Delhi District Court
M/S Srk Overseas vs Hazi Fariduddin Prop. Of on 22 December, 2020
IN THE COURT OF SH. LAXMI KANT GAUR, DISTRICT JUDGE
(COMMERCIAL COURT), NORTH EAST, KARKARDOOMA COURTS,
DELHI
CS (Comm) No. 26/2019
M/s SRK Overseas
At 1074, Near Railway Station
Siras Pur, Delhi110042
Through its Prop.
Smt. Anchal Ralhan .......Plaintiff
Versus
Hazi Fariduddin Prop. Of
M/s Engineering Corporation of India
At C44/22, Gali Noorani Masjid,
Chauhan Banger, New Seelampur,
Delhi110053 ......Defendant
Date of filing of the suit : 21.05.2015
Date of reserving judgment : 02.12.2020
Date of judgment : 22.12.2020
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AND
CS (Comm) No. 114/2020
M/s SRK Overseas
At 1074, Near Railway Station
Siras Pur, Delhi110042
Through its Prop.
Smt. Anchal Ralhan .......Plaintiff
Versus
Hazi Fariduddin Prop. Of
M/s Engineering Corporation of India
At C44/22, Gali Noorani Masjid,
Chauhan Banger, New Seelampur,
Delhi110053 ......Defendant
Date of filing of the suit : 21.05.2015
Date of reserving judgment : 02.12.2020
Date of judgment : 22.12.2020
Suit for recovery of Rs. 6,51,778/
Judgment
A note:
1. Before proceedings to decide this case, I would like to note that the suit bearing
CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 1 of 25
No. 26/2019, which was pending before this Court, had been filed before the Court of
District Judge, NorthEast on 21.05.2015. On the same day plaintiff had filed another
suit bearing No. 114/2020 before the Senior Civil Judge, NorthEast District. At the
time of deciding issue no.1, in the suit 26/2019 based on the objection of the
defendant that the present suit was barred under Order II rule 2 CPC, this Court had
passed an order for the consolidation of the suit 26/2019, pending before this Court,
with the suit No. 114/2020 pending before the Court of Ld. Senior Civil Judge taking
into account the fact that there was no way to determine that which one of the two
suits had been filed afterwards based on the judgment of the Hon'ble Bombay High
Court in Ganesh Ramchandra Thakur Vs. Gopal Lakshman Thakur [(1942) 44
BOMLR 819; SSC Online Bom 17]. Now the two cases i.e. CS (Comm) 26/2019 S.
R. K. Overseas Vs. Hazi Fariduddin and CS No. 114/2020 bearing the same title,
originally pending before the Ld. Senior Civil Judge stand consolidated as per the
order of the Court dated 12.11.2020. Consequently, now these two cases are to be
decided as one.
Facts:
2. Pleadings in both the cases are exactly the same except for some minor differences here and there. At the time of deciding issue no.1 by the order dated 16.05.2020 in suit no. 26/2019 the facts as stated in the plaint and the written statement had been mentioned, which sufficiently capture the stated positions of both the parties. I am reproducing the same herein below with minor changes owing to the consolidation of the two cases. Same read as under: Facts: As stated in the plaints
3. It is stated in the plaints that the plaintiff M/s SRK Overseas is a proprietorship firm and Smt. Anchal Ralhan is its proprietor. Plaintiff had been supplying Iron Sheets to the defendant, who is the proprietor of firm M/s Engineering Corporation of India, and raising invoices from time to time. Towards the payment against said supplies, CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 2 of 25 defendant had issued cheques nine in number from 19.11.2013 to 26.02.2014 in all for Rs. 8,24,136/. It is alleged that all the said cheques, however, had bounced on being presented and returned by the banker of the plaintiff with memos bearing the remark '02 Exceeds Arrangement" except for the one which was returned with the remark "Instrument outdated/stale".
4. According to the plaints there were two separate legal notices dated 22.03.2014 sent to the defendant demanding the payment of Rs. 6,51,778/ and Rs.1,72,358/ respectively but defendant had refused to accept the said notices. Plaintiff thereafter had filed the two present suit, as stated above one for the recovery of Rs. 6,51,778/ and the other for Rs. Rs.1,72,358/ with interest from the date of the filing of the suit till realization.
Facts as stated in the written statement
5. Defendant in the written statement filed in the suit bearing no. 26/2019 to begin with has taken the objection that the present suit is not maintainable under Order II rule 2 CPC for the reason that the plaintiff had already filed the suit for the recovery of Rs. 1,72,358/ before the court of Sh. Deepak Dabas, Sr. Civil Judge, Karkardooma Courts, Delhi on the basis of the same transactions. (As noted above this issue already stands decided and consequently two cases stand consolidated)
6. Defendant has denied the allegations levelled in the plaints and has inter alia stated that the amount mentioned in the cheques and total amount referred to in the bills do not match. According to the defendant, for the first time, he had purchased Iron Sheets in the month of June 2013 and issued two undated cheques as security. The said cheques were not presented for payment after the plaintiff had been informed that said Iron Sheets supplied were substandard. Plaintiff had agreed to replace the same and also to not to present the said cheques for encashment till the goods in replacement were not supplied to defendant. Defendant thereafter, having believed the CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 3 of 25 plaintiff received the third consignment. On 10.07.2017, plaintiff had informed the defendant on phone that plaintiff was sending one Ram Singh to collect the substandard Iron Sheets from his premises. Ram Singh had thereafter visited the defendant, collected the Iron Sheets weighting 2300 kg against the challan no. 24. It is stated, thereafter, the plaintiff had delivered Iron Sheets to the defendant but defendant instead of adjusting the same against the substandard Iron Sheets supplied earlier, had raised bills for the said iron sheets supplied later. When the defendant had approached, the plaintiff after this supply had been made (questioning about the bills being raised), plaintiff had assured that she would not take money against the said bills raised and had also further assured that the replacement of the substandard Iron Sheets will be made or the same would get adjusted against the future bills to be raised.
7. From the written statements, it appears that according to the defendant besides the substandard ironsheets being returned for replacement through challan no. 24, dated 10.07.2013 (weighing 2300 kg), substandard iron sheets had also been returned through challan no. 26 dated 15.07.2000 (weighing 1050 kg), challan no. 32 dated 16.08.2013 (weighing 2300 kg), challan no. 33 dated 17.08.2013 (weighing 2045 kg) and challan no. 34 dated 19.08.2013 (weighing 2515 kg). It is submitted that the plaintiff had agreed to replace the said substandard Iron Sheets with Iron Sheets in good condition and also that the plaintiff will not present the cheques taken as security till the replacement is delivered to the defendant.
8. It is further stated in the written statement that till December 2013 the Iron Sheets in replacement of the substandard Iron Sheets supplied, had not been delivered. In the last week of December 2013, the plaintiff had requested the defendant to issue fresh cheques for the material delivered and also assured that fresh cheques would be presented only after the iron sheets in replacement of the earlier supplied substandard Iron Sheets had been delivered. It was also assured that the plaintiff would return the cheque numbers 005744 for Rs. 54,023 and cheque no. 005754 for Rs. 1,18,335/ both CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 4 of 25 undated drawn on Central Bank of India. It is alleged that the plaintiff had turned dishonest and filed the two suits now consolidated. Defendant denied that the cheques returned to the defendant were returned unpaid by the banker of the plaintiff with the remark "exceeds arrangement". It has been pointed in the written statement filed in suit 114/2020 that in the legal notice sent related to the case in respect of the cheque no. 005744 it was stated that this cheque was returned with the remark "Instrument outdated/stale". Defendant has also denied having refused to accept the legal notices sent by the plaintiff to the defendant.
Issues
9. Since the issues framed in the two cases were over lapping, on 25.11.2020 the issues for the decision of thus two consolidated cases were recast as under:
1. Whether the suit of the plaintiff is barred under the provisions of Order 2 rule 2 CPC, as claimed by the defendant in written statement? OPD
2. Whether the two cheques bearing No. 5744 and 5745 dated 19.11.2013 and 21.11.2013 respectively were issued as security cheques in favour of the plaintiff for the supply of the iron sheets? OPD
3. Whether the goods supplied by the plaintiff were substandard and required replacement and were returned for replacement as mentioned in the written statement? OPD
4. Whether the plaintiff is entitled to recover an amount of Rs. 8,24,136/ from the defendant.
5. Whether the plaintiff is entitled to claim interest from the defendant on the above said amount if so, at what rate and for which period? OPP
6. Relief.
CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 5 of 25No fresh Evidence
10. I had asked counsels for the parties if they would like to lead any fresh evidence after the consolidation of the cases and issues being recast as above. It was submitted by them that the court may proceed to decide the said issues on the basis of the overall evidence which has come on record in both the cases and there is no requirement of leading fresh evidence in this matter.
Examination of witnesses
11. Plaintiff and defendant had been examined in both the cases as witnesses. Both of them had deposed on the lines of their respective cases. In suit no. 114/20, plaintiff had also examined one Mukesh Kumar, Ahlmad, as PW2, from the court of Ms. Neha Gupta Singh, Ld. MM, North, Rohini Courts, Delhi who had produced in the court original records related to invoice no. 305, dated 30.06.2013, cheques bearing no. 005744 and 005745, cheque bouncing memos related thereto and also the legal notice which had been sent related to the said cheques with the original registry cover retuned undelivered. Plaintiff had examined another witness Sh. Rajnish Kumar, working as an Accountant with the plaintiff as PW3. This witness in his testimony had referred to ledger account Ex. PW3/1 and sales register Ex. PW3/2 related to M/s S.R.K. Overseas, the proprietorship firm of the plaintiff.
Hearing the submissions
12. I have heard the counsels for the parties in continuation of the submissions made earlier and have also gone through the record of both the consolidated cases.
Findings Issue No. 1 Whether the suit of the plaintiff is barred under the provisions of Order 2 rule 2 CPC, as claimed by the defendant in written statement? OPD CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 6 of 25
13. Issue no. 1 has already been decided by this court vide its detailed order dated 16.05.2020. It is on the basis of the said order, the two cases stand consolidated.
Issue No. 2Whether the two cheques bearing No. 5744 and 5745 dated 19.11.2013 and 21.11.2013 respectively were issued as security cheques in favour of the plaintiff for the supply of the iron sheets? OPD
14. I have examined the evidence which has come on record in both the cases. I have observed that if we add up amount as given in all the invoices against which the goods had been supplied, then the same equals the total of the seven cheques running from serial no. 005750 to 005756, drawn on Bank of India, Ghonda, New Delhi bearing dates between 05.02.2014 to 26.02.2014 which are the subject matter of the suit no. 114/2020. The gap between the dates given on these cheques and the date given on the last invoice (dated 12/12/2013) is of almost two months. For clarity, I am reproducing this information in tabulated form as under: Sr. Invoice number and date Amount as given in Cheque number with date Amount No. invoice 1 305, dated 30.06.2013 1,18,335/ 005750, dated 05.02.2014 1,21,085/ 2 306, dated 30.06.2013 1,18,335/ 005751, dated 14.02.2014 1,00,000/ 3 307, dated 01.07.2013 54,023/ 005752, dated 18.02.2014 1,00,000/ 4 309, dated 08.08.2013 1,05,215/ 005753, dated 21.02.2014 1,00,000/ 5 310, dated 08.08.2013 1,29,345/ 005754, dated 22.02.2014 1,00,000/ 6 319, dated 25.10.2013 74,865/ 005755, dated 24.02.2014 1,00,000/ 7 324, dated 12.12.2013 51,660/ 005756, dated 26.02.2014 30,693/ Total 6,51,778/ Total 6,51,778/ CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 7 of 25
15. These are the only invoices relied upon by the plaintiff to base its claim on. These are the only invoices which find reference to in the ledger account Ex. PW3/1 and the sales register Ex. PW3/2 produced in the court by the Sh. Rajnish Kumar Accountant of the plaintiff in suit no. 114/2020. Significantly, ledger Ex. PW3/1 also shows the amount outstanding against the defendant against the said sales as Rs. 6,51,778/. Rest of the entries relate to the credit entries made on the receipts of the cheques bearing Nos. 00005744 and 00005745 and being reversed after cheques having been returned unpaid with additional entry of Rs. 204/ apparently reflecting the cheque bouncing charges. Witness Sh. Rajnish Kumar in his affidavit also states that as per the ledger account, the amount due to be paid was Rs. 6,51,982/ (inclusive of Rs. 204 as bouncing charges). His affidavit does not provide any explanation as to how the amount of Rs. 2,26,381/ was found to be outstanding against the defendant and against which sales (apparently, it is not even the amount which is being claimed in the suit 114/2020 related to the cheque no. 005744, dated 18.11.2013 and cheque no. 005745, dated 21.11.2013). The relevant part of his affidavit reads as under: "2. That the deponent submits that as per the ledger account maintained by the plaintiff's firm there is a due amount of Rs. 6,51,982/ from the defendant for the goods supplied to the defendant. The copy of the ledger account and the sales register are exhibit Ex. PW3/A and Ex. PW3/B.
3. That the deponent further submits that there is a due amount of Rs. 2,26,381/ from the defendant for the goods supplied to the defendant by the plaintiff's firm."
16. In the crossexamination, he tried to give some explanation which is hardly convincing and in fact, to justify this amount of Rs. 2,26,381/ to be due he goes on to make a statement which borders admitting plaintiff having committed some illegality. This part of the crossexamination reads as under: CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 8 of 25 "We maintain the account through sale bill books, bank ledger, purchase invoice and expense vouchers. The amount of Rs. 2,26,381/ is not reflected in the document Ex. PW3/1 and document Ex. PW3/2. Vol. In reference to the present case, the goods which were supplied by plaintiff to defendant, the sales bills were not generated and therefore, the said supply and the amount of Rs. 2,26,381/ is not reflected in the ledger account Ex. PW3/1 and sales register Ex. PW3/2.
Court Question: Is it legally possible that the sales transaction done by the plaintiff to the defendant is not reflected or disclosed in the ledger account and the sales register of the plaintiff's firm?
Ans. No, it is not legally possible.
Court question: Please explain.
Ans. The goods have been supplied and it is reflected in the challan prepared by plaintiff and based upon the challan, a bill is prepared, but in the present case, the bill was not prepared by the plaintiff and thus, it is not reflected in the document Ex. PW3/1 and Ex. PW3/2.
17. The stand taken by the plaintiff that the said cheques no. 005744 and 005745 had been given as security is also far from being convincing. The cheques which are given as security usually would not be two but one. The purpose of a security cheque is to give to the other side a direct access to the account of the party issuing the cheque to recover the money directly from his account in case such party issuing the cheque fails to make the payment of the amount which may be found to be due to be paid by such party. More often than not if the supplies are to be made over a period of time such a cheque would be blank for it would be difficult to predict at the end of the transaction as to how much money would be due to be paid and it would also be CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 9 of 25 undated considering that it would give liberty to the person to whom the money is to be paid to give a date on it according to his convenience to avoid such a cheque turning stale at the time of its presentation for payment.
18. If we look at the copy of the ledger Ex. PW3/1 (in suit no. 114/2020), it would show that the cheque bearing no. 005744 had the date of 19.11.2013. It was first presented to Punjab National Bank on 21.11.2013 i.e. just after two days and it was returned unpaid. In fact after it was returned, for the second time it was presented for payment to State Bank of India on 21.02.2014. This time it was returned with remarks 'Instrument outdated/Stale'. A situation like this would not have arisen if this cheque had been blank or undated or offered as a security cheque as is being claimed by the defendant. Similarly, the other cheque bearing no. 005745, dated 21.11.2013 was presented on 21.02.2014 just before it could turn stale or become outdated. It may further be noted that these dates appearing on the cheques are of the time when the business relationship between the plaintiff and defendant was still in existence and supplies were continuing to be made. As noted above, last invoice is of 12.12.2013. Like it has been stated before, it is unlikely that the security cheque would bear any of the dates of the middle of the transactions but a date of the time after the transactions are over and the payment has not been made. Similarly, the amount to be mentioned on such a security cheque would not be an amount which may look like an in between payment having been made but a consolidated amount which may tally the entire amount payable at the end after the transactions are over and not paid for.
19. Thus, in all probability in my opinion these cheques i.e. cheques bearing no. 005744 and 005745 were not issued as the security cheques but what does appear to be a logical to say, based on the facts emerging, is that the defendant had issued the bunch of seven cheques of different amounts and of different dates in total for the entire payment due including the amount covered by the cheques 005744 and 005745. It is most likely that these cheques had been given at one time not on CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 10 of 25 different dates as is evident from running sequence of the cheques from 005750 to 005756 though bearing different dates.
20. There is also, however, no clarity as to why plaintiff chose to present these cheques 005744 and 005745 for encashment on 21.02.2014 when he had already received the said cheques in her hands against the supplies made in terms of the invoices issued. This is an explanation which should have come from the plaintiff but that has not happened. The fact, however, remains, in my view, in respect of these two cheques i.e. 005744 and 005745 amounting to Rs. 1,72,358/ which are the subject matter of the suit no. 114/20, plaintiff cannot claim any recovery. In other words, plaintiff would not be entitled to recover Rs. 1,72,358/ sought to be recovered on the basis of the said cheques.
21. Issue stands decided accordingly.
Issues no. 3 Whether the goods supplied by the plaintiff were sub standard and required replacement and were returned for replacement as mentioned in the written statement? OPD
22. Defendant has taken a stand in the written statements that on 10.07.2013, he had phoned the defendant and informed him that he is sending one Ram Singh for collecting the defective iron sheet. Ram Singh had received the said iron sheets of about 2300 kg from the defendant through challan no. 24. Subsequently, plaintiff had once again made delivery of iron sheet and raised bills for the same. When this was brought to the notice of the plaintiff, plaintiff had assured that he was not claiming any money from him against the bills raised and will make sure that the replacement as against the defective goods shall be delivered or adjusted in the coming bills. It is stated that the defendant had returned the defective goods through challan number 24, dated 10.07.2013 (2300 kg), challan number 26, dated 15.07.2013 (1050 kgs), challan number 32, dated 16.08.2013 (2300 kg), challan number 33, CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 11 of 25 dated 17.08.2013 (2045 kgs) and challan number 34, dated 19.08.2013 (2515 kgs.). Defendant in his testimony had referred to these challans as Ex. DW1/2 to Ex. DW1/6. It is noticeable that the defendant has not provided the details of the weight of the iron sheets and value thereof which he had received from the plaintiff and how much of that he had returned. Since the defendant claims that there is nothing payable by him to the plaintiff, it would be safe to assume that he had returned all the iron sheets which he had received without retaining anything. The details of the challans by which the said sheets were stated to have been returned are as under: Sr. Challan No. Weight Vehicle number appearing on the Name of the person appearing No. challan on the challan 1 24 2300 kg DL 1LJ 4379 Ram Singh
2. 26 1050 kg DL1LJ4379 Surender 3 32 2300 kg DL1L4096 Ram Singh 4 33 2045 kg DL1L4379 Ramesh 5 34 2515 kg DL1LJ4349 Rahul
23. On behalf of the defendant there was absolutely no question put to the plaintiff that the goods were indeed returned to the plaintiff by the defendant so far as the suit no. 26/19 is concerned. In the other case also this question had not been probed further except giving a suggestion that the goods had been returned to the plaintiff by the said challans, which had been obviously denied by the plaintiff. She expectedly denied the suggestion. Relevant part of her testimony reads "it is wrong to suggest that defective material was returned to the plaintiff concern vide challan no. 24, dt. 10.07.2013, 2300 kg, challan no. 26, dt. 15.07.2013, 1050 kg, challan no. 32, dt. 16.08.2013, 2300 kg, challan no. 33, dt. 17.08.2013, 2045 kgs, challan no. 34, dt. 19.08.2013, 2515 kg."
24. I am of the view it was not enough. It may be noted crossexamination is not CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 12 of 25 like examination in chief. In the crossexamination, a witness is generally required to only answer the questions put to him/her precisely. Therefore, to be fair to the witness and give her chance to explain it was important that the complete stand of the defendant as to return of the goods should have been put to her. Like where the goods were delivered how they were delivered and who had delivered and who had received the goods on behalf of the plaintiff. In the absence such a line of questioning it cannot be read against her that the so called defective goods were delivered to her in different vehicles and received some persons named Ram Singh, Surendra, Ramesh or Rahul. If such questions had been put her she would have had chance to say if they were even employed by her not. It was submitted by the ld counsel for Defendant, that the whole of the crossexamination of the defendant had been just related Ram Singh and there was no word put to the defendant about the persons such as Rahul, Ramesh or Surendra. The fact of the matter is in the pleadings there is no reference to any other person except Ram Singh in the context of goods retuned. Even in that case it is not stated that the goods had been delivered through any tempo to the plaintiff. The case, however, presented is that Ram Singh had collected the goods from the premises of the defendant. I would thus conclude with the plaintiff having not being the full opportunity to explain as to so called return of the defective goods, this fact can be read against her.
25. It will be important to note that what has been stated by the defendant in his crossexamination in the suit no. 114/20 and suit no. 26/19 in this regard. The same is being reproduced hereunder:
Relevant part of crossexamination in suit no. 114/20 "I have returned the iron sheets to the plaintiff firm in a tempo through challan no. 24, 26,32, 33 and 34 dated 10.07.2013, 15.07.2013, 16.08.2013,17.08.2013 and 19.08.2013 in the quantity of 2300 kg, 1050 kg, 2300 kg, 2045 kg and 2515 kg respectively.CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 13 of 25
The particulars including number of tempo are mentioned in the challan. However, the said tempo was hired by me. I had paid the tempo appropriate charges. I have not obtained the receipt of the said charges. Whenever any delivery of goods is made, my firm hires any available tempo. I have not cited the tempo driver as a defendant witness. It is correct that the challan bearing no. 24,26,32,33 and 34 does not bear signatures/stamp of either of the proprietor of the plaintiff firm or any other person. Again said, the proprietor of the plaintiff's firm signature/stamp are not on any of the said challan bearing nos. 24,26,32,33 and 34. Vol. Person who had received back the said articles/goods must have signed the same. The said challans bearing no.s 24,26,32,33 and 34 with the endorsement by signatures/stamps acknowledging the fact at the said articles/goods received back by the plaintiff's firm, were handed over to me by the same tempo driver by which the goods were sent. Original bills pertaining to the said goods which were returned were not sent with the challans. The goods/articles which were returned were weighed before returning the same. I do not have any receipt recording such weight of goods/articles."
Relevant part of the crossexamination no. 26/19 "I have been making payments to the Plaintiff in respect of the goods supplied by cheques. It is correct that these cheques were issued by me in the name of M/s Engineering Corporation of India.
Q. Would it be correct to say that the cheques bearing no.
005750, 005751, 005752, 005753, 005754, 005755 and 005756 [ Ex PW1/C ( Colly) during the period from 05.02.2014 to CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 14 of 25 26.02.2014 had bounced.
Ans. It is correct that the said cheques had bounced but I would like to explain that I had stopped the payments of cheques on discovering that the PCRC sheets supplied were rusted.
Q. I put it to you that you had not stopped the payment of the said cheques but according to the memos filed on record ExPW1/D ( colly) the said cheques had been returned unpaid with the remark " Exceeds Arrangement". What would you like to say?
Ans. It is correct.
He had further deposed in his crossexamination:
It is correct that this fact that I had issued the blank cheques to the plaintiff prior to the supply of the goods has not been mentioned anywhere in my affidavit.
I had not given any intimation to the bank with regard to the stoppage of payment of the said cheques. I will have to check my record if after having discovered that the iron sheets were rusted. I had written any letter to the plaintiff for the return of the said cheques.
Q. I put it to you that you had not written any such letter to the plaintiff. What would you like to say?
Ans. I will have to check my record and if I find any such letter I will place on record.
It is wrong to suggest that I have no such record because there had no such occasion ever where I was required to send any letter because the cheques were given subsequent to the supplied made and the goods not being defective.
Q. Would it be correct to say that the challans you have filed Ex.CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 15 of 25
DW1/2 to Ex. DW1/6 there is no signature of acknowledgement on any of these challans by the plaintiff of anyone from the side of the plaintiff of having received the goods referred to in the said challans?
Ans. The said challans bear the signatures of the person who had received the goods at the godown of the plaintiff. One can find the same at point A on the all those challans.
The said goods were returned by a tempo. No one had accompanied the tempo driver from my side. The address was given to the tempo driver and he had delivered the goods accordingly.
Q. Did you send any copy of the challan to the proprietor? Ans. There were two copies of the challan. One was delivered to the person who had received the goods and on the other the driver who had taken the signatures of the person to whom the goods were delivered and then returned the same to me. It is correct that I have not cited the said driver as a witness in this case. It is correct that this fact that the goods were delivered through a tempo to the godown of the plaintiff has not been mentioned anywhere in the affidavit I have filed and the written statement.
(the attention of the witness is drawn to para no. 4 of the reply on merits of the written statement).
Q. Would it be correct to say that in this paragraph you have stated that a person by the name of Ram Singh had visited your premises and had collected the alleged rusted iron sheets about 2300 kg through challan no. 24?
Ans. I want to explain that Ram Singh had never visited my premises for collecting the goods but it was the driver of the CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 16 of 25 tempo who had delivered the goods at the godown of the plaintiff. What has been stated in the said paragraph of the written statement is not correct."
26. If we closely examination statement of the defendant given in his deposition, it would show that whatever he says in terms of the return of the goods is not verifiable.
As per his statement no one accompanied the tempo from his side for delivery of goods thus there is no one to verify from his own side delivery of goods. Tempo driver or drivers who may have been engaged to return the goods have not been examined. He deposed he had hired tempos for the delivery of goods and paid the money but states that he had not taken receipt for the payment. Thus this fact that he had hired any tempo for the return of the goods also cannot be verified. It could be a deliberate attempt to hide the fact that there had not such tempo hired and goods not returned. He also goes on to categorically contradict what he had stated in the written statement with regards goods being returned to one Ram Singh and says that the statement he has made in the written statement is not true. He further claims that he stopped the payment of cheques he had issued but produces nothing to support it. On the contrary admits that according to bank memos produced the said cheques had been returned because there insufficient balance in the account. I am of the view testimony of this witness is not trustworthy to believe that he had actually returned the goods.
27 It is a fundamental principle of law that "what is not pleaded, cannot be proved, what is admitted need not be proved" ( T Murlidhar Vs. P.V.R. Murthy 2014 SCC OnLine Del 2326: (2015) 217 DLT 79 (DB)). I am of the view, defendant could not have left the details completely vague just by referring to the challans that he had returned the goods. He should have pleaded that has to how the goods had been actually returned in terms of as to how goods were picked up from his premises and delivered to the plaintiff and by what transport. What is stated in a document cannot be automatically read into the pleadings. What is required is, a fact should be stated in the pleadings and in support thereof document is presented in the evidence.
CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 17 of 25When a party in the pleadings keeps its pleadings vague, then it puts the other party distinctly to a disadvantage because it gives the party pleading vague facts room to manipulate the facts as it may desire or as it may suit it depending on the stand which may be taken by the other party during the course of the trial. A party which keeps its pleadings vague cannot be allowed to take advantage of it subsequently and must suffer the consequences flowing from it. In the given circumstances, I am of the view just by referring some to challan numbers in the written statement the other attended facts cannot be read in the pleading. In other words, just referring to those challans or production of those challans would be grossly insufficient to prove that the goods had actually been returned in terms of the said challans. It has already been discussed that there is no other evidence to support this claim of return of the goods.
28. It is also very odd that the last return of the defective goods is stated to have been made by challan no. 34 dated 19.08.2013. Defendant does not dispute at least six invoices bearing no. 306, 307, 309, 310, 319 and 324 dated 30.06.2013, 01.07.2013, 08.08.2013, 08.08.2013, 25.10.2013 and 12.12.2013 respectively. He had admitted these documents at the time of the admissiondenial of document. Out of these six invoices two invoices are of 25.10.2013 and 12.12.2013 by which the goods worth Rs. 74,865/ and 51,660/ had been supplied. It is difficult to imagine that he could have returned the goods even before they had been supplied. Further, it also does not stand to reason from any angle that the defendant would issue the cheques in the month of February for the goods which had been supplied to him vide the invoices subject matter of two cases if he had already returned goods supplied against them.
29. Plaintiff interestingly in the written statement filed does not claim that the subsequent fresh cheques which he had issued to the plaintiff were blank. In fact he only says that he had issued those cheques on the assurance that the goods delivered earlier would be replaced and the cheques issued earlier bearing no. 005744 for Rs. 54023/ and cheque no. 005745 for Rs. 118335/ would be returned. The relevant part of the written statement reads as under: CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 18 of 25 "That the plaintiff assured that the iron sheets were replaced in a good condition iron sheets and at the same time it is agreed between the plaintiff and defendant that the plaintiff shall not present the cheques taken by him as a security till the replacement is not received by the defendant. That till December the plaintiff had not returned any replacement. That in the last week of December 2013 the plaintiff requested the defendant to issue fresh cheques for the materials received and the plaintiff also assured the defendant that the fresh cheques were presented in the bank only after the replacement is delivered at the defendants address. That it is also assured by the plaintiff that he shall return the cheques in question i.e. Cheque no. 005744 of Rs. 54023/ and cheque no.
005745 for Rs. 1,18,335/ both drawn on Central Bank of India,Ghonda Branch, Delhi 110053 and undated to the defendant."
30. When this witness in the crossexamination was asked that the good were supplied to him the year in 2013, then why did he issue the cheques Ex PW1/C (colly) of February after he had discovered goods to be defective? He had changed his stand to say these cheques issued were blank prior to the supply of goods. Though he admitted that he has said no such thing in the affidavit filed by him in the affidavit filed in the evidence. What an odd thing to say that he was issuing seven fresh blank cheques on the assurance first two blank cheques would be returned to him. To put it in the context, I am reproducing here in below what he had deposed in the cross examination, after having reproduced what he has stated in the written statement. It reads as under:
"Q. Can you explain to the court that iron sheets had been supplied to you as against the said bills in the year 2013 CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 19 of 25 then as to why you had issued the cheques ExPW1/C ( Colly) even after having discovered that the iron sheets were rusted?
Ans. I had issued those cheques undated and blank without writing an amount therein prior to the supply of the iron sheets. The dates and the amount had been filled in by the plaintiff subsequently.
It is correct that this fact that I had issued blank cheques to the Plaintiff prior to the supply of goods has not been mentioned anywhere in my affidavit."
31. It is obvious that the defendant made up this story of issuing cheques blank having no other explanation to offer.
32. The burden to prove this issue was on the defendant and in the light of above discussion it can be said that he has failed to prove he had returned the goods to the plaintiff as claimed by him. Issue is according decided against the defendant and in favour of the Plaintiff.
Issue No. 4Whether the plaintiff is entitled to recover an amount of Rs. 8,24,136/ from the defendant.
33. Before proceeding to decide this issue, it may be stated that while coming to decide this after having decided the issue no. 2, that the plaintiff is not entitled to recover any money in respect to the cheques bearing no. 005744 and 005745 for Rs. 1,72,358/. I will confine myself to seven cheques which form the subject matter of the suit bearing no. 26/19 relating to the recovery of Rs. 6,51,778/.
Issuance of cheques and presumption that the cheques had been issued in discharge of liability
34. It is the case of the Plaintiff that the defendant had issued cheques seven in CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 20 of 25 number ExPW1/ C (colly) in suit 26/2019 in all for Rs 6,51,778/ in discharge of his liability to make payment for the good supplied. All these cheques had been returned unpaid by Plaintiff's Banker by memos Ex PW1/ D (colly) seven in number, with remark "Exceeds Arrangement". There is no dispute in principle by the defendant that the said cheques had been issued by the Defendant to the Plaintiff. As already discussed at one stage in his crossexamination he tried to put up a defence that the cheques issued by him were blank though neither in the affidavit filed in evidence or in the written statement any such plea had been taken. In short it stands established that the cheques had been issued by the defendant as they are on the record. In the given circumstances it can be presumed under section 139 1 of the Negotiable Instruments Act that the said cheques had been issued in whole or part discharge of his liability. It also constitutes presumption of fact under section 114 of Indian Evidence Act in terms of illustration (c) 2. Needless to say it is a rebuttable presumption [Re Mandavi Cooperative Bank Ltd v. Nimesh B. Thakore - (2010)3 SCC 83]. Therefore it was for the defendant to rebut this presumption or one may say defendant had reverse burden to prove that said cheques had not been issued in discharge of any liability by bringing some evidence on record sufficient to discharge this burden on the balance probabilities.
35. Defendant did try put up a defence that the goods supplied were substandard and defective and therefore he had returned the same. Findings on issue No.4 would show that this defence has failed and he has failed to prove that he had indeed returned the goods as claimed by him.
36. It may also be noted that the defendant does not deny the supply of goods or what he would have returned. He specifically had admitted the six invoices part of suit no.26/2019 Ex PW1/A (collectively) at the time of admission denial of 1 139 Presumption in favour of holder It shall be presumed, unles the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, or any debt or other liability.
2 114 Indian Evidence Act illustration c That a bill of exchange, accepted or endorsed, was accepted or endorsed for good consideration;
CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 21 of 25documents. In respect of the invoice no. 305 dated 30/06/2013, Ex PW2/A in suit no. 114/20.There was a suggestion given to the Plaintiff in her crossexamination that this invoice was forged and fabricated. Her answers to the suggestions given in the cross examination are like this "It is wrong to suggest that there is no amount due from the defendant towards the plaintiff concern as the defective materials were returned to the plaintiff. It is wrong to suggest that the bill no. 305 Ex PW2/A is forged and fabricated or the signatures at point A on the said exhibit is also forged. It is wrong to suggest that no material as mentioned in Ex PW2/A was ever supplied to the defendant." During the course of arguments at one time it was submitted by the counsel for the defendant that it is difficult to believe that there would be two invoices of the same day, of the same amount of goods supplied and also of the same amount.
37. First of all it may be noted that this invoice is forged is a later introduction. Para no. 4 is the main paragraph in the written statements filed in the two cases. It stated in this paragraph "It is also submitted that in the month of June 2013 the defendant first time purchased the iron sheets from the plaintiff and issued two cheques without dated (sic) as security in favour of the Plaintiff the two cheques had not been presented by the plaintiff as the material i.e the iron sheets supplied by the plaintiff are substandard as the iron sheets are hard and rusted the defendant informed the same to the plaintiff on phone." There is absolutely no defence anywhere that the invoices raised in particular invoice no. 305 was forged. Defendant cannot be allowed take up an entirely new stand which he had never pleaded before.
38. We have already seen at the time of deciding issue no.2 that the sum total of seven cheques of the month of February 2014 completely matches the sum total of the amount given in the invoices including the invoice no. 305. It rules out the possibility of this invoice being forged. There is nothing unusual in issuing two invoices of the exactly same details of the same day. It may be noted one of the copies of the invoices is also handed over generally to the carrier of goods and if the goods are transported in CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 22 of 25 two carriers then it is very much possible to issue two invoices of the same day.
39. One may here further add that if the defendant was putting the defence that the said invoice was forged then it was for him to prove it. There is no evidence led to prove that the said invoice is forged or it does not bear the signature of the defendant. Thus defendant had failed prove that the said invoice bearing no. 305 is forged.
40. In the light of above that there is nothing to doubt that the said cheques Ex PW1/C (collectively) in all for Rs. 6,51,778/ had been issued in discharge of his liability to pay for goods supplied in terms of the invoices referred to in suit no 26/2019 as Ex PW1/ A ( Collectively) and invoice Ex PW2/A in suit No. 114/20. Plaintiff, therefore is entitles to recover from the defendant Rs.6,51,778.
Issue is accordingly decided in favour of the plaintiff and against the defendant.
Issue No. 5Whether the plaintiff is entitled to claim interest from the defendant on the above said amount if so, at what rate and for which period? OPP
41. In the plaint there is no specific rate given at which the plaintiff would like the interest to be awarded. I would like to make here reference to Judgment of the Hon'ble High Court of Delhi in Geetu Lakhpat & Another vs Jaipal 2011 SCC OnLine Del 1706, wherein it was laid down as under:
"2. Learned counsel for the appellants has in the appeal only prayed for reduction of the unduly high rate of interest of 2% per month which has been granted by the trial Court. Reliance has firstly been placed upon Section 3 of the Usurious Loans Act, 1918 (as applicable to Delhi) as per which in case of an unsecured loan the maximum rate of interest which is allowed is 121/2% per annum simple. Learned counsel for the appellants also relies upon CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 23 of 25 various judgments of the Supreme Court as per which the Supreme Court has directed the Courts to take note of the consistent fall in the rates of interest on account of the changed economic scenario, more so when there is time spent in litigation. These judgments of the Supreme Court are Rajendra Construction Co. v. Maharashtra Housing & Area Development Authority, (2005) 6 SCC 678, McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181, Rajasthan State Road Transport Corporation v. Indag Rubber Ltd., (2006) 7 SCC 700 & Krishna Bhagya Jala Nigam Ltd. v. G. Harischandra, (2007) 2 SCC 720 and State of Rajasthan v. Ferro Concrete Construction Pvt. Ltd, (2009) 3 Arb. LR 140 (SC).
3. Learned counsel for the respondent, in reply, states that the respondent is entitled to interest @ 2% per month because the said rate was a contractual rate of interest.
4. In my opinion, the arguments as urged by the counsel for the appellants are well founded. In the present date, granting of interest @ 2% per month is both exorbitant and usurious. The Supreme Court in the aforesaid judgments, relied upon by the counsel for the appellants, has granted interest varying between 6% to 9% per annum. A Division Bench of this Court in the case of Pt. Munshi Ram & Associates (P) Ltd. v. Delhi Development Authority, 2010 (3) Arb. L.R. 284 (Delhi) has held that Court has power to reduce even the presuit rate of interest in case the said rate of interest is found to be against the public policy. In my opinion, rate of interest of 24% per annum i.e. 2% per month as granted by the trial Court is clearly against the public policy in the present economic scenario considering the aforesaid judgments of the Supreme Court.
CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 24 of 25Considering the facts and circumstances of the present case, I am of the opinion that interest of justice would be more than served if the respondent is granted interest @ 71/2% per annum instead of 2% per month i.e. 24% per annum."
42. After having taken account the fact that this case has been pending for longtime and plaintiff too played a role in this case in getting it delayed and also taking into account on the other hand what we have here is a commercial transaction, in my opinion interest of justice would be served if the defendant is asked to pay the interest at the rate of 9 percent per annum from the date of filing of suit till realization. Issue stands decided accordingly.
Relief Cost
43. Cost follow the event is normally the principle. In this case as one can see Plaintiff unjustifiably forced the defendant to follow two suits where in fact there should have been only one. I am, therefore, not inclined to allow the cost which relate advocate fee and other expenses incurred in the examination of witnesses but just restricting cost to courtfee paid in respect of the suit filed in Suit No. 26/2019.
44. In the light of the above findings given I am decreeing this suit in favour of the Plaintiff and against the defendant for a sum of Rs. 6,51,778/ with interest at the rate of 9% per annum from the date of filing of suit till realization. Cost to be paid to the plaintiff would be restricted to the courtfee paid in the Suit. 26/2019.
Decreesheet be prepared accordingly.
Both the consolidated files be consigned to record room after compliance.
Announced in the open court on 22.12.2020 (LAXMI KANT GAUR) District Judge (Commercial Court), North East, KKD, Delhi CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 25 of 25 CS (Comm) No. 26/2019 and CS (Comm) No. 114/2020 Page 26 of 25