TaxTMI 
TaxTMI 
2009 (3) TMI 562
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....4. They have been known to produce the ready to wear line of garments every season under the name "Lecoanet Hemant". 3. The respondent is a company incorporated under the Act having its registered office at Delhi. The authorised share capital of the respondent-company is Rs. 1,55,00,00,000. The paid-up capital of the respondent-company as on 31-8-2006, as per the balance-sheet filed with the Registrar of Companies on 31-3-2006, was Rs. 99,00,00,000. The respondent is a company within the InterGlobe Enterprises Group, a travel corporation diversified in the field of aviation management, travel related services etc. The respondent-company is engaged in the business of aviation and air transport services. It is responsible for, managing and controlling the airline IndiGo for servicing destination within the country. 4. The petitioner states that on account of the expertise and international acclaim of Mr. Sagar and Mr. Lecoanet in the aviation industry, the respondent approached and engaged the petitioner to design and deliver the uniforms for the airlines staff and personnel to be launched under the name "IndiGo". The petitioner states that after detailed discussions and numero....
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....17-8-2006 214 208,384.80 dt. 17-8-2006 5. 034/2006-07 29-8-2006 200 212,628.00 dt. 29-8-2006 Total 23,80,508.00 B. Uniforms produced but delivery not accepted : 24,90,778.80 C. Less part advance payment received** : 18,13,062.00 Total principal outstanding 30,58,224.80 5. The petitioner states that the aforesaid tabulation reflects the contractual liability of the respondent. However, the claim of the petitioner is not confined to the aforesaid amount. So far as the present petition is concerned, the petitioner is confining its claim to the contractual liability, while reserving its right to sue the respondent for all its monitory claims by way of civil suits. The petitioner states that on 17-11-2006, to its amazement it received a letter of termination of the agreement aforesaid. The petitioner states that it issued a statutory notice to the respondent dated 25-1-2007, demanding from the respondent-company, inter alia, payment in respect of delivered and undelivered uniforms along with interest at 12 per cent per annum.....
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....d its breaches and even acknowledged the same. 9. Mr. Sanjay Jain, senior advocate has appeared for the petitioner while Mr. Sandeep Sethi, senior advocate has represented the respondent. I have heard their detailed arguments and learned senior counsel have taken me through the relevant record. 10. The agreement between the parties, as aforesaid, is contained in two communications dated 5-7-2006, issued by the petitioner to the respondent and accepted by the respondent. Some of the relevant clauses of the first communication dated 5-7-2006, are as follows : "Dear Sir, 1. We, Locoanet Hemant India Private Limited ('LH'), write with reference to our recent meetings with InterGlobe Aviation Private Limited ('IndiGo') in course whereof we discussed diverse matters in relation to the designing, creating and supply of uniforms by our company to your personnel. The purpose of this letter is to clarify and record certain important issues related to the business arrangement envisaged between us. 2. In terms of the understanding arrived at between us, we shall design, create, produce and deliver uniforms for your ground staff, technical staff and on board personnel in terms he....
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....ies the position, as far as reasonably possible, within sixty days." 11. The petitioner raised a proforma invoice bearing No. 0612, dated 22-7-2006, for an amount of Rs. 76,38,186.40 (inclusive of 4 per cent VAT). The terms of payment stated in this invoice were "50 per cent advance immediately, 50 per cent balance 30 days after delivery 18 lakhs received 3rd July". This proforma invoice was, according to the petitioner, accepted and approved by the respondent. 12. It appears that the petitioner made deliveries of the manufactured uniforms and accessories to the respondent from time to time. However, these uniforms and accessories were admittedly found to be defective in various respects. My attention has been drawn to a series of exchanges, which took place between the parties. I may refer to a few of these exchanges. On 3-8-2006, the respondent sent the following e-mail to the petitioner : "As per our conversation on August 2, we had discusses several issues, 1.Dye issue ; 2.Incorrect fabric ; 3.Deadlines and timeliness ; 4.Initial uniforms through August 21, and retraction/replaceable items; 5.Itemized orders ; 6.Contact person. I will address and s....
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.... 15. On 13-8-2006, the respondent sent the following e-mail to petitioner : "Dear Anu, Please advice our uniforms department that the shirts for female colleagues are losing colour, thus causing stain marks on their sleeves. We are yet to check our trousers for same. We have still not received uniforms for Naveen Pal, Kishore Kumar and Bharathi. Regards" 16. On 14-8-2006, the respondent sent another e-mail to petitioner : "Hello This is an update regarding various complaints that we have been receiving from various staff. u Ladies shoes are very rough from the inside so that's resulting in foot sores and torn stockings. u The colour of the blue cloth piping on the white shirts is bleeding so that means they don't have a proper shirt to wear. u The trousers are not made to proper measurements, either they are too tight or too loose. Kindly send at least 2 more shirts per staff as is the regular uniform issue as per our company's policy. We hope that all these issues will be taken care of on an urgent basis. Regards." 17. On 19-8-2006, the respondent sent the following e-mail to the petitioner: "Attention Minutes from meeting conc....
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.... of this meeting were recorded by the respondent in its e-mail dated 22-8-2006, which reads as follows : "Hello, Minutes from the meeting held at DLF Corporate Park August 21, 2006 : 1.Conducted a dye test with the new fabric in boiling water, and it did not bleed. Approval of new material as of August 21, 2008. 2.Do not use Surf Excel detergent while washing uniforms and the temperature should not be above 60 degrees. 3.Re-issue for all cabin attendants, customer service agents, security and dispatchers will be reissued new uniforms in the new blue material. 4.New uniform deadline : All stations and cabin attendants currently wardrobed in the old material will be re-issued the new uniforms by 21 September. 5.Masterji will be travelling to the following stations for new measurements : 22 August DEL CCU 6E 302/Return CCU-DEL S2 316/22 August 23 August DEL BLR 6E 105 24 August BLR PNQ 6E 106 25 August PNQ DEL 6E 106 26 August DEL IMF 6E 201 27 August IMF GAU 6E 202 28 August GAU DEL BE 202 I held a meeting with the following four uniform contacts on the following on August 21, 2006 : Nidhi Dhingra/Flight Operations-She has been instruct....
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.... arrangements so that the production and supply of the new uniforms is achieved as per schedule. It was also agreed that Batch 2 will receive their uniforms by 23-8-2006. Batch 3 was to receive their uniforms on a date to be announced. Batch 1 was to receive its new uniform by September 21, 2006. It was also agreed that all stations will receive new uniforms by 21-9-2006. 21. Mr. Sanjay Jain, learned senior counsel for the petitioner candidly stated that there was nothing on record to show that the uniforms of Batch 2 were, in fact, delivered by 23-8-2006, as per the agreement between the parties arrived at on 21-8-2006. In the meantime, on 28-8-2006, the respondent tendered a cheque for Rs. 18,87,800 after taking tax at source at 5.61 per cent. On the same day the petitioner returned the cheque to the respondent and sent an e-mail stating that the deduction of tax at source had been made under a wrong head. The petitioner stated that another cheque be issued in which the deductions of tax at source should be at 2.24 per cent and the cheque amount should be of Rs. 19,55,200. 22. The submission of Mr. Jain is that the respondent did not make payment terms of the request dated ....
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....ry not only for the 3rd batch cabin crew but also of the IndiGo uniforms of customer service and captains/co-pilots and Batches 1 and 2 of cabin crew for all stations. After such a written confirmation shall we proceed to deliver the uniforms. Further more we would like to emphasize that in spite of our repeated phone calls, mails, etc., there is no response from Indigo's side regarding the captains uniforms and the t-shirts which have been ready for delivery for 10 days now. Thus we would request you to please reply to the mails." 25. On 12-9-2006, another mail was sent by the petitioner, which reads as follows : "Dear Ritu Please note that we would be able to deliver the below against batch 3 cabin crew on 16-9-2006. 1.ladies 3/4 slv. jacket....... 2pcs./person 2.ladies skirt...................... 2pcs./person 3.ladies shirt...................... 3pcs./person 4.ladies belt....................... 1pc./person 5.ladies shoes.................... 1pair/person 6.ladies hand bag............ 1pc./person 7.ladies tote-bag................. 1pc./person Please also note that I need to send 1 pair of ladies shoes in each size for the girls to try on. Ple....
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....on, or in the civil suit filed by the petitioner against the respondent to the effect that Batch 2 was delivered on 23-8-2006, as per the mutual understanding arrived at on 21-8-2006. He submits that the petitioner had not even procured new approved fabric in terms of the understanding arrived at on 21-8-2006. He has referred to the various invoices of the materials stated to have been procured by the petitioner for fabrication of the uniforms. These invoices have been filed by the petitioner along with its civil suit being CS(OS) No. 1163 of 2007. These invoices are all of the period April, 2006 to 19-8-2006, i.e., prior to 21-8-2006, when the new fabric was approved. He submits that the petitioner, in fact, did not procure the approved fabric after 21-8-2006 and consequently, there was no question of the petitioner offering the uniforms fabricated from the new fabric. He submits that uniforms stitched with new approved fabric were never offered to the respondent. He refers to the specific averments of the respondent in its reply contained in paragraphs 13 and 14, which has not been denied by the petitioner in its rejoinder. In paragraph 13 of its reply the respondent has stated :....
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....ch reads as follows : "Dear Mr. Bhandari, Your request for prototypes is noted. You can send your team with prior appointment to check the material and fitting. Since we have reason to believe that Indigo has procured the uniforms developed by Lecoanet Hemant from another manufacturer during the last weeks we will not send any merchandise until the following steps are taken care of : Outstanding payment of Rs. 5,67,445.60 (see account statement in letter of 26/09) 100% advance against (re) delivery Rs. 1,27,628.80 (rejected delivery from 4th Sept.) 100% advance against delivery TBC (delivery scheduled for 21st Sept.) We would then deliver the above mentioned and could discuss further steps. I suggest that you come with your quality control team to see what we are talking about and then decide how you want to proceed. We are looking forward to find an amicable solution. Best regards." 32. He submits that, pertinently, the issue of payment of the amount covered by the returned cheque of 28-8-2006, was not contemporaneously raised by the petitioner, as it was mutual understanding of the parties that payment would be made to the petiti....
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....he respondent only on 5-10-2006, whereas the petitioner had offered fresh uniforms fabricated with the new approved fabric in September, 2006. He refers to paragraph 34 of the plaint in the aforesaid civil suit which discloses the dates on which the cause of action for filing the suit arise. 35. He submits that as per the published accounts of the respondent-company, the net loss suffered by the respondent-company is Rs. 201 crores. The respondent-company has no fixed assets. All its aircrafts are leased. He submits that the petitioner would be satisfied so far as the present petition is concerned, if the amount covered by the returned cheque of Rs. 20 lakhs is paid by the respondent. He further submits that the admissions made by the respondent are evident from the following circumstances : "(i)That it placed orders for production of uniforms on the petitioner ; (ii)That it was liable to pay an advance amount to the petitioner, equivalent to 50 per cent of Rs. 76,38,186.40, i.e., the amount mentioned in the aforesaid proforma invoice, even before the commencement of production of uniforms ; (iii)That under instructions of the respondent-company, the petitioner created ....
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....r the mutual understanding of 21-8-2006. According to the respondent despite the meeting dated 21-8-2006, the petitioner had failed to procure the newly approved fabric. The respondent states that it had asked for verification of the new uniforms offered by the petitioner, but such verification was denied. Though the petitioner disputes and denies that any such issue was raised by the respondent, it is pertinent to note that the petitioner in its own alleged communication dated 26-9-2006. (The receipt of this communication is denied by the respondent. However, since the petitioner claims to have sent this communication the petitioner would, in any event, continue to be bound by what is recorded therein) stated the reason for the respondent's refusal to accept the uniforms offered by the petitioner from 4-9-2006, onwards in the following words: "3. Accordingly, we have put in all our effort and mobilised resources to meet your specifications and requirements within the agreed time lines. Unfortunately and to our utmost surprise, on September 4, 2006, your office refused to accept the delivery of T-shirts and Captains uniforms without providing us with any explanations for the ref....
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.... we still do not have the uniforms that you said you will produce for us. You committed this afternoon to me that we will have all the replacement uniforms by the 21st of September and we agreed that once IndiGo has had a chance to verify that the uniforms are of the same quality and specifications as we asked for, the payments will be made to you. Is there any change since then ? I dont want to sound rude but I think that for this relationship to continue and for us not to terminate this agreement for breach on your part, we need to receive the products as we ordered. I think the the remedy period for rectifying a breach according to our agreement is 60 days... which is fast running out!" [Emphasis supplied] 39. The petitioner responded to this e-mail on 5-9-2006. The said is extracted, in its entirety is reproduced hereinbelow : "Dear Aditya, Thank you for your very simplified reply. The shift of communication I refer to is from Rahul Bhatia to you, he who insisted on mastering each and every detail of our collaboration so far. I also noted the total abstraction of our development of the product free of charge for IndiGo and the chronically late placing of order....
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....ct the respondent's stand with regard to the verification of the quality of the offered uniforms, or with regard to the payment being made. 41. The respondent has categorically denied having received the invoices of the amount of Rs. 24,90,778.80. The respondent admits the receipt of only one invoice of Rs. 9,08,200.80 and submits that the other four invoices mentioned in paragraph 15 of the petition have not been served on the respondent. From the tabulation of invoices stated to have been sent by the petitioner, it is seen that the first four invoices pertain to deliveries stated to have been made up on 7-8-2006, that is prior to the meeting of 21-8-2006. Since these supplies evidently were defective for one or the other reason, the liability of the respondent to make payment on these invoices in their entirety is seriously disputed. So far as the fifth invoice dated 29-8-2006, is concerned the receipt of this invoice is also denied by the respondent. Along with the rejoinder the petitioner has placed on record the gate passes to show the dispatch of the uniforms in respect of which the invoices dated 29-8-2006, is stated to have been issued. The respondent disputes having rec....