Summary Suit Based On Written Contract Is Maintainable, There Is No Requirement That Such Contract Is To Be Signed By Both Parties: Karnataka HC
The Karnataka High Court held that a summary suit is maintainable if it is based on a written contract, and invoices can constitute written contracts further it was held that there is no requirement that the written contract should be signed by both the parties. The appellant (defendant) had appealed the decision, arguing that the suit was not maintainable, and there was no evidence of the plaintiff taking over the assets and liabilities of a dissolved partnership firm named 'M/s. Pradeep International.' The appellant also disputed the privity of contract and the provision of interest in the agreements.
A Division Bench of Justice P.S. Dinesh Kumar and Justice T.G. Shivashankare Gowda, held that, “It is also settled that invoices amount to ‘written contracts’ within the provision of Order XXXVII of the CPC. It is not in dispute that the plaintiff has brought the instant suit based on invoices raised for supply of goods.”
The plaintiff, a Private Limited Company importing stainless steel, entered into two 'High Sea' Sale agreements with the defendant in 2002. The defendant was to purchase steel coils from Rio-De-Janeiro, Brazil, to Chennai Port. The plaintiff issued debit notes totaling Rs. 27,67,046-87ps for the goods, but the defendant did not respond. The defendant later sent a demand draft for Rs. 10 lakhs, but the dispute remained unresolved. The plaintiff initiated a summary suit for the recovery of Rs. 25,67,000/- under Order XXXVII Rule 1 of the Code of Civil Procedure.
The Trial Court had decreed the suit.
Advocate Anantha Krishna Murthy appeared for the Appellant and Advocate G.P. Jagadeesh appeared for the Respondent.
The respondent (plaintiff) argued that the suit was commercial in nature, and the plaintiff had taken over the business of M/s. Pradeep International. They claimed that the suit was maintainable under Order XXXVII Rule 1 of the CPC and provided evidence of the defendant taking delivery of the goods and paying Customs duty.
The Court noted that the plaintiff filed a summary suit based on two 'High Seas' Sale agreements dated July 15, 2002, against the defendant. The defendant failed to pay for the goods as per the agreements, resulting in the plaintiff raising debit notes totaling Rs. 27,67,046.87. The defendant acknowledged part of the debt and disputed the rest.
The High Court carefully considered the evidence, including invoices, ledger extracts, and the defendant's admission of the transactions. The Court found that the suit was based on written contracts, invoices, and the defendant's admission, making it maintainable under Order XXXVII of the CPC.
Dealing with the first issue of maintainability of the Summary Suit the Court clarified that a summary suit is maintainable if it is based on a written contract, and invoices can constitute written contracts. In this case, the suit was based on written 'High Seas' Sale Agreements and invoices, making it maintainable. The Court added, “It is settled that summary suit is maintainable if the suit is based on written contract arising out of written purchase orders.”
Coming to the second issue of privity of contract the defendant had contested the existence of a transaction related to one of the debit notes. Still, the Court found that the agreement, invoices, and a letter from the defendant acknowledging the transaction provided evidence of privity of contract. The Court emphasized on Jatin Koticha Vs. Vfc Industries Pvt. Ltd wherein the Court had held that,
“It is not the requirement of the law that it should be a written contract signed by both the parties. What is necessary is that the suit should be based on a written contract. That, one can find in this case, in the form of invoices which were raised on the defendants along with delivery of the goods in pursuance of each purchase order.”
Discussing the final issue of interference with the impugned Judgment and Decree and after examining the evidence, including ledger extracts, the defendant's admission of the transaction, and certified financial statements, the Court allowed the appeal in part.
The Court determined that the plaintiff was entitled to recover Rs. 20,67,067 along with 12% interest from the date of filing the suit until the date of realization. Additionally, the Court reduced the claim by Rs. 5,00,000, which the plaintiff had received from the defendant after filing the suit.
Cause Title: M/s. Stove Kraft Pvt. Ltd. v. M/s. Pradeep Stainless Steel India Pvt. Ltd.
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