BHARAT ELECTRONICS LIMITED Vs. SHYAM TELECOM LIMITED

JUDGEMENT

(1.) THIS is a suit for recovery of Rs.1,78,22,826/-. The plaintiff is a Government company incorporated under the Companies Act, 1956. The suit has been instituted and plaint signed and verified by its Deputy Manager (Personnel and Administration) Mr. M.S. Khan. The plaintiff company is engaged in catering to the needs of defence forces and para-military forces, by manufacturing and supplying various professional grade electronic equipments and is also engaged in manufacturing and sale of various equipments such as PCM MUX (VLSI) etc. to the private parties. It is alleged in the plaint that the defendant approached and informed the plaintiff that it had obtained order from the Department of Telecommunications (DOT) for supply of 2 GHZ 30 channel digital micro wave radio equipment and wanted to purchase 200 units of PCM MUX (VLSI) equipment from the plaintiff for supply to the DOT. The quotations for supply of the aforesaid equipment was submitted by the plaintiff at the rate of Rs.74,500/- per unit, FOR kotdwara basis, exclusive of taxes and duties, which were to be charged at the rate prevailing at the time of dispatch of goods. The rate of excise duty, according to the plaintiff, at the relevant time was 20% and CST payable against C/D Forms was 4% whereas the freight was to be charged on actual basis. One of the terms of the quotations submitted by the plaintiff to the defendant provided that interest charged beyond 30 days up to 90 days shall be equally shared by the parties. The equipments were to be inspected by the Inspectors of the plaintiff, which already had an inspection status issued by CGM (QA) of Department of Telecommunications for PCM I, II, III Order MAX RAX 256 P., SBM RAX & MAX L. products. The equipments could also be inspected by the defendant at the works of the plaintiff before their dispatch. On receipt of quotations, the defendant placed purchase order dated 1st February, 1995 for supply of 200 units of PCM MUX (VLSI). However, while placing the purchase order, the defendant changed the condition stipulated by the plaintiff in the quotation for furnishing of bank guarantee to opening of a Letter of Credit (LOC) for 90 days and it was also stipulated that last 60 days interest was to be shared by the parties. Regarding inspection of the equipment, the defendant while placing the order stipulated that DOT ( QA) inspection will be done at the premises of the plaintiff and it will be the responsibility of the plaintiff to get the equipment passed by DOT (QA) and get a certificate for the same. It was further stipulated that if it was not possible to conduct DOT (QA) testing at the premises of the plaintiff then the same will be done at his place and the plaintiff will help in getting it cleared by DOT (QA).

(2.) IT is further alleged that in response to the purchase order, the plaintiff vide fax dated 10 th February, 1995 gave delivery schedule, which envisaged completion of delivery of the entire equipments by 31st March, 1995 and also set out the procedure for inspection of the equipments before its dispatch. IT was stated by the plaintiff that the equipments would be inspected by the BEL (QA) Inspectors, who had "Approved Inspection Status" conferred by CGM (QA) (DOT) and based on the inspection certificate issued by BEL(QA) Inspector, the defendant could get those equipments cleared by DOT(QA) resident Inspector at defendant's factory. The plaintiff also confirmed that the Multiplexers to be supplied by it will conform to the Telecom Engineering Centre (TEC) DOT specifications. The defendant was requested to issue LOC for full value of the order, including taxes, up to 90 days, with interest free credit for 30 days and interest for balance 60 days at the rate of 16% per annum to be shared equally between the parties. The defendant was requested to make necessary amendments accordingly in the purchase order issued by it.

(3.) THE defendant vide fax dated 28 th March, 1995 informed the plaintiff that there were certain defects in the equipments sent to it and requested that the engineers of the plaintiff be sent to set the equipments in order. A meeting was accordingly held on 29th March, 1995 wherein it was decided that the plaintiff will make the further supplies. THE plaintiff further supplied 116 equipments between 28th March, 1995 and 31st March, 1995. All these equipments had been finally inspected and cleared by the DOT (QA) Resident Inspector on 28th March, 1995, 30th March, 1995 and 31st March, 1995. Thus, in all the plaintiff supplied 166 units of PCM (MUX) (VSLI) equipments to the defendants by 31st March, 1995. THE amount payable by the defendant in respect of these 166 units comes to Rs.1,55,28, 252/-, out of which the defendant has paid only Rs.20,00,000/- vide cheque dated 15th July, 1995 leaving a balance of Rs.1,35,28,252/-. Since the defendant has failed to pay the aforesaid amount, the plaintiff has filed this suit claiming a sum of Rs.1,35,28,252/- being the principal amount and a sum of Rs.42,94,574/- towards interest upto 31st December, 1996 thereby making a total of Rs.1,78,22,826/-.