Authority: High Court of Judicature at Madras

Order Date: 26-10-2026

Case Overview

  • Plaintiff: M. Mohan, proprietor of Sivasakthi Corporation, a supplier of spares, scraps, tools, instruments and computer components, based in Coimbatore.
  • Defendant: Tamil Nadu Cooperative Union, a registered cooperative society under the Tamil Nadu Cooperative Societies Act, 1983, engaged in cooperative education and training, represented by Special Officer/Managing Director N. V. Natarajan.
  • Contract: Tender floated on 17‑05‑2012 for machinery and equipment for nine Industrial Training Institutes (ITI) in Tamil Nadu. Plaintiff was the lowest bidder (L1) and a work order dated 06‑06‑2012 was issued for a total contract value of Rs 6,86,93,549.
  • Supply: Plaintiff supplied machinery and equipment worth Rs 4,97,14,956 in 2012 as per NCVT specifications.
  • Payments made by defendant: Rs 1,26,67,247 on 15‑06‑2012, Rs 56,73,634 on 28‑06‑2012 and Rs 55,82,437 on 30‑06‑2012, totalling Rs 2,39,23,318.
  • Outstanding balance claimed: Rs 2,57,91,638 with interest at 18% per annum from the date of suit institution.
  • Dispute: Defendant alleged the supplied machinery was defective, sub‑standard, non‑branded, lacking ISI/BIS standards, and unfit for vocational training, leading to an enquiry under Section 81 of the Tamil Nadu Cooperative Societies Act on 07‑01‑2015 and surcharge proceedings under Section 87.
  • Plaintiff contended that no defects were reported within three months of supply (as per undertaking dated 10‑06‑2012), that inspections in 2018‑2019 by the Directorate of Employment and Training found the machinery in working condition, and that the defendant’s letters dated 14‑05‑2015, 07‑05‑2018, 19‑09‑2018 and 03‑06‑2019 constituted acknowledgments of liability.
  • Procedural history: Earlier writ petition (W.P.No.11061 of 2014) directed the defendant to dispose of the plaintiff’s representation; the plaintiff’s writ petition (W.P.No.23443 of 2015) was dismissed on 03‑08‑2015. The suit was initially rejected on 19‑08‑2021, restored by the Division Bench on 12‑03‑2024, and appealed to the Supreme Court (SLP (C) No.26038 of 2024), which dismissed the appeal on 11‑11‑2024.
  • Issues framed by the Court (19‑02‑2025): limitation, maintainability, acknowledgment of liability, defectiveness of goods, obligation to take back goods, entitlement to principal claim, entitlement to interest, and any other relief.

Findings on Key Issues

1. Limitation: The three‑year limitation period expired on 30‑06‑2015. The Court examined each communication. Ex.P8 (14‑05‑2015) was found to merely acknowledge disposal of a representation, not liability. Ex.P15 (03‑06‑2019) was issued after the limitation expiry and did not constitute a promise under Section 25(3) of the Indian Contract Act. Consequently, the suit is barred by limitation.

2. Maintainability after Writ Dismissal: The dismissal of the writ petition did not preclude a civil suit; the issue was answered in the affirmative.

3. Defectiveness of Machinery: Based on inspection reports, principals’ letters (2012‑2014), and the plaintiff’s failure to conduct trial runs, the Court held, on a preponderance of probabilities, that the machinery supplied was defective and unfit for its intended purpose.

4. Obligation to Take Back Goods: The tender document contained no clause obligating the plaintiff to take back the machinery; therefore, no contractual duty to return the goods was found.

5. Entitlement to Principal and Interest: Because the suit is barred by limitation, the plaintiff is not entitled to the principal amount or interest, irrespective of the defect finding.

6. Other Relief: No other relief was granted.

Final Outcome

  • The suit is dismissed with costs. The claim for Rs 2,57,91,638 and interest at 18% per annum is rejected as time‑barred. The Court also affirmed that the supplied machinery was defective, but this finding does not affect the limitation bar.

Topics: Legal Dispute, Limitation Bar, Defective Goods