Delhi District Court
M/S Aggarwal Sales And Services vs M/S Lmj International Limited on 17 January, 2013
IN THE COURT OF MS. SUJATA KOHLI:ADDITIONAL DISTRICT JUDGE:
WEST DISTRICT:TIS HAZARI COURT:DELHI
RCA No. 37/2010
M/S AGGARWAL SALES AND SERVICES
THROUGH ITS PROPRIETOR
SH. ASHUTOSH AGGARWAL
35, TYAGI VIHAR, BBLOCK,
NANGLOI, DELHI41.
.......APPELLANT
VERSUS
M/S LMJ INTERNATIONAL LIMITED
9, HANUMAN ROAD, NEW DELHI
THROUGH ITS MANAGING DIRECTOR
..........RESPONDENT
DATE OF INSTITUTION OF THE CASE : 03.08.2010
DATE OF RESERVATION OF ORDER : 21.09.2012
DATE OF JUDGMENT/ORDER : 17.01.2013
O R D E R:
1. Brief facts giving rise to the present appeal are that the plaintiff filed a suit for recovery of Rs.13,576/ claiming therein that plaintiff was a private limited company under the Companies Act having an office at New Delhi, being engaged in the wholesale business of wheat and tea and also government recognized export house, exporting tea under the brand RCA No. 37/2010 M/S AGGARWAL SALES & SERVICES V/s M/S LMJ INTERNATIONAL LTD. PAGE No. 1/11 name 'Prime Tea'.
2. Further it was alleged that defendant had been buying the products of the plaintiff and had been given a cash credit facility up to a period of 15 days i.e. from the date of invoices and with the arrangement that in case of any further delay, interest was to be levied at the rate of 18% p.a. and thus, a running and regular account was being maintained between the parties, kept with the plaintiff in the name of defendant firm, in the usual course of business.
3. As per the plaintiff, for the period from 01.04.2005 till 29.03.2006, there had accrued an outstanding liability against the defendant to the tune of Rs.9,848/ as per their Books of Account and since defendant failed to pay up the same in spite of repeated requests and reminders and even in spite of being served with a legal notice dated 30.05.2006, ultimately the plaintiff was compelled to file the suit claimed therein the aforesaid sum alongwith an interest at the rate of 18% p.a. was amounting to Rs.1,478/ for the period from 28.09.2005 till 31.07.2006 besides claiming legal notice charges to the tune of Rs.2200/ thereon.
4. In their written statement, defendant raised technical objection firstly that the suit had not been signed, verified and instituted by a duly authorized person. On merits they contended that there was no outstanding amount against the defendant. As per this version, defendant was not a customer/client but was appointed as a distributor of 'Prime Tea', by the plaintiff, as per terms and conditions, as per which, the plaintiff would be sending the stock of tea against the securities of post dated cheques, and defendant was required to distribute the tea in the area of Nangloi, Delhi and other adjoining areas.
RCA No. 37/2010 M/S AGGARWAL SALES & SERVICES V/s M/S LMJ INTERNATIONAL LTD. PAGE No. 2/11
5. Furthermore, according to defendant, defendant was to appoint a sales person for the promotion of the said tea and the salary of such a salesman was borne by the plaintiff alongwith expenses of the samples of tea which were to be distributed for promotion of sale.
6. It was further the part of terms and conditions that defendant was to pay the proceeds of the sale of tea to the plaintiff, after having received the payment from the market.
7. It was the second part of the story of the defendant that despite his best efforts, the tea could not be successfully sold in the market and this status of the sales promotion was duly apprised by the plaintiff to the defendant, on a regular basis and also a meeting was held between the parties on 19.11.2005, wherein after much deliberation, representatives of the plaintiff reported the matter to the plaintiff and also gave suggestions and which suggestions were also mentioned in the ledger dated 19.11.2005.
8. Further contended on behalf of the defendant that on the basis of the assessment done by the plaintiff, plaintiff informed the defendant to return the products and which were duly returned by the defendant, particularly stated to be the tea received vide bills no.4243 dated 27.09.2005, vide an acknowledgment issued by the plaintiff on 22.11.2005 and cheque bearing No.417678 dated 30.10.2005 for a sum of Rs.45,000/ earlier kept by the plaintiff by way of security was also returned to the defendant.
9. Further contended on behalf of the defendant that while he was settling the payment against the bill No.4148, the expenses of salary of the salesman from the period dated 22.08.2005 till 22.11.2005 amounting to a total of Rs.9,000/ and besides the costs of the tea samples distributed for promotion of tea were also adjusted. Thus, total to Rs.10,000/ had already been incurred by the defendant and which had been allowed by the RCA No. 37/2010 M/S AGGARWAL SALES & SERVICES V/s M/S LMJ INTERNATIONAL LTD. PAGE No. 3/11 plaintiff.
10. Accordingly, the cheque bearing No.417674 dated 21.09.2005 for a sum of Rs.19,990/ given to the plaintiff as a security was also returned to the defendant. Thus, according to the defendant, a full and final settlement had been arrived at between the plaintiff and the defendant, wherein a sum of Rs.9,848/ had been adjusted towards the amount of the salary of the salesman and costs of the tea sample, thus total amounting to Rs.10,000/.
11. The sole issue relating to the entitlement of the plaintiff to the amount and interest claimed was framed in the light of the evidence led.
12. During evidence, plaintiff examined one Sh. Avinash Jain, the AR of the plaintiff being the sole witness and similarly, defendant has also examined only himself. The trial Court decreed the suit in favour of the plaintiff.
13. The defendant aggrieved with the said order has challenged the same in the present appeal, mainly on the ground that the trial court erred in holding that there was no agreement between the parties as to the payment of salary of one salesman and adjustment of Rs.1,000/ towards sample of 25 gram of 'Prime Tea' between the parties, and as contended on behalf of the defendant/appellant the plaintiff/respondent had returned the post dated cheque dated 21.09.2005 of Rs.19,990/ only because the settlement had already been arrived at between the parties.
14. Furthermore, it was also the grievance of the appellant that the trial court arrived at a wrong conclusion while holding that Sh. Avinash Jain was competent to institute the claim on behalf of the respondent/plaintiff without even the plaintiff bringing the Board of Resolution on record and without even producing the original Power of Attorney. In other words, his RCA No. 37/2010 M/S AGGARWAL SALES & SERVICES V/s M/S LMJ INTERNATIONAL LTD. PAGE No. 4/11 objection regarding the defective institution of the suit remained unaddressed by the court. The appellant has also challenged the finding on the rate of interest taken as 12% p.a.
15. Going deep into the controversy, it is quire surprising that it has been completely ignored by the Ld. Trial Court, the glaring fact that the plaintiff gave a different story throughout, concealing that the arrangement and relation between the parties was one of a 'whole sale dealer' (being the respondent/plaintiff) and a 'distributor' (being the appellant/defendant) and instead they portrayed their relationship being as that of a 'seller' and 'purchaser'.
16. From the entire facts coming up on record, it stood quite well established that the relationship between the parties was that of a 'whole seller' and 'distributor', as otherwise, no worthwhile explanation has come on record either in the testimony of the parties, or elsewhere, as to why the appellant/defendant was being allowed to return the goods, when it was nobody's case that the goods had been found defective, and were being returned, and in the absence of any such case, what was the circumstance under which the defendant/applicant was being allowed to return so much substantial quantity of the goods, taken by him from the respondent/plaintiff. The only implication and the inference that could have been drawn in the circumstances, would be that indeed the defendant was taking the products of the respondent/plaintiff in order to sell them in certain areas, and for being allowed to take so many products, the defendant was issuing post dated cheques as security which used to be returned as and when any unsold quantity was being returned. The entire trend of the transaction is speaking volumes to establish the case of the defendant/appellant.
17. The cheques given to the plaintiff/respondent were always returned without any RCA No. 37/2010 M/S AGGARWAL SALES & SERVICES V/s M/S LMJ INTERNATIONAL LTD. PAGE No. 5/11 objection being raised by the plaintiff/respondent.
18. In the normal case between the seller and purchaser, there would be no question of post dated cheques to be issued by way of routine, as has been between the parties and the said cheques would not be returned so easily without any question being raised from the plaintiff to ask for a reason for the return of the products. There has also not been so much a whisper uttered by the respondent/plaintiff throughout, from the date of the first return of the product till the end, regarding the reason for return of the products, and that by itself would be sufficient to render their entire story put forward, of there being a seller purchaser relationship between the parties, and there being a running account being maintained and an amount of Rs. 9000/ and above being outstanding, as absolutely false..
19. On the contrary, it was the case of the respondent/plaintiff that payments were to be made for the products, at the most within 15 days on receiving of the invoice, and there has not been any mention about the deposit of any post dated cheque by the defendant/appellant with the plaintiff at any stage, either in the plaint or even thereafter in the replication.
20. Though the plaintiff/respondent has mentioned about there being a facility of 15 days credit from the date of the invoice, there was no mention of deposit of any post dated cheque by the defendant/appellant.
21. It is only the defendant/appellant who in his WS came up with his own version and also filed the original cheques so deposited by the security and later on returned when he could not sell of the goods.
22. The original cheques are on record, the plaintiff/respondent even in the RCA No. 37/2010 M/S AGGARWAL SALES & SERVICES V/s M/S LMJ INTERNATIONAL LTD. PAGE No. 6/11 replication avoided to admit the factum of deposit of cheques by the defendant/appellant by way of security and the return of those cheques. Plaintiff throughout has concealed the true and most material facts from the court and which alone would have been sufficient to hold him disentitled to claim any relief whatsoever from the court.
23. There was no material coming up on the record as to why due weightage be not given to the document admitted in the evidence as Ex. PW1/5, as being an extract of the party ledger.
24. Coming to the endorsement and the most significant and material part of this document, the entire hand written is being necessary to reproduced herein as under: "Already provided cheque of Rs.43,000/ approx. holding stock of more than Rs.50,000/.
Options:
1.To either transfer the stocks to other parties where it is
selling immediately or
2.To provide consumer offer with 250 gm pack and one
sales person immediately.
Sd/
(Tuntun Kumar)"
25. The very first endorsement "already provided cheque of Rs. 43,000/"
approximately and "holding stocks of more than Rs. 50,000/" would also be sufficient by itself to indicate that defendant/appellant was not a purchaser but a distributor "to hold stocks" for any amount whatsoever even for Rs. 50,000/, for no good reason. Coming to the second endorsement titled as 'options', the first option has been stated as "to either transfer the stocks to some other parties where it is selling immediately" or second option being to "provide consumer officers with 250 grams packs and one sales person immediately."
26. This document was signed by Tuntun Kumar as was being constantly and RCA No. 37/2010 M/S AGGARWAL SALES & SERVICES V/s M/S LMJ INTERNATIONAL LTD. PAGE No. 7/11 consistently maintained by the appellant/defendant right from his WS till the evidence. The stand taken by the defendant/appellant, through and through stood established by Ex. DW1/5 and it is not understandable as to why the very significant endorsement thereon was completely disregarded by the Trial Court.
27. From the entire evidence on record, it is clear that it is not just a case where plaintiff/respondent had failed to prove his story of a simple sale purchase of goods and outstanding balance claimed against the defendant, but the plaintiff clearly came up with a completely false version not just the concealing actual facts, remaining salient about the real relationship being one of whole seller and distributor and about deposit of post dated cheques by the defendant/appellant by way of security.
28. Apart from concealing sevearl facts as has been established from the original cheques already on record, the endorsement of their record, document Ex. DW1/5 was sufficient to clinch the controversy in as much as it hardly left any doubt that defendant/appellant was only a distributor visavis the plaintiff company and to whom the products were being given for promoting the sale and since he could not reach the desired sale target, he had reported to the company, as is visible from the document also being titled as a "report as on 17.11.2005" and accordingly two options were suggested by Tuntun Kumar, the officer of the plaintiff/respondent company, the option being clearly that the stock should be transferred to some other parties where there was likelihood of immediate sale or second option in the alternative was to provide (sale promotion offer) with 250 grams pack and also to provide one sales persons to the defendant/appellant immediately.
29. Not only that the most material document on the record has been ignored by Ld. RCA No. 37/2010 M/S AGGARWAL SALES & SERVICES V/s M/S LMJ INTERNATIONAL LTD. PAGE No. 8/11 Trial Court, but also that objection raised by the defendant to the lack of competence in the person who had instituted the suit, no issue was even framed on the basis of the pleadings.
30. The contention on behalf of the appellant to the effect that even original Power of Attorney was not considered necessary to be produced, much less Board Resolution would indicate that Ld. Trial Court had made up its mind to reject all objections of the defendant and even the objection which would go to the root of the maintainability of the suit itself.
31. Reference is had to the testimony of PW1 Avinash Jain who replied that he had filed the certified copy of the Power of Attorney in his favour without assigning any reason as to why the original Power of Attorney could not be filed or at least even produced.
32. There was no good reason also when an objection had been taken up by the defendant in his WS, to the competence of Avinash Jain to sign, verify and institute the suit, the original Board Resolution could not have been produced by PW1 when he was throughout aware about the objections already raised by the defendants in its pleadings.
33. Just because no issue was framed, as such, it could not be said as to whose onus it was to prove, but in the given circumstances, it had been the plaintiff who would have to establish that the said Avinash Jain was duly authorized and competent official to have signed, verified and instituted the suit.
34. In fact as rightly contended on behalf of the defendant/appellant, most of the events were not in the personal knowledge of the PW1. Ld. Counsel for defendant/appellant has relied upon the case law on the point as to who has power to institute a suit, and as to who has the power to depose being as under: Nibro Limited V/s National Insurance Company Ltd. 41 (990) DLT 633 RCA No. 37/2010 M/S AGGARWAL SALES & SERVICES V/s M/S LMJ INTERNATIONAL LTD. PAGE No. 9/11 wherein it was held that signing and verification of the plaint is different from filing the suit by a competent person and further that powers of the company vest with the Board of Directors and individual Director cannot, without a specific resolution of the board, institute a suit.
35. Wherein also reference was had to Order 3 Rule 1 and Order 29 Rule 1 CPC whereby it was held that the said provision does not entitle the principal officer of a company to file a suit on its behalf, for that the authority has to be found either in the Article of Association of the company, or in the resolution by its Board of Directors.
36. In M/s Rajghria Papers Mills Limited V/s General Manager, Indian Security Press and Another AIR 2000 DELHI 239, the same view was taken.
37. AIR 2005 SC 439 , it is held that a Power of Attorney holder cannot depose for the principal in respect of matters, which only the principal, could have a personal knowledge and in respect of which, the principal would be liable to be crossexamined.
38. There is no doubt that appellant/defendant has succeeded in establishing that the Trial Court has not correctly appreciated the evidence lead by the parties and the approach of the Trial Court has been erroneous. Even at one point in the impugned judgment Ld. Trial Court had held that respondent sought return of the goods from the appellant, and thereby brought an end to the relationship of "sellerpurchaser/distributor, as the case may be between the parties". This is by itself would show that the Trial Court did not even want to go into the controversy, as to whether relationship between the parties was one of 'seller purchaser' or one of 'sellerdistributor' and without deciding it, the Trial Court proceeded to decree the suit in favour of the plaintiff.
The impugned judgment and decree dated 25.05.2010 are hereby set RCA No. 37/2010 M/S AGGARWAL SALES & SERVICES V/s M/S LMJ INTERNATIONAL LTD. PAGE No. 10/11 aside. The suit as filed by the plaintiff stands dismissed.
Fresh Decree Sheet be prepared.
Trial Court record be sent back alongwith copy of the order.
Appeal file be consigned to Record Room.
ANNOUNCED IN THE OPEN COURT (SUJATA KOHLI)
TODAY i.e. ON 17TH JANUARY, 2013 ADJ:WEST:THC
DELHI:17.01.2013
RCA No. 37/2010 M/S AGGARWAL SALES & SERVICES V/s M/S LMJ INTERNATIONAL LTD. PAGE No. 11/11