Delhi District Court
Cs - 9685/16 vs Kay Bee & Co on 28 October, 2017
IN THE COURT OF SH. GURVINDER PAL SINGH
ADDITIONAL DISTRICT JUDGE 01 SOUTH EAST
DISTRICT, SAKET COURTS, NEW DELHI.
CS - 9685/16
M/s. SRP Industries Limited
having its Head Office at Flat no. 5, 1st Floor
Atma Ram Mansion, Scindia House
Connaught Circus, New Delhi 110001
....... Plaintiff
VERSUS
1. Kay Bee & Co.
2689/29, Tughlakabad Extension
New Delhi - 110019.
2. Mr. R.P. Mathur
Proprietor
Radhika Leather Fashions
C44, Okhla Industrial Area, PhaseI
New Delhi - 110020.
3. M/s. Radhika Leather Fashions
through its Proprietor, Sh. R.P. Mathur
C44, Okhla Industrial Area, PhaseI
New Delhi - 110020.
4. State Bank of India, Lodhi Road
through the Branch Manager
8283, Mehar Chand Market, Lodhi Colony
New Delhi - 110 003.
....... Defendants
CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 1 of 16
Date of Institution : 11.01.1995
Date of Arguments : 13.09.2017
Date of Judgment : 28.10.2017
JUDGMENT
1. Plaintiff company had filed the suit for recovery of Rs.
63,05,500/ alongwith interest @ 18% p.a. under Order XXXVII CPC against the defendants.
2. Adumbrated in brief the facts of the case of plaintiff are :
The plaintiff is a registered company incorporated under the Indian Companies Act. The defendant no.2 for and on behalf of his Sole Proprietorship firm M/s. Radhika Leather Fashions, the defendant no.3 had received the delivery of 1000 meters dyed cotton drill of the value of Rs. 60,00,000/ from the defendant no.1 under Delivery note no. 01247 dated 25.02.1994 on credit. The defendants no. 1 to 3 approached M/s. Sunrise Polycon Ltd., the amalgamated company of the plaintiff for financial accommodation for a period of 6 months and agreed to pay the prevailing rate of interest i.e. 18% per annum. The defendants 2,3 and 4 had also assured the plaintiff company that they had running limit of Rs. 2.75 crores and the defendant no.4 had agreed to coaccept the bills of exchange in the sum of Rs. 60,00,000/ vide letter dated 24.03.1994 and as such the CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 2 of 16 payment of Rs. 60 lakhs was secured and guaranteed on the due date 30.09.1994. Accordingly, the defendant no.1 had drawn a bill of exchange dated 30.03.1994 on M/s. Radhika Leather Fashion, defendant no.3 for the payment of Rs. 60 lacs on 180 days sight in favour of abovesaid amalgamated company of the plaintiff for goods received as per invoice no. 01247 dated 25.02.1994. The said bill of exchange was accepted by the defendant no.2 being an authorized signatory for and on behalf of defendant no.3.
3. It is further averred that in order to secure the payment of said Rs. 60 lakhs, defendant no.4, then namely M/s. State Bank of Saurashtra through its Chief Manager duly authorized Principal Officer of the bank, the defendant no.4 also coaccepted the said bill of exchange dated 30th September 1994 and this fact was confirmed by defendant no.4 vide their letter dated 30.03.1994 and assured that the payment of Rs. 60 lakhs shall bemade on due date without any recourse. It is further averred that the amalgamated company of plaintiff issued a cheque no. 360152 dated 30.03.1994 in the sum of Rs. 54,60,000/ drawn on the Federal Bank Ltd. Nehru Place, New Delhi after deducting the interest @ 18 % per annum amounting to Rs. 5,40,000/ which was got encashed by the defendant no.1 through their bankers and as such the defendants 1 to 4 had availed the discounting CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 3 of 16 facility in respect of the Bill of Exchange dated 30.03.1994 in the sum of Rs. 60 lakhs which was due for payment on 30.09.1994.
4. It is further averred that the plaintiff company presented the Bill of Exchange for payment on 30.09.1994 with the defendants no. 2 and 3 who failed to make payment and honour the same and issued a letter dated 30.09.1994 and therefore the plaintiff company issued the letter/notice of dishonour dated 30.09.1994 to the defendant nos. 2 and 3. The plaintiff also approached the defendant no.4 on 05.10.1994 with the request to make the payment. Defendant no.4 refused to pay stating that there was no balance in the account of defendant no.3. The Chief Manager of the defendant no.4 was also informed that since the Bank had coaccepted the bill of exchange, therefore it was bounden duty of the bank to make the payment of Rs. 60 lakhs but he refused to pay. On 07.10.1994 plaintiff again demanded the payment from defendant no.4 who refused to pay and also refused to take delivery of the photocopies of the documents including the bill of exchange. The defendant no.2 for and on behalf of his Sole Proprietorship firm the defendant no.3 had also issued a post dated cheque no. 48074 dated 30.09.1994 in the sum of Rs. 60 lakhs drawn of State Bank of Saurashtra favouring M/s. Sunrise Polycon Pvt. Ltd. which on presentation CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 4 of 16 was dishonoured with the endorsement "funds insufficient". A criminal complaint under Section 138 of the amended Negotiable Instrument Act was presented in Magisterial Court.
5. It is further averred that demand notice dated 11.10.1994 was served upon the defendants to pay Rs. 63,05,500/ including interest and legal charges, however the defendants failed to pay the same despite presentment on the Bill of Exchange dated 30.03.1994. Resultant, had been this suit.
6. Summons for appearance in prescribed form under Rule 2 of XXXVII CPC were served upon the defendants. Defendant no.4 entered appearance. Defendants no. 1 to 3 were also served by way of publication, however no appearance was filed on behalf of defendants 1 to 3. Summons for judgment were served upon defendant no.4. Vide Order dated 08.11.2000, a decree for recovery for a sum of Rs. 63,05,500/ with interest @ 18% p.a. was passed against defendants 1 to 3.
7. Summons for judgment were served upon defendant no.4, Defendant no.4 moved an application for grant of leave to defend. Leave to defend was granted unconditionally to defendant no.4 vide Orders dated 12.04.2004.
CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 5 of 16
8. Defendant no. 4 filed written statement denying the averments of the plaintiff and averred that the alleged two letters dated 24.03.1994 and 30.04.1994 allegedly issued by defendant no.4 are not issued by defendant no.4. On perusal of the same letters, it is found that the letters bear no reference number., The record of defendant no.4 Bank also reveals that no such letters have been issued or dispatched. The suit is not maintainable in the present form. Plaintiff had no license for money lending, so suit was liable to be dismissed. The suit of the plaintiff is based on the Bill of Exchange dated 30.03.1994 for Rs. 60 lakhs due on 30.09.1994. The plaintiff has himself admitted that the defendant no.2 has issued the cheque no. 48074 dated 30.09.1994 to discharge his liability under the Bill. On presentation of the said cheque by the plaintiff, it was dishonoured due to insufficient funds in the account of the defendant no.2. It is further averred that the transaction in question is a fraudulent transaction and the CBI is investigating the said fraud. The plaintiff has not produced any document of authorisation in favour of Sh. Brij Mohan as such the alleged Bill of Exchange is not legal document under the Negotiable Instruments Acts.
9. It is further averred that there is no provision of Coacceptance of Bill by the Banker . No individual employee at the Branch CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 6 of 16 has the authority to undertake such liability. No Officer at the Branch is vested with the financial powers to coaccept the Bill for Rupees Sixty Lacs unless it has the approval from the competent authority of the bank. The cheque issued by defendant no.2 has substituted the alleged bill of exchange and the defendant no.4 stood discharged from all liability on account of novation of contract. It is averred that the bill of exchange is not coaccepted by the Defendant no.4 and the allegations of the plaintiff to this effect are false and incorrect.
10. Admission/denial of documents was conducted on 14.01.2005 wherein defendant no.4 admitted one document of the plaintiff i.e. reply of defendant counsel dated 19.10.1994 to notice of plaintiff counsel dated 11.10.1994 as Ex. P1.
11. Plaintiff did not file replication.
12. From the pleadings of the parties, following issues were framed on 18.02.2005.
1. Whether the defendant no.4 is not liable to pay the suit amount to the plaintiff on the grounds raised in the written statement? OPD4.
2. To what amount the plaintiff is entitled from defendant CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 7 of 16 no.4 as principal and interest? OPP.
3. Relief.
13. In evidence, plaintiff examined himself as PW1 vide affidavit Ex PW1/A. PW1 relied upon copies of documents referred as Mark PW1/1 to Mark PW1/9 viz., (i) copy of the resolution passed in the meeting of Board of Directors dated 06.10.1994 as Mark PW1/1; (ii) copy of incorporation certificate and a copy of the order as Mark PW1/2 and Mark PW1/3; (iii) copy of bill of exchange dated 30.03.1994 and the copy of the invoice no. 01247 dated 25.02.1994 as Mark PW1/4 and Mark PW1/5 respectively; (iv) copy of letter dated 30.03.1994 as Mark PW1/6; (v) copy of notice of dishonour dated 30.09.94 as Mark PW1/7; (vi) copy of certificate of Notary dated 07.10.1994 as Mark PW1/8; (vii) copy of cheque return memo dated 03.10.1994 referred as Mark PW1/9. PW1 was crossexamined.
14. Defendant no.4 got examined Sh. Praveen Jain, Assistant General Manager, State Bank of Saurashtra, Lodhi Road, New Delhi as DW4 vide affidavit Ex. DW4/1/A. DW4 was cross examined.
15. Hon'ble Mr. Justice Valmiki J. Mehta dismissed the suit of the plaintiff against defendant no.4 bank vide judgment dated CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 8 of 16 12.09.2012.
16. Vide Order dated 20.02.2014 in RFA (OS) 104/2013, the aforesaid judgment dated 12.09.2012 was set aside by Division Bench of High Court of Delhi and this suit was restored with the direction to serve Defendant no.4 with the restoration of the suit, to reconstruct the file of the suit and decide the issues afresh. It was observed therein that written statement of defendant no.4 bank was not on record. In terms of afore elicited Order dated 20.02.2014 in RFA (OS) no. 104/2013 of High Court of Delhi, the parties were directed on 25.07.2017 to place on record with the affidavit the true copy of pleadings viz. written statement of defendant no.4 bank and replication, for reconstruction of the record. On 01.08.2017 copy of written statement of defendant no.4 with documents and index was filed by counsel for defendant no.4 with affidavit of the Manager of defendant no.4 bank of such copy being true copy of written statement of defendant no.4. No counter affidavit to affidavit of Manager of defendant no.4 was filed on behalf of the plaintiff but it was simply orally asserted that written statement of defendant no.4 was not filed earlier.
17. Since defendants no. 1 to 3 had failed to put in appearance, suit was decreed against them vide Order dated 08.11.2000. Order CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 9 of 16 sheet of the Joint Registrar dated 20.05.2004 finds mention of written statement of defendant no.4 to be on record. Had defendant no.4 not filed any written statement, there would have been no occasion for framing issues on the basis of the pleadings on 18.02.2005 when the file was in the High Court of Delhi. Even no submission to that effect of non filing of written statement by defendant no.4 were made by plaintiff/counsel at that stage nor consequent thereto plaintiff/counsel at any stage of the matter took any steps for any consequential remedy. Even for such oral assertion of plaintiff counsel that no written statement of defendant no.4 was earlier filed, same was not supported with counter affidavit of AR of plaintiff/counsel. Accordingly, considering the affidavit of Manager of defendant no.4 bank, copy of Written Statement of defendant no.4 had been taken as reconstructed written statement in terms of Orders of date 20.02.2014 in RFA (OS)104/2013 of High Court of Delhi.
18. I have heard arguments addressed by Sh. Ashutosh Dubey, Ld. Counsel for plaintiff; Ms. Reema Mann, Ld. Counsel for defendant no.4 and have given thoughts to the rival contentions put forth, pleadings of the parties, evidence, written arguments, and have also examined the record of the case.
CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 10 of 16
19. My issue wise findings are as under :
Findings on Issues no. 1 and 2
1. Whether the defendant no.4 is not liable to pay the suit amount to the plaintiff on the grounds raised in the written statement? OPD4.
2. To what amount the plaintiff is entitled from defendant no.4 as principal and interest? OPP.
20. Since both these issues are interconnected, so they are being taken up together for the findings.
21. In the preliminary objection no.1 of written statement of defendant no.4 bank, it has been asserted that pleadings in the plaint referred to money lending business done regularly by plaintiff. Plaintiff company has not placed on record nor proved any document by cogent evidence of holding licence for doing money lending business. In terms of Section 3 of The Punjab Registration of Money Lender's Act, 1938 as adopted in NCT of Delhi, the suit of money lender is barred unless money lender is registered and holding a valid license in prescribed form. Reliance placed upon - (1) Shop named Kaloji Talusappa Ganga Vathi Vs. Khyanagouda & Ors., AIR 1970 SC 1420;
CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 11 of 16 (2) Daljit Kumar & Anr. Vs. Popal Dass, AIR 1981 Punjab & Haryana 211; (3) Gyanananda Sen Vs. Ranjit Kumar Das & Anr., AIR 2003 Orissa 166; (4) Jaswanti Devi & Ors. Vs. Sunil Mehra, AIR 2004 Himachal Pradesh 15; (5) Niranjan Singh Vs. Mohinder Singh, RSA No. 2551 of 1987 (O&M), High Court of Punjab & Haryana at Chandigarh, decided on 03.03.2010; and (6) Smt. Fula Devi Vs. Mangtu Maharaj & Ors., AIR 1969 Patna 294 (V 56 C 75) Full Bench. Plaintiff is not having license of money lender nor is a registered money lender and is accordingly not entitled to lend any money and such a suit by money lender is barred accordingly. Originals of Mark PW1/1 to Mark PW1/9 were stated to be in the custody of Central Bureau of Investigation in a matter registered by it inter alia against one official of defendant no.4 facing trial with other coaccused before the Court holding special jurisdiction under provisions of The Prevention of Corruption Act. Such original documents of copies marked Mark PW1/1 to Mark PW1/9 were not requisitioned by the plaintiff in the course of plaintiff evidence before the Ld. Local Commissioner nor steps were taken before the Court for ensuring their production to prove their copies. Mark PW1/1 to Mark PW1/9 accordingly stand not proved.
22. For sake of arguments, even if the letters dated 24.03.1994 and CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 12 of 16 30.03.1994 alleged to be issued by defendant no.4 bank are seen, then it is crystal clear that they find no reference number and serial numbers as of authorised letters of the banks, as so averred by D4W1.
23. Bill of Exchange dated 30.03.1994 Mark PW1/4 bears the text for making payment on 180 days sight to Sunrise Polycon Ltd. A/c. M/s. Radhika Leather Fashion. Plaintiff company claimed in pleadings and PW1 in affidavit Ex. PW1/A that said M/s. Sunrise Polycon Ltd. stood amalgamated with SRP Industries Ltd. i.e. plaintiff, whereby the entire assets, liabilities, business and right to recover debts etc. of M/s. Sunrise Polycon Ltd. had been vested with plaintiff company by virtue of Order dated 11.04.1994 of High Court of Patna in company proceedings bearing no. 5 of 1993. Certified copy of said order was not filed to prove said fact of amalgamation of Sunrise Polycon Ltd. with plaintiff entitling plaintiff company to sue inter alia defendant no.4 for recovery of any debt on the premise of afore elicited Bill of Exchange dated 30.03.1994.
24. Defendant no.4 bank is neither a drawee nor a drawee in case of need nor an acceptor for honour of Bill of Exchange, copy Mark PW1/4, dated 30.03.1994 of due date 30.09.1994. Section 33 of The Negotiable Instrument Act, 1881 embodies that only CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 13 of 16 a drawee of Bill or a person named therein as drawee in case of need can accept a Bill and only when acceptance is in such form/mode, a drawee or drawee in case of need can be held liable. The person must be named as either a drawee or drawee in case of need in the Bill. It is the case of defendant no.4 counsel that there is no concept of coacceptance in the Negotiable Instrument Act 1881. The relevant copy of Bill of Exchange Mark PW1/4 of date 30.03.1994 having due date 30.09.1994 nowhere finds mention of defendant no.4 to be either a drawee or a drawee in case of need nor an acceptance for honour of it made defendant no.4 liable for the same.
25. Original liability register produced by D4W1 contained no entry of defendant no.4 bank having stood as guarantor in any manner by coaccepting the Bill in question. For all liabilities incurred by Public Sector bank, entries are to be recorded in liability register. It is not the case of the plaintiff company that defendant no.4 received any fee/commission or charges to incur contingent liability with respect to the Bill of Exchange in question. It is beyond comprehension by preponderance of probabilities of defendant no.4 bank having agreed for any contingent liability by virtue of coaccepting the Bill of Exchange in question without receipt of any fee/commission/charges. There was no reason for defendant CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 14 of 16 no.4 bank itself to not to have discounted the bill but to co accept, more so when defendant no.4 bank is engaged in business of discounting bills and earnings commissions.
26. Dispatch Register produced by D4W1 contained no entry for dispatch of any such letters dated 24.03.1994 or 30.03.1994 from the bank.
27. Best evidence was withheld by the plaintiff as Chartered Accountant Mr. Barar who is alleged to have the knowledge and was involved in every part of the transactions, as per PW1 for the execution of the Bills of Exchange and its coacceptance, has not been brought into the witness box to testify the material facts. For non examination of the Chartered Accountant Mr. Barar, there is no option but to draw adverse inference against plaintiff company in terms of illustration (g) of Section 114 of The Indian Evidence Act, that had such evidence been produced, which could have been produced by plaintiff company but had withheld it, then such evidence would have been unfavourable to the plaintiff company. It is also the fact of the matter that despite money decree dated 08.11.2000 against defendants no. 1 to 3, no execution application had been preferred within period of limitation of 12 years by plaintiff company/Decree Holder against defendants no. 1 to 3/Judgment CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 15 of 16 Debtors. As has been submitted by Counsel for defendant no.4, there is every likelihood by preponderence of probabilities of the suit being collusive one between plaintiff on one part and defendants no. 1 to 3 on the other part. In this fact of the matter, the plaintiff has failed to prove to be entitled for the claimed sum from Defendant no.4. Defendant no.4 is not liable to pay the suit amount on the premise raised in the written statement. Since plaintiff is held not entitled for any principal sum from defendant no.4, plaintiff is also held not entitled for any interest from defendant no.4. Issues no. 1 and 2 are decided against the plaintiff and in favour of the defendant no.4 bank.
Relief
28. In view of my findings with respect to issues no. 1 and 2, the suit of the plaintiff is dismissed with costs. Decree sheet be prepared accordingly. File be consigned to record room.
Announced in the open (GURVINDER PAL SINGH) Court on 28.10.2017. Additional District Judge 01(SE), Saket Courts, New Delhi. (sm) CS - 9685/16 M/s. SRP Industries Limited Vs.Kay Bee & Co. & Ors. Pg. 16 of 16