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TMI Blog2021 (12) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent no.2/defendant no.1 could get pharmaceutical tablets and capsules manufactured from various third-party manufacturers, including the respondent no.1/plaintiff. 2.2 The respondent no.1/plaintiff and the respondent no.2/defendant no.1 entered into an agreement dated 29th September, 2005, whereby the respondent no.2/defendant no.1 was to place orders for the pharmaceutical tablets and capsules that were to be manufactured by the respondent no.1/plaintiff on a principal-to-principal basis. 2.3 In order to discharge the outstanding balance amount of Rs. 60,47,218/-, and payment of purported interest in the sum of Rs. 10,00,000/- accrued on the principal sum of Rs. 60,47,218/, the respondent no.2/defendant no.1 issued cheques in favour of the respondent no.1/plaintiff on 14th March, 2008. 2.4 On presentation, the said cheques were returned unpaid by the banker of the respondent no.2/defendant no.1 vide cheque returning memos. 2.5 The respondent no.1/plaintiff issued the letter dated 14th December, 2007 calling upon the respondent no.2/defendant no.l to submit 'Form C' under the Central Sales Tax Act, 1956 (hereinafter referred to as 'C Forms') in respect of the supplies mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me express or implied contract to issue the C Forms; (iii) the total claim of recovery of Rs. 91,65,975/- of the respondent no.1/plaintiff included the amount recoverable on account of the non-issuance of the C Forms; (iv) the bills were allegedly issued in the name of petitioner/defendant no. 2; and (v) while passing the decree, the Court may decide whether the decree was to be executed partly or in full against both the defendants jointly or a particular sum was to be recovered from one or other defendant only. 4. None appears on behalf of the respondent no.1/plaintiff, who was proceeded ex-parte vide order dated 20th September, 2021. 5. The counsel appearing on behalf of the petitioner/defendant no.2 has drawn attention of the Court to paragraphs 8, 10, 11, 12, 15 and 18 of the plaint filed in the said suit to contend that the suit has been filed only on the basis of cheques issued by respondent no.2/defendant no.1 in favour of the respondent no.1/plaintiff as detailed in paragraph 11 of the plaint and the said cheques were dishonoured as described in paragraph 12 of the plaint. 6. Attention is drawn to paragraph 15 of the plaint to contend that the respondent no.1/pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PAYMENT STOPPED BY THE DRAWER" and thereafter the Banker of Plaintiff Company informed the Plaintiff Company about the dishonour of the above mentioned cheques by Debit memo dated 18.03.2008 & 20.03.2008. ... 15. That in addition to the admitted amount of Rs. 60,47,218/- (Rs. Sixty Lakhs Forty Seven Thousands Two Hundred Eighteen only), the Defendants are also liable to make payment of agreed rate of interest @ 24% p.a. on the above outstanding amount of Rs. 60,47,218/- (Rs. Sixty Lakhs Forty Seven Thousands Two Hundred Eighteen only) from the due date of payment which comes to Rs. 31,18,757/- (Rs. Thirty One Lakhs Eighteen Thousand Seven Hundred Fifty Seven Only) calculated upto 31.07.2009. Besides this amount, the Defendants are also liable to pay a sum of Rs. 33,82,155/- (Rs. Thirty Three Lakhs Eighty Two Thousands One Hundred Fifty Five Only) to the Plaintiff Company towards the penalty @ 150% towards non supply of C Forms to the Plaintiff Company. However, the Plaintiff Company is not claiming the said amount of penalty in the present suit since the same is outside the purview of Order XXXVII CPC. ... 18. That, accordingly, the following amounts are due and payable by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -; (iv) as per the letter dated 8th January, 2009 issued by the respondent no.1/plaintiff to the petitioner/defendant no.2, it is the liability of the petitioner/defendant no.2 to furnish C Forms; and (v) the respondent no.1/plaintiff is dominus litis and has claimed in the said suit that it has a right to some relief against the petitioner/defendant no.2. 10. I have considered the rival submissions. 11. As per Order I Rule 10(2) of the CPC, the Court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out. 12. In Mumbai International Airport (P) Ltd. vs. Regency Convention Centre & Hotels (P) Ltd. & Ors. (2010) 7 SCC 417, the Supreme Court stated that the general rule in regard to impleadment of parties is that the plaintiff in a suit, being dominus litis, may choose the persons against whom he wishes to litigate and cannot be compelled to sue a person against whom he does not seek any relief. The impleadment of a party can be on the basis that it is a necessary or a proper party t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he payments were being made by the respondent no.2/defendant no.1 directly in favour of the respondent no.1/plaintiff in respect of the supplied goods. 15. It is an undisputed position that a cheque of Rs. 60,47,218/- and a cheque of Rs. 10,00,000/- were issued by the respondent no.2/defendant no.1 in favour of the respondent no.1/plaintiff on 14th March, 2008 and that the said cheques were dishonoured. 16. A reading of paragraph 15 of the plaint clearly shows that the amounts payable due to non-issuance of C Forms by the petitioner/defendant no.2 to the respondent no.1/plaintiff have not been claimed in the present suit. The amount claimed in the suit corresponds to the amount sought to be paid by way of the dishonoured cheques i.e., Rs. 60,47,218/-. In addition, a sum of Rs. 31,18,757/- has been claimed towards interest with the rate of 24% per annum. However, the amount of Rs. 33,82,155/- payable to the respondent no.1/plaintiff towards the penalty on non-supply of C Forms to the respondent no.1/plaintiff has specifically been ousted from the relief claimed in the plaint. It is clear from the reading of the plaint that the amounts arising on account of non-supply of C Forms we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Purchase Order and balance 50% payment before delivery of goods; and within 2 days from the receipt of the Intimation from the First Party. 4. That the Second Party or Sarabhai to whom the goods are billed shall submit Form 'C' in advance to the First Party, within 3 months of the First Sale; and that the Second Party shall be responsible for deposit of 'C' Form to the First Party failing which to pay 6% difference in Sales Tax. ... 12. That the Second Party shall purchase the goods from the first party on Principal-to-Principal basis and nothing contained in this agreement shall constitute a partnership or an agency relationship between the parties; and the First Party does not authorize relationship between the parties; and the First Party does not authorize the Second Party to make any representation or to incur any liability on behalf of the First Party." 18. A reading of the aforesaid clauses of the agreement between the respondent no.1/plaintiff and respondent no.2/defendant no.1 clearly demonstrates that the said agreement was on a principal-to-principal basis and the liability to make payment towards the goods supplied was that of the respondent no.2/defenda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sking the respondent no.1/plaintiff to supply particulars for issuance of C Forms, was on record, prima facie it was reflected that the petitioner/defendant no. 2 was a proper party and under obligation or at least was having some express or implied contract to issue the C Forms, is erroneous. From a reading of the Clause 4 of the agreement dated 29th September, 2005, it is apparent that even if the C Forms were to be deposited/submitted by the petitioner/defendant no.2, in the event of default in the issuance of the C Forms, the liability to pay 6% difference in Sales Tax was of the respondent no.2/defendant no.1. Furthermore, the letter dated 5th May, 2008 does not admit any liability undertaken by the petitioner/defendant no.2 for payment of 6% difference in Sales Tax in the event of default in deposit/submission of C Forms. 24. As regards the contention of the counsel appearing on behalf of the respondent no.2/defendant no.1 that the amount of Rs. 60,47,218/- included a sum of Rs. 22,71,204/- towards Sales Tax, the remaining fact of the matter is that it was the respondent no.2/defendant no.1 who made the aforesaid payment by issuance of cheques to the respondent no.1/plaintif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Therefore, it appears that there was a dispute between the petitioner/defendant no.2 and the respondent no.2/defendant no.1, which led to termination of contract between two of them. However, the inter se disputes between the petitioner/defendant no.2 and respondent no.2/defendant no.1 cannot be agitated in the suit filed by the respondent no.1/plaintiff. 29. During the course of arguments, the counsel for the respondent no.2/defendant no.1 conceded that a separate suit should have been duly filed by the respondent no.2/defendant no.1 against the petitioner/defendant no.2 to establish the liability of the petitioner/defendant no.2 in respect of the amounts recoverable due to the non-deposit of Forms C. 30. The respondent no. 2/defendant no.1 cannot in this manner insist on the petitioner/defendant no.2 being impleaded in the aforesaid suit as the same would amount to expansion of scope of the relief sought in the suit as filed by the respondent no.1/plaintiff. 31. In light of the aforesaid, in the opinion of this Court, the petitioner/defendant no.2 is neither a proper nor a necessary party to the suit. Accordingly, there is a manifest error in the impugned order passed by AD ..... X X X X Extracts X X X X X X X X Extracts X X X X
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