Delhi District Court
Also At vs M/S R. V. International on 15 April, 2014
1
IN THE COURT OF MS. POONAM CHAUDHARY, ADJ03, SAKET COURT,
NEW DELHI
CS No. 80/12
I.D. No. 02406C0255222011
M/s Style Design Embroideries (P) Ltd.,
209, Masjid Moth, South ExtensionII,
New Delhi110024.
Also at:
Plot NO. 257, Sector 7, IMT Manesar,
Gurgaon, Haryana. ........Plaintiff
Versus
1. M/s R. V. International,
32D, Pocket A3, Sector71,
NOIDA, UP201301.
2. Mr. M. P. Singh,
Partner: M/s R. V. International,
32D, Pocket A3, Sector71,
NOIDA, UP201301.
3. Mr. Ajay Chauhan,
Partner: M/s R. V. International,
32D, Pocket A3, Sector71,
NOIDA, UP201301.
4. Ms. Vimla,
Partner: M/s R. V. International,
32D, Pocket A3, Sector71,
NOIDA, UP201301. ...Defendants
DATE OF INSTITUTION : 03.10.2011
DATE OF RESERVING FOR JUDGMENT/ORDER : 07.04.2014
DATE OF PRONOUNCEMENT : 15.04.2014
SUIT UNDER ORDER XXXVII OF CPC FOR RECOVERY OF RS. 8,65,782/
ALONG WITH PENDENTE LITE & FUTURE INTEREST
JUDGMENT
1. Vide this order/judgment I proceed to disposed off the application filed by the defendant, under order 37 rule 3 Sub rule (5) 2 read with section 151 Code of Civil Procedure, for grant of leave to defend.
2. The plaintiff filed suit under order 37 Code of Civil Procedure, against the defendants, on the averment that plaintiff is company, incorporated under Companies Act, 1956 and is engaged in business of trading into embroidered fabric and job work of embroidery on fabric.
3. It was further submitted that defendant no. 1 is a Partnership Firm of which defendants no. 2, 3 and 4 are partners carrying on business in the name and style of M/s Kunnumal Exports and the defendants no. 2 to 4 are responsible for day to day management of the affairs of the firm. It was further submitted that defendants no. 2 and 3 had been negotiating and dealing with plaintiff company in normal course of transactions and defendant no. 4 was signatory to cheques.
4. It was further submitted that defendant no. 2 and his agents approached plaintiff on behalf of defendant No. 1 firm for purchase of embroidered fabric from the plaintiff and getting embroidery job work done.
5. It was also stated that defendants purchased embroidered fabric from plaintiff worth Rs.11,50,658/ from February, 2011 - April, 2011 and after adjusting the payment of Rs.1,00,000/ given vide cheque dated 28.02.2011, a balance of Rs.9,77,758/ was outstanding as on 02.04.2011. The defendants issued a cheque dated 05.04.2011 for Rs.3,31,695/ against bill/Invoice No. SD/1110916, but requested officials of plaintiff company to present the said cheque only in Jun, 2011 and in the meantime, defendants purchased further fabric worth Rs.72,900/ vide Invoice No. 3 SD/12100017 dated 07.04.2011. It was further alleged that the defendants again issued cheque dated 20.04.2011 for Rs.6,10,957/ against the net outstanding of two Invoices No. SD/11/0400 dated 17.02.2011 and Invoice No. SD/ 1110881. It was further averred that Rs.1,00,000/ having been received cheque dated 28.02.2011, however, defendants again requested the plaintiff to present the chque only in June, 2011.
6. It was further averred that said chequs were dishonoured on presentation by plaintiff vide return memo dated 01.07.2011 for reason of 'Payment Stopped by Drawer'. Thereafter, defendants made two on account payments of Rs.1,50,000/ on 13.06.2011 and Rs.1,00,000/ on 02.07.2012.
7. It was further submitted that cheques No. 063051 and 063054 when presented for clearance by plaintiff, were returned unpaid for reason of 'Stop Payment' vide Return Memo dated 01.07.2011.
8. It was further submitted that due to dishonour of above said cheques issued by defendants and non payment of invoices/ bills, officials of plaintiff company made efforts to contact the defendants but all in vain. Thereafter, a legal demand notice dated 05.09.2011 was sent to defendants, but defendants failed to make the outstanding amount, despite service of legal notice, hence, the present suit.
9. The defendant on being served with the summons under order 37 CPC filed appearance. Thereafter, pursuant to service of summons for judgment, defendant filed an application for leave to defend taking various pleas interalia that no amount what so ever was due payable by defendants to plaintiff. It was further alleged that defendants placed an order for supply of good quality 4 embroidery work on the fabric supplied by the defendants, however, the plaintiff delivered poor quality of embroidery work due to which defendants had to arrange for almost same quantity of work from some other vendor which caused loss of not only fabric but also of the valuable time and the business of defendant was also adversely affected.
10. It was further alleged that the Cheques given by defendants to plaintiff of Rs. 3,31,695/ and Rs. 6,10,957/ were towards security and not towards payments. It was also alleged that defendants had complained to the plaintiff about the poor quality of embroidery work but they did not pay heed. The defendant thus, asked the plaintiff to settle their account since poor/ bad quality of work done by them was of no use to the defendants but the plaintiff instead of settling the accounts accounts presented the cheques given to them towards security. It was also alleged that in the said facts and circumstances, the defendant had no choice but to stop the payments of cheques given towards security. It was further alleged that defendant have bonafide defence which raises triable issues as such defendants are entitled to unconditional leave to defendant the suit.
11. Plaintiff filed reply to the application opposing the same taking the preliminary objections that the suit was filed on the basis of cheques issued against supplies of embroidered fabric to defendant firm and against Invoice/bills and the job work of embroidery done on the fabric supplied by defendant. It was alleged that the defendants duly received fabric supplied by plaintiff against delivery challan. It was further averred that Invoices/bills were prepared as per mutual agreed prices/rates and the defendant accepted the invoices/bills. It was reiterated that the cheques were issued for outstanding liability. It was also alleged that defendants 5 did not complain about the bad quality of embroidery. It was also stated that defendants did not dispute the date of issuance of cheques and the allegations that the cheques were given as security is a false defence. It was also alleged that the issuance of stop payment was due to dishonest intention of defendant. It was reiterated that a sum of Rs.8,65,782/ with interest was due and payable by the defendants. It was denied that the defendant had a bonafide defence or triable issue arises.
12. While deciding an application for leave to defend under order 37 CPC it is to be seen whether valid defence or triable issues have been disclosed and the defence is bonafide and genuine. The court has to exercise the discretion judiciously and in consonance with the principles of natural justice.
13. In this regard it has been held in AIR1977 SC 577 , titled as M/s Mechalec Engineers & Manufacturers Vs. Basic Equipments Corporation, as under : The following principles are to be followed while considering the question of granting leave to defend:
(a) If the defendant satisfies the court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend.
(b) If the defendant raises a triable issue indicating that he has a fair or bonafide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend.
(c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend that is to say, although the affidavit 6 does not positively and immediately make it clear that he has a defence, yet, shews such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff 's claim the plaintiff is not entitled to judgment and defendant is entitled to leave to defend but in such as case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security.
(d) If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend.
(e) If the defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the Court may protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the defendant on such condition and thereby show mercy to the defendant by enabling him to try to prove a defence."
14. I have heard Ld. Counsels for parties and perused the record. The crucial question that needs consideration is whether the defence of defendant raises any triable issue or not. Further whether the plea raised are sham, so as to refuse the leave to contest.
15. The contentions of Ld. Counsel for defendants is that the suit is wholly misconceived and unsustainable in law and is liable to be dismissed. It was further alleged that the plaintiff had wrongly invoked the provisions of Order 37 CPC as the none of the documents filed by plaintiff to show an agreement entered into between the parties or acknowledge of liability by defendant.
716. However, Ld. Counsel for plaintiff contended that the suit has been filed on the basis of invoice which are written contract. The same have been acted upon and accepted by the defendant. It was further contended by Ld. Counsel for plaintiff that as invoices are written contracts, the present suit was maintainable under Order 37 CPC.
17. I find substance in the contentions of Ld. Counsel for plaintiff as invoices are written contract as held in 'Jatin Koticha Pearlplast Corporation, Mumbai V. Messrs VFC Industries Pvt. Ltd. Gujrat' 2008 (2) Bom. C.R. 155, Indian Contract Act, 1872 - Code of Civil Procedure, 1908 - Summary suit for recovery of amount and interest on principal amount filed on basis that invoices were in form of written contract as contemplated by O.XXXVII - Defendants submitted that summons for judgment could not be granted since suit could not be treated as summary suit under Order XXXVII and suit was not based on any written contract and thus could not be termed as summary suit - Held, even though invoice of bill is not signed by other party to contract, as result of acceptance of goods delivered in pursuance of invoice demand for price of goods admittedly received by purchaser on basis of invoice must be held to arise on "written contract" Goods were delivered by plaintiff to defendants and defendants enjoyed benefit of that, therefore they are liable u/s 70 of Contract Act to pay compensation in respect of such goods to plaintiff - Petition disposed of.
18. Ld. Counsel for the plaintiff has also submitted that suit is also based on cheques and thus, covered under Order 37 CPC. Order 37 Rule 1 (2) CPC which provides as follows:
"(2) Subject to the provisions of subrule (1), the Order applies to the following classes of suits, namely: 8
(a) suits upon bills of exchange, hundies and promissory notes:
(b) suits in which the plaintiff seeks only to recover adebt or liquidated demand in money payable by the defendant, with or without interest, arising:
(i) On a written contract; Or
(ii) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or
(iii) On a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only."
19. Section 6 of the Negotiable Instrument Act 1881 defines cheques as a bill of exchange and thus, the present case falls under the above provisions of Order 37 CPC. Moreover, the present suit must be treated as a summary suit also because it is based on an enactment as pursuant to the purchase orders placed by the defendant on the plaintiff and the defendants enjoyed the benefit of the goods supplied and were liable under Section 70 of Indian Contract Act, to pay compensation in respect of enjoying the benefit of the nongratuitous act. Section 70 of Indian Contract Act is as under: "Obligation of person enjoying benefit of nongratuitous act Where a person lawfully does anything for another person, or delivers anything to him, no intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered."
20. The next contention of ld. Counsel for plaintiff is that the plaintiff claimed the suit amount on account of job work done for 9 defendant. Plaintiff denied that cheques were given towards security. The parties to the suit admittedly had business dealing and transactions. The question for consideration thus, is whether the cheque in question was given as security or for the purchase of embroidered fabric and embroidery work done by plaintiff.
21. The defendants on the other hand have raised a plea that the plaintiff supplied bad quality of embroidery work due to which defendants had to arrange for same quality of work from some other vendor. However, in this regard it is pertinent to note that no letter was written by defendant to plaintiff. Moreover, it was specifically mentioned in the invoices that "no claim acceptable if not informed withint 3 days of delivery in writing. The said plea is thus false and is an afterthought to avoid payment. Moreover, had there been any dispute regarding quality of work done, defendant would not have issued the cheques in question. Thus, in my view, pleas taken by defendant are an afterthought and are bogus and sham.
22. It is also not disputed by defendants that cheques were issued by defendant. Thus, as the execution of the cheque in question is admitted, presumption arises under section 118 (a) of Negotiable Instrument Act (in short N. I. Act), that it is supported by consideration. Though the presumption is rebuttable as provided under section 139 of N. I. Act.
23. Section 118 (a) and 139 of N. I. Act are reproduced as below:
Section 118 Presumptions as to negotiable instruments Until the contrary is proved, the following presumptions shall be made:
(a) of consideration that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, endorsed, negotiated or transferred, was 10 accepted, endorsed, negotiated or transferred for consideration;
Section 139. Presumption in favour of holder: It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.
24. Section 4 of the Indian Evidence Act, defines "Shall Presume"
as under : "Shall Presume". Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved.
25. The word proved and disproved have been defined in Section 3 of the Indian Evidence Act which is as follows: "Proved" A fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists.
"Disproved" A fact is said to be disproved when, after considering the matters before it, the Court either believes that it does not exist, or considers its nonexistence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist.
26. Thus, applying the definition of proved or disproved to the principle of Section 118 (a) of N. I. Act the court shall presume a Negotiable Instrument to be for consideration unless and until it is prima facie established that consideration does not exist or that non existence of consideration is so probable that a prudent man ought not to believe that it exists.11
27. Thus, it was for the defendant to prove the nonexistence of consideration by raising a probable defence as provided in Section 139 of the N. I. Act. It is only when defendant discharges the initial onus of proof, that onus would shift on the plaintiff. But in case defendant fails to discharge the onus of proof of showing the non existence of consideration, the plaintiff would be entitled to benefit of presumption arising under Section 118 (a) of Negotiable Instrument Act.
28. Now coming to the facts of the present case, the defendants have admitted the issuance of the cheque in question but raised defence that cheque in question was given as security. It was also alleged that no amount was due and payable as the defendants had suffered losses on account of poor quality of embroidery work done by the plaintiff and due to which defendants had to arrange for almost same quantity of work from some other vendor which resulted in losses to the defendant. However, in this regard it is pertinent to note that defendant had not filed any document to show that defendant had complained in writing to the plaintiff regarding poor quality of embroidery work done by plaintiff and losses suffered on account of same which resulted in losses to the defendant. Moreover, as per invoices "no claim was acceptable if not informed within three days in writing." Thus, defendant ought to have informed the plaintiff within 3 days about the defect or poor quality of work done. Thus, in my view the plea about the quality of work done has been taken to avoid payment.
29. Moreover, no plausible explanation has been given by the defendants as to why they had issued the cheques in question without settling accounts. Thus, the story set up by the defendant is afterthought and not genuine and malafide. The said plea do not 12 show any ground for grant of leave to defend. I am further of the view that as defendant had taken delivery of the goods without any reservation , he is liable to pay prices of the same. I accordingly, hold that the pleas taken by the defendant do not raise any triable issues as the liability arose in terms of business dealings between the parties and cheques in question were issued in discharge of liability. I accordingly, dismiss the application for leave to defend.
30. As regards the rate of interest Ld. Counsel for plaintiff submitted that Section 80 of NI Act provides that every negotiable instrument is subject to the payment of interest @ 18 % per annum when no rate of interest is specified in the instrument. Thus, in view of section 80 of the Negotiable Instrument Act, plaintiff is entitled to interest @ 18 % per annum. I accordingly, pass a decree for a sum of Rs. 8,65,782/ in favour of the plaintiff and against the defendants with interest @ 18 % p.a. from the date of cheque till realization along with the cost of the suit. Decree sheet be prepared accordingly. File be consigned to record room.
Announced in the open Court (POONAM CHAUDHARY)
on 15.04.2014 ADJ03, SAKET COURT COMPLEX,
NEW DELHI
13
CS No. 80/12
M/s Style Design Embroideries (P) Ltd.
Vs. M/s R V International & Ors.
15.04.2014
Present : Counsels for parties.
Vide separate judgment dictated and announced, the application for leave to defend moved by defendants, stands dismissed. I passed a decree for a sum of Rs. 8,65,782/ in favour of the plaintiff and against the defendant with interest @ 18 % p.a. from the date of cheque till realization along with the cost of the suit. Decree sheet be prepared accordingly. File be consigned to record room.
[POONAM CHAUDHARY] ADJ - 03, SOUTH DISTRICT, SAKET COURTS COMPLEX, NEW DELHI : 15.04.2014