2021 (12) TMI 40 - HC - Indian Laws

Dishonor of Cheque - delayed supply of products specified in the purchase order - territorial Jurisdiction - whether the Commercial Court in Bengaluru has no territorial jurisdiction to entertain the suit on the premise that the cause of action has arisen in Delhi and the Courts in Delhi alone have the jurisdiction to entertain the suit? - HELD THAT - The cheque was issued by the defendant company towards purchase of materials from the plaintiff. Now, the question that needs to be answered is whether all the materials were supplied to the defendant or not? The answer to this question is found in Ex.P9(a) i.e., the email sent by the defendant wherein the defendant has admitted that the issue relating to the software is resolved - From the above said communications, there is no difficulty to hold that hardware and software were delivered in time. The defendant had requested the plaintiff to hold the cheque for few more days. In the next email, the defendant has requested not to present the cheque on the premise there is delay in delivery of complete licenses. It is also relevant to note that the contract for supply of materials between the plaintiff and the defendant is at Ex.P3. This document does not stipulate any time limit for the plaintiff to supply the goods. The plaintiff has established supply of the products to be within time. The defendant has failed to establish short/delayed supply of materials. Thus, the defendant cannot evade the liability. Though the defendant has taken a stand that the cheque is issued as a security towards the transaction between the plaintiff and the defendant, since the plaintiff is able to establish supply of materials specified in the purchase order and the defendant having failed to establish alleged short supply/delayed supply, assuming that the cheque was issued towards security, then also the said cheque would attract presumption under Section 118 of the Negotiable Instruments Act, 1881 and the defendant has failed to rebut the presumption under Section 118 of the Negotiable Instruments Act, 1881. Territorial jurisdiction - HELD THAT - Based on the admission of DW1, the Court has come to the conclusion that the cause of action has also arisen in Bengaluru. Moreover, the contention relating to the territorial jurisdiction is not a contention which goes into the root of the matter. The defendant had appeared and participated in the trial and led evidence. No prejudice is caused to the defendant by the act of the Commercial Court in entertaining and deciding the suit. Thus, this contention of the appellant again has no merit. Appeal dismissed.

Issues:
1. Validity of judgment and decree passed by the LXXXIII Additional City Civil and Sessions Judge, Bengaluru City
2. Territorial jurisdiction of the Commercial Court in Bengaluru
3. Liability of the defendant to pay for software components, maintenance, and service charges
4. Non-joinder of necessary parties
5. Mis-joinder of causes
6. Entitlement of the plaintiff for the relief claimed
7. Interpretation of the purchase order and related communications
8. Presumption under Section 118 of the Negotiable Instruments Act, 1881

Analysis:

1. The Commercial Appeal was filed by the defendant challenging the judgment and decree passed by the lower court, which partially decreed the plaintiff's suit for recovery of a specified amount along with interest. The defendant contested the suit, denying liability for certain components specified in the purchase order, and raised objections regarding territorial jurisdiction and non-joinder of necessary parties.

2. The defendant argued that the Commercial Court in Bengaluru lacked territorial jurisdiction as the cause of action allegedly arose in Delhi. However, the Court found that the defendant participated in the trial without prejudice and that the cause of action also arose in Bengaluru, dismissing this contention.

3. Regarding the liability of the defendant to pay for software components, maintenance, and service charges, the defendant claimed that delayed supply caused losses, leading to a denial of liability. However, evidence showed that all components were delivered on time, as per communications and admissions by the defendant, leading to the rejection of this defense.

4. The Court analyzed the purchase order, emails exchanged between the parties, and the defendant's admissions to conclude that the plaintiff had fulfilled its obligations, and the defendant failed to establish any short or delayed supply of materials, thereby upholding the plaintiff's claim.

5. The Court also addressed the presumption under Section 118 of the Negotiable Instruments Act, 1881, stating that even if the cheque was issued as security, the defendant failed to rebut the presumption, leading to the dismissal of this defense.

6. Ultimately, the Court found no merit in the appeal, dismissing it with costs and confirming the judgment and decree passed by the lower court. The detailed analysis of each issue presented in the appeal was thoroughly considered and addressed in the judgment.

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