross

examination, nothing has been elicited to disbelieve Ex.C.1

and Ex.C.2. Further the defendant company has not

produced any document to show that pursuant to Ex.D.74 ,

the cheque was issued to the plaintiff. The defendant

company except producing Ex.D.74 has not produced any

other records to show that there was settlement between the

plaintiff and defendant company and plaintiff agreed to

receive a sum of Rs.7,50,000/- from defendant No.1 towards

full and final settlement of all dues payable to the plaintiff till RFA. NO.100242/2017 83

that date. Thus the defendant company have failed to prove

that there was settlement between the parties. In view of the

above discussion, we answer point No.3 in the negative.

55. Point No.5: The plaintiff filed a suit for recovery

of money against the defendants. The defendant No.1 filed

the written statement seeking for counter claim against the

plaintiff . The trial Court decreed the suit of the plaintiff and

dismissed the counter claim of defendant No.1. The

defendant No.1 aggrieved by the common judgment

preferred the instant appeal. The plaintiff has raised

objections in regard to the maintainability of single appeal

against the decree passed in the suit and the counter claim.

Counter claim is a plaint in law:

(i) when two suits are consolidated and tried together

with common issues framed and common evidence led by

the parties, resulting in a common judgment and decree, the

same may be subject to challenge by single appeal at the

instance of aggrieved party.

RFA. NO.100242/2017 84

(ii) Where a single appeal is filed questioning the

judgment and decree passed in two suits, which were

consolidated and decided by common judgment, decision of

such single appeal, by a common judgment, reversing or

modifying the claim in one suit out of the two can be

challenged by the aggrieved party also, in a single appeal.

The said view is supported in the case of Shri Ramesh Chand

Vs. Om Raj and others in RSA No.57/2017, the Hon'ble High

Court of Himachal Pradesh.

(iii) When two suits though not consolidated but are

decided by a common judgment, resulting in to preparation

of two separate decrees, the aggrieved party would be

required to challenge both of them by filing separate appeals.

(iv) When both the suit and the counter claim are

decreed by a common judgment, regardless of whether

separate decree has been prepared in the counter claim,

both required to be challenged by separate appeals; RFA. NO.100242/2017 85

(v) In a case where two separate appeals are required

to be filed against judgment of the suit and the counter claim

and if appeal is filed only against one and not against the

others, non filing of appeal against such judgment and

decree would attach finality thereto and would attract not

only the principle of res-judicata but also waiver and estoppel

and the judgment and decree not appealed against would be

fallen to have been acquiesced to by the party not filing

appeal and;

(vi) When however, two appeals are filed against a

common judgment passed by the Trail Court, both the

plaintiff and defendant are disposed of by the first appellate

court by modifying/reversing/affirming judgment of Trial

Court, the aggrieved party, would be required to challenge

both by two separate appeals, in absence of which, non-filing

of appeal against one shall attract bar of the principles of

res-judicata against another.

RFA. NO.100242/2017 86

(vii) Where more than one appeals are required to be

filed or are filed and one more of/them are dismissed for

default, delay of any other similar reason any such situation

would attract res-judicata and such dismissal would satisfy

the requirement of appeal being heard any finally decided on

merits "in a former suit" for the purpose of attracting

principles of res-judicata.

The learned senior counsel for the defendant submits

that the defendant will not press prayer in regard to the

counter claim. He submits that he confines the appeal only in

respect of decree granted in favour of the plaintiff. In view of

the submission made by the learned senior counsel for the

defendant, point No.5 does not survive for consideration.

56. Point No.6: The trial Court considering the

pleadings, oral and documentary evidence and the admission

of DW.1 has rightly decreed the suit of the plaintiff. As we

have recorded a findings that there was a shortage of

materials supplied by the plaintiff and the plaintiff is not RFA. NO.100242/2017 87

entitled to claim amount for 1249.9 MT., the said fact was

not considered by the Trial Court. To the above said extent,

the judgment and decree of Trial Court needs to be modified.

Thus, in view of the above discussion, we answer point No.6

partly negative and partly affirmative. Hence, in view of facts

and circumstances of the case, we proceed to pass the

following:

ORDER

Appeal is allowed in part.

The judgment and decree dated 26.04.2017

passed by the learned Principal Senior Civil Judge and

JMFC, Hospet in O.S.No.22/2009 is modified. The suit

of the plaintiff is partly decreed. The plaintiff is

entitled for a sum of Rs. 2,45,70,623.98/- with

interest at 12% p.a. from May 2008 till its realization.

Defendant No.1 is directed to pay the amount to the

plaintiff within two months from the date of receipt of

copy of this judgment.

RFA. NO.100242/2017 88

No order as to the costs.

Office is directed to transmit the amount

deposited by the appellant before this Court to the

trial Court.

Sd/-

JUDGE

Sd/-

JUDGE

MBS/RD