TaxTMI 
TaxTMI 
2021 (12) TMI 41
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....aceutical division and in this capacity, the respondent 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 re....
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....d that the petitioner/defendant no.2 was under the obligation or at least was having some 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....
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....------------- 12. That on presentation, the said cheques were returned unpaid by the banker of the Defendant No.1 vide Cheque Returning Memos dated 17.03.2008 and 19.03.2008 respectively with the remarks "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 ....
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....therefore, it cannot be stated that goods were not supplied to the petitioner/defendant no.2; (iv) in the letter dated 27th June, 2009 issued by the petitioner/defendant no.2 to the respondent no.1/plaintiff, the petitioner/defendant no.2 had admitted to the liability of Rs. 27,55,300/-; (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 re....
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....nst the said defendants, entitling him to proceed against them." 14. It appears from a reading of the plaint that the respondent no.1/plaintiff was supplying goods directly to the respondent no. 2/defendant no.1 even though the bills were being raised in the name of the petitioner/defendant no.2. It is also an admitted position that the 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% ....
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....to an agreement dated 29th September, 2005, the relevant clauses of which are extracted below: "2. That the goods will be sold by the First Party to the Second Party or to Sarabhai as may be advised by the Second Party at the rates as may be decided from time to time. 3. That the Second Party shall make payment to the First Party 50% advance along 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 ....
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....Trial Court and the conduct of the respondent no.1/plaintiff before this Court, it is found that neither was any relief sought by the respondent no.1/plaintiff against the petitioner/defendant no.2 nor was there a cause of action pleaded in respect of the petitioner/defendant no.2. 23. The finding of the ADJ that since the letter dated 5th May, 2008, issued by the petitioner/defendant no.2 and asking 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 d....