Delhi District Court
M/S Danisco Ingredients vs M/S Allied Beverage Ltd on 21 January, 2009
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IN THE COURT OF SHRI RAKESH TEWARI:
ADDL. DISTRICT JUDGE: DELHI.
SUIT NO.978/08 (Old no.366/03)
M/s Danisco Ingredients
Having its registered office at-
5, Block-E, Local Shopping Center,
Masjid Moth, Greator Kailash II,
New Delhi-110 048.
Also at:- DLF Corporate Park,
5th Floor, Block 4B, Phase III,
Gurgaon-122 002.
....PLAINTIFF
VERSUS
M/s Allied Beverage Ltd.
Through its Managing Director
Mr.Surender Sadhu
UG-1, District Center-1,
Janak Puri, New Delhi.
Also At:
M/s Allied Beverage Ltd.
Plot No.51, Industrial Area,
Daruhera, District Rewari,
Haryana.
....DEFENDANT
Date of Institution : 08.05.2003
Date when the case reserved for order : 06.01.2009
Date of Order : 21.01.2009
JUDGMENT
1. The case of the plaintiff company is that it is engaged in business relating to bakery, beverages, confectionery, 2/18 dairy, frozen desert, processed meat and sea foods, soups & sauces etc., and is subsidiary of Danisco A/S, Denmark and its products portfolio includes Emulsifiers, stabilizers, flavours and sweeteners such as Xylitol and Fructose.
2. It is further averred in the plaint that on 26.11.1998 the plaintiff company has taken over the business of flavor division of M/s Wimco Exports Ltd. which was carrying its business at 5, Block E, Local Shopping Centre, Masjid Moth, Greater Kailash-II, New Delhi-110 048 and thus, the plaintiff had stepped into the business of manufacturing and selling of food flavors of M/s Wimco Exports Ltd. and had taken over all its stocks, debtors, effects inventories etc.
3. It is further alleged in the plaint that the defendant is a company incorporated under the Companies Act and in the first week of March 1997 approached M/s Wimco Exports Ltd., predecessor-in-interest of the plaintiff for purchasing the food flavors, ingredients etc., from it and that since then, the predecessor-in-interest of the plaintiff and thereafter the plaintiff has been supplying the food flavors, ingredients etc. to the defendant as per its orders placed from time to time and bills were accordingly raised from time to time and 36 3/18 bills have been narrated in the plaint and the last bill dated 6.6.2002 and that the goods sold by the plaintiff and its predecessor-in-interest to the defendant were duly acknowledged by the defendant by making an endorsement on the bills and also acknowledged the supply of goods by issuing the Sales Tax Form 'C' to the plaintiff and its predecessor-in-interest and that the predecessor-in-interest of the plaintiff and thereafter the plaintiff have been selling the goods to the defendant on credit basis from time to time and had opened an account of the defendant in its books of accounts and the purchases so made by the defendant were duly and regularly debited in the said account of the defendant and the payments received from the defendant from time to time were duly and regularly credited to the said account of the defendant maintained by the plaintiff and its predecessor-in-interest in their books of accounts and that on 7.6.2002 the defendant made the last part payment of Rs.20,000/- by way of cheque and thereafter the defendant stopped making the payments and as per the books of accounts of the plaintiff, a sum of Rs.10,30,641/- was outstanding as on 7.6.2002 after adjusting the said amount 4/18 received from the defendant. It is further averred in the plaint that despite various reminders and representation made to the defendant by the plaintiff regarding the payment of the outstanding dues, the defendant had failed to make the payment and accordingly on 23.10.2002 a legal notice was got served upon the defendant calling upon it to make the payment of the outstanding dues which was duly received by the defendant but had failed to make the payment. It is further alleged that an interest @ 24% per annum has also accrued on the said outstanding amount from 7.6.2002 till the filing of the present suit which comes to Rs.1,85,515/- and it is prayed that a decree for the sum of Rs.12,16,156/- may be passed with an interest @ 24% per annum from the date of institution of the suit till its realization in favour of the plaintiff along with costs of the suit.
4. In its written statement the defendant has taken the objections that the suit of the plaintiff is neither signed nor verified by the competent person nor the same has been instituted by the competent person and that no cause of action has accrued in favour of the plaintiff and in reply on 5/18 merits, it is submitted that M/s Wimco Exports Ltd., the predecessor-in-interest of the plaintiff had not supplied, the present plaintiff, the correct facts and the plaintiff had filed the present false suit and that M/s Wimco Exports Ltd. had deliberately and willfully cheated the defendant company and raising the bills from time to time was absolutely false because nothing was due and payable by the defendant to the plaintiff and its predecessor-in-interest and that the dates, bill/invoice and the amount shown therein by the plaintiff and its predecessor-in-interest were concocted to the suitability of the plaintiff as nothing is due and payable by the defendant to the plaintiff and whatever goods had been taken by the defendant, all the payments were made upto date to the plaintiff and its predecessor-in-interest. It is further denied that the plaintiff had been selling the goods to the defendant on credit basis from time to time and that books of accounts are concocted and manipulated by the plaintiff and that by making a payment of Rs.20,000/- by the defendant on 7.6.2002 though it has made the full and final amount to the plaintiff and its predecessor-in-interest and the outstanding amount as claimed in the suit has been 6/18 denied, receiving of the notice has also been denied and interest as claimed in the suit has also been denied.
5. In the replication the plaintiff has denied the preliminary objections and reiterated the contents of the plaint on merits.
6. On the merits of the said pleadings my learned predecessor vide his order dated 11.10.2004 framed the following issues:-
i. Whether the present suit has been
filed and plaint signed and verified by a
competent person? (OPP)
ii. Whether the plaintiff is entitled to
Rs.10,30,641/- as outstanding till 7.6.2002 from the defendant? (OPP) iii. Whether the plaintiff is entitled to interest of Rs.1,85,515/- @ 24% p.a. from 7.6.02 till the filing of the present suit i.e., 9.4.03. If not at that rate of interest, to which rate of interest, if any, the plaintiff is entitled to recover from the defendant?
(OPP)
iv. Whether the payment of Rs.20,000/-
made by the defendant to the plaintiff on
7.6.02 was by way of full and final settlement 7/18 and nothing remains due and payable by the defendant to the plaintiff/its predecessor-in-
interest? (OPD)
v. Relief.
7. In order to prove its case the plaintiff has produced its Assistant Manager (Finance & Liaison) as PW1 who filed his examination-in-chief by way of affidavit which is Ex.PW1/A which shall now be read as Ex.P1 because the first document has also been exhibited as Ex.PW1/A, who has exhibited the copy of the resolution of the board of directors of the plaintiff company as Ex.PW1/A, the copy of the certificate of incorporation along with the memorandum and article of association as Ex.PW1/B-1 (colly) and B-2 (colly), the copy of the board resolution regarding the taking over of the business of M/s Wimco Exports Ltd. as Ex.PW1/C, the consolidated balance sheet of the plaintiff company and M/s Wimco Exports Ltd. as Ex.PW1/D, the copies of the bills/invoices pertaining to the transactions as Ex.PW1/E1 to Ex.PW1/E36, sales tax forms 'C' as Ex.PW1/F1 to Ex.PW1/F4, the copy of the statement of account of the plaintiff company as Ex.PW1/G, the copy of the statement of bank account of the 8/18 plaintiff company as Ex.PW1/G2 (colly), copy of the cheque deposit slips kept by the plaintiff as Ex.PW1/G3 (colly), the copy of the legal notice dated 23.10.2002 as Ex.PW1/H, its postal receipt as Ex.PW1/I, its UPC as Ex.PW1/J and acknowledgment cards as Ex.PW1/K (colly) and thereafter he was cross-examined. The plaintiff further produced PW2 the partner in the chartered accountant firm auditing the account of the plaintiff company who filed his affidavit of examination-in-chief which is Ex.PW2/A in which he proved the consolidated balance sheet which is already exhibited as Ex.PW1/D and thereafter he was cross-examined.
8. On the other hand, the defendant company has produced its authorized representative as DW1 who filed his affidavit of examination-in-chief which is Ex.DW1/A and thereafter he was cross-examined.
9. I have heard the counsels for both the parties and perused the record and written submissions filed on behalf of the defendant.
ISSUE NO.1
10. With regard to issue no.1 PW1 has proved the resolution of the board of directors of the plaintiff company as 9/18 Ex.PW1/A and the copy of the certificate of incorporation along with memorandum and article of association as Ex.PW1/B1 (colly) and B2 (colly) and in his cross examination he replied that he was serving in the management of the plaintiff company since 1.7.1999 and he denied the suggestion that suit has not been filed by competent person. In the resolution Ex.PW1/A passed by the board of directors of the plaintiff company the name of PW1 as Sh.Vinod Bhardwaj is mentioned who has been authorized to sign, appear, represent, compromise, reply to legal notice and documents and to represent the company in the matters pertaining to civil, criminal, company law and also under the Negotiable Instruments Act before the Courts of Law and any other competent authority. The said resolution has been duly signed by the Managing Director of the plaintiff company. The defendant has miserably failed to assail the same in the cross examination of PW1. Hence, I hold that the suit has been duly signed, verified and instituted by a competent person on behalf of the plaintiff and accordingly, the issue no.1 is decided in favour of the plaintiff and against the defendant.
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ISSUE NO.2
11. With regard to issue no.2 the PW1 has deposed in his affidavit of examination-in-chief Ex.P1 about the facts as narrated in the plaint and he has exhibited the resolution of the board of directors of taking over the business of M/s Wimco Exports Ltd. as Ex.PW1/C, the consolidated balance sheet of the plaintiff company and said M/s Wimco Exports Ltd. as Ex.PW1/D, the original of which was again produced and exhibited by PW2 who was the chartered account in the plaintiff company and who audited the consolidated balance sheet under his signatures. The PW1 further proved 36 bills/invoices raised against the defendant as Ex.PW1/E1 to Ex.PW1/E36 and he has also proved the sale tax forms 'C' as Ex.PW1/F1 to Ex.PW1/F4, the statement of account as Ex.PW1/G, the legal notice dated 23.10.2002 as Ex.PW1/H and its postal receipt, UPC and acknowledgment cards as Ex.PW1/I to Ex.PW1/K. At the time of his cross examination although the Ld. Counsel for the defendant objected the exhibition of the certain documents exhibited by PW1 but neither the said objections have been pointed out in the written submissions on behalf of the defendant nor argued 11/18 orally at the time of final arguments and hence, the objections being vague and unspecific are hereby overruled.
12. In the cross examination PW1 has replied that M/s Wimco Exports Ltd. was merged with the plaintiff company prior to his joining with the management. He denied the suggestion that amount claimed against the invoices had already been paid by the defendant. He admitted that a sum of Rs.20,000/- was paid by the defendant on 7.6.2002 which was the last payment made by the defendant but he denied the suggestion that the defendant had already made the settlement with the M/s Wimco Exports Ltd. or that the defendant was only to pay the said amount of Rs.20,000/- which was paid on 7.6.2002. He further denied the suggestion that Wimco Exports Ltd. has not authorized the plaintiff to recover the amount and he further denied the suggestion that material mentioned in Ex.PW1/E1, Ex.PW1/E25 to Ex.PW1/E27, Ex.PW1/E29 to Ex.PW1/E36 was never delivered to the defendant. He admitted that Ex.PW1/E35, Ex.PW1/E1 to Ex.PW1/E7 and Ex.PW1/E15 to Ex.PW1/E18 does not have the signatures of person to whom the material was delivered. He did not produce the original 12/18 of the statement of bank account of the plaintiff which was exhibited as Ex.PW1/G2. He denied the suggestion that no amount is due and payable by the defendant.
13. In the cross examination of PW2 the chartered accountant of the plaintiff company, he has replied that he was auditor for M/s Wimco Exports Ltd. for more than 10 years and was also auditing the income tax audit of the plaintiff company for more than 10 years and the job of audit was assigned to his firm by the share holders of the company. Further he had no personal knowledge of the sale and purchase of the goods between the parties.
14. From the said cross examination of PW1 and PW2 it is quite evident that the defendant has totally failed to assail any of the documents proved on record on behalf of the plaintiff as mentioned above. Although, it was argued orally that the 36 bills as mentioned in para 7 of the plaint do not tally with the sales tax forms which are Ex.PW1/F1 to Ex.PW1/F4. To a little extent, I found the said contention of the defendant as correct for example the bill/invoice no.23 dated 22.4.1997 as mentioned in para 7 of the plaint was for Rs.1,74,200/- but at the back of the sales tax form Ex.PW1/F1 13/18 as item no.1 the amount of the said bill was shown as Rs.1,72,400/-. Except that discrepancy of the amount the defendant has failed to point out anything false or frivolous in the bills/invoices or the Central Sales Tax Forms Ex.PW1/F1 to Ex.PW1/F4 and vouchers Ex.PW1/E1 to Ex.PW1/E7. The sales tax forms are in original and are basic documents and in this sense the plaint is a document secondary in nature because the plaint is prepared on the basis of some facts which are gathered from other sources and this discrepancy cannot by itself a ground of rejecting the case of the plaintiff and I am taking the amount at the bill no.23 dated 22.4.1997 as Rs.1,72,400/- because the same is mentioned in the sales tax form Ex.PW1/F1.
15. It was further argued on behalf of the defendant orally that sales tax forms have not been duly proved by calling the concerned official from the Sales Tax Department. This was not pleaded in the written statement nor mentioned in the written submissions and even a suggestion was not thrown to PW1 and PW2 that the sales tax forms Ex.PW1/F1 to Ex.PW1/F4 are false and fabricated. Hence, I hold that the said sales tax forms have been duly proved on behalf of the 14/18 plaintiff. Even no suggestion was thrown to PW1 that bills/invoices Ex.PW1/E1 to Ex.PW1/E36 or the statement of account of the plaintiff company Ex.PW1/G1 was false and fabricated. The statement of account Ex.PW1/G1 mentions the outstanding amount against the defendant as Rs.10,30,641/- in the account sheet from 1.5.2001 to 11.3.2003.
16. On the other hand, the defendant has taken the defence that it has never dealt with the plaintiff company in any transaction on credit basis and whatever material was supplied its payment was duly made from time to time and nothing was due to the defendant and it was to pay a sum of Rs.20,000/- only to the plaintiff which has been duly paid on 7.6.2002. Let me examine what defendant has to say in its defence who has produced its authorized representative as DW1 who filed his affidavit of examination-in-chief as Ex.DW1/A wherein he has deposed about the facts on the lines indicated above but in his cross examination he has replied that he had been working with the defendant company since 1994 as Managing Director and since 2004 he was the Director and that he was the share holder but he 15/18 could not tell as to how many shares he was having and the amount thereof. He categorically admitted that the defendant company used to take goods from M/s Wimco Exports Ltd. on credit as well as cash basis. He did not know that on 26.11.1998 M/s Wimco Exports was taken over by the plaintiff company. He did not know if the sales tax forms Ex.PW1/F1 and Ex.PW1/F4 were issued by the defendant company or not but the same bore the stamps of the defendant company. A specific question was put to DW1 in his cross examination that in his affidavit Ex.DW1/A he had stated that on 7.6.2002 the defendant made the payment of Rs.20,000/- in full and final settlement to the plaintiff to which he replied that he did not remember if he had stated so in his reply and affidavit. Although, he denied to have received the legal notice of the plaintiff nor he could recognize the signatures on the AD cards Ex.PW1/K (colly) but he admitted that in both the AD cards the address of the defendant company was correctly written.
17. From the said cross examination of DW1 the only inference which can be drawn is that the defendant company is blowing hot and cold in the same breathe. On the one hand 16/18 it is pleaded that the defendant company never took the goods from the plaintiff or its predecessor-in-interest on credit basis but in his cross examination the said witness of the defendant company admitted that goods were being taken on credit and cash basis. No evidence was led on behalf of the defendant to prove as to how the payment of Rs.20,000/- was in full and final settlement of the claim of the plaintiff or its predecessor-in-interest. Thus, the defendant has miserably failed to prove its defence. The plaintiff has not only proved its claim by way of documentary evidence but also pointed out the contradictory stand of the defendant which is fortified by the fact that in the cross examination of DW1 he has denied the knowledge of sales tax forms as Ex.PW1/F1 to Ex.PW1/F4 issued by the defendant company but at the stage of admission/denial of the documents the same have been admitted by the defendant. Thus, the plaintiff company is held entitled to recover the amount of Rs.10,30,641/- from the defendant outstanding on 7.6.2002. Accordingly, the issue no.2 is decided in favour of the plaintiff and against the defendant.
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ISSUE NO.3
18. The plaintiff has claimed interest which is to the tune of Rs.1,85,515/- @ 24% p.a. from 7.6.02 to 9.4.03 when the present suit was filed. I am of the considered opinion that this rate of interest is not only on higher side but penal in nature. Even in the invoices which have been exhibited on the record as Ex.PW1/E1 to Ex.PW1/E14 which were issued on behalf of the predecessor-in-interest of the present plaintiff it is mentioned in the footnote that interest @ 20% per annum would be charged if payment not received in accordance within 15 days. These words contradict the claim of rate of interest by the plaintiff. Even rate of interest as 20% p.a. is penal in nature in my considered opinion. Accordingly, a reasonable rate of interest @ 9% p.a. is awarded on the said decreed amount to the plaintiff from 7.6.2002 till realization. The issue no.3 is decided accordingly to the extent indicated above in favour of the plaintiff and against the defendant.
ISSUE NO.4
1. In view of my discussion in the issue no.2 above, I am of the considered opinion that the defendant has miserably 18/18 failed to establish on record that the payment of Rs.20,000/- made on 7.6.02 was by way of full and final settlement and nothing remains due and payable by the defendant to the plaintiff/its predecessor-in-interest. Accordingly, the issue no.4 is decided against the defendant and in favour of the plaintiff.
RELIEF
20. In view of my holding on issues no.2 and 3, the plaintiff is entitled to a decree for the sum of Rs.10,30,641/- along with an interest @ 9% p.a. with effect from 7.6.2002 till realization and the costs of the suit is also awarded to the plaintiff. Let the decree-sheet be prepared accordingly. File be consigned to Record Room.
ANNOUNCED IN THE OPEN COURT ON 21.1.2009.
(RAKESH TEWARI) ADDL. DISTRICT JUDGE:
DELHI.