JYOTSNA TEXTILE PROCESSORS PRIVATE LTD v. SONAKARAN INTERNATIONAL LTD AND ANOTHER

HCA 2173/2014 &

HCA 2175/2014

[2019] HKCFI 213

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NOS 2173 AND 2175 OF 2014

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J U D G M E N T

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INTRODUCTION

1.  This is a claim by the Plaintiff for payment in respect of goods sold and delivered.  Leave has been given for the Plaintiff and the 2^nd Defendant to withdraw the claim and the counterclaim respectively.  This trial therefore concerned only the Plaintiff and the 1^st Defendant.

2.  The 1^st Defendant did not appear at this trial although the notices of trial had been served at its former registered office and latest registered office at Kaiser Estate and Focal Industrial Centre respectively, pursuant to the directions of DHCJ Seagroatt dated 29 November 2017.  I was satisfied that I could proceed to trial.

AGREED FACTS

3.  The following facts were agreed at the time when the 1^st Defendant was still legally represented.

4.  The Plaintiff was a company incorporated in India and carrying on the business of manufacturing and exporting fabrics.  The 1^st Defendant was a company incorporated in Hong Kong. 

5.  Pursuant to oral orders, the Plaintiff supplied fabrics to the 1^st Defendant by 5 consignments and issued 5 invoices in relation to them, tabulated below:

Invoice No	Invoice date	Invoice amount (US$)
009/2013	30.10.2013	74,013.33
010/2013	07.10.2013	66,432.15
012/2013	20.12.2013	86,205.71
013/2013	07.01.2014	100,860.77
014/2013-14	20.01.2014	112,663.28

EACH PARTY’S CASE

6.  The 1^st Defendant had delayed in payment.  In the course of negotiation between the Plaintiff and the 1^st Defendant, one Ayush Khemka (“AK”) approached Janak Tuarkhia (“JT”) of the Plaintiff and claimed to be responsible for arranging and receiving payments on behalf of the 1^st Defendant. 

7.  Subsequently, a series of payments were made for settling invoice nos. 012, 013 and 014, with a credit balance of US$5,948.99 (“the credit balance”). The 1^st Defendant claimed that it had no knowledge of this matter. 

8.  The 1^st Defendant had not settled invoice nos 009 and 010 (“the unpaid invoices”).  Taking into account the credit balance, a total sum of US$134,496.49 was and is due to the Plaintiff.

9.  The defence was that the fabrics were damaged and hence not of merchantable quality and that inspection was denied.

ISSUES

10.  The issues (agreed at the time when the 1^st Defendant was legally represented) were:

(1)   Whether the goods sold and delivered to the 1^st Defendant under the invoice nos. 009/2013 and 010/2013 were not of merchantable quality such that the 1^st Defendant was entitled not to pay?

(2)   Whether the payments received by the Plaintiff from about January to May 2014 were for the settlement of invoice nos. 012/2013, 013/2013 and 014/2013-14 for and on behalf of the 1^st Defendant?

(3)   Further to issues (1) and (2) above, whether the Plaintiff is entitled to the outstanding sum due by the 1^st Defendant and the quantum thereof?

11.  As the 1^st Defendant was absent, it was for the Plaintiff to prove its claim, having regard to the pleaded defence: Hong Kong Civil Procedure 2019, Vol 1, §35/1/1; Halsbury’s Laws of Hong Kong, 2^nd ed, 2016, Vol 10, [90.1030].

Issue (1): Whether the goods sold and delivered to the 1^st Defendant under the unpaid invoices were not of merchantable quality such that the 1^st Defendant was entitled not to pay?

12.  The unpaid invoices related to the first 2 consignments of fabrics (“the subject fabrics”) which the Plaintiff delivered.  The pleaded defence did not give any particulars as to how the subject fabrics were damaged or not of merchantable quality, and how inspection was denied.

13.  JT, Karan Sajnani (“KS”) and a Mr Sherkhan (buyer of the 1^st Defendant) had inspected the subject fabrics.  According to JT, Mr Sherkhan appeared to be very pleased with their quality and accepted the first 2 consignments right away.  Mr Sherkhan paid KS in HK$300,000 cash as part payment for those consignments in JT’s presence.  As there was no evidence from the 1^st Defendant to contradict the Plaintiff, I accept such evidence as true.

14.  There were emails and whatsApp messages produced by the 1^st Defendant. There was not even an allegation that the subject fabrics were damaged or not merchantable.

15.  A bill of lading produced by the 1^st Defendant related to a consignment and bill of lading that described the 2^nd Defendant as a shipper (B282).  It did not relate to the goods delivered under the unpaid invoices.

16.  The first and second consignments were delivered to the 1^st Defendant in mid-December 2013.  The emails produced by the 1^st Defendant were dated September 2014 (B283) and they mentioned “many trouble and many defects” under a bill of lading which was not identified or alleged to be connected to the unpaid invoices.  The sender of the emails (Manesh) was not identified either.

17.  I am not satisfied that the goods delivered under the unpaid invoices were damaged or not of merchantable quality.

Issue (2): Whether the payments received by the Plaintiff from about January to May 2014 were for the settlement of invoice nos. 012/2013, 013/2013 and 014/2013-14 for and on behalf of the 1^st Defendant?

18.  The pleaded defence asserted that the 1^st Defendant was not aware of the settlement of invoice nos. 012, 013 and 014 for and on behalf of the 1^st Defendant. 

19.  The Plaintiff has admitted, against its self-interest that those 3 invoices had been paid and made no claim on them.  There was not even an assertion from the 1^st Defendant that any payments received by the Plaintiff was towards settlement of the unpaid invoices.

20.  Further, the Plaintiff has demonstrated from the whatsApp messages produced by the 1^st Defendant that AK had been discussing with JT over payments and there were references to the respective consignments in the whatsApp messages.  AK also claimed to have spoken to KS.  (See pages 207, 208, 215, 222, 223, 244, 246, 247, 249, 251, 260, 267, 272 in Bundle B.)  From the point of 5 March 2014, the Plaintiff had been receiving payments from the 1^st Defendant’s buyer directly.  The whatsApp message on page B262 referred to a credit note (B206) which JT issued in respect of invoice 013 issued to the 1^st Defendant.  The last response of AK in respect of payments through whatsApp messages was on 14 March 2014.

21.  The pleaded defence has no merits.  I accept the Plaintiff’s version.

Issue (3): Further to issues (1) and (2) above, whether the Plaintiff is entitled to the outstanding sum due by the 1^st Defendant and the quantum thereof?

22.  The Plaintiff admitted that it had been overpaid in respect of invoices 012, 013 and 014.  After taking into account the credit balance, the amount due from the 1^st Defendant to the Plaintiff is US$134,496.49.  I accept this amount to be correct.

CONCLUSION

23.  I find the Plaintiff to have established its claim.  I give judgment to the Plaintiff in the sum of US$134,496.49.

24.  According to the case of Chow How Yeen Margaret v Wex Pharmaceuticals[2018] 3 HKLRD 163, §59, Lam VP,there shall be pre-action interest on the judgment sum at P+1% from the date of the writ (ie 28 October 2014) to the date of judgment.  Thereafter interest shall be at judgment rate until the date of payment.  I make an order nisi as regards interest accordingly.

25.  Also on a nisi basis, I order costs to the Plaintiff to be borne by the 1^st Defendant, including costs reserved by Deputy Judge Seagroatt on 29 November 2017 when the 1^st Defendant was absent at the original trial.

26.  I thank Ms Margaret Chan for her assistance.