Delhi District Court
Office At vs S.Hariharaputran & Co on 20 April, 2023
IN THE COURT OF SH. SUDHANSHU KAUSHIK :
ADDL. DISTRICT JUDGE-02 & WAQF TRIBUNAL :
PATIALA HOUSE COURTS : NEW DELHI
CIVIL SUIT NO.132/2018
CNR NO.DLND01-001072-2018
DEEPAK FASHIONS PVT. LTD.
(THROUGH ITS DIRECTOR
SH.KUNDAN LAL GUGNANI)
OFFICE AT:
33-34, UDYOG VIHAR PHASE-6,
GURGAON, HARYANA
.....PLAINTIFF
VERSUS
1. S.HARIHARAPUTRAN & CO.,
CHARTERED ACCOUNTANTS
2. S.HARIHARAN, PROPRIETOR,
S.HARIHARAPUTRAN & CO.,
CHARTERED ACCOUNTANTS
BOTH AT:
ER-40 (GROUND FLOOR),
INDER PURI, NEW DELHI-110012
ALSO AT:
B-13, 2nd FLOOR,
INDER PURI, NEW DELHI-110012
ALSO AT:
EA-1/75, INDER PURI,
NEW DELHI-110012
DATE OF INSTITUTION : 13.02.2018
DATE OF CONCLUSION OF FINAL ARGUMENT : 18.04.2023
DATE OF PRONOUNCEMENT OF ORDER : 20.04.2023
CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 1 of 15
ORDER
1. This is a suit under Order XXXVII of Code of Civil Procedure, 1908 (hereinafter referred to as 'CPC') for the recovery of a sum of Rs. 94,12,500/- (Rupees Ninety Four Lac Twelve Thousand and Five Hundred Only) along with pendente-lite and future interest at the rate of 18 % per annum. The suit is based on a cheque and four invoices.
2. The brief facts disclosed in the plaint are;
a) Plaintiff/Deepak Fashion Pvt. Ltd. is a company registered under the Companies Act, 1956 having its office at Plot No.33-34, Udyog Vihar, Phase-6, Gurgaon, Haryana. Plaintiff is engaged in the business of manufacturing fabric and exporting garments. The suit has been instituted by Sh. Kundan Lal Guglani, Director of the plaintiff company, who has been authorized to do so vide resolution passed by the Board of Directors of the company in the meeting held on 02.02.2018.
b) Defendant No. 2/S.Hariharaputran is stated to be a Chartered Accountant. Defendant No.1 M/s S.Hariharaputran & Company is the sole proprietorship firm of defendant No.1.
c) It is the case of the plaintiff that defendant No.2 and the Director of plaintiff were on friendly terms. In the month of April, 2016, defendant No.2 met the Director of the plaintiff at his residence and expressed desire to start a side business of trading in fabric in the local market. He made a written proposal vide letter dated 25.04.2016 for purchasing the fabric from the plaintiff and CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 2 of 15 requested that he may be granted 70 days credit period for making the payment for the purchases. Plaintiff accepted the offer and the parties arrived at an agreement.
d) It is the plaintiff's case that on the agreed terms, defendant placed two purchase orders of fabric; (i) dated 03.05.2016 for a sum of Rs.42,10,917.50/- and (ii) dated 04.05.2016 for a sum of Rs.32,72,800/-.
e) Plaintiff supplied the fabric vide four invoices; (i) No.DFPL/LS/015/ 2016-17 dated 01.07.2016 for a sum of Rs.20,12,417.50/-; (ii) No.DFPL/ LS/016/2016-17 dated 02.07.2016 for a sum of Rs. 22,06,800/-; (iii) No. DFPL/LS/017/2016-17 dated 02.07.2016 for a sum of Rs. 17,10,350/- and (iv) No.DFPL/LS/018/2016-17 dated 04.07.2016 for a sum of Rs. 15,70,450/-.
f) Defendant No.2 received the goods and acknowledged the same vide separate delivery challans. Towards the payment of goods, defendant No.2 issued a post dated cheque bearing No.000189 dated 14.09.2016 for a sum of Rs. 75,00,000/- drawn on Laxmi Vilas Bank, Karol Bagh Branch, New Delhi. Plaintiff presented the cheque with his banker but the same was dishonoured and received back with remarks 'Account Closed'. Legal notice was served on the defendant but he failed to make the payment. Hence the present suit.
3. Summons under Order XXXVII of CPC were served on the defendant. Defendant filed appearance within the requisite period.
CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 3 of 15 Thereafter, on the application filed by the plaintiff, summons for judgment were served on defendant. Defendant filed the application seeking leave to defend. Plaintiff opposed the application by filing reply.
4. The averments made in the application seeking leave to defend are that; The suit is not maintainable under Order XXXVII of CPC; Defendant admitted his signatures on the cheque; He also admitted the acknowledgement given by him on the invoices but denied the entire transaction. He mentioned that he was on friendly terms with the Director of the plaintiff company. He conveyed that a sham transaction of sale was created to enable the Director of the plaintiff to secure short term loan for his business; He mentioned that he handed over the purchase orders, invoices and post-dated cheque to the Director of the plaintiff to help him in obtaining loan and no commercial transaction took place between them; He claimed that plaintiff has forged his signatures on the delivery challans; He conveyed that plaintiff misused the cheque which were handed over by him. On the basis of these contentions, defendant has sought leave to defend.
5. I have heard the arguments advanced on behalf of plaintiff.
6. Although, defendant filed the application seeking leave to defend but he abandoned the proceedings and did not address arguments. Counsel for defendant sought discharge. Court notice was issued CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 4 of 15 to the defendant but the same was received back unserved with report that he is not traceable at the address furnished in the memo of appearance.
7. Counsel for plaintiff argued that defendant has failed to disclose any triable issue and the leave to defend should be dismissed. He has mentioned that the plaintiff's claim is based on a cheque and four invoices. He mentioned that the suit is perfectly maintainable under Order XXXVII of CPC. He argued that defendant has no defence to the plaintiff's claim and the defence raised by him is sham and bogus. He contended that defendant has raised a false plea that no commercial transactions took place. He contended that defendant duly placed the purchase orders and the fabric was supplied against those orders. He stated that defendant duly acknowledged the receipt of fabric by putting his signatures on the delivery challans. He mentioned that the invoices were submitted with the defendant and he acknowledged having received the same by signing them. He has prayed that defendant has no defence to the plaintiff's claim and the suit may be decreed.
8. I have perused the record.
9. Order XXXVII of CPC provides for expeditious delivery of judgment in respect of certain documents as mentioned therein. The procedure is basically an exception to the general rule relating to the recovery of money under classes of suit specified under CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 5 of 15 Order XXXVII of CPC. The procedure for recovery of money under Order XXXVII of CPC being summary in nature envisaged that defendant has to satisfy the court that he has defence to the suit filed by plaintiff. If the defence raised by the defendant is plausible, court would grant him leave to defend and thereafter, the defendant would be permitted to contest the suit either conditionally or unconditionally.
10. The principles governing the grant and non-grant of leave to defend under Order XXXVII Rule 3 of CPC have been laid down by the Apex Court in the matter of "IDBI Trusteeship Services Ltd. Vs Hubtown Ltd." 2017 (1) SCC 568. The observations made in para-17 of the judgment are as follows:
"17. Accordingly, the principles stated in paragraph 18 of Mechelec's case will now stand superseded, given the amendment of Order XXXVII Rule 3, and the binding decision of four judges in Milkhiram's case, as follows;
17.1 If the defendant satisfies the Court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit;
17.2 If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign judgment, and the defendant is ordinarily entitled to unconditional leave to defend;
CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 6 of 15 17.3 Even if the defendant raises triable issues, if a doubt is left with the trial judge about the defendant's good faith, or the genuineness of the triable issues, the trial judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security;
17.4 If the Defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires.
17.5 If the Defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintiff is entitled to judgment forthwith;
17.6 If any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court."
11. Coming to the facts of the present case. It has been submitted by defendant that the suit is not maintainable under Order XXXVII of CPC. This argument deserves to be rejected. The present suit has CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 7 of 15 been filed on the strength of a cheque and four invoices. Section 6 of the Negotiable Instrument Act defines the cheque as a bill of exchange drawn on a specified banker not expressed to be payable otherwise then on demand. Normally, cheques are issued to the banks holding the money of the drawer of the cheque. The bank is in the position of the debtor of the drawer of the cheque. The cheque is thus an order of the drawer thereof as creditor, to the bank who is his debtor, to pay to the payee of the cheque on the date of presentation, the amount thereof. The relationship between the drawer of the cheque and his banker is contractual.
12. Section 30 of NI Act states that the drawer of a cheque is bound in case of dishonor of cheque by the drawee or acceptor thereof to compensate the holder provided due notice of dishonour has been given to, or received by, the drawer. Thus, Section 30 requires due notice of dishonour to be given to the drawer of the cheque for maintaining a claim for compensation on account of dishonour of the cheque. Section 31 states that the drawee of the cheque having sufficient funds of the drawer in his hands properly applicable to the payment of such cheque must pay the cheque when duly required to do so, and, in default of such payment, must compensate the drawer for any loss or damage caused by such default. In view of these provisions, it is apparent that the dishonour of a cheque is actionable under Order XXXVII of CPC provided notice of dishonour has been given to the drawer. The present suit is based on a dishonoured cheque. Plaintiff has placed CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 8 of 15 on record the certified copy of the cheque as well as the original invoices. Plaintiff issued legal notice in respect of dishonoured cheque. The copy of the legal notice has been placed on record. The suit has been filed in the manner prescribed under Order XXXVII of CPC. It contains an averment to the effect that the plaintiff is not seeking any other relief which does not fall within the ambit of Order XXXVII of CPC. In view of this, the argument that the suit is not maintainable under Order XXXVII of CPC is erroneous and the same deserves to be rejected.
13. Further, plaintiff's suit under Order XXXVII of CPC is also based on four invoice. The original invoices have been placed on record. The High Court of Delhi has held in the matter of 'Flick Studios Pvt. Ltd. Vs Gravity Entertainment Pvt. Ltd.' CM (Misc.) No.1185/2021, decided on 20.12.2021 that a suit under Order XXXVI of CPC is maintainable on the basis of an invoice. Similar view was taken by the High Court of Delhi in the matter of 'Flint Group India Pvt. Ltd. Vs Good Morning India Pvt. Ltd.' 2017 SCC OnLine Del 7894. The High Court observed in this matter that once the details of goods/services, price and purchaser are clearly stated in the invoice and the invoice has been acted upon and accepted, it can not be said that the suit based on such invoice would not be maintainable under Order XXXVII of CPC.
14. Now, coming to the aspects whether the defendant has a substantial defence to the plaintiff's claim or the defence raised by CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 9 of 15 him is sham. Section 118 of the Negotiable Instrument Act provide certain presumption in case of a negotiable instrument. Section 118(a) states that until the contrary is proved, it shall be presumed that every negotiable instrument was made or drawn for consideration and that every instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration. This is indeed a rebuttable presumption. At this stage, it has to be seen whether an opportunity for rebutting the presumption needs to be granted.
15. It is not the defence raised by the defendant that the cheques does not bear his signatures or that the details therein were not filled by him. Defendant has admitted his signatures on the cheques. He mentioned in his leave to defend application that a sham sale transaction was created so that plaintiff may obtain loan for his business. It is improbable to believe that defendant, being a Chartered Accountant, would create fake documents like the proposal dated 25.04.2016, purchase orders, invoices and delivery challans. Each of these documents bears his signatures and he has not denied this aspect except stating that the signatures on the delivery challans are forged. Be as it may, defendant has admitted having issued a cheque in the name of the plaintiff. There is an admission on the part of the defendant about the date, signatures and the name of the person in whose favour the cheque was issued. He has admitted that he was the author of the cheque. His CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 10 of 15 sole contention is that the cheque was handed over towards a sham transaction. The said line of defence is improbable. It cannot be conceived that an ordinary prudent man would hand over a cheque for a large amount of Rs.75,00,000/- to someone simply to help him obtain loan. Defendant has raised this bald plea without tendering any explanation as to how these documents would have helped the plaintiff to obtain loan. Defendant did not take any action against the plaintiff even after gaining the information that he has misused the cheque. He kept silent and did not even reply to the legal demand notice. This, further goes on to show that the plea taken by him is false.
16. In view of the discussion made in the aforesaid paras, it is apparent that defendant has no defence to offer to the plaintiff's claim. Defendant has taken false and baseless pleas which highlights the falsity of the defence taken by him. The argument that the suit under Order XXXVII of CPC is not maintainable merely because the plaintiff has claimed interest and incidental charges does not hold ground. The High Court of Delhi observed in "Jindal Steel & Power Limited Vs N.S.Atwal" (CS-OS No.713/2010) as under:
"13. As far as the plea of the maintainability of the suit under Order 37 of the CPC is concerned, though undoubtedly there is no document on the basis whereof, the defendant can be said to have admitted the liability in the balance principal amount of Rs.2,98,39,060/- towards the plaintiff but in my opinion, in view of the subsequent admission CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 11 of 15 by the defendant of the liability in the principal amount claimed in the suit, the same pales into insignificance. This Court, if were to, inspite of such admission by the defendant, go into technicalities as to the maintainability of the suit under Order 37 of the CPC, would be lending credence to the perception "the law is an ass - an idiot" echoed by Mr. Bumble in Charles Dickens 'Oliver Twist'. Justice cannot be frustrated by legalistics. It is the duty of every court to prevent its machinery from being made a sham, thereby running down the rule of law itself as an object of public ridicule. It will and must prove any stratagem self defeating if a party indulges in making the law a laughing stock, for the court will call him to order. Justice Krishna Iyer in Bushing Schmitz Private Limited v. P.T. Menghani (1977) 3 SCR 312 quoted with approval Lord Erskine "there is no branch of the jurisdiction of this Court more delicate than that, which goes to restrain the exercise of a legal right". He further held "But the principle of unconscionability clothes the court with the power to prevent its process being rendered a parody". Once it is clear that there is no dispute of the sum of Rs. 2,98,39,060/- being due from the defendant to the plaintiff in the loan account, the Court will not enter into an academic exercise and pronounce on technicalities. The Supreme Court in T. Arvindandam Vs. T.V. Satyapal, AIR 1977 SC 2421, Liverpool & London S.P. & I Association Ltd. Vs. M.V. Sea Success I (2004) 9 SCC 512 and ITC Limited Vs. Debts Recovery Appellant Tribunal, (1998) 2 SCC 70 has held that the Courts are not to prolong litigations, the fate whereof is otherwise clear and at the expense of other cases requiring adjudication.
Even if not under Order 37of the CPC, the plaintiff under Order 12 Rule 6 CPC or under Order 15 is CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 12 of 15 entitled to a decree in the principal sum of Rs.
2,98,39,060/-. Recently also, in Krishna Devi Malchand Kamathia v. Bombay Environmental Action Group, (2011) 3 SCC 363, the Supreme Court observed that justice is only blind or blindfolded to the extent necessary to hold its scales evenly; it is not, and must never be allowed, to become blind to the reality of the situation, lamentable though that situation may be."
17. Question whether interest could be granted in the absence of agreement between parties came for consideration before Hon'ble Delhi High Court in "Ramesh Chander versus M/s Shiv Infra Promoters Pvt Ltd RFA No. 211/2017 dated 21st August, 2018 in which it held as under:
"No doubt there is no agreement between the parties, but counsel for the appellant/plaintiff rightly relies upon paragraph 21 of the judgment of the Supreme Court in the case of South Eastern Coalfields Ltd. Vs. State of M.P. and ors., (2003) 8 SCC 648 and which holds that interest is payable in equity in certain circumstances. This paragraph 21 of the judgment in the case of South Eastern Coalfields Ltd. (supra) reads as under:- "21. Interest is also payable in equity in certain circumstances. The rule in equity is that interest is payable even in the absence of any agreement or custom to that effect though subject, of course, to a contrary agreement. Interest in equity has been held to be payable on the market rate even though the deed contains no mention of interest. Applicability of the rule to award interest in equity is attracted on the existence of a state of circumstances being established which justify the CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 13 of 15 exercise of such equitable jurisdiction and such circumstances can be many.
18. In Ramesh Chandra's case (supra) after relying upon the judgment of "South Eastern Coal Fields Ltd vs State of MP & Anr." (2003) 8 SCC 648, the High Court of Delhi held that a Court can always grant an interest on equity basis to a party entitled for the same and therefore, there is nothing wrong in law for a plaintiff to claim an interest in a summary suit as grant of an interest would always be subject to discretion of the Court. Merely because a plaintiff has demanded an interest from defendant, it cannot be said that the suit filed by plaintiff would not be maintainable and therefore, contention of defendant on this account is rejected.
19. Plaintiff has sought recovery of liquidated demand of money payable by defendant arising out of a cheque. The liability for the payment of the debt arises out of cheque issued by the defendant in favour of plaintiff. The purchase order, invoices and delivery challans further support the plaintiff's claim. I am of the considered opinion that defendant has failed to disclose that there is a triable issue for which leave to defend may be granted. The suit is based on a cheque executed by defendant. Indeed, the claim of the plaintiff contains the amount towards interest but this does not mean that the plaintiff is dis-entitled for a decree under Order XXXVII of CPC.
CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 14 of 15
20. Section 80 of Negotiable Instrument Act, 1881, provides that when no rate of interest is agreed, rate of interest shall be calculated at the rate of 18 % per annum from the date when such amount should have been paid by the party Present suit is a suit based on dishonoured instrument, therefore, plaintiff under the law is entitled to claim interest @ 18% on the dishonoured cheque. Accordingly, the suit is decreed against the defendant with the following reliefs;
(a) A decree for a sum of Rs.75,00,000/- (Rupees Seventy-Five Lac only).
(b) Interest at the rate of 18% per annum from the date of notice i.e. 01.10.2016 till realization of decreetal amount.
(c) Cost of the suit is also awarded to the plaintiff.
21. Decree sheet be prepared accordingly.
22. File be consigned to record room.
Announced in open Court on 20.04.2023 (Sudhanshu Kaushik) Addl. District Judge-02 & Waqf Tribunal, New Delhi, Patiala House Courts, New Delhi/20.04.2023 CS No.132/2018:Deepak Fashions Pvt. Ltd. Vs S.Hariharaputran & Co. & Anr. page 15 of 15