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2025 DIGILAW 347 (KAR)

RR Enterprises v. Sheetal Trading Co.

2025-06-11

K.S.HEMALEKHA, MOHAMMAD NAWAZ

body2025
JUDGMENT : K S HEMALEKHA, J. 1. The defendant prefers this Regular First Appeal, challenging the judgment and decree dated 04-04-2024 passed in Commercial O.S.No.12/2023 on the file of the Principal District and Sessions Judge and Commercial Court, Raichur (hereinafter referred to as ‘Trial Court’ for short), whereby the suit filed by the respondent - plaintiff for recovery of money was decreed, directing the appellant-defendant to pay a sum of Rs.19,22,882/- along with future interest at the rate of 18% p.a. till realization. 2. Parties herein are referred to as per their rank before the trial Court. 3. The respondent-plaintiff, a sales trading company operating under the name and style of Sheetal Trading Company, filed a suit for recovery of Rs.19,22,882/- along with interest at the rate of 18% p.a.from the date of the suit till realization. 4. It is the case of the plaintiff that, as per the letter dated 01-12-2018 an order was placed with NACOF, Bangalore for supply of food-grains to five Morarji Desai Residential Schools in Raichur Taluka for the period from January, 2017 to February, 2021. 5. Upon receiving the order from the concerned department, NACOF, Bangalore, in turn, entrusted the defendant with the responsibility to supply the said materials. It is stated that due to operational difficulties and the defendant being based in Bangalore, the defendant assigned the task of supplying the materials to the plaintiff, with the promise to reimburse the cost of the materials supplied. 6. It is stated that pursuant to this arrangement, the plaintiff supplied food-grain materials to five schools from January, 2017 to February, 2021. The defendant made part payments amounting to Rs.7,71,504.80 on 01-10-2019 and also an amount of Rs.16,80,730.80 on 09-06-2020, but a balance of Rs.13,37,897/- remained unpaid. Despite repeated requests and a legal notice demanding payment of the outstanding amount, the defendant failed to pay the balance. Consequently, the plaintiff instituted the suit seeking recovery of the said amount with interest. 7. The defendant entered appearance and filed written statement inter alia contending that the plaintiff acted merely as an agent of the defendant and was entrusted with the task of supplying food-grains to the Morarji Desai Residential Schools in Raichur Taluka during the period of January, 2017 to February, 2021. 8. 7. The defendant entered appearance and filed written statement inter alia contending that the plaintiff acted merely as an agent of the defendant and was entrusted with the task of supplying food-grains to the Morarji Desai Residential Schools in Raichur Taluka during the period of January, 2017 to February, 2021. 8. It is the further case of the defendant that the plaintiff has failed to produce the certified bills from the concerned hostels, work orders and details of the payments allegedly made on 01-10-2019 and 09-06-2020. It is stated by the defendant that the defendant has made several payments to the plaintiff and the plaintiff suppressing those payments has misrepresented the actual outstanding amount. The defendant categorically admitted in his written statement that an amount of Rs.13,37,897/- is due from NACOF. However, defendant emphasized that as per the agreement between the plaintiff and the defendant, the defendant is only required to make payment to the plaintiff upon realization of funds from NACOF as per the understanding between the NACOF. Without such receipt, the defendant claimed that he is not in a position to discharge the liability to the plaintiff. 9. The trial court, by considering the oral and documentary evidence, observed that the defendant's stand was inconsistent and self-contradictory. On one hand, admitting liability towards the plaintiff, and on other hand, attempting to deny or shift the responsibility on the NACOF, without producing any supporting evidence. The trial court relying upon Para-3 and 4 of the written statement, noted that the defendant had in fact admitted the payment paid by him as well as the balance due of Rs.13,37,897/-, and observed that the only contention raised by the defendant was that the outstanding amount was payable only after receipt of payment from NACOF. 10. The trial Court further held that such an admission clearly established the transaction between the plaintiff and defendant, and that any internal agreement or liability between the defendant and NACOF was not relevant to the plaintiff's claim. The trial court concluded that the plaintiff had established his case for recovery of money based on the admitted facts and evidence on record. Accordingly, the trial court decreed the suit in favour of the plaintiff, holding that the plaintiff is entitled to recover a sum of Rs.19,22,882/- from the defendant along with future interest at the rate of 18% p.a. from the date of the suit till realization. Accordingly, the trial court decreed the suit in favour of the plaintiff, holding that the plaintiff is entitled to recover a sum of Rs.19,22,882/- from the defendant along with future interest at the rate of 18% p.a. from the date of the suit till realization. 11. We have heard the learned counsel appearing for the appellant and the learned counsel appearing for the respondent. 12. Learned counsel for the appellant would contend that the suit filed by the plaintiff is not maintainable, as there is no privity of contract between the parties. According to the appellant, the primary contract for supply of food-grains was between NACOF and Government, and failure to implead NACOF as necessary party renders the suit bad in law and is liable to be dismissed on that ground alone. It is contended by the appellant that the entire claim of the plaintiff is based on an oral agreement and it is admittedly not supported by any written contract. In the absence of any documentary evidence to establish the terms and conditions of the alleged arrangement, the trial Court ought to have dismissed the suit. It is argued that while transaction itself may have been admitted, liability to pay the amount claimed was specifically denied. That the trial Court erred in concluding that the admission of the transaction amounted to admission of liability and failed to appreciate that the obligation to pay was subject to realization of funds from NACOF, which had not occurred. 13. It is argued that there is no reliable material evidence on record to prove that any amount is still due and payable by the appellant to the plaintiff and therefore, the judgment and decree passed by the trial Court is unsustainable on law and facts. 14. Per contra, the learned counsel for the respondent-plaintiff contends that the respondent is an independent sales trading company operating under the name Sheetal Trading Company and supplied food-grains to the five residential schools based on the instruction of the appellant, with a clear promise of payment and the supplies were between January, 2017 and February, 2021. It is submitted that the appellant-defendant had acknowledged the past payments and the balance amount due from the appellant stood at Rs.13,37,897/-, which the appellant admitted in its written statement. It is submitted that the appellant-defendant had acknowledged the past payments and the balance amount due from the appellant stood at Rs.13,37,897/-, which the appellant admitted in its written statement. It is argued that any internal arrangements between the appellant and the NACOF do not absolve the liability of the appellant/ defendant. It is contended that the plaintiff has no liability of contract, privity of contract with NACOF and the liability to pay rests solely with the defendant. 15. Upon hearing the learned counsels on both sides, perusal of the pleadings, evidence on record and the findings of the trial Court, the point that arises for consideration is: “Whether the judgment and decree passed by the trial Court warrants any interference in the facts and circumstances of this case?” 16. The undisputed fact is that the plaintiff supplied food-grains to five Morarji Desai Residential Schools during the period between January, 2017 to February, 2021, based on the directions/instructions from the defendant, who had secured the contract through NACOF, Bangalore. The part payments are made by the plaintiff and the defendant claims to have made other payments as well, however, the payments stated in the plaint by the plaintiff are not disputed. The defendant has admitted in his written statement that a sum of Rs.13,37,897/-remains unpaid, though he contends that the liability to pay arises only, after the receipt of the funds from NACOF. 17. It is also admitted that there is no written agreement between the plaintiff and the defendant, the arrangement is based on an oral understanding. The defendant's own admission in his written statement, particularly in Para-3 and 4, and for ready referral, it is culled out as under. “3. That the contents of para 2 of the plaint to the extent of that as per latter number KAVASHISASA/SHIKSHNA/CR-50/2015-16/ PART-2 DT:1-12-2018 given order to NACOF, Bengalore for supplying the food grain material to Morarji Desai residential schools at Raichur Taluka for a period from January 2017 to February 2021 and it is further true that after taking order from the department the NACOF, Bengalore entrusted to supply the same to the defendant. It is false that the defendant Company facing difficulties to supplying the food grain materials to the above said residential schools. It is false that the defendant Company facing difficulties to supplying the food grain materials to the above said residential schools. Further it is false that in view of the same the defendant entrusted the plaintiff to supply the food grains material to the above said residential school and promised to pay the supplied food grain cost to the plaintiff etc. is are all false, baseless. In fact there is no agreement in between the plaintiff and defendant or with NACOF of company the plaintiffs Shital Trading Company not entered into any agreement of contract with the defendant or NACOF Company as such in the absence of contract in between the plaintiff and defendant or with NACOF Company the very suit itself is not maintainable in the present under the commercial act as such suit is deserved to dismissed as not maintainable. And defendant not promised to pay the supply food grain material cost to the plaintiff. In fact the plaintiff is the agent of defendant and it is orally entrusted the plaintiff to supply the food grains to Morarji Desai Residential schools at Raichur Taluka from January 2017 to February 2021. But the plaintiff has not furnished the certified bills from the concerned hostels and work order also not furnished to the defendant and also not furnished the details of amount paid on 01-10-2019 and 9-06-2020 but the deft has paid amount of Rs.8,00,000/- on 30-10-2019 and Rs.10,18,248/-on 11-11-2019 and Rs. 10,03,226/-on 14-02-2020, and Rs.7,05,550/- on 05-10-2020 inspite of this the plaintiff has suppressed the payments made by the defendant as stated above. It is orally agreed in between deft and plaintiff that the bills will be clear of after the payment of made by the NACOF company but NACOF has not paid balance amount to the deft company till today and bills are pending with the government and defendant company is not responsible for the amount claimed by the plaintiff so also defendant is not responsible for non clearance of deft bills if any. 4. 4. That the contents of para 4 of the plaint is true that there is a due amount of Rs.13,37,897/- which is received by the NACOF, and there is a agreement with the NACOF for the payment only on realization from the governments/buyer of NACOF without receiving the amount from the NACOF the defendant is not in a possession to clear of the dues with plaintiff. And it is false that the plaintiff severally requested to pay the balance amount, and it is false that due to the nonpayment of balance the plaintiff effected and put loss and in convenience is all false, baseless.” (Emphasis supplied) 18. The plain reading of the above para clearly establish the transaction with the plaintiff and outstanding due of Rs.13,37,897/- from the defendant. The contention that the payment was conditional upon receipt of funds from NACOF is unsupported by any cogent evidence. As rightly held by the trial Court, any internal arrangement between the defendant and NACOF is irrelevant to the plaintiff's lawful claim. 19. For the foregoing reasons, the judgment and decree passed by the trial Court does not warrant any interference and there is no merit in the appeal. The point for consideration is answered accordingly, and this Court pass the following order. ORDER i) The Commercial Appeal is hereby dismissed. ii) The judgment and decree dated 04.04.2024 passed by the Principal District and Sessions Judge and Commercial Court, Raichur in Commercial O.S.No.12/2023 stands confirmed.