Delhi District Court
Mukesh Jain, Sole Prop vs Ms Context Exports on 6 June, 2025
DLST010000352007
DLST010000362007
IN THE COURT OF SH. MUNISH BANSAL,
DISTRICT JUDGE-03, SOUTH DISTRICT,
SAKET COURTS, NEW DELHI.
Old Suit No. CS(OS) 1283/2007
New Suit No. CS DJ 245/2020
&
Old Suit No. CS(OS) 705/2007
New Suit No. CS DJ 246/2020
IN THE MATTER OF :
Mukesh Jain
Sole Proprietor-M/s. Jay Dee Exports
A-35, Industrial Area, G.T. Karnal Road
Delhi-110033. ......Plaintiff
Versus
1. M/s Context Exports
136, First Floor, Udai Park
New Delhi.
2. Paramjit Singh
S/o Kuljit Singh
136, First Floor, Udai Park
Digitally
signed by
New Delhi.
MUNISH
MUNISH BANSAL
BANSAL Date:
2025.06.06
16:02:19
+0530
CS DJ 245/2020 & 246/2020 Page 1 of 48
3.Satyendra Kumar
S/o Shri Gajender Singh
R/o 82m Sector-16, Faridabad,
Haryana.
4. R.N. Singh
S/o Sh. Sita Ram Singh
R/o 696, Sector-16, Faridabad
Haryana
Also at-
M/s Sita Ram Process
Plot No.5A, Sector-4,
Faridabad, Haryana .....Defendants
Date of Institution (CS DJ 245/20) : 29.05.2007
Date of Institution (CS DJ 246/20) : 07.03.2007
Arguments concluded on : 31.05.2025
Judgment pronounced on : 06.06.2025
SUIT FOR RECOVERY OF RS.52,11,080/- (RUPEES FIFTY
TWO LAKHS ELEVEN THOUSAND EIGHTY ONLY AND
INTEREST Rs.15,63,324 /- (RUPEES FIFTEEN LAKHS
SIXTY THREE THOUSAND THREE HUNDRED AND
TWENTY FOUR ONLY)
&
SUIT FOR RECOVERY OF RS.51,58,825- (RUPEES FIFTY
ONE LAKHS FIFTY EIGHT THOUSAND EIGHT HUNDRED
AND TWENTY FIVE ONLY (PRINCIPAL 34,45,000/- +
INTEREST Rs.17,13,825/-) ALONGWITH FUTURE AND
PENDENTE LITE INTEREST.
JUDGMENT
A. Vide this common judgment, this Court shall dispose off suits bearing CS DJ 245/2020 (old no. CS (OS) Digitally 1283/2007) and CS DJ 246/2020 (old no. CS (OS) 705/2007) as signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:02:25 +0530 CS DJ 245/2020 & 246/2020 Page 2 of 48 common issues were framed on 16.11.2011 by orders of Hon'ble High Court of Delhi (being predecessor court) and common evidence was being led in both the said suits.
Facts of CS DJ 245/2020 (Old Suit No. CS(OS) 1283/2007)
1. The brief facts of the case as stated in the plaint are that plaintiff is the sole proprietor of a firm M/s Jay Dee Exports, having its office at A-35, Industrial Area, G.T. Karnal Road, Delhi. Plaintiff is engaged in the trading & export of readymade garments. Defendants were known to the plaintiff for last more than a decade when defendants no.2 and 4 used to be worked as Manager and General Manager with Sh. Satyender Kumar, Director of M/s Orphic Dyeing and Printing Mills Pvt. Ltd., Plot No.121, Sector-24, Faridabad, Haryana. In the month of January 2004, defendant no.3 approached the plaintiff that he had started a partnership concern in the name and style of defendant no.1 with the defendant no.2 and 4, having its registered office at Udai Park, New Delhi and factory at A/2, Sector-59, Noida. Defendant no.3 told the plaintiff that the said firm was running into financial crunch and because of certain limitations defendant no.3 could not replenish the funds into said partnership firm. Defendant no.3 requested the plaintiff to lend some funds to defendant no.1 firm. Defendant no.3 assured that funds would be repaid soon as as the firm has received at hand lot of orders for exports and guaranteed the repayment with an interest @18% per annum.
Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:02:30 +0530 CS DJ 245/2020 & 246/2020 Page 3 of 48 1.1. Plaintiff visited the office of defendant no.3, who then also called defendant no.2 and 4 to his office. The negotiations for providing finance were held and it was agreed that the payments would be made through account payee cheques and the defendants promised that funds would be repaid with interest @18% per annum from the date of cheques immediately after money is received under the letters of credit from the overseas buyers. Thereafter, defendant no.2 and 4 would come to the office of plaintiff no.1 and collected cheques as per their requirement. The said amount was credited directly into the accounts of defendant no.1 maintained with Standard Chartered Bank, New Delhi and PNB, EC-ICR, Patparganj, Delhi A/C No.4058 from the plaintiff's account maintained with Canara Bank, Wazirpur Branch, Ashok Vihar, New Delhi. However, in the meanwhile, plaintiff contacted defendant no.3, on whose assurance and partnership, the plaintiff had lent funds even without any collateral security but there was no repayments forthcoming. Defendant no.3 assured that the payments under the Letter of Credits were yet to be realized and repayments would be forthcoming soon. When repayment of funds was not forthcoming, plaintiff insisted for the repayment of the funds so lent. The defendants put the innocent plaintiff to coaxing blackmail to provide further funds stating that unless some more funds are provided to make the unit profit making, they would not be in a position to payback. However, the defendants assured that further export would be done by the defendants in the name of the plaintiff firm, M/s Jay Dee Exports and the funds would be Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:02:34 +0530 CS DJ 245/2020 & 246/2020 Page 4 of 48 provided by the plaintiff directly to the suppliers instead of defendants and profit margins earned by the defendants would be used to pay back the outstanding. Hence, plaintiff would provide funds to said M/s Context Exports by way of crossed cheques in favour of its suppliers and the Letters of Credit from foreign buyers would be transferred in the name of the plaintiff firm. However, the defendants have not paid back a single penny on account of principal amount of Rs.34,45,000/-, so borrowed by way of account payee cheques in favour of defendant no.1 firm, nor even paid the interest accrued thereupon. The plaintiff has filed a separate suit for recovery of said loan with interest @18% per annum and same is pending adjudication before this Hon'ble Court.
1.2. As per plaint, the Letter of Credit opened by a foreign buyer of defendant no.1 would be transferred in the name of plaintiff i.e. M/s Jay Dee Exports and an invoice would be issued by the firm of plaintiff in favour of such foreign buyer in respect of purchase order. The requisite goods would be produced by the defendants through the factory of defendant no.1 at Noida and the necessary raw material, fabric etc. for said purpose would be purchased out of the payments made by the firm of plaintiff. All the suppliers and even the labour would be paid from the accounts of plaintiff firm by way of account payee cheques. The goods so produced by the defendant at the factory of defendant no.1 at Noida would then be sent to Cargo Handling agent at Delhi or Mumbai and packing list of such consignment Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:04:04 +0530 CS DJ 245/2020 & 246/2020 Page 5 of 48 would be given to the plaintiff. The cargo handling agent would then send a Bill of Lading to the defendants after getting the goods /consignment cleared through customs. After receiving the Bill of Lading, the plaintiff would submit the same with Invoice, Packing list and Quota Certificate issued in favour of the plaintiff firm M/s Jaye Dee Exports to the banker of plaintiff. Copy of all said documents would then be forwarded to Buyer's bank as per the terms and conditions of Letter of Credit and collections used to be credited to the account of the plaintiff firm, which would then adjust as per the agreement.
1.3. Plaintiff firm made payments to various suppliers and workers of defendant no.1 aggregating to Rs.1,46,66,060/-, last of such payments being made on 20.09.2004. Goods produced by defendant no.1 in their factory at Noida were exported to various importers abroad i.e. M/s Neutral, M/s SHOPKO, M/s. DORIANS, M/s P.J. Marketing & M/s A& M under the letters of Credit opened in favour of the plaintiff's firm.
However, dishonest and malafide intentions of the defendants were soon revealed from the fact that one firm in respect whereof plaintiff was induced to make the payments under the pretext of making payment to suppliers was none else but a dummy personal enterprise of defendant no.2, M/s Sunstreak Fashions and an amount of Rs.17,10,000/- was thus received by the defendant no.1 through account payment cheques drawn from the account of plaintiff maintained with Canara Bank, Wazirpur Branch, New Delhi, which went directly into the account of Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:04:09 +0530 CS DJ 245/2020 & 246/2020 Page 6 of 48 defendant no.2 Paramjit Singh through M/s Sustreak Fashions. Defendant no.2 played double fraud on the plaintiff by exporting the goods prepared / manufactured out of the funds/payments made to the suppliers form the account of the plaintiff under the name of M/s Sunstreak Fashions and also by channeling the funds to himself through that dummy firm. The defendants did not stop there and exported the goods under different accounts by opening the Letters of Credit in their own name and withdrawing the money therefrom.
1.4. The plaintiff was induced to make payments to various suppliers and workers aggregating to Rs.1,46,66,060/-
whereas the plaintiff received only Rs.94,54,980/- under various letters of credit, rest of the goods worth rs.52,11,080/- were fraudulently exported by defendants and the receipts were credited into their own accounts. In so much so that one LC worth Rs.26 lakhs was transferred in the name of plaintiff firm on 01.07.2004 for the buyer GMAC Commercial Finance, LLC Block, USA though originally it was in the name of its buying house, namely M/s Rubrik Apparel Pvt. Ltd., B-369, New Friends Colony but the defendants made no exports under said LC and same eventually lapsed, clearly showing that said LC was transferred in the name of plaintiff only as a bait and to induce him to supply more and more funds. However, soon it was revealed that defendants had befriended with the plaintiff under a well-planned conspiracy to exploit the funds of the plaintiff to run their own businesses and with a view to reduce any chances Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:04:34 +0530 CS DJ 245/2020 & 246/2020 Page 7 of 48 of recovery of said money, the defendants closed down the unit at Noida. The defendant no.2 vanished from the scene and could not be contacted/traced for a long time and the defendant no.4 started his independent venture in the name and style of M/s Sita Ram Process, Plot No.5A, Sector-4, Faridabad.
1.5. Plaintiff served a legal demand notice upon defendants for payment of the above stated amount of Rs.52,11,080/- due and outstanding against the defendants along with an interest @18% per annum from the date of payment, besides demanding another outstanding amount. Defendant no.3 instead of making the payment, wishfully, falsely and ironically replied vide reply dated 25.10.2005 through his counsel that he had ceased to be the partner with the defendant no.1 firm. Defendant no.4 also sent a malafide and frivolous reply dated 17.10.2006 and made obvious attempt to shed off the liability/responsibility. The notice sent to defendant no.1 came back with the remark 'left'. Despite service of notice, the defendants have failed to pay the outstanding amount. Hence, the plaintiffs have filed the present suit.
2. Written statement was filed by the defendant No.3 wherein preliminary objections are taken that the plaintiff has not come with clean hands. The present suit richly deserves to be dismissed under Order 2 Rule 2 of CPC. The plaintiff has filed another suit on the same cause of action before this court bearing Suit No.705/2007. In both the suits filed by the plaintiff, the relief has been sought from the same alleged transaction Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:04:39 +0530 CS DJ 245/2020 & 246/2020 Page 8 of 48 allegedly arising between the same parties. The defendant cannot be vexed for the same issue twice. Present suit is not maintainable and is merely a frivolous, vexatious attempt to make the defendant subjugate and pay something for which he is not liable at all.
2.1. In para-wise reply, all the allegations made in the plaint against the defendant have been denied. It is stated that the present suit filed by the plaintiff against the defendant no.3 is nothing but an unjustified and unlawful recovery of plaintiff's alleged money. Defendant no.3 is a reputed businessman, running several businesses in the capacity of a sole proprietor, partner and is also serving as Director in several companies. In the year 1994, the answering defendant entered into a partnership business with the defendant no.2 Paramjeet Singh and defendant no.4 R.N. Singh. The said business was under name and style of M/s Context Exports, defendant no.1 herein with its registered office at 136, First Floor, Udai Park, New Delhi. Defendant no.3 was a sleeping partner in the said firm, who invested money and gave authority to the defendant no.2 Paramjeet Singh to use the goodwill of the answering defendant. But when the answering defendant found himself completely unable to look after the transactions of M/s Context Exports and also on receiving negative feedback from the business circle regarding the transactions executed by defendant no.2, the answering defendant retired from the partnership on 01.04.2000 and the firm was reconstituted and continued with two partners i.e. defendant no.4 Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:04:45 +0530 CS DJ 245/2020 & 246/2020 Page 9 of 48 Raj Nath Singh and defendant no.2 Paramjeet Singh. The notice regarding the retirement was also published in the local newspaper on 05.04.2000. The said factum of retirement and reconstitution of defendant no.1 M/s Context Exports was duly intimated by answering defendant to the Registrar of Firms; Bank Manager of Central Bank of India, Delhi; Labour Officer, Noida; Deputy Labour Commissioner, Noida; ESIC Regional Director, Noida; Regional P.F Commissioner, Noida and to the Assistant Collector, UP for necessary action.
2.2. It is further stated that a memorandum of understanding dated 07.01.2001 was also executed between the retiring and continuing partners. As per the said MoU, it was the obligation of the remaining partners i.e. defendants no.2 & 4 to get the personal properties of the answering defendant and his family members released from all charges, which were created during his partnership in the business. As per the said MoU, the answering defendant shall be paid an amount of Rs.71 lacs by the remaining partners. It is stated that defendant no.4 R.N. Singh also retired from the partnership firm in the year 2003 and the partnership firm i.e. defendant no.1 was dissolved vide a Deed of Dissolution dated 01.04.2003. Hence, after 01.04.2003, the firm M/s Context Exports became a sole proprietorship of the defendant no.2 Paramjeet Singh.
2.3. It is stated that defendant no.2 acting with dishonest, deceitful, wrongful and malafide intentions never cared to honour Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:04:49 +0530 CS DJ 245/2020 & 246/2020 Page 10 of 48 his commitments and obligations made in the MoU dated 07.012001. Defendant no.2 in furtherance of his malafide intentions, even after retirement of the answering defendant and defendant no.4, continued to represent the defendant no.1 as a partnership firm and issued payments in the form of cheques to several parties, signing as a partner of defendant no.1. The said payments made were never materialized, hence several cases of bounced cheques has been filed against M/s Context Exports implicating the answering defendant also as a partner, though he had nothing to do with the business transactions of M/s Context Exports after 01.04.2000.
3. Written statement also filed by the defendant no.4 in which he had taken preliminary objections that present suit is devoid of cause of action as the plaintiff has neither suffered any loss during the tenure of the answering defendant as a partner in M/s Context Exports, as the said partnership dissolved w.e.f. 01.04.2003 or the plaintiff has been able to point out any specific allegation against the answering defendant, as a result, the suit does not lie against the answering defendant, hence needs to be dismissed on this short ground alone. Present suit is based on absolutely false, frivolous, vague, misconceived, baseless and vexatious allegations and therefore, the same being an abuse and misuse of the process of law.
4. Defendants no.1 & 2 were proceeded ex-parte vide order dated 27.05.2009.
Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:04:54 +0530 CS DJ 245/2020 & 246/2020 Page 11 of 48 Facts of CS DJ 246/2020 (Old Suit No. CS(OS) 705/2007)
5. The brief facts of the case as stated in the plaint are that plaintiff is the sole proprietor of a firm M/s Jay Dee Exports, having its office at A-35, Industrial Area, G.T. Karnal Road, Delhi. Plaintiff is engaged in the trading & export of readymade garments. Defendants were known to the plaintiff for last more than a decade when defendants no.2 and 4 used to work as Manager and General Manager with Sh. Satyender Kumar, Director of M/s Orphic Dyeing and Printing Mills Pvt. Ltd., Plot No.121, Sector-24, Faridabad, Haryana. In the month of January 2004, defendant no.3 approached the plaintiff that he had started a partnership concern in the name and style of defendant no.1 with the defendants no.2 and 4, having its registered office at Udai Park, New Delhi and factory at A/2, Sector-59, Noida. Defendant no.3 told the plaintiff that the said firm was running into financial crunch and because of certain limitations, defendant no.3 could not replenish the funds into said partnership firm. Defendant no.3 requested the plaintiff to lend some funds to defendant no.1 firm. Defendant no.3 assured that funds would be repaid soon as the firm has received at hand lot of orders for exports and guaranteed the repayment with an interest @18% per annum.
5.1. Plaintiff visited the office of defendant no.3, who then also called defendants no.2 and 4 to his office. The negotiations for providing finance were held and it was agreed Digitally signed by MUNISH that the payments would be made through account payee cheques MUNISH BANSAL BANSAL Date:
2025.06.06 16:04:58 +0530 CS DJ 245/2020 & 246/2020 Page 12 of 48 and the defendants promised that funds would be repaid with interest @18% per annum from the date of cheques immediately after money is received under the letters of credit from the overseas buyers, which took maximum two months' time. Thereafter, defendants no.2 and 4 collected cheques of about Rs.17 lakhs in the month of March 2004 and about 11 lakhs in the month of April 2004. In the month of May 2005 at the time of issuing cheque, the plaintiff again contacted defendant no.3 on whose assurance and partnership, plaintiff had lent funds even without any collateral security and told him that though he had paid about Rs.30 lakhs to the defendants in the name of defendant no.1 but no repayments forthcoming. The defendant no.3 assured that the payments under the Letters of Credits were yet to be realized and repayments would be forthcoming soon.
5.2. The defendant no.1 borrowed funds to the tune of Rs.34,45,000/- by way of account payee cheques, the details of the same is given in Para 8 of the plaint. All the aforesaid cheques were credited directly into the accounts of defendant no.1 maintained with Standard Chartered Bank, New Delhi and PNB, EC-ICR, Patparganj, Delhi A/C No.4058 from the plaintiff's account with Canara Bank, Wazirpur Branch, Ashok Vihar, New Delhi. However, till date, the defendants have not paid back a single penny on account of principal amount of Rs.34,45,000/- nor even paid the interest accrued thereupon. In around 2nd week of May 2004, when repayment of funds was not forthcoming, plaintiff insisted for the repayment of the funds so Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:03 +0530 CS DJ 245/2020 & 246/2020 Page 13 of 48 lent. The defendants put the innocent plaintiff to coaxing blackmail to provide further funds stating that unless some more funds are provided to make the unit profit-making, they would not be in a position to payback. However, the defendants assured that further export would be done by the defendants in the name of the plaintiff firm, M/s Jay Dee Exports and the funds would be provided by the plaintiff directly to the suppliers instead of defendants and profit margins earned by the defendants would be used to pay back the outstanding. Hence, plaintiff would provide funds to said M/s Context Exports by way of crossed cheques in favour of its suppliers and the Letters of Credit from foreign buyers would be transferred in the name of the plaintiff firm. However, in respect of payments made directly to the suppliers, the defendants instead of exporting said goods on account of M/s Jay Dee Exports, the plaintiff's firm, the defendants exported said goods under different accounts by opening the Letters of Credit in their own name and withdrawing the money therefrom. Defendant no.2 played a further fraud upon plaintiff as on enquiry, it is revealed that one firm M/s Sunstreak Fashions in respect whereof plaintiff was induced to make the payments, worth Rs.17,10,000/- was none else but a dummy personal enterprises of defendants no.2. However, soon it was revealed that defendants had exploited the plaintiff under a well-planned conspiracy to drain the funds of the plaintiff to run their own business. Defendants closed down the unit at Noida to reduce any chances of recovery of said money and the defendant no.2 vanished from the scene and could not be contacted/traced for a Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:07 +0530 CS DJ 245/2020 & 246/2020 Page 14 of 48 long time and the defendant no.4 started his independent venture in the name and style of M/s Sita Ram Process, Plot No.5A, Sector-4, Faridabad.
5.3. Plaintiff served a legal notice dated 09.09.2006 upon defendants for payment of the above stated amount of Rs.34,45,000/- due and outstanding against the defendants along with an interest @18% per annum from the date of payment, besides demanding another outstanding amount. Defendant no.3 instead of making the payment, wishfully, falsely and ironically replied vide reply dated 25.10.2005 through his counsel that he had ceased to be the partner with the defendant no.1 firm. Defendant no.4 also sent a malafide and frivolous reply dated 17.10.2006 and made obvious attempt to shed off the liability/responsibility. The notice sent to defendant no.1 came back with the remark 'left'. Despite service of notice, the defendants have failed to pay the outstanding amount. Hence, the plaintiffs have filed the present suit.
6. Written statement was filed by the defendant No.3 wherein preliminary objections are taken that the plaintiff has not come with clean hands. Present suit is not maintainable and is merely a frivolous, vexatious attempt to make the defendant subjugate and pay something for which he is not liable at all. The claim of the plaintiff regarding the presence of defendant no.3 during the relevant time when the alleged transactions took place between the plaintiff and Sh. Paramjit Singh (Defendant Digitally signed by no.2) are false, baseless and without any evidence. The plaintiff MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:12 +0530 CS DJ 245/2020 & 246/2020 Page 15 of 48 is guilty of suppresso-veri and falsio suggestio & has concealed the material facts from this court Plaintiff has deliberately concocted the facts to his advantage and to the disadvantage of the defendant no.3. The present suit is liable to be dismissed on the sole ground that the prayer clause is vague and is against the settled law of the land and the basic canons of the Indian jurisprudence.
6.1. In para-wise reply, all the allegations made in the plaint against the defendant have been denied. It is stated that the defendant no.3 is a reputed businessman, running several businesses in the capacity of a sole proprietor, partner and is also serving as Director in several companies. In the year 1994, the answering defendant entered into a partnership business with the defendant no.2 Paramjeet Singh and defendant no.4 R.N. Singh.
The said business was under name and style of M/s Context Exports, defendant no.1 herein with its registered office at 136, First Floor, Udai Park, New Delhi. Defendant no.3 was a sleeping partner in the said firm, who invested money and gave authority to the defendant no.2 Paramjeet Singh to use the goodwill of the answering defendant. But when the answering defendant found himself completely unable to look after the transactions of M/s Context Exports and also on receiving negative feedback from the business circle regarding the transactions executed by defendant no.2, the answering defendant retired from the partnership on 01.04.2000 and the firm was reconstituted and continued with two partners i.e. defendant no.4 Digitally signed by Raj Nath Singh and defendant no.2 Paramjeet Singh. The notice MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:17 +0530 CS DJ 245/2020 & 246/2020 Page 16 of 48 regarding regarding the retirement was also published in the local newspaper on 05.04.2000. The said factum of retirement and reconstitution of defendant no.1 M/s Context Exports was duly intimated by answering defendant to the Registrar of Firms, Bank Manager of Central Bank of India, Delhi; Labour Officer, Noida; Deputy Labour Commissioner, Noida; ESIC Regional Director, Noida; Regional P.F Commissioner, Noida and to the Assistant Collector, UP for necessary action.
6.2. It is further stated that a memorandum of understanding dated 07.01.2001 was also executed between the retiring and continuing partners. As per the said MoU, it was the obligations of the remaining partners i.e. defendants no.2 & 4 to get the personal properties of the answering defendant and his family members released from all charges, which were created during his partnership in the business. As per the said MoU, the answering defendant shall be paid an amount of Rs.71 lacs by the remaining partners. It is stated that defendant no.4 R.N. Singh also retired from the partnership firm in the year 2003 and the partnership firm i.e. defendant no.1 was dissolved vide a Deed of Dissolution dated 01.04.2003. Hence after 01.04.2003, the firm M.s Context Exports became a sole proprietorship of the defendant no.2 Paramjeet Singh.
6.3. It is stated that defendant no.2 acting with dishonest, deceitful, wrongful and malafide intentions never cared to honour Digitally signed by MUNISH his commitments and obligations made in the MoU dated MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:21 +0530 CS DJ 245/2020 & 246/2020 Page 17 of 48
07.01.2001. Defendant no.2 in furtherance of his malafide intentions even after retirement of the answering defendant and defendant no.4 continued to represent the defendant no.1 as a partnership firm and issued payments in the form of cheques to several parties, signing as a partner of defendant no.1. The said payments made were never materialized, hence several cases of bounced cheques has been filed against M/s Context Exports implicating the answering defendant also as a partner, though he had nothing to do with the business transactions of M/s Context Exports after 01.04.2000.
6.4. Written statement also filed by the defendant no.4 in which he had taken preliminary objections that present suit is devoid of cause of action as the plaintiff has neither suffered any loss during the tenure of the answering defendant as a partner in M/s Context Exports, as the said partnership dissolved w.e.f. 01.04.2003 or the plaintiff has been able to point out any specific allegation against the answering defendant, as a result, the suit does not lie against the answering defendant, hence needs to be dismissed on this short ground alone. Present suit is based on absolutely false, frivolous, vague, misconceived, baseless and vexatious allegations and therefore, the same being an abuse and misuse of the process of law.
7. In the Replication to the written statement of defendants no.3 & 4, the plaintiff has denied the contents of the Written Statements of said defendants. Plaintiff has reiterated & Digitally reaffirmed the contents of the plaint. signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:26 +0530 CS DJ 245/2020 & 246/2020 Page 18 of 48
8. Defendant no.1 & 2 were proceeded ex-parte vide order dated 27.05.2009.
9. Vide order dated 16.11.2011, both the suits were clubbed and consolidated for the purposes of framing common issues and leading common evidence. From the pleadings of the parties, following common issues were framed on 16.11.2011:-
1. Whether defendant No.3 resigned as a partner of defendant No.1 w.e.f. 1st April, 2000 and defendant No.4 resigned as its partner w.e.f 1st April, 2003, as alleged in their written statement and if so to what effect?OPD
2. Whether defendant No.3 had sought finance from the plaintiff, as alleged in the plaint and if so to what effect?
OPD
3. Whether defendant No.4 agreed with the plaintiffs that the payments to be made by him by way of cheques in the name of defendant No.1 would be re-paid with interest at the rate of 18% per annum as alleged in the plaint?OPP
4. Whether defendant No.2 and 4 used to collect the cheques of Rs.28 lakh from the plaintiff, as alleged in the plaint and if so to what effect?OPP
5. Whether the plaintiff lent a sum of Rs.34,45,000/- to defendant No.1, as alleged in the plaint?OPP
6. To what amount, if any the plaintiff is entitled as principal sum in Suit No.705/2007 and from whom?OPP
7. Whether Suit No.1283/2007 is barred under Order 2 Rule 2 of CPC?OPP
8. Whether the plaintiff made payment of Rs.1,46,66,060/- to Digitally signed by MUNISH the suppliers of defendant No.1 and received a payment of MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:31 +0530 CS DJ 245/2020 & 246/2020 Page 19 of 48 Rs.94,54,980/- from its buyers thereby leaving unpaid amount of Rs.52,11,080/-, as alleged in the plaint of Suit No.1283/2007?OPP
9. To what amount the plaintiff is entitled as principal sum in Suit No.1283/2007 and from whom?OPP
10. Whether the plaintiff is entitled to interest and if so to what rate and what amount?
11. Relief.
10. Plaintiff in support of his case has examined eight witnesses. He had examined himself as PW1. He had tendered his evidence by way of affidavit Ex.PW1/A. He had relied upon the following documents:
1) Copy of statement of account of Canara Bank w.e.f. 18.03.2004 to 22.09.2004, Ex.PW-1/1 (colly) running into 64 pages;
2) Certified copy of bank account opening form of defendant no.1, Ex.PW-1/2 (colly), running into 14 pages;
3) Certified copy of bank account of Standard Chartered bank of defendant no.1, Ex.PW-1/3, running into 48 pages.
4) Legal notice dated 09.09.2006, Ex.P-1 and its three postal receipt of legal notice, Ex.PW-1/4 (colly), UPC receipt is Ex.PW-1/5
5) Reply dated 25.10.2006 to the legal notice Ex.P-2;
6) Other legal notice dated 09.09.2006, Ex.Pwf-1/6 Digitally signed by MUNISH (this notice is sent in connected case bearing no.8349) MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:36 +0530 CS DJ 245/2020 & 246/2020 Page 20 of 48 and its two postal receipts are Ex.PW-1/7 (colly), its UPC receipt Ex.PW-1/8.
(7)Copy of envelop bearing postal receipt dated 26.10.2006 Ex.PW-1/9.
(8)Reply dated 17.10.2006 to the notice is Ex.P-3.
(9) Envelop bearing the name of Sh. Shialendra Akhouri Ex.PW-1/10.
(10)Two envelops through which the notices sent to defendant no.1 and 2 returned back with remark "Left" are Ex.PW-1/11 and Ex.PW-1/12.
(11) Certificate dated 01.09.2005 issued by Canara Bank to plaintiff, Ex.PW-1/13.
10.1. PW-2 Sh. Anil Handa, Single Window Operator, Canara Bank, Branch Wazir Pur Main, New Delhi-110052 is a summoned witness. He had proved the certified copy of the statement of account of M/s Jay Dee Exports w.e.f 01.03.2004 to 31.10.2004, Ex.PW2/1 and copy of Inter-Office Memorandum dated 17.11.2017, Mark 'A'. He had also proved Certificate under Section 65B(4)(c) of the Indian Evidence Act, Ex.PW2/2. Certificate under Section 2(A) of Bankers Book Evidence Act, Ex.PW2/3 and his Authority Letter dated 23.12.2017, Ex.PW2/4.
10.2. PW-3 Sh. Kapil Saighal, Operation Officer, Standard Chartered Bank, DLF, Gurgaon, Cyber City, Haryana had proved the summoned record i.e. certified copy of statement of account of M/s Context Exports having A/c No.52105004258 Digitally signed by MUNISH from 18.02.2004 to 18.12.2004, Ex.PW3/1, Certificate under MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:40 +0530 CS DJ 245/2020 & 246/2020 Page 21 of 48 Section 2A of Bankers Book Evidence Act, 1891, Ex.PW3/2 and his authorization letter issued by Manager Internal Services of Standard Chartered Bank, Ex.PW3/3.
10.3. PW-4 Sh. Ravi Negi, SWOB, Punjab National Bank, ICD, PPG, Delhi 110096 had proved the letter dated 30.11.2017 issued by Branch Manager, PNB, ICD, Patparganj, Delhi to the effect that there is no Account in their branch in the name of M/s Context Exports and the A/c No.4200012100040583 belongs to M/s Alpha Exports, Ex.PW4/1.
10.4. PW-5 Sh. Pawan Kumar, Assistant Manager, Oriental Bank of Commerce, M Block, Connaught Place, New Delhi had testified that the summoned record of the present suit could not be traced as same pertains to the year 2004 and proved a letter issued by Assistant General Manager of the Branch in this regard, Ex.PW5/A. 10.5. PW-6 Rajiv Kumar Mishra, Assistant Manager, Central Bank of India, Karol Bagh, New Delhi had proved the statement of account no. 101021 of the defendant no.1 M/s Context Exports for the period from March, 2004 to October, 2004 (total 17 pages), Ex.PW6/A. He had also proved the letter deputing him to depose in the court, issued by the Assistant General Manager of the Branch, Certificate under Section 2(A) of Bankers Book Evidence Act and Certificate under Section 65B Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:44 +0530 CS DJ 245/2020 & 246/2020 Page 22 of 48 of the Indian Evidence Act(Colly) are Ex.PW6/B (3 pages). He had proved a letter Ex.PW6/C regarding the summoned record of LC No.DCNPH 177284 from M/s SHOPKO Stores USA and LC No.NPH 177933 from DORIANS Mexico (transferred by M/s Context Exports to M/s Jay Dee Exports) is not available as the same pertains to the year 2004 and account was closed longtime back.
10.6. PW-7 Sh. Randhir Kotwal, Senior Executive, J&K Bank, South Extension, Part II had proved a letter dated 30.05.2018, to the effect that they had not found any record of foreign Inward letter of Credit (LC No.10101111093 dated 02.08.2004) in favour of party M/s Context Exports, which is Ex.PW7/1.
10.7. PW-8 Sh. Anil Gupta, Partner of Anil Knitting Industries, M-118, Shashtri Nagar, Delhi-52. He had proved the computerized copy of Ledge Account maintained by him in respect of transactions, Ex.PW8/1.
10.8. Thereafter, PE was closed and matter was fixed for Defendants' evidence.
11. Defendant No.3 Sh. Satyender Kumar Chauhan had examined himself as DW1. He has tendered his evidence by way of affidavit, Ex.DW1/A. DW1 has relied upon the following documents:
Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:50 +0530 CS DJ 245/2020 & 246/2020 Page 23 of 48 (1)Ex.DW1/1 is Certified copy of Partnership Deed dated 23.09.1994 (mentioned as Ex.PW3/1 in Affidavit Ex.PW1/A) (mode of proof objected to) (2)Ex.DW1/2 is Certified copy of Retirement-cum-
Reconstitution Deed dated 01.04.2000 (mentioned as Ex.DW3/2 in Affidavit Ex.DW1/A) (mode of proof objected to).
(3)Ex.DW1/3 is photocopy of Notice Publication dated 05.04.2000 (mentioned as Ex.DW3/3 in Affidavit Ex.DW1/A).
(4)Mark A (colly) are certified copies of copies of Intimation of Resignation of defendant no.3 from defendant no.1 firm to different Departments (5 pages) (mentioned as Ex.DW3/4 in Affidavit Ex.DW1/A)(mode of proof objected to).
(5)Ex.DW1/4A is photocopy of Intimation regarding retirement to Manager, Central Bank of India (OSR) bearing receiving stamp of the bank, Ex.DW1/4B is photocopy of Intimation regarding retirement to Manager, Central Bank of India (OSR) sent through Post, Ex.DW1/4C is photocopy of Postal Receipt (OSR) (mentioned as Ex.DW3/5 (colly) in Affidavit Ex.DW1/A) (mode of proof objected to) (6)Ex.DW1/5 is certified copy of MOU dated 07.01.2001 (mentioned as Ex.DW3/6) in Affidavit Ex.DW1/A (mode of proof objected to).
(7)Ex.DW1/6 is certified copy of Deed of Dissolution dated 01.04.2003 (mentioned as Ex.DW3/7 in Affidavit Ex.DW1/A) (mode of proof objected to).
(8)Ex.DW1/7A is the covering letter dated 31.05.2016 from the Commissioner of Industries (OSR) and Mark B is Form A obtained from Registrar of Firms through RTI (mentioned as Ex.DW3/8 in Affidavit Ex.DW1/A (mode of proof objected to) (9)Ex.DW1/8 Copy of Agreement dated 14.06.2004 (mentioned as Ex.DW3/9 in Affidavit Ex.DW1/A)(mode of proof objected to) (10)Already Ex.P-2 Reply dated 25.10.2006 sent on behalf of defendant no.3 to Legal Notice dated 09.09.2006 of the plaintiff (mentioned as Ex.DW3/10 in Affidavit Ex.DW1/A).
Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:54 +0530 CS DJ 245/2020 & 246/2020 Page 24 of 48 11.1. DW-2 Sh. Vikash, Assistant Ahlmad in the court of Sh. Sidharth Mathur, Ld. ADJ-02, North West District, Rohini Courts, Delhi has brought the summoned record of Civil Suit No.578608/2016 titled as 'Gaurav Sharma vs M/s Context Exports & Ors.' and proved the following documents:
(1)The original Partnership-Deed dated 23.09.1994, which is already Ex. DW1/1 (certified copy), is lying in summoned record.
(2)The original Retirement-cum-Reconstitution Deed dated 03.02.2001 which is effective from 01.04.2000, which is already Ex. DW1/2 (certified copy), is lying in summoned record.
(3)The original Notice Publication dated 05.04.2000, which is already Ex. DW1/3 (certified copy), is lying in summoned record.
(4)The original of Intimation of Resignation to the Labour Officer, NOIDA dated 10.09.2004 alongwith its due receipt dated 10.09.2004 by the department, the clear photocopy is now Ex. DW2/1.
(5)The original of Intimation of Resignation to the Deputy Labour Commissioner, NOIDA dated 10.09.2004 alongwith its due receipt dated 10.09.2004 by the department, the clear photocopy is now Ex. DW2/2.
(6)The original of Intimation of Resignation to the Assistant Regional Director, ESI Corporation, NOIDA dated 15.04.2006 alongwith its due receipt dated 20.04.2006 by the department, the clear photocopy is now Ex. DW2/3.
(7)The original of Intimation of Resignation to the Regional PF Commissioner, NOIDA dated 10.09.2004 alongwith its due receipt dated 10.09.2004 by the department, the clear photocopy is now Ex. DW2/4.
(8)The original of Intimation of Resignation to the Assistant Collector, Business Tax, Gautam Budh Nagar, NOIDA dated nil alongwith its due receipt dated 24.11.2005 by the department, the clear photocopy is now Ex. DW2/5. Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:05:59 +0530 CS DJ 245/2020 & 246/2020 Page 25 of 48 (9)The original MOU dated 07.01.2001, which is already Ex.
DW1/5, is lying in summoned record.
(10)The original Deed of Dissolution dated 01.04.2003, which is already Ex. DW1/6, is lying in summoned record.
(11)The original Agreement dated 14.06.2004, which is already Ex.DW1/8, is lying in summoned record.(all original summoned record seen and returned).
11.2. DW-3 Sh. R.P. Raghuvanshi, Editor, Chetna Manch Newspaper, C-86, Sector-2, Nodia. He had proved the copy of the public notice dated 05.04.2000, Ex.DW1/3 and copy of RNI certificate Ex.DW3/1.
11.3. DW-6 (inadvertently mentioned as DW-4 and same stood corrected and to be read as DW-6 as recorded in the cross examination dated 10.08.2023) Sh. Rajnath Singh had tendered his evidence by way of affidavit, Ex.DW4/1. He had relied upon the following documents:
1) Copy of aadhar card Ex.DW4/A (OSR).
2)Deed of Dissolution w.e.f. 01.04.2003 already Ex.DW3/7, now de-exhibited as already exhibited as Ex.DW1/6.
3. Original Newspaper namely 'Chetna Manch' dated 06.04.2003 Ex.DW4/B.
4. Dissolution of firm w.e.f. 01.04.2003 vide Form C dated 23.07.2004 is Ex.DW4/A, now de-exhibited and marked as Mark DW4/A.
5. Letter dated 15.04.2006 Ex.DW4/D, de-exhibited as not on record.
11.4. DW-4 Sh. Anil Kumar, Assistant General Manager, Digitally signed by Central Bank of India, Janpath Branch, New Delhi is a MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:06:03 +0530 CS DJ 245/2020 & 246/2020 Page 26 of 48 summoned witness. He deposed that the summoned record i.e. Intimation dated 15.02.2001 regarding retirement cum re- constitution deed is not available with the bank as such kind of documentation are maintained by the bank for a period of 10 years from the date of receipt.
11.5. DW-5 Sh. Vikesh Kumar Shah, Office Assistant, District Magistrate, South, SDM Headquarters, M.B Road, Saket, New Delhi is a summoned witness and proved the documents already Ex.DW-1/7A, which is a letter under RTI Act dated 31.05.2016 and also proved the Form A (already Mark B) as Ex.DW5/A (OSR).
11.6. Thereafter, DE was closed and matter was fixed for final arguments.
12. Arguments heard. Record perused including written submissions on behalf of plaintiff, defendants no. 3 and 4. My findings on the issues are as follows:-
Issue no. 1 Whether defendant No.3 resigned as a partner of defendant No.1 w.e.f. 1st April, 2000 and defendant No.4 resigned as its partner w.e.f 1st April, 2003, as alleged in their written statement and if so to what effect?OPD
13. Onus to prove this issue was on the defendants no.3 and 4. In the plaint, plaintiff has averred that in the month of January 2004, defendant no.3 approached the plaintiff and told Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:06:08 +0530 CS DJ 245/2020 & 246/2020 Page 27 of 48 that he has started a partnership concern with defendants no. 2 and 4 in the name and style of defendant no.1 and since defendant no.3 was aware of the financial soundness of plaintiff, he requested plaintiff to lend some money to defendant no.1 since defendant no.1 firm was running into financial crunch and that after few days, defendant no.3 again contacted the plaintiff on telephone regarding the lending of funds and subsequently, after a week, the plaintiff visited the office of defendant no. 3 who then also called defendants no. 2 and 4 to his office and negotiations for providing finance were held and defendants agreed that funds would be repaid with interest @ 18% p.a. and that thereafter defendants no. 2 and 4 would come to the office of plaintiff and collect the funds in the shape of cheques as per their requirement.
13.1. The claims in the respective suits have been made and & against the defendant no.1 firm alongwith defendants no. 2 to 4 claiming them to be the partners of the defendant no.1 firm. It is not clear as to how the plaintiff came into the knowledge of the factum that defendants no. 2, 3 and 4 are the partners of defendant no.1 firm. A bare averment has been made in the plaint and qua the same, plaintiff has deposed in his evidence affidavit that defendant no.3 approached the plaintiff representing that he has started a partnership concern with defendants no. 2 and 4. Thus, as per version of the plaintiff himself prior to January 2004, he was not aware of the partnership and its constituents. No source of knowledge of the Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:06:13 +0530 CS DJ 245/2020 & 246/2020 Page 28 of 48 aforesaid factum that defendants no. 2 to 4 are partners in defendant no.1 firm has been divulged out by the plaintiff either in his plaint or in his evidence affidavit. In the evidence affidavit, plaintiff has again made a similar, vague and bald claim without any supporting material or evidence. Thus, as far as plaintiff is concerned, he has been unable to demonstrate or show that he was in knowledge of names of partners of defendant no.1 firm.
13.2. In cross-examination dated 23.09.2017, plaintiff appearing as PW1 has stated that he does not have any documentary proof to say that defendant no.3 approached him in January 2004 and told him that defendant no.3 started a partnership concern with defendants no. 2 and 4. In cross-
examination dated 24.10.2017, PW1 has stated that loan was given by him to defendant no.1 firm, there was no formal agreement executed between them and further that he does not have any documentary proof regarding his visit to the office of defendant no.3 where defendants no. 2 and 4 were present and where negotiation for providing finance were held.
13.3. On the other hand, defendant no.3 has pleaded that he resigned from the partnership of the defendant no.1 firm w.e.f. 01.04.2000 and the firm was dissolved w.e.f. 01.04.2003 and therefore, the alleged transactions in both the suits pertains to year 2004 and were all done by the plaintiff with defendant no.2 and his sole proprietorship firm defendant no.1, therefore, defendant no.3 cannot be made liable for the said transactions. Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:06:17 +0530 CS DJ 245/2020 & 246/2020 Page 29 of 48 Similar submission has been made on behalf of the defendant no.4 also. Countering the said submission, plaintiff has pleaded that defendants no. 3 and 4 cannot avoid their liability as partners of defendant no.1 firm when credit was extended to defendant no.1 firm through them and on their assurances and that they have always represented to the plaintiff to be the partners in the firm and never intimated to the plaintiff before receiving the legal demand notice that they discontinued from the partnership. Counsel for the plaintiff has argued that as per Section 32 r/w Section 72 of the Partnership Act, 1932, liability of a partner who retires remains intact unless public notice of the retirement is given and that public notice in the form of the publication in the Official Gazette is a must and admittedly, in the present case, no publication in the official gazette was done. The aforesaid provisions read as under :-
32. Retirement of a partner.--
(1) A partner may retire--
(a) with the consent of all the other partners,
(b) in accordance with an express agreement by the partners, or
(c) where the partnership is at will, by giving notice in writing to all the other partners of his intention to retire. (2) A retiring partner may be discharged from any liability to any third party for acts of the firm done before his retirement by an agreement made by him with such third party and the partners of the reconstituted firm, and such agreement may be implied by a course of dealing between such third party and the reconstituted firm after he had knowledge of the retirement.
(3) Notwithstanding the retirement of a partner from a firm, he Digitally signed by MUNISH and the partners continue to be liable as partners to third MUNISH BANSAL BANSAL Date:
2025.06.06 16:06:22 +0530 CS DJ 245/2020 & 246/2020 Page 30 of 48 parties for any act done by any of them which would have been an act of the firm if done before the retirement, until public notice is given of the retirement:
Provided that a retired partner is not liable to any third party who deals with the firm without knowing that he was a partner.
(4) Notices under sub-section (3) may be given by the retired partner or by any partner of the reconstituted firm.
72. Mode of giving public notice.--A public notice under this Act is given--
(a) where it relates to the retirement or expulsion of a partner from a registered firm, or to the dissolution of a registered firm, or to the election to become or not to become a partner in a registered firm by a person attaining majority who was admitted as a minor to the benefits of partnership, by notice to the Registrar of Firms under section 63, and by publication in the Official Gazette and in at least one vernacular newspaper circulating in the district where the firm to which it relates has its place or principal place of business, and
(b) in any other case, by publication in the Official Gazette and in at least one vernacular newspaper circulating in the district where the firm to which it relates has its place or principal place of business.
13.4. In the present case, defendant no.3 has retired from the partnership w.e.f. 01.04.2000 which stands proved by certified copy of the retirement cum reconstitution Deed dated 01.04.2000 Ex. DW1/2. Similarly, defendant no. 4 also ceases to be the partner w.e.f. 01.04.2003 in view of in view of dissolution of the firm which stands proved by deed of dissolution dated 01.04.2003 Ex. DW1/6. As per Section 32 of The Partnership Digitally Act, 1932, the question of liability of defendants no. 3 and 4 of signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:06:27 +0530 CS DJ 245/2020 & 246/2020 Page 31 of 48 the acts done after their retirement arises only if the plaintiff dealt with the firm knowing that defendants no. 3 and 4 were the partners of the firm prior to their retirement and no public notice of the retirement is given. Thus, plaintiff has to prove factum of his knowledge that defendants no. 3 and 4 are shown as partners in the firm prior to their retirement. Mere alleging the factum of the said knowledge is not enough, cogent evidence has to be led. Partnership was formed in 1994 and admittedly, there is no prior or past transaction of plaintiff with the firm. Defendants no. 3 and 4 ceased to be partners of firm vide deeds Ex. DW1/2 and Ex.DW1/6. No prior knowledge of plaintiff regarding partners can be there as plaintiff in the plaint himself states that defendant no. 3 told plaintiff in January 2004 that he has started a partnership concern with defendants no. 2 and 4 in the name and style of defendant no.1. Plaintiff has not produced any document on which defendants no. 3 and 4 were shown as partners in the partnership firm when the alleged transactions happened with the defendant no.1 firm. There is no evidence on record to show plaintiff's source of knowledge that defendants no. 3 and 4 were partners of the defendant no.1 firm. Mere bald assertion of the knowledge is not enough in the absence of any supporting material. The plaintiff has not shown any evidence to show that he lay hands to any documentary record wherein defendants no. 3 and 4 have been shown or represented as partners in the defendant no.1 firm. In such scenario, where plaintiff had no previous dealings with the firm and also have no substantive knowledge of the firm's constituent, is not entitled to hold the Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:06:32 +0530 CS DJ 245/2020 & 246/2020 Page 32 of 48 retired partner i.e. defendants no. 3 and 4 for the debts/ liabilities incurred by the defendant no.1 subsequently to the said defendants' retirement notwithstanding no notice of any sort was given.
13.5. The record Ex. DW5/A made available from the office of the Registrar of Firms shows that defendant no.3 has retired as a partner of the defendant no.1 firm w.e.f. 01.04.2002 vide notice dated 28.11.2003 and the firm was dissolved w.e.f. 01.04.2003 vide notice dated 01.07.2004. Defendants no. 3 and 4 have also respectively proved publication of the notice of retirement and dissolution of the firm in vernacular newspaper vide Ex.DW1/3 and Ex. DW4/B respectively. The requirement of publication of notice of retirement and dissolution in the official gazette, becomes immaterial in light of the aforesaid finding that plaintiff has not been able to prove his knowledge that defendants no. 3 and 4 were the partners of defendant no.1 firm before their respective retirements from the firm.
13.6. Counsel for the plaintiff has also argued that since plaintiff has provided funds to defendant no.1 firm on the faith and assurance of defendant no.3 and similarly, defendant no. 4 was also part of the negotiations for providing funds, the said persons can also be held liable on the basis of principle of holding out provided u/s 28 of the Partnership Act. Though plaintiff has alleged that defendants no. 3 and 4 have represented Digitally signed by themselves to be partners of the firm, the onus was on the MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:06:38 +0530 CS DJ 245/2020 & 246/2020 Page 33 of 48 plaintiff to prove the said representation by the said defendants. No evidence in this regard has been led by the plaintiff attributing the aforesaid representation by defendants no. 3 and 4.
13.7. Relevant here in is to quote the observation of the Hon'ble Supreme Court in the judgment titled as Kovai Yarn Traders Vs. P. Subramaniam (2009) 2016 SCC 322:-
'A.P. Palaniappan preferred an appeal before the High Court. The High Court is of the view that the since the appellant /plaintiff has business transaction with the newly constituted firm, the want of notice for retirement from the partnership firm by A.P Palaniappan under Section 72 of the Partnership Act, 192 was totally irrelevant. In that view of the matter, the appeal preferred by A.P Palaniappan was allowed and suit against him to that extent stood dismissed. However, the High Court permitted the appellant- plaintiff to proceed for the recovery of money against N.C.C.A Palanisamy and his heirs. It is against the said judgment of the High Court, the appellant. Plaintiff is in appeal before us.
xxxx we have gone through the judgment and found that the High Court has considered the entire evidence and has come to the conclusion that, in fact, A.P Palaniappan had retired on 16.02.1977 and thereafter N.C.C. A Palanisamy ran the said dissolved firm as proprietor concern and on 01-04-1978, a newly registered partnership was constituted. In that view of the matter, we do not find any infirmity in the said finding. Once it is held that the firm was reconstituted on 01-04-1978 and the appellant/ plaintiff had dealt with the said firm, the High Court was right in its conclusion that no proceedings can be taken against A.P. Palaniappam and his heirs' Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:06:42 +0530 CS DJ 245/2020 & 246/2020 Page 34 of 48 13.8. If one person represents others as partners of a firm, to some third party though in actual they are not partners of the firm, the other persons do not become liable as partners of firm.
The third party by believing it blindly cannot cast liability on the other persons, he has to show he made reasonable enquiries to know about constitution of firm. Either he may seek partnership details i.e. partnership deed or if firm is a registered one, then he can inspect or seek copy of partnership details from Registrar of Firms. The same is not done in present case. A person who wrongly represents himself as partner, can be made liable provided the representation so made is well proved. If he represents others as partners, without their knowledge, others cannot be held liable as partners.
13.9. Plaintiff has made his claim against the defendants on the basis of being liable as partners of the firms and also on the basis of principal of holding over. However, cross- examination of DW1 and DW6 (defendants no.3 & 4 in the present suits), has extended to the transactions beyond the alleged transactions and dealings between the plaintiff and the defendant no.1 firm. The transactions pertaining to memorandum dated 07.01.2001 Ex. DW1/5 and agreement dated 14.06.2004 Ex. DW1/8, are between the defendants inter se. Plaintiff is not privy to the said transactions. There is no privity of contract in favour of the plaintiff qua these transactions. There is no dispute that the aforesaid documents Ex. DW1/5 & Ex. DW1/8 and the transactions made in pursuance of the said documents were ever Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:06:47 +0530 CS DJ 245/2020 & 246/2020 Page 35 of 48 communicated to the plaintiff. Since in view of the aforesaid discussions, this Court has already observed and concluded that the defendants no. 3 and 4 have resigned and are no longer liable as partners, any transaction between the erstwhile partners are not relevant and not material for the adjudication of the present claim. When it has already been held that the defendants no. 3 and 4 are not liable as partner the argument raised by the plaintiff that since as per document Ex. DW1/5 and Ex. DW1/8, money was to be transferred or was transferred from the account of defendant no. 1 firm to defendant no. 3, the defendant no. 3 should be held liable, is not tenable. Simply because the said documents were executed among the defendant inter se and certain benefit was to accrue to defendant no. 3, cannot per se be sufficient to hold defendant no. 3 liable as a partner.
13.10. When the plaintiff has not been able to prove the liability of defendants no. 3 and 4 as partners of the firm, any agreement made between defendants no. 2 to 4 and any transaction thereof in pursuance of the said agreement, does not amount to representation of defendants no. 3 and 4 as partners of the firm as plaintiff was never privy to the said agreement nor the entering of said agreement per se results in representation to the plaintiff. Counsel for the plaintiff has relied upon the judgment of the Hon'ble Supreme Court in Oriental Bank of Commerce, New Delhi Vs. M/s S.R.Kishore & Company & ors AIR 1992 Delhi
174. In the said case, partners were made liable on the basis of principle of holding out as active participation of the partner in Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:06:52 +0530 CS DJ 245/2020 & 246/2020 Page 36 of 48 each and every transaction was proved. Clearly, the facts of the case at hand are completely different as it has not been established and proved that defendants no. 3 and 4 represented as partners or actively participated in the transactions of the firm.
13.11. Plaintiff has thus also failed to prove liability of defendants nos. 3 and 4 on the basis of holding out. No other independent evidence, oral or documentary, has been brought for proving representation of defendants nos. 3 and 4 as partners.
Liability cannot be imputed on sole bald assertions and sole oral testimony of plaintiff.
13.12. From the aforesaid discussion, it is clear that when the defendant no.1 firm as a partnership stood dissolved and the business of the plaintiff, with the reconstituted firm after dissolution, started thereafter, the earlier retired partners cannot be made liable. In view of the aforesaid discussion, this issue is decided in favour of the defendants no. 3 and 4 and against the plaintiff.
Issue no.2 Whether defendant No.3 had sought finance from the plaintiff, as alleged in the plaint and if so to what effect? OPD
14. Onus to prove this issue was upon the plaintiff (though in the issues framed, the burden has been wrongly mentioned as 'OPD'). In cross-examination, plaintiff appearing Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:06:57 +0530 CS DJ 245/2020 & 246/2020 Page 37 of 48 as PW1 has admitted that he does not have any documentary proof to say that defendant no. 3 approached him in January 2004 and that defendant no. 3 told him that defendant no. 3 is starting a partnership concern with defendants no. 2 and 4 and the firm is running into financial crunch. Apart from the sole bald assertions and sole oral testimony of plaintiff, there is no independent evidence, oral or documentary, to prove or corroborate the fact that the defendant no. 3 has sought finance from the plaintiff. The present issue appears to have been framed on the pleading of the plaintiff that since defendant no. 3 has sought finance from the plaintiff, defendant's no. 3 liability would arise on the basis of 'holding over'. Moreover, in view of the aforesaid discussion on issue no. 1, this Court has already observed that plaintiff has not been able to prove representation made by the defendant no.3 of being a partner and therefore, no liability under the principal of 'holding over' lies upon the defendant no. 3. Thus, plaintiff has not been able to prove that the defendant no. 3 has sought finance from plaintiff. The said issue stands decided against the plaintiff.
Issue no. 3 Whether defendant No.4 agreed with the plaintiffs that the payments to be made by him by way of cheques in the name of defendant No.1 would be re-paid with interest at the rate of 18% per annum as alleged in the plaint? OPP
15. Onus to prove this issue was upon the plaintiff. In Digitally signed by suit no. CS DJ 246/2020, it is alleged that Rs.34,45,000/- has MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:07:02 +0530 CS DJ 245/2020 & 246/2020 Page 38 of 48 been paid by the plaintiff to the defendant no. 1 firm through cheques. Similarly, in suit no. CS DJ 245/2020, it is alleged that as per alleged arrangement, payments were made to suppliers from the account of the plaintiff by way of account payee cheques. In the cross examination, PW1 has stated that he gave Rs.34,50,000/- to the defendant no. 1 firm as a loan. He has further deposed that when the loan was given by him to defendant no.1 firm, there was no formal written agreement executed between them. He has also further admitted that he has no documentary proof regarding the negotiations held between them. He has further admitted that there is no document to show that the defendant no. 3 ever consented or agreed to arrangement between plaintiff and the defendant no. 1 firm. Thus, there is no evidence to show that the amount paid by the plaintiff by way of cheques in the name of defendant no. 1 firm or the payments made to suppliers from the account of the plaintiff by way of account payee cheques, would be repaid with interest at the rate of 18 % per annum. Plaintiff in his plaint has alleged that he is entitled to statutory interest under section 80 of the NI Act, 1881 @ 18 % from the date of the cheques till the filing of the suit together with pendente-lite and future interest. As per Section 80 of the NI Act, the interest @ 18% is applicable only when no rate of interest is specified in the instrument and the said rate of interest can be claimed by the holder/ payee of the instrument/cheque(s). In this case, as alleged, plaintiff has given loan to the defendants through cheques. It is not a case where the plaintiff is claiming recovery from the defendant on the basis of a Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:07:06 +0530 CS DJ 245/2020 & 246/2020 Page 39 of 48 cheque issued in his favour. Thus, it is not proved that defendant no.1 agreed to pay interest @ 18 % per annum. Accordingly, the said issue stands decided against the plaintiff.
Issue no. 4 Whether defendants No.2 and 4 used to collect the cheques of Rs.28 lakh from the plaintiff, as alleged in the plaint and if so to what effect? OPP
16. Onus to prove this issue was upon the plaintiff. In cross-examination, PW1 has stated that cheques given by him were collected by defendants no. 2 and 4 and defendant no. 3 was never given any cheque by him. It has been argued on behalf of the plaintiff that since defendants no. 2 and 4 collected the cheques from him, they are liable as partners on the basis of principal of 'holding over'. It is further argued that since the cheques were given on the instruction of defendant no.3, liability of defendant no. 3 also arises on the basis of holding over. As regards defendants no. 3 and 4 are concerned, this Court under discussion on issue no. 1 has already observed that the defendants no. 3 and 4 are not liable on the basis of 'holding over'. Even if it is assumed that the defendants no. 2 and 4 used to collect cheques on the instructions of defendant no. 3, there can be no further presumption that the said act per se amounts to representation by such persons, as partners of defendant no. 1 firm. Moreover, there is no independent evidence to show and prove that defendants no. 2 and 4 used to collect the cheques of Digitally signed by Rs.28 lacs from the plaintiff. Plaintiff has admitted that he does MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:07:13 +0530 CS DJ 245/2020 & 246/2020 Page 40 of 48 not have any documentary proof that defendant no. 4 was active participant of the day-to-day business of the defendant no. 1. Thus, plaintiff has not been able to prove that the defendants no. 2 and 4 used to collect the cheques of Rs.28 lacs from the plaintiff. Accordingly, the said issue stands decided against the plaintiff.
Issue no. 5 Whether the plaintiff lent a sum of Rs.34,45,000/- to defendant No.1, as alleged in the plaint? OPP Issue no. 6 To what amount, if any the plaintiff is entitled as principal sum in Suit No.705/2007 and from whom? OPP
17. Both these issues pertain to suit no. CS(OS) 705/2007 (new suit no. CS DJ 246/2020). Onus to prove the said issues is upon the plaintiff. Both the issues are taken up together being connected with each other.
17.1. In the plaint, plaintiff has alleged that defendant no.3 approached him to lend "some funds" and after lending Rs.34,45,000/- to defendant no. 1 firm, defendants asked for "some more funds". A simple vague averment has been made by the plaintiff. Plaintiff himself is engaged into similar business. It is beyond comprehension as what constitutes "some funds" or "some more funds". If defendants would have approached plaintiff for funds, the quantum or atleast some approximate sum Digitally signed by would have been specified to the plaintiff by the defendants. The MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:07:18 +0530 CS DJ 245/2020 & 246/2020 Page 41 of 48 averment that defendants asked for some funds and that he deposited Rs.34,45,000/- in account of defendant no. 1, defies logic and also does not inspire confidence.
17.2. Similarly, plaintiff has further alleged that the arrangement with payments to be made to the suppliers directly by the plaintiff and exports being done in name of plaintiff firm and in course of such arrangement, plaintiff making payments to the tune of Rs.1,46,66,060/- to the suppliers of defendant No.1 on the defendants' asking for 'some more funds', that too without any written agreement, is also beyond comprehension and belief of a man of ordinary prudence.
17.3. In view of the discussion on the aforementioned issues, it has already been proved that defendants no. 3 and 4 are not liable as partners of the defendant no.1 firm. The question remains whether the defendant no.1 firm and defendant no.2, who both have been proceeded ex-parte are liable to pay back an amount of Rs.34,45,000/- on the basis that the said amount has been lent to the defendant no.1 firm.
17.4. It is a settled law that even if the Court proceeds ex parte and in the absence of written statement from the defendant, plaintiff is not absolved of burden to prove his case to the satisfaction of the Court. Such burden of proof is not very heavy upon the plaintiff, though, plaintiff is still required to prima facie prove the relevant facts, which constitute the cause of action as Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:07:23 +0530 CS DJ 245/2020 & 246/2020 Page 42 of 48 averred in the plaint. A mere fact that there is no written statement or the fact that the defendant has been proceeded with ex parte, does not mean that the Court will blindly and mechanically accept the case of plaintiff. Even in case of ex parte proceedings, the Court is bound to find its ex parte judgment on the basis of proof of relevant and admissible evidence. In the absence of counter pleadings from the defendant, Court does not frame issues under Order XIV CPC. Yet, the Court, peruses the available pleadings and documents filed therewith, consider the evidence adduced by plaintiff and then the Court can frame the points for determination, which are necessary for passing the ex parte judgment.
17.5. Plaintiff has been able to prove that a sum of Rs.34,45,000/- was transferred in the account of defendant no.1 firm vide documents Ex. PW1/1, Ex. PW1/2 (colly), PW2/1, and PW3/1 and further from the depositions of PW1, PW2 and PW3.
Plaintiff has averred and deposed that the said amount was transferred in the account of defendant no.1 firm as a loan. Though the counsel for the defendant no.3 has argued that there is no proof that the said amount was transferred to the defendant no.1 as loan, however, the said argument on behalf of defendant no.3 is superfluous and immaterial since defendant no. 3 has denied his liability as a partner of the firm on the ground that he has already resigned before the transactions between the plaintiff and the defendant no.1 started.
Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:07:28 +0530 CS DJ 245/2020 & 246/2020 Page 43 of 48 17.6. Since this Court has already observed and concluded that defendants no. 3 and 4 are not liable as partners of the defendant no.1 firm and after reconstitution, the defendant no.1 firm was relegated to a proprietorship firm with only defendant no.2 as its proprietor and since both defendants no.1 and 2 have been proceeded ex-parte and the averments and evidence of the plaintiff qua defendants no.1 and 2 have gone un-rebutted, un-
challenged and unimpeached and further plaintiff has been able to prove transfer of Rs.34,45,000/- in the account of defendant no.1 firm, the claim of Rs.34,45,000/- against defendants no. 1 and 2 cannot be denied. As regards liability of defendants no. 1 and 2 viz-a-viz plaintiff, after the retirement of defendants no. 3 and 4 as the partners and the transactions between the plaintiff and the defendant no. 1 starting after the said retirement, and defendant no. 2 remaining the only person controlling the affairs of defendant no. 1 firm, it stands proved that defendant no. 2 was running defendant no. 1 firm as a proprietary concern and therefore, this Court holds that plaintiff is entitled to a principal sum of Rs.34,45,000/- from the defendants no.1 and 2, who are jointly and severally liable to pay the same.
Issue no.7 Whether Suit No.1283/2007 is barred under Order 2 Rule 2 of CPC? OPP
18. Onus to prove this issue was upon the defendants (though in the issues framed, the burden has been wrongly mentioned as 'OPP').
Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:07:33 +0530 CS DJ 245/2020 & 246/2020 Page 44 of 48 18.1. No evidence has been led by the defendants, especially defendants no. 3 and 4, who have contested the suits on the said issue. Even during the oral arguments and also in the written submissions separately filed by defendants no.3 and 4, no submission with regard to the said issue. It appears that contesting defendants have relegated the said issue to a back-
burner and were not interested in pressing the said issue in the facts and circumstances of the present suits. Accordingly, the said issue stands decided against the defendants.
Issue no.8 Whether the plaintiff made payment of Rs.1,46,66,060/- to the suppliers of defendant No.1 and received a payment of Rs.94,54,980/- from its buyers thereby leaving unpaid amount of Rs.52,11,080/-, as alleged in the plaint of Suit No.1283/2007? OPP Issue no.9 To what amount the plaintiff is entitled as principal sum in Suit No.1283/2007 and from whom? OPP
19. Both these issues pertain to suit no. CS(OS) 1283/2007 (new suit no. CS DJ 245/2020). Onus to prove the said issues is upon the plaintiff. Both the issues are taken up together being connected with each other. Counsel for the plaintiff has alleged that though the defendants have not paid back a single penny on account of principal amount of Rs.34,45,000/- so borrowed by way of account payee cheques in favour of defendant no.1 firm (qua which the other suit was filed), an arrangement was made with defendants that further Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:07:38 +0530 CS DJ 245/2020 & 246/2020 Page 45 of 48 export would be done by the defendants in the name of the plaintiff firm M/s Jay Dee Exports and the funds would be provided by the plaintiff directly to the suppliers instead of defendants and profit margins earned by the defendants would be used to pay back the outstanding. The third-party vendors to whom payments have been made were relevant/material witnesses to prove such an arrangement, if any. PW-8 was called as witness and on cross-examination of said witness being deferred after his examination-in-chief, plaintiff's evidence was closed without cross-examination of the said witness. So, in these circumstances, testimony of said witness cannot be read in evidence and therefore, cannot be considered. Plaintiff has admitted that there is no document to show that the defendant no.3 ever consented or agreed to arrangement between plaintiff and the defendant no. 1 firm. No other evidence of arrangement has been led by the plaintiff. There is no independent witness to prove such an arrangement or negotiation. It is highly unbelievable that such an arrangement was entered into orally without any written agreement when it is plaintiff's case that prior to such an arrangement, plaintiff has lent a sum of Rs.34,45,000/- which defendants have failed to return. Thus, plaintiff is not entitled to any principal sum in Suit No.1283/2007 as plaintiff has failed to prove the said issues. Accordingly, the said issues stand decided against the plaintiff.
Issue no.10 Whether the plaintiff is entitled to interest and if so to what rate and what amount?CS DJ 245/2020 & 246/2020 Page 46 of 48
20. Onus to prove this issue was upon the plaintiff. So far as the rate of interest is concerned, the plaintiff has claimed interest @ 18% per annum. Plaintiff has not been able to prove any agreement qua the rate of interest being agreed upon and also whether he is entitled to any interest and from what date. However, this court is not oblivious to the fact that the plaintiff has been deprived of his constructive use of money and since in view of the aforesaid discussions on issues no. 5 and 6, this Court has held plaintiff to be entitled to recovery of Rs.34,45,000/- from defendants no. 1 and 2 jointly and severally, this Court, in the facts and circumstances of the case and also guided by the provision of Section 34 of CPC, deems fit to grant pendente lite and future interest @ 6 % per annum from the date of institution of the suit till its realization.
Relief
21. The upshot of the aforesaid discussion is that :-
a. The suit CS DJ 246/2020 (old no. CS (OS) 705/2007) of the plaintiff is partly decreed against defendants no.1 and
2. The plaintiff is entitled to recover a sum of Rs.34,45,000/- from the defendants no.1 and 2, who are jointly and severally liable to pay the same. The plaintiff is also entitled to interest @ 6% per annum, calculated from the date of institution of the suit till its realization, against Digitally defendants no.1 and 2, who are jointly and severally liable signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06 16:08:02 +0530 CS DJ 245/2020 & 246/2020 Page 47 of 48 to pay the same. Costs of the suit are also awarded in favour of the plaintiff. Decree sheet be drawn accordingly.
b. The suit CS DJ 245/2020 (old no. CS (OS) 1283/2007) is dismissed, with no order as to costs. Decree sheet be drawn accordingly.
File be consigned to Record Room after due compliance.
Digitally signed by MUNISH MUNISH BANSAL BANSAL Date:
2025.06.06
16:08:08
Announced in the Open Court
+0530
on 06.06.2025 (Munish Bansal)
District Judge-03, South District, Saket Courts, New Delhi.CS DJ 245/2020 & 246/2020 Page 48 of 48