KLG SYSTEL LIMITED Vs. FUJITSU ICIM LIMITED

JUDGEMENT

(1.) By this application the Defendant has prayed for the grant of leave to defend the present summary suit filed under Order XXXVII of the Code of Civil Procedure (hereinafter referred to as,'the Civil Procedure Code' ). It is contended by the Defendant that out of the contracted sale consideration of approximately Rs.25 lakhs the Defendant has already paid approximately Rs.19 lakhs, at which stage it was discovered that the software supplied by the Plaintiff was defective. It is submitted that at this juncture the Plaintiff offered to supply another software programme but by that time the Defendant had already incurred damages stipulated in its contract with the party to whom the software had to be supplied. Each party knew of the other, as well as their respective contractual obligations. It was also argued that Order XXXVII of the Civil Procedure Code. was not attracted as no written agreement is available for reliance viz a viz the summary suit. Territorial jurisdiction was assailed on the foundation that the Purchase Order dated 2nd August, 1994 was issued by the Defendant for supply to be effected in Cochin, and no part of the cause of action had arisen in Delhi. The Defendant's Branch office in Delhi had no connection with the transaction, and that the plaint does not aver any such role. Order XXXVII of the Civil Procedure Code does not apply since the Purchase Order envisages that 'billing instructions' were to be issued separately, on the basis of the satisfaction of Fertilizers and Chemicals Travancore Ltd. (hereinafter referred to as 'the FACT'). It is submitted that the Plaintiff has admitted the failure of the software package. It is then contended that Fact Engineering and Design Organization (hereinafter referred to as 'the FEDO') is a necessary party. It is stated that time was of the essence of the contract and its performance had not been completed. As FACT was not satisfied with the software package it levied damages of Rs.9,30,375.00 . on the Defendant and also encashed a Bank Guarantee of Rs.5.12 lakhs. It has been highlighted that despite specific Orders dated 31st July, 1998, the Plaintiff has failed to file the original of Annexure-II dated 25th August, 1994 and should not be allowed to rely on it. (However, on a perusal of the file it appears that this document was filed on 18th August, 1998.) Learned counsel for the Defendant has further argued that the software "Autovesl' was not satisfactory and 'Isogen' was not supplied at all. Reliance was placed on Indian Biotech Co. (P) Ltd. v. Assam State Co-op Marketing & Consumers Federation Ltd. 36 (1988) DLT 60 and Delhi Travels & Tours v. Motorola 84 (2000) DLT 753. In the former case the provisions of the Sale of Goods Act, 1930 (hereinafter referred to as 'the Act) were not even considered. In the latter, the decision to grant leave to defend rested on the appreciation of the facts of the case, and hence is of no assistance to the Defendant/Applicant.

(2.) The contention of Mr. S.N. Kumar, Learned Senior Counsel appearing for the Plaintiff is that the suit is maintainable under Order XXXVII of the Civil Procedure Code as the complete contract is available in the shape of the invoice. He has submitted that the contract between the parties envisages the supply of seven items all of which were supplied. The controversy about Autovesl was of the Defendants making, inasmuch as despite an order for this software they had subsequently requested for an alternate software, namely, Pvelite. Although, the Plaintiff was not contractually obligated to substitute Autovesl with Pvelite, because of the Defendant's request the Plaintiff even complied with this fresh requirement. It has been submitted, and not controverted by the Defendant, that in fact even Pvelite was supplied by the Plaintiff to the Defendant. It is contended that 'Autovesi' was not unsatisfactory in any respect, and that this alleged controversy has been generated only because of the Defendant's desire to substitute the supply. He has contended that there is no documentary proof whatsoever in respect of the Defendant's contention that Autovesl was imposed on it by FACT and no evidence that any payment was made pursuant to this claim for damages. He, therefore, submits that the projected defence is a complete moonshine which is clearly evident from the fact that out of the consideration of Autovesl of approximately Rs.26,00,000.00 the Defendant had already paid approximately Rs. 19,00,000.00. Thereafter, the Defendant developed dishonest intentions. Mr. Kumar, learned counsel appearing on behalf of Defendant, drew attention to the fact that the dishonesty of the Defendant is manifest from the fact that it had attempted to by-pass the Plaintiff and deal directly with the Plaintiff's Principal in the United States of America. The Defendants reverted to the Plaintiff only when the Principal wrote back to them advising them to deal only with the Plaintiff, since it had already spent considerable time and effort on the contract. He further submitted that this Court had territorial jurisdiction because the purchase order was despatched by the Defendant to the Plaintiff at Delhi and was accepted here. He relied on the provisions of Section 20 of the Code of Civil Procedure. These facts were clearly stated in Paragraph 19 of the Plaint and these averments have not been denied.

(3.) The provisions of law relevant for the grant of leave to defend are as follows: Ordrer XXXVII Rule 3 (5)