Bangalore District Court
Hindustan Unilever Limited vs M/S Sree Krishna Traders on 23 October, 2019
IN THE COURT OF THE XLI ADDL.CITY CIVIL JUDGE
AT BANGALORE [CCH.No.42]
PRESENT:
SRI. KASANAPPA NAIK. M.A., LL.M.
XLI Addl. City Civil Judge
Dated this the 23rd day of October 2019
O.S.No.7234/2009
PLAINTIFF : Hindustan Unilever Limited
Registered Office:
165-166, Backbay Reclamation
Mumbai-400 020
Regional Office:
101, Santhome High Road
Chennai-600 028
Represented by its Commercial
Manager and authorized Signatory
Mr.Thirunavukkarasu
Aged about 53 years
S/o Somasundaram
(By Sri.S.B., Advocate)
V/s.
DEFENDANTS : 1. M/s Sree Krishna Traders
Plot No.375, Sundaram Shetty
Nagar, 10th Cross, Vijaya Bank
Co-operative Housing Society
Bilekahalli, Bangalore-560 076
2 OS No.7234/2009
Represented by its Proprietor
Subhash Kedia
2. M/s Dhanalakshmi Trade Links
Private Limited, Plot No.375
Sundaram Shetty Nagar
10th Cross, Vijaya Bank
Co-operative Housing Society
Bilekahalli, Bangalore-560 076
Represented by its Proprietor
Subhash Kedia
3. Subhash Kedia
Plot No.375, Sundaram Shetty
Nagar, 10th Cross, Vijaya Bank
Co-operative Housing Society
Bilekahalli
Bangalore-560 076
4. L & T Construction Equipment Ltd.
Formerly L & T Komatsu Ltd.
Bellary Road, Byatarayanapura
Bangalore-560 092
Represented by its Managing
Director
5. Usha Kedia
W/o Subhash Kedia
Aged about 45 years
6. Nikhil Kedia
S/o Subhash Kedia
Aged about 21 years
Defendants 5 & 6 residing
At Plot No.375, Sundaram Shetty
Nagar, 10th Cross
Vijaya Bank Co-operative Housing
3 OS No.7234/2009
Society, Bilekahalli
Bangalore-560 076
(D1 to 3, 5 & 6 By Sri.K.C.N.,
D4 By Sri.K.C.P., Advocates)
Date of Institution of the Suit: 27.10.2009
Nature of the suit
(Suit on Pronote, suit for Money Suit
declaration & possession, suit
for injunction)
Date of commencement of 06.06.2013
recording of evidence:
Date on which the Judgment 23.10.2019
was pronounced:
Total Duration: Year/s Month/s Day/s
09 10 26
JUDGMENT
The plaintiff has filed this suit for recovery of sum of Rs.88,89,018/- being the value of credit under the DEPB license mentioned in Schedule 1, dated 7.9.2009, utilized by the 4th defendant at Bangalore ICD port, along with interest at the rate of 18% per annum, from the date of utilization of DUTY ENTITLEMENT PASSBOOK SCHEME License (herein 4 OS No.7234/2009 after DEPB for short), declaring that the gift deed dated 24.12.2008 executed by defendants No.3 and 5 in favour of defendant No.6, is fraudulent, illegal and with an intention to defraud the plaintiff/creditor and not binding on him, to award costs of the suit and such other reliefs.
2. The Schedule as described in the plaint is as under:
SCHEDULE I DUTY ENTITLEMENT PASSBOOK SCHEME (DEPB) LICENSES Sl. Amount Port of Number Date No. Rs. Registration 1 0710053617 10.1.2007 738578 Cochin Sea Port 2 0710053612 10.1.2007 90889 Bangalore ICD 3 0710053613 10.1.2007 664222 Cochin Sea Port 4 0710053614 10.1.2007 441480 Cochin Sea Port 5 0710053615 10.1.2007 789166 Cochin Sea Port 6 0710053618 10.1.2007 93985 Cochin Sea Port 7 0710053619 10.1.2007 551738 Bangalore ICD 8 0710053620 10.1.2007 780911 Cochin Sea Port 5 OS No.7234/2009 9 0710053624 10.1.2007 654433 Cochin Sea Port 10 0710053626 10.1.2007 339364 Bangalore ICD 11 0710053775 10.10.2007 945780 Bangalore ICD 12 0710054204 10.29.2007 8370 Bangalore Air Cargo 13 0710054205 10.29.2007 84186 Nhavasheva Sea 14 0710054222 10.30.2007 775853 Bangalore ICD 15 0710054841 12.07.2007 983687 Cochin Sea Port 16 0710053845 12.07.2007 946376 Cochin Sea Port Total 8889018 Amount SCHEDULE 2 All that piece and parcel of House Property bearing No.375, 6th Main, 10th Cross, Sunder Rama Shetty Nagar, Vijay Bank Colony, Bilekahalli, Bangalore -560 076 measuring East to West 40 ft. and North to South: 29.6 + 30/2 with electricity and water connection and bounded on: 6 OS No.7234/2009
East by : 6th main Road
West by : Property No.380
North by : Property No.375A
South by : 10th Cross Road
3. The facts of the case is as under:
The plaintiff is a Company incorporated under the Companies Act 1956, represented by its Regional Manager, P.Ganesh.
The 1st defendant is M/s Sree Krishna Traders, a proprietary concern, represented by its Proprietor Subhash Kedia. The 2nd defendant is Private Limited Company represented, by its Director Subhash Kedia.
The plaintiff claims to be an Indian Company forming part of multi-national company, Unilever PLC, having an annual turnover in the Order of Rs.11,000/- crores. The plaintiff and its parent company Unilever PLC have a market presence in India for over 75 years. The plaintiff has been inter alia engaged in the business of manufacture, marketing 7 OS No.7234/2009 and export of Fast Moving Consumer Goods (FMCG) to various countries across the world including U.S.A., Europe, Middle East, Russia, Australia and South East Asian Countries ever since it was engaged in the export business. The plaintiff's export portfolio includes detergents, soaps, personal products, beverages (tea and coffee), processed foods, value added marine products etc. The plaintiff is the country's one of the larges exporters and has been recognized as the Premier Trading Housing, a prestigious and accredited status accorded, by the Government of India, considering the consistent and excellent track record of export performance.
The plaintiff exports said products under various schemes offered by the Government of India, including the Duty Entitlement Passbook Scheme (DEPB). The DEPB licenses are issued under Duty Remission Scheme, as an export incentive by the Regional Joint Director General of Foreign Trade, Government of India. In the course of its said export business, the plaintiff had engaged the services of the defendants No.1 to 3. Though the 1st and 2nd defendants are 8 OS No.7234/2009 two distinct legal entitles, the same were controlled, managed and operated by the 3rd defendant, who is the proprietor of the 1st defendant and the Director of the 2nd defendant. Under the DEPB Scheme, the plaintiff was entitled to get export incentives in the form of licenses in respect of export made. Such export incentives in the form of licenses could be utilized and adjusted against the payment of import duty. The plaintiff engaged the services of the defendants No.1 to 3 for the purpose of compiling the documents and facilitating the obtaining of the said DEPB licenses in respect of the exports done for and on behalf of the plaintiff. The plaintiff had engaged the services of the defendants No.1 to 3 since 2002. Apart from assisting and facilitating the plaintiff in getting its DEPB licenses from the office of the Joint Director General of Foreign Trade, Bangalore, for the exports done, since said DEPB Licenses were freely transferable in the open market, the services of the defendants No.1 to 3 were also engaged for the purpose of registering the licenses with 9 OS No.7234/2009 Customs authorities and selling the DEPB Licenses earned by the plaintiff.
During the year 2007, the defendants No.1 to 3 had assisted and facilitated the plaintiff in getting DEPB credit worth Rs.1,50,00,000/-, which included the 19 DEPB licenses worth Rs.1,10,34,820/-, which credit was given to the plaintiff on account of export of Coffee Beans/Instant Coffee.
It is further contended that the Original DEPB licenses issued by the Government of India in respect of the export done are required to be verified and registered at the customs port from where the goods were actually exported. Only after which the DEPB licenses could be made use for availing the duty credit. As it is the practice, the plaintiff had handed over to the 2nd defendant the said 19 DEPB licenses worth Rs.1,10,34,820/- in original for the purpose of Customs registration.
It is further contended that after the registration of the DEPB licenses with the Customs Port, the defendants 2 and 3 10 OS No.7234/2009 had to return the said 19 DEPB licenses to the plaintiff. However, the defendants No.1 to 3 evaded the return of the said 19 DEPB licenses on various grounds. Since the original DEPB licenses were not returned to the plaintiff after Customs registration for a long time and the said DEPB licenses were freely transferable documents, the plaintiff proceeded to investigate into the matter suspecting foul pay by the defendants 1 to 3. It was only then did the plaintiff learn that the defendants 1 to 3 had, in clear breach of trust, defrauded the plaintiff and illegally transferred the said 19 DEPB licenses to third parties by resorting to forgery and that the credit value of the said DEPB licenses were also availed by such third parties in collusion with defendants 1 to 3. The plaintiff immediately lodged a complaint with jurisdictional police on 17.12.2008 and an FIR was also registered under Cr.No.0875/2008 on 19.12.2008 with the MICO Layout Police Station, Bangalore.
After the registering of the criminal complaint, the interrogation of the 3rd defendant has revealed that the said 11 OS No.7234/2009 19 DEPB licenses were fraudulently transferred and sold to the 4th defendant. 16 out of the 19 DEPB licenses amounting to Rs.88,89,018/- were fraudulently transferred and sold to the 4th defendant.
Since the plaintiff had not transferred the said 16 DEPB licenses, it addressed letters to the 4th defendant requesting for documents pertaining to the transfer of title in the DEPB licenses by virtue of which the 4th defendant claimed title over the DEPB license. Despite receipt of the letter, the plaintiff has not received copies of the documents. However, the MICO Layout Police during the course of their investigation, seized 8 used licenses from the 4th defendant.
It is further contended that the plaintiff also made independent enquiries with the customs department with regard to 16 DEPB licenses and has learnt that the 4th defendant had utilized the said 16 DEPB licenses belonging to plaintiff in collusion with the defendants No.1 to 3 and have fraudulently encashed the DEPB credit of Rs.88,89,018/- in respect of the said 16 licenses with regard to goods imported 12 OS No.7234/2009 by the 4th defendant at Bangalore ICD. The plaintiff claims to be the lawful owner of the DEPB credit of Rs.88,89,018/- under the said 16 licenses and the act of the 4th defendant in encashing the said DEPB credit of Rs.88,89,018/- is alleged to be fraudulent and is in collusion with the defendants No.1 to 3. The said credit of Rs.88,89,018/- under 16 DEPB licenses was given to the plaintiff on account of coffee beans exported.
Pursuant to the complaint given, the MICO Layout police arrested the 3rd defendant and produced him before the jurisdictional Magistrate on 20.12.2008 and he was released on bail subject to certain conditions.
The defendant No.3 along with his wife defendant No.5 are the owners of house property bearing No.375, 6th Main, 10th Cross, Sundaram Shetty Nagar, Vijaya Bank Colony, Bilekahalli, Bangalore measuring 40 X 29.6 + 30/2 feet as per the boundaries mentioned in Schedule II of the plaint. The Schedule II property was mortgaged by defendants No.3 and 5 13 OS No.7234/2009 in favour of Vijaya Bank, Jayanagar III Block on 1.6.2007 and availed a loan of Rs.30,00,000/-.
It is further contended that the defendant No.3 executed the said gift deed along with defendant No.5 only with a view to defraud the creditor i.e. the plaintiff. Immediately on his release, the 3rd defendant along with his wife - 5th defendant hurriedly closed the mortgage with the Vijaya Bank on 23.12.2008. Thereafter, on the very next day i.e. on 24.12.2008 defendants No.3 and 5 transferred the Schedule II property by way of gift in favour of their son the 6th defendant.
There are no other creditors of the 3rd defendant within the knowledge of the plaintiff and hence the present suit instituted to avoid the transfer made by defendant No.3 on the ground that it has been made with intent to defeat or delay the plaintiff creditor of the 3rd defendant is maintainable. So, prays to decree the suit.
14 OS No.7234/2009
4. Upon service of summons, the defendants No.1, 2, 3, 5, and 6 appeared before the court through his counsel and filed written statement contending that the suit filed by plaintiff against them is not at all maintainable either in law or on facts, since they have not made any transactions with plaintiff, but on the contrary, they dealt with only M/s Hindusthan Lever Limited.
The 1st defendant M/s Sree Krishna Traders, a proprietary concern having office at Plot No.375, Sundaram Setty Nagar, 10th Cross, Vijaya Bank Co-operative Housing Society, Bilekahalli, Bangalore and represented by its Proprietor, Subash Kedia are true and admitted and 2nd defendant is M/s Dhanalakshmi Trade Links Pvt. Ltd., a Private Limited Company, having its office at Plot No.375, Sundaram Setty Nagar, 10th Cross, Vijaya Bank Co-operative Housing Society, Bilekahalli, Bangalore and represented by its Director Subash Kedia. It is true that Mr.Subhash Kedia is the proprietor of Sree Krishna Traders and is the Director of M/s Dhanalakshmi Trade Links Private Limited. The 2nd 15 OS No.7234/2009 defendant is not represented properly as the Managing Director and has not been impleaded as such defendants and hence the suit as against 2nd defendant is not maintainable.
The plaintiff exports its said products under various schemes offered by the Government of India, including the duty entitlement pass book scheme (DEPB) and that the DEPB Licenses are issued under the duty remission scheme, as an export incentive by the regional joint director general of foreign trade, government of India, may be true. In the course of its said export business the plaintiff has engaged the services of the 1st, 2nd and 3rd defendants and though the 1st and 2nd defendants are two distinct legal entitles, the same were controlled, managed and operated by the 3rd defendant is true and admitted. The averment that the under the DEPB scheme the plaintiff was entitled to get export incentives in the form of licenses in respect of the export made and such export incentives in the form of licenses could be utilized and adjusted against the payment of import duty is not within the knowledge of them and they are in no way concerned with the 16 OS No.7234/2009 same. The plaintiff engaged the services of the defendants No.1 to 3 for the purposes of compiling the documents and facilitating the obtaining of the said DEPB licenses in respect of the exports done for and on behalf of the plaintiff is true and admitted. The plaintiff engaged the services of the defendants No.1 to 3 since 2002 and the plaintiff states that apart from assisting and facilitating the plaintiff in getting its DEPB licenses from the office of the Joint Director General of Foreign Trade, Bangalore for the exports done since the said DEPB licenses were freely transferable in the open market, the services of the defendants No.1 to 3 were also engaged for the purpose of registering the licenses with Customs authorities and Selling the DEPB licenses earned by the plaintiff, is partly true and admitted. Whereas the DEPB licenses cannot be transferred unless there is an authorization letter i.e. Transfer Letter from its original owner of the licenses.
The averments made in para 6 and 7 are true and admitted except that as is the practice, the plaintiff had 17 OS No.7234/2009 handed over to the 2nd defendant the said DEPB licenses worth Rs.1,10,34,820/- in original for the purpose of Customs registration is not true, whereas in contrary, the plaintiff handed over the said 19 DEPB licenses to the defendants not only to register in the Customs and also to sell all the 19 DEPB licenses along with the Transfer Letter. In this connection they points out that there was a scheme called VKGUY, which was an incentive given by the Government to Coffee Exporter and of the said incentive amount 80% of the amount will go to the exporter and 20% will go the consultant namely the defendants and the plaintiff did not honour the said terms. It is admitted by the plaintiff that it is only on account of the efforts made by the defendants 1 to 3, who have assisted and facilitated the plaintiff in getting the DEPB Credit worth of Rs.1,50,00,000/- which included the 19 DEPB licenses worth Rs.1,10,34,820/, which credit was given to the plaintiff on account of export coffee beans/instant coffee.
18 OS No.7234/2009
The original DEPB Licenses issued by the Government of India in respect of the Export done or required to be verified and registered at the customs code where the goods were actually exported, only after which the DEPB Licenses would be made use for availing duty credit, it true and admitted and that as is the practice need to be more accurate and should be transparent.
FIR was also registered under Cr.No.0875/2008 on 19.12.2008 is a false complaint against the defendants and a false FIR was registered. The said case is pending and in the said case Subash Kedia is on regular bail.
Since the plaintiff has not transferred the said 16 DEPB licenses it addressed letters to the 4th defendant requesting for documents pertaining to the transfer of title in the DEPB licenses by virtue of the 4th defendant claimed title over the DEPB Licenses are not within the knowledge of them and the 4th defendant is not a party in the criminal case filed by plaintiff against them.
19 OS No.7234/2009
The mortgage i.e. created with the Vijaya Bank is still continues in the said bank till today. As the 3rd defendant along with his wife 5th defendant are the absolute owners of the schedule II property, out of love and affection they have gifted these property in favour of the 6th defendant, who is their own son and nothing prevented them from doing so when the said transaction is not hit by Section 53 of the Transfer of Property Act and the defendants No.5 and 6 are not necessary and proper parties to the suit.
Without prejudice to the contention after doing all JDGFT (Joint Director General of Foreign Trade) work like filling of the applications for DEPB/advance licenses/EPCG license at JDGFT to the plaintiff, they were paying to the defendants towards the service charges as and when defendant raises bills on them at the agreed rates. Only when the new scheme "Vishesh Krishi Upaj Yojana" VKGUY they raised these frivolous problems in order to divert from their commitment as per agreed terms of 20% amount commission for them.
20 OS No.7234/2009
The plaintiff has to pay under the scheme called VKGUY which was an incentive given by the government to coffee exporter and it was contracted for 80% of the amount will go to the exporter namely the plaintiff and 20% will go to the consultant namely them as per understanding and as they did not honour the said verbal contract and if it is accounted @ 20% it amounts to Rs.1 crore, which the defendants have to receive from the plaintiff. The plaintiffs are not entitled for the amount claimed in the plaint. Under the VKGUY scheme the plaintiff got license to the tune of five crores. They were working for Hindustan Lever since the last six years and not even a single default or any problem happened. They have done the business with Hindustan Lever Limited for the said 19 DEPB licenses for which the plaintiff has not paid any service charges even after raising the Invoices for Rs.4,51,859/-.
The plaintiff was well aware of the transfers of the 16 out of 19 DEPB licenses in question in suit by the defendants No.1 to 3 to it even on dates when the transfers took place. 21 OS No.7234/2009 Plaintiff deliberately feigns ignorance of the same with ulterior motives and has alleged that it came to know of the said transfers only upon independent enquires and learning. For all the DEPB licenses its authorized attorney and operation Manager - Exports Mr.Rajneesh Varma had signed on behalf of the plaintiff company, the Transfer Letters relating to all DEPB licenses in favour of defendants No.1 to 3 and whose signatures had been verified by plaintiff's bank official.
They confirm the sale but the plaintiff has also to pay to the defendants only when they settle the account of them the plaintiff are entitled for any legitimate amount if found upon striking of the accounts. Further, they denies that there was any forgery resorted to by defendants No.1 to 3 in transfers the said licenses in question and also denies that there was any collusion among the defendants. Further, they have purchasing licenses from the plaintiff at the same period and out of 31 licenses only 19 licenses are mentioned in this suit and for the remaining licenses they have paid the amount. Hence, prayed to dismiss the suit.
22 OS No.7234/2009
5. The defendant No.4 filed written statement contending that, it is not a proper and necessary party to the suit, which is an alleged dispute between the plaintiff and defendants No.1, 2, 3, 5 and 6. It is only a bonafide purchaser of a few of the licenses listed in Schedule I of the plaint and is unaware of the nature of the business transactions between the plaintiff and other remaining defendants. There is no privity of contract between the plaintiff and it. It is a joint venture company registered under the provisions of Companies Act, 1956 and was established in the year 1998. The joint venture is between Larsen and Toubro Limited, India and Komatsu Asia Pacific Pte, Singapore. It is engaged in the business of manufacture of hydraulic excavators for the Indian market. It has introduced hydraulic excavators in India and has immensely contributed towards improving the technology used therein. For the purpose of manufacturing hydraulic excavators, it imports components and other raw materials from Komatsu, Japan 23 OS No.7234/2009 and other foreign suppliers. For these imports, it avails various schemes announced by the Ministry of Commerce, Government of India, namely Advance Licensing Scheme, Export Promotion Capital Goods Scheme (EPCG) and Duty Entitlement Pass Book Scheme (DEPB) etc. The DEPB is a scheme under the Export Import (EXIM) policy announced by the Ministry of Commerce, Government of India and is implemented by the Directorate General of Foreign Trade (DGFT). The DEPB is an incentive given to a company, which exports goods and is used for payment of Customs duty leviable on goods imported by that company. The DGFT issues the DEPB licence to a company exporting goods, which in turn surrenders the DEPB licence to the Customs authorities in lieu of Customs duty payable on goods imported by that company. Every year the Government of India announces the DEPB rates for exported goods, which is a percentage of the value of exports or sometimes the certain amount per weight of the exported goods. If a company exports goods but does not import goods, then the 24 OS No.7234/2009 DEPB licence issued to that company cannot be used. Therefore, the DEPB licence is freely transferable in the open market for a valid consideration. Thus, by selling the DEPB licence in the open market, a company, which only export goods but does not import goods, earns additional revenue. The transfer of the DEPB licence from a seller to a buyer is through a transfer letter indicating that the DEPB licence is being transferred for a particular value and the said letter if verified and attested by the seller's bank.
The DGFT issues the DEPB licence to be utilized at the port of export, wherein the DEPB licence holder has to produce and register the DEPB licence with the Customs authorities. The DEPB licence after registration is transferred by Customs authorities to the port of choice of the buyer/holder of the said DEPB licence. The Customs authorities then issue a Transfer Release Advice (TRA) for the DEPB licence used for payment of duty on imported goods. Admittedly, the plaintiff has engaged the services of defendants No.1 to 3 since the year 2002 for registering the 25 OS No.7234/2009 DEPB licenses issued to it with the Customs authorities and for selling the DEPB licenses in the open market. Therefore, defendants No.1 to 3 could be deemed as agents of the plaintiff. In the course of business, it has purchased valid DEPB licenses from the open market including defendant No.1. During the ear 2007-08, it purchased valid DEPB licenses worth Rs.2.06 crores.
The defendant No.1 represented to it that it has been engaged by the plaintiff for selling the DEPB licenses in the open market. Between October 2007 and January 2008, it purchased 18 valid DEPB licenses from defendant No.1 for valuable consideration and in good faith and without notice of any irregularity or lack of authority on the part of defendant No.1. Thereafter, it utilized the said 18 valid DEPB licenses for payment of Customs duty leviable on its imported goods. After a gap of 10-14 months the plaintiff vide letter dated 29.12.2008 alleged that 15 DEPB licenses belonging to the plaintiff were transferred to it by defendant No.1 in a fraudulent manner. It is not aware of any alleged fraud 26 OS No.7234/2009 committed by defendant No.1 with regard to the transfer of valid DEPB licences. It has purchased the valid DEPB licences from defendant No.1 against tax invoices and has paid the invoice amount through cheques to defendant No.1.
The plaintiff in its letter dated 29.12.2008 has alleged that defendants No.1 to 3 were not authorized by the plaintiff to sell the DEPB licences, but were only engaged for getting the DEPB licences registered with the Customs authorities. In the said letter, the plaintiff sought the return of the transfer letters for 15 DEPB licences enumerated in the list attached to the said letter and payment of Rs.88,13,980/- towards value of the said DEPB licences. In that letter the transfer letters were forged by defendant No.1 by applying whitener and changing the particulars of the DEPB licences in the transfer letters issued by the plaintiff to the defendant No.1 for sale of DEPB licences. It vide reply letter dated 17.1.2009 interalia stated that it had no knowledge or notice either of the terms of the plaintiff's engagement with defendant No.1 or as to the authority the plaintiff had given 27 OS No.7234/2009 or not given to defendant No.1. In its reply that in the regular course of business, it purchased valid DEPB licences from defendant No.1 for valuable consideration, in good faith and without any notice of irregularity or lack of authority. Therefore, it acquired good title to the valid DEPB licences purchased from defendant No.1, it had utilised the valid DEPB licences by 21.01.2008. The Customs authorities vide letters dated 28.2.2009 and 6.5.2009 confirmed the utilization of the DEPB licences by it.
The plaintiff has selectively and incorrectly chosen 16 DEPB licences out of 18 DEPB licences purchased in the year 2007-08 by it from defendant No.1. Out of 16 DEPB licences, 2 DEPB licences in the Schedule I of the plaint have not been purchased by it viz. Licence NO.0710054204 and 0710054845. Out of 18 DEPB licences purchased from defendant No.1 between October 2007 and January 2008, the plaintiff has not questioned the validity or legality of 4 such DEPB licences and other similar DEPB licences purchased from defendant No.1, which have in an identical manner, 28 OS No.7234/2009 overwriting of the licence particulars by applying whitener on the licence number mentioned in the plaintiffs' transfer letters to defendant No.1. The genuineness of the said transactions is accepted by the plaintiff. The defendant No.1 had explained to it that the overwriting of the licence particulars on the plaintiff's transfer letters to defendant No.1 is a regular feature, which was supported by other similar transactions with identical overwriting approved by the plaintiff without any objection. Therefore, it did not have any reason to suspect the transactions with defendant No.1 for the purchase of valid DEPB licences.
After due diligence, it has purchased valid DEPB licences for valuable consideration, without malafide intention to deprive the plaintiff of any resultant income. If there would have been any fraud as alleged by the plaintiff, the plaintiff could have blocked the DEPB licences in question at the DGFT/Customs preventing their utilization. The plaintiff has been grossly negligent in their conduct of safeguarding their interest and now cannot saddle it with their imaginary loss 29 OS No.7234/2009 and recover the same from it. If the plaintiff has any claim it can only be against the other remaining defendants. It is specifically denied that it has colluded with defendants No.1 to 3 and has purchased the valid DEPB licences fraudulently. Therefore, it is not liable to pay any sum much less an amount of Rs.88,89,018/- to the plaintiff.
Regarding the plaintiff obtaining DEPB licences as a benefit as a result of its export activity, is within the knowledge of it in so far as the same is provided for by the policies of the Government of India. Admittedly, since the year 2002 the plaintiff has engaged the services of defendants No.1 to 3 for the purpose of compiling the documents and facilitating the obtaining of DEPB licences, registering the DEPB licences with the Customs authorities and also selling the same in the open market. Therefore, it can be construed that the plaintiff has had a long standing relationship with defendants No.1 to 3.
30 OS No.7234/2009
Out of 16 DEPB licences enumerated in Schedule I of the plaint, it purchased only 14 DEPB licences in good faith and for valuable consideration from defendant No.1.
It is true that the plaintiff vide letter dated 29.12.2008 sought return of the transfer letters for 15 DEPB licences listed out in the attachment to the aforesaid letter. It was contented by the plaintiff in its aforesaid letter that the said 15 DEPB licences have been sold to it by defendant No.1 in a fraudulent manner. It vide reply letter dated 17.9.2009 categorically denied any knowledge of fraud committed by defendant No.1 for transfer of valid DEPB licences to it. It was categorically stated that valid DEPB licenses were purchased by it from defendant No.1 in good faith and for valuable consideration. Therefore, it acquired good title over the valid DEPB licences purchased from defendant No.1. Further, the defendant had utilized the DEPB licences purchased between October 2007 and January 2008 from defendant No.1 by 21.01.2008 and therefore, in no way the title of the DEPB licences in question in the plaintiff's letter dated 29.12.2008 31 OS No.7234/2009 could have been transferred by it to the plaintiff. It was categorically pointed out to the plaintiff that it has been selective in questioning only 15 DEPB licences and has accepted the similar transactions with regard to the other DEPB licences purchased from defendant No.1. Further, the defendant specifically denies that the MICO Layout police, Bangalore has during the course of their investigation seized 8 DEPB licences from it. The MICO Layout police had approached the defendant seeking submission of the DEPB licences in question. It with an intention to aid the investigation vide letter dated 3.3.2009 handed over 8 utilised valid DEPB licences to the MICO Layout police.
It has purchased 13 valid DEPB licences under invoice No.030/SKT/07-08 dated 8.10.2007 from defendant No.1, out of which the plaintiff has not objected to the purchase of 3 valid DEPB licences. The plaintiff has been selective in questioning the transfer of the valid DEPB licences to it. Further, in the present suit, the plaintiff has claimed that 16 DEPB licences have been sold to it, but 2 of those DEPB 32 OS No.7234/2009 licenses have not been purchased by it at all, as already stated above. Moreover, the DEPB licenses enumerated in the plaintiff's letter dated 29.12.2008 do not match with the list of the DEPB licenses provided herein and in Schedule I of the plaint. The plaintiff's claim suffers from lack of credibility not only because selective transactions have been questioned, but also because the claim is factually inaccurate and untenable.
Since, it is only a bonafide purchaser of the valid DEPB licences, it cannot be held liable for any of the acts of fraud alleged to have been committed by the other remaining defendants.
It purchased the valid DEPB licences from defendant No.1 vide bonafide transactions and for valid considerations and without any knowledge or notice of the alleged acts of fraud committed by defendant No.1. Therefore, it is submitted that the plaintiff has no cause of action against it. Hence, prayed to dismiss the suit.
33 OS No.7234/2009
6. On the basis of the pleadings of both the parties, the following issues have been framed:
ISSUES
1) Whether the plaintiff proves that defendant No.1 to 3 colluding with defendant No.4 have played fraud on the plaintiff and further proves that the defendant No.1 to 3 fraudulently and illegally transferred and sold the DEPB licenses worth Rs.88,89,018/- described in Schedule 1 of the plaint in favour of the defendant No.4 by forging the transfer letters?
2) Whether the plaintiff proves that defendant No.1 to 4 are jointly and severally liable to pay a sum of Rs.88,89,018/- together with interest at the rate of 18% per annum from the date of utilization of DEPB license described in Schedule 1 of the plaint to the plaintiff?
3) Whether the defendants No.1 to 3 prove that there was on oral contract between them and plaintiff to pay 20% of the incentive amount to these defendants, which was given by the Government to Coffee Exporter under VKGUY Scheme by way of service charges and further proves that these defendants were able to do business of 5 crores and entitled 20% of the amount of Rs.1 crore out of above said business as pleaded in para 18 of their written statement?
4) Whether the plaintiff proves that the gift deed executed by defendant No.3 and 5 in respect of schedule property in favour of defendant No.6 is hit by Section 53 of Transfer of Property Act and 34 OS No.7234/2009 thus required to be declared as null and void and not binding on the plaintiff?
5) Whether the defendant No.4 proves that it is a bonafide purchaser of DEPB license for valuable consideration without any notice on irregularity or lack of authority, hence this defendant is not liable to pay amount much less an amount of Rs.88,89,018/- to the plaintiff as prayed in the plaint?
6) What decree or order?
7. The plaintiff organization examined its Asst. Supply Chain Manager of plaintiff Company as P.W.1 and got marked documents at Exs.P.1 to P.19. The defendant No.4 examined its Asst. Manager, Central Materials (MW) as DW1 and got marked documents at Ex.D.1 to D.21. The 3rd defendant represented by 1st and 2nd defendant examined himself as DW2 and got marked documents at Ex.D.22 to D.73.
8. Heard the arguments and perused the records of the case.
9. My findings to the above issues are as under: 35 OS No.7234/2009
Issue No.1 & 2 - Partly in the affirmative Issue No.3 & 4 - In the negative Issue No.5 - In the affirmative Issue No.6 - As per the final order, for the following:
REASONS
10. ISSUE Nos.1 TO 5:- Since these Issues are interconnected with each other hence in order to avoid repetition of facts and evidence, they are taken together for common discussion.
11. The learned counsel for the plaintiff argued that the defendants No.1 to 3 are the agents of plaintiff in compiling DEPB licenses, which are earned by the plaintiff and they were orally authorized to get such DEPB licenses from Director General of Foreign Trade (herein after DGFT for short) and thereafter, they were authorized to receive the same from the customs office, but defendants No.1 to 3 in collusion with defendant No.4 have encashed the said 36 OS No.7234/2009 licenses and appropriated the money and thereby caused loss of Rs.88,89,018/-. It is further argued that the encashment of the said amount by selling DEPB licenses is admitted by defendants in the cross-examination. It is further argued that the plaintiff never sold DEPB licenses in favour of defendants No.1 to 3. Such being the case, they have acted contrary to instructions of plaintiff and thereby caused loss to the plaintiff. It is further argued that the defendant No.4 has purchased licenses without authorization letter from the plaintiff and therefore he is also jointly and severally liable to pay the amount to the plaintiff. It is further argued that though the defendants have contended that they are entitled for 20% of the commission under VKGUY scheme, but no document produced to prove the same. Thus, contended that the plaintiff has oral and documentary evidence in support of its case, whereas defendants have not produced satisfactory evidence and thus prayed to decree the suit.
37 OS No.7234/2009
12. On the other hand, the learned counsel for the defendants No.1 to 3, 5 and 6 contended that the plaintiff authorized defendants No.1 to 3 to sell the DEPB licenses and as per said authority only the defendants have sold licenses. It is further argued that the defendants are entitled for 20% of the commission, which is earned by the policy of Central Government under VKGUY Scheme and the plaintiff has not paid commission amount to the defendants. It is further argued that the defendants have not committed any offence as the defendants have purchased licenses from the plaintiff at the same period and out of 31 licenses, only 19 licenses are mentioned in the suit and for remaining licenses, the defendants are not paid the amount. It is further argued that there is no nexus between the gift deed executed by defendant No.1 in favour of defendants No.5 and 6 and question of cancellation of gift deed does not arise. Thus, prayed to dismiss the suit.
38 OS No.7234/2009
13. The learned counsel for defendant No.4 also filed his written arguments, wherein it is contended that 4th defendant is bonafide purchaser for value without notice of the transactions between the plaintiff and defendants No.1 to 3 and that there is no lapse on his part and there is no privity of contract between defendant No.4 and plaintiff and further that defendant No.4 is not a necessary and proper party to the suit. Thus, prayed to dismiss the suit. In support of arguments, the learned counsel for the defendant No.4 has relied upon decisions reported in AIR 1955 KAR 43 (S.Ramarao v. Dasarath Rao and others).
14. Keeping in mind, the rival submissions, I have carefully perused entire oral and documentary evidence. It is seen that in this suit, there is no dispute that the defendants No.1 to 3 are the agents of plaintiff and assisting the plaintiff in compiling the DEPB licenses, which are issued by DGFT and further to receive the same from customs authority. 39 OS No.7234/2009
15. In this regard, the plaintiff examined its Assistant Supply Chain Manager namely, R.Kumara Ramaswamy as PW1, who has deposed all the necessary facts of the plaint in his evidence affidavit. He deposed categorically that the plaintiff had engaged services of defendants No.1 to 3 in compiling documents and facilitating obtaining of DEPB licenses in respect of exports done for and on behalf of plaintiff. It is further deposed that said DEPB licenses were freely transferable in the open market and that the services of defendants No.1 to 3 was taken for the purpose of registering the licenses with the customs authority and selling DEPB licenses earned by the plaintiff. He has also deposed that in the year 2007, defendants No.1 to 3 had assisted and facilitated the plaintiff in getting DEPB licenses worth Rs.1,50,00,000/-, which included 19 DEPB licenses worth Rs.1,10,34,820/-. He has deposed that the plaintiff came to know that the defendants No.1 to 3 have sold 16 DEPB licenses to 4th defendant, who had utilized the same belong to the plaintiff in collusion with defendants No.1 to 3 and 40 OS No.7234/2009 encashed the DEPB credit of Rs.88,89,018/-. In this regard, the plaintiff produced documentary evidence.
16. Ex.P.1 is General Power of Attorney dated 18.10.2010 executed by plaintiff in favour of PW1. Ex.P.2 to P.8 are expert incentive licenses along with Annexures. Ex.P.9 is memorandum of deposit of title deeds dated 1.6.2007. Ex.P.10 is certified copy of gift deed dated 24.12.2008 executed by defendant No.3 and 5 in favour of defendant No.6 with respect to Schedule - 2 property. Ex.P.11 is certified copy of order sheet in CC.No.38013/2010 pending on the file of 4th ACMM, Bengaluru. Ex.P.12 is certified copy of FIR in Cr.No.875/2008 registered by Mico Layout police against defendant No.3 in pursuance to complaint filed by the plaintiff. Ex.P.13 is certified copy of charge sheet filed in that case against 3rd defendant in CC.38013/2010 for the offence punishable under Section 468, 471, 406 and 420 of IPC with respect to very same transaction. Ex.P.14 is certified copy of PF.44/2009 dated 4.3.2009 in CC.38013/2010, wherein 8 41 OS No.7234/2009 DEPB licenses were seized and retained. Ex.P.15 is FSL report filed in CC.38013/2013 by Scientific Officer, FSL, Madiwala, Bengaluru City. Ex.P.16 to P.19 are 4 board resolutions authorizing PW1 to conduct the case.
17. PW1 was subjected to cross-examination by the learned counsel for the defendants, wherein it is clarified that there is no specific contract between the plaintiff and defendants, but PW1 stated that letter was given to them and it has been acknowledged by them and the said letter had authorized them to do certain acts. He admits that he has not produced copy of said letter. He admits that there were only oral talks between him and defendants and there is no any contract. He admits that services provided by defendants to them are chargeable. It is clarified that they are taking services of the defendants since 2002. He has denied that there was a contract between the plaintiff and defendants orally to share the payment of import duty. He has denied that there was a oral contract between the plaintiff and 42 OS No.7234/2009 defendants to share the incentives on 80%-20% basis. He admits that they have not paid service charges to the defendants rendered by them during 2006-07 and the witness stated that since defendants have not given bills, so no payment has been made. Further, PW1 admitted that he was using the services of defendant No.1 to sell the licenses. He admits that as per their usual procedure, they had sold the licenses to defendant No.1 in same manner, as they sold to BT solders. He has clearly admitted that defendant No.1 being agent was authorized to sell licenses. He has clearly admitted that the defendant No.4 might have purchased licenses from defendant No.1 in good faith. He admits that reply notice issued by defendant No.4 for notice issued by plaintiff dated 29.1.2008 and said reply is marked as Ex.D.2. He admits that they have not produced any document to show that they have responded to Ex.D.2. He further admits that they have not filed criminal complaint against defendant No.4 alleging fraud or collusion. He has denied that no fraud has been committed by defendants to the plaintiff. 43 OS No.7234/2009
18. Further, in the cross-examination by the learned counsel for the defendants No.1 to 3, PW1 clearly admitted that their Company was previously called as Hindustan Liver Limited and approximately during the year 2007-08, it has been re-named as Hindustan Uniliver Limited. The witness has explained the procedure for registering DEPB licenses, which discloses that plaintiff hand over license to the defendant for registering in the customs, wherein the defendants have required to register them and then give back the said licenses to the plaintiff and then the plaintiff used to give authorization to the defendants for selling them. He also admits that under certain terms and conditions, the plaintiff had given licenses to defendants. He clearly admitted that the entire transaction, which he stated was oral. The witness deposed that licenses that are issued directly by the Government will give to the plaintiff Company, but denied that the said licenses are freely transferable in the market. He has further deposed the procedure to transfer the licenses, 44 OS No.7234/2009 wherein the plaintiff has to give authorization letter for the agent to sell the said licenses and the authorization letter would be taken by the buyer and that authorization letter itself is authority to the buyer to sell the licenses or for paying the duty. He admits that without the authorization given by the plaintiff, the buyer cannot sell licenses. He also admits that the person, who buys the said licenses, is also required to obtain transfer letters. He also admits that the defendants after obtaining licenses have not given any amount to the plaintiff. In the further cross-examination by the learned counsel for defendants No.1 to 3, wherein he has denied that the defendants have helped the plaintiff in obtaining licenses and incentives. He has deposed that they have paid all the bills, to the defendants, whichever they had submitted and that the bill was calculated on the basis of agreed rate between the plaintiff and defendants. He has denied that it was a sale in process of 80% and 20%. He has denied that the plaintiff Company issued license to transfer DEPB licenses to the defendants.
45 OS No.7234/2009
19. PW1 has denied that as per VKGUY scheme, 80% of the consideration has to be received by license holders and 20% to the concerned. He has denied that the defendants are entitled for Rs.1 crore towards the consideration charges as per the VKGUY scheme. He has denied that the plaintiff Company has refused to pay Rs.4,51,859/- towards invoices as service charges. He has denied that the defendants are not liable to pay any amount to the plaintiff, but on the contrary, the plaintiff is liable to pay Rs.1 crore with interest to the defendants. He has spoken about role of defendants No.1 and 2. As per that, the plaintiff will give documents to 2nd defendant - Dhanalaxmi for incentives claims and defendant No.2 would submit document to JDGFT and then JDGFT will process the documents and then send licenses to plaintiff by registered post and thereafter, the licenses are handed over to 2nd defendant to be furnished to the JDGFT for verification by the Port authority and that Port authority will verify and send back the licenses to JDGFT and thereafter, the 2nd defendant Dhanalaxmi traders will collect 46 OS No.7234/2009 the licenses from JDGFT and handed over the same to the plaintiff and thereafter the sale may be made through 1st defendant - Krishna Traders. He deposed that thereafter, the sale will be made through 1st defendant and before selling, the 1st defendant will obtain quotation from intending purchaser and send the same to the plaintiff for approval and after an approval the plaintiff will issue authorization letter with authorized signatory authenticated by the Company bankers to 1st defendant for selling licenses and thereafter the 1st defendant will pay the proceeds and the plaintiff will issue sale invoices with the 1st defendant and hand over licenses with authorization letter and he clarified that this process is not in writing. He has deposed categorically that the 2nd defendant would raise invoices for their service charges and the plaintiff will clear the service charges to 2nd defendant as and when invoice is submitted. He has denied that the 2nd defendant will be made the payments before the sale.
20. In the further cross-examination by the learned counsel for defendants No.1 to 3, 5 and 6, PW1 admits that 47 OS No.7234/2009 after licenses came to custody of the plaintiff, they issue written permission to 1st defendant to sell the licenses to third party and it will be in the letter head of the plaintiff company. He further deposed that they have not received licenses back from the 1st defendant in the year 2006. He has denied that the defendants are not in due of any amount to the plaintiff.
21. On over all appreciation of documents of the plaintiff and oral evidence of PW1, make it crystal clear that though the defendants have stated that they are authorized to sell the licenses, but there is no evidence to show that those licenses have been sold by the plaintiff in favour of defendants No.1 to 3 for consideration. The evidence discloses that the licenses are handed over to the defendants for registration and to claim commission charges. It is further clarified that the defendants have not returned the DEPB licenses nor paid the consideration of the licenses to the plaintiff. It is clear that they have also not raised the invoices to claim commission, which they entitled to.
48 OS No.7234/2009
22. On the other hand, the DW1, who is Manager of defendant No.4 Company has given evidence reiterating the defence taken by him in his written statement. He has deposed categorically that he has purchased license from 1st defendant as a bonafide purchaser for valuable consideration and utilized fully on or about 21.1.2008. He has denied that he has purchased the said licenses in collusion with defendants No.1 to 3 and encashed licenses worth Rs.88,89,018/- .
23. Even the defendant No.4 has produced Ex.D.1 to D.21 in evidence. The witness was subjected to cross- examination by learned counsel for the plaintiff, wherein he admitted that there was no any written contract between the defendant No.1 and defendant No.4 to purchase the DEPB licenses from the market. He has admitted that in order to purchase DEPB license, it should be accompanied by the transfer letter from the licensor. He admits that on the face of 49 OS No.7234/2009 ExD.1, 10, 13 and 19, they look as if they are manipulated. He admits that they have not verified with the plaintiff Company as to whether the transfer letters Ex.D.1, 10, 13 and 19 were issued by it or not. He further admits that during the investigation by Mico Layout police, they had sent Ex.D.1, 10, 13 and 19 to the Forensic Science Lab for investigation and it is reported by Forensic Science Lab that those documents are fabricated documents. He has denied that they have colluded with defendants No.1 to 3 for purchasing DEPB licenses at a lesser rate. He admits that the purchase value of DEPB licenses is less than the face value of licenses of the plaintiff. He clearly admits that he has purchased 16 DEPB licenses from the plaintiff as mentioned in the plaint.
24. The DW1 was subjected to cross-examination by the learned counsel for the defendants No.1 to 3, wherein he admits that there are over writings in Ex.D.9 and 10 and also Ex.D.1, 10, 13 and 19. He admits that the 1st defendant was 50 OS No.7234/2009 producing such documents in normal course, so no enquiry has been held in respect of such over writings. The signature on transferred documents were verified by the plaintiff bankers. He deposed that defendant No.4 has purchased 14 licenses.
25. In the cross-examination by learned counsel for the plaintiff, DW1 admits that Ex.D.9 is in the letter head of the 1st defendant firm and that defendant No.1, 10, 13 and 19 are under the letter head of plaintiff Company. He has denied that he has colluded with other defendants to make wrongful gain and that he is liable to pay suit claim.
26. Even the defendant No.3 has filed his evidence affidavit as DW2 reiterating the averments of his written statement. He deposed that as per the instructions and transfer letter, the 1st defendant sold license to 4th defendant and when the incentives matter came up as 80%-20% basis, the plaintiff has diverted the matter and waited for to clear all 51 OS No.7234/2009 the licenses for over a period of two years and filed this suit. He further deposed that the plaintiff has to pay under the scheme called VKGUY, which was incentive given by the Government to Coffee exporter and out of the said incentive amount, 80% of the amount will go to the exporter i.e. plaintiff and 20% will go the consultant namely, the 1st defendant as per understanding between plaintiff and defendants No.1 to 3. He deposed that under the said scheme, the plaintiff got licenses to the tune of Rs.5 crores. He deposed that the plaintiff has not paid any service charges with respect to 19 DEPB licenses even after raising invoices. He further deposed that the plaintiff was well aware about 16 out of 19 DEPB licenses in question. He further deposed that the transfer letters relating to all DEPB licenses are in favour of defendants No.1 to 3 and the signatures have been verified by the plaintiff's bank official. He has finally deposed confirming the same, but the plaintiff have also to pay to the defendants only when they settle the amount of all these defendants. The plaintiff is entitle for any legitimate amount 52 OS No.7234/2009 if found upon striking of the accounts. The defendant No.3 produced e-mail correspondence Ex.D.22 and 23, which are marked subject to production of certificate under Section 65B of Evidence Act. The bank letter is Ex.D.24. The contract letter, which was entered between the plaintiff and defendants is as per Ex.D.70. One more contract letter is Ex.D.71. The statement issued by Vijaya Bank is at Ex.D.72. The statement issued by JDGFT is at Ex.D.73.
27. Even DW2 was subjected to cross-examination by learned counsel for the plaintiff, wherein he admits that he used to collect DEPB licenses from the plaintiff and that the plaintiff used to give authorization to sell the DEPB licenses virtually. He has denied that he has sold 19 DEPB licenses to defendant No.4 without any authorization by the plaintiff. He has denied that he has forged authorization letter of the plaintiff in selling 19 DEPB licenses to the 4th defendant. He further admits that a criminal case is pending against himself with allegation that he has forged authorization letter of the 53 OS No.7234/2009 plaintiff in selling DEPB licenses. He clearly admits that he used to raise invoices for the work done by him. He admits that he has not taken any legal action against plaintiff for the amount due by it. There is clear admission that he has realized a sum of Rs.88,89,018/- from selling 16 DEPB licenses to the 4th defendant. He admits that there is no written contract to show that the plaintiff Company agreed to give 20% incentive to the defendants. He has denied that he has sold property bearing No.375 situated at Vijaya Bank Colony, Bangalore and that he executed Ex.P.10 - gift deed to defraud the plaintiff.
28. A careful reading of evidence of DW1 and DW2, reveal that there is no written agreement between plaintiff and defendants No.1 to 3 regarding share of VKGUY scheme amount and absolutely there is no agreement between the parties and no document is produced in this regard. As I already pointed out, DW2 clearly admits that he has realized a sum of Rs.88,89,018/- from selling 16 DEPB licenses to the 54 OS No.7234/2009 4th defendant and same is suit amount. It is not case of defendants No.1 to 3 that plaintiff sold the said licenses to defendants No.1 to 3 by receiving consideration. There is no evidence to show as to what is the due of the plaintiff to the defendants No.1 to 3. There is absolutely no documents in this regard. The defendants No.1 to 3 after selling DEPB licenses were required to pay sale consideration to the plaintiff and produce bill towards their commission charges. But, in this case, there is no such bills have been produced. This indicate that the defendants No.1 to 3 have illegally realized the suit amount, which was payable to the plaintiff. The plaintiff/PW1 himself clearly admits that he has to pay commission amount to the defendants, but stating that the defendants have to produce bill for the same. It is to be noted that if at all there was any due by defendants No.1 to 3 to the plaintiff, they have to file a suit for recovery of money or atleast could have set up counter claim or set off in this suit, but no said course is chosen.
55 OS No.7234/2009
29. A perusal of documents produced by the defendants No.1 to 3 reveal that Ex.D.1 is transfer letter about DEPB licenses in favour of 1st defendant, wherein it is stated that they have received full amount of consideration towards transfer of the above DEPB licenses in favour of 1st defendant. But the defendants No.1 to 3 in their written statement or in evidence have nowhere stated that they have paid consideration of DEPB licenses mentioned in the letter. Thus, the said document is contrary to pleadings and evidence. Ex.D.2 is letter issued by 4th defendant in favour of plaintiff, wherein it is stated that they have no knowledge or notice of the terms of engagement of defendant No.3 with defendant No.4 regarding allegation that they have not authorized defendant No.3 to sell licenses and that he sold the same in fraudulent manner. It is reiterated that they have purchased said licenses from defendant No.3 for the valuable consideration bonafide in good faith without notice of any irregularities or lack of authority.
56 OS No.7234/2009
30. A careful perusal of the documents reveal that the 4th defendant has clearly stated that he is a bonafide purchaser of DEPB licenses and even PW1 in his cross- examination has probablized by giving admission that it might be true that the defendant No.4 might have purchased licenses from defendant No.1 in good faith. This indicate that there is no any fault on the part of defendant No.4 in the transaction. Ex.D.3 is authorization letter in favour of DW1 - S.Ravi Kumar. Ex.D.4 is statement of particulars of purchase of DEPB licenses by defendant No.1. Ex.D.6 to 9 are tax invoices issued to defendant No.4. Ex.D.9 is letter regarding re-transfer of DEPB licenses in favour of defendant No.4 by 1st defendant. Ex.D.10 is letter regarding transfer of DEPB licenses. Ex.D.11 to D.14 are said DEPB licenses along with Annexure. Ex.D.15 is letter issued by 4th defendant to the Inspector of Police, Mico Layout police station, wherein they have handed over relevant documents mentioned therein. Ex.D.16 is letter issued by 1st defendant to the 4th defendant requesting to return the DEPB value and to get the 57 OS No.7234/2009 encashment in value. Ex.D.17 is letter issued by 1st defendant in favour of defendant No.4 with similar contents as in Ex.D.9. Ex.D.18 is one DEPB license with Annexure. Ex.D.19 is letter dated 21.11.2006 issued by plaintiff in favour of defendant No.1 transferring DEPB licenses mentioned therein and declare that they have received the full amount of consideration towards transfer of above DEPB licenses, but it is to be held once again that the defendants No.1 to 3 have nowhere taken defence that they have received DEPB licenses after paying full amount of consideration. Ex.D.20 is one more such document. Ex.D.21 is letter issued by office of the Joint Commissioner of Customs, Bangalore on 6.5.2019 in favour of the plaintiff about utilization of 14 DEPB licenses. Ex.D.22 and Ex.D.23 are e-mail documents Ex.D.24 is letter issued by Vijaya Bank stating that Schedule property is mortgaged in the said bank since 2002. Ex.D.25 to 69 are the bills produced by 2nd defendant, but so far as these bills are concerned there is no pleading. Defendant No.2 nowhere stated that they raised bill towards DEPB 58 OS No.7234/2009 licenses. Ex.D.70 and 71 are letters issued by plaintiff in favour of 2nd defendant sending 5 DEPB licenses, but the purpose for which these documents issued has not been mentioned. Ex.D.72 is copy of bank statement. Ex.D.73 is statement issued by DGFT, Bengaluru.
31. The documents produced by defendants if perused carefully reveal that the defendants never stated that they received the suit DEPB licenses towards their commission of VKGUY scheme. It is not clarified as to what was the due of the plaintiff to them towards said scheme. As I already pointed out, there is no pleading in the written statement that the defendants received said licenses towards their commission under VKGUY scheme. The defendants clearly admits about receipt of suit amount by selling DEPB licenses belong to the plaintiff. There is no satisfactory evidence about authorization to the defendants to sell the DEPB licenses and appropriated the consideration amount. It is seen that the defendants have violated the agreement between 59 OS No.7234/2009 the parties and thus the plaintiff is entitled for the relief sought for.
32. A careful perusal of the evidence on hand reveal that the plaintiff has failed to establish collusion between defendants No.1 to 3 and defendant No.4 that he played fraud upon the plaintiff. It is there in the evidence that the plaintiff has not filed any complaint against defendant No.4 with allegation of fraud and he was not accused in the criminal case filed by the plaintiff. There is no evidence to show that the 4th defendant has played any fraud upon the plaintiff. Thus, the plaintiff failed to prove Issue No.5. Further, there is no nexus between the property of the defendants with the transactions, which was gifted by defendants No.3 and 5 in favour of defendant No.6. First of all, there is no written agreement between the parties. Therefore, the plaintiff has failed to prove that gift deed executed by defendants No.3 and 5 in respect of schedule property in favour of defendant No.6 is hit by Section 53 of the Transfer of Property Act. There is 60 OS No.7234/2009 no ground to declare the said gift deed as null and void or that same is not binding on the plaintiff. As I already indicated, there is no documents produced to show that there was any oral contract between the plaintiff and defendants No.1 to 3 to pay 20% of the incentive amount to defendants No.1 to 3, which was given by Government to Coffee Exporter under VKGUY scheme by way of service charges. The said allegation of the defendants has been denied and there is no document produced to prove the same and thus the defendants No.1 to 3 have failed to prove the Issue No.3. Thus, on the basis of appreciation of entire oral and documentary evidence, I came to the conclusion that the case put forth by the plaintiff is probable and there is no satisfactory evidence on the side of the defendants to disprove the case of the plaintiff. Thus, the defendants No.1 to 3 are liable to pay the suit amount to the plaintiff. In this case, the plaintiff claimed interest at the rate of 18% p.a. from the date of utilization of DEPB licenses, but considering the nature of transactions between the parties and there being no 61 OS No.7234/2009 written agreement or contract between the parties, I find that if the defendants are directed to pay interest at the rate of 12% p.a., the same would be just and proper. Thus, I have answered Issue Nos.1 and 2 partly in the affirmative, Issue Nos.3 and 4 in the negative and Issue No.5 in the affirmative.
33. ISSUE NO.6:- In view of my findings on the above said issues, I proceed to pass the following:
ORDER The suit of the plaintiff is decreed in part with costs.
The defendants No.1 to 3 are jointly and
severally liable to pay an amount of
Rs.88,89,018/- to the plaintiff with interest at
12% per annum from the date of suit, till the date of realization.
The suit of the plaintiff against defendants No.4 to 6 is dismissed.62 OS No.7234/2009
Draw decree accordingly.
(Dictated to the judgment writer directly on the computer, thereof, is corrected and then pronounced by me in the open court, on this the 23rd day of September 2019).
( KASANAPPA NAIK ) XLI ADDL.CITY CIVIL JUDGE BANGALORE 63 OS No.7234/2009 ANNEXURE I. List of witnesses examined on behalf of :
a) Plaintiff's side:
P.W.1 R.Kumara Ramaswamy
b) Defendants' side:
D.W.1 S.Ravi Kumar
D.W.2 Subhash Kedia
II. List of documents exhibited on behalf of :
a) Plaintiff's side:
Ex.P.1 General power of attorney dated
18.9.2010
Ex.P.2 to 8 7 Export incentive licenses along
with Annexures
Ex.P.9 Memorandum of deposit of title
deeds dated 1.6.2007
Ex.P.10 C/c of gift deed dated 24.12.2008
Ex.P.11 C/c of order sheet in
CC.38013/2010
Ex.P.12 C/c of FIR along with complaint
Ex.P.13 C/c of Charge sheet
64 OS No.7234/2009
Ex.P.14 C/c of PF submitted by police in
CC.38013/2010
Ex.P.15 C/c of FSL Report in
CC.38013/2010
Ex.P.16 to 19 4 Board resolutions authorizing PW1 to conduct the case
b) Defendants side :
Ex.D.1 Annexure B1
Ex.D.2 Copy of reply from defendant No.4
To notice issued by plaintiff dated
29.1.2008
Ex.D.3 Letter of authorization given to
DW1 by defendant No.4
Ex.D.4 List of DEPB Licenses for the year
2007-08
Ex.D.5 Original tax invoice No.30 given
by defendant No.1
Ex.D.6 Tax Invoice No.32 given by
defendant No.1
Ex.D.7 Tax Invoice No.37 given by
defendant No.1
Ex.D.8 Tax Invoice No.44 given by
defendant No.1
Ex.D.9 Original transfer letter given by
defendant No.1 dated 8.10.2007
65 OS No.7234/2009
Ex.D.10 Original transfer letter issued by plaintiff to defendant No.1 dated 6.10.2007 Ex.D.11 Original DEPB License No.0710053621 dated 1.10.2007 Ex.D.12 Transfer letter issued by defendant No.1 to defendant No.4 dated 8.10.2007 Ex.D.13 Transfer letter issued by plaintiff to defendant No.1 dated 6.10.2007 Ex.D.14 DEPB License No.0710053623 dated 1.10.2007 Ex.D.15 Office copy of letter given to the police Ex.D.16 Office copy of fax sent by defendant No.1 in favour of defendant No.4 along with DGFT notification Ex.D.17 Office copy of fax acknowledgment sent by defendant No.1 to defendant No.4 dated 8.12.2007 Ex.D.18 Origial DEPB License No.0710048402 dated 14.11.2006 Ex.D.19 Letter issued by plaintiff inf avur of defendant No.1 dated 21.11.2006 66 OS No.7234/2009 Ex.D.20 Letter issued by defendant No.1 to defendant No.4 dated 21.11.2006 Ex.D.21 Original letter issued by Office at the Joint Commissioner of Customs dated 6.5.2009 Ex.D.22 & 23 Two e-mail correspondences between plaintiff and defendants No.1 to 3 (Subject to filing of Certificate under Section 65B of Evidence Act) Ex.D.24 Bank letter Ex.D.25 to 69 45 Invoices Ex.D.70 Contract letter entered into between the plaintiff and defendant No.3 Ex.D.71 Another contract letter dated 11.9.2006 Ex.D.72 Statement issued by Vijaya Bank Ex.D.73 Statement issued by the Joint Director, General Foreign Trade ( KASANAPPA NAIK ) XLI ADDL.CITY CIVIL JUDGE BANGALORE 67 OS No.7234/2009