PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION LIMITED Vs. RAIL INDIA TECHNICAL AND ECONOMIC SERVICE

JUDGEMENT

(1.) This is an unfortunate litigation between two Public Sector Undertakings (PSUs) which never should have come to the Courts in the first place, inasmuch as, the admitted fact is that the appellant/defendant No. 2 was making a joint venture project with defendant No. 1 and for which, project report was submitted by respondent No. 1/plaintiff/Rail India Technical & Economic Services, a PSU and for which report an amount was agreed to be paid. There is no dispute that the project report was prepared by respondent No. 1/plaintiff and submitted. There is also no dispute that the balance payment with respect to the project report was not made. The suit has therefore been decreed for the balance amount payable. The project report prepared by the respondent No. 1/plaintiff was for a joint venture project of Coil Spring Manufacturing plant which was to be set up by the appellant/defendant No. 2 with respondent No. 2/defendant No. 1. The facts of the case are that the appellant/defendant No. 2 sought to set up a joint venture project of a Coil Spring Manufacturing plant with defendant No. 1/respondent No. 2/M/s Bombay Motor Trading Company. With respect to this project the plaintiff/respondent No. 1 was called upon to prepare a project report. The respondent No. 1/plaintiff gave a quotation to the appellant/defendant No. 2 for a sum of Rs. 3.5 lakhs vide letter dated 26.6.1987, Ex. P1. The appellant/defendant No. 2 requested for reduction of charges vide letter dated 3.7.1987, Ex. P2, and therefore, the respondent No. 1/plaintiff vide its letter dated 24.7.1987, Ex. P3, reduced the price for preparing of the project report from Rs. 3.5 lakhs to Rs. 2.5 lakhs.

(2.) As per the terms and conditions of the contract, first the draft final report was to be submitted, and which was submitted by respondent No. 1/plaintiff on 27.3.1989 (Ex. P5). The respondent No. 2/defendant No. 1 had to give its comments to this draft final report within a fixed period of time, but the same were not given and, therefore, the final bill was sent. The respondent No. 1/plaintiff hence became entitled to the balance payment after Rs. 50,000/- was paid initially by the defendant No. 1/respondent No. 2. The respondent No. 1/plaintiff thereafter addressed its letter dated 25.4.1989 (Ex. P6) asking for the balance payment due of Rs. 1.5 lakhs. Various reminders, thereafter, were sent which are dated 2.5.1989 (Ex. P7), 13.6.1989 (Ex. P9), 4.7.1989 (Ex. P10), 10.11.1989 (Ex. P11), 6.12.1989 (Ex. P12), 15.1.1990 (Ex. P13), and so on. Ultimately, a legal notice was got served upon the defendants vide notice dated 11.2.1991 (Ex. P17).

(3.) Defendant No. 1/respondent No. 2 remained ex-parte in the trial Court and the suit was contested by the appellant/defendant No. 2. There were three basic contentions which were raised on behalf of the appellant/defendant No. 2. The first was that there was no privity of contract between appellant/defendant No. 2 and the plaintiff/respondent No. 1. The second defence was of the suit being barred by limitation. The third defence was that the report was not sent within the period of three months, as has been mentioned in the offer letter dated 26.6.1987 (Ex. P1).