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2021 DIGILAW 2158 (MAD)

M. Mohan, Proprietor, Sivasakthi Corporation v. Tamil Nadu Co-Operative Union

2021-08-19

G.JAYACHANDRAN

body2021
JUDGMENT : G. JAYACHANDRAN, J. Prayer: Plaint has been filed under Order IV, Rule 1 of Original Side Rules read with Order VII, Rule 1of C.P.C. praying to pass a judgment and decree in favour of the plaintiff: (a) directing the defendant to pay the plaintiff a sum of Rs. 2,57,91,638/- (Rupees Two Crores Fifty Seven Lakhs Ninety One Thousand and Six Hundred Thirty Eight only) with interest 18% p.a. Principal Rs. 2,57,91,638/- from this date till date of realization and (b) to pay cost of the suit. Application has been filed under XIV, Rule 8 of O.S. Rules read with Order VII, Rule 11 of C.P.C. praying to reject the plaint in C.S. No. 72 of 2020 on the file of the High Court of Madras as barred by law. 1. Suit is filed for recovery of Rs. 2,57,91,638/- with interest at the rate of 18% from the date of suit till date of payment. 2. The suit laid on the foundational fact that, the plaintiff is a dealer in scraps, spares, tools and instruments in computer components and accessories. He supplied machineries and equipments to 9 Industrial Training Institutes (ITI) run by the defendant for a sum of Rs. 4,97,14,956/- during the year 2012. The defendant paid only a sum of Rs. 2,39,23,318/- and failed to pay the balance. The defendant did not show any initiative to take delivery of machineries worth Rs. 1,89,78,593/-, which were kept ready for delivery, as per their order. After lapse of two and half years, the defendant falsely initiated proceedings under Section 81 of the Tamil Nadu Co-operative Societies Act. 3. In this regard, the plaintiff’s representation for payment of the balance amount was not considered by the defendant, hence, the plaintiff filed a writ petition in W.P. No. 11061/ 2014 to dispose of his representation. The High Court directed the defendant to consider the representation. The defendant refused to pay the balance amount, based on the verification report done behind his back, which says that materials worth of Rs. 82,96,542/- are defective. 4. Alleging that the defendant cannot refuse to pay the balance amount, based on the Enquiry Report initiated under Section 81 of the Co-operative Societies Act and contrary to the terms of the tender condition. The suit is filed. 5. As far as limitation to sue, the plaint Para 13 reads as under:- “13. 82,96,542/- are defective. 4. Alleging that the defendant cannot refuse to pay the balance amount, based on the Enquiry Report initiated under Section 81 of the Co-operative Societies Act and contrary to the terms of the tender condition. The suit is filed. 5. As far as limitation to sue, the plaint Para 13 reads as under:- “13. The cause of action for the above suit arose within the jurisdiction of this Hon’ble Court when the defendant by the proceedings Na. Ka. No. 6676/2011, dated 06.06.2012 placed order with the plaintiff for the supply of machineries to the tune of Rs. 6,86,93,549/- and when the plaintiff supplied machineries to the tune of Rs. 4,97,14,956/- and when the defendant paid a sum of Rs. 2,39,23,318/- and failed to pay the balance amount of Rs. 2,57,91,638/- and when the plaintiff placed orders with their principal supplier for balance machineries for the value of Rs. 1,87,78,593/- to be supplied to the defendant and when the defendant without taking delivery of balance machineries initiated proceedings against the plaintiff under Section 81 of the Tamil Nadu Co-operative Societies Act and when the plaintiff gave representation dated 13.3.2014 to take delivery of balance machineries for payment for the sale of machineries effected and when there was no reply and when the plaintiff failed W.P. No. 11061 of 2014 before the Hon’ble High Court, Chennai for Writ of Mandamus to dispose of the representation dated 13.3.2014 and directing the defendant to receive the balance materials and to pay balance amount of Rs. 2,57,91,638/- towards the machineries already supplied and when the defendant neither informed of the enquiry proceedings under Section 81 of T.N. Coop. Societies Act nor paid amount due to the plaintiff and when the plaintiff issued letters dated 23.07.2018 and 12.10.2018 pointing out the breach of obligations and on 03.06.2019 of when the defendant acknowledged the liability and agreed to pay the same after getting permission from the higher authority and on 13.09.2019 the plaintiff issued Legal Notice for recovery of amount and the defendant having received the notice neither replied nor paid the balance amount and subsequently.” 6. On receipt of the suit summons, the defendant has come out with the application alleging misrepresentation and suppression of facts. The defendant prays for rejection of the plaint on the ground of limitation and lack of cause of action to file the suit. 7. On receipt of the suit summons, the defendant has come out with the application alleging misrepresentation and suppression of facts. The defendant prays for rejection of the plaint on the ground of limitation and lack of cause of action to file the suit. 7. According to the applicant/defendant, in response to the tender floated by the defendant on 17.05.2002 for procurement of machineries and equipments for the education institutes run by the societies under the defendant, work order was issued to the plaintiff being the lowest Tenderer through proceedings dated 06.06.2012 for Rs. 6,86,93,549/-. A total sum of Rs. 2,39,23,318/- was released to him between 14.06.2012 and 27.06.2012. The machineries supplied by the plaintiff were not in usable condition and could not be utilised for the purpose for which it was procured. Further, there was short supply of materials by the plaintiff. 8. Quality Verification of the materials supplied by the plaintiff was conducted, which confirming serious defect and damages found in the materials. The plaintiff was called upon to conduct trial run of the equipments to test the worthiness and quality of the equipments and tools supplied by him. The plaintiff did not come forward to demonstrate the worthiness of the material supplied. Hence, the institutes were instructed not to receive materials from the plaintiff any further. The plaintiff was instructed to take back the materials already supplied and to repay the money received. The plaintiff did not take back the machineries/equipments and returned the money back. Hence, proceedings under Section 81 of the Co-operative Societies Act was initiated appointing an Enquiry Officer, vide proceeding dated 13.05.2014. The enquiry report concluded that the materials supplied by the plaintiff are defective/in damaged condition and not fit for imparting training and the supplier (plaintiff herein) has caused loss to the society to a tune of Rs. 2,39,23,318/-. The report also recommended for Domestic enquiry and criminal action against 4 persons, who are staff/members of the society along with the plaintiff herein. 9. Accordingly, the defendant has initiated surcharge proceedings and criminal action. The surcharge proceedings concluded on 09.12.2015 with a finding that the society has incurred loss and the four members of the society are jointly and severally liable for causing wrongful loss to the society. The plaintiff was not incriminated, since he was not a member of the society. 9. Accordingly, the defendant has initiated surcharge proceedings and criminal action. The surcharge proceedings concluded on 09.12.2015 with a finding that the society has incurred loss and the four members of the society are jointly and severally liable for causing wrongful loss to the society. The plaintiff was not incriminated, since he was not a member of the society. The said award is now subject matter of C.M.A. No. 9/2017 pending before the Chief Court of Small Causes, Chennai. 10. The Writ Petition in W.P. No. 23443/2015 to issue Certiorarified Mandamus to quash the proceedings of the defendant dated 07.01.2015 against the plaintiff and to direct the defendant herein to pay the plaintiff a sum of Rs. 2,57,91,638/- was dismissed by this Court on 03/08/2015. Suppressing all the above materil facts, the suit is filed on 16.12.2019, i.e. four years after expiry of limitation. Hence, the suit is hopelessly barred by limitation. 11. Heard the learned counsel on either side. Records perused. 12. Keeping in mind that while considering the point of limitation, under Order VII, Rule 11 (d) of the Civil Procedure Code, the Court has to go only by the statement made in the plaint and the documents relied. The exception shall be grave misrepresentation or suppression of material fact. 13. According to the plaint, the suit is within the limitation period since on 03.06.2019, the defendant had acknowledged the liability and agreed to pay the same after getting permission from the higher authority. Subsequently, on 13.09.2019 when the plaintiff issued legal notice for recovery of amount and the defendant having received the notice neither replied nor paid the balance amount. 14. The case of the plaintiff is that, the order for supply of materials was placed in the year 2012. Last payment made on 30.06.2012. Supply effected on 09.11.2012. Before expiry of three years (period) letter dated 14.05.2015 by defendant (plaint Doc. No. 8) acknowledging and admitting liability was given. Hence, the limitation to be reckoned from 14.05.2015. Also, the letter dated 07.05.2018 by the defendant (Plaint Doc. No. 10) acknowledging liability will save the limitation. The Letter dated 03.06.2019 (Plaint Doc. No. 15) given is a promise to pay, which gives fresh cause of action. Hence, the suit filed on 16.12.2019 considering the letter of the defendant dated 14.05.2015, 07.05.2018 and 03.06.2019 is within time. 15. Also, the letter dated 07.05.2018 by the defendant (Plaint Doc. No. 10) acknowledging liability will save the limitation. The Letter dated 03.06.2019 (Plaint Doc. No. 15) given is a promise to pay, which gives fresh cause of action. Hence, the suit filed on 16.12.2019 considering the letter of the defendant dated 14.05.2015, 07.05.2018 and 03.06.2019 is within time. 15. The learned counsel for the plaintiff contended that, the cause of action arose, when order for supply of materials was placed on 06.06.2012 and on 14.05.2015, 07.05.2018, and 19.09.2018 and 03.06.2019 when the defendant acknowledged the liability and promised to pay the debt. The plaintiff was summoned by the Committee of inspection during the year 2018 and issued certificate which constitutes the cause of action to institute the suit. In all the replies, the defendant did not dispute the liability, contrarily after inspection of goods by the Director of Employment and Training and in completion of surcharge proceedings, acknowledged the liability and promised to pay the balance amount. Hence, the suit is well within limitation as per Sections 18 and 19 of the Limitation Act. 16. As an alternate plea, the counsel submitted the acknowledgement of a time barred debt, on the promise to pay through the letter dated 03.06.2019 constitutes fresh contract in the eyes of law under Section 25(3) of the Contract Act, 1872. Whether or not the said letter constitutes fresh contract is a mixed question of law and fact, which has to be decided after trial and not a matter for decision summarily. 17. In support of his arguments, the learned counsel for the plaintiff relies upon the following judgments:- (a) N. Ethirajulu Naidu vs. K.R. Chinnikrishnan Chettiar, AIR 1975 Mad 333 . (b) R. Madesh vs. M. Rathinam C.S. No. 205/2007 (Madras High Court) dated 11.02.2015. 18. Per contra, the learned ocunsel for the defendant submitted that the plaintiff has deliberately suppressed material facts and the suit is filed, based on the letter dated 03.06.2019 sent by the defendant which is neither acknowledgement of debt nor promise to pay the time barred debt. For non disclosure of cause of action and suppression of facts, coupled with bar under law of limitation, the plaint liable to be rejected. To the facts of the case as found in the plaint, neither Sections 18 and 19 of the Limitation Act or Section 25(3) of the Contract Act is applicable. For non disclosure of cause of action and suppression of facts, coupled with bar under law of limitation, the plaint liable to be rejected. To the facts of the case as found in the plaint, neither Sections 18 and 19 of the Limitation Act or Section 25(3) of the Contract Act is applicable. 19. In support of his submission the learned counsel rely upon the following judgments:- (1) M/s Bharat Heavy Electrical Ltd. vs. M/s Dowel Erectors (2) K. Jeyaraman vs. M/s Sundaram Industries Limited (3) M. Balaji vs. Perim Janardhana Rao and Others 20. The plaintiff relies upon the letter dated 03.06.2019, which according to the plaintiff, is a letter promising to pay debt and therefore, under Section 25(3) of the Contract Act, 1872, the suit is well within the period of limitation. According to the learned counsel, the said letter constitutes fresh contract in the eyes of law. Section 25(3) of the Contract Act, 1872 reads as below: Section 25: Agreement without consideration, void, unless it is in writing and registered, or is a promise to compensate for something done, or is a promise to pay a debt barred by limitation law - An agreement made without consideration is void, unless: (1)........ (2)........ (3) It is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits. 21. In the light of the above Section, if the letter dated 03.06.2019 is read, this Court finds that the said letter is not a letter promising to pay the debt. In the said letter, the Additional Registrar/Managing Director has said: Others Language 22. The English version of the above paragraph is that: After examining the above facts, the equipments and machineries supplied by Mr. M. Mohan, Proprietor, Siva Sakthi Corporation, in the year 2012, are available at 9 ITI. Likewise, as per the records, the balance sum of Rs. 2,57,91,638/- is payable to him. It is hereby informed that only after obtaining permission from the higher authorities, the payment of balance amount to Mr. M. Mohan, Proprietor, Sivasakthi Corporation could be made. 23. The reading of this letter does not indicate any unequivocal promise to pay the debt. Likewise, as per the records, the balance sum of Rs. 2,57,91,638/- is payable to him. It is hereby informed that only after obtaining permission from the higher authorities, the payment of balance amount to Mr. M. Mohan, Proprietor, Sivasakthi Corporation could be made. 23. The reading of this letter does not indicate any unequivocal promise to pay the debt. It is only a confirmation of fact that as per the records, a sum of Rs. 2,57,91,638/- is payable to Mr. M. Mohan, Proprietor, Sivasakthi Corporation. 24. The other facts of the case, which are partly disclosed and partly undisclosed in the plaint, indicate that parallel proceedings initiated by the defendant both criminal action and departmental proceedings for defective supply of materials. The writ petitions filed by the plaintiff prior to filing of the suit challenging the departmental proceedings under Section 81 of the Co-operative Societies Act, initiated against the plaintiff and others will not save running of the limitation. 25. According to the plaintiff, the communication dated 14.05.2015 (which is not part of the plaint document or pleadings) will amount to acknowledgement of debt and the letter dated 03.06.2019 will amount to promise to repay the debt. This Court finds, neither the letter dated 14.05.2015 acknowledges the debt nor the letter dated 03.06.2019 promises to pay the debt. Section 25(3) of the Contract Act, 1872 clearly indicate that the promise to pay a time bar debt should emanate from a person, who is in-charge or specially authorised on their behalf to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of the suits (emphasis added). In the letter dated 03.06.2019 given by the defendant, she has expressed in an unequivocal term that the amount can be paid only after getting permission from the higher authorities. Therefore, it is very clear that the defendant is not a person who is authorised to pay. Moreover, her letter except expressing the fact that as per the records a sum of Rs. 2,57,91,638/- is payable to the plaintiff, it is not a promise to pay. 26. The learned counsel appearing for the plaintiff would submit that the limitation is a mixed question of law and fact. Therefore, the suit cannot be rejected at threshold without framing issues regarding limitation and trial. 27. 2,57,91,638/- is payable to the plaintiff, it is not a promise to pay. 26. The learned counsel appearing for the plaintiff would submit that the limitation is a mixed question of law and fact. Therefore, the suit cannot be rejected at threshold without framing issues regarding limitation and trial. 27. When the pleadings as disclosed and the documents relied on by the plaintiff, if it clearly indicates that the suit is barred under law, the defendant is entitled to invoke Order VII, Rule 11(d) of C.P.C. A defendant need not suffer the ordeal of trial, when no cause against him could be made out in view of limitation. 28. In the instant case, for the goods supplied during the month of November 2012, the present suit is filed on 16.12.2019. The dispute regarding the quality of goods supplied started in the year 2014. While so, instead of filing the suit for recovery of money within the time, the plaintiff had first filed the writ petition in the year 2015 to get money by short circuiting the legal process. The High Court has rightly dismissed the writ petition in W.P. No. 23443 of 2015 with the following observations:- “The relief sought by the petitioner is amounting to recovery of money arising out of realm of contract. Further, the request of the petitioner for appointment of a retired Judge or an Advocate as an Arbitrator cannot be entertained as it is not backed by any Act or Rule. Hence, the writ petition is dismissed. No costs. Connected M.P. is closed.” 29. For the very same amount, after dispose of five years the present suit is filed based on the letter dated 03.06.2019 claiming it as a promise to pay. This claim is unfound and contrary to content of the document. This clearly shows that there is no cause of action survives on the date of filing the suit and the suit is hopelessly barred by limitation. Therefore, the application to reject the plaint is allowed. Consequently, the Civil Suit is dismissed. No order as to costs.