SHRI DEEPANSHU GOEL vs M/S VIJAY TRADING CO. & ORS
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Pronounced on: 8th December, 2023
+ C.S.(COMM) No. 179/2017 and IAs 11042/2018 & 6958/2018
SHRI DEEPANSHU GOEL
….. Plaintiff
Through: Mr. A.K. Jain and Mr. Sushant Kumar, Advocates.
versus
M/S VIJAY TRADING CO. & ORS
….. Defendants
Through: Mr. Vishwendra Verma, Ms. Riya and Mr. Archit Verma, Advocates.
CORAM:
HON’BLE MS. JUSTICE NEENA BANSAL KRISHNA
J U D G M E N T
NEENA BANSAL KRISHNA, J.
I.A.6958/2018 (for leave to defend by D2 and D3)
1. An application has been filed on behalf of defendant No.2 and 3 under Section XXXVII Rule 3(5) of Code of Civil Procedure, 1908 (hereinafter referred to as CPC) seeking Leave to Defend the suit for Recovery, filed on behalf of the plaintiff.
2. It is submitted in the application that the suit is not maintainable as it is hopelessly barred by time. The suit for recovery of the alleged amount pertains to the period 09.06.2012 to 24.01.2014 for the goods that were supplied by the plaintiff to the defendant during this period. The accounts were settled for the aforesaid period between the parties on 02.02.2014 and after minor deductions, an amount of Rs.3,34,60,548/- was found due for which defendant No.2 issued a cheque which was dishonored due to insufficiency of funds on 19.02.2014. It is asserted that the suit has been filed on 02.03.2017 after a lapse of three years of limitation and is, therefore, barred.
3. The defendants have further asserted that the suit under Order 37 CPC can be maintained for a debt or liquidated amount for which there is an Agreement in writing showing the admitted liability or the liquidated debt. The present suit is based primarily on the Bills, Memos generated by the plaintiff for the alleged sale and delivery of goods. Each transaction is a separate and distinct transaction for which separate Memo/ Bill was issued. The Invoices cannot be taken as Agreement containing liquidated demands. The plaintiff has not produced any delivery challan receipts of the goods showing delivery of goods, as claimed by him. Plaintiff is relying on documents/ VAT returns issued by Sales/ VAT Authority for showing delivery of goods. These documents are nothing but the reproduction of the entries and returns filed by the plaintiff with the Authority and therefore, do not prove delivery of goods in any case. There being no Agreement, or any admitted liability or debt on the part of the defendants, the present suit is not maintainable under Order 37 of CPC.
4. It is further claimed that the present suit is not based on Invoices but for the recovery of the balance due. Defendant No.2 and Shri Jagdish Kumar used to make payments against all transactions within the credit period of two to five days from the date of supply of goods. A hand written account was being maintained to reflect all the transactions actually entered by the parties and the payment of the dues. The handwritten Statement of Account has been concealed by the plaintiff who has annexed only a computer generated Statement of Account which has false and frivolous entries.
5. Further, as per the practice prevalent in the Trade and Food Grain market, Shri Jagdish Kumar, father of defendant No.3, also maintained a Statement of Account/ Ledger Account reflecting the original transactions that were entered into between the parties and the details of the payments. The defendants further submitted that as per the entries of Statement of Account maintained by Shri Jagdish Kumar and acknowledged by the plaintiff and his father, defendant No.2 was liable to pay Rs.20,31,784/- on 26.1.2013, which subsequently came down to Rs.9,50,418/- by February, 2014. The said account can be tallied with Hand Written Statement of Accounts maintained by the plaintiff, to confirm that accounts were settled between the parties, and that no such alleged dues were payable by the defendants.
6. It is further claimed that defendant No.2 had neither signed the subject cheque nor issued and handed over the same to the plaintiff or his father. In fact, the plaintiff had taken away the subject cheque fraudulently from the possession of defendant No.2 without any intimation and consent; had forged the signatures and got the same dishonoured. The truth is that the cheque was lost from the possession of defendant No.2 for which he lodged a Police Complaint vide DD No.1359/7 dated 09.11.2013. When defendant No.2 came to know about the presentation of the cheque by the plaintiff to the Bank, he made another complaint to the Police, Ludhiana, Punjab against the plaintiff and his father. This was claimed to be not the first instance of taking away the cheques of the plaintiff, but on earlier occasions as well the cheque book issued by J & K Bank, Ludhiana in the name of Babu & Co., the partnership firm owned by Shri Jagdish Kumar father of defendant No.3, had been fraudulently obtained by the plaintiff and his father. From the said cheque book, five cheques for Rs.5 lakh each in the name of his firm Deepak Trading Company were forged by the father of defendant No.3 by filling in the details and forging the signatures. A complaint was made to the police vide DD No.20/29/12/12. The moment the plaintiff and his father came to know about the Police Complaint, they acknowledged their misdeeds, apologized and returned the cheques. They also assured that they would not indulge in such acts in future. Despite that they fraudulently took away the subject cheque with ulterior motive and for causing the wrongful loss.
7. The Ludhiana Police registered FIR No.49 dated 18.02.2015 on the aforesaid complaint of defendant No.2 and Shri Jagdish Kumar after which the Charge Sheet was filed for the offence under Section 379/420//467/468/471/506 IPC before learned Additional Chief Judicial Magistrate, Ludhiana. The charges have already been framed vide Order dated 04.08.2017 and the father of the plaintiff is facing trial.
8. The defendant has further asserted that defendant No.1 Firm Vijay Trading Company, was the partnership Firm. Defendant No.2 and Shri Jagdish Kumar, father of defendant No.3, were engaged in the business of Food Grains through their two partnership Firms, namely, Babu & Co. and defendant No.1 Company namely Vijay Trading Company. Defendant No.1 had entered into various transactions with the plaintiff, the Commission Agent in Trade & Operations from Delhi. Defendant No.3 was a sleeping partner of defendant No.1. Moreover, defendant No.1 Firm was a partnership at will and the same was dissolved vide Retirement cum Partnership Deed dated 05.02.2014 executed between defendant No.2 and 3.
9. It is thus, submitted that in the light of the aforesaid objections and submissions and various issues raised by the defendant, the Leave to Defend may be allowed and the suit be put to trial.
I.A.11042/2018 (for leave to defend by D1)
10. Another application seeking Leave to Defend dated 13.08.2018 on behalf of defendant No.1 was filed raising identical grounds as taken in the earlier Leave to Defend application.
11. The plaintiff contested the Leave to Defend application by filing a detailed reply. It has been explained by the plaintiff that a cheque bearing No.933640 dated 15.02.2014 for Rs.3,34,60,548/- drawn on State Bank of India, G.T. Road, Ludhiana under the signatures of defendant No.2 had been issued on behalf of defendant No.1, the Partnership Firm and defendant No.3 the partner, as the entire payment due till 02.02.2014 with an assurance that the cheque would be honoured. However, the same was dishonoured and the present case for recovery is based on the said cheque and is squarely covered under Order XXXVII of CPC.
12. It is explained that the cheque on presentation was dishonoured on 19.02.2014. The limitation commences from the date of issue of cheque i.e. 15.02.2014 and the present suit has been filed on 10.02.2017 which is within the period of limitation of three years. The defendants have wrongly claimed that the present suit was filed on 02.03.2017 or is barred by limitation.
13. The plaintiff has clarified that the present suit has been filed only against M/s Vijay Trading Company and this case has no concern with the other partnership Firm M/s Babu & Co. and/or its partners. All the Bills had been raised by the plaintiff upon the defendants No.1, 2 and 3. Moreover, defendant No.3 was a working and not a sleeping partner as has been wrongly claimed. It is denied that defendant No.1 Partnership Firm was dissolved vide Retirement cum Partnership Deed dated 05.02.2014. The plaintiff has asserted that false documents dated 05.02.2014 have been created by defendant No.2 and 3 as in the Excise and Taxation Record and in the record of Banks, Income Tax, both are being shown as the partners.
14. It is further asserted that Shri Jagdish Kumar has no concern with defendant No.1 Partnership Firm despite which his name is being entangled in each and every averment by the defendants in their Leave to Defend application. The plaintiff has instituted a separate case against Shri Jagdish Kumar, his partner and his Firm.
15. It is further submitted that the defendant No.2 did not make the payments as alleged by him within two to five days from the date of supply of goods. Moreover, all the payments received have been detailed in the Account Books and the same has already been placed on record. It is denied that there was a hand written Statement of Account being prepared to reflect the actual transactions entered into between the parties and the payments received. It is denied that any hand written Statement of Account as per the usual practice in the trade of food grains market, was ever prepared. Furthermore, the Statement of Account has already been submitted by the plaintiff to Income Tax Department and the relevant Authorities. The defendant has also filed the Tax Returns before Excise and Taxation Department, Ludhiana which is identical to the one which is relied upon by the plaintiff.
16. The averments of the defendants that Shri Jagdish Kumar had acknowledged the outstanding dues as Rs.9,50,418/- in February, 2014 is not relevant for the present case which have been filed not against Shri Jagdish Kumar but against defendant No.1 Vijay Trading Company with defendant No.2 and 3 as its partners. Shri Jagdish Kumar may be having another Firm and conducting business along with the other partner Ms. Rama Arora, but the transactions with the said Firm are not the subject matter of the present case.
17. It is further asserted that defendant No.2 has wrongly denied his signatures on the subject cheque or that he had not handed over the same to the plaintiff or his father who was involved with him in the business or that the same was taken away fraudulently by the plaintiff and his father. In fact, the FIR has been lodged by defendant No.2 as a part of pre-planned criminal conspiracy. Also, a Complaint Case under Section 138 of the Negotiable Instruments Act, 1881 has been filed by the plaintiff in respect of dishonoured cheque and the trial is admittedly pending.
18. Furthermore, while defendant in the reply dated 13.03.2014 to the Legal Notice, has claimed that the plaintiff and his father took away some blank signed cheques without the knowledge of the defendants, but in the complaint to Additional Dy. Commissioner of Police (Crime), Ludhiana it is claimed that one of the lost cheque of defendant has fraudulently and dishonestly been misused by forging the signatures. It is claimed that the cheque has been dishonoured for the insufficiency of funds and not because of signatures being different. In fact, the defendants are trying to manipulate a concocted story and have got a false FIR registered. In view of the contrary stands, it is evident that the cheque has been duly issued by defendant No.2, in acknowledgement of the due amount and the present suit for recovery is liable to be allowed. It is asserted that the Leave to Defend has no merit and is liable to be dismissed.
19. Learned Counsel for the plaintiff has made submissions essentially on similar lines as his Reply.
20. Submissions heard.
21. The plaintiffs case for recovery rests on a cheque dated 15.02.2014 which got dishonoured on 19.02.2014 for insufficiency of funds. The defendant has taken a plea that this cheque was stolen by the plaintiff and his father and thereafter, fraudulently manipulated by forging the signatures on the basis of which an FIR No.49 dated 18.02.2015 has been registered in Ludhiana, in which charges have already been framed and the trial is ongoing.
22. The plaintiff has explained that in the reply to Legal Notice dated 13.03.2014 the defendant has admitted that it was a blank signed cheque which had been stolen by the plaintiff and his father. From his submissions in the Legal Notice itself it is evident that the signatures on the cheque are admitted. The only defence taken is that it is a fraudulent and manipulated cheque.
23. Though the defendants have alleged that the cheque in question was a forged cheque and did not bear his signatures, but he himself in his Legal Notice has asserted that it was a blank signed cheque that was taken away by the plaintiff. This implies that the signatures on the cheque are admitted by the defendants. This admission in the reply, is evidently made in view of the fact that the dishonour of cheque was not on account of signature not tallying, but for insufficiency of funds. The defence of the alleged cheque having been stolen and manipulated is clearly an attempt by the defendant to wriggle out of the cheque which reflects the admitted liability of the defendant.
24. Much had been argued about the Statement of Accounts and there being two Statement of Accounts; one which was being maintained officially while other was hand written which in fact reflected the true nature of the transactions. The authenticity of the computerized statement of account is not disputed by the Defendants, but it has been claimed that another handwritten statement of account reflecting the correct entries, was being maintained by both the parties which is not in consonance with the cheque amount. Significantly, as pointed out by the Plaintiff, the Statement of Account filed by the defendants with the statutory Authority is the same as filed by the plaintiff. Also, the defendants have asserted their own hand written statement of account, which has not been filed. The authenticity of the computer generated statement of the account is not challenged. Such defence of there being parallel unofficial statement of account is clearly not legally tenable. The Statements of Accounts in any case, lose their significance on account of the fact that the cheque with a claimed amount which was dishonoured, is the basis of the claim of the plaintiff in the present suit.
25. Undeniably, criminal litigation had been initiated against the plaintiff in regard to the cheque being a forged document. However, considering the contradictory stands taken in the present case to explain the issue of cheque and the admission that the signatures on the cheque are of defendant No.2, the defendants cannot avoid their civil liability arising out of a dishonoured cheque. Also, it is a Charge sheet in which the trial is pending and no presumption of the cheque being forged can be drawn; more so when the signatures on the cheque are admitted by the defendant no.2 in the Reply to the Legal Notice.
26. Another objection taken is that the partnership of defendants stood dissolved vide Dissolution Deed on 05.02.2014, while the cheque is of subsequent date of 15.02.2014, which could not have been issued on behalf of defendant no. 1, which had ceased to exist on the date of issue of cheque.
27. Even though the plaintiff has claimed the Dissolution Deed to be a fabricated document, but irrespective of that, Section 45 of the Indian Partnership Act, 1932 provides that notwithstanding dissolution of Firm, the partner shall continue to be liable to the third parties for the acts done by any partner on behalf of the Firm, if done before dissolution, until Public Notice is given at the time of dissolution. No such assertion is made by the defendants that Public Notice of dissolution was given, and even if it is accepted that the partnership stood dissolved the defendants cannot escape their liability incurred while the Partnership was subsisting. Section 46 of the Partnership Act states that the funds of the Partnership after its dissolution, may be applied by any partner which shall bind all the partners, in discharge of the debts and the liabilities of the partnership. Section 47 of the Partnership Act further provides and even after the dissolution of the partnership Firm, the authority of the partners continue, to bind the Firm for the transaction which were begun but incomplete at the time of winding up.
28. Though no Partnership Dissolution Deed has been placed on record, but even if the claim of the Defendants is believed that it was dissolved prior to issue of Cheque, then too in the light of the aforementioned sections of the Partnership Act, the defendants cannot evade their liability arising out of the Cheque issued on behalf of the Partnership Firm.
29. The defendants had asserted that the suit was barred by limitation. However, the cause of action arose on the date of issue of cheque on 15.02.2014 when the stated amount was acknowledged to be due. It further arose on 19.02.2014 when the cheque got dishonoured. The suit has been filed on 10.02.2017 and is thus, within the period of limitation. The plea of suit being barred by limitation is ex facie without any merit.
30. The defendants have speciously argued that the suit having been filed after 3 years, clearly reflects that no amount was due, however, this argument merely reflects the desperate attempt on part of the defendants to somehow make out a ground for leave to defend. Moreover, so long as the suit is within limitation this argument is frivolous and not tenable.
31. In the case of IDBI Trusteeship Services Ltd. vs. Hubtown Ltd., (2017) 1 SCC 568, while discussing the quintessential terms for deciding an application seeking Leave to Defend, the Apex Court observed as under :-
17.1. If the defendant satisfies the court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit.
17.2. If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign judgment, and the defendant is ordinarily entitled to unconditional leave to defend.
17.3. Even if the defendant raises triable issues, if a doubt is left with the trial Judge about the defendant’s good faith, or the genuineness of the triable issues, the trial Judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security.
17.4. If the defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires.
17.5. If the defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintiff is entitled to judgment forthwith.
17.6. If any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court.
32. Subsequently, in the case of B.L. Kashyap and Sons Limited vs. JMS Steels and Power Corporation and Another (2022) 3 SCC 294, the Apex Court had referred to the case of Mechelec Engineers & Manufacturers vs. Basic Equipment Corpn., (1976) 4 SCC 687, IDBI (supra) and Kiranmayi Dasi vs. J. Chatterji, 1945 SCC OnLine Cal 114 and reaffirmed that the Court has to determine if the defendant has a good defence, on merits. Moreover, only if the defendant raises a triable issue indicating a fair and bonafide or a reasonable defence, even though not a positively good defence, the defendant is entitled to unconditional Leave to Defend. However, if there is no defence raised or the defence set up is appears to be a sham or practically moon shine, then ordinarily the Leave to Defend application must be dismissed.
33. In the present case, as has been already discussed, the signatures on the impugned cheque are admitted and the defence of it having been stolen is nothing but an after though and a malafide defence concocted by the defendant to wriggle out of the admitted liability, as reflected in the dishonoured cheque.
34. There is no reasonable defence disclosed in the present Leave to Defend application, which is hereby dismissed.
C.S. (COMM.) No. 179/2017
35. The suit of the plaintiff is decreed for a sum of Rs.3,34,60,548/- along with pendent lite and future interest @ 6% per annum from the date of institution of the suit till the date of payment.
36. Parties to bear their own costs.
37. Decree Sheet be drawn accordingly.
(NEENA BANSAL KRISHNA)
JUDGE
DECEMBER 08, 2023
Va /JN
C.S.(COMM) No. 179/2017 Page 1 of 13