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Shiv Ispa Udyog Pvt. Ltd. Vs. Indus Valley - Court Judgment

LegalCrystal Citation
SubjectContract
CourtDelhi High Court
Decided On
Case NumberRegular First Appeal No. 194 of 1983
Judge
Reported inAIR1984Delhi405; [1986]60CompCas405(Delhi); 26(1984)DLT328; 1984(7)DRJ142; 1984RLR559
AppellantShiv Ispa Udyog Pvt. Ltd.
Respondentindus Valley
Excerpt:
.....purchaser did take the delivery of goods, though after 12 days of the contractual date : is the purchaser entitled to confiscate the guarantee amount of rs. 40,000 ? held--no. ; it is not denied that time for delivery of goods was extended up to 15-3-79. nor is this in dispute that the seller delivered the goods by 12-3-79. now in terms of the clause 5 which we have quoted above the purchaser is entitled to 1/1000 per cent of the total value of the goods for each day's delay. this is his right. he has no right to claim or 'confiscate' the entire amount of rs. 40,000/- because the contract was never cancelled. only where there is a delay of more than seven days the purchaser is given the right to cancel the contract and to 'confiscate the guarantee of rs. 49,000/-'. but that is not the..........is of paramount importance. the guarantee is subordinate to its paramountcy. it is subject to its terms. the contract says that if there is a delay in delivery of goods damages will be ascertained on each day's delay at a given rate. if there is no delivery at all for more than seven days the purchaser will have a right to can cel the contract and confiscate the entire amount of rs. 40,000.00 . this is the long and short of the whole case. distinguished from :- (4) we have calculated damages at the rate of 1/1000 per cent of the total value of the goods and find that the purchaser will be entitled to rs. 9500.00 only. mr. dhir on behalf of the purchaser prays for interest on this amount. this request is granted. the .amount of interest comes to rs. 4500.00 from the date of the order of.....
Judgment:

G.C. Jain, J.

(1) It is not denied that time for delivery of goods was extended up to 15-3-79. Nor is this in dispute that the seller delivered the goods by 12-3-79. Now in terms of the clause 5 which we have quoted above the purchaser is entitled to 1/1000 per cent of the total value of the goods for each day's delay. This is his right. He has no right to claim or 'confiscate' the entire amount of Rs. 40.000.00 because the contract was never cancelled. Only where here is a delay of more than seven days the purchaser is given the right to cancel the contract and to 'confiscate the guarantee of Rs. 0,000.00 '. But that is not the case here. In fact under the contract Supply was made and was accepted by the purchaser. The second part of the clause will not thereforee, come into operation. The first part of the clause giving a right to claim damages at the rate of 1/1000 per cent of the total value of the goods is all that the purchaser is entitled to in this case.

(2) Here the terms of the contract will govern the parties. The purchaser cannot claim anything more than what is stipulated in the contract. The guarantee bond was furnished in terms of the contract. The contract is paramount. The guarantee bond is subordinate to the contract. The rights and obligations of the parties are defined in the contract. The purchaser is entitled to damages in terms of the contract. The contract gives him a right to 'confiscate' the entire amount of Rs. 40,000.00 only if the delay exceeds 7 days and the purchaser cancels the contract. That will be a case where the seller has filed to deliver the goods. This is not so here.

(3) The contract is of paramount importance. The guarantee is subordinate to its paramountcy. It is subject to its terms. The contract says that if there is a delay in delivery of goods damages will be ascertained on each day's delay at a given rate. If there is no delivery at all for more than seven days the purchaser will have a right to can cel the contract and confiscate the entire amount of Rs. 40,000.00 . This is the long and short of the whole case. Distinguished from :-

(4) We have calculated damages at the rate of 1/1000 per cent of the total value of the goods and find that the purchaser will be entitled to Rs. 9500.00 only. Mr. Dhir on behalf of the purchaser prays for interest on this amount. This request is granted. The .amount of interest comes to Rs. 4500.00 from the date of the order of stay passed by the court of first instance in the suit on 27-3-1979 up to date. thereforee, the respondent purchaser Indus Valley will be entitled to get Rs. 14,000.00 only.

'IN case the Second Party does not supply whole quantity of goods in time they the Second Party will be penalised 1/1000% of the total value of the goods for every day delay and the corresponding amount will be collected from the performance Bank Guarantee. In case the delay exceeds 7 days then the First Party will cancel the contract and will confiscate the Guarantee of Rs. 40,000.00 in his own favor.'

(5) Before the time for the delivery of goods arrived the seller wrote to the purchaser a letter dated 2-2-1979, asking for extension of time up to 15-3-79. The purchaser agreed to the extension of time but 'without prejudice to our right of encashing the bank guarantee for default committed by you in supplying the material in terms of the agreement.

(6) The purchaser claimed that they were entitled to realise the entire amount of Rs. 40,000.00 from the bank because there was a default on the part of the seller inasmuch as goods had not been supplied to them by 28-2-79. The seller then filed a suit for declaration claiming that the purchaser was not entitled to receive the amount of Rs. 40,000.00 from the bank. - The suit was dismissed on 30-7-83. From that order the seller appeals to this court.


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