Mcdowell and Company Ltd. vs Wine Link L-1 Licensee and Another

Kuldip Singh, J.—The Plaintiff has filed a suit against the Defendants for recovery of Rs. 30,11,856/- along with 24% per annum future interest from the date of the suit till realisation of the suit amount.

The pleaded case of the Plaintiff is that Plaintiff is a Company having its registered Office at Bangalore. The Defendant No. 1 is L-1 licensee and is the sole proprietorship concern of Defendant No. 2 having its business at Mandi. The Plaintiff is engaged in the manufacture and sale of Indian Made Foreign Liquor (IMFL) and Defendants had been dealing with the Plaintiff since 1.4.1999.

The Plaintiff in between 3.5.2000 to 29.5.2000 through Himalayan Gold Beverages Pvt. Ltd., Nalagarh had supplied 3851 cases of IMFL to Defendants with balance outstanding amount Rs. 12,39,726/-. The Defendants in between 17.5.2000 to 29.5.2000 had lifted 958 cases of whisky and gin with balance outstanding amount Rs. 6,66,512/- directly from Plaintiff bond house, Nalagarh. Thus in all the Plaintiff had supplied 4809/-IMFL cases to Defendants in between 3.5.2000 to 29.5.2000 with balance outstanding amount Rs. .19,06,238/-.

It has been alleged that as per invoices and the terms of the supply of IMFL the Defendants had agreed to pay interest at the rate of 24% per annum on the bills if not paid immediately on presentation. The Defendants were requested time and again to pay the amount but the Defendants neglected to pay the amount. The Defendants in their letter dated 19.5.2002 acknowledged the amount but on account of financial constraint sought time to pay the amount. The Defendants were served notice dated 16.6.2002 calling upon them to pay Rs. 19,06,238/- alongwith interest at the rate of 24% per annum. The Plaintiffs have thus claimed principle amount of Rs. 19,06,238/- and interest at the rate of 24% per annum amounting to Rs. 11,05,618/- total Rs. 30,11,856/- and filed the suit against the Defendants for Rs. 30,11,856/-.

The suit was contested by the Defendants by filing written statement in which Defendants took preliminary objections of maintainability, suit has not been filed by the authorized person, there is no privity of contract between the Plaintiff and Defendants, Himalayan Gold Beverages Pvt. Ltd., Nalagarh and M/s Chopra and Company, Wine Contractors, Shimla L-2 licensee are the necessary parties, mis-joinder of cause of action, suppression of material facts by not giving true and complete accounts, no enforceable cause of action and limitation. On merits, it has been pleaded that the Plaintiff had an understanding with M/s Chopra and Company, L-2 licensee in the year 2000-2001 to supply them its products on demand on the rates settled between them directly without any involvement of Defendants. Himalayan Gold Beverages Pvt. Ltd., Nalagarh was also supplying different brands of liquor to M/s Chopra and Company. The Defendants were holding L-1 licence. The liquor in State of Himachal Pradesh is to be supplied to retailer L-2 licensee through L-1 whole seller licence holder. In these circumstances, the Defendants were brought in picture, who were merely acting as conduit in between Plaintiff and M/s Chopra and Company.

It has also been alleged that Defendants were supplied the liquor at higher price as per bills which in turn was to be supplied to M/s Chopra and Company at a lower price. The difference was to be compensated to Defendants through credit notes at the end of financial year. The Plaintiff and the Himalayan Gold Beverages Pvt. Ltd. had been supplying different brands of liquor to M/s Chopra and Company through the Defendants and the payments were received by the Plaintiff directly and through the Defendants, whenever M/s Chopra and Company sent the amount to the Defendants. The Plaintiff had no privity of contract with Defendants. The liability, if any, is of M/s Chopra and Company and not of the Defendants.

The Plaintiff has not furnished true accounts. The payments made to Himalayan Gold Beverages Pvt. Ltd. have not been shown. Himalayan Gold Beverages Pvt. Ltd is an independent legal entity and Plaintiff is not entitled to claim any amount from Defendants on behalf of Himalayan Gold Beverages Pvt. Ltd. The Defendants have denied their liability to pay the suit amount. It has also been denied that there was any agreed term between the parties for payment of interest at the rate as claimed by the Plaintiff. The stipulation of interest if any, was for M/s Chopra and Company and not for Defendants. The letter dated 19.5.2002 was written by Defendants in the context of other situation and it has no relevancy in the present case. It has been denied that Defendants ever acknowledged the claim of Plaintiff. The notice alleged in the plaint was not served on Defendant No. 1 as per law. The Defendants have prayed for dismissal of the suit. The Plaintiff filed replication and reiterated its case.

On the pleadings of the parties the following issues were framed:

Whether the Plaintiff had supplied Indian Made Foreign Liquor to the Defendants during the year 2000, as alleged, and out of the price of the liquor so supplied, a sum of Rs. 19,06,238/- is still due to the Plaintiff from the Defendants and the Plaintiff is entitled to recover that amount with interest at the rate of 24%, as alleged? OPP

Whether the liquor, as alleged to have been supplied to the Defendants, was in fact supplied to two other firms, namely Chopra & Co. and Himalayan Gold Beverages and it was simply routed through the Defendants, because they held L-1 licence and the liquor could not have been supplied directly to L-II licensees as the aforesaid two firms were and, therefore, the Defendants are not liable to pay any amount of money? OPD

Whether the suit of the Plaintiff is not maintainable, as alleged? OPD

Whether the suit is not instituted by a duly authorized person? OPD

Whether there is no privity of contract between the Plaintiff and the Defendants? OPD

Whether the suit is bad for non-joinder of M/s Himalayan Gold Beverages and M/s Chopra & Co. wine contractors, as alleged? OPD

Whether the suit is bad for mis-joinder of causes of action? OPD

Whether the suit is barred by limitation? OPD

Whether the Plaintiff does not have any cause of action? OPD

Relief.

I have heard the learned Counsel for the parties and have also gone through the record. The issue-wise findings are as follows:

Issues No. 1, 2 5 and 9:

The issues No. 1, 2, 5 and 9 are inter-connected, therefore, these issues are taken up collectively for determination. The case of the Plaintiff is that in between 3.5.2000 to 29.5.2000 4809 IMFL cases amounting to Rs. 19,06,238/- were supplied to the Defendants. According to Plaintiff, 3851 cases were supplied through Himalayan Gold Beverages Pvt. Ltd., Nalagarh and 958 cases were directly supplied from Plaintiff bond house, Nalagarh. The contention of the Defendants is that there is no privity of contract between Plaintiff and Defendants. The Defendants were holding L-1 licence, M/s Chopra and Company, were L-2 licensee. The liquor to retailer L-2 licensee could be sold through L-1 whole seller licensee. The Plaintiff had an understanding with M/s Chopra and Company to supply its products without the involvement of the Defendants. The Plaintiff and Himalayan Gold Beverages Pvt. Ltd. had been supplying liquor to M/s Chopra and Company through Defendants, who used to make payments to Plaintiff directly and through Defendants. The Defendants were simply used for supplying liquor to M/s Chopra and Company. The Defendants were not the purchasers of the liquor.

PW-1 Dina Nath, Inspector Excise and Taxation office, Mandi has proved copies of applications Ex.PA/1 to Ex.PA/10 which were submitted by Defendant No. 1. The permits issued on the basis of applications are Ex.PB/1 to Ex.PB/10. He has stated that permits were issued in favour of Defendant No. 1 being L-1 licensee. PW-2 Aman Sofat, Excise Inspector, has stated that he is an Excise and Taxation Inspector in the Excise and Taxation Department, H.P., he had been posted in Himalayan Gold Beverages Pvt. Ltd. Kirpalpur. In every Brewery the Department maintains a L-1C godown where the excise duty paid liquor is kept. The permits for transportation of liquor are issued in triplicate. After issuance of permit, the Brewery applies to the Excise and Taxation Inspector posted in the Brewery for release of the excise paid material from L-1C godown. Himalayan Gold Beverages Pvt. Ltd had given seven applications, copies Ex.PC/1 to Ex.PC/7 for permission to lift excise paid liquor from L-1C godown in term of the permits received from the Excise and Taxation Commissioner, Mandi. Thereafter, passes, copies Ex.PD/1 to Ex.PD/7 were issued in favour of Himalayan Gold Beverages Pvt. Ltd.

PW-3 Lalit Sareen vide power of attorney, copy Ex.PW-3/A was authorized to file the suit. He has stated that Himalayan Gold Beverages Pvt. Ltd. are holder of L-1B licence. The said Company had been doing the bottling of Gold Riband Whisky and Diplomat Whisky on behalf of the Plaintiff in terms of agreement Ex.PW-3/B. Gold Riband Whisky and Diplomat Whisky bottled by Himalayan Gold Beverages Pvt. Ltd. used to be sold and marketed by the Plaintiff. The Plaintiff had supplied IMFL to Defendants against invoices Ex.PW-3/C-1 to Ex. PW3/C-10. He has proved copies of G Rs Ex.PW3/D-1 to Ex.PW3/D-6 pertaining to IMFL supplied to Defendants. He has stated that Defendants had not paid the price of IMFL supplied to them against invoives Ex.PW3/C-1 to PW3/C-10. He has proved letter dated 19.5.2002 Ex.PW3/E and the notice Ex.PW3/F. In cross-examination, he has stated that Himalayan Gold Beverages Pvt. Ltd. were not authorized to market the Gold Riband Whisky and Diplomat Whisky bottled on behalf of the Plaintiff directly. He has denied that L-1 licence of the Defendants for making supplies to M/s Chopra and Company was used by the Plaintiff. He has denied that Plaintiff supplied any liquor to M/s Chopra and Company against the licence of the Defendants. He has stated that Plaintiff had received import permits from the Defendants and against those permits supplies were made.

The Defendants have examined DW-1 Dina Nath, who was earlier examined as PW-1. DW-1 has stated about the procedure. He has stated that L-1 licensee supplies the liquor consignment to L-2 licensee. The distillery cannot supply the liquor directly to L-2 licensee bypassing L-1 licensee. The Defendants have not examined any other witness. The evidence of the Plaintiff has remained almost unrebutted. It has been contended that Defendant No. 2, who is the sole proprietor of Defendant No. 1 could not appear in the court and make statement on account of his ill health but Defendants could examine him on commission, however for reasons best known to the Defendants, they did not examine Defendant No. 2 on commission.

PW-3 has stated that Defendants used to procure excise permits from Excise Commissioner, Mandi for transporting whisky from premises of Plaintiff and from Himalayan Gold Beverages Pvt. Ltd. The Defendants used to hand over those permits to Plaintiff. Thereafter, the Plaintiff used to make applications to excise officials at Nalagarh for issuing export permits. On receiving export permits, the Plaintiff used to raise invoives, the copies of G Rs used to be annexed with the export passes. The Plaintiff has proved applications of Defendant No. 1 Ex.PA/1 to Ex.PA/10 and permits Ex.PB/1 to Ex.PB/10 on the basis of applications issued in favour of Defendants. Thereafter the liquor was supplied to Defendants against invoices Ex.PW3/C-1 to Ex.PW3/C-10 and G Rs Ex.PW3/D-1 to Ex.PW3/D-6. PW-3 has denied that Plaintiff had supplied liquor to M/s Chopra and Company against licence of Defendants.

The Defendants have not denied the supply of liquor by Plaintiff. But their stand is that the liquor supplied by the Plaintiff to Defendants was not meant for them but it was for M/s Chopra and Company and, therefore, Defendants are not liable to pay any amount to Plaintiff. The Plaintiff has independently proved that 4809 IMFL cases were supplied to Defendants by Plaintiff in between 3.5.2000 to 29.5.2000, out of which 3851 cases of IMFL amounting to Rs. 12,39,726/- were supplied to Defendants through Himalayan Gold Beverages Pvt. Ltd. and 958 cases of IMFL amounting to Rs. 6,66,512/- were supplied to Defendants directly from Plaintiff bond house, Nalagarh. In all, the balance outstanding amount of 4809 IMFL cases supplied to Defendants comes to Rs. 19,06,238/-. The Plaintiff has thus proved that liquor worth Rs. 19,06,238/- was supplied by Plaintiff to Defendants in the year 2000.

The Defendants have accepted the delivery. The Defendants have written letter dated 19.5.2002 Ex.PW-3/E. They were called upon to pay the amount vide notice Ex.PW-3/F. In the written statement, it has been pleaded that letter dated 19.5.2002 pertained to some other situation but that situation has not been proved by the Defendants. Therefore, it can be safely concluded that the Defendants vide letter dated 19.5.2002 Ex.PW-3/E admitted their liability to pay the amount but they sought some time for this purpose. The liquor supplied by Plaintiff was not meant for any other firm namely M/s Chopra and Company or Himalayan Gold Beverages Pvt. Ltd. The Defendants have failed to prove that liquor was routed through them and was not supplied to them.

The Plaintiff has claimed interest at the rate of 24% per annum. In invoices Ex.PW3/C-1 to Ex.PW3/C-10 there is a specific stipulation that interest at the rate of 24% per annum will be charged on all bills not paid immediately on presentation. The notice dated 16.6.2002 Ex.PW-3/F was issued to Defendant No. 2 demanding 24% interest per annum on all bills. In letter dated 19.5.2002 Ex.PW-3/E the Defendants assured the payments to the Plaintiff. The stipulation of 24% per annum interest in the invoices before filing of the suit was never disputed by the Defendants. The Plaintiff has proved the interest at the rate of 24% per annum to be charged from the Defendants which has not been rebutted by the Defendants in evidence. In these circumstances, it is held that the Plaintiff is entitled to interest at the rate of 24% per annum on principal amount of Rs. 19,06,238/- till the institution of the suit. In my opinion, however, after the institution of the suit, the Plaintiff is entitled to interest at the rate of 9% per annum from the date 27.11.2002 of filing of the suit till realisation of the suit amount.

In view of the findings recorded above, it is held that there was privity of contract between Plaintiff and Defendants for supplying IMFL by the Plaintiff to Defendants. The Defendants have failed to pay price of IMFL supplied by the Plaintiff to Defendants amounting to Rs. 30,11,856/- which includes interest at the rate of 24% per annum, therefore, the Plaintiff has cause of action for filing of the suit. The issues No. 1, 2, 5 and 9 in view of above discussion, are decided in favour of the Plaintiff and against the Defendants.

Issues No. 3 and 6:

The issues No. 3 and 6 are taken up together. The Defendants have taken the stand that Himalayan Gold Beverages Pvt. Ltd. is a separate legal entity, according to Plaintiff 3851 cases were supplied to Defendants from the premises of Himalayan Gold Beverages Pvt. Ltd, therefore, the suit is bad for not impleading Himalayan Gold Beverages Pvt. Ltd. The connected objection of the Defendants is that Plaintiff is not competent to file the suit for recovery of price of 3851 cases IMFL which were supplied from the premises of Himalayan Gold Beverages Pvt. Ltd. and therefore, the suit is not maintainable. The other objection of the Defendants is that the liquor was meant for M/s Chopra and Company. The Defendants were only conduit for supplying the liquor to M/s Chopra and Company, hence, the suit is not maintainable for want of M/s Chopra and Company as party.

It has already been held while deciding issues No. 1, 2, 5 and 9 that there was privity of contract between Plaintiff and Defendants for supplying liquor to Defendants. The liquor was not supplied to M/s Chopra and Company, therefore, M/s Chopra and Company is not necessary party. PW-3 has stated that Himalayan Gold Beverages Pvt. Ltd. had a written agreement Ex.PW-3/B for bottling Gold Riband Whisky and Diplomat Whisky on behalf of the Plaintiff. He has also stated that Himalayan Gold Beverages Pvt. Ltd. were not authorized to market the aforesaid two brands of liquor bottled on behalf of the Plaintiff directly. In letter dated 19.5.2002 Ex.PW-3/E or at any stage prior to filing of the suit the Defendants had never taken the stand that liquor supplied from the premises of Himalayan Gold Beverages Pvt. Ltd. did not belong to Plaintiff. It is not the case of the Defendants that they had paid the price of 3851 cases to Himalayan Gold Beverages Pvt. Ltd. nor it is their case that Himalayan Gold Beverages Pvt. Ltd. have claimed the price of 3851 cases from them. Himalayan Gold Beverages Pvt. Ltd. were authorized to bottle the two brands of the Plaintiff namely Gold Riband Whisky and Diplomat Whisky. Thus, seen from any angle, the suit is not bad for want of Himalayan Gold Beverages Pvt. Ltd. and M/s Chopra and Company as parties. The suit filed by the Plaintiff is maintainable. The issues No. 3 and 6 are decided against the Defendants and in favour of the Plaintiff.

Issue No. 4:

The suit has been filed by Lalit Sareen on the basis of power of attorney Ex.PW-3/A. It has not been shown by the Defendants how in presence of power of attorney Ex.PW-3/A the suit has not been filed by the competent person. Hence, issue No. 4 is decided against the Defendants.

Issue No. 7:

It has not been argued how the suit is bad for mis-joinder of causes of action. In any case the Plaintiff has filed the suit on the basis of supplies made to Defendants. Rule 3 of Order 2 CPC provides that save and otherwise provided, a Plaintiff may unite in the same suit several causes of action against the same Defendant, or the same Defendants jointly; and any Plaintiffs having causes of action in which they are jointly interested against the same Defendants or the same Defendants jointly may unite such causes of action in the same suit. In the teeth of Order 2 Rule 3, it has not been shown how the suit is bad for mis-joinder of causes of action. Hence, the issue No. 7 is decided against the Defendants and in favour of the Plaintiff.

Issue No. 8:

The liquor was supplied to Defendants from 3.5.2000 to 29.5.2000 and the suit was filed on 27.11.2002 within three years. It has not been pointed out in these circumstances how the suit is not within limitation, hence it is held that the suit is within limitation. The issue No. 8 is decided against the Defendants and in favour of the Plaintiff.

Relief:

In view of above discussion, a decree of Rs. 30,11,856/- is passed in favour of the Plaintiff and against the Defendants jointly and severally alongwith future interest on Rs. 30,11,856/- at the rate of 9% per annum from the date of institution of the suit i.e. 27.11.2002 till realisation of the suit amount. The Defendants shall also pay the costs of the suit.