In a first appeal arising from a commission recovery suit, the Delhi High Court has ruled that a plaintiff who fails to prove the foundational condition for earning commission cannot succeed merely because the defendant’s own account books are inadmissible for want of certification. The Court held that since the commission was contractually payable only in respect of goods supplied to government departments, and Rays Medical failed to prove any such supply, no commission was payable to it.
On the issue of misjoinder, the Court held that the substitution of Jindal Photo in place of Sh. R.B. Paul was a mere correction of misdescription of parties, and not the addition of a new defendant, and accordingly Section 21 of the Limitation Act, 1963, would not apply to revive limitation afresh. On the plea of limitation raised for the first time in appeal, the Court held that since Jindal Photo did not raise the issue of limitation in its written statement and no issue was framed thereon, the plea could not be entertained at the appellate stage.
A Single Judge Bench of Justice Amit Bansal noted that Rays Medical did not file any statement of account along with the plaint or with its evidence by way of affidavit, as mandated by Order VII Rule 14 CPC. The summary statement of account was produced only during the cross-examination of the defendant’s witness, and was exhibited on 2nd December 2011, even though the witness denied having seen the document. A second, more detailed statement of account was produced at the stage of final arguments without any order of the Trial Court permitting or taking it on record.
The Court further observed that the witness of Rays Medical, in his cross-examination dated 1st December 2009, expressly admitted that he had no proof of supply of goods to any government department, no delivery proof, and no document to substantiate that the material for which commission was claimed was ever supplied to any government body. The appointment letter dated 22nd May 2003 and the document dated 27th May 2003, clearly established that the commission structure was exclusively tied to supplies made to government departments under the DGS&D Rate Contract.
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Briefly, the dispute arose out of an agency arrangement between M/s Jindal Photo Ltd. (the defendant/appellant), a manufacturer of X-Ray films, and M/s Rays Medical Services (P) Ltd. (the plaintiff/respondent). By a letter dated 22nd May 2003, Jindal Photo appointed Rays Medical as its agent for supplying X-Ray films to government departments and institutions in Delhi on a commission basis. The agency was withheld on 26th March 2004 but was subsequently restored on 27th September 2004. On 2nd May 2007, Rays Medical issued a legal notice claiming Rs. 8,40,982 towards unpaid commission and refund of security deposit, and thereafter instituted a suit on 3rd August 2007, seeking recovery of Rs. 12.20 lakhs.
Notably, the original plaint named Sh. R.B. Paul, the former Managing Director of Jindal Photo, as the sole defendant in his individual capacity, and not the company itself. Only at the stage of final arguments did Rays Medical move an application under Order VI Rule 17 CPC to substitute Jindal Photo in place of Sh. R.B. Paul, which was allowed by the Trial Court on 4th January 2014, subject to payment of costs of Rs. 5,000. The Trial Court ultimately decreed the suit for Rs. 8.40 lakhs with interest at 12% per annum till realisation.
