Delhi District Court
Through Its Authorized Representative vs Abhijit Roy on 30 July, 2022
IN THE COURT OF SUMIT DASS, ADDITIONAL DISTRICT
JUDGE-04, SOUTH WEST DISTRICT, DWARKA COURTS :
NEW DELHI.
CS No.18 of 2019
In the matter of:
Zasha Advertising Pvt. Ltd.
[Formerly known as Sharma's Advertising Pvt. Ltd.]
A company incorporated under the Companies Act
Having its registered office at
15/6, Chhoti Sabzi Mandi,
Janakpuri, New Delhi-110058.
Through its Authorized Representative
Mr. Rajesh Sharma .......Plaintiff
Versus
Abhijit Roy
Proprietor of Koncepts & Kreations
to be served at
734-A, K.L.Sehgal Road,
New Alipore, Block - P
Kolkata -700053. ......Defendant
Suit under Order XXXVII CPC for recovery of Rs. 4,71,320/-
under a written contract alongwith interest.
Date of Filing : 07.01.2019
Date of Arguments : 20.07.2022
Date of Decision : 30.07.2022
CS No. 18 of 2019
Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 1/15
JUDGMENT
1. Vide this order I shall dispose of an application seeking leave to defend filed by the defendant U/o 37 rule 3(5) r/w Section 151 of the Civil Procedure Code, 1908 [in short CPC]. Accompanying the leave to defend application there is another application U/s 5 of the Limitation Act, 1963 which too shall be disposed of by the present order.
2. Reply to leave to defend has been filed. Reply to the application U/s 5 of the Limitation Act has been separately filed. Before proceeding further relevant to note herein that the suit U/o 37 CPC was filed and was dismissed in limine vide order dated 07.01.2019 passed by my Ld. Predecessor. A challenge was laid by the plaintiff against the said order resulting into the order dated 29.11.2019 in RFA No. 337/2019 titled as 'Zasha Advertising Pvt. Ltd. v/s Abhijit Roy'. The matter was remanded back. I can conveniently cull out the facts from the said order itself:
"2. The brief facts are:
a) on 26.05.2018 the Respondent placed purchase order upon the Appellant at Delhi for taking the Appellant's service for branding AC bus with effect from 27.05.2018 for a period of one month at the rate of Rs.78,000/-
excluding GST per bus per month;
CS No. 18 of 2019Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 2/15
b) on 02.07.2018 being satisfied by the Appellant's services, the Respondent placed another purchase order dated 02.07.2018 for continuing the above-mentioned services for another period of one month;
c) on 17.07.2018 in order to discharge the Respondent's liability as per purchase order dated 26.05.2018, the Respondent issued a cheque bearing no.000003 dated 17.07.2018 of Rs.3,68,160/-, drawn on Punjab & Sind Bank, Branch New Alipore, Kolkatta in favour of the Appellant. However, the Respondent requested the Appellant not to present the said cheque for encashment as the Respondent had been running into financial crunch;
d) after repeated requests and reminders for making the payment of the outstanding amount by the Appellant's officials, the Respondent made part payment of Rs.1,20,000/- to the Appellant against the purchase order dated 26.05.2018;
e) on 20.08.2018 thereafter, in order to discharge the Respondent's liability as per the purchase order dated 02.07.2018, the Respondent issued a cheque bearing no.000022 dated 20.08.2018 of Rs.3,68,160/-, drawn on Punjab & Sind Bank, Branch New Alipore, Kolkatta in favour of the Appellant. However, the said cheque got dishonored upon its presentation by the Appellant with its banker;
f) on 11.10.2018 thereafter the Appellant and its officials approached the Respondent repeatedly with request to pay the due amount to the Appellant. After much persuasions, the Respondent paid an amount of Rs.70,000/- against the purchase order dated 26.05.2018. The Respondent also instructed the Appellant to present the cheque bearing CS No. 18 of 2019 Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 3/15 No.000022 dated 20.08.2018 for an amount of Rs.3,68,160/-, drawn on Punjab & Sind Bank, Branch NewAlipore, Kolkatta in the last week of October, 2018 with promise and undertaking that the same would be honored upon its presentation. Further the Respondent also undertook and promised to pay the balance amount as soon as possible;
g) on 02.11.2018 the above stated cheque bearing no.000022 dated 20.08.2018 of Rs.3,68,160/-, drawn on Punjab & Sind Bank, Branch New Alipore, Kolkatta was presented for clearance by the Appellant to its Banker, namely Federal Bank, Marathahalli Branch (FMH), Bangalore within the statutory period, the said cheque was dishonored due to stopping of payment by the Respondent. The said cheque and returning memo dated 02.11.2018, containing the remarks "payment stopped by the drawer"
was received by the Appellant thereafter;
h) on 05.11.2018 The Appellant had also caused a legal notice to be served upon the Respondent, calling upon the Respondent to pay the abovementioned amount;
i) on 06.12.2018 the Respondent, replied to the said legal notice, wherein making certain false and frivolous allegations, however admitting the abovementioned amount and further made payment of a sum of Rs.75,000/-
to the Appellant. Hence the sum of Rs.4,71,320/- is still due and payable by the Respondent to the Appellant"
3. Suffice to note herein that two points were raised. One was with regard to territorial jurisdiction and other one was with regard to the fact that name of the plaintiff concern was changed from CS No. 18 of 2019 Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 4/15 Sharma's Advertising Pvt. Ltd. to Zasha Advertising Pvt. Ltd. which were dealt by the said order.
4. In the leave to defend application filed herein the grounds which have been taken can be conveniently summarized as under :-
i. No cause of action accrued within the territorial jurisdiction of the Courts at Delhi.
ii. The suit has been filed against Abhijit Roy whereas the suit ought to have been filed against 'Koncept and Kreation'. iii. Cheques in question were blank and only for the security purpose which have been misused.
iv. The defendant never dealt with M/s Zasha Advertising Pvt. Ltd.
In fact the plaintiff had filed a complaint case U/s 138 of Negotiable Instrument Act, 1881 before the concerned Court at Banglore, Karnataka and Hon'ble Karnataka High Court had stayed the proceedings.
v. M/s Sharma's Advertising Pvt. Ltd. had issued the legal notice dated 05.11.2018 which was duly replied by the defendant.
5. In reply the version of the plaintiff was that Section 23 of the Companies Act permits the change of name of the company and simultaneously it does not affect the transaction between the parties or in any manner the rights and obligations. Insofar as the suit being CS No. 18 of 2019 Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 5/15 within the territorial jurisdiction is concerned reliance on Section 20(c) of the CPC was made. Other details were denied. It was stated that the transactions between the parties were prior to the change of name of the company which was communicated later on to the Ministry of Corporate Affairs. It was also stated that the defendant is the proprietor of M/s Koncept and Kreations and therefore the suit has been rightly filed against him.
6. I have heard the arguments advanced by Sh. Dhruv Kapoor, Ld Counsel for plaintiff and Sh. Luv Kush Agnihotri, Ld. Counsel for defendant.
7. Now the principle with regard to grant of leave to defend has been succinctly stated in the leading judgment of IDBI Trusteeship Services ltd. v/s Hubtown ltd. (2017) 1 SCC 568.
18. Accordingly, the principles stated in paragraph 8 of Mechelec's case will now stand superseded, given the amendment of O.XXXVII R.3, and the binding decision of four judges in Milkhiram's case, as follows: If the defendant satisfies the Court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit;
if the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to CS No. 18 of 2019 Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 6/15 sign judgment, and the defendant is ordinarily entitled to unconditional leave to defend;
even if the defendant raises triable issues, if a doubt is left with the trial judge about the defendant's good faith, or the genuineness of the triable issues, the trial judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security; if the Defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires.
if the Defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintiff is entitled to judgment forthwith;
if any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court.
CS No. 18 of 2019Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 7/15 7.1 In the light of the aforesaid principle let me evaluate the case set forth by the defendant.
i) First is with regard to change of name. The plaintiff has stated that earlier the name of the company was M/s Sharma's Advertising Pvt. Ltd. which has been changed to M/s Zasha Advertising Pvt. Ltd. On this aspect Section 23 of the Companies Act is quite clear and categoric. It does not affect the liabilities, rights and obligations. It is also not the case of the defendant that they dealt with two different firms or entities.
ii) The main thrust of arguments of Ld. Counsel for defendant was predicated on the fact that proceedings before Hon'ble Karnataka High Court have been stayed precisely on this ground. Insofar as the case U/s 138 N.I. Act is concerned the parameters are quite different. Herein it is the civil liability which is being sought to be enforced. The said order is also not a final order. Secondly the said order cannot be pressed insofar as the present proceedings are concerned for the reason that already there is an adjudication before the Hon'ble High Court with regard to the aforesaid fact and para 9,10,11 and 12 are material. I am quoting the same as here under :
9. It is the submission of the appellant earlier the name of the appellant was M/s.Sharma's Advertising Private Limited and they had applied for the change of the name of the company. Admittedly, M/s.Sharma's CS No. 18 of 2019 Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 8/15 Advertising Private Limited and M/s.Zasha Advertising Private Limited are not different companies and as a matter of fact both the names are of same company. It is also not the case of the respondent M/s.Zasha Advertising Private Limited is a different company than M/s.Sharma's Advertising Private Limited. The entire transaction has been carried out by the appellant in earlier name of the company as the business dealings with the respondent were going on prior to the change of the name. It is the respondent who placed the purchase order in the old name of the company. The name of both the companies are also embodied in the memo of parties in the plaint, which perhaps was not noticed by the learned Trial Court while passing the impugned order. Prima facie change of name of the company though has come into existence but in fact it is the very same company with the same Board of Directors and in the control of same Management.
10. Section 23 of the Companies Act, 1956 reads as under: "23. Registration of change of name and effect thereof.
(1) Where a company changes its name in pursuance of section 21 or22, the Registrar shall enter the new name on the Register in the place of the former name, and shall issue a fresh certificate of incorporation with the necessary alterations embodied therein; and the change of name shall be complete and effective only on the issue of such a certificate.
(2) The Registrar shall also make the necessary alteration in the memorandum of association of the company.CS No. 18 of 2019
Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 9/15 (3) The change of name shall not affect any rights or obligations of the company, or render defective any legal proceedings by or against it; and any legal proceedings which might have been continued or commenced by or against the company by its former name may be continued by or against the company by its new name.
11. A bare perusal Sub clause (3) Section 23 (supra) clarifies that change of name obviously will not debar the company under the new name, to sue for any claim under the old name; as a mere change of name has no other consequential legal effect.
12. The change of name of a company shall never affect its rights or obligations, as in the present case, any rights or obligations, carried out by the Appellant in its previous name shall not affect its rights and obligations by merely changing its name and which shall pass on to the same company under the new name. Moreso, it is alleged the purchase order were received when application for change of name was pending before Registrar of Companies, though such application, if accepted would relate to the date of application.
7.2 To my mind this issue also does not detain me for the reason that change of name is concerning interse the plaintiff only and does not vest any legal right with the defendant to challenge the same or otherwise evade his liability on the said score.
CS No. 18 of 2019Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 10/15 7.3 Coming to the second argument that the dealings were with M/s Koncept and Kreation and case has been filed against Abhijit Roy individually. The suit is to be filed only against the name of the proprietor and not against the proprietorship concern which is not a legal entity. No umbrage can be taken on the said score as well.
7.4 Coming to the third argument/contention with regard to territorial jurisdiction. It is but obvious that once the parties had exchanged legal notice then it is but apparent that they intend to convert their relationship into a legal relationship or the litigation clouds were in horizon. Reply sent by the defendant in response to the legal notice is important and I am quoting the same as here under for the ready reference :
"To Mr Dhruba Kapur Advocate of D & V Legal Advocate and Solicitors D360, Ground floor, Defence Colony New Delhi110024.
Your client : Sharma Advertising Pvt. Ltd. 15/6, Chhoti Sabji Mandi, Janakpuri, New Delhi 110058.
Ref. Your Letter dated 05.11.2018 CS No. 18 of 2019 Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 11/15 My Client : Mr. Abhijit Roy, Proprietor of M/s Koncepts and Kreations 743A, K.L.Saigal Road, New Alipore, BlockP, Kolkata 700053.
Under instructions for an on behalf of my above named client I do hereby write to you as follows :
That my client handed over to me your letter dated 05.11.2018 and after thoroughly going through the said letter it appears to me that perhaps you are not well aware of the actual facts and your client divulged a distorted stories before you other wise Ld Advocate prudence would not have written such erroneous letter addressed to my client.
It is a fact that your client has provided satisfactory service to my client and a contractual obligation to make payment of Rs. 7,36,320/ only in your favour is accrued upon my client, out of which my client paid on 25.07.2018 a sum of Rs. 50,000/, on 01.08.2018 of Rs.70,000/ and on 11.10.2018 Rs. 70,000/ totaling a sum of Rs.
1,90,000/ and accordingly your client received and acknowledged the said amount from my above named client and being the lawful agent of my client, I further like to let you know that my client has sent you a letter dated 01.11.2018 in which my client requested your client not to present two security deposited cheques [which was earlier deposited to your client as a guarantee] bearing cheque no. 000003, 000022, due to financial crunch unfortunately your client inspite of receiving the said letter arbitrarily deposited the said two cheques with their banker CS No. 18 of 2019 Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 12/15 and for the above reason the said two security cheques dishonoured by the Bank.
I further like to inform you that my client has no motive or intention to siphone off the money of your client and to prove my client prima facie I am sending on behalf of my client a draft of Rs. 75,000/ being No. 876813 dated 05.12.2018 drawn on Punjab & Sind Bank, New Alipore, Kolkata 700053 to your client.
In view of the above I on behalf of my client therefore request you to advise your client not to file any suit against my client U/s 138 N.I. Act and also allow my client adequate time so that my client meet up the dues of your client as early as possible.
This is for your information and necessary action."
7.5 The same has been sent by the defendant through his counsel Mr. Prabuddha Ghosh Majumdar. By the said reply infact the liability has been admitted and a sum of Rs. 75,000/- was also sent by way of demand draft to the plaintiff at Delhi. The fact of the matter is that the said reply to the legal notice does not take any umbrage with regard to the territorial jurisdiction and the payment was made at Delhi after service of legal notice. In fact all the payments were made at Delhi. Now to contend that the Courts of Delhi have no jurisdiction is completely untenable moreso when there is no place agreed where parties can sue amongst the one where cause of action accrues. In fact the letter dated 26.05.2018 and 02.07.2018 whereupon the contract CS No. 18 of 2019 Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 13/15 came into existence was addressed to the plaintiff at Delhi and also does not restrict the place of suing in any manner.
7.6 That being the scenario the payments having been made at Delhi and at the same time the said letters were addressed to the plaintiff at Delhi - integral part of the cause of action i.e. the place where the contract came into existence coupled with the fact that payments were being made, Courts at Delhi have the necessary jurisdiction to try the present suit.
7.7 Coming to the last arguments i.e. the plea of cheques having been given as security. I fail to understand what prompted the defendant to give payment alongwith the reply to the legal notice. Security cheques are given only as security with respect to a collateral promise. The plaintiff had already performed his promise. He had raised the liability. The same has been admitted and subsequently part payments were given and one payment was made at the time giving reply to the legal notice. The plaintiff had performed his part of obligation. The plea of security cheque, if any ceases inasmuch as, as per the terms and conditions of the agreement they were only security cheques till 45 days of the contract within which period the defendant could have raised any objection qua the same. Post that they ceases to be so called 'security cheques'.
CS No. 18 of 2019Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 14/15
8. Summary suits are filed only to expedite the adjudication with regard to the disputes which fall within the sweep of Order 37 CPC. The defendant has to make out a plausible case for trial. On the pleadings and material available on record I am of the opinion that no case is made out by the defendant moreso in view of the categoric admission made in the reply to the legal notice and in view of the law laid down in IDBI Trusteeship Services ltd. v/s Hubtown ltd. case. The balance amount is due of Rs. 4,71,320/-. It is a commercial nature of dispute, accordingly instead of giving interest @ 24% as sought I am granting interest @ 12 % p.a. from the date of second legal notice.
Leave to defend application filed by the defendant stands dismissed. As a fortiori application U/s 5 of the Limitation Act is also dismissed as infructuous.
9. RELIEF :- In view of the aforesaid discussion, plaintiff is entitled to the suit amount i.e. Rs. 4,71,320/- alongwith interest @ 12% p.a. from the date of second legal notice i.e. 14.12.2018 . Cost is also awarded in favour of the plaintiff company Decree sheet be prepared accordingly. File be consigned to Record Room.
Announced in open Court on 30.07.2022. (Sumit Dass) Additional District Judge-04, South West District, Dwarka Courts/New Delhi.
CS No. 18 of 2019Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 15/15 CS No. 18 of 2019 Zasha Advertising Pvt. Ltd. v/s Abhijit Roy 16/15