Delhi District Court
Mahender Dayma vs Aspek Media Pvt. Ltd on 28 January, 2023
IN THE COURT OF SH GURVINDER PAL SINGH,
DISTRICT JUDGE (COMMERCIAL COURT)-02,
PATIALA HOUSE COURT, NEW DELHI
CS (Comm.) No. 98/2021
Mahender Dayma
Proprietor of M/s Shri Mohan Welding Works
Office at D-102-104, J.J. Colony,
Budh Nagar, Inderpuri,
New Delhi-110012 ..Plaintiff
versus
1. ASPEK MEDIA PVT. LTD.
Through it's Managing Directors
2. Mr. Dharamvir Singh,
Director, ASPEK MEDIA PVT. LTD.
3. Mr. Harish Chaudhary,
Director, ASPEK MEDIA PVT. LTD.
Office at;
803, 4th Floor, Arjun Nagar,
Kotla Mubarakpur,
Opposite Defence Colony,
New Delhi-110003 ..Defendants
Date of Institution : 09/03/2021
Arguments concluded on : 01/12/2022
Decided on : 28/01/2023
Appearances : Sh. Nishant Bhardwaj, Ld. Counsel for plaintiff.
Sh. Atul Verma, Ld. Counsel for defendants.
JUDGMENT
1. Plaintiff filed the present suit for a commercial dispute of a specified value, seeking recovery of Rs.23,28,749/- with pendente lite and future interest @ 24% per annum till realization CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 1 of 29 with cost against defendants.
2. Adumbrated in brief, following are the relevant brief facts of the case of plaintiff. Plaintiff is running an iron, hoarding and welding work in the name and style of M/s Shri Mohan Welding Works from the above mentioned address. Defendant no. 1 company and its Directors defendant nos. 2 and 3 are running an advertisement work and were in need of installing the structure iron boards at Great India Place Mall at Children Park at Plot No. A-2, Sector-38 A, Noida, U.P.-201301 for the advertisement. Defendant no. 3 had approached plaintiff at his office described as above at Inderpuri in second week of August, 2017 to install the above said structure iron boards. Defendant no. 2 and defendant no. 3 made an offer to install two iron structure board measuring of 65 feet wide X 33 feet height and 78 feet wide X 27 feet height at the aforesaid place. Plaintiff had agreed for the same. It was settled that the total amount will be incurred on defendants site to the tune of Rs. 11,00,000/- + ACP Charity + Scaffolding + GST 18%. Thereafter on 24/08/2017 defendant nos. 2 and 3 had issued a job sheet to plaintiff where all details were well settled in writing including all the structure board quantity and quality. It was decided between plaintiff and defendants company that the said work will be completed within 30 days from the date of job sheet and accordingly plaintiff had accepted the same. Plaintiff started above required work at above site and plaintiff had put great efforts and hard earned money for installing the above said structural board. Plaintiff fulfilled his part as per the aforesaid job sheet/order given by defendants within the stipulated period and the final extra work was CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 2 of 29 completed till first week of March as per request of defendants. Plaintiff had raised several bills against the work done by him related to the expenses incurred on installing of all above said structural board at above site and the last bill was handed over to the defendant against the work done by plaintiff on 18/03/2018. All bills were duly acknowledged by defendants company and the total bills were raised to the tune of Rs. 21,07,321/- whereas extra work was done by plaintiff for holding the above board for installing pipes with other iron plate to the tune of Rs. 2,13,398/- but no bills were issued against the extra work as defendant nos. 2 and 3 instructed the plaintiff that no bills were required for extra work although defendant had issued one signed paper on 14/03/2018 to acknowledge the extra work details. Several requests were made by plaintiff to defendant nos. 2 and 3 for the clearance of his outstanding amount but defendant company did not honour their commitment for the clearance of the settled amount which was agreed at the time of entering into the contract-cum-job sheet dated 24/08/2017. Lame excuses were made by defendants by misleading plaintiff that payment will be cleared but no payments were made to the plaintiff for work got done. Plaintiff served legal notice through Counsel on 04/12/2019 to defendants demanding to clear outstanding amount although demanded amount was lesser than the actual arrears. Plaintiff took recourse to pre-institution mediation before New Delhi District Legal Services Authority but received Non Starter Report dated 15/10/2020 on 15/01/2021. Resultant was this suit.
3. Defendants filed the Written Statement as well as affidavit of admission and denial of documents of plaintiff. Following are CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 3 of 29 the brief relevant material facts in their written statement. Defendants have made all the payments against the liabilities towards the plaintiff. Even plaintiff has taken excess money in lieu of fake works, based on the concocted and manipulated bills. Unfortunately, due to greed, plaintiff again has filed the present case based on the self serving documents. Performance of understanding/work took place at Plot A2, Sector 38-A, Noida, UP-201301, wherein defendants were authorized to advertise and install permanent structure for advertisements, wherein plaintiff worked for defendants from September/October, 2015 to November, 2018. All the business relations, execution and installation of work was done at Noida, UP from where defendants were operating earlier. The registered address of defendant no. 1 is at Kotla Mubarakpur, Delhi, which falls under South East District of Delhi. This Court does not have territorial jurisdiction to adjudicate this suit. Two other petitions were filed by Mr. Mohan Dayma on behalf of M/s Mohan Welding Works, proprietorship firm against answering defendants. No averments were made in the said two petitions as well in the present plaint as to who is proprietor of firm whether Mohan Dayma or Mahinder Dayma. Plaintiff has filed the present case after concealing major facts which will demolish the whole case of the plaintiff. Plaintiff has intentionally concocted and fabricated the facts with own comfort to misuse the legal proceedings against the defendants. Plaintiff had failed to mention that defendants have made continuous payments to the plaintiff till 29/08/2019. Defendants were in habit of issuing various cheques amounting to Rs. 5,00,000/- against the work done by plaintiff for their running payments. After August, 2017 defendants have paid CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 4 of 29 substantial amounts which is more than to his work done. As per their own Complaint No. 17665/2019 the stand of the plaintiff was that the amount of total works done by plaintiff was Rs. 1,05,58,820/- (approximately 1.05 crores), out of which defendants had paid Rs.84,48,911/- through cheques and remaining amount of Rs. 21,09,909/- was pending. Plaintiff has concealed that he had filed two other separate cheque bounce cases amounting to Rs. 15,00,000/- against the alleged liability of Rs. 21,09,909/-. Defendant no. 1 had business relationship with Mr. Mohan Dayma from October, 2015 to 2019 and till date defendants had paid total Rs.1.34 Crores to Mr. Mohan Dayma which was in excess of their work done. Whereas even the case of plaintiff was that they have worked for amount of Rs. 1.05 crores only. Mr. Mohan Dayma had fooled the defendant company and in collusion with its official, has taken various post dated cheques which were misused by plaintiff for filing cheque dishonor case; some of the cheques were stopped by defendant on time. Plaint is liable to be dismissed due to major concealment regarding payment made to plaintiff. Plaintiff deliberately concealed that defendant had paid Rs. 5,00,000/- each on 31/08/2017, 08/11/2017, 23/01/2017, 29/01/2018, 18/06/2018, 22/06/2018. Plaintiff had cheated the defendants by misusing some post dated cheques on the pretext of fake bills and fake work, due to which plaintiff has taken extra money. Plaint is liable to be dismissed since there is no existence of valid claim of recovery. Plaintiff has failed to make averments about who is proprietor of the firm. Three different petitions have been filed on behalf of two different proprietors. One is Mohan Dayma and other is Mahinder Dayma. Defendants had worked with plaintiff CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 5 of 29 for installation and developing advertisement assets at Sector 38 A, Noida. Defendants always were in the habit of making "Payment of RA bills" which were mostly in the form of Rs. 5,00,000/- to the running account bills. In other words, defendants made payments in part on basis of work progress. Plaintiff never initiated any work unless past running bill was not cleared. As against to installation two iron board structure of 65X33 feet and 78X27 feet work, defendants issued a job sheet dated 24/08/2017 with specific directions to complete it within 30 days. Defendants have cleared all the amounts which plaintiff has concealed from this Court. Same is self evident from the perusal of bank statement of the defendants. Defendants have paid first running advance payment on 31/08/2017 of Rs. 5,00,000/-. Plaintiff delayed the work by 4-5 months and installed it only in March, 2018, due to which defendants suffered heavy losses. Due to this next running payment was made only in November, 2017 of Rs. 5,00,000/-. When work progressed in January, 2018, defendants again paid Rs. 10,00,000/-. It was understanding between the parties that all the payments of the work will be made on the basis of work in process which is called running payment understanding between the parties. Plaintiff wrongly and deliberately suppressed the payment details for best reason known to them. There is no whisper about any payments made by the defendants. No claim exists qua the defendants. It is the case of defendants that plaintiff has wrongly taken some extra money from the defendants in lieu of some fake and fabricated bills, on that basis plaintiff had filed cheque bounce cases wherein defendant had stopped the payment of certain cheques. Plaintiff completed 30 CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 6 of 29 days work in six months for which defendant had paid each and every penny to plaintiff, which plaintiff has deliberately concealed from this Court. Plaintiff has taken extra money in lieu of fabricated and self serving bills. All payments have been made in running payments by the defendants against the work of Rs. 21,07,321/-. Plaintiff had cheated defendants as well as Government Department by depositing less GST and plaintiff may be put to strict proof to show payment of GST in respect of Rs. 1.34 Crores. Defendants prayed for dismissal of the suit with cost.
4. In replication to written statement of defendants, plaintiff reiterated the averments of plaint and denied the contentions put forth by defendants in written statement. Following are the relevant brief material facts averred in filed replication. Defendants never paid any single penny against the work done by plaintiff till date and all the defence made by defendant in written statement is not supported by any documents filed by defendants along with their written statement and none of the documents pertain to show any kind of payment made by them against the work done by the plaintiff. Defendants are relying upon some other transactions that took place between Sh. Mohan Dayma in some other works done by him and not disclosed any payment regarding the work done by plaintiff through any document. Defendants have also relied upon some cases filed by Sh. Mohan Dayma which are not related with the plaintiff in any manner. In order to mislead this Court, defendants have created and submitted irrelevant documents along with their written statement; whereas defendants have submitted that they have CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 7 of 29 accepted the work done by the plaintiff as stated in their written statement; whereas defendants have submitted that they have already made payment against the plaintiff's allied work but defendants have failed to furnish any single document which shows that they ever released any payment towards work done by plaintiff.
5. Case management hearing was done on 26/08/2022. After hearing plaintiff, Ld. Counsel for the parties and on the basis of pleadings of the parties following issues were framed:-
"ISSUES
1. Whether plaintiff is entitled for recovery of Rs.
23,28,749/- from defendants? If so against which of defendants? OPP.
2. Whether plaintiff is entitled for any interest claimed? If so, at what rate and for which period? OPP
3. Whether the defendants have made payments for all works got done by them to plaintiff, as claimed? OPD
4. Relief."
6. Ld. Counsel for defendants submitted that earlier exercise for compromise had been done several times and there was no scope of settlement/compromise between the parties. Schedule timeline was fixed for speedy disposal of the case.
7. Plaintiff Sh. Mahender Dayma examined (i) himself as PW1 and (ii) his father Sh. Mohan Lal Dayma as PW2, in plaintiff evidence.
CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 8 of 298. PW1 relief upon the following documents:-
S.No Documents Exhibit
1. JOB SHEET NO : Ex P-1/1
AUG/STRUCTURES/
002 dated 24/08/2017
2. Copy of Invoice No. Ex P-1/2 (Colly)
004 dated 28/08/2017
of Rs 56,200/-;
Invoice No. 036
dated 17/03/2018 of
Rs.17,99,311/-;
Invoice No. 037 dated
18/03/2018 of Rs.
2,51,810/-; all of Shri
Mohan Welding
Works billed to
ASPEK MEDIA
PRIVATE LIMITED
3. Original extra work Ex P-1/3
acknowledgment
dated 14/03/2018
4. Copy of Legal Notice Ex P-1/4
dated 04/12/2019 sent
by Advocate of
plaintiff to defendant
company
5. Copy of speed post Ex P-1/5
receipts dated
05/12/2019 of Legal
Notice sent to
defendant company.
6. Copies of Ex P-1/6 (Colly)
photographs
alongwith Certificate
under Section 65B of
The Indian Evidence
Act
7. Copy of Non Starter Ex P-1/7
Report issued by New
Delhi District Legal
Services Authority
dated 15/10/2020
9. PW2 relied upon the following document:-
CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 9 of 29 S.No Document Exhibit
1. Copy of Adhar Card Ex PW2/1
of PW2
10. Ld. Counsel for plaintiff closed the plaintiff evidence vide separate statement on 27/09/2022.
11. Defendants examined Sh. Kanhaiya Singh, Director and Authorized Representative of defendant no. 1 as DW1 in defendants evidence.
12. Ld. Counsel for defendants closed the defendant evidence vide separate statement on 27/10/2022.
13. Written arguments were filed on behalf of parties. Oral arguments were also addressed by Ld. Counsel for the parties. I have perused the record and have considered the rival contentions put forth by Ld. Counsel for the parties.
14. My issue-wise findings are as under:-
Findings on issue no. 3
3. Whether the defendants have made payments for all work got done by them to plaintiff, as claimed? OPD
15. DW1 Sh. Kanhaiya Singh, Director and AR of defendant no. 1 company in affidavit Ex DW1/A inter alia averred (i) defendant no. 1 paid first running advance payment on 31/08/2017 of Rs. 5,00,000/- to plaintiff and only thereafter CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 10 of 29 plaintiff initiated work; (ii) next running payment was made in November, 2017 of Rs. 5,00,000/- to plaintiff by defendant no. 1 on instructions of Sh. Mohan Dayma; (iii) in January, 2018 defendant no. 1 again paid Rs. 5-5 lakhs on 23/01/2018 and 29/01/2018; (iv) defendant no. 1 has paid total Rs. 1.34 Crores to plaintiff and his father Sh. Mohan Dayma, which is an excess of their work done and (v) defendant no. 1 has paid to plaintiff and his father Rs. 5,00,000/- each on 31/08/2017, 08/11/2017, 23/01/2017, 29/01/2018, 18/06/2018 and 22/06/2018.
16. In the list of documents of defendants at serial no. 2 is mentioned the copy of Bank Statement of defendants at pages 40 to 68. At page 40 is the compilation of payment details which is not signed by anyone whereas in the filed list of documents with respect to said document, it is mentioned that it is a photocopy and the document is in power/possession/control/custody of banker of defendant no. 1 and the mode of execution/transactions maintained by the banker as per law, whereas its line of custody was with banker of defendant no. 1. At pages 41 to 68 of documents of defendants are some photocopies of computer generated documents with respect to some statements of accounts in Bank of Maharashtra and Kotak Mahindra Bank for various periods and of various financial years. In the course of his examination in chief, DW1 had stated that he had not filed any affidavit under Order XI Rule 6 (3) of The Code of Civil Procedure,1908 (hereinafter referred as CPC) for electronic record document i.e., copy of bank document, referred in end of para no. 5 of his affidavit Ex DW1/A and it was marked as Mark DW1/1. Copy marked as Mark DW1/1 is aforesaid document CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 11 of 29 referred as copy of bank statement of defendant no. 1 company at pages 40 to 68 of documents of defendants.
17. Order XI Rule 6 (3) of the Code of Civil Procedure, 1908 (in short CPC) mandates providing of specified information for electronic record documents i.e., (a) the parties to such Electronic Record; (b) the manner in which such electronic record was produced and by whom; (c) the dates and time of preparation or storage or issuance or receipt of each such electronic record; (d) the source of such electronic record and date and time when the electronic record was printed; (e) in case of e-mail ids, details of ownership, custody and access to such e-mail ids; (f) in case of documents stored on a computer or computer resource (including on external servers or cloud), details of ownership, custody and access to such data on the computer or computer resource; (g) deponent's knowledge of contents and correctness of contents;
(h) whether the computer or computer resource used for preparing or receiving or storing such document or data was functioning properly or in case of malfunction that such malfunction did not affect the contents of the document stored;
(i) that the printout or copy furnished was taken from the original computer or computer resource.
18. For want of requisite specified information and necessary declaration in form of affidavit, compliant of Order XI Rule 6 (3)
(a) to (i) CPC for electronic record document marked as Mark DW1/1, said document Mark DW1/1 stands not proved.
CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 12 of 2919. In the cross examination, PW1 categorically denied the suggestion of the cross examining Counsel for defendants and stated that he had not received any payment of Rs. 5,00,000/- each on (i) 31/07/2017; (ii) 08/11/2017; (iii) 23/01/2018; (iv) 29/01/2018; (v) 18/06/2018. PW1 had also categorically denied to have received all payments payable from defendants or that nothing was outstanding.
20. PW2 in cross examination stated that he looked after the work in question on behalf of his son plaintiff and that payment was made by cheque but PW2 did not remember the amounts of cheques and stated that they may be of amount of Rs. 5,00,000/- or even of other amounts. PW2 categorically denied payment was made in part with respect to work done. PW2 was unable to remember/recollect the total amount paid by defendant to plaintiff, so he was not able to admit or deny whether defendant had paid to plaintiff in all sum of Rs. 1,34,39,225/-, as suggested by cross examining Counsel for defendants. PW2 also denied of having collected payments on behalf of his son. PW2 also denied that he had obtained post dated cheques on behalf of his son. PW2 also denied the suggestion that the work done was of total sum of Rs. 1,05,00,000/-. Also was denied by PW2 that bills Ex P1/2 (Colly) were exaggerated, self serving and fabricated. PW2 also denied that defendants had paid to plaintiff all payments payable and nothing was outstanding.
21. Despite averments in pleadings in the written statement and arguments of the defendants through their Counsel; in view of the appreciated evidence led on record, the defendants have failed to CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 13 of 29 discharge their onus on this issue and have failed to prove that defendants had made payments for all work got done by them as claimed by defendants. This issue is decided against the defendants and in favour of the plaintiff accordingly.
Finding on issue no. 1
1. Whether plaintiff is entitled for recovery of Rs.
23,28,749/-from defendants? If so against which of defendants? OPP.
22. PW1 in affidavit Ex PW1/A deposed in terms of pleadings in plaint, elicited above. PW1 also deposed that inadvertently wrong site name i.e., Great India Place Mall at Children Park was mentioned in the pleadings whereas correct name was Garden Galleria Mall which was so detailed in legal notice dated 04/12/2019 and job sheet Ex P-1/1 dated 24/08/2017. As per deposition of PW1, job sheet Ex P-1/1 dated 24/08/2017 was issued by defendant nos. 2 and 3 on behalf of defendant no. 1 company for the project of Fabrication of Frontlit Structures 78'x28' & 65'x33' with specified terms therein including estimated cost 11,00,000/- + ACP Cladding + Scaffolding + GST 18%. PW1 also testified that after offer and acceptance of work as per Ex P-1/1, not only the work as per job sheet was done but even the final extra work was done as per request of defendants. PW1 further deposed that bills/invoices Ex P-1/2 (Colly) comprising (i) Invoice No. 004 dated 28/08/2017 of Rs. 56,200/-;
(ii) Invoice No. 036 dated 17/03/2018 of Rs. 17,99,311/-; (iii) Invoice No. 037 dated 18/03/2018 of Rs. 2,51,810/- were issued CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 14 of 29 to defendant no. 1 company whereas for extra work the original acknowledgment Ex P-1/3 dated 14/03/2018 was given by defendant to plaintiff. PW1 also deposed that since despite several demands outstanding payments for work done by plaintiff were not made by defendants, so legal notice Ex P-1/4 dated 04/12/2019 was sent to defendant no. 1 company by speed post on 05/12/2019 vide receipts Ex P-1/5. PW1 had also placed on record the photographs Ex P-1/6 (Colly) with certificate under Section 65B of The Indian Evidence Act depicting the work in question done by plaintiff.
23. In filed written statement though it is the assertion of defendants that 30 days work was completed by plaintiff in six months but there is no denial of work done by plaintiff in terms of job sheet Ex P-1/1 by defendants. In para 2 of reply on merits in written statement of defendants the line of defence of defendants was that plaintiff never initiated any work unless past running bill was not cleared. It is the admission therein of defendants of having issued job sheet Ex P-1/1. The other defence of defendants borne out in pleadings of defendants is that payments beyond work done were made by defendants to plaintiff. Defendants have not raised any dispute with respect to the three invoices, above said, Ex P-1/2 (Colly). In fact in affidavit of admission/denial of documents of plaintiff by defendants the existence; execution and issuance of job sheet Ex P-1/1 by the defendants and bills/invoices Ex P-1/2 (Colly) by plaintiff and their receipt by defendants has been admitted.
24. In cross examination PW1 inter alia elicited that the work CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 15 of 29 detailed in Ex P-1/3 i.e., stated extra work; was included in the work of bills Ex P-1/2 (Colly).
25. It is borne out of deposition of plaintiff witnesses PW1 and PW2 that plaintiff PW1 was engaged in business and was proprietor of M/s Shri Mohan Welding Works whereas father of plaintiff namely Sh. Mohan Lal Dayma PW2 was also engaged in business and was proprietor of M/s Mohan Welding Works. It is also borne out from the testimonies of plaintiff witnesses PW1 and PW2 that both PW1 and PW2 were doing their respective business at premises bearing number D-102-104, J.J. Colony, Budh Nagar, Inder Puri, New Delhi-110012. When father and son are doing their respective business in same premises with different proprietorship concern names, there arises no occasion for any third person to question their engagement in business, since it is their legal right to do business as per law. If father PW2 looked after the works of son plaintiff PW1; there was neither any legal bar/impediment in his way nor estoppel for him to do so. Argument of Ld. Counsel for defendants of existence of collusion between plaintiff PW1 and his father PW2 calling for drawing adverse inference and/or dismissal of suit does not hold water in the fact of the matter.
26. PW1 in cross examination also elicited that name and mobile number at portion encircled as X in Ex P-1/1 was of his father; whereas mobile numbers mentioned in Ex P-1/2 were of his father and himself respectively. Also PW1 in cross examination had elicited that the bank account detailed in Ex P- 1/1 is in the name of PW1 plaintiff. None of these answers by CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 16 of 29 PW1 in cross examination of defendants Counsel provides any premise to demolish the case set up by plaintiff nor entitles defendants for dismissal of the suit. More so when in the fact of the matter, issuance of job sheet Ex P-1/1 dated 24/08/2017 was admitted by defendants and above detailed invoices/bills Ex P- 1/2 (Colly) were admittedly received by defendants. As elicited above in findings on issue no. 3, defendants have failed to prove of having made payments for all works got done by them to plaintiff, as claimed by them.
27. Supreme Court in the case of Narayan Bhagwantrao Gosavi Balajiwale vs Gopal Gosavi & Ors., (1960) 1 SCR 773:
AIR 1960 SC 100 inter alia held that an admission is the best evidence that an opposing party can rely upon, and though not conclusive, is decisive of the matter, unless successfully withdrawn or proved erroneous.
28. Supreme Court in the case of Vice-Chairman, Kendriya Vidyalaya Sangathan & Anr. vs Girdharilal Yadav, (2004) 6 SCC 325, inter alia held that in terms of Section 58 of the Evidence Act, 1972 facts admitted need not be proved. It is also a well settled principle of law that the principles of natural justice should not be stretched too far and the same cannot be put in a straitjacket formula.
29. Non filing of documents depicting deposit of GST by plaintiff with respect to invoices in question; non filing of E-way bills and bilties for transportation of goods to defendants; cannot be held to be fatal to the case of plaintiff, as has been argued by CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 17 of 29 Ld. Counsel for defendants nor can it be presumed without any evidence led and proved by defendants that bills/invoices Ex P- 1/2 (Colly) were exaggerated, self serving and/or ante dated, from the evidence on record. Above discussions make it ample clear that own admission of defendants are on record regarding issuance of job sheet Ex P-1/1 by defendants to plaintiff as well as receipt of bills/invoices Ex P-1/2 (Colly) from plaintiff by defendants. In fact in pleadings and evidence, elicited above, defendants have admitted of providing of the services detailed in Ex P-1/1 by plaintiff to defendants. Arguments per contra to defence taken in pleadings by defendants would not help in any manner to defendants for rejection of claim of plaintiff for dismissal of the suit. Defendants have miserably failed to prove by admissible evidence/proved documents of facts of making of any part payments of Rs. 5,00,000/- each on dates 31/08/2017, 08/11/2017, 23/01/2017, 29/01/2018, 18/06/2018, 22/06/2018. Defendants have also miserably failed to prove of having paid any sum equal to or exceeding the amount of invoices Ex P-1/2 (Colly) to plaintiff.
30. In this fact of the matter, from the evidence on record, by preponderance of probabilities, plaintiff has been able to prove for his entitlement for recovery of Rs. 21,07,321/- i.e., the amount of invoices Ex P-1/2 (Colly) i.e., (i) Invoice No. 004 dated 28/08/2017 of Rs. 56,200/-; (ii) Invoice No. 036 dated 17/03/2018 of Rs. 17,99,311/-; (iii) Invoice No. 037 dated 18/03/2018 of Rs. 2,51,810/-.
31. Following is the framed prayer clause in the plaint of CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 18 of 29 plaintiff:-
PRAYER It is, therefore respectfully prayed that a decree for a sum of 23,28,749/- may kindly be passed in favour of the plaintiff and against the defendant with pendente-lite interest and future interest @ 24% p.a. till realization of the suit amount. Costs of the suit be also awarded in favour of the plaintiff against the defendant.
32. Above elicited prayer clause in the plaint of plaintiff simply finds mention of the prayer for decree of money against defendant (one) and not against all the three defendants. In the pleadings of the plaintiff, it is not the case of plaintiff that defendant no. 2 and/or defendant no. 3 by any act of themselves by promise or guarantee or indemnity or undertaking made themselves personally liable for payment of work done by plaintiff in terms of job sheet Ex P-1/1 issued by defendant no. 1 company to plaintiff. It is also not the case of plaintiff that defendant no. 2 and/or defendant no. 3 made any fraudulent misrepresentation to plaintiff for getting works done as per job sheet Ex P-1/1 to make them personally liable, as an action of tort, with respect to works detailed in job sheet Ex P-1/1.
33. Hon'ble Ms. Justice Jyoti Singh in the case of Sanuj Bathla & Anr. vs Manu Maheshwari & Anr., C.R.P. 166/2018 & CM APPL. 32378/2018 & 10441/2021 decided on 12/04/2021 appreciated the following passages and law laid in the case of Mukesh Hans & Anr. vs Smt. Uma Bhasin & Ors., 2010 SCC OnLine Del 2776:-
"28. Learned counsel for the Petitioner has rightly relied on the judgment of the Co-ordinate Bench in Mukesh Hans (supra), which, in my view, squarely covers the present case and fortifies the view taken by this Court. Relevant passages from the judgment are as follows :-CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 19 of 29
"10. The short question which arises for consideration in the present appeal is as to whether the appellants as erstwhile Directors of the Company, M/s. Dawson Leasing Limited (In Liquidation) can be made liable in a suit for recovery of money when the Directors have not made themselves personally liable by extending any guarantee, indemnity, etc.
11. Indubitably, a company incorporated under the Companies Act, whether as a private limited company or a public limited company, is a juristic entity. The decisions of the Company are taken by the Board of Directors of a Company. The Company acts through its Board of Directors, and an individual Director cannot don the mantle of the Company by acting on its behalf, unless he is so authorized to act by a special resolution passed by the Board or unless the Articles of Association so warrant. It is equally well settled that a Director of a Company though he owes a fiduciary duty to the Company, he owes no contractual duty qua third parties. There are, however, two exceptions to this rule. The first is where the Director or Directors make themselves personally liable, i.e., by execution of personal guarantees, indemnities, etc. The second is where a Director induces a third party to act to his detriment by advancing a loan or money to the Company. On the third party proving such fraudulent misrepresentation, a Director may be held personally liable to the said third party. It is, however, well settled that this liability would not flow from a contract, but would flow in an action at tort, the tort being of misrepresentation and of inducing the third party to act to his detriment and to part with money.
12. This is the settled position ever since 1897 when the House of Lords decided the case of Salomon vs. Salomon & Co. Ltd. 1897 AC 22, and Lord Macnaghten, observed as under: -
"the company is at law a different person altogether from the subscribers to the memorandum; and, though it may be that after incorporation the business is precisely the same as it was before, the same persons are managers, and the same hands receive the profits, the company is not in law the agent of the subscribers or trustee for them. Nor are the subscribers as members liable, in any shape or form, except to the extent and in the manner provided by that Act."
13. However, with the passage of time inroads have been made into the aforesaid legal principle that the company is a CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 20 of 29 legal entity distinct from its shareholders and directors and certain exceptions have been carved out. One such inroad is commonly described as lifting or piercing of the corporate veil. This has been succinctly put by the Supreme Court in Tata Engineering and Locomotive Co. Ltd. v. State of Bihar [1964]6SCR885 as follows:
"24. The true legal position in regard to the character of a corporation or a company which owes its incorporation to a statutory authority, is not in doubt or dispute. The Corporation in law is equal to a natural person and has a legal entity of its own. The entity of the Corporation is entirely separate from that of its shareholders; it bears its own name and has a seal of its own; its assets are separate and distinct from those of its members; it can sue and be sued exclusively for its own purpose; its creditors cannot obtain satisfaction from the assets of its members; the liability of the members or shareholders is limited to the capital invested by them; similarly, the creditors of the members have no right to the assets of the Corporation. This position has been well established ever since the decision in the case of Salomon v. Salomon and Co. was pronounced in 1897; and indeed, it has always been the well-recognised principle of common law. However, in the course of time, the doctrine that the Corporation or a Company has a legal and separate entity of its own has been subjected to certain exceptions by the application of the fiction that the veil of the Corporation can be lifted and its face examined in substance. The doctrine of the lifting of the veil thus marks a change in the attitude that law had originally adopted towards the concept of the separate entity or personality of the Corporation. As a result of the impact of the complexity of economic factors, judicial decisions have sometimes recognised exceptions to the rule about the juristic personality of the corporation. It may be that in course of time these exceptions may grow in number and to meet the requirements of different economic problems, the theory about the personality of the corporation may be confined more and more."
14. Similar observations were made by the Supreme Court in the case of New Horizons Ltd. v. Union of India:
(1995)1SCC478 :
"27. The conclusion would not be different even if the matter is approached purely from the legal standpoint. It cannot be disputed that, in law, a company is a legal CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 21 of 29 entity distinct from its members. It was so laid down by the House of Lords in 1897 in the leading case of Salomon v. Salomon & Co. Ever since this decision has been followed by the courts in England as well as in this country. But there have been inroads in the doctrine of corporate personality propounded in the said decision by statutory provisions as well as by judicial pronouncements. By the process, commonly described as "lifting the veil", the law either goes behind the corporate personality to the individual members or ignores the separate personality of each company in favor of the economic entity constituted by a group of associated companies. This course is adopted when it is found that the principle of corporate personality is too flagrantly opposed to justice, convenience or the interest of the Revenue. (See : Gower's Principles of Modern Company Law, 4th Edn., p.112.) This concept, which is described as "piercing the veil" in the United States, has been thus put by Sanborn, J. in US v. Milwaukee Refrigerator Transit Co.4:
'When the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons.'
15. The question therefore in the instant case is - Can the corporate veil be lifted in the present case to reveal the identity of the person or persons behind it? The respondents in their plaint have not made out any such case to justify the piercing of the corporate veil. Therefore, this matter is not required to be dwelt upon by this Court any longer.
16. The next question which arises for consideration is whether the appellants as Directors made themselves personally liable for the dues of the Company. Reference in this context may be made to the judgment of this Court in Tristar Consultants vs. Customer Services India Pvt. Ltd. And Anr., 139 (2007) DLT 688. Paragraphs 28 to 30 of the said judgment, which are apposite, read as under:-
"28. To interpret the law as is sought to be projected by the petitioner would mean negation of the concept of a company being limited by its liability as per the memorandum and articles of association of the company. Other than where directors have made themselves personally liable i.e. by way of guarantee, indemnity, etc. liabilities of directors of a company, under common law, are confined to cases of CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 22 of 29 malfeasance and misfeasance i.e. where they have been guilty of tort towards those to whom they owe a duty of care i.e. discharge fiduciary obligations. Additionally, qua third parties, where directors have committed tort. To the third party, they may be personally liable.
29. For example by making false representations about a company, a director induces a third party to advance a loan to the company. On proof of fraudulent misrepresentation, a director may be personally liable to the third party.
30. But this liability would not flow from a contract but would flow in an action at tort. The tort being of misrepresentation of inducement and causing injury to the third party having induced the third party to part with money."
17. In the case reported as Space Enterprises vs. M/s. Srinivasa Enterprises Ltd. 72 (1998) DLT 666, this Court while dealing with the liability of the Directors of a company for the dishonor of cheques of the company, in a suit filed under Order XXXVII of the Code of Civil Procedure, made the following observations: -
"11. In so far as the liability of defendant No. 2 is concerned, the effect of the registration of a company under Section 34 of the Companies Act is that it is a distinct and independent person in law and is endowed with special rights and privileges; a person distinct from its members. Consequently, the company is enabled to contract with its shareholders also, to use common seal and acquire and hold property in its corporate name. The company is distinct from its shareholders and its directors. Neither the shareholders nor the director can treat the companies assets as their own. Directors of a company are liable for misappropriation of company's funds and other misfeasance, but not for an ordinary contractual liability of the company. The liability of the members or the shareholders or the directors is limited to the capital invested by them. So long the liability is not unlimited under Sections 322 and 323 of the Companies Act and no special resolution of the limited company making liability of the directors or the managing directors unlimited is alleged. The doctrine of lifting of the corporate veil could be applied in cases of tax evasion, or to circumvent tax obligation or to perpetuate fraud or trading with an enemy are concerned. It is not alleged that the director has lost CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 23 of 29 the privilege of limited liability and has become directly liable to the plaintiff i.e. creditor of the company on the ground that with his knowledge the company carries on business six months after the number of its members was reduced below the legal minimum number. In absence of such a case it would be totally inappropriate and improper to say that defendant No. 2 is patently covered under Order 37 CPC.
12. There is no contract between the plaintiff and defendant No. 2. therefore, case against defendant No. 2 is not based on any contract nor there is any such liability on defendant No.2. Consequently, there is no cause of action against defendant No. 2. Since there is no cause of action against defendant No. 2, the plaint is liable to be rejected so far as defendant No. 2 is concerned."
18. In the instant case, there is admittedly no assertion in the plaint that the appellants had extended any contract of guarantee or had even undertaken to make payment to the respondents of the loan amount on behalf of the company, M/s. Dawson Leasing Limited. No case of joint and several liability is, therefore, made out and the liability, if any, is the sole liability of the Company, which is stated to be under liquidation. There is also no denial to the fact that the respondent No.4 himself was one of the Directors of the Company and therefore part and parcel of the Company. When the decision to invite secured non-convertible debentures was taken by the Board, the names of the respondent No.4 and his brother appeared in the offer document issued on behalf of the Company. In such circumstances, merely because the respondent No.4 subsequently resigned as a Director, it is not open to the respondents to allege that they have been deceived and defrauded.
19. It is also well settled that fraud, if alleged, must be pleaded meticulously and in detail and proved to the hilt. A mere assertion that fraud has been committed is neither here nor there. Precisely and in what manner fraud has been committed is required to be delineated by the party alleging the same if the plea of fraud is to be made the basis of a decree against the other party. Bald assertions and vague allegations will not be countenanced by the Courts. Rule 4 of Order VI specifically lays down that the particulars of the fraud alleged (with dates and items, if necessary) shall be stated in the plaint.
CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 24 of 2920. To conclude, the instant case is not one in which the appellants could have been held jointly and severally liable as Directors to pay the amount invested by the respondents in the Company. The appellants are not even alleged to be guarantors or indemnifiers for payment of the amount due from the Company nor it is pleaded in the plaint that the respondents had undertaken to make payment on behalf of the Company. As stated above, no particulars of fraud are set out, presumably for the reason that the respondent No.4 himself was a functional Director of the Company responsible for the day-today affairs of the Company. In such circumstances, in my considered opinion, it is the Company and the Company alone upon whom the liability can be fixed at all.""
34. Delhi High Court in the case of Tristar Consultants vs Vcustomer Services India Pvt. Ltd. & Ors., MANU/ DE/7339/2007 inter alia held that in a suit for recovery of money, only such persons can be impleaded as defendants against whom averments are made which on proof would entitle the plaintiff to a decree whether jointly or severally or in the alternative against the said persons named as defendants. Also was held that other facet of the aforesaid proposition of law is that there must be a cause of action disclosed against a person impleaded as a defendant.
35. Delhi High Court in the case of Tristar Consultants vs Vcustomer Services India Pvt. Ltd. & Ors. (supra) had also held as follows:-
"19. It is settled law that a company is a juristic person. Therefore, a company has to act through a living human being. Collectively, decisions on behalf of the company, are taken by the board of directors of a company. An individual director has no power to act on behalf of a company of which he is a director, unless there is a specific resolution of the board of directors of the company giving specific power to him/her, or, where the articles of company confer such an power.
20. Directors of companies have been described as agents, trustees CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 25 of 29 or representatives of the company because of the fact vis-a-vis the company they act in a fiduciary capacity. They perform acts and duties for the benefit of the company. Thus, directors are agents of the company to the extent they have been authorized to perform certain acts on behalf of the company.
21. But directors of a company owe no fiduciary or contractual duties or any duty of care to third parties who deal with the company.
22. This distinction has been ignored by learned Counsel for the petitioner.
23. Directors of a company are referred to as agents of the company in the context of their fiduciary duty to the company and therefore if they derive any personal benefit while purporting to act on behalf of the company, they will be liable to the company and its shareholders. But the directors cannot be treated as acting as agents of the company, in the conventional sense of an agent, vis-a-vis third parties."
36. Defendant no. 1 is a separate legal entity distinct from its Directors, defendant nos. 2 and 3. There is no contract/ agreement/documents signed/executed between plaintiff and defendant nos. 2 and 3 documenting/evidencing their inter se rights and liabilities. In the absence of any fiduciary or contractual duty of defendant nos. 2 and 3, Directors of defendant no. 1 company and also in the absence of defendant nos. 2 and 3 having extended any promise or guarantee or indemnity or undertaking to plaintiff with respect to payment for work done by plaintiff with respect to job sheet Ex P-1/1 issued by defendant no. 1 company; plaintiff is not entitled to a decree for recovery of money against defendant nos. 2 and 3. In view of foregoing discussions, plaintiff is held entitled for recovery of Rs. 21,07,321/- i.e., aggregate sums of bills/invoices i.e., (i) Invoice No. 004 dated 28/08/2017 of Rs. 56,200/-; (ii) Invoice No. 036 dated 17/03/2018 of Rs. 17,99,311/-; (iii) Invoice No. CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 26 of 29 037 dated 18/03/2018 of Rs. 2,51,810/- from defendant no. 1 company. Issue no. 1 is decided accordingly in favour of plaintiff and against defendant no. 1 company whereas defendant nos. 2 and 3 are held not liable to pay any sum to plaintiff.
Finding on issue no. 2
2. Whether plaintiff is entitled for any interest claimed? If so, at what rate and for which period? OPP
37. Though the legal notice Ex P-1/4 dated 04/12/2019 was dispatched by plaintiff to defendant no. 1 company by speed post on 05/12/2019 as is evident from speed post receipts Ex P-1/5; but fact of the matter is that plaintiff instituted this suit on 09/03/2021 and claim of the plaintiff is for pendente lite interest and future interest @ 24% per annum till realization but said claim is not based on terms of contract inter se parties. Bills/invoices Ex P-1/2 (Colly) on the bottom have the terms and conditions including term and condition no. 2 which reads: "2. If the bill is not paid within 15 days. Interest @ 22% will be charged." Fact remains that despite service of legal notice Ex P- 1/4 sent by speed post vide speed post receipts Ex P-1/5 as well as consequent to receipt of summons defendant no. 1 failed to make the payment of balance outstanding sum of the plaintiff.
38. Order VII Rule 2A of CPC in respect of a commercial dispute of a specified value was brought in by way of amendment in respect of the requirements of pleadings where interest has to be claimed by the plaintiff accordingly.
CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 27 of 2939. Under Section 34 of CPC it is provided that where the liability in relation to the sum so adjudged had arisen out of commercial transaction, the rate of such further interest may exceed 6% per annum but shall not exceed the contractual rate of interest or where there in no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to the commercial transactions.
40. Transactions inter se parties are commercial in nature. Bills/ invoices Ex P-1/2 (Colly) issued by plaintiff were admittedly received by defendant no. 1 company, as elicited and held in earlier paragraphs in this judgment. For the terms and conditions contained in Ex P-1/2 (Colly); prior to filing of the suit neither objections nor disputes were raised by defendant no. 1 company inter alia for the rate of interest for delayed payment. In the fact of the matter, plaintiff is entitled for pendente lite interest and future interest @ 22% per annum in terms of bills/invoices Ex P- 1/2 (Colly). Issue no. 2 is decided accordingly in favour of plaintiff and against the defendant no. 1 company.
41. Plaintiff has also claimed the cost of the suit. Keeping in view Sections 35 and 35A of CPC, it has been established that defendant no. 1 failed to pay the amount despite service of summons. Therefore, defendant no.1 itself is responsible for the cost of the litigation to the extent of court fee and lawyers fee etc. as per rules. In my view plaintiff is accordingly entitled for the cost of litigation against the defendant no. 1 to above said extent.
CS (Comm.) No. 98/2021 Mahender Dayma vs ASPEK MEDIA PVT. LTD. & Ors. Page 28 of 29Relief.
42. In view of the above discussions, suit for recovery is decreed in favour of the plaintiff and against the defendant no. 1 company for an amount of Rs. 21,07,321/- along with interest @ 22% per annum from the date of filing of suit till the date of decree and from the date of decree till realization of the decretal amount. Cost is also awarded in favour of the plaintiff and against the defendant no. 1 company to the extent of court fee and advocate's fee as per rules.
Decree sheet be prepared accordingly.
File be consigned to the record room.
Digitally signed byGURVINDER GURVINDER SINGH PAL PAL SINGH Date: 2023.01.28 12:23:12 +0530 ANNOUNCED IN (GURVINDER PAL SINGH) OPEN COURT District Judge (Commercial Court)-02 th On 28 January, 2023. Patiala House Court, New Delhi.
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