Delhi District Court
Having Its Office At vs M/S Aristo Motors Pvt. Ltd on 20 November, 2019
IN THE COURT OF SH. LAXMI KANT GAUR, ADDITIONAL
DISTRICT JUDGE, CENTRAL, TIS HAZARI COURTS, DELHI
CS (Commercial) No. 117 of 2019
M/s Grippers India
Through its proprietor :
Sh. Pradeep Rastogi
Having its office at :
Municipal No.850, D5,
IIIrd Floor, Sant Nagar,
Burari, Delhi84. .......PLAINTIFF
Versus
1. M/s Aristo Motors Pvt. Ltd.
C/o Auto Needs Hero (Hero Motor Cycle Dealer)
501/2, Mehrauli Road,
Sector15, Part2, Sector14,
Gurugram, Haryana PIN 122001. ....... DEFENDANT NO.1
2. Mr. Vivek Goel,
Managing Director
M/s Aristo Motors Pvt. Ltd.
C/o Auto Needs Hero (Hero Motor Cycle Dealer)
501/2, Mehrauli Road,
Sector15, Part2, Sector14,
Gurugram, Haryana PIN 122001. ....... DEFENDANT NO.2
3. Mrs. Anju Goel
Director :M/s Aristo Motors Pvt. Ltd.
C/o Auto Needs Hero (Hero Motor Cycle Dealer)
501/2, Mehrauli Road,
Sector15, Part2, Sector14,
Gurugram, Haryana PIN 122001. ....... DEFENDANT NO.3
CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 1 of 14
Date of filing of the suit : 15.01.2019
Date of reserving judgment : 27.08.2019
Date of judgment : 20.11.2019
Suit for recovery of Rs.4,49,700/ (Rupees Four Lacs Forty Nine
Thousand Seven Hundred only) alongwith interests.
Judgment
1. By this judgment, I propose to decide the present suit filed by the
plaintiff against the defendants for the recovery of Rs.4,49,700/ with
pendntelite and future interest at the rate of 18% per annum.
Facts
2. Plaintiff firm is a proprietorship firm and Sh. Praddep Rastogi is its proprietor. Defendant no.1 is a Private Limited Company and defendant no.2 &3 are its directors.
3. Plaintiff is in the business of marketing trading, distribution and selling of chemicals for engine laminations, tyre Id, glass etching etc. Plaintiff also provides Car Care products as well as provide other services by way of work contract services.
4. Plaintiff had been dealing with the Defendant company since October, 2015. In October, 2015, Defendant No. 2 had visited the plaintiff. Plaintiff had provided quotations to him giving the price at which the CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 2 of 14 goods would be supplied by the Plaintiff. Price quotation dated 20.10.2015 of providing goods had been signed by both the parties.
5. Plaintiff continued to supply goods and provide services to the defendant company from 01/11/2015 to 17/09/2017 and continued to raise services, retails invoices and tax invoices. Plaintiff had been maintaining a regular ledger account of the defendant.
6. It is alleged that the defendant had not been regular in clearing the pending dues. After continuous follow up he used to make the payment. Last payment was made by him on 14/02/2018 by a cheque of Rs.50,000/.
7. In the plaint Plaintiff has provided the details of the account as per its books of account as under:
Financial Debit Credit Opening balance Balance pending Year amount amount 201516 Rs.13,40,871.90/ Rs.6,97,317.61/ Rs.00/ Rs.6,43,554.29/ 201617 Rs.21,85,706.89/ Rs.17,419.56/ Rs.6,43,554.29/ Rs.10,50,841.62/ 201718 Rs.5,75,948.87/ Rs.11,77,090/ Rs.10,50,841.62/ Rs.4,49,700.49/ Total Rs.41,02,527.66/ Rs.36,52,827.17/ Rs.4,49,700.49/ (outstanding amount)
8. Plaintiff, thereafter, had sent a legal notice to the defendants on CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 3 of 14 05.09.2018 by registered post & courier. The defendants, however, neither replied to the said legal notice nor cleared the outstanding payment due to the plaintiff firm.
9. According to plaintiff, the defendants are liable to pay a sum of Rs.4,49,700.49/.
Defendants proceeded exparte
10.Defendants were duly served with the process of the Court. However, none had appeared on behalf of the defendants. Accordingly, vide order dated 14.03.2019 case was proceeded exparte against the defendants. ExParte Evidence
11.In the exparte evidence the plaintiff had examined Sh. Pradeep Rastogi, proprietor of the plaintiff firm as PW1. The affidavit Ex.PW1/1 he had filed in the evidence was drawn on the lines of the plaint filed in this case. Along with the affidavit he had filed copies of certificates of registration Ex.PW1/A issued under Delhi Sales Tax Rules, the price quotation verified and approved on behalf the Defendant Company Ex.PW1/B; the invoices Ex.PW1/C (colly.) raised by the plaintiff firm against the defendant company, print out of the CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 4 of 14 ledger account Ex.PW1/D of the defendant company as maintained by the plaintiff firm duly supported by the certificate u/s 65B of Indian Evidence Act, Ex.PW1/E and Ex.PW1/F1 copy of legal notice sent to the defendant by registered post vide postal receipt Ex.PW1/F2. Hearing of submissions
12.I have heard counsel for plaintiff, gone through the record of this case including the written submissions which had been filed on behalf of the plaintiff.
Findings Jurisdiction
13.The plaint would show that though the defendants are the residents of Gurugram, Haryana but that this Court will have the jurisdiction to try this suit because it appears from the record of this case that the contract was finalized within the jurisdiction of this Court.
14.Witness PW1 in his affidavit has stated that the defendant No. 2 Sh. Vivek Goel, Managing Director of the defendant No. 1 company had approached the plaintiff at his office bearing No. 850, D5, IIIrd floor, Sant Nagar, Delhi110084 to have discussion as to the business CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 5 of 14 dealings he wanted to have with the plaintiff. As per the discussion between the parties, plaintiff had given price quotation of the product/goods on 20.10.2015 on his letter head Ex.PW1/B which had been accepted and signed by both the parties. In his testimony, the witness had stated that the said document i.e. Ex.PW1/B had been signed by Sh. Shashwat Goel, Director of the company on behalf of the defendant company at point B after it had been verified by the HR Head of the company by putting his signatures at point C. It thus appear from the affidavit which has been filed of the witness PW1 that this document was executed within the jurisdiction of this Court and therefore, one can say that in terms of Section 20 (C) of the Code of Civil Procedure, this Court will have the jurisdiction to try this suit. Supply of goods
15.In his testimony Plaintiff has referred to invoices which are 48 in number. All these invoices bear the stamp of the defendant company of having received the goods except six of them. Relevant part of the testimony of the witness reads as under:
"Ex PW1/C (collectively) are the invoices 48 in number running from pages 17 to 64, all bear my signature at point A and stamp initials of the person receiving the goods as against CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 6 of 14 those invoices at point B except for invoices at pages no.50,51,53,55 and 59 total six in number. I do not have the originals of these documents and therefore I have signed them as true copies ( originals seen and returned)"
16.On the basis of the testimony of this witness it can be said that the goods had been supplied to the defendants at least in respect of the goods which bear the stamp of the defendants company. Entries in accounts need to be backed by independent evidence
17. Plaintiff has filed on record printouts of statement of account Ex.PW1/D. It is supported by a certificate under section 65B of the Evidence Act. Thus can be read in evidence. But that itself is not enough. According to section 34 of the Evidence Act, entries in the books of account are relevant but not sufficient. Section 34 of Indian Evidence Act reads as under:
Entries in books of account including those maintained in an electronic form] when relevant.--Entries in books of accounts including those maintained in an electronic form], regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability. Illustration A sues B for Rs. 1,000, and shows entries in his accountbooks showing B to be indebted to him to this amount. The entries are relevant, but are not sufficient, without other evidence, to prove the debt.
18. Thus liability of the defendant cannot be fastened just on the basis of CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 7 of 14 the statement of account even if maintained in the regular course of business.
19. It is only the entries against which the supplies can be said to have been made can be considered to be relevant for fixing the liability for payment and not others. The plaintiff can be allowed to recover the money on the basis of the entries so far as they could be related to the invoices which have been filed on record as part of Ex.PW1/C (colly.) bearing the stamp of the defendant acknowledging the receipt of the goods.
Limitation
20. It is a suit which has been filed on the basis of the supplies being made and the payments being received on running basis. It has been stated in the evidence that the plaintiff has maintained a running ledger account of the defendant of the goods so supplied and the payments received. He had filed on record the said account Ex. PW1/D. As has already been stated the same can be read in evidence as having been supported by a certificate under 65 B of the Evidence Act. The examination of this statement of account would show that it is an openrunningnon mutual account. As was held by the Hon'ble High Court in the case of CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 8 of 14 Bharath Skins Corporation Vs. Taneja Skins Company Pvt. Ltd. RFA (OS) 13 OF 2002 that in the cases like this the applicable article in the schedule of the Limitation Act would be Article 113, which provides the Limitation of 3 years which begins to run when the right to sue would accrue. In this case the right to sue would have accrued only after the plaintiff had asked for the payment of money and the defendant had refused to pay the same or it could be inferred that the defendant was not willing to make the payment. Plaintiff had sent a legal notice to the defendant dated 05.09.2018 Ex.PW1/F.1 which has been sent vide postal receipts Ex. PW1/F.2. According to the statement given despite the service of the notice, the defendant had not made the payment. In the notice the plaintiff had given 15 days time to make the payment. In other words, the right to sue had accrued in favour of the plaintiff after the expiry of 15 days of the service of the notice on the defendant i.e. it accrued on or around 20.09.2018. The suit in this case had been filed on 16.01.2019. It thus can be said that the suit filed by the plaintiff is within Limitation.
CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 9 of 14 Limited liability of directors
21. It was submitted by the counsel for the plaintiff that in this case the directors of the company i.e. defendants no. 2 and 3 would also be personally liable to make the payment. He had relied on the judgment of the Hon'ble High Court of Delhi in Saurabh Exports Vs. Blaze Finlease and Credits Pvt. Ltd. CS(OS) No. 469 of 1999. It was a case where the Hon'ble High Court in given facts of the case had decided to lift the corporate veil in the light of the conclusion reached that the plaintiff was being defrauded under the cloak of corporate entity. The observation made by the Hon'ble High Court was "The present case is one where clearly the plaintiff is sought to be defraud of the amount of Rs.15,00,000/ under the cloak of a corporate entity of defendant No. 1 company and thus such a corporate veil must be lifted especially taking into consideration the defendant No. 1 company was only a family arrangement of remaining defendants."
22. The present case does not fall into that category. The allegation is limited to nonpayment of dues by defendant despite repeated demands but certainly there is nothing on record to even remotely suggest that CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 10 of 14 the defendants had entered into transactions with the plaintiff which had continued for many years to defraud the plaintiff. In my opinion, it is a settled principle of law that the directors of a company are not liable to the dues of the company. (see - Liugong India Pvt. Ltd. Vs. Yograj Infrastructure Ltd. & Ors. CS (OS)3318/2012 2018 SCC Online Del 7442) Amounts recoverable
23. Although in the examination of the witness PW1 it was stated that there were six invoices not bearing the stamp of the defendant as to having received goods but after having gone through the record again I find that they are not six but eight in number. Their details are as follows: S. No. Invoice No. Date Amount
1. 22 06.07.2016 Rs.45,369.60
2. 31 02.10.2016 Rs.38,301.00
3. 38 09.02.2017 Rs.46,144.80
4. 39 23.03.2017 Rs.28,539.60
5. 40 31.03.2017 Rs.20,308.20
6. 1 10.05.2017 Rs.23,776.20
7. 3 14.06.2017 Rs.21,460.80
8. 22 22.08.2017 Rs.4,800.00 Total 2,28,700.20 CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 11 of 14
24.Thus out of the total amount of Rs. 4,49,700/ only an amount of Rs.2,20,999.80 would be recoverable by the plaintiff from the defendant after deducting the above amount of Rs.2,28,700.20/. Interest
25.So far as the principal amount is concerned, there is no difficulty in passing a judgment but when it comes to the interest part, I am of the view that the amount of interest which is being claimed is on higher side. It is not necessary for a court to award the interest as may be prayed for. The court is within its right to reduce the interest, if it is found to be excessive. One can here make the reference to the judgment of the Hon'ble High Court of Delhi in the case of Geetu Lakhpat & another Vs. Jaipal [2011 SCC OnLine Del 1706] it was observed as follows;
"2. Learned counsel for the appellants has in the appeal only prayed for reduction of the unduly high rate of interest of 2% per month which has been granted by the trial Court. Reliance has firstly been placed upon Section 3 of the Usurious Loans Act, 1918 (as applicable to Delhi) as per which in case of an unsecured loan the maximum rate of interest which is allowed is 121/2% per annum simple. Learned counsel for the appellants also relies upon various judgments of the Supreme Court as per which the Supreme Court has directed the Courts to take note of the consistent fall in the rates of interest on account of the changed economic scenario, more so when there is time spent in CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 12 of 14 litigation. These judgments of the Supreme Court are Rajendra Construction Co. v. Maharashtra Housing & Area Development Authority, (2005) 6 SCC 678, McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181, Rajasthan State Road Transport Corporation v. Indag Rubber Ltd., (2006) 7 SCC 700 & Krishna Bhagya Jala Nigam Ltd. v. G. Harischandra, (2007) 2 SCC 720 and State of Rajasthan v. Ferro Concrete Construction Pvt. Ltd, (2009) 3 Arb. LR 140 (SC).
3. Learned counsel for the respondent, in reply, states that the respondent is entitled to interest @ 2% per month because the said rate was a contractual rate of interest.
4. In my opinion, the arguments as urged by the counsel for the appellants are well founded. In the present date, granting of interest @ 2% per month is both exorbitant and usurious. The Supreme Court in the aforesaid judgments, relied upon by the counsel for the appellants, has granted interest varying between 6% to 9% per annum. A Division Bench of this Court in the case of Pt. Munshi Ram & Associates (P) Ltd. v. Delhi Development Authority, 2010 (3) Arb. L.R. 284 (Delhi) has held that Court has power to reduce even the presuit rate of interest in case the said rate of interest is found to be against the public policy. In my opinion, rate of interest of 24% per annum i.e. 2% per month as granted by the trial Court is clearly against the public policy in the present economic scenario considering the aforesaid judgments of the Supreme Court. Considering the facts and circumstances of the present case, I am of the opinion that interest of justice would be more than served if the respondent is granted interest @ 71/2% per annum instead of 2% per month i.e. 24% per annum."
26.In my view therefore, awarding interest @9% p.a. on Rs.2,20,999.80/ from the date the said amount became payable i.e. 20.09.2018 i.e. the date on which the payment became due to be recoverble till realization would meet the end of justice.
CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 13 of 14 Relief
27. In view of the aforesaid discussion, I am decreeing this suit in favour of Plaintiff and against the defendant no.1 for a sum Rs.2,20,999.80/ alongwith interest @9 % p.a. from 20.09.2018 till realization. Plaintiff would also be entitled to costs.
28. Decree sheet be prepared accordingly.
29. File be consigned to record room.
Announced in the open court on 20th November,2019 (LAXMI KANT GAUR) Additional District Judge(05), Central District, Delhi.
CS (Comm.) No. 117/19 M/s Grippers India vs. Aristo Motors P. Ltd. 14 of 14