Delhi District Court
M/S Tide Water Oil Co.(I) Ltd vs M/S. Manorma Paper Mills Ltd on 11 January, 2012
IN THE COURT OF HARJYOT SINGH BHALLA :
CIVIL JUDGE-1, SOUTH DISTRICT, SAKET, NEW DELHI
Suit No.155/10
Case ID No. 02403C0088912010
M/s Tide Water Oil Co.(I) Ltd.,
1003, 10th Floor, Bhikaji Cama Bhawan,
11-Bhikaji Cama Place,
New Delhi
Through its authorized representative
Sh. A.K. Sarkar .................plaintiff
Versus
1. M/s. Manorma Paper Mills Ltd.
(A unit of Chadha Group)
Project office Doraha Rampur Road
Bazpur, U.S. Nagar, Uttrakhand
Through its M.D. / Director
Sh. Hardeep Singh Chadha
2. Sh. Hardeep Singh Chadha
Director M/s. Manorama Paper Mills Ltd.
I-1, Center Stage Mall, Sector-18
Noida, U.P. ...............defendants
SUIT FOR RECOVERY OF RS.71,855/- (RS. SEVENTY ONE THOUSAND
EIGHT HUNDRED AND FIFTY FIVE ONLY).
Date of Institution : 22.03.2010
Date of reserving the Order : 23.12.2011
Date of pronouncement : 11.01.2012
J U D G M E N T.
1 Plaintiff has filed the present suit for recovery of Rs.71,855/-
(Rs.49,005/- being the principal amount and Rs.21,750/- being the interest @
Suit no. 155/10 1 of 12
18% per annum upto 13.12.2009 and Rs.1100/- as notice charges).
BRIEF FACTS CULLED OUT FROM THE PLEADINGS:
Plaintiff's Case as per the plaint 2 The plaintiff is stated to be a Public Limited Company incorporated under the Companies Act having its registered office at 8 Dr. Rajender Prasad Sarani, Kolkatta-700001 and having its regional office at 1003, 10th Floor, Bhikajicama Bhawan, 11, Bhikajicama Place, New Delhi. The present suit has been filed by Sh. A K Sarkar, holder of power of attorney dated 16.1.2007. The plaintiff is engaged in the business of manufacturing and marketing lubricants and greases. The defendant had placed an order for purchase of lubricant oil and greases from the plaintiff company at its regional office at New Delhi on credit basis from time to time. The plaintiff has been raising invoices against supply made to the defendants and have opened and maintained a mutual and current account in its books of account in ordinary course of business.
3 As per the books of account of the plaintiff as on 22.09.2007, a sum of Rs.49,005/- was due and payable as balance principal after adjusting the part payment made by the defendant from time to time. The defendant failed to pay the amount within the grace period of 30 days as per the bills and has become liable to pay interest @ 18 % per annum from the due date of the bills as per terms printed on the bill, market customs and trade usage and the provisions of the Interest Act. The plaintiff's representatives visited the defendant but the defendant kept on postponing the payment on assurances that the same would be paid. The plaintiff got the defendant served with a legal demand notice dt. 23.12.2009 vide registered AD and UPC. Despite service of notice the amount has not been paid. Hence the present suit.
Suit no. 155/10 2 of 12 4 It is stated that the orders were placed at the office of the
plaintiff company at New Delhi, part payments were made at New Delhi. Hence the cause of action arose at New Delhi and the court has jurisdiction to try the present suit.
Defendant's case as per written statement 5 The defendant was duly served with summons. Defendant entered appearance and filed written statement. It is the case of the defendant that the suit has not been signed, verified and instituted by duly authorized person and therefore, present suit is liable to be dismissed. The defendant no. 2 has been wrongly arrayed as a party and the suit is bad for misjoinder.
6 On merits, it has been denied that the power of attorney has been duly executed or that Sh. A.K. Sarkar is authorized to institute the present suit. It has been denied that any amount is due in the books of account of the plaintiff as alleged. It has been submitted that second lot of goods delivered to the defendant company was sub standard. Not packed properly and therefore, received by the defendant in damaged condition. Intimation was given to the plaintiff company on number of occasions and the plaintiff assured to replace the goods. However, the same were never replaced.
7 It has been denied that the payment was not made within the grace period of 30 days despite demands and interest @18% per annum has to be paid. Visits by the representative and demands are denied. Service of legal notice has been denied. The amount shown as due has also been denied by the defendant.
8 It has been denied that orders were placed at the regional office at New Delhi and goods were supplied as per instructions and the part Suit no. 155/10 3 of 12 payments were made at the office of the plaintiff at New Delhi within the jurisdiction of South District. It is denied that as per the bills, jurisdiction was of courts at New Delhi. It has been averred that goods were supplied from the factory of the plaintiff company at plot no. 119, Sector-59, Balabhgarh, Faridabad (Haryana) to the factory of the defendant at Bazpur, US Nagar, Uttrakhand and invoices were raised at Regional Office of the plaintiff at Bulandshahar Road, Ghaziabad (U.P.).
Replication:
9 The contents of the written statement have been denied and those of the plaint are reiterated. It has been reiterated that the order was placed upon the Regional Office at New Delhi. Goods were delivered at the Ghaziabad address under the control of the Regional Office of the plaintiff situated at New Delhi. The payment of the earlier bills had also be made at the Regional Office at New Delhi, hence, this Court has jurisdiction. It is denied that the goods had been supplied from the factory of the plaintiff at Balabhgarh to the factory at Uttrakhand.
10 It has been reiterated that notice was duly served and the AD cards have been relied upon.
11 On the basis of the pleadings of the parties, following issues were framed on 05.02.2011 as modified by order dated 06.04.2011:-
(1) Whether the second lot of goods received by the defendant was defective?(OPD) (2) Whether the court has no territorial jurisdiction to try the present suit? (OPD) (3) Whether the suit has been signed, verified and filed by authorised person? (OPP) (corrected by order dated 06.04.2011) (4) Whether the plaintiff is entitled to any cost of the litigation or interest on the invoice amount? If so, at what rate?OPP Suit no. 155/10 4 of 12 (5) Relief.
12 Both the parties have led their evidence. The plaintiff has led its evidence and examined Sh. A.K. Sarkar as a witness. The witness was cross examined by the counsel for the defendant.
13 The defendant tendered the affidavit of DW1, however, the witness failed to appear for his cross examination on the next date and vide a order dated 21.12.2011, the right of the defendant to lead the evidence was closed.
14 The plaintiff exhibited the following documents through PW1:
1. Power of attorney in favour of Sh. A.K. Sarkar as PW1/1.
2. Copies of certificate of incorporation and memorandum of articles as PW1/2 and PW1/3.
3. The purchase order dated 10.07.2007 as PW1/4.
4. Copies of bills (OSR) as PW1/5 and PW1/6.
5. Notice and postal receipts and UPC as Ex.PW1/8 to PW1/11.
6. AD cards as Ex.PW1/12 and PW1/13.
7. Copy of Computerized Ledger of the plaintiff as Ex.PW1/14.
15 Since the witness DW1 never turned up for cross examination, his affidavit cannot be read for any purpose by the defendant. Vide an order dated 23.12.2011, an application under Order 7 rule 14 of CPC filed by the plaintiff was dismissed as belated. The plaintiff was trying to place on record the minutes of meeting of the Board of Directors in order to prove the resolution authorizing execution of POA in favour of Sh. A.K. Sarkar. Both the counsel have addressed oral arguments. Counsel for plaintiff has also relied upon written submissions filed by him.
Arguments:
Suit no. 155/10 5 of 12 16 Ld. Counsel for the plaintiff has argued that out of the two
purchase orders, payment has been made against the first and not against the second purchase order. He has relied upon the purchase order Ex.PW1/4 to contend that the purchase order was addressed to the plaintiff's office at New Delhi and the payment was to be made within 30 days. Counsel has further relied on the reverse of the invoice Ex.PW1/5 towards the clause printed over leaf excludes the jurisdiction of all other courts except for Delhi. He submits that there was no reply to the legal notice and the entire defence has been cooked up. It is submitted that even though there is no term on the payment of interest, the provisions of Interest Act are applicable and plaintiff is entitled to interest. Ld. Counsel for the defendant has on the other hand stated that the plaintiff has failed to prove that Sh. A.K. Sarkar was authorized to institute the present proceedings and even the board resolution has not been proved. Ld. Counsel has also relied upon the cross examination to buttress this submission. He has also argued that the testimony of the plaintiff's witness is contrary to the pleadings and the defendant has demolished the case of the plaintiff.
17 After having heard the parties and having perused the record, I am proceeding to deliver my issue-wise findings:
18 Issue no. 1:Whether the second lot of goods received by the defendant was defective? Onus to prove this issue was on the defendant. Defendant has not led any affirmative evidence as the affidavit of the only witness DW1 cannot be read in evidence in the absence of cross examination of the witness due to his non appearance. The defendant has only put his case to the plaintiff's witness in his cross examination which suggestions were denied by the plaintiff's witness. Therefore, the defendant has failed to prove that the goods were received in a defective condition. This issue is Suit no. 155/10 6 of 12 accordingly decided in favour of the plaintiff and against the defendant. 18 Issue no. 2: Whether the court has no territorial jurisdiction to try the present suit? Onus to prove this issue was on the defendant. Defendant has not led any affirmative evidence as the affidavit of the only witness DW1 cannot be read in evidence in the absence of cross examination of the witness due to his non appearance. The defendant has only put part of his case to the plaintiff's witness in his cross examination. 20 The witness answered this question in the following manner:-
"It is correct that the goods were delivered from the Ghaziabad Depot of the plaintiff company to the factory premises of the defendant company at Doraha Rampur Road, Bazpur, U.S. Nagar, Uttarakhand. After seeing the invoice, it is correct that there is no mention about the terms and conditions on the front of the invoice. The terms and conditions were printed from the back portion of the invoice"
21 Defendant has not even put any suggestion to the witness that the order was not placed at the New Delhi office of the plaintiff. The purchase order has been proved by the plaintiff and it is addressed to the Delhi office of the plaintiff. Defendant has failed to discharge the onus placed upon him. This issue is accordingly decided in favour of the defendant and against the plaintiff.
22 Issue no.3: Whether the suit has been signed, verified and filed by authorised person? Onus to prove this issue was on the plaintiff. The witness PW1 has in his affidavit deposed that he is duly constituted attorney and the company has executed a Power of Attorney dated 16.01.2007 in his favour through Principal Officer of the company. The original was produced for the perusal of the court. The certificate of incorporation and memorandum of articles have already exhibited by the Suit no. 155/10 7 of 12 witness. The witness has deposed that the power of attorney in his favour authorized him to sign, verify and file the present suit and is also competent to give evidence. Ld. Counsel for the defendant has urged that no board resolution has been produced by the witness which authorized the execution of the power of attorney as has been purported to have been done. Counsel has relied upon the decision in State Bank of Travencore Vs. Kingston Computers (I) (P.) Ltd. [2011] 102 CLA 124 (SC). Counsel for plaintiff on the other hand relied upon para no. 2 of the power of attorney to contend that the same authorizes the plaintiff to 'defend and prosecute, enforce or resist any suit or other action .... and to verify plaint and written statement .... as may be required on behalf of the company'. He has urged that words 'prosecute' and 'institute' are inter changeable in the context of the filing of the suit and there was ample authority to institute the suit. Reliance has been placed upon B.K. Rao Vs. Sub Collector AIR 1969 SC 563 and P.J. Joseph Vs. Suhara Beevi Hussain AIR 2000 Ker 60.
23 In his cross examination, the PW1 was only given one suggestion on the aspect of signing the plaint and the answer is as follows:
"It is correct that a specific word to sign the suit has not been mentioned in the Power of Attorney Ex. PW1/1. Vol. Clause D on page 2 of the said attorney is has been mentioned to conduct the court proceedings."
24 As far as the aspect of want of board resolution is concerned, the only suggestion and its answer is as follows :
"It is correct that there is no Board Resolution of the person who has executed Power of Attorney in my favour on the record. Vol. I have brought the board resolution."
25 There is no probe on the statement of the witness that the power Suit no. 155/10 8 of 12 of attorney was executed by the Chief Executive Officer as well as the Director of the plaintiff company. No question was put to the witness as to the number of directors of the plaintiff company. No suggestion was given that the power of attorney was not duly executed. When the witness volunteered that he had brought the resolution, no further question was put to the witness nor if the defendant demand production of the same for perusal. No suggestion was given to the witness that no board resolution had been passed and the only suggestion was that the resolution had not been placed on the record. There is no challenge to the execution of the power of attorney during the entire cross examination of the plaintiff's witness. The testimony of the witness that he was employee of the plaintiff company and working as Manager (Accounts) was not challenged in the cross examination. His testimony that the power of attorney was executed by the Chief Executive Officer as well as Director and Secretary of the company was also never challenged nor probed in the cross examination. The defendant if intended to challenge the GPA, ought to have put his case to the witness during the cross examination. In my view the power of attorney has been duly proved. 26 In my view even otherwise an implied ratification of the signing of the Plaint by Sh. A.K. Sarkar can be inferred in this case. Reference may be made to United Bank of India, Appellant v. Naresh Kumar and others. Respondents, AIR 1997 SC 3. The defect, if any, is a mere irregularity and does not oust the jurisdiction of the court. The observations of the Hon'ble Supreme Court and various High Courts are relevant in this regard. In United Bank of India Vs. Naresh Kumar & Ors AIR 1997 SC 3, it was observed and I quote:
"In cases like the present where suits are instituted or defended on behalf of a public corporation, public interest should not be permitted to be defeated on a mere technicality. Procedural Suit no. 155/10 9 of 12 defects which do not go to the root of the matter should not be permitted to defeat a just cause. There is sufficient power in the Courts, under the Code of Civil Procedure, to ensure that injustice is not done to any party who has a just case. As far as possible a substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable.
10. It cannot be disputed that a company like the appellant can sue and be sued in its own name. Under Order 6 Rule 14 of the Code of Civil Procedure a pleading is required to be signed by the party and its pleader, if any. As a company is a juristic entity, it is obvious that some person has to sign the pleadings on behalf of the company. Order 29 Rule 1 of the Code of Civil Procedure, therefore, provides that in a suit by or against a corporation the Secretary or any Director or other Principal Officer of the corporation who is able to depose to the facts of the case might sign and verify on behalf of the company. Reading Order 6, Rule 14 together with Order 29, Rule 1 of the Code of Civil Procedure it would appear that even in the absence of any formal letter of authority or power of attorney having been executed a person referred to in Rule 1 of Order 29 can, by virtue of the office which he holds, sign and verify the pleadings on behalf of the corporation. In addition thereto and dehors Order 29, Rule 1 of the Code of Civil Procedure, as a company is a juristic entity, it can duly authorise any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Order 6, Rule 14 of the Code of Civil Procedure. A person may be expressly authorised to sign the pleadings on behalf of the company, for example, by the Board of Directors passing a resolution to that effect or by a power of attorney being executed in favour, of any individual. In absence thereof and in cases where pleadings have been signed by one of its officers a Corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied. The Court can on the basis of the evidence on record, and after taking all the circumstances of the case, specially with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleading Suit no. 155/10 10 of 12 by its officer. (Emphasis supplied)"
27 In Smt. Mukhtiar Kaur, Applicant v. Smt. Ghulab Kaur, Respondent. AIR 1977 P & H 257 it was observed and I quote:
"The counsel for Gurdial Kaur is presumed to be acquainted with the facts of the case, so the verification of the claim made by him, can be accepted. Moreover, it is a defect which can amount to an irregularity and can be ignored for rejecting the plaint. The legal position is, that want of verification has not the effect of making the plaint void. It merely amounts to an irregularity. So far as the question of signing the pleading is concerned, the decisions are not uniform as to whether the defects are of substance or of procedure. The prominent view is that an irregularity in the signatures of a plaint is a mere defect of procedure and does not affect the jurisdiction of the Court. (Emphasis Supplied)"
28 In my view the ratio of the above decisions can be applied to the case in hand as the Plaintiff is a company and cannot sue by itself but must act through its agents.
29 As far as the authority to institute is concerned the words used in the power of attorney Ex.PW1/1 are that the attorney was authorized to appear and represent the company before any judicial forum and to defend and prosecute, enforce or resist any suit or any actions and for that purpose also could verify the plaint affirm affidavits and sign Vakalatnama. In my view, the power of attorney is widely worded and authorized Sh. A.K. Sarkar to institute the present suit. This issue is decided in favour of the plaintiff and against the defendant.
30 Issue no.4: Whether the plaintiff is entitled to any cost of the litigation or interest on the invoice amount? If so, at what rate? Onus to prove this issue was on the plaintiff. In the cross examination the Suit no. 155/10 11 of 12 witness produced by the plaintiff admitted and I quote:
"It is correct that there is no term and condition regarding the interest @ 18% on all the invoice raised by the plaintiff company against the defendant company. Vol. it is mutual understanding with the defendant that the interest will be charged @ 18% per annum if the payment is not received within 30 days from the date of invoice. It is correct that there is no document of mutual understanding between the plaintiff and the defendant on record. It is wrong to suggest that there was no mutual understanding to pay 18% interest and also the defendant is not liable to pay the said interest."
31 Thus, plaintiff has failed to prove that there was any agreement understanding, stipulation for payment of interest @18% per annum. As far as the legal notice is concerned, the same raised a demand of interest for delayed payment. The term of payment is mentioned in the purchase order itself i.e. Ex.PW1/4 and the same is thirty days of receipt of material. Even though no date for delivery of goods has been pleaded. It can be safely presumed that the goods dispatched on 14.07.2007 would have been received by the defendant within a period of one month and money would be payable on the 14.09.2007. Therefore, the plaintiff shall be entitled to interest @10% per annum from 14.09.2007 up till payment on the principal amount of Rs.49,005/- as well as costs of the suit. Let decree sheet be drawn accordingly. File be consigned to record room.
Announced in the open court Harjyot Singh Bhalla, Dated 11.01.2012 Civil Judge-1, South District, New Delhi.
Suit no. 155/10 12 of 12