Delhi District Court
M/S Shakti Trading vs M/S Dzirevents & Exhibitions on 19 November, 2022
IN THE COURT OF DISTRICT JUDGE
(COMMERCIAL-02),
SOUTH, SAKET COURT, NEW DELHI
CS (COMM) 50/2022
M/s Shakti Trading,
Through Shri Shashi Kant Sharma (Proprietor),
Office at A-166, Chauhdary Sardar Singh House,
Raju Park, Devli Road, Khanpur,
New Delhi - 110080 ..... Plaintiff
versus
1. M/s Dzirevents & Exhibitions ..... Defendant No. 1
Office at Khasra No. 378, Plot No. 11,
Chattarpur Road, New Delhi-110074
2. Shri Kapil Sahu ..... Defendant No. 2
Son of Shri Ramji Sahu,
R/o Sahu Niewas, H. No. A1597,
Dabua Colony, Faridabad, Haryana
3. Shri Ashish Kumar ..... Defendant No. 3
R/o 16, Masigad, Opp. Shukhdev Vihar,
Near Church & Fortish Hospital,
Delhi
Date of Institution: 24.09.2018
Arguments concluded on :18.11.2022
Date of Judgment: 19.11.2022
JUDGEMENT
1. This is a suit originally filed U/o XXXVII CPC for recovery of Rs.10,49,547/-. The case was converted into an ordinary suit in view of the statement of the counsel for the plaintiff on 24.09.2018 M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 1 of 27 Case of Plaintiff
2. In brief, case of the plaintiff is that it is a proprietorship concern being run/managed through its proprietor Shri Shashi Kant Sharma dealing in all kinds of plywoods, Flush Door, Laminates, Molding, margins etc. Defendants were regular customers of the plaintiff, who used to purchase the material on credit/cash basis from the plaintiff against tax invoice/bills.
3. It is pleaded that during the period between 2016- 18, plaintiff supplied material to the defendants on number of occasions and issued bills against the material supplied. Plaintiff has reminded the defendants about payment of the pending bills but the defendants avoided paying the same & details of outstanding bills are as follows :-
S. Tax Invoice Tax Pending Due on dated Overdue Interest No. Dated Invoice Amount days Till No. 31.08.18
1. 21.02.2017 345 Rs.66,499/- 08.03.2017 537 Rs.23,629/-
2. 21.02.2017 346 Rs.62,983/- 08.03.2017 537 Rs.22,379/-
3. 22.02.2017 349 Rs.1,06,601/- 09.03.2017 536 Rs.37,807/-
4. 24.02.2017 352 Rs.44,058/- 11.03.2017 534 Rs.15,567/-
5. 05.08.2017 31 Rs.1,27,181/- 21.08.2017 374 Rs.31,371/-
6. 07.08.2017 32 Rs.31,232/- 23.08.2017 372 Rs.7,662/-
7. 09.08.2017 35 Rs.75,162/- 25.08.2017 370 Rs.18,339/-
8. 13.09.2017 82 Rs.35,051/- 28.09.2017 337 Rs.7,781/-
9. 05.12.2017 265 Rs.88,883/- 20.12.2017 250 Rs.14,873/-
10. 08.12.2017 273 Rs.84,420/- 23.12.2017 247 Rs.13,957/-
11. 10.12.2017 277 Rs.11,533/- 25.12.2017 245 Rs.1,891/-
12. 17.12.2017 298 Rs.13,142/- 02.01.2018 240 Rs.2,093/-
13. 20.12.2017 305 Rs.40,929/- 05.01.2018 237 Rs.6,439/-
14. 31.01.2018 433 Rs.74,997/- 15.02.2018 196 Rs.9,799/-
Total Rs.8,62,671/- Rs.2,13,587/- M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 2 of 27
4. It is pleaded that outstanding bills amounting to Rs.8,62,671/- are pending to be paid by the defendants in respect of the aforementioned tax invoices and the material supplied. It is stated that as per the ledger account statement, defendants have to pay an outstanding amount of Rs.8,35,960/- apart from interest amounting to Rs.2,13,587/- calculated @ 24% per annum till 31.10.2018 and thus, total amount works out to be Rs.10,49,547/-.
5. It is stated that after much persuasion, defendants issued eight cheques during 31.12.2017 to 27.06.2018 in the total sum of Rs.7,97,940/-, detailed given in para 9 of the plaint. On presentation, cheques were returned with the remarks 'funds insufficient'. Plaintiff sent a legal notice U/s 138 NI Act with respect to the abovementioned bounced cheques. Defendants failed to pay the amount despite service of legal demand notice dated 31.08.2018. Plaintiff has prayed for decree in the sum of Rs.10,49,547/- alongwith pendente lite & future interest @ 24% per annum.
6. Shri R.D. Tyagi, Learned counsel filed appearance on behalf of defendant no. 3 but since defendant no. 3 failed to file written statement, his right to file written statement was closed on 25.11.2019 by the Ld. Predecessor of this court. On 27.02.2020, Court noted that defendant nos. 1 and 2 had been served by way of publication in the newspaper 'Veer Arjun' dated 07.02.2020. On 15.03.2021, this case was received by way of transfer to this Commercial Court. On 01.09.2021, defendant no. 3 was directed to file statement of admission/denial of documents within two weeks. Vide order dated 05.10.2021, defendant nos. 1 & 2 were proceeded exparte. Defendant no. 3 filed an application M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 3 of 27 U/o VII Rule 11 CPC for rejection of plaint. Vide order dated 27.11.2021, said application U/o VII Rule 11 CPC filed by D-3 was dismissed.
7. Perusal of record shows that on 05.11.2018, D-3 filed written statement and thereafter on 25.11.2019, right of D-3 to file written statement was closed by Ld. Predecessor of this court.Case of Defendant No. 3
8. In his written statement, what defendant no. 3 stated that defendant no. 3 was a partner with defendant no. 1 an unregistered firm, since the year 2014, providing events and exhibition services to the clients. The cheques were signed by defendant no. 2 & 3 being partners of defendant no. 1. It is stated that it was also clearly understood between the partners as to which of the vender would be dealt with by which of the partners of defendant no. 1 and as such the work and nature of services had been segregated between defendant no. 2 and defendant no.
3. It is stated that the goods and the material received on behalf of defendant no. 1 were to be received by the respective partners separately and independently. As the invoices of the material had to be signed by defendant no. 2 and defendant no. 3 separately as per the allocation of vendors to them and thereafter, the same had to be paid after verification and cross checking of all those invoices relating to the goods and material and then, payment had to be made by cheque under the signatures of both the partners i.e. defendant no. 2 and defendant no. 3. It is stated that dispute arose between defendant no. 2 and defendant no. 3 which resulted into termination of partnership firm during the month of November, 2017 and thereafter, CA of defendant no. 1 firm M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 4 of 27 prepared draft of the termination of the partnership firm which was sent for approval to the defendant no. 2 through email dated 04.12.2017.
9. It is further averred in the written statement that there was addition of a new partner namely Shri Ramji Sahoo and the business of defendant no. 1 was to continue without defendant no. 3 but it was settled between them that the vendors would be allocated to each of the partners who would take care of their liability and settle the dues/accounts between them. It is submitted that in the draft of the partnership deed, specifically the name of the vendors to be handled and taken care by the defendant no. 3 and by the defendant no. 2 were specified wherein the total liability of the defendant no. 3 was Rs.9 Lakhs as per the list mentioned in the draft deed of the partnership. It is stated that the name of the plaintiff has not been mentioned in the said list of the liability of the defendant no. 3 as the name of the plaintiff had been mentioned in the list of liability assigned to the defendant no. 2 on behalf of defendant no. 1. Thus, as per the clear understanding between defendant nos. 2 and 3, the liability of the plaintiff firm is entirely the responsibility of the defendant no. 2 as regards claims made by the plaintiff firm and not the liability of the defendant no. 3.
10. It is submitted that it was also the mutual understanding between defendant nos. 2 and 3 that they would clear and settle all outstanding dues and liabilities in respect of the bank loan etc but defendant no. 2 did not take care of such liability & defendant no. 3 had taken interest and cleared the bank liabilities on behalf of defendant no. 1 under the compelling circumstances as the defendant no. 2 refused to cooperate with M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 5 of 27 defendant no. 3. It is submitted that there was separate list of the vendors for settlement of their respective dues and liabilities upon the defendant no. 2 on behalf of defendant no. 1 which included the liability of the defendant no. 2 to clear the dues of Rs.5,70,000/- of the plaintiff firm which was also known as Shashi Timber, sole proprietorship firm of Shri Shashi Kant Sharma. It is submitted that during the course of business transaction between the plaintiff and defendant no. 1, defendant nos. 2 and 3 had issued certain blank and signed cheques to the plaintiff firm as security for the supply of the goods and material.
11. It is submitted that since the dispute between defendant nos. 2 and 3 spread in the market and came to the knowledge of vendors and clients including the plaintiff firm, but the defendant no. 2 avoided signature on the said draft deed with the new partner and also avoided the liabilities pursuant to the said draft of partnership deed wherein defendant no. 3 had to remain out of the said firm by the entry of new partner as mentioned in the said draft. However, defendant no. 2 continued to run the business on behalf of defendant no. 1 without the involvement of defendant no. 3, as such the defendant no. 2 had misused the name of defendant no. 1 for the purpose of taking undue advantage in the name of the firm which was not within the knowledge of defendant no. 3. It is submitted that defendant no. 2 had been running the business of defendant no. 1 without closing the said previous bank account of the firm/defendant no. 1 and the defendant no. 2 projected himself as proprietor of defendant no. 1 firm and using the same name till date whereas the crucial fact of the partnership of defendant no. 3 is not there in the said firm of defendant no. 1.
M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 6 of 27
12. It is further submitted that defendant no. 3 apprised the plaintiff in the month of November/December, 2017 about this fact that he had left the said partnership firm of defendant no. 1 and the defendant no. 3 had specifically mentioned/communicated to the plaintiff that liability, if any would lie on defendant no. 2 on behalf of defendant no. 1 and thereafter, plaintiff assured the defendant no. 3 that he would take care of the issue with the defendant no. 2 for the reasons that the plaintiff was still dealing with the defendant no. 2 and having other business transactions with defendant no. 2 on behalf of defendant no. 1. It is stated that there was no involvement of defendant no. 3 in any of those subsequent transactions conducted by defendant no. 2 with the plaintiff for which he is solely responsible for making the due payment, if any, and settle the account with the plaintiff and hence, there cannot be any liability of the defendant no. 3 for the transactions made by the plaintiff with the defendant nos. 1 and 2, after the said draft of deed of partnership dated 01.12.2017 duly communicated to the defendant no. 2 on 04.12.2017.
13. It is submitted that plaintiff filed the present suit in the month of September, 2018 and when the summons of the said suit was received by defendant no. 3 then only the defendant no. 3 came to know about the several liabilities imposed upon the defendant no. 3, lying to the share of defendant no. 2 on behalf of defendant no. 1. It is stated that scrutiny of documents enclosed with the suit show that all invoices had been received by defendant no. 2 on behalf of defendant no. 1 and few of the invoices appeared to have been forged and fabricated by the plaintiff with connivance of the defendant no. 2 which is evident M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 7 of 27 from the fact that one of the invoice no. 31 dated 05.08.2017 for the amount of Rs.1,27,181/- wherein the GST has been added in the said invoice, but in the subsequent invoice no. 346 dated 21.08.2017 for the amount of Rs.62,983/-, no GST was added in the said invoice and the same has been charged as VAT which was changed to GST without any basis.
14. It is submitted that no invoice dated 21.08.2017 in the chart of the transaction is mentioned in the suit. It is submitted that plaintiff is very much aware about the leaving of defendant no. 3 from the partnership firm of defendant no. 1 in the month of November, 2017 which is evident from the documentary evidence of the cheque no. 000004 dated 31.12.2017 for the amount of Rs.88,883/- and another cheque no.
000003 dated 10.01.2018 for the amount of Rs.84,420/- from his individual account no. 50100205074621 drawn on HDFC Bank, Chattarpur Branch, New Delhi which was signed by defendant no. 2 only which is the sole liability of defendant no. 2 as the said cheques were not signed by defendant no. 3 and the same were not issued from the partnership account of the defendant no. 1.
15. Thus, it is submitted that the individual liability of defendant no. 2 in respect of the abovementioned cheques cannot be attributed and imposed upon the defendant no. 3 since those cheques had been issued by defendant no. 2 in his individual capacity in favour of plaintiff for which defendant no. 3 is having no liability towards the plaintiff, but the name of defendant no. 3 had been wrongly dragged upon in the present case.
16. On merits, defendant no. 3 admitted to the extent of the nature of the business done by the plaintiff and supply of required material under different invoices and raising of the bills M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 8 of 27 for the same. It is submitted that defendant no. 2 used to visit the shop of the plaintiff and place purchase order for the material to be supplied and defendant no. 3 never visited the office/shop of the plaintiff. It is stated that defendant no. 2 used to place purchase orders directly with the plaintiff as is evident from the various invoices produced by the plaintiff.
17. It is averred that plaintiff has placed on record certain false and fabricated invoices from the invoice of book no. 7, Sr. No. 346 dated 21.08.2017 but there is no such invoice mentioned in the chart or invoice. It is stated that all the invoices had been signed by defendant no. 2 in token of receipt of the goods supplied by the plaintiff to him who receive the same on behalf of defendant no. 1 and none of the invoice bears the signature of defendant no. 3. Hence it cannot be said that goods and material supplied by the plaintiff were received by the defendant no. 3 on behalf of defendant no. 1. It is stated that therefore, defendant no. 3 is not having any liability for settlement of account with the plaintiff.
18. It is further pleaded that invoices mentioned in the chart from Sr. No. 1 to 9 relates to period when defendant no. 3 was the partner of defendant no. 1, whereas rest of the invoices i.e. 9 to 14 in the chart pertain to the period when defendant no. 3 had withdrawn himself and opted out of the firm of defendant no. 1 by virtue of draft deed dated 01.12.2017 of the new partnership with another partner after his withdrawal. It is stated that defendant no. 2 in connivance with the plaintiff deliberately and intentionally mentioned subsequent transactions after 01.12.2017 which took place between defendant no. 2 and plaintiff without any involvement of defendant no. 3 and as such same are not M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 9 of 27 binding upon defendant no. 3.
19. Next, it is further stated that the cheques enclosed with the suit had been signed by defendant no. 2 from his personal account and not from the account of defendant no. 1. Plaintiff mis-used those advance blank cheque given by defendant no. 3 to the plaintiff as security for the outstanding dues which had signature of defendant no. 3 alongwith defendant no. 2 but the date mentioned therein was related to the subsequent period when defendant no. 3 had already withdrawn out of the status of partner in the said partnership firm/defendant no. 1. It is submitted that plaintiff is having no cause of action to file the present suit against defendant no. 3. Defendant no. 3 has prayed for dismissal of the present suit.
Issues
20. Case management hearing was held & issues were framed and schedule timelines were fixed for speedy disposal of the case. The issues framed are as under :-
1. Whether plaintiff is entitled to the recovery of principal amount of Rs.8,35,960/- from the defendants (D-1 to D-
3)? OPP
2. Whether D-2 and D-3 had issued certain blank and signed cheques to the plaintiff as security for supply of goods and material during the course of transactions between plaintiff and D-1? OPD
3. Whether D-3 had apprised plaintiff in November, 2017 about leaving the partnership firm (D-1) and the liability, if any, would lie on D-2, on behalf of D-1 or the plaintiff assured D-3 that he would take up the issue with D-2? OPD
4. Whether there was no involvement of D-3 in the subsequent transactions conducted by D-2 with the M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 10 of 27 plaintiff since December, 2017 and therefore, D-3 is not liable to pay for the said transactions? OPD
5. Whether plaintiff is entitled to interest @ 24% per annum amounting to Rs.2,13,587/- till 31.08.2018? OPP
6. Relief.
21. This Court has heard the submissions advanced by Shri Dhiraj Bidhuri and Shri Jasram Sharma, Ld. Counsels appearing for plaintiff and Shri Tarun Narayan Tyagi, Ld. Counsel appearing for defendant no. 3 and perused the material placed on record.
22. It is pertinent to note before analysis of evidence that in order to explore the possibility of settlement, parties were referred to Mediation Center and vide settlement dated 11.03.2022, plaintiff and defendant no. 3 agreed to settle the matter and defendant no. 3, Shri Ashish Kumar agreed to pay a sum of Rs.3.5 Lakhs in seven instalments of Rs.50,000/- each, during the period between 10.04.2022 to 10.10.2023. Statements of the parties to that effect was recorded on 25.03.2022 but since defendant no. 3 as well as defendant no. 2 are the partners of defendant no. 1's partnership firm, therefore, question arose about the maintainability of suit against defendant nos. 1 and 2 having regard to the position of law pertaining to joint and several liabilities of the partners in a partnership firm. In view of this, plaintiff chose to proceed further with the case and adduced evidence. Shri Shashi Kant Sharma tendered his affidavit in evidence, Ex.PW-1/A and he was cross-examined by Shri T.N. Tyagi, Ld. Counsel appearing for D-3. D-3 had not adduced any defence evidence.
M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 11 of 27 Submissions advanced by Plaintiff
23. Ld. Counsel for plaintiff submitted that plaintiff is a proprietorship concern managed through its proprietor Sh. Shashi Kant Sharma dealing in all kinds of plywood, Flush Door, Laminates, Molding, margins etc. and the defendants were the regular customer of the plaintiff. It is submitted that as per the records maintained by the plaintiff, the defendants are liable to pay outstanding amount of Rs.8,35,960/-. It is submitted that defendants have to pay amount of Rs.2,13,587/- towards interest @ 24% per annum and total amount comes to Rs.10,49,547/- till date 31.08.2018.
24. Ld. Counsel for the plaintiff further submitted that after persuasion, defendants issued eight cheques in favour of plaintiff at number of occasion as part payment to discharge his legal liabilities out of total outstanding amount Rs.10,49,547/- towards the plaintiff, who presented all cheques (except cheque bearing no.000003 & 00004) in its bank, which were returned with the remarks "FUND INSUFFICIENT". It is submitted that plaintiff sent a legal notice under section 138 of N.I Act regarding the bounced cheques on 31.08.2018, which was received by the defendants but despite service of the notice, defendants have neither made the payments nor have given any reply to the demand notice. It is submitted that all the outstanding bills are tax paid bills, whereas the plaintiff has paid all the taxes as per law.
25. Ld. Counel for the plaintiff urged that D-1 and D-2 are already exparte vide order dated 05.10.2021. D-3, in the preliminary objection of written statement admitted that he was partner in the Dzirevents and Exhibitions. D-3 in the para no. 13 M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 12 of 27 of preliminary objection of written statement, admitted the liabilities along with D-2. Ld. Counsel for the plaintiff submitted that D-3 has stated in para no. 15 of the preliminary objection of written statement that D-2 and D-3 had issued certain blank and signed cheques in favour of plaintiff on behalf of the D-1 for supply of goods and material.
26. He further argued that D-3 admitted its liabilities in para no. 18, 20, 23 & 26 of the preliminary objection of written statement. It is submitted that statement of D-3 in para No. 29 is contradicts Para No. 26 of the preliminary objection of written statement. It is submitted that there is contradiction of statement in para wise reply of Para No. 3-4 of preliminary objection. There is also contradiction of statement in para wise reply of Para No. 6-7 to the statement of Para No. 26 of preliminary objection. It is submitted that D-3 admitted his business dealing with plaintiff partners of D-1 are equally liable to pay their liabilities. It is submitted that in the draft "deed of admission-Cum- retirement", it is clearly stated that "The point not provided here before the partnership shall be governed by the Indian Partnership Act." It is submitted that perusal of the document reveals active participation of D-3 as a partner on behalf of D-1 till 2018 and thus, D-3 cannot escape from his liabilities as per the partnership act 1932.
27. Ld. Counsel for the plaintiff submitted that the bills are admitted and D-3 never raised any kind of objection in his written statement regarding the claim of the plaintiff for Rs.10,49,547/- along with interest @ 24% per annum.
28. In support of his submission , Ld. Counsel for the plaintiff placed reliance on "Rampa Devi and Others V/s M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 13 of 27 Bishambhar Nath Puri & Others", 1976 AIR (ALD);
"Meenakshi Achi & Another Vs P.S.M. Subramanian Chettiar & Others., 1956 (69) LW 704; Laxmibai V/s Roshan Lal, 1972 AIR (RAJ) 288; Chainraj Ramchand Vs. V.S Narayanaswamy 1982 AIR (MAD) 326 and Syndicate Bank Vs R.S.R Engineering Work & Others, (2003) 6 SCC 265. It is submitted that in the last judgment, it is observed that in the absence of agreement discharging the retiring partners, they would remain liable towards their pre-retirement liability. In para 11 of the said judgment, it is held that the plaintiff appellant had every right to proceed against all the defendants in the suit and there shall be a decree against all the respondents.Submissions advanced by Defendant No. 3
29. Ld. Counsel for D-3 submitted that the suit is bad in law as there is no clarification of specification in regard of cause of action arose against D-3. It is submitted that D-1, the firm had already dissolved in the year 2017 and few cheques were in possession of the plaintiff, which have been misused by the plaintiff later on after taking the undue advantage of the blank few cheques signed by D-3 in the capacity of one of the partner of D-1.
30. Ld. Counsel for D-3 submitted that plaintiff relied on the invoices mentioned in para no. 5 in respect of alleged material supplied in the year 2016-18 and cheques issued in favour of plaintiff in para no. 9 of the suit. It is submitted that the supporting documents filed by plaintiff are fabricated and the endorsement of receiving the alleged material by D-2 and no single invoice has been endorsed by D-3 on behalf of D-1, and the plaintiff has failed to show that invoices were even in the M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 14 of 27 notice or knowledge of D-3 and objection in this regard had been taken by D-3 in para no. 21 of the written statement.
31. Ld. Counsel for D-3 submitted that D-3 is not liable to pay any amount to the plaintiff since the transactions had not been taken place on behalf of the firm/defendant no. 1 for the reasons that the cheque had not been signed by defendant no. 3 which is essentially required for all the transactions conducted on behalf of defendant no. 1 and thus, defendant no. 3 cannot be held responsible for clearing and settling any outstanding dues of the plaintiff as alleged in the plaint. Subsequent transactions conducted between plaintiff and the defendant no. 2 without any knowledge/information about the same to defendant no. 3. It is submitted that present suit is not maintainable against defendant no. 3.
Issue-wise findings Issue no. 2
32. Whether D-2 and D-3 had issued certain blank and signed cheques to the plaintiff as security for supply of goods and material during the course of transactions between plaintiff and D-1?" The onus to prove this issue was upon defendants.
33. Case of the defendant no. 3 was that during the course of business transaction between the plaintiff firm and defendant no. 1, defendant nos. 2 and 3 had issued certain blank & signed cheques to the plaintiff firm as security for the supply of the goods and material. In written statement, D-3 also stated that few cheques enclosed with the suit had been signed by defendant no. 2 from his personal account and not from the account of defendant no. 1. In the written statement, D-3 stated that plaintiff mis-used those advance blank cheque given by M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 15 of 27 defendant no. 3 to the plaintiff as security for the outstanding dues which had signature of defendant no. 3 alongwith defendant no. 2. It is submitted that the date mentioned therein relates to the subsequent period when defendant no. 3 had already withdrawn out as partner in the said partnership firm/defendant no. 1. Admittedly, D-3 has not protested or lodged any complaint regarding the fact that the alleged blank cheques were mis-used by the plaintiff. Being the partner of D-1, both D-2 and D-3 are jointly and severally liable for the day to day affairs of D-1/firm with respect to the third parties. D-3 has not appeared in the witness box and has failed to establish during cross-examination of PW-1 that blank and signed cheques were issued by D-2 and D-3 as security. Issuance of cheques from personal account by a partner will not absolve other partners of their liability. D-3 has failed also to show that cheques were misused by plaintiff.
34. In view of the aforesaid reasons, issue no. 2 is decided accordingly in favour of the plaintiff and against the defendants.
Issue no. 3 & Issue no. 4
35. Whether D-3 had apprised plaintiff in November, 2017 about leaving the partnership firm (D-1) and the liability, if any, would lie on D-2, on behalf of D-1 or the plaintiff assured D-3 that he would take up the issue with D-2 and whether there was no involvement of D-3 in the subsequent transactions conducted by D-2 with the plaintiff since December, 2017 and therefore, D-3 is not liable to pay for the said transactions?" The onus to prove these issues was upon the defendant no. 3. Being inter-connected, these issues are taking up together.
M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 16 of 27
36. Ld. Counsel for the defendant no. 3 submitted that defendant no. 3 had apprised the plaintiff in the month of November/December, 2017 about the fact that he had left the said partnership firm of defendant no. 1 and the defendant no. 3 had specifically mentioned/communicated to the plaintiff that his liability if any would lie on defendant no. 2 on behalf of defendant no. 1 and thereafter the plaintiff had assured the defendant no. 3 that he would take care of the issue with the defendant no. 2 for the reasons that the plaintiff was still dealing with the defendant no. 2 and having other business transactions with defendant no. 2 on behalf of defendant no. 1 and there was no involvement of defendant no. 3 in any of those subsequent transactions conducted by defendant no. 2 with the plaintiff for which other partner/defendant no. 2 shall be solely responsible for making the due payment, if any, and settled the account with the plaintiff and hence there cannot be any liability of the defendant no. 3 after the said draft of deed of partnership dated 01.12.2017 duly communicated to the defendant no. 2 on 04.12.2017.
37. Ld. Counsel for D-3 submitted that since the dispute between defendant nos. 2 and 3 had spread in the market and also came into the knowledge of their vendors and clients including the plaintiff firm also, but the defendant no. 2 had avoided the signature/execution of the said draft partnership deed with the new partner and also avoided the liabilities in pursuant to the said draft of partnership deed wherein defendant no. 3 has to remain out from the said firm by the entry of new partner as mentioned in the said draft. However, defendant no. 2 had continued to run the business on behalf of defendant no. 1 without the M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 17 of 27 involvement of defendant no. 3, as such the defendant no. 2 had misused the name of defendant no. 1 for the purpose of taking undue advantage in the name of the firm which was not within the knowledge of defendant no. 3. It is submitted that defendant no. 2 had been running the business of defendant no. 1 without closing the said previous bank account of the same firm of defendant no. 1 and the defendant no. 2 had projected himself as proprietor of defendant no. 1 firm and using the same name till date whereas the crucial fact of the partnership of defendant no. 3 is not there in the said firm of defendant no. 1.
38. Defendant's version is that it was unregistered partnership firm which was created in the year 2014 but it had been dissolved on 21.12.2017. Dissolution deed was not signed by the partners. Oral contract was entered into and there was mutual understanding between the two partners i.e. D-2 and D-3 herein. By virtue of said contract between the partners , it was agreed that both the partners had shared of 50% of all the assets and liabilities.
39. After 01.12.2017, it was Kapil Sahoo D-2, who had been dealing with the plaintiff and other three persons on behalf of firm and D-3 had come out of the partnership firm. It is further the case of defendant as pleaded in para 8 of the written statement that there was dispute between the partners i.e. D-2 and D-3 which resulted into the termination of the partnership firm during the month of November 2017 and thereafter, the CA of the D-1 firm prepared draft of the termination of the partnership firm which was sent for approval to D-2 on 04.12.2017 through email ID.
M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 18 of 27
40. In para 9 of WS that there was oral settlement between the D-2 and D-3 with respect to the vendors which would be dealt by D-3 respectively. In para 10 it is submitted that in the partnership deed there was an addition of new person as partner and partnership of D-3 had to be ended by the entry of new partner in the said firm.
41. The case of Defendant no. 3 as pleaded is that Defendant no. 2 had continued to run the business on behalf of defendant no. 1 without the involvement of defendant no. 3, as such the defendant no. 2 had misused the name of defendant no. 1 for the purpose of taking undue advantage in the name of the firm which was not within the knowledge of defendant no. 3. Ld. Counsel for D-3 submitted that Defendant no. 2 had been running the business of defendant no. 1 without closing the said previous bank account of the same firm of defendant no. 1 and the defendant no. 2 had projected himself as proprietor of defendant no. 1 firm and using the same name till date whereas the crucial fact of the partnership of defendant no. 3 is not there in the said firm of defendant no. 1.
42. According to defendant no. 3, draft dissolution deed (named as Deed of Admission cum Retirement) prepared by the CA in which the name of another incoming partner RamJi Sahoo-father of defendant no. 2 was specified and thus, defendant no. 2 Kapil Sahoo and Ashish Kumar defendant no. 3 had agreed that Sh. Ashish Kumar would be going out of partnership firm and Sh. Ramji Sahoo would come in his place and the firm would continue to be run by them in the existing name of D-1 i.e. M/s Dzirevents and Exhibitions and thereafter, M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 19 of 27 Sh. Ashish Kumar would not be liable for the acts and the liabilities of defendant no. 1 partnership firm.
43. It is further submitted that there was meeting of mind between the partners defendant no. 2 and defendant no. 3 to the effect that liability of defendant no. 3 would be shared equally and there was division of vendors as reflected in para 7 and 8 of the draft of Admission cum Retirement deed. Defendant no. 3 has not adduced any defence evidence and had chosen not appear in the witness box in order to substantiate his version as asserted in the written statement.
44. There is no documentary evidence on record or any oral testimony adduced by Defendant no. 3 to establish the fact asserted by him that he had apprised the plaintiff in the month of November/December, 2017 about this fact that he had left the said partnership firm of defendant no. 1. There is nothing on record to substantiate the fact that the defendant no. 3 had specifically mentioned/communicated to the plaintiff that his liability if any would lie on defendant no. 2 on behalf of defendant no. 1. There is also no evidence brought on record by defendant no. 3 to the effect that plaintiff had assured the defendant no. 3 that he would take care of the issue/liability with the defendant no. 2.
45. The other fact pleaded by defendant no. 3 was that few cheques signed by defendant no. 3 had been handed over by him to other partner Sh. Kapil Sahoo - defendant no. 2 . The cheques dated 12.10.2017 Ex. PW1/D-3; dated 12.12.2018 Ex. PW1/D-4; dated 12.12.2018 Ex. PW1/D-4; dated 27.06.2018 Ex. PW1/D-8; dated 17.07.2018 Ex. PW1/D-6; dated 17.07.2018 Ex. PW1/D-7. Ld. Counsel for defendant contended M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 20 of 27 that the other cheques dated 31.12.2017 Ex. PW1/D-1; dated 10.01.2018 Ex. PW1/D-2 and dated 12.07.2018 Ex. PW1/D-5 bear the signature of only Kapil Shaoo (defendant no. 2) and these cheques were issued by him to plaintiff in his personal capacity from his personal account no. 50100205074621 drawn on HDFC Bank and cheque Ex. PW1/D-5 dated 12.07.2018 is of ICICI Bank account of the D-1 firm but signed by only Kapil Sahoo and defendant no. 3 was not having any knowledge about the transaction and payments which were to be exchanged between plaintiff and defendant no. 2.
46. It was submitted that aforementioned fact indicates that the transactions between D-1 and the plaintiff had been done only by Kapil Sahoo in his personal capacity and defendant no. 3 had no role therein. In response, there were two partners of D-1 and therefore, each of them i.e. D-2 & D-3 was competent to sign and issue the cheque to the plaintiff. Admittedly, defendant no. 1 firm either through defendant no. 2 or defendant no. 3 had not given any notice or intimation regarding retirement of D-3 from D-1 firm at any point of time to the plaintiff. Moreover, no public notice as required under u/s 32 of the Partnership Act 1932 was given by defendant regarding the retirement of defendant no. 3 and there is nothing on record to indicate that plaintiff had no knowledge about the retirement of defendant no. 3.
47. Defendant no. 3 has failed to place on record any evidence or material to indicate that the aforementioned cheques had been handed over by defendant no. 3 to Kapil Sahoo Defendant no. 2. These cheques pertain to the period after the alleged contract of outgoing of defendant no. 3 and incoming of M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 21 of 27 Sh. Ramji Sahoo -father of defendant no. 2 Kapil Sahoo as partner by virtue of Retirement cum Admission Deed which was not executed by any of the partners. Admittedly, in the present case no agreement was made by defendant no. 3 with the plaintiff for discharge of his liability. Defendant no. 3 has failed to establish that plaintiff had knowledge of his retirement from defendant no1-firm. As per Section 25 of the Indian Partnership Act, every partner is liable , jointly with all the other partners and also severally, for all acts of the firm done while he is a partner. As per Section 32 (3) notwithstanding the retirement of a partner from a firm , he and the partners continue to be liable as partners to third 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.
48. Defendant no. 3 has failed to prove that he had apprised plaintiff in November 2017 about leaving the partnership firm (D-1) and the liability, if any would lie on D-2 on behalf of D-1 or the plaintiff assured D-3 that he would take up the issue with D-2. D-3 could have proved the same by producing any such document, which he failed to do. Indisputably, no public notice was given by retired partner or firm about defendant no. 3's retirement from defendant no. 1 firm, therefore, defendant no. 3 shall continue to be liable as partner to the third parties for any act done by any of the partner, which would have been an act of the firm, if done by the retirement.
49. In view of the aforenoted reasons, the issue no. 3 & issue no. 4 are accordingly, decided in favour of the plaintiff and against the defendants.
M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 22 of 27 Issue no. 1
50. Whether plaintiff is entitled to the recovery of principal amount of Rs.8,35,960/- from the defendants (D-1 to D-
3)? The onus to prove this issue was upon plaintiff.
51. Plaintiff has claimed a sum of Rs. 8,35,960/- as principal amount and interest of Rs. 2,13,587/- @24% per annum accrued till 31.08.2018 alongwith pendente lite interest . Plaintiff has placed on record tax invoices Ex. PW1/B-1 to Ex. PW1/B-
14. Ld. Counsel for the plaintiff submitted that the bills are admitted and D-3 never raised any kind of objection in his written statement regarding the claim of the plaintiff for Rs. 10,49,547/- alongwith interest @24% per annum.
52. This Court finds no merits in the submission of Ld. Counsel for defendant that cheques issued by defendant no. 1 which bear signature of defendant no. 2 and 3 both, are in the total sum of Rs. 5,24,632/- and the balance amount of Rs. 3,11,328/- pertains to the transactions, which only Kapil Sahoo/ defendant no. 2 had with the plaintiff in his personal capacity and therefore, defendant no. 3 is not liable to pay the said sum. Defendant no. 1 partnership as well as both of its partners are jointly and severally liable to pay and clear the liability of the the third party towards the firm.
53. As per the records maintained by the plaintiff, the defendants have to pay total outstanding amount of Rs.8,35,960/- and defendants have also to pay amount of Rs.2,13,587/- towards interest @ 24% per annum, total of which comes to Rs.10,49,547/- till date 31.08.2018. Crux of the evidence adduced by PW-1, Shri Shashikant Sharma, proprietor of plaintiff-M/s Shakti Trading, documents placed and proved on M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 23 of 27 record may be noted. PW-1 has proved carbon copy of tax invoice no. 345 dated 21.02.2017 in the sum of Rs. 66,499/-, Ex. PW1/B-1; copy of tax invoice no. 346 dated 21.02.2017 in the sum of Rs.62,983/-, Ex. PW1/B-2; copy of tax invoice no. 349 dated 22.02.2017 in the sum of Rs.1,06,601/ Ex. PW1/B-3; copy of tax invoice no. 352 dated 24.02.2017 in the sum of Rs.44,058/- Ex.PW1/B-4; copy of tax invoice no. 31 dated 05.08.2017 in the sum of Rs.1,27,181/- Ex.PW1/B-5; copy of tax invoice no. 32 dated 07.08.2017 in the sum of Rs. 31,232/- Ex.PW1/B-6; copy of tax invoice no. 35 dated 09.08.2017 in the sum of Rs.75,162/- Ex.PW1/B-7; copy of tax invoice no. 82 dated 13.09.2017 in the sum of Rs.35,051/- Ex. PW1/B-8; copy of tax invoice no. 265 dated 05.12.2017 in the sum of Rs. 88,883/- Ex.PW1/B-9; copy of tax invoice no. 273 dated 08.12.2017 in the sum of Rs.84,420/- Ex. PW1/B-10; copy of tax invoice no. 277 dated 10.12.2017 in the sum of Rs.11,533 /- Ex.PW1/B-11; copy of tax invoice no. 298 dated 17.12.2017 in the sum of Rs.13,142/- Ex.PW1/B-12; Carbon copy of tax invoice no. 305 dated 20.12.2017 in the sum of Rs.40,929/- Ex.PW1/B-13; copy of tax invoice no. 433 dated 31.01.2018 in the sum of Rs.74,997/- Ex.PW1/B-14.
54. PW-1 proved Ledger account statement w.e.f 01.04.2016 to 31.07.2018 of Dzirevents & Exhibitions Ex. PW1/C; cheque no. 000004 dated 31.12.2017 drawn at HDFC Bank in the sum of Rs. 88,883/- Ex. PW1/D-1; cheque no. 000003 dated 10.01.2018 drawn at HDFC Bank in the sum of Rs.84,420/- Ex. PW1/D-2; cheque no. 1623 dated 12.10.2017 drawn at ICICI Bank in the sum of Rs.1,00,000/- Ex. PW1/D-3; cheque no. 1626 dated 12.02.2018 drawn at ICICI Bank in the M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 24 of 27 sum of Rs.1,00,000/- Ex.PW1/D-4 ; cheque no. 1627 dated 12.07.2018 drawn at ICICI Bank in the sum of Rs.1,00,000/- Ex. PW1/D-5; cheque no. 1628 dated 17.07.2018 drawn at ICICI Bank in the sum of Rs. 1,00,000/- Ex.PW1/D-6 ; cheque no. 1629 dated 17.07.2018 drawn at ICICI Bank in the sum of Rs.1,24,637/- Ex.PW1/D-7 ; cheque no. 1506 dated 27.06.2018 drawn at ICICI Bank in the sum of Rs. 1,00,000/- Ex. PW1/D-8; returning memos dated 13.02.2018 of cheque bearing no. 1626 Ex.PW1/D-9 and dated 22.11.2017 for cheque no. 1623 Ex. PW1/D-10; Returning memos dated 24.08.2018 for cheque no. 1627 Ex. PW1/D-11; dated 24.08.2018 for cheque no. 1628 Ex. PW1/D-12; dated 24.08.2018 for cheque no. 1629 Ex. PW1/D-13 and dated 24.08.2018 for cheque no. 1506 Ex.PW1/D-14; office copy of Legal notice dated 31.08.2018 Ex. PW1/E; Certificate u/s 65-B of Indian evidence Act with regard to retail invoices/tax invoices and statement of ledger account.
55. PW-1 has proved carbon copy of tax invoices, Ex.PW-1/B-1 to Ex.PW-1/B-14 and ledger account statement w.e.f. 01.04.2016 to 31.07.2018. Perusal of the tax invoices show that there is a total outstanding of Rs.8,62,671/- towards the defendants. PW-1 has been cross-examined by Ld. Counsel for D-3 but in the cross-examination of PW-1, not even a single suggestion has been given to the effect that defendants are not liable to pay any payment.
56. On appreciation of the material on record as a whole, this Court finds that plaintiff is entitled to recovery of principal amount of Rs.8,35,960/-. Defendant no. 2 and 3 being the partner of D-1/partnership firm are liable to pay the principal M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 25 of 27 amount amounting to Rs.8,35,960/-. Accordingly, this issue no. 1 is decided in favour of plaintiff and against the defendants. Issue no. 5
57. Whether plaintiff is entitled to interest @ 24% per annum amounting to Rs.2,13,587/- till 31.08.2018? The onus to prove this issue was upon plaintiff.
58. Plaintiff has claimed interest @ 24% per annum and the total interest payable is Rs.2,13,587/-. Ld. Counsel for plaintiff submitted that on the tax invoices Ex. PW1/B-1 to B-8 it has been mentioned that the interest @24% per annum will be charged if payment is not made within 15 days. The rate of interest is not mentioned in the other invoices Ex. PW1/B-9 to Ex. B-14. The legal notice Ex. PW1/E dated 31.08.2018 pertains to 138 Negotiable Instruments Act wherein plaintiff has demanded the amount pertaining to dishonour of cheques and total outstanding of Rs. 8,35,960/- .
59. As per Section 34 CPC, wherein and in so far as a decree is for payment of money, the court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of suit to the date of decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit with further interest at such rate not exceeding 6% pa at Court deems reasonable on such principal sum from the date of decree to the date of payment or to such earlier date as the Court deems thinks. As per proviso to Section 34 CPC, where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed six per cent, per annum, but shall not exceed the contractual rate of M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 26 of 27 interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to commercial transactions.
60. Having regard to the totality of aforenoted facts, this Court is of the view that the plaintiff is entitled to the interest @ 12% per annum from the date of filing of this suit till realization of the decreed amount. This issue is accordingly, decided in favour of the plaintiff and against the defendant. Relief
61. Plaintiff shall also be entitled to costs. The present suit was filed on 24.09.2018. Total number of 32 hearings have taken place in this case. In the circumstances noted above, pleader's fee and litigation expenses are assessed as Rs.35,200/- and Court fee deposited by the plaintiff is Rs.12,600/-. This Court finds that plaintiff is entitled to costs of Rs.47,800/- (inclusive of Court fees).
62. In view of issue wise findings given above, the suit is decreed. A decree in the sum of Rs.8,35,960/- towards principal amount and interest @ 12% per annum from the date of filing of the suit till realization and costs of Rs.47,800/- is hereby passed in favour of the plaintiff and against the defendants no. 1 and 3 jointly and severally.
63. Decree sheet be drawn up accordingly. File be consigned to the record room.
(dictated and announced in the open Court on 19.11.2022) (VINAY KUMAR KHANNA) District Judge (Commercial Court-02) South Distt., Saket, New Delhi M/s Shakti Trading Vs. M/s Dzirevents & Exhibitions & Ors. page no. 27 of 27