Delhi District Court
M/S Shree Cement Ltd vs M/S Mayour & Company on 30 April, 2008
Page no. 1 Suit no. 82/07/99
IN THE COURT OF SHRI RAJ KUMAR CHAUHAN
ADDITIONAL DISTRICT JUDGE:DELHI
Suit no. 82/07/99
M/s Shree Cement Ltd.
Through Shri R. K. Bharani,
Senior Manager (Commercial),
Having its office at:-
G-6, Hans Bhawan,
1-Bahaur Shah Zafar Marg,
New Delhi-110002.
.......Plaintiff
versus
1 M/s Mayour & Company
Ansal Farms, D-2, Satbari
New Chhattarpur Temple,
New Delhi.
2 Mayor & Company
Village Begumpur, Khatola
Behrampur Road, Jaipur Highway,
Gurgaon Haryana
.......Defendants
Date of institution : 16/7/1999
Date on which the
judgment has been
reserved for orders: 25/4/2008
Date of judgment : 30/4/2008
JUDGMENT
1. In this suit for recovery, plaintiff company has stated Page no. 2 Suit no. 82/07/99 that defendants have approached it for purchase of cement and accordingly their request was accepted and plaintiff started supplying cement to the defendants. It was agreed between them that payment would be released promptly. The plaintiff raised invoices/ bills for supply of cement and defendants have been making "on account" payments against invoices submitted by the plaintiff. The plaintiff had been maintaining an Open Current A/c in the name of defendants in its books of account. The account made by the defendants were duly credited and adjusted against the bills raised by the plaintiff. Last payment was made by the defendants of Rs. 15,416/- on 4/9/1996 and thereafter no payment was made by the defendants to the plaintiff and as on 4/9/1996 a sum of Rs. 1,19,060/- was legally recoverable from the defendants and the defendants failed to pay the same inspite of repeated requests by the plaintiff. The defendants are liable to pay interest @ 18 % per annum on the aforesaid amount as a result a sum of Rs. 62,979/-
Page no. 3 Suit no. 82/07/99 is recoverable from the defendants as interest w.e.f 05/9/1996 till the filing of the suit. The plaintiff has served legal notice dated 18/12/1997 upon the defendants but despite service of notice they did not make the payment hence, the present suit is instituted for recovery of Rs. 1,82,939/- along with pendentelite and future interest.
2.Vide exparte judgment dated 22/10/2001 passed by Shri A.K. Garg, the then Ld ADJ, the suit was decreed. The said exparte judgment/decree was set-aside on 12/5/2007. The defendants have contested the suit by filing their written statement wherein they took the preliminary objection that the suit was without any cause of action; it has not been filed, signed, verified by duly authorised competent person; the court does not have territorial jurisdiction as no part of cause of action arose in Delhi; there is no privity of contract between the plaintiff and defendants; suit was bad for non-
Page no. 4 Suit no. 82/07/99 joinder of necessary party i.e M/s Bestech Engineers and Constructors because all the goods were supplied by the plaintiff to the said Constructors and bills were also raised against the said Constructors and statement of A/c was also maintained in the name of said constructors and the suit is barred by limitation. It is further stated that defendants have already cleared off all the accounts of M/s Bestech Engineers and Constructors and present suit has been filed in collusion with said Constructor to blackmail the defendants to extract money in the name of alleged transaction. On merits, it is stated that accounts maintained by the plaintiff are false and defendants have not made any on account payment. It is further stated that defendants always made the payment against the account of the constructor and in any case the plaintiff has not given the credit of a payment of Rs. 98,472/- and dishonestly adjusted the same against a different transaction for different entity. All other averments have been Page no. 5 Suit no. 82/07/99 controverted and denied.
3.In replication, plaintiff has reiterated and reaffirmed the stand taken in the plaint and controverted and denied the averments in the written statement. It is stated that as per documents of the defendants the services of M/s Bestech Engineers and Constructors were engaged by them only and plaintiff company has nothing to do with the said constructors directly or indirectly. The cement was dispatched and bills were raised in the name of defendants. The defendants have not deliberately placed on record alleged contract awarded by them to M/s Bestech Engineers & Constructors and nature of dealings between them is not ascertained. The stand of the defendants is contrary because on the one hand they stated that they are making payment to the plaintiff company on some other account of company and on the other hand they are denying the liability. There is no other transaction with the plaintiff except supply of Page no. 6 Suit no. 82/07/99 cement.
4.On 20/11/2007 from the pleadings of the parties following issues were framed.
1.Whether the suit has been filed without any cause of action? OPD
2.Whether the suit has been filed, signed and verified by duly authorised and competent person on behalf of plaintiff ? OPP
3.Whether the court in Delhi has no territorial jurisdiction to try the present suit? OPD
4.Whether there is no privity of contract between the plaintiff and defendant, if so, its effect ?OPD
5.Whether the suit is bad for non-joinder of M/s Bestech Engineers and Contractors as necessary party ?OPD
6.Whether the suit is barred by limitation?OPD
7.Whether the plaintiff is entitled to sit amount as claimed? OPP
8.Whether the plaintiff is entitled to interest if so, at what rate and at what period.
9.Relief.
Page no. 7 Suit no. 82/07/99
5.In support of its case plaintiff has examined Shri. S. L. Bhansali, Senior Manager Chief (Legal) and defendants have examined Shri Kishan Bisht, Consultancy-Cum- Attorney of the defendants.
6.I have heard Ld counsel for the parties at length and have gone through the material on record. MY ISSUEWISE FINDING IS AS UNDER:-
7. ISSUE NO.1 The onus of this issue was upon the defendants. Ld counsel for the defendants argued that the plaintiff has nothing to recover from the defendants as there is no liability to make the payment for alleged supply of cement because supply was made to M/s Bestech Engineers and Constructors engaged by the defendants and as such suit has been filed without any cause of action. Ld counsel for the plaintiff on the other hand argued that there is no substance in the said averments Page no. 8 Suit no. 82/07/99 because defendants have not placed on record contents of the contract between the defendants and M/s Bestech Engineers and Constructors so as to ascertain what was the nature of dealing with them. It is argued that cement was supplied on their factory and account has been maintained in the name of defendants company in the Ledger A/c of plaintiff where payments were credited in the accounts of the defendants. Ld counsel for the plaintiff pointed out that if there is no liability of the defendants, what was the purpose for maintaining the accounts of plaintiff in the account books of the defendants which has been proved as Ex. DW-1/4. It is further argued that the defendants have clearly shown that payment of Rs. 98,472.88/- in the Ledger A/c of the defendants in Ex. DW-1/4 and it is the stand of the defendants that the said payment has been wrongly shown paid in some other account for some other transaction by the Plaintiff. It is therefore argued that the above facts makes it clear that suit has been instituted Page no. 9 Suit no. 82/07/99 with a valid cause of action. The above evidence referred and relied upon by the counsel for the defendants and other material record clearly stipulated that the plaintiff has cause of action to institute the present suit against defendants. Issue no.1 is accordingly decided in favour of Plaintiff and against the defendants.
8. ISSUE NO.2 The onus of this issue was upon the Plaintiff. The PW1 deposed in his affidavit that he has appeared as Attorney of the plaintiff company vide General Power of Attorney Ex.PW-1/1. It is further deposed that the plaintiff company executed the GPA in favour of Shri M. K. Singhi as Ex.PW-1/2. As per Resolution Ex. PW-1/3 dated 29/01/04 the power of attorney was executed by Shri O.P. Kalani on behalf of plaintiff company by virtue of Power of Attorney dated 23/7/1997 in favour of Shri R.K Bharani Ex. PW-1/4. Ld counsel for the defendants Page no. 10 Suit no. 82/07/99 argued that in cross-examination the PW1 has stated that he has not filed any appointment letter of the plaintiff company. It is further pointed out that PW1 admitted that the resolution dated 9/4/1997 does not mention of passing the resolution regarding the court cases etc. Ld counsel for the defendants further argued that in the Resolution dated 9/4/1997 the name of the defendants are not mentioned. PW1 replied voluntarily that the name of the party is not required to be specifically mentioned. PW1 further deposed that the resolutions are entered in the minute books and extracts of the minutes books are already on record. Ld counsel for the Plaintiff argued that the witness has brought the minutes books but Ld counsel for the defendants did not put any question in that regard. The deposition of PW1 and his cross-examination shows that he has successfully replied all the questions put in the cross- examination questioning his competency to depose on behalf of Plaintiff company and also the competency of Page no. 11 Suit no. 82/07/99 the person who has instituted the present suit on behalf of Plaintiff company. The transaction between the parties is not disputed and dispute is with regard to the liability by defendants to make payment to the plaintiff. The evidence led by the plaintiff with regard to this issue is sufficient to prove that suit has been instituted on behalf of the Plaintiff by duly authorised, competent person and PW1 is also duly authorised to depose on behalf of the Plaintiff. Issue no.2 is accordingly decided in favour of plaintiff and against the defendants.
9. ISSUE NO.3 The onus of this issue was upon the defendants. During arguments Ld counsel for the defendants argued that no cause of action took place in Delhi. In reply, Ld counsel for the plaintiff stated that if defendants counsel is so interested, Plaintiff has no objection to the return of the plaint. When it was pointed out to Ld counsel for the defendants that this case is already 9 years old, the Ld Page no. 12 Suit no. 82/07/99 counsel for the defendants did not press this issue any more. Thus both the Ld counsels agreed that the mater be disposed of finally by this court. The issue no.3 with regard to territorial jurisdiction of this court is disposed of in above terms.
10. ISSUE NO. 4&5.
The onus of this issue was upon the defendants. In preliminary objection no. 6 in the written statement, it was alleged that defendants have no privity of contract with the Plaintiff and thus no liability to pay any amount to the Plaintiff because none of the alleged bills/challans was ostensibly received by the defendants. In preliminary objection no. 8 it is also stated that suit is bad for non-joinder of necessary party i.e M/s Bestech Engineers and Constructors because all the said goods were supplied by the Plaintiff to the said constructor, so called bills were also raised against the said constructor and statement of A/c was made in the name of said Page no. 13 Suit no. 82/07/99 constructor. However, in preliminary objection no.11, it is stated that the defendants engaged the service of M/s Bestech Engineers and Constructors and the Plaintiff was engaged by the said M/s Bestech Engineer and constructors and thus having no direct privity of contract with the defendants and the alleged liability is due only qua the M/s Bestech Engineers and Constructors and the defendants have already cleared off all the accounts of the said contractor.
11.I have seen the evidence led by the defendants to find out whether the above averments in the written statement has been substantiated or not. In Affidavit of DW1 in para. 3 it is deposed that in the year 1995, the defendants engaged the services of M/s Bestech Engineers and Constructors for the construction of a site at Gurgaon. The said M/s Bestech Engineers & Constructor entered into the deal with the Plaintiff at Beawar, Rajasthan. However, the defendants used to Page no. 14 Suit no. 82/07/99 make the payments to the Plaintiff in the account of the said M/s Bestech Engineers and Constructors, although the same were required to be made by the said M/s Bestech Engineers and Constructors. In para. 4 it is deposed that the defendants never placed any purchase order or acknowledged the challan or receipts of the invoices and the said M/s Bestech Engineers and Constructors used to place orders to the plaintiff at Beawar and used to deliver the cement only to M/s Bestech Engineers and Constructors at Gurgaon. In cross-examination DW1 admitted that M/s Mayor & Company (defendant) used to make the payments to the Plaintiff by way of cheques. It is further admitted that M/s Mayor International has issued the cheques in the name of the Plaintiff towards supply of the goods. He further admitted the entries with regard to the payments to the Plaintiff towards supply of the goods. He further admitted the entries with regard to the payment to the Plaintiff i.e the five entries in Ex. DW1/4 Page no. 15 Suit no. 82/07/99 by M/s Mayor & Company (defendant). He further admitted that Shri Rajesh Mayor is one of the partner in M/s Mayor and Company and Managing Director with M/s Mayor International. It is further deposed that M/s Mayor International is controlled by the Board of Directors whereas M/s Mayor & Company is controlled by the partners. He further deposed that Challan from Ex. PW1/7 to Ex. PW1/18 are showing the supplies made to M/s Mayor and Company (defendant ). It is further admitted that M/s Mayor & company and M/s Mayor International had been maintaining separate accounts of M/s Bestech Engineers and Constructors. He can not tell if he can produce the accounts of M/s Bestech and Constructors maintained by the defendants company as the same is quit old and were not located. Further he deposed that M/s Mayor & Company had not been maintaining any accounts in the name of M/s Bestech and Constructors. He further admitted that defendants have not received goods from the Plaintiff without Page no. 16 Suit no. 82/07/99 orders because same were received by M/s Bestech Engineers and Constructors. He further admitted that he has not filed copy of the contract between M/s Mayor & company and M/s Mayor International with M/s Bestech Engineers and Constructors. He further deposed that contract with the M/s Bestech Engineers and Constructors was with regard to the construction at the rate per square feet inclusive material. Ld counsel for the Plaintiff vehmentally argued that in the absence of the contract between the defendants and the M/s Bestech Engineers and Constructors, the defendants have miserably failed to prove that M/s Bestech Engineers and Constructors were responsible for the supply of the cement for the construction and has dealt with the Plaintiff directly. It is further argued that if there is no privity of contract between the Plaintiff and the defendants, then why defendants have maintained the accounts of the Plaintiff. Ld counsel for the Plaintiff further argued that M/s Mayor International and M/s Page no. 17 Suit no. 82/07/99 Mayor & Company are the same things but has been made separate entity for the reasons best known to the defendants. It is further argued that there is no different between two so far as dealing with the Plaintiff is concerned. It is further argued that the defendants have not raised any objection to the adjustment of Rs.98,472/- in the accounts of M/s Mayor and company by cheque issued and drawn on by M/s Mayor International. At page no.11 of cross-examination of DW1, Ld counsel for the Plaintiff put specific question to the DW1 about supply of cement to M/s Bestech Engineers and Constructors and making the payment to the defendants by the Plaintiff. DW1 replied as under:-
Bills are clearly showing that the same were delivered from Beawar and to M/s Bestech at the site. It was M/s Bestech's outlook to see how the cement was reaching the site. No challan for the construction of the building was to be prepared by M/s Bestech. We made payment to the plaintiff on the basis of cheques to reduce cheque clearing time. Vol. i.e. if we would have made payment first to M/s Bestech and then M/s Bestech making the payment to the plaintiff, the same would have taken double time and, Page no. 18 Suit no. 82/07/99 thus, we had been making payment directly to the plaintiff.
12.The above deposition of DW1 in cross-examination of DW1 shows that defendants have failed to prove and substantiate their averments made in the written statement that M/s Bestech Engineers and constructors has employed the plaintiff for supply of the cement. The defendant further failed to prove that it was M/s Bestech Engineers who is liable for payment to the Plaintiff . The defendants have failed to place on record the contract between the defendants and M/s Bestech Engineers and Constructors because it was their own admitted case that they have employed M/s Bestech Engineers for construction at site. In the absence of said important evidence not led by the defendants, the defendants have failed to discharge the onus of both these issues. Plaintiff on the other hand has succeeded in proving that it has supplied the cement to the defendants and its sister concern M/s Mayor International for construction at Page no. 19 Suit no. 82/07/99 their site . The Plaintiff has also proved various documents including the payments made on account through cheques by the defendants and all these facts and material are sufficient to prove that there was privity of contract between the Plaintiff and defendants.
13.Ld counsel for the defendants vehementally argued that suit was bad for non-joinder of necessary party i.e M/s Bestech Engineers and Constructors who was necessary and proper party to the present suit. In 129 (2000) DLT 565 It was held that:
"A party who is likely to be affected by any decision in a judicial proceeding is a necessary party and a party whose presence is necessary for adjudication a dispute, though he may not be affected by the final decision, is a proper party."
Further 118 (2005) DLT 597 it was held that:-
"Necessary parties are those without whom the Court will not proceed to any judgment. Included in this category would be the persons who have an interest in the controversy of such a nature that a final decree cannot be made without either affecting their Page no. 20 Suit no. 82/07/99 interest or without causing some prejudice to their rights. Additionally, a party may be a necessary party where the decision of the Court would leave the controversy in such a condition that its final determination would be inconsistent with the rights of a party."
14. It is admitted case of the defendants that they have already cleared off dues of M/s Bestech Engineer and constructors. The defendants have not placed on record copy of the agreement between it and M/s Bestech Engineer and Constructors so that this court might have been benefited from the dealings between them to ascertain whether M/s Bestech Engineers & Constructors was necessary party to the present proceedings. For the above reasons and the law referred (Supra), I am of the considered opinion that M/s Bestech Engineers and Constructors is not the necessary party for deciding the present controversy. Accordingly, Issue no. 4&5 are decided in favour of Plaintiff and against the defendant.
Page no. 21 Suit no. 82/07/99 15. ISSUE NO.6
The onus of this issue was upon the defendants. In para.6 of the affidavit of DW1, it is deposed that the defendant cleared off accounts by making full and final payments on 06/07/1996 of Rs. 98472/- by cheque no. 451864. To prove issuance of cheque and its acknowledgment, the defendants have proved the cheque Ex. DW-1/3 (Original Seen and returned) and confirmation Certificate of bank Ex. DW-1/4. Nothing is stated in the affidavit that suit is barred by limitation.
16. The plaintiff in his affidavit Ex. P-1 in para. 5 deposed that after accounting by the defendants last payment of Rs15,416/- on 4/9/1996, a sum of Rs. 1,19,960/- was due from the defendants as on 5/9/1996. The said payment is reflected in the statement of A/c Ex. PW-1/6 in the earlier recorded evidence which has been exhibited as Ex. PW-1/21 in the evidence led after setting-aside the Page no. 22 Suit no. 82/07/99 exparte judgment. The said payment is also reflected in the statement of A/c Ex. DW-1/4 of the defendants in the accounts of the Plaintiff. The account of the Plaintiff has been debited on 28/8/1992 for a sum of Rs. 15,416/-. Thus payment made in the account shown in Ex. PW- 1/6 of Rs. 15,416/- on 4/9/1996 by the defendants are sufficient to prove that present suit instituted on 16/7/1999 is within the period of limitation. The period of limitation will start from the said part payments on 04/09/1996 and as such the suit is instituted within the period of limitation. Issue no.6 is accordingly decided in favour of plaintiff and against the defendants.
17. ISSUE No. 7 &8 The onus of these issues is upon the plaintiff. PW1 stated that after the payment of Rs. 15,416/- on 4/9/1996 as per the books of accounts of the plaintiff a sum of Rs. 1,19,960/- was due from the defendants as on 5/9/1996. It is further stated that plaintiff was entitled to claim Page no. 23 Suit no. 82/07/99 interest @ 18% per annum on the said amount. The defendant took the defence in the written statement as well as evidence that the liability of payment of the suit amount was of M/s Bestech Engineers and constructors who has engaged the plaintiff for supply of cement at the site of the defendant. It is further argued on behalf of defendants that the defendants have already cleared off the dues of M/s Bestech Engineers and Constructors and M/s Bestech was therefore liable to make payment of the amount claimed by the plaintiff. The defendant did not led any evidence to prove that the plaintiff was engaged M/s Bestech Engineers and Constructors and that the defendants have made payment of all the supply of cement to the said constructor. The explanation given by the DW1 for part payment made to the defendants also through cheque can not be believed. The defendant cannot be allowed to blow hot and cold in the same breath. On the one hand they have stated that plaintiff has been engaged by the M/s Bestech Engineer Page no. 24 Suit no. 82/07/99 Constructors for supply of cement who has been paid for supply of cement by the defendant. On the other hand, it is being deposed that defendants made the payment to the plaintiff directly in order to avoid double time in case if it has made payment to M/s Bestech Engineers and Constructors and then M/s Bestech would have made payment to the Plaintiff. This deposition is beyond pleadings and does not even find mentioned in the written statement. The defendants have even maintained the accounts of the plaintiff in its Ledger A/c and has reflected the payments made to the plaintiffs in the said account. The plaintiff has also maintained the accounts of the defendants in ordinary course of business and the defendants have failed to show that the said maintaining of accounts was fictitious and illegal. The defendant has claimed that payment of Rs. 98,472/- by Cheque no. 541874 on 6/7/1996 was full and final payment of the plaintiff in the present case. Ld counsel for the plaintiff on the other hand argued that the said Page no. 25 Suit no. 82/07/99 payment was made for other transaction which find mentioned in the case against M/s Mayor International the sister concern of the defendants. It was further argued that defendants have not objected to the adjustment of the said payment in the account of M/s Mayor International where their account has been duly credited in the said account. For that reasons, the defendant can not claim adjustment of the said payment in the present case. Defendant has tried to prove the said fact by proving extracts of cheque-book of the account of the defendant M/s Mayor and Company with the Punjab and Sind Bank and in the leaf of said Cheque book the payment of Rs. 98477/- has been shown to be paid to the plaintiff from the accounts of the defendant.
18.PW1 in his cross-examination has categorically replied to the question with regard to the issuance of the cheque by the defendant on 6/7/1996 for Rs. 98,472/- stating that the said cheque was received on 6/7/1996 and same Page no. 26 Suit no. 82/07/99 was duly credited in the accounts of M/s Mayor International. Ld counsel for the defendant has not suggested to the witness that the credit of the account of M/s Mayor International by the said cheque was irregular or illegal. The silence of the defendants after reply of the PW1 shows and implies that the defendant has accepted the adjustment of a sum of Rs. 98,472/- in the accounts of M/s Mayor International, sister concern of the defendant. Further in the cross-examination Ld counsel for the defendant has tried to suggest that the aforesaid payment of Rs. 98,472/- was made by the defendant as advance to which PW1 clarified that the said payment was made by the defendant towards its outstanding amount as per the books of the account. In the later part of the cross-examination it was suggested to the witness that plaintiff has unauthorisedly appropriated the said amount of Rs. 98,472/- in the account of M/s Mayor International, although same was made by the defendants towards outstanding of its Page no. 27 Suit no. 82/07/99 amount. This stand is again contrary to the stand already taken in the cross-examination wherein it was stated that the payment was made as advance.
19.Ld counsel for the defendants further argued that the statement of A/c of the plaintiff is not correct because there are several entries reflected in it for which no document has been filed. It is further argued that the plaintiff has wrongly debited the account of the defendants by freight charges where as there is no agreement for recovery of freight charges. Further the plaintiff has made certain entries against debit note without issuing any debit notes by the defendant. It is therefore argued that the Plaintiff was not entitled to any amount as claimed in the suit. With regard to the claim of the interest, it is also argued that there is no agreement between the parties and PW1 admitted in the cross-examination stating that there is no consent between the parties for claiming interest. PW1 has Page no. 28 Suit no. 82/07/99 denied the suggestion that in commercial mercantile practice interest is not claimed from the parties for long transactions. PW1 further denied the suggestion that there is no consensus and agreement between the parties relating to the claim of the interest. Voluntarily deposed that it is mentioned in the bills.
20. The plaintiff has placed on record invoices and the bills of the supplies made to the defendants. The said bills were raised in the name of the defendant company and regularly reflected in the statement of A/c of the plaintiff who has also proved the bills and the invoices against which supply was made. The defendants have not denied that the plaintiff has supplied the cement at its factory. It was simply alleged that the plaintiff has supplied the cement to M/s Bestech Engineers and Constructors who are liable to make the payments to the plaintiff. It has already been decided, that the plaintiff has failed to prove the said fact and can not be benefited Page no. 29 Suit no. 82/07/99 from the same. On the bills, there is stipulation that the interest @ 24 % shall be charged if payment is not received. The evidence on record has proved that plaintiff has not received the payment for the amount claimed in the present suit. The plaintiff has further succeeded in proving that it has supplied the cement to the defendants at its factory site to the constructor engaged by the defendants. It has already been held that there is privity of contract between the plaintiff and the defendants and defendants have failed to prove that it has already paid full and final payment to the plaintiff for the amount claimed in the present suit. The plaintiff has claimed interest @ 18% and has calculated Rs. 62,979/- in the suit amount along with principal amount of Rs. 1,19,960/-. For the above discussion, the plaintiff is entitled to the suit amount alongwith pendentelite and future interest from the date of institution of the suit. These issues are accordingly decided in favour of plaintiff and against the defendants.
Page no. 30 Suit no. 82/07/99 21. RELIEF
In the light of my above findings on the issues, suit for recovery of Rs. 1,82,939/- is decreed in favour of plaintiff and against the defendants. Defendants are further liable to pay pendentelite and future interest @ 12 % per annum on the principal amount of Rs. 1,19,960/- from the filing of the suit till the realisation of decretal amount. Cost of the suit also awarded in favour of plaintiff and against the defendants. Decree-sheet be prepared accordingly. File be consigned to the record room after due compliance.
Announced in the open court on 30/4/2008 (RAJ KUMAR CHAUHAN) ADDITIONAL DISTRICT JUDGE:
DELHI.