OTIS ELEVATOR COMPANY (INDIA) LIMITED REPRESENTED BY CHIDAMBARAM Vs. OFFICIAL LIQUIDATOR, HIGH COURT OF MADRAS

JUDGEMENT

(1.) The Plaintiff, M/s.OTIS Elevator Company (India) Limited had originally filed a suit in CS.No.457 of 1999 against J.K.Pharmachem Limited, seeking a direction to pay a sum of Rs.8,37,922/- together with interest 18% p.a. and in the alternative, to direct the Defendant to deliver the lift materials, which had been supplied to the Defendant and also a sum of Rs.3,17,350/- towards cancellation charges and for costs.

(2.) The case of the Plaintiff was that they were carrying on the business of manufacturing and erecting elevators and lifts. The Defendant, J.K.Pharmachem Limited is a Public Limited Company. They had approached the Plaintiff in 1993 and placed an order dated 24.2.1994 for supply and installation of one freight lift at the Defendant's factory at SIPCOT Industrial Complex, Cuddalore. The Plaintiff had given a letter dated 11.1.1994 with specification sheets and terms and conditions. Further letters were issued on 19.3.1994 and 19.5.1994, accepting the contract. The said lift was a special type with flame proof facility. A contract was allotted to purchase by contract dated 27.6.1994. The contract price of the lift was Rs.9,07,000/-. The price adjustment was Rs.59,213/- and the sales tax was Rs.1,29,859/-. The total price was Rs.1,96,072/-. The Defendant had paid an advance of Rs.2,58,150/-. Out of the balance of Rs.8,37,922/-, leaving 10% of the contract price, namely, Rs.90,700/-, which was payable on completion of the installation, a sum of Rs.7,47,222/- was payable by the Defendant.

(3.) It had been stated that the Defendant had to make the building suitable for installation of the lift and only thereafter, can the Plaintiff commence the installation. Consequently, the deadline for supply and installation of the lift was depending on the Defendant completing the building in time. It had been stated that the Defendant delayed in construction of the building. The Plaintiff raised invoices on 12.2.1996 for Rs.7,47,222/- towards the materials supplied. The installation work was started in good faith. While partial erection was over, the Defendant cancelled the contract by letter dated 21.12.1996. Another letter dated 23.6.1997 was issued by the Defendant, stating that it was not interested in installing the lift. The Defendant demanded repayment of the advance amount of Rs.2,58,150/-. The Defendant sent further letters dated 6.8.1997, 8.11.1997 and 20.2.1997. The Defendant finally stated that the lift was no more required by letter dated 19.3.1998. The Plaintiff issued a letter on 18.3.1998, stating that unilateral cancellation could not be done since materials had been supplied. The Defendants issued a legal notice on 18.3.1998. The Plaintiff issued a letter on 8.12.1998, claiming 35% of the contract price, namely, Rs.3,17,450/- as cancellation charges. This was refused to be accepted by the Defendant by letter dated 21.1.1999. Claiming that the Plaintiff was always ready to complete the installation work and that it was the Defendant, who prevented the Plaintiff from completing the installation work, by not completing the building, the Plaintiff issued a notice on 10.2.1999, which was replied on 28.4.1999. The Plaintiff had, therefore, filed the suit for recovery of a sum of Rs.8,37,922/-, deducting the advance amount of Rs.2,58,510/-. The Plaintiff also claimed Rs.3,17,450/- as 35% of the contract price towards cancellation charges and costs.