Delhi District Court
Dugar Overseas Private Limited vs Enetstudioz Inc on 4 November, 2024
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IN THE COURT OF MS. NEELAM SINGH
DISTRICT JUDGE (COMMERCIAL COURT-02)
SOUTH EAST, SAKET COURTS,
NEW DELHI
CS (COMM)-765/23
Dugar Overseas Private Limited
D-64, 2nd Floor, Kh. No 284/2,
Chattarpur Enclave,
Near 100 Fita Road,
New Delhi-110074 .....Plaintiff No.1
Noblex Creation Private Limited
4831/24, 2nd Floor,
Ansari Road, Daryaganj,
New Delhi - 110002 .....Plaintiff No. 2
Go Explore Private Limited
A-179/2, Andheria More,
M.G. Road Opposite Vasant Kunj Red Light,
New Delhi-110074 .....Plaintiff No. 3
And Blooms
A-179/2, Andheria More,
MG Road, New Delhi
South Delhi- 110074 .....Plaintiff No.4
VERSUS
Enetstudioz Inc.
Jujhar Tower, 59/16,
Guru Ravidas Marg,
New Delhi - 110019 .....Defendant No.1
Ankit Aggarwal
K37B, Kailash Colony,
New Delhi - 110048 .....Defendant No.2
Date of institution of the suit : 18.08.2023
Date on which judgment was reserved : 28.09.2024
Date of pronouncement of Judgment : 04.11.2024
JUDGMENT
CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 1 of 39
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1. Vide this judgment, I shall decide the present suit for recovery of principal amount of Rs. 47,02,377.55/- and Rs.10,33,093.97/- alongwith interest @ 10% per annum and declaration concerning the business relationship between the plaintiffs and the defendants as prayed in the prayer clause.
CASE OF THE PLAINTIFF 2.1 The subject matter of the present suit is a 'commercial dispute' as defined under Section 2(c)(ix), Section 2(c)(x), Section 2(c)(xi), and Section 2(c)(xviii) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. The present Suit has been filed seeking recovery of principal amount of Rs.47,02,377.55/- alongwith interest (including pendente lite interest, future interest) from the dates on which last invoices were issued by the Plaintiff No.1 1 and Plaintiff No. 2 respectively. The suit has also been filed seeking declarations regarding the contractual relationship between the Plaintiffs and the Defendants as the parties largely transacted on verbal arrangements/agreements. 2.2 The Plaintiff No. 1 is a company registered under the Companies Act, 1956 having registered office at D-64, 2nd Floor, Kh. No 284/2, Chattarpur Enclave, Near 100 Fita Road, New Delhi - 110074. The Directors of the Plaintiff No. 1 are Mr. Nagraj Dugar, Mr. Manoj Dugar and Mr. Sanjay Jain. The Plaintiff No. 1 is amongst India's front-running import, export, manufacturing, and marketing companies specializing in FMCG, International Foods, and Confectionery space. The CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 2 of 39 :3: Plaintiff No. 1 owns a few recognized brands such as Sapphire (chocolates and cookies), Blunt (energy drink) etc. The Plaintiff No.1 is also an exclusive importer/distributor of brands such as Ritter Sport (Germany), Tiffany Biscuits and Wafers (Dubai), Impact Mints (Germany), etc. 2.3 The Plaintiff No. 2 is Noblex Creation Private Limited, which is a company registered under The Companies Act, 1956 having registered office at 4831/24, 2nd Floor, Ansari Road, Daryaganj, New Delhi - 110002. The Directors of the Plaintiff No. 2 are Mr. Nagraj Dugar and Mrs. Shalini Dugar. Plaintiff No. 2 is in the trading business of FMCG goods since 1995 and deals in a variety of products both imported and manufactured in India.
2.4 The Plaintiff No. 3 is Go Explore Private Limited, which is a company registered under the Companies Act, 1956 having registered office at A-179/2, Andheria More, M.G. Road Opposite Vasant Kunj Red Light, New Delhi - 110074. The Directors of the Plaintiff No. 3 are Mrs. Shalini Dugar and Mr. Suraj Dugar. Plaintiff No. 3 is in the business of travel and travel reservations.
2.5 The Plaintiff No, 4 is ANDBlOOMS, which is a Partnership having office at D-64, 21d Floor, Kh. No 284/2, Chattarpur Enclave, Near 100 Fita Road,New Delhi - 110074. The Partners in Plaintiff No. 4 are Mrs. Shalini Dugar and Mr. Ayush Dugar. The Plaintiffs are companies/partnership being managed by Dugar family, which had a range of contractual understandings with the Defendants. The Plaintiffs have duly nominated and appointed Mr. Ayush Dugar as the authorised CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 3 of 39 :4: representative and signatory on behalf of all Plaintifis. 2.6 The Defendant No. 1 is Enetstudioz Inc. which is a Proprietorship situated at Jujhar Tower, 59/16, Guru Ravidas Marg, New Delhi - 110019 i.e. within the territorial jurisdiction of this Court. The precise constitution of the Defendant No. 1 is not known to the Plaintiffs, accordingly, the Plaintiffs have reserved the right to introduce/add or remove parties, if required, when the Defendants provides information about the same. The Defendant No. 2 is Mr. Ankit Aggarwal who is the proprietor of the Defendant No. 1 and resides at K37B, Kailash Colony, New Delhi -110048 i.e. within the territorial jurisdiction of this Court.
2.7 In the year 2019, Mrs. Shalini Dugar met the Defendant No. 2 through a business networking group. Considering the wide range of businesses being managed by Mrs. Dugar along with her family, the Defendant No. 2 proposed to enter into a business understanding where he would sell/resell/distribute the products of the Plaintiff No. 1 and Plaintiff No. 2 on e- commerce websites. In this regard, Plaintiff No. 1 and 2 were to sell/supply their FMCG products to the Defendants, which thereafter were resold/distributed by the Defendants on e- commerce websites such as Amazon. There were instances where Plaintiff No. 1 and 2 directly supplied the products to the Amazon warehouse on the Defendants' directions. Additionally, Mrs. Dugar and the Defendant No. 2 also decided to extend their business understanding to other ventures where Mrs. Dugar through her contacts secured business for the Defendant No. 2 in exchange for commission paid. Depending on the CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 4 of 39 :5: understanding, these commissions were paid either directly to Mrs. Dugar, or to the company/partnership of Mrs. Dugar such as Plaintiff No. 3 and 4. Furthermore, in extension of their business relationship invested an amount of Rs.4,51,000/- in the Defendant No. 2. However, Mrs. Dugar became a partner at Hydevest India alongside the Defendant No. 2. However, Mrs. Dugar later resigned from the Partnership. Mrs. Dugar's claim for refund of Rs.4,51,000/- has not been raised in the present suit. She had reserved her right to raise disputes in relation to and in connection with Hydewest India Partnership in a separate legal proceeding.
2.8 The parties were in a range of business understandings with customised modes of payment of consideration. In terms of the invoices raised, products delivered, and the amount finally realised from the Defendants, an amount of Rs.47,02,377.55/- remained due and payable to the Plaintiffs (particularly to Plaintiff No. 1 and Plaintiff No. 2). As and when the Defendants raised a Purchase Order, the Plaintiff No. 1 or Plaintiff No. 2, respectively delivered the ordered products either to the Defendants directly or to the Defendants' preferred location. In terms of the understanding, the Defendants were required to pay the invoiced amount upon delivery of the products as requested by the Defendants. The payments which were actually made by the Defendants were erratic lumpsum payments and were rarely correlated to any particular invoice. This is because the Plaintiffs had to regularly remind the Defendants about the amounts due and payable, which were then - after considerable delays - settled as lumpsum payments. Till date, the Plaintiffs CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 5 of 39 :6: No. 1 and 2 are yet to receive payment of Rs.47,02,377.55. Despite the Plaintiffs' regular follow-ups, an amount of Rs.47,02,377.55 still remains due and payable towards actual deliveries of the products. Defendants do not have any credible or legally tenable reason to withhold the payments of the Plaintiffs. As on date an amount of Rs.45,31,430/- (excluding interest) is due and payable to the Plaintiff No. 1 towards goods supplied, and an amount of Rs.1,70,947.14/- (excluding interest) is due and payable to the Plaintiff No. 2 towards goods supplied. 2.9 Accordingly, the Plaintiffs have claimed the aforementioned amounts with interest at 10% per annum. The interest has been calculated from the last invoices raised by the Plaintiff No. 1 and 2 respectively to the Defendants. The last invoice raised by the Plaintiff No. 1 to the Defendants was on 27 May 2021, therefore the amount of interest due till 27 July 2023 has been calculated to be Rs.9,81,809.83 for 26 months. Further, the last invoice raised by the Plaintiff No. 2 to the Defendants was on 23 July 2020, therefore the amount of interest due till the filing of the present Suit has been calculated to be Rs.51,284.14 for 36 months. The Plaintiffs have also sought a declaration that the parties to the Suit, including the Plaintiffs No. 3 and 4, and the Defendants were in a contractual business relationship. Plaintiffs No. 3 and 4 every now and then provided goods/services to the Defendants or the Defendants provided goods to the said Plaintiffs. Further, Mrs. Dugar also received commissions from the Defendants in exchange for connecting the Defendants to businesses which ultimately resulted in revenue for the Defendants. These commissions were CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 6 of 39 :7: either paid directly or on instances paid to the Plaintiff No. 3 and Plaintiff No. 4. The Respondents vide its legal notices (issued through their Counsels) dated 22 November 2022, 25 November 2022, and 26 November 2022, for the first time claimed that the amounts paid by the Defendants to the Plaintiff No. 3 and Plaintiff No. 4 were given as loans. The said statement is false and cannot be substantiated through any evidence. The parties to the Suit shared a wide range of contractual relationships, where the Plaintiffs supplied products/services to the Defendants (on instances) to be further resoled/distributed online. Accordingly, the Respondent regularly deposited payments to the Plaintiffs. Further, payments were also made in form of commissions, for conversion of business for the Defendants through the Plaintiffs' contacts. At no point did the Plaintiffs or Mrs. Dugar request for a loan from the Defendants. The onus to prove such a fact squarely lies on the Defendants. Accordingly, the Plaintiffs have prayed for a declaration from this Court that the relationship between the Plaintiffs No. 3 and 4 and the Defendants was contractual. The present suit of the Plaintiff is commercial in nature and is a commercial dispute within the meaning of Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 and subsequent amendments thereof.
2.10 No such similar proceeding on the cause of action disclosed in the present suit is pending before any other court in India. The Plaintiffs filed a Civil Suit numbered CS DJ 103 of 2023 before the learned District Court of Delhi (South Delhi) in CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 7 of 39 :8: relation to and in connection with the same cause of action which is subject matter of the present suit, However, considering the commercial nature of the disputes between the parties, the previous civil suit was withdrawn with liberty to file a fresh commercial suit in relation to and connection with the same cause of action. The learned Judge in CS DJ 103 of 2023 vide order dated 7 March 2023 recorded as under:
"During the course of the proceedings, ld. Counsel for the plaintiff prays for withdrawal of the present petition with liberty to file fresh petition as per law. The request is allowed and the suit is hereby disposed off as withdrawn with liberty to the plaintiff to file fresh suit on the case cause of action as per law. The original documents including the e-court fee receipt be returned to the plaintiff after retaining the certified copies of the same..."
2.11 In terms of the liberty granted, the Plaintiffs instituted CS (Comm) 200 of 2023, which on 21 April 2023 was withdrawn with liberty to file it afresh after invoking the provisions of Section 12A of Commercial Courts Act. In this regard, a pre- litigation mediation under Section 12A of Commercial Courts Act was instituted before the South Delhi Legal Services Authority on 18 May 2023, and on 22 July 2023, the said authority issued the non-starter report. Hence, the present suit has been filed by the Plaintiffs.
CASE OF THE DEFENDANTS 3.1 Written Statement was filed on behalf of Defendants. It has been stated in the Written statement that Defendant No. 1 is engaged in the business of e-commerce and retail since April 2000. Defendant No.1 provides active supply chain distribution of various verticals such as Consumer Electronics, Fast Moving CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 8 of 39 :9: Consumer Goods (FMCG), Gourmet Grocery, IT& Mobility, marketing and support services that include advertising, design and web solutions for businesses that engage in retail distribution services including on e-commerce websites such as Amazon and Flipkart. Defendant No. 1 is also one of the top vendors for Amazon India and its related subsidiaries. 3.2 The Defendants denied all the averments made by the Plaintiffs in the present suit and stated them to be false and incorrect. It has been stated that a scrutiny of the averments in the plaint read in conjunction with the documents relied upon demonstrate that the claims of the Plaintiffs are manifestly vexatious and without any merit.
3.3 The Defendants have stated that the Plaintiffs' claims are based on a vague averment that there existed a "range of business understandings with customised modes of payment of consideration" between the Plaintiffs and the Defendants. The Plaintiffs have placed no pleadings or documents to demonstrate the aforesaid range of business understandings. Specifically, the Plaintiffs have not demonstrated by way of any material to substantiate the claim that there existed any "customized modes of payment consideration" exclusively between the parties. 3.4 The Defendants have further stated that the Plaintiffs have concealed the true nature of relationship between the parties and rather, it is the Plaintiffs who owe the Defendants Rs.1,19,29,130/- on account of unpaid invoices, short-term liquidity loans and advances, including sums spent on discharging the financial obligations of the Plaintiffs. 3.5 The Plaintiff No.2 has not placed on record any purchase CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 9 of 39 : 10 : orders corresponding to the invoices produced by them with respect to the alleged transactions Defendant and Plaintiff No. 2. The Defendants have therefore denied the invoices as false. Defendants have claimed that the Plaintiffs have raised bogus claims unsupported by facts like date of alleged transactions, terms of repayment etc. The Defendants have submitted that the Plaintiffs have baldly placed self-serving invoices that do not even measure up to their own claims. They have produced no material to substantiate their own claims by producing their Books of Account, Ledgers, Bank Statements, or any other document to support their averment that invoices amounting to Rs.45,31,430/- remain due to Plaintiff No.1 and invoices amounting to Rs.21,70,947.14 remain due to Plaintiff No. 2. Furthermore, the Plaintiffs have also not produced ITR returns/GST payment receipts to demonstrate that they have actually raised invoices to the tune that they are claiming. 3.6 The Defendants have submitted that declaration sought by Plaintiffs No.3 and 4 has been sought without any material on record to demonstrate that the relationship between Plaintiffs No. 3 and 4 and the Defendants was based on agreement to pay commissions. It has been stated that the Plaintiffs' claims are further belied by the fact that the amount they claim as commissions are larger than the gross profit margins on the products sold by both the Plaintiffs or the Defendants. 3.7 Defendants have alleged that suit is not maintainable on ground of misjoinder of parties and causes of action as Plaintiff No. 1 to Plaintiff no.4 are distinct entities and Plaintiffs cannot institute a single suit making a consolidated claim when the CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 10 of 39 : 11 : causes of action are independent and different. 3.8 The Defendants have claimed that the relief sought by the Plaintiffs do not arise out of the same act, transaction, or series of transactions. The Defendants engaged in separate transactions with Plaintiff No. 1 to 4 in their individual capacity. The terms of the transactions between Plaintiff No. 1 to 4 were distinct. The Defendant settled his accounts with Plaintiff No. 1 to 4 distinctly. The supply made by one Plaintiff had no concern with the supply made by another Plaintiff to the Defendants. The claims made by Plaintiffs No.1 and 2 are based on distinct facts. Plaintiff No.1 deals in FMCG goods with different pricing, unit prices, inventory costs, shipping rates, promotions, and marketing cost. Whereas Plaintiff No.2 dealt in basic medical supplies with their own regulatory regime, unit prices, inventory costs, shipping rates, promotions etc. The relief sought by Plaintiffs No.3 and 4 are not even based an agreement to sell goods and deliver services and hence cannot possibly be based on a common set of facts or law.
3.9 The Defendants have stated that the Plaintiffs are guilty of concealment, suppression and misrepresentation, hence are not entitled to any equitable relief and the entire plaint is misconceived. No dues are owed towards the Plaintiffs and the present suit has been filed as a Counterblast to five legal notices issued by the Defendants to the Plaintiff No. 3 and Plaintiff No.4 dated 25.11.2022 and 26.11.2022 seeking recovery of money owed by them to the Plaintiff on account of unpaid invoices, short term liquidity loans and advances. 3.10 The Defendants have alleged that the entire factual matrix CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 11 of 39 : 12 : put forward by the Plaintiffs of their business relationships and transactions with the Defendant is riddled with falsehoods and concealments in order to obscure their own monetary liability towards the Defendants. The real factual matrix elaborating the relationship between the parties is as follows:
a) Defendant No. 2 joined the BNI Go Givers chapter as a new member in January 2018. The BNI Go Givers Chapter is a business networking group which follows the philosophy of Givers Gain' thereby stipulating through its membership rules and policies that there will be no charges, commission or fee for the business referral shared or exchanges among members. It is pertinent to note that at the time of Defendant No. 2's membership in the BNI Go Givers chapter, Mrs. Shalini Dugar was already an existing member well versed with BNI membership rules and policies. At the time of Defendant No. 2's membership, Mrs. Shalini Duggar was representing Plaintiff No. 3, Go Explore Private Limited as a travel agent. In late 2019, Mrs. Shalini Duggar entered the florist category representing Plaintiff No. 4.
b) In the course of their acquaintance, from April 2018 onwards, the relationship between Mrs. Shalini Dugar and Defendant No.2 became an intimate personal relationship. Mrs. Shalini Duggar communicated to Defendant No. 2 that she was unhappy within her marriage and faced financial difficulties on account of an strained relationship with her husband. Defendant No.2 and Mrs. Shalini Duggar often went on personal and intimate trips to luxury hotels in Goa and Gurgaon, where they went for lunches, dinners and stayed together in hotel rooms and CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 12 of 39 : 13 : established a sexual relationship.
c) Mrs. Shalini Dugar communicated to Defendant No.2 that her family was not supporting and funding her business ventures and on account of their intimate relationship she solicited his support and financial assistance.
3.11 The Defendants have further submitted that in the course of their acquaintance, it was Mrs. Shalini Dugar, the wife of Manoj Dugar, Director of Plaintiff No. 1 who approached Defendant No. 2 on account of his extensive corporate business networks particularly in e-commerce distribution on websites such as Amazon India and introduced her husband, Mr. Manoj Dugar, the Director of Plaintiff No. 1 to Defendant No. 2. Thereafter, Plaintiff No. 1 purchased a range of services against consideration to the Defendants, a majority of which remained unpaid. That Mrs. Shalini Dugar solicited the assistance of Defendant No. 2 in the retail distribution of products belonging to Plaintiff No. 1. The Plaintiffs communicated to the Defendants that they intended to sell the products owned and imported by them on e-commerce websites. However, because of having no expertise in the field of ecommerce distribution, they faced impediments in autonomously expanding their business on e-commerce websites. Therefore, Mrs. Shalini Dugar and the Plaintiffs communicated to Defendants that they wished to engage services of Defendants in order to sell their products on e-comerce websites like Amazon.
3.12 The Defendants have submitted that Plaintiff No. I thereafter availed a range of services offered by them such as CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 13 of 39 : 14 : marketing; advertising; branding; product and industrial design; particularly for the range of FMCG products imported by Plaintiff No. 1. Between 10.03.2018 and 23.09.2020, Plaintiff No.1 purchased goods and services worth Rs.81,95,967/- from the Defendants. Despite repeated reminders, Plaintiff No. 1 has failed to clear all invoices and balance amount of Rs.17,87,576/- remains due to the Defendants. The Defendants have reserved their right to file appropriate proceedings in accordance with law for the recovery of the same.
3.13 The Defendants have submitted that from March 2019 onwards, Plaintiff No. 1 began selling his products being Fast Moving Consumer Goods like chocolates and non-alcoholic drinks to the Defendants, who would resell/distribute them to online sellers like Cloudtail India. These online sellers would thereafter sell Plaintiff No. 1's products to the end-consumer. Plaintiff No. 1 raised invoices for the products sold to the Defendants and the same were paid either directly through bank transfers or were adjusted through Debit Notes that were issued by the Defendants for promotional offers, discounts and price adjustments on those products. As such, there is no amount that is due towards Plaintiff No.1. Rather it is Plaintiff No.1 who owes the Defendant a sum of Rs.17,87,576/- on account of unpaid invoices for goods supplied and services rendered by the Defendants.
3.14 The Defendants have alleged that the falsity of the Plaintiff's claims is evident from a perusal of Certificate dated 26.07.2023 allegedly issued by the Plaintiff's Chartered Accountant. The above stated document claims that CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 14 of 39 : 15 : Rs.20,18,604.96/- is owed to the Plaintiff No. 1 by the Defendants on account of Trade Receivables and Rs.25,12,825.45/- on account of Short-Term Loans and Advances- Advances to suppliers/ service providers. Even this false, vexatious, and self-serving document placed on record by the Plaintiffs themselves is contrary to the claim made by the Plaintiffs in the present suit where they have alleged that Rs.45,31,430 (excluding interest) is owed by the Defendants to Plaintiff No. 1 on account of unpaid invoices. The Plaint is completely silent on any dues owed to the Plaintiff on account of unpaid loans and cash advances, as there exists none. The incongruity and contradictions between Certificate dated 26.07.2023 allegedly issued by the Plaintiff's Chartered Accountant and the Suit filed by the Plaintiff reveals the falsity and factiousness of claim raised through present suit. 3.15 Defendants have submitted that during the COVID-19 Pandemic, Plaintiff No. 2 through Mrs. Shalini Dugar and Mr. Manoj Dugar communicated to the Defendants that they wished to expand their business to retailing basic medical products, specifically thermometers, N-95 masks, etc. on online marketplaces such as Amazon. They stated that on account of COVID-19, all their other businesses had been adversely affected and this venture stood as their sole beneficial prospect at the time. From April 2020, Defendant No.1 purchased products such as thermometers, N-95 Masks and other medical items from Plaintiff in order to resell/distribute them consequently sold Plaintiff No. 2's products to the end- consumers online.
CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 15 of 39 : 16 :3.16 The Plaintiff No.2 raised invoices for the products that they sold to the Defendants and the same were paid either directly through bank transfers or so adjusted on account of Debit Notes that were issued by the Defendants to discounting and price adjustments on those products. As such, there is no amount that is due to Plaintiff' No.2. Rather it is Plaintiff No.2 who owes the Defendant a sum of Rs.3,87,941.69/-. The Defendants have reserved their right to file appropriate proceedings in accordance with law for the recovery of the same.
3.17 The Defendants have submitted that Plaintiff No.3 engaged the Defendant for the purchase of Gourmet Grocery goods to be supplied to them. On 03.09.2018, Plaintiff No.3 made an initial purchase of goods worth Rs. 29,500. The invoice for the same was cleared on 06.09.2018. Thereafter, around in August 2020, Plaintiff no. 3 and Mrs. Shalini Dugar entered into a business arrangement, wherein he assisted her in setting up a seller account for the sale of Gourmet Grocery goods on Amazon. The same was set up in August 2020, with the assistance of the Defendants.
3.18 The Defendants have submitted that Plaintiff No. 3 consistently failed to honour invoices raised by the Defendants for goods supplied to Plaintiff No. 3, leading to substantial outstanding debts, amounting to Rs. 5,24,795/-. Despite repeated requests, Plaintiff No. 3 failed to make any payment against the said Invoices. After various failed attempts, including bona fide attempts to personally contact Mrs. Shalini Dugar, the Defendants were forced to send Plaintiff No. 3 and CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 16 of 39 : 17 : its Partners- Mrs. Shalini Dugar and Mr. Suraj Dugar a Legal Notice dated 26.11.2022 calling upon Plaintiffs to make the outstanding payment of Rs.5,24,795/-.
3.19 The Defendants have submitted that through the course of their various business transactions, Mrs. Shalini Dugar through Plaintiff No. 3 made several requests for loans and advances from the Defendants. A total amount of Rs.77,23,223/- was advanced by the Defendants to Plaintiff No. 3 as short-term liquidity loans and sums paid to fulfill Plaintiff No.3's financial obligations/operational costs. Plaintiff No. 3 has only repaid Rs.48,20,643/- and a sum of Rs.29,02,580/- remains due to the Defendants. Defendants have reserved their right to file appropriate proceedings in accordance with law for the recovery of the same.
3.20 The Defendants have submitted that in December 2018, Mrs. Shalini Dugar sought financial assistance from Defendant No. 2 in the form of short-term liquidity loans and cash advances in order to invest the same in her business ventures. She explicitly promised the Defendants that the same would be returned with interest. On 31.12.2018, the Defendant advanced a loan of Rs.20,00,000/- to the bank account of Mrs. Shalini Dugar. Despite multiple reminders, Mrs. Shalini Dugar has only repaid an amount of Rs.10,00,000/- on 21.03.2020 and a balance of Rs.10,00,000/- is owed by her to the Defendants. The Defendants shall prefer an appropriate legal proceeding for recovery of the same.
3.21 The Defendants have submitted that Mrs. Shalini Dugar also requested the Defendant to register a new business venture CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 17 of 39 : 18 : that could be used by her to fund her own businesses. To that end, the Defendant registered HYDEWEST CORP as a sole proprietorship that was exclusively funded by him for the purpose of financing Mrs. Dugar's business ventures. The Defendants reserved the right to prefer an appropriate legal proceeding to recover unpaid dues of Rs.39,13,752/-. 3.22 The Defendants have submitted that through 2019, Plaintiff No. 4 through Mrs. Shalini Dugar requested several loan amounts and advances to the tune of Rs.7,75,000/- out of which only a sum of Rs.1,50,000/- was ever repaid to the Defendants. Despite numerous requests to Plaintiff No. 4 and Mrs. Shalini Dugar to clear the outstanding due of Rs.6,25,000/-, the same remains unpaid till date. After various failed attempts, including bona fide attempts to personally contact Mrs. Shalini Dugar, the Defendants were forced to send Plaintiff No. 4 and its Partners- Mrs. Shalini Dugar and Mr. Ayush Dugar a Legal Notice dated 25.11.2022 calling upon the Plaintiffs to clear the outstanding Rs.6,25,000/-. 3.23 The Defendants have also submitted that Mrs. Shalini Dugar induced the Defendant No.2 to make purchases on behalf of Defendant No.4 under the explicit understanding that all payments shall be reimbursed but failed to do so and owe a sum of Rs.7,87,486/- to the Defendants and it was only receipt of five Legal Notices dated 25.11.2022 and 26.11.2022 that the Plaintiffs have filed this suit as an afterthought. It has been submitted that the pleadings in the Suit herein demonstrate that the Plaintiffs have provided absolutely no information about the businesses that were allegedly referred by them nor is there any CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 18 of 39 : 19 : information or document in the nature of an Invoice or a purchase order or a bill with respect to alleged commissions paid to them.
3.24 Defendants have alleged that assuming but not admitting the same, , even if it be assumed that the loan amounts advanced by the Defendants to the Plaintiff are in the nature of Commissions, the following facts completely belie this position:
a) The amounts claimed as commission are without reference to any business/ product or service that has been referred to the Defendants by the Plaintiffs.
b) There is no documentary record in the form of invoices that were raised by the Plaintiffs for these alleged Commission.
c) The alleged Commissions are subject to the GST tax regime for which also, the Plaintiffs have produced no documentary record to substantiate the claim that the same were received as commissions. Specifically, the Plaintiffs appear to have furnished no record of paying no GST, State or Central on receipt of the alleged Commissions.
d) The documentary record relied upon by the Plaintiff themselves only demonstrates the existence of dealing in FMCG products that were provided by the Plaintiff to the Defendants which he would distribute/resell to online sellers who would in turn sell them on e-commerce websites like Amazon.The Defendants would earn a profit on the basis of minimal distribution margins. Hence, on the basis of the only existing business in FMCG products produced by the Plaintiffs, the amounts claimed are grossly disproportionate to the sales made and the profits earned by the parties.CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 19 of 39 : 20 :
3.25 In view of all these submissions and objections as detailed above, the Defendants have denied all the submissions made in the plaint and have prayed for dismissal of the suit. Rather, the Defendants have stated that they settled all amounts either through bank transfers or through Debit Notes. Furthermore, the fact that a flexible payment schedule was a mutually agreed upon term between the Plaintiffs and the Defendants is evinced from the fact that the Plaintiffs continued to supply goods to the Defendants even though bills and invoices raised by them periodically and not after every purchase were paid/settled.
4. Detailed replication has been filed on behalf of the Plaintiffs, where they have reiterated the submissions made in the plaint and have denied the submissions made in the Written Statement of the Defendants.
5. Vide order dated 10.05.2024, Admission/Denial of documents was concluded and on the pleadings of the parties, following issues were framed :-
i. Whether the suit of the plaintiff is not maintainable in the present form and as per the mandate of Commercial Courts Act, 2015? OPD ii. Whether there is no cause of action disclosed in the present suit in favour of the plaintiff and against the defendant? OPD iii. Whether the plaintiff has concealed material facts relating to the trading relations between the parties and has not approached the Court with clean hands? OPD iv. Whether the plaintiff has not placed on record relevant purchase order corresponding to the invoices and debit CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 20 of 39 : 21 : notes andaccordingly the suit of the plaintiff is not maintainable? OPD v. Whether the suit of the plaintiff is entitled for a decree of Rs.45,31,430/- in favour of plaintiff no. 1 and Rs. 1,70,947.14/- in favour of plaintiff no. 2 and against the defendant? OPP vi. Whether the plaintiff is entitled for any interest on the decretal amount pendente lite and in future, if yes, then at what rate? OPP vii. Whether the plaintiff is also entitled to cost of the suit?
OPP viii. Relief.
Thereafter, the matter was referred to learned Local Commissioner who submitted her report after conclusion of recording of evidence.
6. Plaintiffs have examined one witness i.e. PW-1 Shri Ayush Dugar who has tendered his evidence by way of affidavit Ex. PW-1/A and has relied upon the following documents: -
i. Copy of the extract of Board Resolution issued by Plaintiff No. 1 in favor of AR as Ex. PW-1/1.
ii. Copy of the extract of Board Resolution dated 03.05.2023 issued by Plaintiff No.2 in favor of AR as Ex. PW-1/2. iii. Copy of the extract of Board Resolution dated 03.05.2023 issued by Plaintiff No.3 in favor of AR as Ex. PW-1/3. iv. Copy of Authorisation letter dated 03.05.2023 issued by Plaintiff No.4 in favor of AR as Ex. PW-1/4.
v. Copy of Certificate of Incorporation of Plaintiff No.1 as Ex. PW-1/5.
vi. Copy of Certificate of Incorporation of Plaintiff No 2 as Ex. PW-1/6.
vii. Copy of Certificate of Incorporation of Plaintiff No.3 as CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 21 of 39 : 22 : Ex. PW-1/7.
viii. Copy of GST Registration Certificate of Plaintiff No.4 read with affidavit under Order X1 Rule 6 of Commercial Courts Act shown as Ex. PW-1/8.
ix. Copies of Plaintiff No. l's invoices along with Purchase Orders raised by Defendants (Page No. 47 to 136) as Ex. PW-1/9.
x. Copies of Plaintiff No. 2's invoices along with Purchase Orders raised by Defendants. (Page No.137 to 148) as Ex. PW-1/10 (Colly.) xi. Copy of Notices issued on behalf of Defendants to Plaintiff No.3 and 4 and their Directors/Partners, (Page No.149 to 160) as Ex. PW-1/11.
xii. Copy of Legal Notice dated 14" January 2023 issued on behalf of the Plaintiffs to the Defendants. (Page No.161 to 164) as Ex. PW-1/12.
xiii. Copy of Certificate issued by the Chartered Accountant certifying the amount due and payable by the Defendant's to the Plaintiff No.1 as Ex. PW-1/13.
xiv. Copy of Certificate issued by the Chartered Accountant certifying the amount due and payable by the Defendant's to the Plaintiff No.2 as Ex. PW-/14.
xv. Copy of Pre-Litigation Mediation form submitted before DLSA as Ex. PW-1/15.
xvi. Copy of Original Non- Starter report dated 06h July 2023 as Ex. PW-1/16.
He was cross examined by learned Counsel for Defendants. The relevant portion of his cross examination is reproduced herein under:
Q 44. Shown Ex PW-1/13 and question and answer of Q. 42. I put it to you that even alleged CA certificate only accounts for Trade receivables for Rs.20,18,604.96/- only. What do you have to say?
Ans. In addition to the amount of Rs.20,18,604.96/- there is also an amount of Rs. 25,12,825.45/- pertaining to advances paid to defendant. Q 45. Reference answer to Q 44. Are you seeking recovery of alleged advances paid, quantified and allegedly certified by the CA in this case? Ans. Yes.
Q 46. Can you identify the relevant pleadings or deposition pertaining to recovery of alleged advance paid from the Plaint or Evidence Affidavit I don't know.CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 22 of 39 : 23 :
047. Shown para 25 of the Evidence Affidavit A deposition has been made in respect of "debit notes were adjusted in the invoice amounts raised by the plaintiffs". Can you show such specific adjustment and quantification thereof in the calculation of recoverable amount under the present suit?
Ans. The business between the defendant (s) and Plaintiff No. I was in excess of Rs. 5 Crores over a period of 3- 4 years. There were a lot of debit notes raised and adjusted in this period. After which the final adjusted and payable amount for the defendant (s) is as claimed in the suit. There were lot of transactions. Q 51. You are seeking a declaration "that the relationship between the plaintiffs (including its directors and partners) and the defendant(s) was contractual" without filing any foundational, transactional and commercial or communication exchange on behalf of Plaintiff No.3 & 4. What do you have to say? Ans. The business understanding between the defendant (s) and the plaintiffs started from a business networking group namely "BNI". This business networking group is an International body that helps independent business owners network, foster business through the help of networking and referrals. This business understanding started between Plaintiff 3 & 4 from BNI, and led to introductions of Plaintiff 1 & 2 being passed as referrals to the defendant (s). This introduction led to the defendant(s) getting business through the sale of the products of the Plaintiff 1 & 2. The understanding was established as Plaintiff 1 & 2 delivered goods and subsequent business transactions took place. With respect to Plaintiff 3 & 4 the transactions that were made were commissions that were passed on as benefit for introductions made. The Plaintiffs No. 3 & 4 have been included in the suit as a clarification to the Legal Notices sent by the defendant(s)".
Thereafter, Plaintiffs Evidence was closed on the statement of learned Counsel for the Plaintiff.
7. The Defendants have examined one witness i.e. DW-1 Shri Ankit Agarwal who relied upon evidence by way of affidavit Ex. DW-1/A and has relied upon Copy of Debit notes issued by Defendant No. 1 to the plaintiff between August 2019 and September 2021 as Ex. DW-1/1. He was cross examined by learned Counsel for Plaintiffs. The relevant portion of his cross examination is reproduced herein under:
"Q 33. The defendants through its legal counsel issued Legal Notices dated 26.11.2022, 26.11.2022, 22.11.2022 and 26.11.2022 exhibit PW- 1/11 (Colly) from Pg. 149 to 160 seeking recovery of certain amounts 25.11.2022, allegedly owed to the defendants. Did you take any legal action to seek recovery of these alleged due amounts?
Ans. I do not wish to answer.
Q34. I put it to you that the alleged dues mentioned in EX PW-1/11 (colly) seeing to be for a period between December 2018 and March 2021. Have you CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 23 of 39 : 24 : taken any steps for recovery of such alleged amounts between March 2021 and now?
Ans. The legal notice itself is an answer.
Q35. I put it to you that in your legal notices EX PW-1/11 (colly) you did not claim recovery of the amounts allegedly due towards debit notes and rather you did not even mention such debit notes. What do you have to say? Ans. These legal notices are for Plaintiffs 3 and 4 who are not even seeking anything out of the suit instituted by you.
Q36. Assuming that there are certain debit notes which remain due payable, have you taken any legal action such as filing your own suit for recovery of these amounts?
Ans. We will take appropriate action.
Q42. I draw your attention to para 5 of your Evidence Affidavit EX DW-1/A and para 7 of written statement where you have alleged that certain payments are payable from the plaintiffs to the defendants. Considering these are your allegation have you placed on record any document to substantiate these calculations?
Ans. No, we reserve our rights to file appropriate proceedings in accordance with law for recovery of the same.
Q43. In you legal notices EX PW-1/11 (colly), written statement you have alleged that there were certain loans extended by the defendants in response to which at para 4 of the legal notice/reply EX PW-1/12 it is clearly mentioned that payments if any from the defendants were in form of commissions and not loans. Accordingly, plaintiffs 3 & 4 have filed the present suit for payments if any were commissions and not loans. Have you placed on record any document to substantiate the allegation made in your legal notices EX PW- 1/11(colly) that certain payments were loans in you legal notices? Ans. No, this is your suit and no document have been placed on record to substantiate the allegation and you have failed to provide any document but not limited to contract, invoice, GST filing report, TDS or any such information to prove the false allegation of commissions.
051. In response to Q40 you said "I cannot recall the exact amount but I can provide at a later date. Accordingly. I ask you again what was the volume of business given by plaintiffs no. 1 & 2 to the defendants? Ans. I had no opportunity to go through the accounts, records. I will answer at a later date and time.
Q52. I put it to you that in financial year 2019-2020, the defendants had purchased goods worth INR 1,09,67,340.86/- from the plaintiff no.1. What do you have to say?
Ans. It is not a part of court record.
Q53. Witness confronted with Pg No. 816 to 823 of the documents filed along with the replication. This is the ledger account statement for financial year 19-
20. After looking at this document can you please confirm the total trade between plaintiff no.1 and defendants in the said financial year?(Objection by Defendants Counsel: The plaintiffs despite being conscious of the court record and order dated 10.05.2024. The question is being asked from the irrelevant documents which are not part of court record as such and there is no confrontation and no contradiction. This is a irrelevant question. Ans: This is not part of court record and I don't remember seeing them in court CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 24 of 39 : 25 : file before".
Thereafter, Defendant's evidence was closed and the matter was fixed for final arguments on 19.09.2024.
8. Final arguments heard. Record perused carefully. I have gone through the testimony of the plaintiff's witness and on the basis of documents, pleadings and testimony of witnesses, my issue wise findings are as follows:
Issue No.1: Whether the suit of the plaintiff is not maintainable in the present form and as per the mandate of Commercial Courts Act, 2015?
The onus to prove this issue was on the Defendants. In the present case, the plaint has been filed alongwith a memo of parties, list of documents, statement of truth and Affidavit under Order XI Rule 6 CPC. The plaint also contains a recital that suit of the Plaintiff is commercial in nature and is a commercial dispute within the meaning of Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 and subsequent amendments thereof and covered under Section 2(c)(ix), Section 2(c)(x), Section 2(c)(xi), and Section 2(c)(xviii) of the Act. Plaintiffs have claimed that Plaintiff No. 1 and 2 were to sell/supply their FMCG products to the Defendants, which thereafter were resold/distributed by the Defendants on e-commerce websites such as Amazon. There were instances where Plaintiff No. 1 and 2 directly supplied the products to the Amazon warehouse on the Defendants' directions. Additionally, Mrs. Dugar and the Defendant No. 2 also decided to extend their business understanding to other ventures where Mrs. Dugar through her contacts secured CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 25 of 39 : 26 : business for the Defendant No. 2 in exchange for commission paid. Depending on the understanding, these commissions were paid either directly to Mrs. Shalini Dugar, or to the company/partnership of Mrs. Shalini Dugar such as Plaintiff No. 3 and 4.
The Defendants have denied the submissions made by the Plaintiffs about the relationship between them and the Plaintiffs and have stated that rather the relationship between Defendants and Plaintiffs was that of lender and borrower. However, in the same breath, the Defendants have submitted that from April 2020, Defendant No.1 purchased products such as thermometers, N-95 Masks and other medical items from Plaintiff in order to resell/distribute them consequently sold Plaintiff No. 2's products to the end-consumers online. The Plaintiff No.2 raised invoices for the products that they sold to the Defendants and the same were paid either directly through bank transfers or so adjusted on account of Debit Notes that were issued by the Defendants to discounting and price adjustments on those products. As such, there is no amount that is due to Plaintiff No.2. No question was put to PW-1 that the dispute between the parties was not commercial. As regards the objection of the Defendants that plaintiff no. 4 is an unregistered firm, the whole plaint has been perused along with cross examination of PW-1. Plaintiff no.4 has not raised any claim against the Defendants and therefore, bar of Section 69 of Partnership Act in filing the suit will not apply to the maintainability of the present suit. In his cross examination, PW-1 has also specifically stated that no recovery of money for CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 26 of 39 : 27 : and on behalf of plaintiff no.3 or 4 has been sought. Therefore, the Defendants have failed to discharge their onus. The issue no. 1 is therefore, decided against the Defendants and in favour of the Plaintiffs and it is held that the suit of the plaintiff is maintainable in the present form and as per the mandate of Commercial Courts Act, 2015.
Issue No.2: Whether there is no cause of action disclosed in the present suit in favour of the plaintiff and against the defendant?
The onus to prove this issue was on the Defendants. Learned Counsel for Defendants have contended that there is no cause of action in the present suit. However, determining whether a cause of action exists is critical to the plaintiff's ability to bring forth a legitimate claim. A cause of action consists of the legal right of the Plaintiffs, the corresponding legal duty of the Defendants and a breach of such legal duty resulting in injury or damage to the Plaintiffs. As detailed in the findings in regard to issue no.1, the Defendants have admitted about the commercial transactions between them and the Plaintiffs. Defendants have submitted that Defendant No.1 purchased products such as thermometers, N-95 Masks and other medical items from Plaintiffs in order to resell/distribute them consequently sold Plaintiff No. 2's products to the end- consumers online. The Plaintiff No.2 raised invoices for the products that they sold to the Defendants and the same were paid either directly through bank transfers or so adjusted on account of Debit Notes that were issued by the Defendants to CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 27 of 39 : 28 : discounting and price adjustments on those products. The submissions of the Defendants that they had made the payment against the raised invoices have been disputed by the Plaintiffs. Therefore, in the present case, the cause of action for the Plaintiffs arose from the non- payment of dues by the Defendants as detailed in the plaint. The Plaintiffs have claimed the dues against the Defendants based on invoices and on the certificates issued by their Chartered Accountant. The Plaintiffs claim that the Defendants, failed to fulfil their payment obligations despite the delivery of goods as per their contractual agreement. The contractual relationship between the parties is evidenced by the invoices but the Defendants did not make the due payments. This failure to pay constitutes a breach of the legal duty under the contract, giving rise to the Plaintiffs' cause of action.
Further, the Plaintiffs made several requests and demands for payment, which were not honoured by the Defendants. Defendants continued to default on the payment, which perpetuated the cause of action. The Plaintiff's initiation of pre- institution mediation on 06.05.2023, which did not result in a settlement, further solidifies the Plaintiffs' cause of action. The issuance of the Non-Settlement Report (NSR) dated 06.07.2023 confirmed the failure to resolve the dispute through Mediation, thereby necessitating the filing of the suit. Considering the facts, the contractual obligations, the breach by the Defendants, and the failed mediation attempts, it is evident that a valid cause of action exists in the present suit. The Defendants' argument that there is no cause of action fails to acknowledge these critical CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 28 of 39 : 29 : elements. Therefore, Issue No. 2 is decided against the Defendants and in favor of the Plaintiffs and it is held that plaint discloses cause of action in favour of the Plaintiffs and against the Defendants.
Issue No.3 : Whether the plaintiff has concealed material facts relating to the trading relations between the parties and has not approached the Court with clean hands?
The onus to prove this issue was on the Defendants. The Defendants have denied the claims made by the Plaintiffs in the present suit. However, it is noticed that though in the Written Statement, the Defendants have repeatedly stated that the Plaintiffs have concealed material facts relating to the trading relationships between the Defendants and the Plaintiffs, but no such question was put to PW-1 so as to disclose or reveal the facts or document which could bring to light any alleged concealment on part of the Plaintiffs. The questions which were put to PW-1 were also put on the merits of the case. In the Written Statements also, the Defendants have repeatedly submitted that they have reserved their right to file appropriate proceedings in accordance with law for the recovery of the same. Filing of Debit Notes by the Defendants in absence of raising any counterclaim or claiming any set off against the Debit Notes is inconsequential. Therefore, the Defendants have failed to discharge their onus in respect of issue no. 3. Therefore, Issue No. 3 is decided against the Defendants and in favor of the Plaintiffs and it is held that the Plaintiffs have not concealed material facts relating to the trading relations between CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 29 of 39 : 30 : the parties and have approached the Court with clean hands.
Issue No.4 :Whether the plaintiff has not placed on record relevant purchase order corresponding to the invoices and debit notes and accordingly the suit of the plaintiff is not maintainable?
The onus to prove this issue was on the Defendants. Non filing of the relevant purchase orders corresponding to the invoices is not fatal to the claims raised by the Plaintiffs. No question was put to PW-1 as to whether PW-1 can produce Purchase Orders. Rather, it is noticed that PW-1 has tendered many invoices alongwith their purchase orders as well. As regards the Debit Notes, it has already been observed that filing of Debit Notes by the Defendants in absence of raising any Counterclaim or claiming any set off against the Debit Notes is inconsequential. Otherwise also, an application under Order XI Rule 1 (10) CPC was also filed on behalf of the Plaintiffs for filing additional documents on record and Purchase Orders were also the documents which were proposed to be taken on record. Therefore, the Defendants have failed to discharge their onus in respect of Issue No. 4. Therefore, Issue No. 4 is decided against the Defendants and in favor of the Plaintiffs and it is held that even if the Plaintiffs have not placed on record relevant Purchase Orders corresponding to the (some) invoices and debit notes, the suit of the Plaintiff is maintainable.
Issue No.5 : Whether the suit of the plaintiff is entitled for a decree of Rs.45,31,430/- in favour of plaintiff no. 1 and Rs. 1,70,947.14/- in favour of plaintiff no. 2 and against the CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 30 of 39 : 31 : defendant?
The onus to prove this issue was on the Plaintiffs. Plaintiffs have submitted that in the year 2019, Mrs. Shalini Dugar met the Defendant No. 2 through a business networking group and Defendant No. 2 proposed to enter into a business understanding where he would sell/resell/distribute the products of the Plaintiff No. 1 and Plaintiff No. 2 on e-commerce websites. Plaintiff No.1 and 2 were to sell/supply their FMCG products to the Defendants, which thereafter, were resold/distributed by the Defendants on e-commerce websites such as Amazon. There were instances where Plaintiff No. 1 and 2 directly supplied the products to the Amazon warehouse on the Defendants' directions. Plaintiffs have also submitted that additionally, Mrs. Shalini Dugar and the Defendant No. 2 also decided to extend their business understanding to other ventures where Mrs. Shalini Dugar through her contacts secured business for the Defendant No. 2 in exchange for commission paid. Depending on the understanding, these commissions were paid either directly to Mrs. Shalini Dugar, or to the company/partnership of Mrs. Shalini Dugar such as Plaintiff No. 3 and 4. It has been further claimed by the Plaintiffs that in extension of their business relationship, Plaintiffs invested an amount of Rs.4,51,000/- in the Defendants and that the parties were in a range of business understandings with customised modes of payment of consideration. In terms of the invoices raised, products delivered, and the amount finally realised from the Defendants, an amount of Rs.47,02,377.55/- remained due CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 31 of 39 : 32 : and payable to the Plaintiffs (particularly to Plaintiff No.1 and Plaintiff No. 2). Plaintiffs have submitted that as and when the Defendants placed a Purchase Order, the Plaintiff No.1 or Plaintiff No. 2, respectively delivered the ordered products either to the Defendants directly or to the Defendants' preferred location. In terms of the understanding, the Defendants were required to pay the invoiced amount upon delivery of the products as requested by the Defendants. The payments which were actually made by the Defendants were erratic lumpsum payments and were rarely corelated to any particular invoice. This is because the Plaintiffs had to regularly remind the Defendants about the amounts due and payable, which were then - after considerable delays - settled as lumpsum payments.
Plaintiffs have further submitted that the Plaintiffs No.1 and 2 are yet to receive payment of Rs.47,02,377.55. Despite the Plaintiffs' regular follow-ups, an amount of Rs.47,02,377.55 still remained due and payable towards actual deliveries of the products on the date of filing of the suit. Plaintiffs have contended that Defendants do not have any credible or legally tenable reason to withhold the payments of the Plaintiffs. As on date an amount of Rs.45,31,430/- (excluding interest) is due and payable to the Plaintiff No. 1 towards goods supplied, and an amount of Rs.1,70,947.14 (excluding interest) is due and payable to the Plaintiff No. 2 towards goods supplied. Accordingly, the Plaintiffs have claimed the aforementioned amounts with interest @ 10% per annum. The interest has been calculated from the last invoices raised by the Plaintiff No. 1 and 2 respectively to the Defendants. The last invoice raised by CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 32 of 39 : 33 : the Plaintiff No. 1 to the Defendants was on 27 May 2021, therefore the amount of interest due till 27 July 2023 has been calculated to be Rs.9,81,809.83 for 26 months. Further, the last invoice raised by the Plaintiff No. 2 to the Defendants was on 23 July 2020, therefore, the amount of interest due till the filing of the present suit which has been calculated to be Rs.51,284.14 for 36 months.
On the other hand, the Defendants have denied all averments made by the Plaintiffs and have rather stated that no dues are owed towards the Plaintiffs and the present suit has been filed as a counterblast to five legal notices issued by the Defendants to the Plaintiff No.3 and Plaintiff No.4 dated 25.11.2022 and 26.11.2022 seeking recovery of money owed by them to the Plaintiffs on account of unpaid invoices, short term liquidity loans and advances.
The said submission on part of the Defendants at least established that the transaction between the parties had the component of 'advances' as well and therefore, it can be presumed that the advances would have been made even by the Plaintiffs to the Defendants. It is noticed that alongwith the suit/plaint, the Plaintiffs had specifically filed two applications, one under section 151 CPC seeking exemption from filing original, legible and typed copies of all the documents and the other under section 149 CPC seeking extension of time for filing of court fees and in both the applications, in para one itself, the Plaintiffs have submitted that the suit has also been filed seeking declaration regarding the contractual relationship between the Plaintiffs and Defendants as the parties largely transacted on CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 33 of 39 : 34 : verbal arrangements/agreements. The said submissions of the Plaintiffs have not been traversed by the Defendants. What is significant at this stage is to refer to the affidavit of admission- denial of the documents of the Plaintiffs filed by the Defendants. The said five legal notices issued by the Defendants to the Plaintiff No. 3 and Plaintiff No.4 dated 25.11.2022 and 26.11.2022 seeking recovery of money owed by them to the Plaintiffs on account of unpaid invoices, short term liquidity loans and advances had been replied by the Plaintiffs vide reply dated 14.01.2023 and has been tendered by PW-1 as Ex. PW- 1/12. In their affidavit of admission denial of documents of Plaintiffs, the defendants have admitted the correctness of contents of reply dated 14.01.2023, its existence, its execution, its receipt as well as its custody.
Affidavit of admission/denial of documents on behalf of defendants.
Srl Details of the Pg. No. in Statement of Statement of Statement of Statement of Statement of document (s) and Plaint correctness of existence of a execution of issuance of custody of a parties contents of the document a document receipt of a document.
documents document
7. Notice issued on 161-164 Admitted Admitted Admitted Admitted Admitted
behalf of the plaintiffs
to the defendants.
Now the relevant contents of document no.7 at page no.161 is reproduced as under which is Ex.PW1/12.
2. In terms of the understanding, you raised Purchase Orders to procure FMCG goods/products from our Clients, which were then delivered to you (as directed) in exchange for immediate payment of consideration for the goods on delivery. It is a matter of fact and documentary records that till date an amount of INR 45,31,430.41 (excluding interest) remains due and payable to Dugar Overseas Private Limited and an amount of INR 1,70,947.14 (excluding interest) remains due and payable to Noblex Creation Private Limited towards goods supplied to you in terms of the Purchase Orders or other orders made by you. Additionally, Mrs. Dugar also invested an amount of INR 4,51,000 in Hydewest India. Consequently, Mrs. Dugar became a Partner at the said Firm which was primarily in the business of service apartments. It is pertinent to highlight that as a result of your unfair and unethical CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 34 of 39 : 35 : business practices, and as a result of gradual decline of trust in you, Mrs. Dugar distanced herself from Hydewest India by retiring as a Partner. Accordingly, she is also entitled to return of INR 4,51,000 invested in your firm along with interest.
3. Our Clients as and when required performed its side of the contractual understanding. However, you have considerably failed in performing your end of the understanding by failing or intentionally avoiding to make payments to our Clients. This has resulted in enormous stocks of our Clients' products being delivered to you without any payments in exchange, which has caused financial and reputational losses to our Clients. Furthermore, subsequent to your false and fraudulent promises, our Clients were also induced and misrepresented to invest in your business Hydewest India.
5. In light of the foregoing, our Clients have instructed us to issue the present Legal Notice whereby our clients demand an immediate payment of INR 51,53,377.55 (excluding interest) within 7 days from receipt of the present Legal Notice failing which we are already under instructions to institute appropriate legal proceedings against you, which shall be at your risk and cost.
The contents of Ex. PW-1/12 i.e. reply dated 14.01.2023 are verbatim reproduction of the claims raised by the Plaintiffs in the present suit. The Defendants have categorically admitted the contents of Ex. PW-1/12 and therefore, the suit of the Plaintiffs is therefore entitled to be decreed on the basis of admissions as per the affidavit of defendant.
Even otherwise, it is noticed that the Plaintiffs have relied on invoices and the Certificate of their Chartered Accountant in support of their claim. During cross examination of PW1, learned Counsel for Defendants tried to strike at the genuineness/authenticity of the invoices by submitting that two invoices relied upon by the Plaintiffs were not in conformity with the photocopy on record of the Court and the same was duly explained by submitting that the plaintiff executed 3 copies of the invoice. The first was sent to the warehouse, the second was sent to the buyer and the third was retained for the record of the Plaintiffs. Accordingly, as a matter of process, there could be minor deviation in which copy is retained digitally and CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 35 of 39 : 36 : physically. The original was also shown which on its top also reflected whether a copy is "original for recipient" or is "triplicate for supplier". Similarly in response to objection against other 2 other invoices of not being in conformity with the copy on record, it was explained that the document on the court record is a digital copy which is filed and retained without signatures and the original of the said invoice was shown which bore the signatures and stamp. It is also noticed that no suggestion was put to PW-1 that the Certificates of the Chartered Accountant, Ex. PW-1/13 and Ex. PW-1/14 were forged or fabricated or that no amount was due to be paid by the Defendants to the Plaintiffs on the basis of those Certificates. Those Certificates clearly establish that the outstanding against the Defendants was the same amount (which is calculated without interest) as has been claimed by the Plaintiffs in the present case. In view of no such question being put to PW-1, there was no reason for summoning or producing the concerned witness from the author of these exhibits. It is further noticed that responses of DW-1 to the questions put by learned Counsel for Plaintiffs during his cross examination were evasive and to all the questions put to him in regard to relief claimed/suit amount or a part thereof, DW-1 did not even deny the suggestions and only stated that it was not a part of court record which amounts to bare denial and is equivalent to admissions. What is equally significant is that questions in the form of suggestions were put to DW-1 during this cross examination conducted on 17.09.2024 that for the financial year 2017-18, Plaintiff no.1 had purchased electronic goods worth Rs.87,900/-
CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 36 of 39 : 37 :and he answered as "I believe so". Similar were his responses in respect of purchasing of electronic goods by Plaintiff no.1 from the Defendants in the financial years 2018-19, 2019-2020 and 2020-2021. When the question was put to him that if it would be safe to assume that the Defendants had received these payments, DW-1 instead of denying or admitting the suggestion, replied that it was not a part of court record. DW-1 also admitted that Defendants had not filed any set off or Counterclaim.
In view of these observations, Plaintiffs have successfully proved their case not only by way of evidence but also by way of admitting the contents of Ex. PW-1/12, i.e. reply of the Plaintiffs dated 14.01.2023 to the notices sent by the Defendants to the Plaintiffs no. 3 and 4. Further the Defendants have failed miserably to prove their defence. Therefore, Issue No. 5 is decided in favor of the Plaintiffs and against the Defendants. It is held that the suit of the plaintiff is entitled for a decree of Rs.47,02,377.55/- and Rs.10,33,093.97/-.
Issue No.6 : Whether the plaintiff is entitled for any interest on the decretal amount pendente lite and in future, if yes, then at what rate?
As regards the rate of interest claimed by the Plaintiff is concerned, I am of the considered opinion that as per the Judgment of Hon'ble Supreme Court in Central Bank of India Vs. Ravindra AIR 2001, Supreme Court 3095, the grant of pendente-lite and future interest is a subject matter of the discretion of the Court and not to be governed by the agreement between the parties. Accordingly in exercise of the discretionary CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 37 of 39 : 38 : power of this Court, I have granted pendente-lite and future interest @ 6% p.a. to the plaintiff because Section 34 of CPC, 1908 as well as the provisions of the Interest Act, 1978, contemplate grant of interest at the rate of 6% per annum and because in the past decade, the nationalized banks have also granted interest at the rate of 5-6% per annum, on terms deposits.
Issue No.7 : Whether the plaintiff is also entitled to cost of the suit?
The onus to prove this issue was on the Plaintiffs. The Plaintiffs have suffered at the hands of the Defendants who not only deprived the Plaintiffs of their legal dues but also the Defendants raised unfounded claims and documents and pleaded that it is the Defendants who are entitled to recover the amounts from the Plaintiffs, but did not plead any Counterclaim or set off. The Defendants have also leveled unwarranted comments against Mrs. Shalini Dugar which have been cited while dealing with submission of the Defendants made in the Written Statement. Therefore, Plaintiffs are entitled to costs of the suit including pleader's fee, court fees, Fees of the Local Commissioner and the other costs on the scale provided under section 35 of the Code of Civil Procedure as substituted by Commercial Courts Act.
Relief.
As a net result of the aforesaid, the suit of the Plaintiff is decreed for an amount of Rs. 47,02,377.55/- and CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 38 of 39 : 39 : Rs.10,33,093.97/- in terms of prayer clause (a) and (b) along with the interest pendente-lite and future interest @ 6% p.a. till its realization. The Suit of the plaintiff is decreed accordingly.
9. Decree sheet be drawn and file be consigned to Record Room after due compliance.
Digitally signed by NEELAM SINGH NEELAM Date:
SINGH 2024.11.04
Announced in the open 16:51:27
+0530
Court on 04.11.2024
(NEELAM SINGH)
District Judge
(Commercial Court-02)
South-East, Saket Courts, ND
04.11.2024
CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 39 of 39
: 40 :
CS (COMM)-765/23
Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors.
04.11.2024 Lawyer's are abstaning from work today due to strike.
Present: Ld. Counsel for plaintiff.
Ld. Counsel for defendant.
Vide separate judgment announced in the open
court, the suit of the plaintiff is decreed.
File be consigned to record room after due
compliance.
(NEELAM SINGH)
District Judge
(Commercial Court-02)
South-East, Saket Courts, ND
04.11.2024
CS (COMM)-765/23 Dugar Overseas Private Limited Vs. Enetstudioz Inc. & Ors. Page 40 of 39