Delhi District Court
M/S Narain Foods vs Rajesh Kumar And Anr on 28 May, 2024
IN THE COURT OF SH. SANJAY SHARMA-II : DJ (COMMERCIAL-11)
(CENTRAL): TIS HAZARI COURTS, DELHI
CS (Comm.) No. 3993/2021
CNR No.: DLCT01-013349-2021
M/s Narain Foods
Through its Proprietor: Smt. Madhu Gupta
3973-74 (2nd Floor), Naya Bazar
Delhi-110006
..... Plaintiff
VERSUS
1. Rajesh Kumar
S/o Sh. Ved Prakash Garg
Proprietor / Owner: M/s Shivangi Agro
R/o E-21/42, Sector-3, Rohini
Delhi-110085
2. M/s. Shivangi Agro
Through its Proprietor / Owner:
Mr. Rajesh Kumar
146/2/137, Khasra No. 52
Lal Dora, Village Nangli Poona City
Near NDPL Office, Delhi-110036
..... Defendants
Date of Institution : 07.10.2021
Date of Arguments : 08.04.2024
Date of Judgment : 28.05.2024
JUDGMENT
THE SUIT:
1. The plaintiff, through its proprietor Smt. Madhu Gupta, instituted a suit for recovery of Rs. 31,56,905/- alongwith pendente-lite and future interest @ 18% per annum against the defendants.
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 1 of 24 THE PLAINT:
2. The plaintiff and the defendants are engaged in the business of 'food grains'.
3. The plaintiff supplied food grains to the defendants and the payments made by the defendants were credited in the statement of account. As on 01.03.2019, an amount of Rs. 31,56,905.70/- was due to the plaintiff.
4. The defendant No. 1 acknowledged his liability of Rs. 31,56,905.70/- on letter-head of the defendant No. 2 wherein he mentioned that he was issuing Cheque No. 073076 dated 03.03.2019 in the sum of Rs. 31,56,905.70/- drawn on 'IDBI Bank' in favour of the plaintiff. The defendant No. 1 agreed that in case the payment is delayed beyond the credit period, the outstanding amount would carry interest @ 18% per annum.
5. The plaintiff did not present the said cheque for encashment as the defendant No. 1 expressed financial issues.
On instruction of the defendant No. 1, the plaintiff presented the said cheque for encashment on 24.05.2019. However, it was returned unpaid with remark 'FUNDS INSUFFICIENT' on 27.05.2019. On instruction, the said cheque was again represented for encashment. But the banker of the defendants returned the said cheque unpaid.
6. The plaintiff issued a demand notice dated 18.06.2019 to the defendants, vide speed post. However, the defendants failed to make payment of the outstanding amount.
7. Therefore, the plaintiff filed the suit for recovery of Rs. 31,56,905/- alongwith pendente-lite and future interest @ 18% per annum.
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 2 of 24 THE WRITTEN STATEMENT:
8. In the written statement, the defendants contended that the suit has not been instituted by an authorized person. They contended that a proprietorship concern has no legal entity and a suit filed by a proprietorship concern is not maintainable. They contended that statement of account filed by the plaintiff is in respect of a partnership firm and not in respect of the plaintiff. They contended that the suit of the plaintiff is based on a statement of account. They contended that the said statement of account does not establish business relationship between the plaintiff and the defendants. They contended that there is no contract regarding interest @ 18% per annum on the outstanding amount. They contended that the documents, relied by the plaintiff, are forged and fabricated. They contended that the defendants never executed the said documents in favour of the plaintiff. They contended that the plaintiff has not filed any document in support of its claim.
9. The case of the defendants is that in March, 2019, a quarrel had taken place at the shop of the defendants and some articles including letter-heads, blank signed cheques, mobile, laptop and watch were stolen from the said shop. They contended that the plaintiff misused the said cheques. They contended that the defendants have no liability towards the plaintiff. They contended that the said cheque is without consideration. They contended that there is no privity of contract between the plaintiff and the defendants. They contended that the defendants had no business transaction with the plaintiff and they are not liable to pay the suit amount. They contended that the defendant No. 1 never acknowledged any liability or issued any cheque in favour of the plaintiff.
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 3 of 24 THE REPLICATION:
10. In the replication, the plaintiff denied the contentions raised by the defendants in the written statement and reiterated the averments made in the plaint. The plaintiff contended that the suit is properly instituted by a proprietor of the proprietorship concern. The plaintiff contended that statement of account inadvertently bears stamp of 'Narain Foods Partnership'. The plaintiff contended that 'M/s. Narain Foods' was a partnership firm at a point of time. However, at the time of transactions with the defendants, 'M/s. Narain Foods' was a proprietorship concern of Smt. Madhu Gupta. The plaintiff contended that the suit of the plaintiff is not based on statement of account alone. The plaintiff contended that the suit of the plaintiff is based on statement of account duly acknowledged and signed by the defendant No. 1 and cheque issued by him. The plaintiff contended that a case under Section 138 NI Act, vide CC No. 8293/2019, is pending before the Jurisdictional Magistrate, Central District, Tis Hazari Courts, Delhi. The plaintiff contended that acknowledgement of dues by the defendant No. 1 on the letter-head of the defendant No. 2 establishes business relationship between the plaintiff and the defendants. The plaintiff contended that the onus to rebut the presumption under Section 138 NI Act is upon the defendants. The plaintiff contended that the defendants admitted their liability and issued the said cheque in presence of Mr. Sunil Goyal, independent witness of Naya Bazar, Grain Merchant Association. The plaintiff contended that theory of theft in the shop of the defendants is inconsequential. The plaintiff contended that there is no material pertaining to the said incident.
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 4 of 24 THE ADMISSION / DENIAL OF DOCUMENTS:
11. In the admission / denial by way of affidavit, the defendant No. 1 denied the documents, as under:
Sl Particulars Correctness of Existence Issuance or Custody of No. contents of of receipt of document documents documents document
1. GST Certificate Denied Denied Denied Not Known
2. Statement of Denied being Denied Does not Not Known Accounts forged and belong to the fabricated plaintiff and not executed by defendant
3. Copy of Denied as same Denied The cheque Not Known Cheque was never issued was never to the plaintiff issued to plaintiff and same was stolen from shop of defendants
4. Letter dt. Denied Denied Letter head Not Known 03.03.2019 was never issued to the plaintiff as the same was stolen from shop of defendants
5. Legal Notice Denied Denied Never Not Known received by defendants
6. Postal Receipt Denied Denied Denied Not Known THE ISSUES:
12. On the pleadings, following issues were framed:
1) Whether the plaintiff is a proprietorship concern or a partnership firm and its effect on the maintainability of the suit?
(OPP)
2) Whether the plaintiff is entitled to a decree for recovery of suit amount from the defendants?
(OPP)
3) Whether the plaintiff is entitled to interest, if so, at what rate and for which period? (OPP)
4) Relief.
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 5 of 24 THE PLAINTIFF'S EVIDENCE:
13. PW-1 Raj Kumar Gupta is husband of Smt. Madhu Gupta, Proprietor of the plaintiff. He filed his examination-in- chief by way of affidavit Ex.PW1/A, as under:
"1. That the sole proprietor of the firm M/s Narain Foods. Mrs Madhu Gupta is my wife.
2. That my wife, being the sole proprietor of M/s Narain Foods, me myself and my younger brother Rajiv Gupta, are looking after the day to day affairs of the aforesaid proprietorship firm M/s Narain Foods along with day to day operations and bank account etc. and I am very well versed about facts of the present case instituted under The Commercial Court Act, 2015, by my wife against Sh. Rajesh Kumar for recovery of the amount Rs. 31,56,905.70/- and I am amongst one of the witnesses in the said case on behalf of the petitioner.
3. That I am very well known to the respondent Sh. Rajesh Kumar and his brother Hitesh Garg for years.
4. That since the respondent and his brother Sh. Hitesh Garg were also having Food grain business in Naya Bazar where I am also running my business of Food grains, I used to meet Rajesh Kumar and his brother almost every other day and it was a daily custom to exchange greetings with both brothers.
5. That my wife's firm M/s Narain Foods had business dealings with Rajesh Kumar's firm M/s Shivangi Agro.
6. That since the payment due towards the firm M/s Shivangi Agro owned by Sh Rajesh Kumar was getting delayed, my wife and me along with my brother Sh. Rajiv Gupta kept requesting and persuading Sh. Rajesh Kumar to clear the dues, almost daily, subsequently, an independent person and a person of impeccable integrity and repute in Naya Bazar Grain Market. Sh. Sunil Goyal of M/s Rajat & Company Commodities Pvt Ltd at 4094-97, FF, Naya Bazar, Delhi-110006, at the request of Rajesh Kumar and Hitesh Garg, was roped in to sort out the matter and a meeting took place at his house at Prashant Vihar on 03/03/2019 and in physical presence of the said Sh. Sunil Goyal, the respondent acknowledged his liability towards the petitioner and in his presence Sh. Rajesh Kumar duly executed various documents already annexed by the petitioner in the present suit along Cheque No. 073076 issued by the respondent in favour of the plaintiff M/s CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 6 of 24 Narain Foods dated 03/03/2019 of Rs. 31,56,905.70/- issued by M/s Shivangi Agro drawn on IDBI Bank at Bldg Shiv Ram Dass & Sons bearing, Municipal No. 3686, 3687 & 3689, Ward No. 9, Chawri Bazar, Delhi-110006 in his own handwriting apart from an acknowledgement letter on the letterhead of his firm M/s Shivangi Agro manuscripted and an acknowledgement on the account statement carrying the stamp of M/s Shivangi Agro along with signature of Rajesh Kumar himself and in his presence, the respondent not only duly executed the various documents and cheque as aforesaid, but orally also, in unequivocal terms admitted his legal liability towards the petitioner of the aforesaid amount. Also the conversation that transpired during the said meeting between the respondent, his brother Sh. Hitesh Garg, Sunil Goyal himself and me myself, my brother Sh. Rajiv Gupta and my wife, was duly recorded wherein the respondent acknowledged his liability towards the petitioner. However, the cheque issued by Rajesh Kumar was current dated and we were being requested by Rajesh Kumar to not encash the said cheque immediately and Rajesh Kumar assured that he shall intimate the date of deposit soon to Sh. Sunil apart from me and my wife. In last week of May 2019, after much follow up, Rajesh Kumar gave his nod to deposit the cheque and subsequently the cheque was deposited and got bounced on 27/05/19."
14. The relevant part of cross-examination of PW-1 Raj Kumar Gupta is, as under:
"I look after day to day affairs of the plaintiff's firm. Only one firm is running from the room which is in possession of the plaintiff from the plaintiff's address. I know the defendant since long but I cannot tell the exact years. I am husband of the plaintiff Ms. Madhu Gupta. I only do little bit work of banking of the plaintiff firm (Vol. My younger brother is mainly looking after the banking work). The meeting took place at the residence of Sunil Goyal in the evening at around 6.00 p.m. but I do not remember the exact time as it was about four years back. To the best of my knowledge, it was a Sunday or it was a holiday for any other occasion. I do not remember the exact address of Sh. Sunil Goyal but it is at Prashant Vihar. I know Sunil Goyal for the last 15-20 years. I have business dealings with Sh. Sunil Goyal.....In the aforesaid meeting, accounts were also tallied and settled. I, plaintiff, my younger brother Rajiv Gupta, Sunil Goyal, defendant Rajesh Kumar and his brother, Hitesh Garg were present in the meeting.
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 7 of 24 The meeting lasted for two hours approximately. Accounts of Sh. Rajesh Kumar and his brother, Hitesh Garg were settled in the said meeting. Both the defendant and his brother issued two separate cheques to the plaintiff in the said meeting.....In the meeting, the defendant requested the plaintiff not to present the cheque immediately as he was short of funds. Thereafter the defendant requested me to present the cheque. I cannot tell the date or month when the defendant requested me to present the cheque.....
Question: Can you tell what type of work you specifically look after in the plaintiff firm? Answer: I do not look after any one specific work but I am looking over all work of the plaintiff firm including banking, accounts, sale purchase, customer dealings etc."
15. PW-2 Madhu Gupta is proprietor of the plaintiff. She filed her examination-in-chief by way of affidavit Ex.PW2/A. She reiterated the deposition, as deposed by PW-1 Raj Kumar Gupta, in his affidavit Ex.PW1/A. The relevant part of her cross-examination is, as under:
"At this stage, witness is shown point A to A1 of para 1 of her affidavit Ex.PW2/A. It is correct that said fact is not mentioned in my plaint or replication. At this stage, witness is shown point B to B1 and C to C1 of para 3 of her affidavit Ex.PW2/A. It is correct that said fact is not mentioned in my plaint or replication.
.....M/s. Narain Foods was a partnership firm till the year 2016 then it got dissolved and the present M/s. Narain Foods was formed as proprietorship firm. I had not filed any document on record to show regarding dissolution of partnership of M/s. Narain Foods.
I had not filed any invoice or goods delivery receipt regarding supply of goods to the defendant. I had also not filed on record, any other receipt regarding delivery of the goods to the defendant. It is wrong to suggest that since I had no business dealings with the defendant therefore, I do not have invoices, GR, proof of delivery. It is wrong to suggest that I have not filed the statement of account (Vol. Whatever relevant statement with respect to the present case, has been filed)."
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 8 of 24
16. PW-3 Sunil Goyal is the mediator. He testified regarding the meeting dated 03.03.2019 on the strength of affidavit Ex.PW3/A. The relevant part of his cross-examination is, as under:
"I know Ms. Madhu Gupta for the last about 20 years. I have been dealing with M/s. Narain Foods since last 6-7 years. It is correct that I have not filed any document pertaining to my dealings with M/s. Narain Foods (Vol. Since the same has got no inkling with the present case).....I was having dealings with Sh. Rajiv Gupta through broker. I know the defendant for the last about 15 years (Vol. I know his brother Hitesh Garg for the last 8-9 years and his another brother Yogesh since last 10-12 years as he used to work in my shop). I was having business dealings with the defendant. I cannot tell the number of dealings with the defendant since the same took place around four years back (Vol. The defendant had wrapped his business around four years back). The meeting took place at my house on 03.03.2019 at A-30, Prashant Vihar. In the said meeting, I, Ms. Madhu Gupta, Rajiv Gupta, Raj Kumar Gupta, Hitesh Garg and Rajesh Kumar were present. The meeting started at around 5.00-6.00 p.m. and lasted for about 2 hours.
Both the parties have also tallied and settled their accounts in the said meeting and the defendant and his brother handed over cheques to Rajiv Ji and Raj Kumar Ji and Madam and also acknowledged their liability.....I had told the defendant that Raj Kumar Gupta is going to the record the entire meeting. It is correct that I have not mentioned in my affidavit that I had told the defendant that Raj Kumar Gupta is to record the meeting.....Rajesh Kumar and his brother Hitesh Garg had brought the stamp papers etc. and both signed and stamped the same in my presence.....After 6-7 months of the said meeting, Rajiv Gupta had given me a call and informed me that he is going to present the cheque issued by defendant to which I told him that prior to presentation of cheque, he should informed Rajesh Kumar (Vol. Thereafter Rajiv Gupta informed me that the cheque has been dishonoured). During the said period of 5-6 months, I had no talks with the defendant or his brother.
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 9 of 24 I have never seen registration certificate of M/s. Narain Foods. I have never seen any document regarding proprietorship of Ms. Madhu Gupta qua M/s. Narain Foods (Vol. I know that Ms. Madhu Gupta is the owner and his devar Rajiv Gupta looks after the business but I do not know whether Madhu Gupta is the proprietor of the same or not since I have not seen any document qua the same)....."
17. PW-4 Rajiv Gupta is brother-in-law of PW-2 Madhu Gupta. He deposed on the strength of affidavit Ex.PW4/A. The relevant part of his cross-examination is, as under:
"I look after Accounts, Bank Accounts and Sales & Purchase of plaintiff's firm since 2016. I am looking after the same regularly since 2016. My brother namely Raj Kumar Gupta also looks after the same and me and my brother used to discuss regarding the same. The plaintiff's firm is being run from a single room. I was partner in 'M/s Narain Foods' prior to 2016. Accountant of the firm also used to prepare accounts of plaintiff firm. It is correct that I alone do not prepare accounts of the plaintiff firm. I do not know exact amount I get as remuneration under the salary heading but it was Rs. 40,000/- to Rs. 50,000/- and it was different at different point of time. I have not brought any document to prove that I am getting Rs. 40,000/- to Rs. 50,000/- as salary. My sister-in- law i.e. Madhu Gupta visits after around 15-20 days. Vol. As and when she is required, she visits the office. Accounts of the firm are maintained by Accountant....."
18. PW-5 Sagar, Record Keeper, Grain Merchant Association, 156/41, Naya Bazar, Delhi-110006 brought the record, as under:
Sl. No. Documents Exhibits
1. Certificate qua Membership of M/s Ex.PW5/A Narain Foods alongwith name of the proprietor of the firm, membership number and dues paid till 2023-24
2. Signature verification on letter-head of Ex.PW5/B M/s Narain Foods in record of Delhi Grain Merchant Association with signature of proprietor Ms. Madhu Gupta attested by Kotak Mahindra Bank, Naya Bazar, Delhi-110006 CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 10 of 24
3. Affidavit-cum-undertaking executed Ex.PW5/C by proprietor Ms. Madhu Gupta of the firm M/s Narain Foods bearing details of PAN number submitted to Delhi Grain Merchant Association and a part of the record of Delhi Grain Merchant Association
4. Circular No. 2003/20 dated 06.08.2003 Ex.PW5/D regarding details of applicable interest
19. The relevant part of cross-examination of PW-5 Sagar is, as under:
"I have no authority letter to depose on behalf of the Delhi Grain Merchant Association. It is correct that I have not filed any document to show that I am working with Delhi Grain Merchant Association.....The document qua the signature verification was given in the year 2018 but I cannot tell date and month of the same. The second document i.e. undertaking was given in 2020 again said it was given in 2021 as there was lockdown in 2020. It is correct that the document Ex.PW5/B bears date i.e. 10.07.2017 at point A and at point B it bears 10.07.2018. In my opinion, Ex.PW5/B is original. It was given to the association in the year 2018. It is wrong to suggest that I am deposing falsely in this regard. We have not verified from the bank whether the signature at Ex.PW5/B were attested by the bank or not. The document Ex.PW5/A bears signature of President. The president had appended the signatures on Ex.PW5/A in front of me. The said document was signed at 2.30 p.m. yesterday i.e. 13.12.2023.....I have not brought any register or record of members. I have brought all the documents i.e. Ex.PW5/A to Ex.PW5/D. Except these documents i.e. Ex.PW5/A to Ex.PW5/C, I have no other documents as of now. The election officer of the association decides about demand of documents from the members. I am working in the association for last more than 8-9 years. I have not brought my appointment letter today, though I am having the same. The Ex.PW5/D is attested on 14.12.2023. It is correct that Ex.PW5/D does not bear my signature. It is wrong to suggest that I am deposing falsely at the instance of the plaintiff."
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 11 of 24
20. PW-6 Paras Sharma, Branch Operation Manager, Kotak Mahindra Bank, Branch Naya Bazar, Delhi-110006 brought the documents, as under:
Sl. No. Documents Exhibits
1. Original Account Opening Form Ex.PW6/A
2. Copy of PAN card of Mrs. Madhu Gupta Ex.PW6/B
3. Aadhar card of Mr. Rajeev Gupta, Authorized Ex.PW6/C Signatory
4. Aadhar card of Mrs. Madhu Gupta Ex.PW6/D
5. GST Registration Certificate of M/s Narain Foods Ex.PW6/E
6. GST Certificate of M/s Narain Foods Ex.PW6/F
7. Verification of GST by Kotak Mahindra Bank Ex.PW6/G
8. Certificate of Importer Exporter Code of M/s Ex.PW6/H Narain Foods
9. Letter issued by Central Licensing Area A Wing Ex.PW6/I regarding allotment of importer exporter code to M/s Narain Foods
10. Importer Exporter Code to M/s Narain Foods Ex.PW6/J
11. Letter regarding date of formation of M/s Narain Ex.PW6/K Foods
12. Form qua linking / seeding Aadhar card number Ex.PW6/L along with FATCA / CRS Declaration Form along with letter authorizing Sh. Rajeev Gupta as authorized signatory
13. Sole Proprietorship Declaration dated 18.08.2018 Ex.PW6/M thereby Madhu Gupta declared as sole proprietor of M/s. Narain Foods
14. Customer profile sheet of M/s Narain Foods Ex.PW6/N
15. Contract point verification of account of M/s. Ex.PW6/O Narain Foods
16. XBRL base electronic filing from RBI site Ex.PW6/P
17. Sanction letter for OD / CD to M/s. Narain Foods Ex.PW6/Q
18. Account opening check list of M/s. Narain Foods Ex.PW6/R
19. Required approvals of M/s Narain Foods Ex.PW6/S CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 12 of 24
21. PW-7 Sapna Arora, Manager, IDBI Bank, Chawri Bazar Branch, Delhi-110006 brought the record, as under:
Sl. No. Documents Exhibits
1. Account Opening Form of 'M/s Shivangi Agro' Ex.PW7/A
2. Copy of Cheque No. 073076 dated 03.03.2019 of Ex.PW7/B Rs. 31,56,905.70/- qua A/c No. 1735102000006217 drawn on 'IDBI Bank, Chawri Bazar Branch' by Rajesh Kumar of 'Shivangi Agro' in favour of 'Narain Foods'
3. Original return memo of Cheque No. 073076 Ex.PW7/C THE DEFENDANT'S EVIDENCE:
22. The defendant No. 1 appeared as DW-1. He filed his examination-in-chief by way of affidavit Ex.DW1/A. His cross-
examination is, as under:
"I have / had no cases against me in any Court of law either in individual capacity or in the capacity of being the proprietor / partner / director of any firm whatsoever. The cheque in question was never issued by me. It is correct that the cheque in question bears my signature.
Question: At one stage, you have stated that you had not issued the cheque and thereafter, you stated that the cheque in question is bearing your signature, what do you mean by non-issuance of cheque? Answer: It means that my signed cheque book along with other documents were stolen from my office and in that regard, I lodged a complaint with PS Lahori Gate.
The theft had taken place in my office at 4034, 1st Floor, Naya Bazar, Delhi-110006. Theft had taken place on 01.03.2019 at about 12-12.30 p.m. There are around 2-3 shops on the ground floor and 3-4 shops on the first floor of the said building i.e. 4034, Naya Bazar, Delhi-110006. There is only one staircase in the building. My shop is in the name of my brother Hitesh Kumar. There is no fix time for reaching the shop. Sometimes, I reach at 10 a.m. and sometimes at 12 noon or 1 p.m. I do not know whether the shop is registered under GST / VAT.
I have not filed the copy of the complaint lodged with PS Lahori Gate. However, I have brought it today. I have no knowledge whether any FIR was lodged in my complaint.
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 13 of 24 I have not filed any complaint before the area Magistrate that police did not register FIR on my complaint and investigated the case. I did follow up my complaint with local police. I visited police station about 2-3 times. I visited police station after 15 days from the date of lodging the complaint. Second time, I had visited after around 7 days. It is wrong to suggest that I lodged a false complaint with PS Lahori Gate. I had not given any letter / notice / reminder to the police regarding their inaction on my complaint. Vol. I did not know it. I had not sent any complaint to senior officers of police i.e. ACP, DCP and / or CP that PS Lahori Gate was not taking action on my complaint. Vol. I did not know it. It is wrong to suggest that I lodged the complaint as I wanted to avoid my liability towards the plaintiff. I had not given nor intimated the bank regarding the complaint lodged by me with PS Lahori Gate. The signed cheques were kept in the office in the cheque book and not in the form of loose leaves. I used to keep signed cheques in my office as I used to go outside and my brother could hand over the cheque to the concerned, as per my instructions. Around 25 cheques were stolen and out of them, 5-6 were signed cheques. I do not remember as to how many cheques out of the said 25 cheques were presented for encashment, after the theft in my office on 01.03.2019. I had availed the SMS alert facility regarding my bank account. Vol. Sometimes I did not receive SMS alert regarding transaction. I do not know whether I was making payment of charges regarding SMS alert facility. I was not updating my bank statement on regular basis.
There was no fixed time period for updation of my bank statement. I used to keep an idea of my bank statement as I am a small businessman. The 5-6 cheques as aforestated been signed by me were blank. I did not obtain my bank statement after 01.03.2019. I was filing income tax returns of my proprietorship concern. My firm M/s Shivangi Agro worked till May-June, 2019. I do not remember whether I had filed income tax returns for the financial year ending on 31.03.2019 and / or 31.03.2020. I do not remember whether I had filed income tax returns for the years previous to the said years. It is wrong to suggest that I have made false statement that I had not filed income tax returns for the financial year ending on 31.03.2019 and 31.03.2020.
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 14 of 24 Question: At how many places did M/s Shivangi Agro, proprietorship firm of yours was having office(s), shop(s), godown(s) since the day of inception of your firm till May-June, 2019. Please mention the complete addresses.
Answer: I was having one office i.e. 4034, 1 st Floor, Naya Bazar, Delhi-110006 and godown at Nangli Poona, Delhi. I do not remember the complete address of my godown or its Khasra number. Shop at 4034, 1st Floor, Naya Bazar, Delhi-110006 was taken on rent. The said shop was under the tenancy of my brother namely Hitesh. It is correct that the godown at Nangli Poona as aforesaid was being owned by Smt. Asha Goel. There were two godowns at Nangli Poona. One was in my name and another was in the name of my brother Hitesh. Question: From 2014 to till date, how many residential addresses you had?
Answer: During the period 2014 to 2021 / 2022, I was residing at E-21/41-42, Sector-3, Rohini, Delhi and thereafter, I am residing at A-47, 2nd Floor, Sanjay Nagar, Sector-2, Rohini, Delhi for the last 2 to 2 and a half year.
At this stage, Ld. Counsel for the plaintiff confronted the witness with a letter-head.
Question: Whether the letter-head of Shivangi Agro dated 03.03.2019 marked as Mark A (for identification) is of your firm?
Answer: No. It is not of my firm and writing and signatures are not mine. It is wrong to suggest that I am deposing falsely in this regard.
I was aware in 80-90 percent cases about the constitution of the firm I was dealing with. My business transactions used to be direct as well as through brokers.
Question: What was the market prevalent interest rates qua the commodities you were dealing with? Answer: The interest rate were in the range of 1- 2.5%, per month. If the payment was being made within 5 days there was no interest and the payment was being made within 15 days the interest used to be 1% and after 15 days it used to be 2-2.5%. Sometimes, there was no interest payable depending upon the transaction.
Question: Whether statement of account marked as Mark B (for identification) bears your signature along with your stamp of M/s Shivangi Agro? Answer: No. CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 15 of 24 It is correct that at both the residential addresses as aforesaid, I was staying with my brother Hitesh and his family and my father. It is wrong to suggest that a meeting place at the residential address of Sh. Sunil Goel. It is wrong to suggest that in the said meeting, I had given the cheque in question to the plaintiff. Vol. No such meeting held at the residential address of Sh. Sunil Goel.
It is correct that the cheque No.(s) are not mentioned in my complaint. It is correct that the particulars of my bank are also not mentioned in the said complaint. The complaint is Ex.DW1/PX. (Original shown to the Court and returned to the witness). It is correct that I did not mention mobile No. in the said complaint. I did mention that my letter-head were also stolen and the letter-heads were not unsigned. I had given the complaint Ex.DW1/PX and no complaint was made by my brother Hitesh as it was made by me only on behalf of my brother also. It is wrong to suggest that I am deposing falsely."
(emphasis supplied) APPEARANCE:
23. The Court has heard arguments of Mr. Sanjay Gupta, Ld. Counsel for the plaintiff and Mr. Sanjay Garg, Ld. Counsel for the defendants and examined the pleadings and documents, and perused case law relied by Ld. Counsel for the parties.
THE ISSUE NO. 1:
1) Whether the plaintiff is a proprietorship concern or a partnership firm and its effect on the maintainability of the suit?
(OPP)
24. The issue No. 1 was framed on the contention of the defendants that the suit is instituted by proprietor of 'M/s.
Narain Foods' whereas statement of account Mark 'B' reflects the status of 'M/s. Narain Foods' as partnership firm. The defendants also contended that a proprietorship concern has no legal entity and therefore, the suit is not maintainable. On that basis, the defendants contended that there was no privity of contract between the plaintiff and the defendants.
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25. Ld. Counsel for the defendants contended that a proprietorship concern has no legal entity and it cannot maintain a suit in its own name. In that regard, he relied on judgment in M/s. Miraj Marketing Corporation vs. M/s. Vishaka Engineering and Anr., RFA No. 349/2003 decided by Hon'ble High Court of Delhi and Svapn Construction vs. IDPL Employees Co-operative Group Housing Society Limited and Ors., AA No. 255/1997 decided on 20.12.2005 by Hon'ble High Court of Delhi. He contended that the status of 'M/s. Narain Foods' is mentioned as a partnership firm in statement of account Mark 'B'. He contended that an unregistered partnership firm cannot maintain a suit.
26. Ld. Counsel for the plaintiff contended that Smt. Madhu Gupta is proprietor of 'M/s. Narain Foods' and she has instituted the suit as a sole proprietor of 'M/s. Narain Foods'. He contended that the judgments relied by Ld. Counsel for the defendants are not applicable. He relied on judgments in Sardar Bhupinder Singh vs. M/s. Green Feeds, CRM-M-5411/2021 decided on 26.08.2022 by Hon'ble Punjab and Haryana High Court, M/s. Royal Pressing and Components vs. Bhushan Power and Steel Limited, CRM-M-30783/2017 decided on 01.12.2022 by Hon'ble Punjab and Haryana High Court and Sri H.N. Nagaraj vs. Sri Suresh Lal Hira Lal, Crl. Petition No. 8257/2019 decided on 21.09.2022 by Hon'ble High Court of Karnataka. He contended that status of 'M/s. Narain Foods' is inadvertently mentioned as partnership firm in statement of account Mark 'B'. He contended that inadvertently, stamp of 'M/s. Narain Foods' as a partnership firm was affixed thereon. He contended that it is a bonafide mistake. He contended that 'M/s. Narain Foods' was a proprietorship concern on the relevant date.
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27. As regards the competence of a proprietor to institute a suit on behalf of the proprietorship concern, it is well settled that a proprietorship concern is not a legal entity. It is a mere trade name. It is a name under which its proprietor is carrying on its business. Legally speaking, proprietor of a proprietorship concern is competent to institute the suit. In the present case, Smt. Madhu Gupta instituted the suit as a proprietor of 'M/s. Narain Foods'. In the memo of parties, the description of the plaintiff is 'M/s. Narain Foods through its proprietor Smt. Madhu Gupta'. At the best, it can be stated that there is an error in the description of the plaintiff. Instead of describing the plaintiff as 'Smt. Madhu Gupta, proprietor of M/s. Narain Foods', the plaintiff is described as 'M/s. Narain Foods through its proprietor Smt. Madhu Gupta'. It is mis-description of the plaintiff. Therefore, the contention of Ld. Counsel for the defendants and reliance on the judgments, as stated above, is without merit.
28. However, the real issue is otherwise. A bare perusal of statement of account for the period from 01.04.2018 to 28.02.2019 Mark 'B' would reveal that it is drawn on letter-head of 'M/s. Narain Foods' wherein Mr. Rajiv Gupta signed as 'Partner For Narain Foods'.
29. PW-2 Madhu Gupta, in her cross-examination, admitted that 'M/s. Narain Foods' was a partnership firm till the year 2016, and then it got dissolved and the present 'M/s. Narain Foods' was formed as a proprietorship concern. She admitted that she has not filed any document regarding dissolution of partnership of 'M/s. Narain Foods'.
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30. PW-4 Rajiv Gupta, in his cross-examination, admitted that he was a partner in 'M/s. Narain Foods' prior to 2016.
31. Therefore, it is evident that 'M/s. Narain Foods' was a partnership firm. PW-4 Rajiv Gupta signed statement of account Mark 'B' as partner of 'M/s. Narain Foods'. However, the plaintiff has not led any evidence that 'M/s. Narain Foods' was dissolved in the year 2016. In the absence of any proof regarding dissolution of 'M/s. Narain Foods', a suit for recovery is not maintainable for enforcement of right of an unregistered firm, as provided in Section 69 (2) of 'The Indian Partnership Act, 1932', as under:
"(2) No suit to enforce a right arising from a contract shall be instituted in any court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the register of firms as partners in the firm."
32. Therefore, the plaintiff, in the absence of any proof of registration of the partnership firm, cannot maintain the suit for recovery against the defendants.
33. Mere description of 'M/s. Narain Foods' as a proprietorship concern of Smt. Madhu Gupta in documents furnished to Kotak Mahindra Bank would not have any impact on the maintainability of the suit by an unregistered partnership firm for enforcement of right against the defendants.
34. Therefore, the suit instituted by 'M/s. Narain Foods' against the defendants is not maintainable.
35. Accordingly, the issue No. 1 is decided in favour of the defendants and against the plaintiff.
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 19 of 24 THE ISSUE NO. 2:
2) Whether the plaintiff is entitled to a decree for recovery of suit amount from the defendants?
(OPP)
36. Ld. Counsel for the plaintiff contended that besides statement of account Mark 'B', the defendant No. 1 issued the said cheque in favour of the plaintiff. He contended that there is a presumption in favour of the plaintiff under Section 139 NI Act. He contended that the defendants have not led any evidence that the said cheque was stolen and misused by the plaintiff. He contended that the plaintiff's witnesses proved that the defendants had business relationship with the plaintiff and they had settled their accounts on 03.03.2019 and thereafter, the defendant No. 1 issued the said cheque in favour of the plaintiff to discharge his liability. He contended that evidence of the plaintiff's witnesses remained unchallenged on the aspect of settlement of accounts and issuance of the said cheque. He contended that the defendants failed to rebut the said presumption. He contended that the plaintiff is entitled to a decree for recovery of the cheque amount alongwith pendente- lite and future interest. He relied on judgment in Gaurav Omprakash Jaju vs. Shri Shakti Fabrics, Crl. Appeal No. 268/2009 decided on 03.03.2010 by Hon'ble High Court of Bombay, Chander Pal Singh vs. Shri Pal Singh, RSA 20/2022 decided on 17.02.2022 by Hon'ble High Court of Delhi.
37. Ld. Counsel for the defendants contended that the defendants had no business relationship with the plaintiff. He contended that the plaintiff has not proved the statement of account Mark 'B' and the said cheque. He contended that the plaintiff failed to prove its case. He contended that the plaintiff proved police complaint dated 01.03.2019.
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38. Ld. Counsel for the defendants relied on the judgments, as under:
(a) Ishwar Dass Jain (Dead) through Lrs vs. Sohan Lal (Dead) through Lrs, decided on 29.11.1999 by Hon'ble Supreme Court of India;
(b) LIC of India and Anr. vs. Ram Pal Singh Bisen, decided on 16.03.2010 by Hon'ble Supreme Court of India; and
(c) Devender Kumar vs. Khem Chand, decided on 06.10.2015 by Hon'ble High Court of Delhi.
39. The case of the plaintiff is that it has supplied food grains to the defendants and an amount of Rs. 31,56,905/- was due against the defendants, as on 01.03.2019. The plaintiff has not led any evidence that the plaintiff had any business relationship with the defendants. PW-2 Madhu Gupta admitted that she has not filed invoices or goods delivery receipt regarding supply of goods to the defendants. She stated that she does not have invoices, goods receipt and proof of delivery. In the absence of invoices, goods receipt and proof of delivery, it cannot be held that the plaintiff had business relationship with the defendants and the plaintiff had supplied food grains to the defendants for the period from 01.04.2018 to 28.02.2019.
40. Moreover, PW-1 Raj Kumar Gupta, PW-2 Madhu Gupta, PW-3 Sunil Goyal and PW-4 Rajiv Gupta neither proved nor marked statement of account Mark 'B' and cheque Ex.PW7/B.
41. The defendant No. 1 admitted his signature on the cheque Ex.PW7/B. He could not prove his defence that the said cheque was stolen from his shop or misused by the plaintiff. He did not intimate his banker regarding theft of the cheque book. He did not pursue the complaint Ex.DW1/PX lodged on 01.03.2019 is quite general in nature. He did no pursue the complaint Ex.DW1/PX.
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42. Presumptions under Section 118 (a) and 139 NI Act are rebuttable presumptions. The defendants can lead evidence or rely upon the evidence of the plaintiff to rebut the said presumptions. The plaintiff cannot derive advantage from the weakness of the defence of the defendants. The plaintiff's case must stand on its own strength. The plaintiff has not adduced substantive evidence in the form of invoices, goods receipt and proof of delivery of food grains. The defendants rebutted the said presumptions.
43. There is no evidence that the meeting dated 03.03.2019 between the plaintiff, PW-1 Raj Kumar Gupta and PW-4 Rajiv Gupta and the defendant No. 1 and his brother Hitesh Garg in the presence of PW-3 Sunil Goyal in his premises had taken place regarding settlement of accounts pertaining to supply of food grains to the defendants. There is no evidence that the cheque Ex.PW7/B was issued in respect of any liability pertaining to any business transactions between the plaintiff and the defendants regarding supply of food grains. In absence of any evidence pertaining to supply of food grains to the defendants for the period from 01.04.2018 to 28.02.2019, the plaintiff is not entitled to seek decree for recovery of Rs. 31,56,905/-.
44. Accordingly, issue No. 2 is decided in favour of the defendants and against the plaintiff.
THE ISSUE NO. 3:
3) Whether the plaintiff is entitled to interest, if so, at what rate and for which period?
(OPP)
45. In the absence of entitlement of the plaintiff for recovery of the suit amount, issue regarding grant of interest does not arise. Issue is decided accordingly.
CS (Comm.) No. 3993/2021 M/s Narain Foods vs. Rajesh Kumar & Anr. Page No. 22 of 24 CONCLUSION:
The suit of the plaintiff is dismissed. In the facts and circumstances of the case, there is no order as to costs. Decree sheet be drawn. File be consigned to record room.Digitally signed by SANJAY
SANJAY SHARMA
SHARMA Date:
2024.05.28
17:34:48 +0530
Announced in the open Court SANJAY SHARMA-II
on this 28th May, 2024 DJ (Commercial-11) (Central)
Tis Hazari Courts, Delhi
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M/s Narain Foods vs. Rajesh Kumar & Anr. CNR No.: DLCT01-013349-2021 CS (Comm.) No. 3993/2021 28.05.2024 Present : Mr. Sanjay Gupta, Ld. Counsel for the plaintiff.
Mr. Sanjay Garg, Ld. Counsel for the defendants.
Vide separate judgment, the suit of the plaintiff is dismissed. In the facts and circumstances of the case, there is no order as to costs. Decree sheet be drawn. File be consigned to record room.
Digitally signed by SANJAY SANJAY SHARMA
SHARMA Date:
2024.05.28
17:34:56 +0530
Sanjay Sharma-II
DJ (Commercial-11)
Central, THC, Delhi
28.05.2024
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