State Of Manipur vs M/S Eagle Enterprises And Others

Kh. Nobin Singh, J

[1] Heard Shri A. Mohendro, learned Advocate assisted by Shri David Boon, learned Advocate appearing for the appellants and Shri H.S. Paonam, learned Senior Advocate assisted by Shri N. Bipin, learned Advocate for the respondents.

[2] The present regular first appeal is directed against the judgment and order dated 6/3/2008 passed by the learned Additional District & Sessions Judge (FTC), Manipur East.

[3.1] Facts and circumstances as narrated in the plaint, are that the respondent Nos.1 & 3/ plaintiff Nos.1 & 3 are the registered Government suppliers/ contractors while the respondent No.2/ plaintiff No.2 is a Small Scale Industrial Unit registered under the Industry Department, Manipur. In the year 1993, the appellants/ defendants invited rate quotations from the supplier firms for supply of certain items like Almirah (wooden and iron) vide Notification dated 8/2/1993 and in response thereto, the respondents/ plaintiffs submitted their rate quotations for supply of the said items. The rate quotations submitted by the supplier/ contractor firms were opened on 15/2/1993 and the rate of items quoted by the respondents/ plaintiffs being found to be lowest in comparison with that of others and after due negotiations being held, the appellant No.2/ defendant No.2 issued supply orders for a sum of Rs. 23,24,955/- (Rupees twenty three lakh twenty four thousand nine hundred and fifty five only).

[3.2] Consequent upon the said supply orders being issued by the appellant No.2/ defendant No.2, the respondents/ plaintiffs supplied the items in full and to the satisfaction of the appellants/ defendants and the appellant No. 2/defendant No.2 informed the appellant No.1/defendant No.1 about the receipt of the said items vide its letter dated 4/1/1994. But since the appellants/ defendants failed to pay the amount, the respondents/ plaintiffs was compelled to file a writ petition being Civil Rule No. 226 of 1994 praying for a direction to direct the appellants/ defendants to pay the said amount with accrued interest @ Rs.14% which was disposed of on 14/9/1994 by the Hon'ble Guhati High Court directing the appellants/ defendants to make the payment after necessary verification was over. Even after receipt of the said court's order, the appellants/ defendants did not pay the said amount within the specified period which further compelled the respondents/ plaintiffs to file contempt petition being Contempt Case No.110 of 1995. During the course of the proceedings of the contempt petition, since the appellants/ defendants gave their commitment for making payment of the said amount, the contempt case was closed as withdrawn.

[3.3] Instead of making full payment, a sum of Rs.23,24,955/- (Rupees twenty three lakh twenty four thousand nine hundred and fifty five only) was paid in 2 (two) installments and in other words, the appellants/ defendants did not make any payment towards the interest. Accordingly, the respondents/ plaintiffs got a notice under section 80 of CPC issued and served upon the appellants/ defendants to make payment of the remaining amount. Due to non-payment of the said remaining amount, the respondents/ plaintiffs filed a suit being Original (Money) Suit No. 209 of 1999/49/2002/3/2007 for payment of Rs.11,45,877/- (Rupees eleven lakh forty five thousand eight hundred and seventy seven only) towards interest thereon.

[4] A written objection on behalf of the appellants/ defendants was filed wherein the averments made in the plaint were denied except that the supply orders were issued by the appellant/ defendants. It was also denied that the respondent No.2/ plaintiff No.2 is a Small Scale Industrial Unit registered under the Industry Department, Manipur; that the respondents/ plaintiffs supplied all items in full and to the satisfaction of the appellants/ defendants; that the appellant No.2/ defendant No.2 informed the appellant No.1/ defendant No.1 about the receipt of the said supplied items vide its letter dated 4/1/1994 and that the total amount payable by the appellants/ defendants to the respondents/ plaintiffs was Rs.34,70,832/- (Rupees thirty four lakh seventy thousand eight hundred and thirty two only). In their written statement, It was categorically stated by the appellants/ defendants that only a few items were supplied to the Department in piece-meal and the supply of the whole items was completed only on 19/11/1998. The fact that the respondents/ plaintiffs approached the Hon'ble Gauhati High Court by way of a writ petition C.R No.226 of 1994 and that thereafter, the contempt petition being Contempt Case No.110 of 1995 was filed by the respondents/ plaintiffs, was not denied. The respondents/ plaintiffs are not the suppliers as defined in "The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993" and therefore, they were not entitled to any relief under the said Act. The then Director, Family Welfare Department, Manipur issued the supply orders by flouting the relevant rules. Out of the total number of items, only a few were supplied by the respondents/ plaintiffs and therefore, the Hon'ble Gauhati High Court while disposing of the said writ petition, passed an innocuous order to the effect that the payment be made after verification was over. Accordingly, a Verification Committee duly constituted by the appellants/ defendants, made the verification on 17/12/1994 and found that only a few items were supplied to the Department and therefore, the appellant No.2/ defendant No.2 cleared the bills in respect of the items supplied by the respondents/ plaintiffs. While disposing of the contempt case on 23/9/1997, the Hon'ble Gauhati High Court passed an order directing the respondent No.4, Addl. Director therein to release the amount to the respondents/ plaintiffs for the articles supplied by them and as regards the non-supply of the rest of the articles, the Hon'ble Gauhati High Court directed that the respondents/ plaintiffs should give prior intimation to the Office of the Respondent No.4 as to the date and time of delivery of the rest of the articles. Pursuant to the direction given by the Hon'ble Gauhati High Court, the appellant No.2/ defendant No.2 requested respondent No. 2/ plaintiff No.2 vide its letter dated 17/9/1997 to deliver the remaining items on 19/9/1997 so that the proper verification could be made and the respondents/ plaintiffs made the supply of the remaining items in piece-meal to the Department from 19/9/1997 to 9/1/1998. On completion of supply of the said remaining items, the appellant No.2/ defendant No.2 paid all the bills for all the items supplied by them.

[5] On the basis of the pleadings of the parties, the learned Additional District & Sessions Judge (FTC) framed the following issues:

"1. Whether there is cause of action to the suit?

Whether the suit is maintainable in its present form in the light of the order passed by the Hon'ble Gauhati High Court, Imphal Bench dated 14.9.94 in Civil Rule No. 226 of 94?

Whether the plaintiffs is entitled the reliefs claimed?"

[6] After having heard the learned counsels appearing for the parties, the learned Addl. District & Sessions Judge (FTC) passed the judgment and order dated 06-03-2008 impugned herein. As regards the first issue, the learned Addl. District & Sessions Judge (FTC) decided the same in favour of the respondents/ plaintiff. According to the learned Addl. District & Sessions Judge (FTC), pursuant to the Notification dated 8/2/1993, a contract was entered into between the appellants/ defendants and respondents/ plaintiffs for supply of certain items and after the same being supplied, it was acknowledged vide letter dated 1/8/1993 of the appellant No.2/ defendant No.2. But the appellant/ defendants failed to pay the said amount within a reasonable time and it was paid only on 29/6/1998. The learned Addl. District & Sessions Judge held that the respondent No.2/ plaintiff No.2 is registered Small Scale Industrial Unit registered under the Government of Manipur. The evidence given by the DWs was totally in contradiction with the agreement dated 29/12/2006 entered into between the appellant No.2/ defendant No.2 and the learned counsel for the respondents/ plaintiffs in presence of witnesses whereby the appellant No.2/ defendant No.2 agreed to pay a sum of Rs. 36,00,000/-(Rupees thirty six lakh only) in 3 (three) installments. The original agreement along with the relevant file No. 13/7/2002-M(FW) was produced by the Addl. Director (FW), Government of Manipur on 15/1/2008 and on examination thereof, it could not be disputed that there was an agreement for payment of the due amount. As regards issue No. 2 relating to the maintainability of the suit in the light of the order dated 14/9/2004 passed by the Hon'ble Gauhati High Court, it was held that the remedy under Article 226 of the Constitution of India is a public law remedy while a remedy by way of a suit in the ordinary Civil Court is a remedy under ordinary law and since the proceedings are different, it would not operate as res judicata. Since the payment made by the appellants/ defendants was without interest for an amount of Rs. 11,45,877/- (Rupees eleven lakh forty five thousand eight hundred and seventy seven only), it is this amount which is claimed by the respondents/ plaintiffs under section 6 of "Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993". Since the said two issues having been decided in favour of the respondents/ plaintiffs, the learned Addl. District & Sessions Judge (FTC), Manipur East ordered and decreed that the respondents/ plaintiffs are entitled to Rs.11,45,877/- (Rupees eleven lakh forty five thousand eight hundred and seventy seven only) as claimed by them as interest and accordingly, the appellants/ defendants were directed to pay the said amount for which a separate decree was prepared by it.

[7] Being aggrieved by the said judgment and order dated 6/3/2008 passed by the learned Addl. District & Sessions Judge (FTC), Manipur East, the instant appeal has been preferred by the appellants/ defendants on the inter-alia grounds that the learned Addl. District & Sessions Judge (FTC), Manipur East failed to peruse effectively the materials on record thereby causing grave miscarriage of justice; that the learned Addl. District & Sessions Judge (FTC), Manipur East failed to appreciate that the claim of Rs.11,45,877/- (Rupees eleven lakh forty five thousand eight hundred and seventy seven only) is the interest accrued upon the principal amount which had already been paid as per the items supplied by them from time to time; that the learned Addl. District & Sessions Judge (FTC), Manipur East failed to decide the legality and validity of the agreement dated 29/12/2006. It has also been submitted that the learned Addl. District & Sessions Judge (FTC) failed to appreciate the evidences and pleadings in a judicious manner.

[8] It is not in dispute that the appellants/ defendants invited rate quotations from amongst the supplier firms for supply of certain items like Almirah (wooden and iron) vide Notification dated 8/2/1993 and in response thereto, the respondents/ plaintiffs submitted their rate quotations for supply of the said items. The rate quotations submitted by the supplier/ contractor firms were opened on 15/2/1993 and the rate of items quoted by the respondents/ plaintiffs being found to be lowest in comparison with that of others and after due negotiations being held, the appellant No.2/ defendant No.2 issued supply orders for a sum of Rs. 23,24,955/- (Rupees twenty three lakh twenty four thousand nine hundred and fifty five only). A contract was entered into between the appellants/ defendants and the respondents/ plaintiffs for supply of the said items and in terms thereof, it was the duty of the respondents/ plaintiffs to supply the said items and on receipt of the said items, it was the duty of the appellants / defendants to make payments thereof. It is also not in dispute that all the items were supplied by the respondents/ plaintiffs for which full payment had been made to them. The short issue involved therein was as to whether there was any delay in payment, because of which the appellants/ defendants were liable to pay interest and its answer would depend upon the corresponding issue as to whether the items were supplied by the respondents/ plaintiffs in time as per the terms of the agreement. The allegation of the respondents/ plaintiffs was that all the items had been supplied in time and in order to support their contention, they had heavily relied upon the letter dated 04-01-1994 whereby the appellants/ defendants had acknowledged the receipt of the items. The allegation was not admitted by the appellants / defendants nor was the letter dated 04-01-1994 exhibited forming part of the record. It is thus seen that the respondents/ plaintiffs failed to prove the letter dated 04-01-1994 and therefore, the finding arrived at by the learned Addl. District & Sessions Judge (FTC) that the receipt of the items was acknowledged by the appellants/ defendants was incorrect. It may be noted that in the writ petition being CR No.226 of 1994 filed by the respondents/ plaintiffs, the Hon'ble Gauhati High Court, while disposing of it, was pleased to pass an order dated 14-09-1994 with the direction that the payment of the sum asked for be made after the verification was over. The report of the verification made on 17-12-1994 was that only a few items were supplied to the department and accordingly, the payment of Rs.9,93,390/- (rupees nine lakh ninety three thousand three hundred and ninety) was made for the said items. In view of this factual position, when the contempt case being CC No.110 of 1995 came up for consideration on 23-09-1997, the Hon'ble High Court ordered that with regard to non-supply of the rest of the articles, the respondents/ plaintiffs should give prior intimation as to the date and time of delivery of the rest of the articles and that the appellants/ defendants should extend co-operation to them. The question of supplying the rest of the articles would not have arisen, had all the articles been supplied 01-08-1993 as claimed by the respondents/ plaintiffs and observed in the impugned judgment and order. The Court's order dated 23-09-1997 appears to have not been challenged by the respondents/ plaintiffs before the appellate forum and therefore, it had attained finality. The irreversible conclusion that can be arrived at, is that as on 23-09-1997 when an order was passed by the Hon'ble High Court, the supply of articles remained incomplete. Another aspect which needs to be considered by this court is that while passing the impugned judgment and order, the learned Addl. District & Sessions Judge (FTC) held that the evidence given by the DWs was contradictory with the agreement dated 29-12-2006 signed between the appellant No.2/ defendant No.2 and the counsel for the respondents/ plaintiffs. There was nothing wrong with the contradiction for the reason that the said agreement was neither executed nor exhibited and was subsequently withdrawn as is evident from the orders dated 19-04-2007 and 25-07-2007 passed by the learned Addl. District & Sessions Judge (FTC). On top of that, it is surprising to note that the said agreement was alleged to have been signed between the appellant No.2/ defendant No.2 and the counsel for the respondents/ plaintiffs to resolve the issue out of the court. Anyway, if there was really such an agreement, the same could have been placed before the court along with a joint application so that the matter could have been brought to an end then and there. It had not been done so and therefore, the finding of the learned Addl. District & Sessions Judge (FTC) that the appellants / defendants had agreed to pay Rs.36/- lakhs in three installments subject to the availability of funds, was erroneous. The issues involved in the suit ought to have been decided by the learned Addl. District & Sessions Judge (FTC) only on the basis of the pleadings of the parties and the materials placed before it by them.

[9] The suit was filed admittedly under Section 6 of the Act called "the Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertaking Act, 1993" claiming for payment of interest, which provides for liability of buyer to pay compound interest. The appellants/ defendants had denied in their written statement that the respondent No.2/ plaintiff No.2 was the small scale industrial unit registered under the Industry Department, Manipur. There is no need of going into the controversy for the reason that the respondents / plaintiffs had failed to prove their case that the full articles were supplied on 01-08-1993, for which due payment was made only on 29-06-1998. Moreover, on their own saying, the respondents/ plaintiffs had stated that out of them, only the respondent No.2/ plaintiff No.2 was the small scale industrial unit and if that be case, the learned Addl. District & Sessions Judge (FTC) erred in directing that they be given interest under the provisions of the Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertaking Act, 1993.

[10] To supply certain items as aforesaid, the agreement was entered into between the respondents/ plaintiffs and the appellants/ defendants and in other words, the agreement was signed between the respondents/ plaintiffs and the State Government. The State Government being an institution, its transaction is always based on records maintained by its officials. Whenever certain items are supplied to the Government and for that matter, the department concerned, the acknowledgment for having received them, is normally given by way of an endorsement on the bill memo by an authorized person. In the present case, there is no such bill memo, with endorsement thereon of having received them, being filed by the respondents/ plaintiffs and moreover, the bill memos filed by them and exhibited bear the year, 1997 which belied the claim that the items had been supplied as back as in the year, 1993. The letter dated 04-01-1994 relied by upon by the respondents/ plaintiffs, was the one stated to have been written by the appellant No.2/ defendant No.2, the Director, family Welfare, Manipur. But it was not the case of the respondents/ plaintiffs that the items were received by the Director, Family Welfare himself and that might be the reason that the respondents/ plaintiffs could not prove it. Moreover, in the plaint, the person to whom the items had been handed over in the year, 1993, was not disclosed at all. Having heard the learned counsels appearing for the parties and perused the materials on record, this court is the view that there are infirmities as aforesaid, in the impugned judgment and order and in view thereof, it is liable to be set aside, since the same is not sustainable in law.

[11] For the reasons stated hereinabove, the instant regular first appeal is allowed and consequently, the impugned judgment and order dated 06-03-2008 passed by the learned Add. District & Sessions Judge (FTC), Manipur is quashed and set aside.