M/S AVON INDUSTRIES vs M/S MASARSINSA STEELS PVT LTD

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 16.01.2024
+ RFA(COMM) 267/2023, CM Nos. 60454/2023, 60455/2023 & 60456/2023
M/S AVON INDUSTRIES ….. Appellant
Through: Mr. Vishal, Adv.
Versus
M/S MASARSINSA STEELS PVT LTD ….. Respondent
Through: None.
CORAM:
HON’BLE MR. JUSTICE VIBHU BAKHRU
HON’BLE MR. JUSTICE RAVINDER DUDEJA
VIBHU BAKHRU, J. (ORAL)
1. The appellant/defendant has filed the present appeal impugning a judgment dated 01.08.2023 (hereafter ‘the impugned judgment’) passed by the learned Commercial Court allowing the respondent/plaintiff’s application filed under Order XIIIA of the Code of Civil Procedure, 1908 (hereafter ‘the CPC’) in Suit No.CS(COMM) No.38/2020 captioned M/s Masarsinsa Steels Pvt. Ltd. v. M/s Avon Industries. Consequently, the learned Commercial Court decreed the respondent/plaintiff’s suit for recovery of an amount of ?11,35,731/- along with cost. The learned Commercial Court also awarded pendente lite and future interest at the rate of 12% per annum from the date of institution of the suit till actual realization. The learned Commercial Court also found that there was no likelihood of the appellant / defendant succeeding in its defence and accordingly rendered a summary judgment.
2. The respondent/Plaintiff had filed a civil suit for recovery of an amount of ?11,35,731/- along with pendente lite and future interest. It was the respondent’s case that the appellant (a partnership firm arrayed as the defendant in the suit) had approached its office at Delhi and placed orders for purchase of ‘C.R. Steel’ as per its requirement. The said purchase orders were serviced by the respondent company and it had supplied the requisite quantity of C.R. Steel as ordered against various invoices raised from time to time. There is no dispute that the respondent / plaintiff had raised the invoices at the material time and had also supplied the goods in question.
3. The respondent also claimed that the constituent partner of the appellant firm (Mr. Vipin Gupta) had acknowledged his liability in terms of letter dated 22.09.2015 whereby he admitted that a sum of ?8,50,000/- was due to the respondent / plaintiff and he would start making payment from November, 2015 onwards. In addition, the respondent claimed that the appellant had handed over seventeen post-dated cheques of ?50,000/- each which were drawn in favour of ‘yourself’ for the purpose of making payment through RTGS/NEFT. Only one out of the said seventeen post-dated cheques was encashed. It was respondent / plaintiff’s case that the attempts to encash other cheques were frustrated as the appellant did not have ‘sufficient funds’ for the funds to be remitted against the said cheques.
4. The respondent had also produced a computerized ledger account maintained in the usual course of business reflecting a debit of ?7,99,811/- as on 31.03.2018.

5. On 02.05.2019, the respondent issued a legal notice demanding the aforesaid amount along with interest at the rate of 24% per annum. The envelope containing the said notice dispatched at one of the addresses of the appellant was returned with a noting to the effect that the addressee could not be found. The respondent alleged that this was despite the fact that the appellant was functioning from the said address. However, the said legal notice was served on another address of the appellant on 02.07.2019.
6. The suit was also referred to West District Legal Services Authority, Delhi for pre-institution mediation. However despite service of notice, the appellant did not appear before the mediator and the mediation was terminated as a non-starter.
7. The appellant disputed its liability to pay the invoiced amounts for the goods that were admittedly received by it on the ground that the quality of the goods was sub-standard. The appellant also claimed that it had called upon the respondent to collect the goods but the respondent failed to do so. Insofar as the post-dated cheques are concerned, it is appellant’s case that the cheques were stolen from its office and were misused. The appellant also disputed that the signatures on all post-dated cheques, except one, were that of Mr. Vipin Gupta (one of its constituent partners). In addition, the appellant / defendant contended that the suit filed by the respondent / plaintiff was barred by limitation, as the last transaction between the parties took place on 20.04.2016, and the suit was filed after a period of three years from the said date. The appellant also claimed that none of the post-dated cheques in question were presented and therefore there was no question of the cheques being dishonoured for want of ‘sufficient funds’.
8. According to the appellant, the aforesaid suit was filed in January, 2020 and therefore was beyond the period of three years from 20.04.2016, being the date on which one of the post-dated cheques presented by the respondent was dishonoured. This was also the last entry in the running account of the ledger produced by the respondent.
9. The learned Commercial Court found that there was no real possibility of the appellant succeeding in its defence, essentially, for four reasons. First, that the receipt of invoices and the goods were admitted. The appellant’s defence that it had no liability to pay for the goods received rested on its claim that goods were of sub-standard quality. However, there were no communications or material on the record to substantiate the said defence.
10. Second, that the learned commercial court did not find substance in the appellant’s defence that the seventeen cheques were stolen from its office as it had not made any complaint regarding the same either to its banker or to the police authorities. The learned Commercial Court noted that it would be improbable that anyone would fail to notice the missing series of cheques. Theft of cheques is a serious offence and since the appellant had taken no steps in this regard, the appellant’s contention that the same were stolen was completely unsubstantiated.

11. Third, that the learned Commercial Court did not accept the appellant’s contention that the cheques were not signed by Mr. Vipin Gupta. The post-dated cheques bear the signature that reads as ‘Vipin’. These signatures were disputed by the appellant. However, one of the cheques – that is, a cheque bearing no.351136 dated 20.12.2016 – bears the admitted signatures of Mr. Vipin Gupta as well as the signature ‘Vipin’. The dispute that the cheques were not signed by Mr Vipin Gupta did not establish that the same were not given by the appellant to the respondent.
12. Lastly, the appellant’s contention that the respondent had coerced Mr. Vipin Gupta, constituent partner of the appellant to issue a letter of acknowledgment dated 22.09.2015 was also not accepted. The appellant had not produced any contemporaneous material to establish the same. The appellant had not sent any letter or communication raising a protest against the said letter or retracting from the statement acknowledging the liability.
13. We find no infirmity with the decision of the learned Commercial Court. Admittedly, there is no material on record to even remotely suggest that the goods supplied by the respondent were of a sub-standard quality.
14. The appellant’s contention that the post-dated cheques were stolen from its office is also difficult to accept. Admittedly, no complaint for theft of the said post-dated cheques was made by the appellant to its banker or the police authorities. The. Respondent had not issued any instructions to its bankers for preventing misuse of the said cheques.
15. The appellant’s contention that the signatures on the post-dated cheques were not that of Mr. Vipin Gupta does not carry the appellant’s defence much further in the given facts. Once the appellant’s defence that the post-dated cheques were stolen is rejected, and it is accepted that the same were given to the respondent in discharge of its acknowledged liability, it would make little difference whether the said cheques were signed by its constituent partner. It is also important to note that the issuance of the post-dated cheques clearly conforms to the letter dated 22.09.2015 (PW1/12) acknowledging the liability to pay Rs. 8,50,000/- and assuring that payments would be made commencing from the month of November.
16. In addition, one of the cheques (Ex.PW1/17) also bears the admitted signatures of Mr. Vipin Gupta beside the disputed signature – ‘Vipin’. It was averred by the respondent that attempts were made to present two of post-dated cheques but the same could not be encashed due to insufficiency of funds in the appellant’s bank account. The attempt made by the respondent is duly supported by an ‘Application for NEFT/RTGS Remittance’ dated 26.10.2016. More importantly, the averment that the funds in the appellant’s bank were insufficient at the material time has not been effectively traversed by the appellant.
17. It is apparent from the above, that the appellant’s case that it was not liable for pay for the goods received by it is insubstantial and there is no real prospect of the appellant succeeding in this defence.
18. The appellant’s contention that the suit was barred by limitation is also ex facie erroneous. The appellant had acknowledged the amount due are in terms of a letter dated 22.09.2015. The said letter also indicates that the respondent was assured that the appellant would start making payments from the month of November, 2015 along with bank interest. The respondent had also produced the seventeen post-dated cheques issued by the appellant for payment of the acknowledged sum of Rs. 8,50,000/-. Out of the seventeen cheques, one was encashed. The ledger account produced by the respondent reflect that cheque for Rs. 50,000/- from the series of cheques was encashed reducing the outstanding balance to Rs. 7,99,811/- as on 31.03.2016. The respondent had sought recovery of Rs. 11,35,731/- which included interest at the contractual rate (as mentioned in the invoices) till the date of filing the suit. The last of the said cheques is dated 28.06.2017 (Ex.PW1/28). The respondent had made an attempt to encash two of the said post-dated cheques on 25.10.2016 but was unsuccessful. As noted above, there is no dispute that on the said date, the appellant’s bank did not have sufficient funds for remittance of the cheque amount. It is also material to note that one of the cheques (Ex.PW1/17) dated 20.12.2016 also bears the admitted signature of Mr. Vipin Gupta. According to the respondent the said cheque was not presented for encashment as the earlier cheque dated 25.10.2016 could not be encashed due to insufficiency of funds.
19. The learned Single Judge had noticed that the suit was filed within the period of three years from 25.10.2016 – being the date when the respondent attempted to remit funds from the appellant’s bank accounts on the strength of two cheques – after excluding the pre-suit mediation period under Section 12A of the Commercial Courts Act. Accordingly, we find no fault with the finding of the learned Commercial Court that the suit was filed within the period of limitation.
20. The appeal is unmerited and is accordingly dismissed. All pending applications are also disposed of.

VIBHU BAKHRU, J

RAVINDER DUDEJA, J
JANUARY 16, 2024
‘gsr’

RFA(COMM) No.267/2023 Page 2 of 2