- 1 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 04TH DAY OF FEBRUARY, 2025 PRESENT THE HON'BLE MR. JUSTICE ASHOK S. KINAGI AND THE HON'BLE MR. JUSTICE UMESH M ADIGA REGULAR FIRST APPEAL NO. 100355 OF 2017 (MON) C/W REGULAR FIRST APPEAL NO.100048/2018 IN RFA NO. 100355 OF 2017 : BETWEEN: 1. REEBOK INDIA LTD., (REEBOK INDIA COMPANY) #2016, 2ND FLOOR, 100’ ROAD, INDIRA NAGAR, BENGALURU-560008, AND REGISTERED OFFICE AT: 6, IIND FLOOR, SECTOR-B, POCKET 7, PLOT NO.11, VASANT KUNJ, NEW DELHI-110070, COMPANY INCORPORATED UNDER COMPANIES ACT REPRESENTED BY ITS LEGAL COUNCIL/LEGAL OFFICER, SRI. VIKAS RANJAN S/O R.R. SINHA, AGE: 40 YEARS, OCC: LEGAL COUNCIL, REEBOK INDIA COMPANY. …APPELLANT (BY SRI. DAYANAND M BANDI, ADV) AND: 1. M/S. SREERAGHAVENDRA ENTERPRISES MOHANKUMAR B SHELAR Digitally signed by MOHANKUMAR B SHELAR Date: 2025.03.01 11:15:23 +0530 - 2 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 BY ITS MANAGING PARTNER G. CHANDRASHEKHAR S/O G. LAXMI NARAYANA, AGE: 45 YEARS, OCC: BUSINESS, R/O: PLOT NO: 48, INNA REDDY LAY OUT, INFANTRY ROAD, CANTONMENT, BALLARI-583101. 2. M/S. FINE FOOT WEAR (P) LTD., #30, IST FLOOR, ARCHANA MARKET, SULTAN PET, BENGALURU-560001. …RESPONDENTS (BY V/O. DATED 07.03.2023, SRI. GIRISH BHAT, ADV FOR R1, NOTICE TO R2 IS SERVED) THIS RFA IS FILED UNDER SECTION 96 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED 28.04.2017 PASSED IN O.S.NO.60/2012 ON THE FILE OF THE I ADDITIONAL SENIOR CIVIL JUDGE, BALLARI, DECREEING THE SUIT FILED FOR MONEY SUIT. IN RFA NO. 100048 OF 2018 : BETWEEN: 1. M/S. FINE FOOT WEAR (P) LTD., #30, 1ST FLOOR, ARCHANA MARKET SULTAN PET, BENGALURU-560053. …APPELLANT (BY SRI. VIJAY M MALALI, ADV) - 3 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 AND: 1. M/S. SREE RAGHAVENDRA ENTERPRISES BY ITS MANAGING PARTNER G. CHANDRA SHEKAR S/O G. LAXMI NARAYANA, AGE: 40 YEARS, R/O: PLOT NO: 48, INNA REDDY LAYOUT, INFANTRY ROAD, CANTONMENT, BALLARI-583104. 2. REEBOK INDIA LIMITED, #2016, 2ND FLOOR, 100 ROAD, INDIRA NAGAR, BENGALURU-560008. …RESPONDENTS (BY SRI. RAKESH S. HATTIKATAGI, ADV FOR R1, NOTICE TO R2 IS SERVED) THIS RFA IS FILED UNDER SECTION 96 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED 28.04.2017 PASSED IN O.S.NO.60/2012 ON THE FILE OF THE I ADDITIONAL SENIOR CIVIL JUDGE, BALLARI, DECREEING THE SUIT FILED FOR MONEY SUIT. THESE APPEALS, COMING ON FOR FINAL HEARING AND ORDERS RESPECTIVELY, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: THE HON'BLE MR. JUSTICE ASHOK S. KINAGI AND THE HON'BLE MR. JUSTICE UMESH M ADIGA - 4 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 ORAL JUDGMENT (PER: THE HON'BLE MR. JUSTICE ASHOK S. KINAGI) These two appeals arise from the judgment and decree dated 28.04.2017 passed in O.S.No.60/2012 by the learned I Additional Senior Civil Judge, Ballari. 2. For convenience, the parties are referred to, based on their rankings before the trial Court. The appellant was defendant No.2, respondent No.1 was the plaintiff and respondent No.2 was defendant No.1. 3. Brief facts leading rise to the filing of these appeals are as follows : The plaintiff filed a suit against the defendants for recovery of Rs.56,27,000/- with future interest @24% p.a. from the date of the suit till the realization of the entire amount and with the costs. It is the case of the plaintiff that, the plaintiff approached defendant No.2 for starting a showroom of Reebok in Ballari city and the defendant No.2 agreed to open a showroom on the plaintiff’s property - 5 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 measuring 1000 sqft. in Infantry Road, Ballari. On 24.03.2009 defendant No.2 issued a letter accepting the proposal of opening a showroom and agreed to give a margin money of 27% on MRP rates on the entire stock, and assured minimum guarantee of Rs.1,72,508/- p.m. irrespective of the sales in the showroom. 4. Defendant No.1 is the sole distributor in Karnataka State for Reebok Company. Defendant No.1 sent an agreement by incorporating terms and conditions of business with the plaintiff, and in turn, the plaintiff by making alterations and affixing his signature on the final agreement forwarded the same to defendant No.1. The plaintiff is not aware, whether the defendant No.1 had signed the final agreement. After sending the agreement to defendant No.1, defendant No.2 supplied the stocks through defendant No.1. The plaintiff started the showroom on 07.06.2009 by investing a huge amount and spent amount for interiors as per the specifications of defendant No.2 - company for more than Rs.20.00 lakhs - 6 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 and paid an amount of Rs.25.00 lakhs for the supply of stocks to the showroom to defendant No.1 on the oral instructions of defendant No.2. 5. Initially for three months, the sale was very good because of the name and fame of defendant No.2. Thereafter, defendant No.1 supplied old and outdated materials to the plaintiff showroom. The said goods supplied by defendant No.1 were defective materials and the same was informed to defendant No.1, and also to defendant No.2 vide communications dated 17.08.2009 and 23.09.2009, wherein the plaintiff demanded the amount as per the terms and conditions of the letter dated 24.03.2009 issued by the defendant -company. In the said letter, the plaintiff requested and demanded defendant No.1 to send an authorized person to inspect the defective goods and to set right things. In view of the defective goods supplied by defendant no.1, gradually the sales are also decreased in the showroom. The plaintiff informed the defendants. Despite information, they did not respond. - 7 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 The plaintiff sent an e-mail on 29.10.2009 regarding the discount payable to the plaintiff along with the statement of details and requested to find a solution to solve the problems of the showroom. The plaintiff has sent samples of the defective goods to the Managing Director of defendant No.2-company. 6. The goods supplied by the defendants are of inferior quality, and old stocks. The plaintiff, vide letter dated 26.02.2010 informed defendant No.2-company regarding the supply of defective goods by defendant No.1, and requested to send any authorized person to rectify the problems. The defendants failed to send an authorized person. The plaintiff stopped placing orders for the supply of goods. Defendant No.1, without placing any order for supply of goods sent the materials to the showroom. As of today, more than Rs.13,08,593/- worth of stock is lying in the shop, but the customers are not ready to purchase the same, and the defendants have - 8 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 failed to pay the minimum guarantee amount as agreed upon and also the margin money on the sales @27%. 7. It is contended that, the plaintiff has respect in the market and business circle and developed a good reputation, name, and fame in Ballari district as well as in the Karnataka State. In view of the supply of defective materials and old stocks to the plaintiffs showroom without any lawful justification plaintiff’s reputation is diminished in the eyes of the entire society. Defendant No.1 issued a letter dated 08.05.2010 to the plaintiff and the plaintiff replied to the said letter on 17.05.2010. The plaintiff issued a legal notice to the defendants on 11.10.2010 requesting the defendants to streamline the business of the showroom. Defendants who received the legal notice, did not reply to the legal notice nor streamlined the business of the showroom. The plaintiff, once again, issued a legal notice dated 30.11.2010. The defendants gave an evasive reply to the legal notice dated 30.11.2010 demanding to pay Rs.3,26,182/- without any bans. The - 9 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 plaintiff issued one more notice dated 25.07.2011. The defendant did not reply to the said legal notice. Hence, the plaintiff was constrained to file the suit for recovery of money with interest against the defendants. Accordingly, prays to decree the suit. 8. Defendant No.1 filed a written statement denying the averments made in the plaint, and it is contended that, the suit filed by the plaintiff is not maintainable. It is stated that the plaintiff has suppressed the material facts and as such the plaintiff is guilty of suppression of material facts. It is contended that, defendant No.1 is merely a super-stockist of defendant No.2 and acts upon the instructions of defendant No.2, as per the super-stockist. Agreement entered between defendant No.1 and 2. Defendant No.1 is neither the manufacturer nor the importer of the Reebok products into India. Defendant No.2 imports Reebok products into India from 1995 and has impeachable records in supplying Reebok products. The defendant No.2 is a distributor. It is - 10 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 contended that the plaintiff has sent the letters dated 17.08.2009 and 23.09.2009 to defendant No.2 informing them about the defective materials supplied and this action of the plaintiff indicates that defendant No.1 had no control over defendant No.2 and its supplies to the franchise. Defendant No.1 was not aware of the agreement as mentioned in paragraph No.4 of the plaint. 9. It is contended that defendant No.1 has never supplied defective goods to the plaintiff. Defendant No.1 is not concerned about the dealings that the plaintiff had with defendant No.2. Defendant No.1 admitted that, plaintiff issued a notice dated 25.07.2011 and 30.11.2011 respectively. Defendant No.1 gave a suitable reply on 15.12.2011. Defendant No.1 reserved the right to claim the amount of Rs.3,26,182/- by way of counter-claim. Defendant No.1 is not entitled to pay the amount as claimed by the plaintiff for the goods supplied by defendant No.2 comply and accordingly, prays to dismiss the suit against defendant No.1. - 11 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 10. Defendant No.2 filed a written statement denying the averments made in the plaint and defendant No.2 admitted that, the plaintiff approached him for starting a showroom in the city of Ballari, and also admitted, issuing a letter dated 24.03.2009. It is contended that, defendant No.1 started supplying the goods to the plaintiff after receipt of Rs.25.00 lakhs by way of Demand Draft, as instructed under the letter dated 24.03.2009. It is denied that, the plaintiff informed the defendants through the letters dated 17.08.2009 and 23.09.2009 about the defective materials supplied by defendant No.1. 11. It is contended that defendant No.2 has not supplied any materials to the plaintiff. It was defendant No.1, who supplied the material to the plaintiff. It is contended that, no orders are placed on defendant No.2. Hence, the question of defendant No.2 failed to supply fresh stock would not arise, and there is no privity of - 12 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 contract between defendant No.2, and the plaintiff except the letter dated 23.03.2009. Hence, prays to dismiss the suit against defendant No.2. 12. The trial Court, based on the pleadings of the parties, framed the following issues and additional issues. ISSUES “1. Whether the plaintiff proves that, he has suffered loss due to the defective materials supplied by the defendants? 2. Whether the defendant No.2 proves that the suit is bad for non compliance of Order-30, Rule-1 of Code of Civil Procedure? 3. Whether the defendant No.2 proves that, his name is mis-described in the plaint? 4. Whether the defendant No.1 proves that, he is not responsible for the defect product supplied by the defendant No.2 and he is not liable to pay the suit claim to the plaintiff? 5. Whether the plaintiff is entitled to the relief claimed in the suit? 6. What order or decree? ADDITIONAL ISSUE DATED 20.7.2016 Whether this court has got territorial jurisdiction to entertain this suit ?” 13. The plaintiff to substantiate its case examined the Managing Partner of the plaintiff firm, as PW.1 and - 13 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 marked 32 documents as Exs.P.1 to P.32. On the other hand, the power of attorney holder of defendant No.1 company was examined as DW-1 and the legal Manager of defendant No.2 company was examined as DW-2, and marked 69 documents as Exs.D.1 to D.69. After recording the evidence, hearing on both sides, and on the assessment of oral and documentary evidence, the trial Court answered issue No.1 and additional issue No.1 in the affirmative, issue No.2 to 4 in the negative, issue No.5 partly affirmative, and issue No.6 as per the final order. 14. The suit of the plaintiff was partly decreed with cost vide judgment dated 28.11.2017. Defendants are jointly and severally liable to pay a sum of Rs.44,26,219/- with future interest @12% p.a. from the date of suit till the date of realization. Out of the decretal amount, the plaintiff is entitled to a sum of Rs.13,08,593/- and Rs.32,731/- and interest thereon subject to the return of defective products supplied by the defendants either to defendant No.1 or to defendant No.2. The defendant No.1 - 14 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 filed an appeal in RFA No.100048/2018, and defendant No.2 filed an appeal RFA No.100355/2017, challenging the judgment and decree passed in O.S.No.60/2012. 15. Heard the argument of learned counsel for defendants No.1 and 2 and learned counsel for the plaintiff. 16. Learned counsel for defendant No.1 submits that, there is no privity of contract between the plaintiff and defendant No.1 regarding the supply of goods. Further, he submits that, defendant No.1 had not supplied defective materials as alleged by the plaintiff in the plaint. He submits that, the prerequisite for payment of the monthly minimum guarantee was that, the plaintiff had to keep a minimum stock level of Rs.25.00 lakhs (invoice value) in the store. He further submits that, the plaintiff had not sought for an appointment of a Commissioner to examine whether the goods were lying in his showroom or not, nor the plaintiff has made any efforts to produce any - 15 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 expert’s opinion to establish that, the goods supplied by the defendants under the invoice of defendant No.1 was defective in any form and manner. The said aspect was not considered by the Court below, and committed an error in passing the impugned judgment. Hence, on these grounds, he prays to allow the appeals. 17. Learned counsel for defendant No.2 submits that, the trial Court has erred in understanding the case since its inception, and has not drawn the proper issues to understand the real point of controversy. He submits that Ex.P.3 is only an offer letter, and not a concluded contract between the parties. In the absence of a contract, letter dated 24.03.2009 has no binding effect on the parties. He submits that, defendant No.2 is not liable to pay the claim of the plaintiff, as the plaintiff has violated the terms of Ex.P.3, and the plaintiff has not kept the minimum stock level of Rs.25.00 lakhs in the showroom at any given point of time, and he submits that the plaintiff is not entitled to the minimum guarantee amount for not maintaining - 16 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 minimum stock level in the showroom. Hence, on these grounds, he prays to allow the appeals. 18. Per contra, the learned counsel for the plaintiff submits that, the plaintiff approached defendant No.2 with a request to open a showroom of Reebok in Ballari City, and defendant No.2 agreed to open a showroom in the plaintiff’s property and defendant No.2 issued a letter on 24.03.2009, accepting the proposal of opening a showroom and agreed to give margin money @ 27% on MRP rates on the entire stock, and also assured minimum guarantee of Rs.1,72,508/- per month irrespective of the sales in the showroom. He submits that the plaintiff placed an order for the supply of goods. Defendant No.1 supplied the goods to the plaintiff on the instructions of defendant No.2. The goods supplied by defendant No.1 are defective, and of inferior quality, and the same are old stocks. 19. He submits that the plaintiff has a good reputation in Ballari district and because of supplying - 17 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 defective goods, his reputation was diminished. He submits that, the plaintiff has issued several letters to the defendants intimating about the supply of defective goods, despite having received the letters, the defendants did not bother to resolve the plaintiff’s problem. There is a privity of contract between the defendants and the plaintiff for the supply of goods. The trial Court, considering the entire material on record was justified in passing the impugned judgment. Hence, on these grounds, he prays to dismiss the appeals. 20. Perused the records, and considered the submissions of the learned counsel for the parties. 21. The points, that arise for our consideration are: 1) Whether the plaintiff prove that the plaintiff has suffered a loss due to defective materials supplied by the defendants? 2) Whether defendants prove that the judgment and decree passed by the trial Court is perverse and arbitrary? 3) What order or decree? - 18 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 Re. Point No.1: 22. The Managing Partner of the plaintiff firm was examined as PW-1. He reiterated the plaint averments in the examination-in-chief, and to show that there was privity of contract between the plaintiff and defendants, the plaintiff has produced documents: Ex.P.1 is an acknowledgment of registration of the firm to show that, the plaintiff firm was registered under the Indian Partnership Act, 1932 on 26.07.1999. Ex.P.2 is the business institution register dated 26.07.1999, Ex.P.3 is the letter dated 24.03.2009 issued by defendant No.2 to the plaintiff informing that the proposal sent by the plaintiff to open a Reebok store in the property of the plaintiff and defendant No.2 offered the property of the plaintiff to open a Reebok store subject to terms and conditions, Ex.P.4 is the letter dated 08.05.2010 issued by the plaintiff to the defendant No.1 informing that store is operational and the plaintiff has received the last payment in August, 2009 and thereafter, the plaintiff had not - 19 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 received any payment from defendant No.1, and the balance due is Rs.3,26,182.50/- after adjusting all the credit notes against the stock supplied till September, 2009. Ex.P.5 is the legal notice dated 17.05.2010 issued by the plaintiff to the defendant No.1. Ex.P.5a, P.5b and P.5c are the postal acknowledgments. Defendant No.1 replied to the letter dated 17.05.2010 denying the allegations made in the letter dated 08.05.2010. Ex.P.6 is the legal notice dated 11.10.2010 issued by the plaintiff to defendant No.1. Plaintiff called upon defendant No.1 to take back the old stock which is worth more than Rs.17.00 lakhs, within a week from the date of receipt of the notice. Ex.P.6a to P.6c are the postal acknowledgments. Ex.P.7 is the reply notice dated 15.12.2010 issued by defendant No.1 to the plaintiff regarding the payment of an outstanding amount of 3,26,182/-. Ex.P.8 is the legal notice issued by plaintiff to defendant No.1. Ex.P.8a and 8b are the postal acknowledgments. Ex.P.9 is the legal notice issued by plaintiff to defendant No.1. Ex.P.9a and 9b are postal acknowledgments. Ex.P.10 is the account - 20 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 extract of plaintiff. Ex. P.11 - is the list of orders placed by the plaintiff company. Ex. P.12 - the letter dated 26/2/10, issued by the plaintiff company, addressing Defendant No.2 regarding the defect in old stock received. EX P.13 - is the letter dated 26/2/10, addressing defendant No.2, issued by the plaintiff company, regarding the list of grievances faced by the Plaintiff company. Ex. P.14 - is the Account statement. Ex. P.15 - is the letter issued by the plaintiff to defendant No.2 regarding the violation of an agreement with Bellari Reebook store. Ex.P.16 - is the email from 15/7/09 to 20/7/09, sent by the plaintiff to defendant No.2 regarding the discount slabs. Ex. P.17 – is the ledger statement dated 02/05/2010, sent through the mail by defendant No.2 to the plaintiff company. Ex.P.18 – are the pictures sent through mail dated 10/7/09. Ex.P.19 is the Stock requirement list sent by plaintiff through mail dated 28/7/09. Ex. P.20 – are the pictures of damaged products, sent by email dated 10/09/09. Ex.P.21 – is the debit note. Ex.P.22 - is the Refund statements of the plaintiff. Ex.P.23 - is the letter sent to defendant No.2 - 21 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 about the dissatisfaction with the products received by the Customers. Ex.P.24 is the Hard copy of an email received from defendant No.2 dated 09/12/2009. Exs.P.25 & P.26 are the invoices dated 26/06/2009. Exs.P.27-P.29 are the email received from defendant No.2, from 19/10/2009 to 30/10/2009 Ex.P.30 is the letter dated 07/09/2009, to certify the goods Sent to the plaintiff. Ex.P.31 is the invoice dated 23/10/2009. Ex.P.32 is a box of damaged shoes, socks & sandals. 23. During the course of cross-examination of PW- 1, it is elicited that, one of the Manager of defendant No.2 approached the PW-1 and insisted PW-1 to open a showroom and start a Reebok showroom in their firm and PW-1 had met the representative of DW-2 namely, Ankit Gupta who is the Sales Manager of the said company. One of the conditions or agreements entered between PW-1 and defendant No.2 was that if he could not sell the minimum products in a month, he would not be entitled to receive a minimum guarantee. It is elicited that Ex.P.3 is - 22 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 the offer letter dated 24.03.2009 as per the terms of the said letter defendant No.1 is the super-stockist to supply the goods of defendant No.2 and defendant No.2 insisted the PW-1 to send the demand draft through defendant No.1, when the plaintiff needs goods. It is elicited that correspondence was made by the plaintiff with defendant No.2 as per Ex.P.21. It was elicited that, he cannot say without seeing the records, how many times, he returned the defective goods to defendant No.1. He had not produced the credit note issued by defendant No.1 but the same was mentioned in Ex.P.10 - account statement. 24. Further defendant No.2 cross examined PW-1. It is elicited that Yugandhar was working as a Manager in the showroom, and he used to make correspondence with defendants No.1 and 2 through e-mail and other communications. Witness volunteers that he was working as a Manager, and he used to communicate the correspondence with defendants No.1 and 2. Yugandhar placed an order for a supply of goods from defendant - 23 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 No.1. It is elicited that, defendant No.1 had issued a letter stating that they will not provide a monthly guarantee from the month of January, 2010 and it is suggested that the plaintiff has created the records. The said suggestion was denied by PW-1. 25. On the other hand the power of attorney holder of defendant No.1 was examined as DW-1, he reiterated the written statement averments in the examination-in- chief. Defendant No.1 has produced the computerized copy of the reminder letter dated 08.05.2010 issued to the plaintiff, a letter about the confirmation of balance dated 27.01.2010 issued to the plaintiff, the reminder letter dated 01.09.2012, the ledger statement of the defendant No.1 maintained by them for the period from 01.04.2009 to 31.03.2010. Tax invoices 31 in numbers raised by defendant No.1 in favour of the plaintiff, sales invoices 27 in numbers raised by defendant No.2 on behalf of defendant No.1. The said documents are marked as Ex.D.1 to D.62. Ex. D.1 - is the letter from defendant No.1 to the - 24 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 plaintiff, dated 08/05/2010 Ex.D.2 is the letter dated 27/1/2010, to the plaintiff by defendant No.1, confirming the balance amount of Rs. 3,26,182 /- from 01/04/2009 to 27/01/2010. Ex.D.3 - is the letter dated 01/09/2012 by defendant No.1 to the plaintiff regarding the outstanding balance. Ex.D.4 - is the ledger extract of defendant No.1 from 01/04/2009 to 31/3/2010. Exs.D.5-D.35 are the tax Invoices, Exs.D.36-D.62 are the sale invoices, Ex.D.63 is the authorization letter dated 14/7/2014. Ex.D.64– Ex.D.68 are the scanned copies of labels. Ex.D.69 is the Power of Attorney dated 20/04/2013, issued by defendant No.1 in favour of Mr. K. Narendra. 26. In the course of cross-examination, of DW.1 he admitted that, he had no where stated either in the written statement or in the affidavit evidence that on what capacity he is working in the defendant No.1 company. Witness volunteers that he was working as a Manager in defendant No.1 company. He also admits that Ex.D.1 to D.62, the power of attorney documents were not marked - 25 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 and he admits that he had not produced any records to show that defendant No.1 company is a super-stockist to the defendant No.2 -company. It was elicited that, the franchise will directly place an order to defendant No.2 – company, they used to supply the goods to the franchise on behalf of defendant No.2. 27. He admits that if any order is placed by the franchise everywhere in Karnataka including the plaintiff, in respect of the defendant No.2 company products order placed by the franchise the said company will be supplied to them through defendant No.1 company only. He admits that the first consignment was sent by defendant No.1 to the plaintiff on 23.05.2009 and the plaintiff started the business transaction from that date only and the plaintiff paid Rs.25.00 lakhs to the defendant No.1 company as an advance and on behalf of defendant No.2 company minimum guarantee will be credited to the account of the plaintiff by defendant No.1-company. He admits that, the - 26 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 plaintiff has returned some of the defective goods to defendant No.1. 28. He admits that the plaintiff has placed an order for the supply of Reebok products as per Ex.P.11 on 05.02.2010 to defendant No.1 company. He admits that defendant No.1 has not sent the goods as per the order placed on Ex.P.11. Witness volunteers that, since no payment was made, therefore, the goods were not supplied. He also admits that defendant No.1 - company has sent a notice on 27.01.2010 and 01.09.2012 i.e., Exs.D.2 and D.3 and he admits that Exs.D.2 and D.3 does not bear the signature of the plaintiff. He also admits that Exs.D.5 to D.35 invoices are maintained by their company and they do not contain the signature of the plaintiff. He admitted that the plaintiff got issued notice on 17.05.2010, 11.10.2010, 30.11.2010, and 25.07.2011 stating that goods supplied by defendant No.1 were defective, and due to that, the plaintiff sustained a loss in his business. He admits that defendant No.1 did not reply - 27 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 to the notice issued by the plaintiff. He also admits that as per Ex.D.18 to D.20 the plaintiff intimated the images of defective goods supplied by defendant No.1 company to defendant No.2 - company. 29. It was suggested to DW-1 that the plaintiff at the initial stage of business had issued a notice on 17.05.2010 to defendant No.1 and 2 to set the right things to run the business smoothly. But, the defendant No.1 did not set the right the same as requested by the plaintiff to which the witness answers that, they have no direct cannot over the business. He pleads ignorance that, the shop was damaged by the public because of the supply of defective goods by defendant No.1 and the plaintiff has sustained a loss to the tune of Rs.10.00 lakhs due to the damage caused to the shop by the public because of the defective goods supplied. 30. Defendant No.2 examined the Legal Manager as DW-2. He reiterated the written statement averments in the examination in chief and marked four documents as - 28 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 per Ex.D.64 to D.68. DW-2 admits, that defendant No.2 received notices sent by the plaintiff i.e., Ex.P.5, 6, 8 and 9. Defendant No.2 company was not aware of the orders placed by the plaintiff, and the goods were not supplied to the plaintiff. He admits that he has seen the copies of the emails that were produced before the Court by the plaintiff. He is not aware of Ex.P.19 and the name of the person, Manish Singh is an employee of the Reebok company i.e., defendant No.2. DW-2 was not aware of Ex.P.20 i.e., the plaintiff sent an email on 10.09.2009 requesting the defendant No.2 company to rectify the defective goods. He admits that there is no agreement between the plaintiff and defendant No.2 about the monthly sale of Rs.5.00 lakhs and defendant No.2 company had not issued notice to the company regarding maintaining of the minimum stock level of Rs.25.00 lakhs in the showroom. 31. From the perusal of the entire evidence placed on record by the parties, it is clear that Ex.P.3 is the letter - 29 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 issued by defendant No.2 to the plaintiff. It is mentioned that as per the discussion, defendant No.2 offered the place to open a Reebok store on certain terms and conditions. Pursuant to Ex.P.3 the plaintiff had paid an amount of Rs.25.00 lakhs through Demand Draft and also spent a huge amount for the interiors of the store. The parties based on Ex.P.3 have acted upon. The plaintiff has placed an order for the supply of goods and accordingly, defendants No.1 and 2 supplied the goods to the plaintiff. Though, the plaintiff has written several letters to the defendants intimating that the goods supplied the defendant No.1 are defective and called upon defendant No.1 to take back the defective goods, the defendants did not reply to the letters by the plaintiff and further, the plaintiff also issued letters and email informing about the defective goods supplied by defendant No.1. Defendants No.1 and 2 have admitted regarding supply of goods to the plaintiff. Supplying goods to the plaintiff is sufficient to establish that, there was a privity of contract between the plaintiff and defendants based on Ex.P.3. - 30 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 32. The plaintiff issued a reply notice to defendant No.1 on 17.05.2010 denying the averments made in the letter dated 08.05.2010 stating that the plaintiff is facing problems to run the showroom as defendant No.1 supplied the defective materials and because of the said facts the customers are returning the goods sold to them, and the plaintiff has shown the defective goods to the Managing Director of the Reebok company by sending the same through courier and the goods sent to the plaintiff are of inferior quality and old stock, and the socks if anybody wears within a day the entire leg of the customers will be coloured as white, because the said socks to be turned into white powder and further, requested the defendants to send an authorized person to rectify the defect. Despite the request made by the plaintiff, the defendants did not send the authorised person. Ex.P.6 is the legal notice issued by the plaintiff to defendant No.1 reiterating the averments made in Ex.P.5. Ex.P.7 is the reply issued by defendants No.1 and 2. Ex.P.8 is the reply notice issued by - 31 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 the plaintiff on 30.11.2010 to the notice dated 08.05.2010 issued by defendant No.1 to the plaintiff. 33. Though the defendants have admitted regarding the supply of stock, though the plaintiff has complained to the defendants regarding the supply of goods and called upon the defendants to send an authorized person to rectify the defect, despite the request made by the plaintiff the defendants did not send the authorised agent to rectify the defect. Thus, the plaintiff has proved that there was a contract between the plaintiff and defendants for the supply of goods/products of defendant No.2. In view of the defective goods supplied by the defendants, the plaintiff has sustained a loss. 34. The plaintiff claimed a sum of Rs.56,27,000/- with interest, and the plaintiff has given the particulars of the claim i.e., total stock supplied by the defendants under the various invoices worth Rs.47,35,914/-. Returning goods to the defendants Rs.1,31,035/-. The balance he has shown as Rs.46,04,879/- and the amount paid by the - 32 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 plaintiff through the cheque Rs.33,90,000/- and the balance remained is Rs.12,14,879/-. Out of it monthly guarantee paid by the defendants is shown as Rs.8,88,614/- and the balance payable by the plaintiff is shown as Rs.3,26,266/-. Defendants No.1 and 2 have not disputed the balance amount payable by the plaintiff. Thus, the plaintiff has proved that, he has suffered a loss due to defective materials supplied by the defendants. In view of the above discussion, we answer point No.1 in the affirmative. Re. point No.2: 35. The trial Court, considering the evidence of PW- 1, DW-1, and DW-2 has recorded its finding that, the defendants had supplied the defective goods, and the plaintiff has sustained a loss. The trial Court has rightly passed the impugned judgment, hence, we do not find any error in the impugned judgment. In view of the above discussion, we answer point No.2 in the negative. - 33 - NC: 2025:KHC-D:2128-DB RFA No. 100355 of 2017 Re.point No.3: Accordingly, we proceed to pass the following: ORDER The Appeals are dismissed. The Judgment and decree dated 28.04.2017 in O.S No.60/2012 passed by the I Additional Senior Civil Judge, Ballari, is hereby confirmed. No order as to the costs. Sd/- (ASHOK S. KINAGI) JUDGE Sd/- (UMESH M ADIGA) JUDGE BVK CT: BSB List No.: 1 Sl No.: 4