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CASE TITLE – Casa 2 Stays Pvt. Ltd. v. Comfia Ecom Private Ltd.

CASE NUMBER – RFA(COMM) 187/2023 &CAV 445/2023

DATED ON – 13.05.2024

QUORUM – Justice Vibhu Bakhru & Justice Tara Vitasta Ganju

FACTS OF THE CASE

This appeal at the Delhi High Court originated after a judgement (hereafter referred to as the Impugned order) passed by the learned Commercial Court in favour of the Respondent (the Plaintiff in the suit first filed – hereafter referred to as ‘the Plaintiff’), where the Appellant was and (hereafter referred to as ‘the Defendant’). The Plaintiff claims that it runs an online apparel store by the name of Poptailor Corporate Apparel and manufactures customized clothing as per the requirements of its clients. The defendant operates a chain of hotels in India and had placed orders for a supply of apparel to be delivered to different locations in the country. The Plaintiff filed the above-mentioned suit inter alia claiming that the Defendant had placed an order dated 30.06.2018 for manufacture and delivery of 2500 T-shirts of various sizes customized as per its requirement. The total value for the said Purchase Order was ₹5,70,725/-, which was payable on delivery of the goods. The plaintiff claims that it had made clear to the defendant that the goods once sold were not returnable and that the plaintiff being an establishment, under the MSMED Act, would be entitled to an interest at the rate of 18% per annum after 45 days of the delivery of the goods. The plaintiff claimed that it had delivered 2500 T-shirts against the afore-mentioned purchase order, which was duly received and acknowledged by the defendant. However, the defendant had not made the payment against the said delivery. The Plaintiff served a legal notice dated 27.07.2019 calling upon the defendant to pay a sum of ₹6,73,455.5 payable as of 27.07.2019. The said amount included ₹5,70,725/- towards the principal amount and ₹1,02,730.5 towards interest. However, the defendant did not clear the said dues. The plaintiff claimed that as on 30.05.2019, an amount of ₹8,49,385/- including the outstanding balance of ₹5,91,906/- towards the principal amount and an amount of ₹2,57,479/- towards interest at the rate of 18% per annum was payable.

ISSUES

1. Whether plaintiff is entitled to the recovery of Rs.5,91,906/- towards balance amount for supply of goods to the defendant?
2. Whether plaintiff is entitled to interest claimed @ 18%per annum w.e.f. July, 2019 till the filing of the suit, amounting to Rs.2,57,479/- from the defendant?

LEGAL PROVISIONS

Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act)

CONTENTIONS BY THE APPELLANT

The defendant filed it’s statement of defence disputing the claim made by the plaintiff. The defendant denied that the plaintiff had supplied the goods in question, 2500 T-shirts. It also denied that the goods were received and acknowledged by the defendant. But on the other hand, It claimed that the goods were never delivered on time and the goods so delivered were always of a bad quality. The defendant also claimed that the goods delivered by the plaintiff did not conform to the agreed design and quality and that the plaintiff had changed the design of the T-shirts as per their whims and fancies, and due to this fact, were returned. Therefore, the amount as claimed by the plaintiff was not payable. In addition, the defendant claims that the learned Commercial Court had erred in allowing pre-suit interest at the rate of 18% per annum on the basis that the plaintiff was covered under the Micro, Small and Medium Enterprises Development Act, 2006 (hereafter MSMED Act). However, no such averment was made in the plaint. It claimed that the defendant had paid all the legitimate dues to the plaintiff. The next entry in the ledger account was a debit entry of ₹5,70,725, leaving a credit balance of ₹1,58,677/-. The learned counsel for the defendant earnestly contended that this clearly reflected that the payments were made in advance and therefore, the invoice in question was paid in advance. He submitted that the plaintiff’s suit was thus, required to be dismissed.

CONTENTIONS BY THE RESPONDENT

The plaintiff had filed the said suit [CS (COMM) 83/22] for recovery, alleging that it had supplied goods to the defendant. However, the amounts payable in terms of the invoices raised were not fully discharged. It claimed that the dispute between the parties, essentially, related to the supply of 2500 T-shirts, which were covered under an invoice dated 30.06.2018 (Ex.PW-1/2A) for an amount of ₹5,70,725/-. The plaintiff had also produced the ledger account of the defendant as maintained in its books of account for the period 01.04.2018 to 22.08.2020, which reflected the outstanding amount of ₹5,91,906/-. The plaintiff claimed that it had delivered 2500 number of Tshirts against the afore-mentioned purchase order, which was duly received and acknowledged by the defendant. However, the defendant had not made the payment against the said delivery. The plaintiff claimed that since there was an already running business relationship between the parties, it did not raise any immediate objection towards non-clearance of the dues of ₹5,70,725/- but it made several efforts thereafter through formal and informal channels for clearance of the said dues. The plaintiff also claims that the defendant had cleared various amounts in respect of various other completed transactions; however, the invoice dated 30.06.2018 in respect of the 2500 number T-shirts remained unpaid.

COURT ANALYSIS AND JUDGEMENT

The Hon’ble High Court viewed that the learned Commercial Court evaluated the evidence led by the parties and considered the issues. The learned Commercial Court observed that the pleadings were not drafted properly, however, the Court is required to not only consider the pleadings but evaluate the documents and evidence brought on record as well. The Hon’ble High Court noticed that the written statement filed by the defendant is contradictory. Where, the defendant had denied receiving the supply of goods of 2500 number of T-Shirts. However, it also claimed that goods supplied were not of good quality. The said claims were mutually inconsistent. If the defendant did not receive the goods, there is no question of it objecting to the quality of the goods. There was also no communication from the defendant claiming that it had not received the goods in question goods covered under an invoice. Even one of the evidence that was cross-examined, confirmed that the defendant had not returned the defective goods. It was clear from the evidence led by the parties that the goods in question were supplied to the defendant but the same were never returned to the plaintiff. An e-mail between the employees of the parties dated 10.07.2018, claimed that the said products were from the batch of 2500 T-Shirts and were found to be defective. However, he acknowledged that the goods were never returned. He was specifically asked as to the whereabouts of the said T-Shirts. To which he responded that they were in different locations. Although, the defendant has relied on the e-mail dated 10.07.2018, and has suggested that the entire lot was defective there is no correspondence on record to indicate that the entire lot was found to be defective. And as noted above, admittedly, the defendant had not taken any steps to return the goods in question. The High Court then accepted and were able to concur with the decision of the Commercial Court that the plaintiff was entitled to a sum of ₹5,91,906/- as reflected in the ledger account maintained by the plaintiff. And the question as to whether the Plaintiff were entitled to the a pre-suit interest at the rate of 18% per annum, they noticed that the Defendant did not contest about whether the Plaintiff was an establishment under the MSMED Act, and the fact, that the Defendant had notice of the interest that claimed by the Plaintiff much prior to the institution of the suit, which included the principal amount and the interest on it, also allowed the High Court to concur with the Commercial Court to accept the plaintiff’s claim for pre-suit interest at the rate of 18% per annum.

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Judgement Reviewed by – Gnaneswarran Beemarao