Delhi District Court
Sh. Kamaljit Singh Pahwa vs M/S Rosa Cosmetics Pvt. Ltd on 21 May, 2014
IN THE COURT OF SH. CHANDER SHEKHAR,
DISTRICT & SESSIONS JUDGE (NORTHWEST),
ROHINI COURTS, DELHI
CS No. 26/14/11
Sh. Kamaljit Singh Pahwa
s/o Late Sh. Harbans Singh
r/o House No. KG1/419, Vikas Puri
New Delhi. ......Plaintiff
Versus
M/s Rosa Cosmetics Pvt. Ltd.
Through its Directors
regd. office : B141, Amar Jyoti Colony
Near Delhi Engineering College, Bawana Road
Delhi.
Also at :
G147, Sector5
DSIDC Indl. Complex, Bawana
Delhi. .......Defendant
Date of institution : 27.08.2011
Date of hearing arguments : 29.04.2014
Date of decision : 21.05.2014
JUDGMENT
1. The plaintiff filed the present suit under provisions of Order XXXVII CPC for the recovery of Rs. 9,28,000/ along with CS No. 26/14/11 Page 1 of 30 interest against the defendant averring therein that the plaintiff is a businessman by profession and the defendant company manufactures various types of cosmetics items and Sh. Arun Jha and Smt. Kiran Jha are the Directors of the defendant company who are old known to the plaintiff and were having cordial relations with the plaintiff.
2. It is further averred that during the month of April 2010, the defendant approached the plaintiff for a friendly loan of Rs. 8,00,000/ to invest in the business and acceding to the request and past relations with the defendant's Directors, the plaintiff gave the said loan of Rs. 8,00,000/ to the defendant on 07.05.2011 for a period of six months. It is further averred that plaintiff had disposed off/sold his house bearing no. H123, Ist Floor, Vikas Puri, Delhi, during the month of April 2010 and he had arranged the said amount of Rs. 8,00,000/ from the sale consideration of his said house.
3. It is further averred that after six months, the plaintiff approached the defendant company for the repayment of the said loan, but both the Directors of the defendant company pleaded financial constraint and requested the plaintiff to give some more time, however, after lengthy conversations, the Directors of the defendant company issued eight cheques amounting to Rs. CS No. 26/14/11 Page 2 of 30 1,00,000/ each in favour of the plaintiff against the repayment of the said loan amount. It is further averred that the defendant also executed eight corresponding Promissory Notes amounting to Rs. 1,00,000/ each in favour of the plaintiff as collateral security.
4. It is further averred that when the plaintiff presented the aforesaid eight cheques i.e. bearing nos. 534006, 534009, 411093, 534010, 534011, 411095, 411094, 534007, dated 01.03.11, 20.03.11, 01.04.11, 01.05.11, 01.06.11, 01.07.11, 01.08.11, 20.08.11 respectively, all drawn on Punjab National Bank, Barwala Branch, Delhi, as per the instructions of the defendant with his banker i.e. Axis Bank, Vikas Puri Branch, Delhi, for encashment, the same got dishonoured with remarks "funds insufficient" vide cheque returning advice dated 19.08.2011 and 25.08.2011. It is further averred that thereafter, the plaintiff telephonically and personally contacted the Directors of the defendant company and demanded the amount of dishonoured cheques, but no heed was paid on the request of the plaintiff which shows and reflects the malafide intention and oblique motive of the defendant to grab the hard earned money of the plaintiff.
5. It is further averred that the defendant company has not bothered to pay the aforesaid loan amount despite repeated requests made by the plaintiff due to which, the plaintiff CS No. 26/14/11 Page 3 of 30 constrained to send three separate legal demand notices all dated 27.08.2011 to the defendant and its Directors also reserving his right to initiate the criminal complaint u/s 138 of the Negotiable Instruments Act against the defendant company and its Directors.
6. On these allegations, the plaintiff has filed the present suit under provisions of Order XXXVII against the defendant company, the detail of which is as under :
Principal Amount : Rs. 8,00,000/
Interest @12 p.a. (simple)
w.e.f. 07.05.2010 till 07.08.2011 (16 months) : Rs. 1,28,000/ Total Rs. 9,28,000/
7. The suit, since, was filed under provisions of Order XXXVII CPC, the special summons in prescribed proforma were issued against the defendant and accordingly, defendant entered its appearance on 07.09.2011 and consequent thereupon, the plaintiff filed an application under Order XXXVII Rule 3(4) r/w Sec. 151 CPC for issuance of summons for judgment against the defendant and the same were served upon the defendant and the defendant accordingly filed an application under Order XXXVII Rule 3(5) r/w Sec. 151 CPC thereby seeking leave to defend the suit, which was allowed by the Ld. Predecessor of this Court vide separate CS No. 26/14/11 Page 4 of 30 Order dated 13.02.2013.
8. Consequently, written statement was filed on behalf of the defendant company thereby denying the contents of the plaint. It is stated in the WS that the suit of the plaintiff is liable to be dismissed under provisions of Order VII Rule 11 CPC. It is further stated in the WS that mere perusal of the documents filed by the plaintiff suggests that the Promissory Notes have been allegedly executed on different dates and the Promissory Notes also suggest that the receipts attached with the Promissory Notes were executed on different dates. It is further stated that the plaintiff has alleged that all the Promissory Notes as well as the cheques were executed on 07.05.2011 itself, whereas the Promissory Notes, corresponding receipts and cheques indicate the dates which are either prior to 07.05.2011 or subsequent to 07.05.2011 and this fact is enough to bring to light the fact that the plaintiff has misused the Promissory Notes and the cheques with the intention to commit fraud.
9. It is further stated in the WS that the plaintiff was C & F of the defendant company and during his tenure as C & F of the defendant company, he won the confidence of the Director of the defendant company Sh. Arun Jha who officially allowed him to operate as Accounts Officer of the defendant company. It is CS No. 26/14/11 Page 5 of 30 further stated that the plaintiff used to issue bills on behalf of the defendant company and even maintained the accounts of the defendant company and the plaintiff even used to get the signatures of the Director Sh. Arun Jha on blank cheques so as to issue the said cheques to various persons in his absence in normal course of business. It is further stated that the plaintiff even misused the blank Promissory Notes which the defendant had entrusted with the plaintiff after signing for availing loan in emergency from some third person in the absence of Sh. Arun Jha who used to travel across the country for business purposes. It is further stated that the plaintiff has misused the cheques in question and has got presented the same for realization after forgiving the said cheques. Accordingly, the defendant company has prayed to dismissed the present suit with heavy costs.
10. Thereafter, the plaintiff filed the replication and denied the contentions raised on behalf of the defendant company in the WS and reaffirmed those as stated in the plaint.
11. From the pleadings of the parties and documents on record, following issues were framed by the Ld. Predecessor on 23.09.2013 :
1. Whether the plaintiff is entitled for recovery of suit amount of Rs.
9,28,000/ along with interest @ 12% p.a. as prayed for? OPP. CS No. 26/14/11 Page 6 of 30
2. Whether the plaintiff has concealed and suppressed the material facts and suit of the plaintiff is not maintainable in the present form and liable to be dismissed on this ground? OPD.
3. Whether the suit of the plaintiff is not maintainable in the present form as the same has not been properly verified and liable to be rejected on this ground alone? OPD.
4. Relief.
12. In order to prove his case, the plaintiff examined himself as PW1 and tendered his affidavit in evidence i.e. Ex. PW1/A.
13. Besides his affidavit, PW1 also proved various documents on the record i.e. Exs. PW1/1 to PW1/19. Document Exs. PW1/1 to PW1/8 are the Promissory Notes. Exs. PW1/9 to PW1/16 are the certified copies of the cheques. Exs. PW1/17 to PW1/19 are the cheque returning memos.
14. PW1 was duly cross examined by the Ld. Counsel for the defendant company.
15. On the other hand, Sh. Arun Jha, Director of the company, was examined on behalf of the defendant company as DW1 who tendered his affidavit in evidence as Ex. DW1/A.
16. DW1 also proved various documents i.e. Exts. A1 to A16 which are the photocopies of the retail invoices of different dates.
17. DW1 was duly cross examined by Ld. Counsel for the CS No. 26/14/11 Page 7 of 30 plaintiff.
18. I have heard Ld. Counsel for both the parties and have gone through the entire record including the written arguments filed on behalf of the defendant.
19. Considering the pleadings, the issues framed, evidence led, documents proved, written arguments filed on behalf of the defendant and arguments addressed by the Ld. Counsels for both the parties, the issuewise findings are as under : ISSUE Nos. 1 & 2 :
Issue no. 1 : Whether the plaintiff is entitled for recovery of suit amount of Rs. 9,28,000/ along with interest @ 12% p.a. as prayed for? OPP.
Issue no. 2 : Whether the plaintiff has concealed and suppressed the material facts and suit of the plaintiff is not maintainable in the present form and liable to be dismissed on this ground? OPD.
20. Both these issues are interconnected hence, are being taken up together for determination and adjudication.
21. The onus to prove issue no. 1 is upon the plaintiff, whereas the onus to prove issue no. 2 is upon the defendant.
22. The plaintiff has stated in the plaint that during the month of April 2010, the defendant company through its Directors Sh. Arun Jha and Smt. Kiran Jha, had approached the plaintiff for a friendly loan of Rs. 8,00,000/ to invest in the business and the plaintiff CS No. 26/14/11 Page 8 of 30 gave the said loan of Rs. 8,00,000/ to the defendant on 07.05.2011 for the period of six months. It is further stated by the plaintiff that he had disposed off/sold his house bearing no. H123, Ist Floor, Vikas Puri, Delhi, during the month of April 2010 and he had arranged the said amount of Rs. 8,00,000/ from the sale consideration of his said house. It is further stated by the plaintiff that after six months, the plaintiff approached the defendant company for the repayment of the said loan, but both the Directors of the defendant company pleaded financial constraint and requested the plaintiff to give some more time, however, after lengthy conversations, the Directors of the defendant company issued eight cheques amounting to Rs. 1,00,000/ each in favour of the plaintiff against the repayment of the said loan amount. It is stated by the plaintiff that the defendant also executed eight corresponding promissory notes amounting to Rs. 1,00,000/ each in favour of the plaintiff as collateral security.
23. It is further stated by the plaintiff that when he presented the aforesaid cheques i.e. bearing nos. 534006, 534009, 411093, 534010, 534011, 411095, 411094, 534007, dated 01.03.11, 20.03.11,01.04.11, 01.05.11, 01.06.11, 01.07.11, 01.08.11, 20.08.11 respectively, all drawn on Punjab National Bank, Barwala Branch, Delhi, as per the instructions of the defendant CS No. 26/14/11 Page 9 of 30 with his banker i.e. Axis Bank, Vikas Puri Branch, Delhi, for encashment, the same got dishonoured with remarks "funds insufficient" vide cheque returning advice dated 19.08.2011 and 25.08.2011. It is further stated by the plaintiff that thereafter, he telephonically and personally contacted the Directors of the defendant company and demanded the amount of dishonoured cheques, but no heed was paid on the request of the plaintiff which shows and reflects and malafide intention and oblique motive of the defendant to grab the hard earned money of the plaintiff.
24. The plaintiff has mentioned in para no. 7 of the plaint that he gave the abovesaid loan to the defendant on 07.05.2010 though earlier in para no. 3 of the plaint, it is mentioned that the loan was provided to the defendant on 07.05.2011. The defence of the defendant as is evident from the written statement, as discussed herein above, is that the Promissory Notes, corresponding receipts and cheques indicate the dates which are either prior to 07.05.2011 or subsequent to 07.05.2011 and it proves that the plaintiff has misused the Promissory Notes and the cheques with the intention to commit a fraud.
25. The plaintiff filed the replication to the WS wherein it is stated that there is no irregularity in the contents of the legal notice and the plaint except one typographical mistake by which the date CS No. 26/14/11 Page 10 of 30 of providing the loan to the defendant has been mentioned as 07.05.2010 in lieu of 07.05.2011 and the defendant is very well aware that the same is only a typographical mistake because it is specifically mentioned in the 4th line of para no. 7 of the plaint that the loan amount was given by the plaintiff to the defendant on 07.05.2010. Hence, so far as the date of giving the loan in para no. 3 of the plaint as 07.05.2011, is concerned, that seems to be a typographical/clerical mistake which stands clarified in para no. 7 itself as well as in the replication also. It is further stated in the replication that the aforesaid cheques were dishonoured on their presentation, but the defendant did not protest or take any action against the plaintiff which proves that the defendant was having liability to repay the loan amount to the plaintiff. Moreover, the defendant had not instructed his banker to stop the payment and also did not lodge any complaint before police or anywhere else regarding misplace or misuse of the cheques.
26. The plaintiff has reiterated almost all the contents of his plaint in the affidavit in evidence Ex. PW/1A and also proved the documents Exs. PW1/1 to PW1/19, as discussed herein above. However, so far as the cross examination of PW1 is concerned, it is stated by the plaintiff, apart from other facts, that he has not placed the paper regarding the sale of property as mentioned in CS No. 26/14/11 Page 11 of 30 para no.2 in his affidavit, but he has brought the same. PW1 further stated that he sold the property for a sum of Rs. 40 lacs and this property was sold by his wife. PW1 further stated that he has not filed any statement of account showing receipt of Rs. 40 lacs or giving friendly loan of Rs. 8 lacs. PW1 further stated that he has not filed the statement of account showing withdrawal of Rs. 8 lacs since no such amount was withdrawn by him from the Bank. PW1 further stated that he asked Mr. Arun Jha and Smt. Kiran Jha to give him a receipt against the loan amount of Rs. 8 lacs, but they on one pretext or other did not give him the receipt. PW1 further stated that the cheques and Promissory Notes bear his handwriting which were signed by Sh. Arun Jha, Director of the defendant. PW1 further stated that he did not present the cheques on 01.03.2011 since Sh. Arun Jha threatened him that he would shoot him. PW1 has further stated in his cross examination that he presented all the cheques after Sh. Arun Jha allowed and asked him to present the same.
27. Similarly, Sh. Arun Jha, Director of the defendant company appeared in the witness box as DW1 and apart from the other facts, stated in the cross examination that the plaintiff was appointed as Carrying and Forwarding Agent (C&F) in the year 2007 vide agreement on a stamp paper, it was not registered. DW1 further CS No. 26/14/11 Page 12 of 30 stated that he has not filed copy of the said agreement on record. DW1 further stated that the plaintiff worked as C & F Agent for six months/ one year with the defendant. DW1 further stated that the C & F arrangement with the plaintiff was never terminated by the defendant. DW1 further stated that the defendant was paying commission to the plaintiff as C & F Agent @ 6% on the sale amount. DW1 further stated that the commission made to the plaintiff has been shown in the A/c Book of the defendant after adjustment of the amount of the purchase of the products by the plaintiff. DW1 further stated that he can produce the account books. DW1 further stated that he cannot tell whether the payments to the plaintiff were made in cash or through cheques, his accountant can tell the same. DW1 further stated that the plaintiff as a friend started looking after his work after he suffered losses. DW1 admitted it to be correct that the plaintiff was never appointed as Accounts Officer or Accountant by the defendant.
28. DW1 further stated in his cross examination that he came to know for the first time in the year 2011 about the bouncing of the cheques. DW1 further stated that he or the defendant did not issue instructions to their banker not to entertain any cheque on their behalf presented by the plaintiff. DW1 admitted it to be correct that they have not lodged any complaint against the plaintiff either CS No. 26/14/11 Page 13 of 30 in the Police Station or in the Court till date. DW1 further stated that the legal notices were received by the defendant, but he does not remember whether the defendant replied the legal notices or not. DW1 admitted it to be correct that the plaintiff presented the eight cheques in their bank and the same were dishonoured. DW1 denied that suggestion that he gave the cheques in the factory of the defendant telling the plaintiff to fill up the same and the plaintiff filled up the same and thereafter he (DW1) signed the same in the presence of his wife.
29. DW1 has proved only the invoices Exts. A1 to A16. It is an admitted fact that the cheques, certified copies whereof stands proved as Exs. PW1/9 to PW1/16, have been issued for and on behalf of the defendant company and bear the signatures of one of the Directors of the defendant company Sh. Arun Jha. Similarly, the plaintiff has also proved the Promissory Notes as Exs. PW1/1 to PW1/8 and has also proved the cheque returning memos as Exs. PW1/17 to PW1/19. It is a fact that Sh. Arun Jha, Director of the defendant company is not a layman, rather he has stated in his affidavit in evidence that he is Master of Arts (MA). DW1 Sh. Arun Jha in his affidavit in evidence Ex. DW1/A, apart from other facts, has stated that he never issued eight cheques to the plaintiff against any liability and the cheques Exs. PW1/1 to PW1/8 were CS No. 26/14/11 Page 14 of 30 blank signed cheques which were entrusted to the plaintiff by him for the purpose of business of the defendant.
30. DW1 Sh. Arun Jha has admitted in his cross examination that the defendant has not lodged any complaint against the plaintiff either in the Police Station or in the Court till date. The receipt of the legal notice has also been admitted by DW1 in his cross examination. The cheque returning memos Exs. PW1/17 to PW1/19 demonstrate that the same were returned due to insufficient funds in the account of the defendant company.
31. The law regarding the cheques is well settled as it is held in the matter of K.N. Beena, Appellant vs. Muniyappan & Anr., Respondents, reported in AIR 2001 SC 2895 that:
"the Judgment erroneously proceeds on the basis that the burden of proving consideration for a dishonoured cheque is on the complainant. It appears that the learned Judge had lost sight of Sections 118 & 139 of the N.I. Act. Under Sec. 118 unless the contrary was proved, it is to be presumed that the Negotiable Instrument (including a cheque) had been made or drawn for consideration. Under Sec. 139, the Court has to presume, unless the contrary was proved, that the holder of the cheque received the cheque for discharge, in whole or in part of a debt or liability. Thus in complaints u/s 138, the Court has to presume that the cheque had been issued for a debt or liability. This presumption is rebuttable. However, the burden of proving that a cheque had not been issued for a debt or liability is on the accused. This Court in CS No. 26/14/11 Page 15 of 30 the case of Hiten P. Dalal vs. Bratindranath Banerjeet reported in (2001) 6 SCC 16 has also taken an identical view.
32. It is held in the matter of Ram Raja Ram, Appellant vs. Dhruba Charan Jena, Respondent, reported in AIR 1982 Orissa 264 that :
"Section 118 of the N.I. Act is imperative and the Court is bound to draw the initial presumption that the negotiable instrument was made for consideration when its execution is proved. It throws the burden of proof of want of consideration on the defendant. Similarly, Sec. 102 of the Evidence Act throws the burden of proving want of consideration on the defendant, for if no evidence was produced by either side and the execution of the document being admitted, the plaintiff's claim would be decreed. When the Court below decided that the defendant had failed to prove that the promissory note was obtained from him under threat and coercion, it was unnecessary to consider whether the plaintiff had proved passing of consideration or not. The execution of the handnote having been admitted, it was not necessary for the plaintiff to prove passing of consideration. The presumption u/s 118 of the N.I. Act, continued in all its rigour untill the contrary was proved. The mere fact that the plaintiff did not adduce sufficient evidence to prove passing of consideration did not in any way relieve the defendant from the burden of establishing the contrary of the presumption arising u/s 118 of the N.I. Act".
33. It is held in the matter of Mojj Engineering Systems Ltd. & CS No. 26/14/11 Page 16 of 30 Ors. vs. A.B. Sugars Ltd., reported in 154 (2008) DLT 579, that :
"even otherwise, prima facie, it was the petitioners who had handed over the undated cheque for a certain amount to the respondent in terms of a contract between the parties. Since an undated cheque cannot be encashed, it can only mean that the petitioners had authorized the complainant to enter an appropriate date on it. In Young v. Grote, (1827) 4 Bing. 253, it was held that when a blank cheque is signed and handed over, it means the person signing it has given an implied authority to any subsequent holder to fill it up. Similarly, in Scholfield vs. Lord Londesborough, (18951899) All ER Rep 282, it was held that whoever signs a cheque or accepts a bill in blank, and then puts it into circulation, must necessarily intend that either the person to whom he gives it, or some future holder, shall fill up the blank which he has left. This common law doctrine was also affirmed by Justice Macnaghten in Griffiths vs. Dalton, (1940) 2 KB 264, where it was held that the drawer of an undated cheque gives a prima facie authority to fill in the date. This aspect has also been incorporated in Sec. 20 of the N.I. Act, which deals with Inchoate Stamped Instruments. The Supreme Court in T. Nagappa vs. Y.R. Murlidhar, IV (2008) SLT 694=II (2008) CCR 398 (SC) = III (2008) DLT (Crl.) 19 (SC) = (2008) 5SCC 633, while discussing the scope of Section 20 held that by reason of this provision, a right has been created in the holder of the cheque. Prima facie, the holder thereof is authorized to complete the incomplete negotiable instrument".CS No. 26/14/11 Page 17 of 30
34. It is held in the matter of Mallavarapu Kasivisweswara Rao vs. Thadionda Ramulu Firm & Ors., 2008(8) SCALE 680, as under :
"that u/s 118(a) of the Negotiable Instruments Act, the Court is obliged to presume, until the contrary is proved, that the promissory note was made for consideration. It is also a settled position that the initial burden in this regard lies on the defendant to prove the nonexistence of consideration by bringing on record such facts and circumstances which would lead the Court to believe the nonexistence of consideration either by direct evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal.
This decision then proceeded to cite an extract from the earlier decision in Bharat Barrel & Drum Manufacturing Co. vs. Amin Chand Pyarelal, (1993) 3 SCC (para 12). Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption u/s 118(a) would arise that it is supported by a consideration. Such a presumption is rebuttable. The defendant can prove the nonexistence of a consideration by raising a probable defence. If the defendant is CS No. 26/14/11 Page 18 of 30 proved to have discharged the initial onus of proof showing that the existence of consideration was 18 improbably or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the nonexistence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event, the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the nonexistence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising u/s 118(a) in his favour. The Court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as the existence of negative evidence is neither possible nor contemplated and even if led, is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence.
Something which is probable has to be brought on the record for CS No. 26/14/11 Page 19 of 30 getting the benefit of shifting the onus of proving to the plaintiff.
To disprove the presumption, the defendant has to bring on record such facts and circumstances upon consideration of which the Court may either believe that the consideration did not exist or its nonexistence was so probable that a prudent man would, under the circumstances of the case, act upon the plea that it did not exist".
35. Now adverting back to the present case. In view of the law, as discussed herein above, the Court is bound to draw the initial presumption u/s 118 of the N.I. Act that the Negotiable Instrument was for consideration unless the contrary is proved. In this case, giving of the cheques to the plaintiff is not in dispute. Similarly, in view of the Judgment of Ram Raja Ram (Supra), and the fact that Section 102 of the Evidence Act throws the burden of proving want of consideration on the defendant, for if no evidence was produced by either side and the execution of the document being admitted, the plaintiff's claim would be decreed. Hence, it is not necessary for the plaintiff to prove passing of consideration. The presumption u/s 118 of the N.I. Act, continued in all its rigour untill the contrary was proved. The mere fact that the plaintiff did not adduce sufficient evidence to prove passing of consideration CS No. 26/14/11 Page 20 of 30 did not in any way relieve the defendant from the burden of establishing the contrary of the presumption arising u/s 118 of the N.I. Act".
36. The facts including the evidence which, as per the defendant's case, can be termed until the contrary is proved, are mentioned in the affidavit and in the WS as discussed herein above.
37. However, this Court has to keep in mind the cross examinations of the Director of the defendant company, as discussed herein above, which is reproduced hereas under :
"I was not an Accountant before joining as a Director of the defendant company. I am an MA. It is correct that the plaintiff was the proprietor of Karan Arjun Industries and used to deal with the defendant and also used to purchase cosmetics from the defendant. I came in contact with the plaintiff through Mr. OP Madan. It is wrong to suggest that I was looking after the work of Accounts of Mr. Madan. Karan Arjun Industries started business in the year 2007 and stopped dealing with the defendant in the year 20092010. The plaintiff was appointed as Carrying and Forwarding Agent (C&F) in the year 2007 vide agreement on a stamp paper, it was not registered. I have not filed copy of the agreement on record. The plaintiff worked as C & F Agent for six months/ one year with the defendant. The C & F arrangement with the plaintiff was never terminated by the defendant. The defendant was paying commission to the plaintiff as C & F Agent @ 6% on the sale amount. I cannot tell how much commission in total was paid to the plaintiff CS No. 26/14/11 Page 21 of 30 while he was working as C & F Agent. The defendant is maintaining Books of Account, as per law. The commission made to the plaintiff has been shown in the A/c Book of the defendant after adjustment of the amount of the purchase of the products by the plaintiff. I can produce the account books. I cannot tell whether the payments to the plaintiff were made in cash or cheques, my accountant can tell the same. The plaintiff as a friend started looking after my work after he suffered losses. It is correct that the plaintiff was never appointed as Accounts Officer or Accountant by the defendant. It is wrong to suggest that the plaintiff was never appointed as C & F Agent of the defendant. It is correct that the plaintiff purchased the cosmetics from the defendant till the year 20082009.
I came to know for the first time in the year 2011 about the bouncing of the cheques. I or defendant did not issue instructions to our banker not to entertain any cheque on our behalf presented by the plaintiff. It is correct that we have not lodged any complaint against the plaintiff either in the Police Station or in the Court till date. Legal notices were received by the defendant. I do not remember whether the defendant replied the legal notices or not. Mrs. Kiran Jha is a Director of the defendant. It is correct that my wife Mrs. Kiran Jha is accused along with me in the complaint cases filed U/s 138 NI Act. The defendant is having a factory in Uttarakhand at Khasra No. 238, Raipur Indl. Area, BhagwanpurRoorki, Distt. Hardwar, Uttarakhand. The plaintiff earlier was residing at H123, Vikaspuri, Delhi. I am not aware whether the plaintiff sold the House No. HG123, Vikaspuri which was in the name of his wife namely Neera Pahwa for the amount of Rs. 40 lakhs on 17.03.2010. It is wrong to suggest that I along with my CS No. 26/14/11 Page 22 of 30 wife approached the plaintiff several times for the loan and according to request past relations with me , my wife, the plaintiff got agreed to provide a loan of Rs.8 lakhs from the sale consideration amount of the house to the defendant and provided a loan amounting to Rs. 8 lakhs on 7.5.2010 for the period of six months. It is wrong to suggest that after six months when the plaintiff approached me and demanded the loan amount back, the me and my wife pleaded financial constraints and requested the plaintiff to give some time and issue 8 cheques amounting to Rs. 1 lakh each against the repayment of the loan amount in favour of the plaintiff. It is wrong to suggest that I also executed eight corresponding promissory notes each amounting to Rs. 1 lakh as collateral security and handed over the same to the plaintiff at that time. It is correct that the plaintiff presented the eight cheques in our bank and the same were dishonoured. It is wrong to suggest that the eight cheques were given against the repayment of the loan amount. It is wrong to suggest that I gave the cheques in our factory telling him to fill up the same and the plaintiff filled up the same and thereafter I signed the same in the presence of my wife. We were not manufacturing earlier the taxable goods. The originals of the bills of the Book No. 27 & 28 had been given to the parties. It is wrong to suggest that the bills which I have exhibited in Book No.26 are the original bills in the booklet. Voltd. The original bills are in white colour. We used to write on the second and third copy by pen on the bills when carbon was not available. The bills were being used to prepare in the books uptill Sl. No.28 by the plaintiff. There are other booklets where the plaintiff prepared the bills. I do not remember the exact number of the bills prepared by the plaintiff. It is wrong to suggest that the bills Ex.DW1/1 to CS No. 26/14/11 Page 23 of 30 Ex.DW1/16 were not prepared by the plaintiff or these bills are forged and fabricated. I can produce the VAT return. It is wrong to suggest that the plaintiff is entitled for the suit amount or that I have deposed falsely or that our defence is false".
38. The cross examination of DW1, as above, does not inspire confidence in the mind of this Court regarding the defence of the defendant and the defence seems to be sham and farce. It is really intriguing that the defendant has failed to lodge any complaint against the plaintiff either in the PS or at any other place after knowing that the plaintiff, as alleged, has misused the blank signed cheques/Promissory Notes entrusted to him, as stated, for the purpose of the business of the defendant company. The defendant has not proved to have sent any notice/letter to the plaintiff for the return of these cheques/Promissory Notes or pointing out that the plaintiff has misused the blank signed cheques/Promissory Notes. The defendant even did not lodge any complaint with the Police or in the Court of law regarding cheating/misuse/forgery of the cheques/Promissory Notes by the plaintiff.
39. The defence from every angle is unbelievable and I have no hesitation to hold that the defence of the defendant in view of the above discussions, is sham, farce and is unbelievable. In view of the evidence on the record as well as law laid down by the Hon'ble CS No. 26/14/11 Page 24 of 30 Supreme Court in the matter of K.N. Been (Supra), the defendant has failed to prove his defence that the cheques had not been issued for debt or liability. In view of the admission of the defendant regarding signing of the cheques, there is a presumption u/s 118 & 139 of the N.I. Act that the above said cheques were made for consideration by the defendant. Even if the cheques were blank, it is not going to have any impact or affect on the case of the plaintiff in view of the Judgment in the matter of Mojj Engineering Systems Ltd. (Supra). Hence, I have no hesitation to hold that the plaintiff has proved his case that the defendant through its Directors took friendly loan from the plaintiff for his business needs and in order to discharge the liabilities, the defendant handed over abovesaid eight cheques to the plaintiff. In this case, the plaintiff though has not proved the legal notice on the record, however, DW1 Sh. Arun Jha, Director of the defendant company, stated that he does not remember as to whether the defendant company replied the legal notice or not. The defendant has not proved the reply to the notice, which also raises contrary presumption against the defendant that the defendant has nothing to say regarding the contents of the notices rather he admits the same. It is a well settled law that if the plaintiff before filing of the suit, makes serious assertions in the notice, then the defendant CS No. 26/14/11 Page 25 of 30 must not remain silent while ignoring to reply. If he does so, then adverse inference may be raised against him that he admits the assertions and contents of the notice.
40. DW1 has admitted in his cross examination that the plaintiff was never appointed as Accounts Officer or Accountant by the defendant company. The defendant has failed to produce any account book, rather DW1 admitted that the defendant company did not issue any instructions to its banker not to entertain any cheque on its behalf presented by the plaintiff. Even otherwise, the case of the plaintiff in view of the law, as discussed herein above, and supported by two set of documents i.e. cheques and Promissory Notes, seems to be correct in view of preponderance of probabilities and the law laid down in this regard. The pleadings, evidence and documents proved on the record discloses existence of legally enforcement debts and/or liabilities since the Director of the defendant company has himself admitted his signatures on the cheques. The statutory presumption comes into play and the same has not been rebutted.
41. The defendant has failed to discharge the initial burden to prove the nonexistence of consideration by bringing on record such facts and circumstances which would lead the Court to believe the nonexistence of consideration either by direct CS No. 26/14/11 Page 26 of 30 evidence or by preponderance of probabilities showing that the existence of consideration was improbable, doubtful or illegal. In this case, the signatures on the cheques and on the promissory notes are admitted. The presumption u/s 118(a) would arise that it is supported by a consideration. The defendant, as discussed herein above, has failed to discharge and show that the existence of consideration was improbable, doubtful or the same was illegal. Hence, the plaintiff is entitled to the benefit of presumption arising u/s 118(a) of the Evidence Act in his favour.
42. Hence, in my opinion, the plaintiff is entitled to a decree for the recovery of Rs. 8,00,000/ on account of principal amount along with interest thereon, however, @ 12% p.a. on the principal amount w.e.f. 07.05.2010 till 07.08.2011 thereby totalling Rs. 9,28,000/. However, taking into consideration the market rate, custom and usage, I deem it appropriate to award the pendente lite and future interest @ 12% p.a. in favour of the plaintiff and against the defendant from the date of filing of the present suit till the realization of the decretal amount. Issue No. 1 is accordingly decided in favour of the plaintiff and against the defendant company.
43. Nothing has been proved on the record by the defendant that the plaintiff has concealed and suppressed the material fact. CS No. 26/14/11 Page 27 of 30 Accordingly, issue no. 2 is also decided against the defendant and in favour of the plaintiff.
ISSUE NO. 3 :
"Whether the suit of the plaintiff is not maintainable in the present form as the same has not been properly verified and liable to be rejected on this ground alone? OPD".
44. The onus to prove this issue is upon the defendant.
45. The defendant in his written statement has simply stated that the plaint has not been properly verified and thus, the suit needs to be rejected on this short ground itself. However, no arguments have been addressed by the Ld. Counsel for the defendant regarding this issue. The present suit has been properly verified by the plaintiff.
46. The reasons for verification is to enable the Court to find out which facts can be said to be proved on the evidence of rival parties. The allegations may be true to knowledge or allegations may be true to information received from persons or allegations may be based on the records. The importance of verification is to test the genuineness and authenticity of allegations and also to make the deponent responsible for allegations. In essence verification is required to enable the Court to find out as to whether it will be safe to act on such evidence [reliance is placed CS No. 26/14/11 Page 28 of 30 upon the Judgments in the matters of A.K.K. Nambiar vs. Union, A 1970 SC 652 and Virendra vs. Jagjiwan, A 1974 SC 1957].
47. It is apparent from the record of the case that inherent nature of facts as made out by the plaintiff are probable and are supported by the record and the documents, then merely because if the verification is not in the form as is required, cannot be the basis to dismiss the suit.
48. Hence, I have no hesitation to hold that the suit has been signed, verified and filed by a proper person. This issue is, accordingly, decided against the defendant and in favour of the plaintiff.
RELIEF :
49. In view of my aforesaid discussions, a decree for the recovery of Rs. 9,28,000/ is passed in favour of the plaintiff and against the defendant, with costs. The plaintiff is also entitled to recover pendente lite and future interest @ 12% p.a. against the defendant from the date of filing of the present suit till the realization of the decretal amount.
CS No. 26/14/11 Page 29 of 30 Decree sheet be drawn accordingly and file be consigned to Record Room.
Announced in the open Court (CHANDER SHEKHAR)
today i.e. 21.05.2014 District & Sessions Judge (N/W)
Rohini Courts, Delhi
CS No. 26/14/11 Page 30 of 30