Research › Search › Judgment

Delhi High Court · body

2007 DIGILAW 1985 (DEL)

Prem Bhasin v. State of Madhya Pradesh

2007-12-07

SHIV NARAYAN DHINGRA

body2007
Judgment 1. This application under Order 37 Rule 3(5) and Section 151 CPC has been preferred by the defendants for leave to defend and to contest the suit. 2. Brief facts required for purposes of deciding this application are that plaintiff filed the instant suit for recovery of a sum of Rs.40,59,515.20 alleging therein that the plaintiff had supplied equipments and instruments worth Rs. 40,59,515.20 to the defendants against order No. 13746 dated 02.12.2003 but no payment was made by the defendants despite the supply having been made by the plaintiff and bill thereto having been raised. It is stated that the material was sent to the defendants vide invoice dated 11.02.2004 and 29.03.2004 vide truck no. MP07J3227, MP 07 96216 and MP 0795808. The supplies were duly received by the defendants. The plaintiff had also paid the transportation charges to M/s Rahul Roadways from whom the trucks were hired. The plaintiff also sent reminders to the defendants for making payment. The plaintiff, instead of receiving the payment, received a letter No. 10229/Yojna/2004-05 dated 01.10.04 from Commissioner-cum-Director Veterinary Services mentioning that the order placed by the plaintiff had been cancelled and the plaintiff should take back his goods. The plaintiff stated that the order dated 02.12.2003 constituted a concluded contract between the parties since the supply of goods was not denied. The contract was in writing and the plaintiff was entitled to receive the entire amount constituting cost of goods and the freight charges @ 18% interest per annum thereon under Order 37 CPC. 3. The defendants, in the instant application under Order 37 Rule 3(5) CPC, took the stand that in the year 2003 in the office of Director Veterinary Services, the defendants were in requirement of surgical and veterinary instruments. For the assistance of procurement of the said goods, the then Deputy Director, Veterinary Services constituted an Advisory Committee on 04.11.2003 consisting of the following members: a. Dr. S.S Chauhan, Joint Director of Veterinary Services,Directorate. b. Shri Vinay Nigam, Deputy Director of Veterinary Services, (HQ) c. Shri V.K. Srivastava, Asst. Engineer, Madhya Pradesh Housing Board, Bhopal. 4. It is stated that as per the financial rules and financial powers of finance department of State of Madhya Pradesh only Director Veterinary Services had the powers to make purchases of above Rs.50,000/-. b. Shri Vinay Nigam, Deputy Director of Veterinary Services, (HQ) c. Shri V.K. Srivastava, Asst. Engineer, Madhya Pradesh Housing Board, Bhopal. 4. It is stated that as per the financial rules and financial powers of finance department of State of Madhya Pradesh only Director Veterinary Services had the powers to make purchases of above Rs.50,000/-. These rules were applicable at the time of the contract and as per the said rules, advertisement inviting tenders was required to be published in two national level dailies and supplies were bound to be approved by the DGNP before any order could be placed. In case where the competent officer considered of taking a decision of making purchase without inviting tenders, he was required to give reasons thereof. Copies of relevant rules and extracts have been filed by the applicant/defendants. It is submitted that the order allegedly placed on the plaintiff runs into several lacs of rupees and it could have been placed by the Director Veterinary Services only, after following due procedure as laid down by the Government. In the instant case, the office of Director Veterinary Services was not even informed of the purchase process adopted by the Advisory Committee. The Advisory Committee was not competent to place any order but was constituted only to give advise in respect of the purchases. The action of the Advisory Committee shows that the same was out for giving undue favour to some of the vendors including the plaintiff and there was a collusion between the members of the Advisory Committee and the plaintiff. The entire purchase process was completed by the Advisory Committee without any authority and the real authority lay with the Director of Veterinary Services for procurement and purchase of goods. The Director Veterinary Service was kept in the dark. The Advisory Committee vide letter dated 20.11.2003 invited quotations of instruments only from four selected vendors/firms including the plaintiff. It is submitted that this procedure had never been adopted in past and it was for the first time in the defendants office that the procedure which was being followed from time immemorial was diverted at the behest of the Advisory Committee with no purchasing powers beyond Rs.50,000/-. It is stated that the entire scam came to the knowledge of the defendants only when bills were presented for payment after the new Director of Veterinary Science had taken over the charge. It is stated that the entire scam came to the knowledge of the defendants only when bills were presented for payment after the new Director of Veterinary Science had taken over the charge. When this came to the notice of the new director, he cancelled the order since the order was unlawful. 5. In reply to the application, it is submitted by the plaintiff that assuming defendants had not followed the requisite rules and the purchase process, the plaintiff bonafidely sold the goods and cannot be blamed for defects in the contract between the plaintiff and defendants. The plaintiff could not be denied the due payment after receipt of material by the defendants on such count as lack of power. It is stated that the defence raised by the defendants was merely a moon shine since there was no dispute about the order placed and the goods supplied or about the quality of goods. 6. While considering the application for leave to defend, this Court has to see whether the defence raised by the defendant was a genuine and plausible defence or it was merely a camouflage just to defeat the claim of the plaintiff. The defendant has to satisfy the Court that the defence raised by defendant raises a triable issues. The defence must be fair, bona fide and reasonable. 7. In the instant case, the defendants placed on record the Finance Rules of the State of Madhya Pradesh showing that only Director of Veterinary has the power to make purchases beyond Rs.50,000/-. Defendants also placed on record the procedure to be followed in case of bulk purchase. The plaintiff has not disputed the existence or validity of these rules. It is also not disputed that these rules are binding in nature. It is settled law that where a statute requires that a .thing shall be done in a prescribed manner or form, it can only be done in that manner. The noncompliance of the mandatory statutory provisions can result into contract being null and void. 8. In the present case, from the documents prima facie it is apparent that the Committee which placed the purchase order on the defendants had no power to place such a bulk order. It is also prima facie apparent that the Committee flouted all the rules and regulations in respect of such bulk purchases. 8. In the present case, from the documents prima facie it is apparent that the Committee which placed the purchase order on the defendants had no power to place such a bulk order. It is also prima facie apparent that the Committee flouted all the rules and regulations in respect of such bulk purchases. No advertisement was issued in national dailies so that there should be a fair competition and the other players in the market regarding quotations of their prices for the purchase were to be of more than Rs.40 lac, quotations were called from selected four firms. 9. The defendants raised a good and probable defence which require considerations. I consider that it is a fit case where the unconditional leave to defend should be granted. 10. In view of my foregoing discussion, the application is allowed and the unconditional leave to defend the suit is granted to the defendants. CS(OS) NO.324/2006 List this suit before Regular Bench on 11th December, 2007.