The defendant’s denial of privity of contract with the plaintiff precludes him from claiming deductions under a contractual relationship: Delhi HC
The Delhi High Court has ruled that the defendant’s denial of privity of contract with the plaintiff equally precludes him from claiming deductions under a contractual relationship.The plaintiff – Oxbridge Associates Limited – a company incorporated in England specializes in the marketing and sourcing of pharmaceutical products. The defendant – Atul Kumra – proprietor of a concern...
The Delhi High Court has ruled that the defendant’s denial of privity of contract with the plaintiff equally precludes him from claiming deductions under a contractual relationship.
The plaintiff – Oxbridge Associates Limited – a company incorporated in England specializes in the marketing and sourcing of pharmaceutical products. The defendant – Atul Kumra – proprietor of a concern known “Medicine House” was engaged in the business of supplying such products. The defendant was in correspondence with one Mr. JJ of an American concern called M/s Daelmann Health Limited, with regard to a potential transaction for supply of medicines.
The present suit arose out of two purchase orders placed by the plaintiff upon the defendant. The case of the plaintiff is that, pursuant to the aforesaid purchase orders, the defendant issued proforma invoices stipulating inter alia that payment was required to be made in advance. The plaintiff remitted the payments due as per the invoices.
The defendant failed to supply the products alleging wrong information provided by the plaintiff.
The purchase orders were cancelled by the plaintiff and the plaintiff sought refund of the amounts remitted by way of advance payment. The defendant however refunded only part of the amount withholding 25% service charges with respect to cancellation of orders from the plaintiff.
By the present application, the plaintiff sought summary judgment under Order XIII-A Rule 3 of the Code of Civil Procedure, 1908 (CPC).
The counsel for the plaintiff submitted that defendant is liable to suffer a decree for the entire amount of the claim under Order XIII-A of the CPC. The defendant denied any privity of contract with the plaintiff which was introduced to the defendant by JJ as an affiliate of Daelmann Health Limited.
The counsel for the defendant contended that further submitted that the plaintiff was requested not to make any payment under the subject invoices until being specifically requested by the defendant to do so. Further, according to the defendant, it was also agreed that the purchaser would pay service charges to the defendant in respect of cancelled orders. Such service charges were payable at the rate of 25% of the invoice amount for each pharmacy with which the defendant was required to pursue the supply of the drugs in question.
The Delhi High Court held that the question to be considered is whether the defenses raised by the defendant afford to him any real prospects of defending the claim, which would necessitate the framing of issues and a trial on those issues.
The High Court ruled that the defendant cannot, on the one hand, deny any contractual relationship with the plaintiff and, on the other hand, also refuse to refund the amount paid by the plaintiff by referring to the alleged contractual arrangements between himself and JJ.
The Court further held that in the absence of a contract, there is no reason whatsoever for the defendant to withhold any amount which he has admittedly received from the plaintiff. If the defendant’s contention in this regard is accepted, it leads to the conclusion that there was no occasion for the plaintiff to make payments to him at all, and any remittance received by the defendant from him is liable to be returned.
The Court observed that “the defendant has contended in correspondence, that the plaintiff ought not to have made advance payments prior to reconfirmation by the defendant of the supplies. This implies that the defendant did not expect to be paid at all if the supplies did not materialize. His grievance was that payments ought to have been made only after the suppliers have approved the patient details and other requirements. This is directly contradictory to his claim that he was entitled to be compensated for the time and expense incurred in attempting to secure the supplies from his vendors.”
The Court thus held that there are inconsistencies in the defendant’s claims. The Court further held that the contract being commercial in nature, the plaintiff is entitled to reasonable interest upon the amounts wrongly withheld. The Court decided that the plaintiff would be entitled to interest 9% per annum pendente lite until realization.
Justice Prateek Jalan presided over the case.