Delhi District Court
This Suit For Money Recovery Was ... vs Auto Pick Up Products Passed In Rfa ... on 27 September, 2019
M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016
IN THE COURT OF SH.MANISH YADUVANSHI
ADDITIONAL DISTRICT JUDGE (CENTRAL):
TIS HAZARI COURTS: DELHI
CIVIL SUIT No : 12160/2016
(19 YEARS & 4 MONTHS & 4 DAYS OLD)
M/s INDRAPRASTHA ICE & COLD STORAGE
LIMITED
17 & 18, New Subzi Mandi
Azadpur, Delhi-110033 .....Plaintif
VERSUS
1. M/s. ARNEJA & COMPANY
537 Katra Ishwar Bhawan
Khari Baoli, Delhi-110006
2. Sh. SUNIL BHATIA
Partner, Arenja & Company
resident of F-3/16, Model Town II, Delhi-110006
3. Sh. MADHUKAR ARENJA
Partner, Arenja & Company
D-1080 New Friends Colony
New Delhi-110065 .....Defendants
SUIT FOR RECOVERY OF Rs.19,80,994/- (RUPEES
NINETEEN LAKHS EIGHTY THOUSAND NINE
HUNDRED AND NINETY FOUR ONLY WITH
PENDENTE LITE AND FUTURE INTEREST AT THE
RATE OF 2 PER CENT PER MONTH WITH EFFECT
FROM 01.06.2000
Result: Suit decreed. Page 1 of 90
M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016
Date of Institution of the suit : 24.5.2000
Date on which judgment was reserved : 16.9.2019
Date of decision : 27.9.2019
JUDGMENT
1. This suit for money recovery was originally filed under the provisions of Order XXXVII of the Code of Civil Procedure, 1908 (herein after referred to as the CPC).
2. As per the facts, the plaintiff is a duly incorporated Company under the Companies Act, 1956 which instituted this suit under the signatures of and verification of pleadings by one of its director namely Sh.Sanjay Aggarwal. The first defendant is a partnership firm of which, defendant nos. 2 & 3 are partners, who requested to the plaintiff for grant of a monetary loan of Rs.25,00,000/ in order to meet business requirements of defendant no.1. The plaintiff agreed and disbursed the loan as under:
i) Cheque no. 885329 dated 01.02.1999 for Rs.10,00,000/
ii) Cheque no. 885340 dated 08.12.1999 for Rs.10,00,000/, and
iii) Cheque no. 885351 dated 22.12.2000 for Rs.5,00,000/.
3. Towards acknowledgement, a receipt dated 22.11.1999 along Result: Suit decreed. Page 2 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 with a Promissory Note of the even date were executed by the defendants to repay the loan amount with interest @ 2 per cent per annum with monthly rest. Initially, defendants may onaccount payments towards interest as principal amount but defaulted in such payment for January, 2000. Despite demand, defendants failed to make payment. It was called upon by way of a legal notice dated 30.04.2000 but despite service, nothing was paid. Accordingly, a sum of Rs.19,80,994/ (suit amount) was due and payable till May, 2000.
4. It is submitted that the cause of action has arisen on every default in payment made by the defendants including on 05.01.2000 when an on account payment of Rs.7,00,000/ was made. It is said to be continuing. Hence, this suit.
5. The defendants entered appearance and on service of Summons for Judgment, defendant nos. 1 & 3 filed the application seeking leave to contest the suit which was disposed off on 23.11.2006. The suit was instituted in the original side of Hon'ble High Court of Delhi on 24.05.2000 when a status quo with respect to title of properties mentioned in Para 5 of IA No. 4857/2000 was ordered. On 14.03.2001, the order dated 24.05.2000 was modified with clarification Result: Suit decreed. Page 3 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 that it does not pertain to title in respect of immovable property bearing no. 537, Katra Ishwar Bhawan, Khari Baoli, Delhi110 006.
6. This order was further modified on 14.08.2001 in relation to exclusion of property No. D1080, New Friends Colony, New Delhi.
7. On 05.01.2009, defendant no.3 was restrained from selling, parting with or disposal of another immovable property i.e. Farm House No. 17 (Old No. 23), Khatauni No. 238, Khasra Nos.22/1, 22/2, 29/1, 29/2, 32, Avenue Moulsari, Western Greens, Rajokari, Delhi.
8. On 06.11.2011, on submissions of defendant no.3, he was allowed to file a bank guarantee of Rs.20.00 lakhs but on 11.12.2001 it was submitted on behalf of his defence that he was prepared to put his property admeasuring 2.7 acres Farm House at Fatehpur Beri, Tehsil Mehrauli, New Delhi as security till the leave to defend application was heard and decided. The registry of the Court was directed to keep the security with direction to supply copy of title deeds to plaintiff.
9. On 30.01.2002, the court decided validity of the surety furnished by D3 as the property belongs to HUF, the remaining Result: Suit decreed. Page 4 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 members of which undertook to file affidavits regarding their No Objections. On 24.05.2002, defendant no.3 made a statement in relation to proposed surety i.e. two sale deeds, both in relation to 13 Half share of the land in each agricultural land measuring 13 Bighas 1 Biswas bearing khasra nos. 2140/1428(09), 2144/1431(016), 2145/1431(08), 2146/1431(07), 1423(415), 1422 (012), 1429(3
0), 2141/1428(214), situated at Village Fatehpur Beri, Tehsil Mehrauli, New Delhi. Statement was also made at behest of the HUF and the remaining members of the HUF. Valuation report of the property was also called from the concerned Tehsildar. On 31.07.2002, defendant no.3 was permitted to furnish Undertaking that he will not encumber or part with possession of this property and furnish original title deeds in court which was permitted. This undertaking was accepted on 05.08.2012 and the matter proceeded for arguments on the leave to defend application.
As a matter of fact, issue with respect to attachment of property has gone up to Hon'ble Apex Court vide SLP No. 1359091 of 2010 which was disposed off with liberty to the plaintiff to approached trial court under Order XXXVIII Rule 5 CPC for modification of order regarding security of Rs.20,00,000/. A stay on Result: Suit decreed. Page 5 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 the proceedings in this suit was also ordered.
10. In the meantime, on 08.01.2004, the suit was transferred to the District Courts on account of enhancement of pecuniary jurisdiction.
11. The defendant no.2 also sought leave to defend by moving a separate application. Thus, on 23.11.2006, the applications of defendants were allowed subject to deposit of a bank guarantee or FDR by the scheduled bank in the sum of Rs.20,00,000/ upon which the order of attachment of immovable property of defendants would stand vacated. Compliance was made on 03.01.2007.
12. Defendants nos. 1 & 3 filed joint written statement on 30.04.2007 and defendant no.2 filed a separate written statement.
14. Defendant nos.1 & 3 challenged the suit, calling it an abuse to the process of law and claiming that plaint is neither signed nor verified by a competent person. It is denied that any Receipt or Promissory Note was executed while taking an alternate plea that even a Promissory Note was ever executed then also , the plaintiff is not in Result: Suit decreed. Page 6 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 regular business of money lending and therefore is not authorized to lend money for want of required license. It is submitted that plaintiff is illegally and unauthorizedly in possession of merchandise of defendant no.1 worth approximately Rs.1,22,20,000/ which were entrusted to it for storage.
15. On merits, it is averred that the partnership firm of defendants dissolved on 31.03.2000 as defendant no.2 started working against interests of defendant no.1 and started hobnobbing with plaintiff against whom criminal proceedings were initiated. It is also claimed that defendant no.2 never informed these defendants having executed any Pronote and Receipt which are stated to be false and baseless documents.
16. It is informed that defendant no.1 called upon plaintiff to release their goods which were entrusted for purpose of cold storage but they were not returned. It is averred that these goods are worth Rs.1,55,00,000/. The legal notice is said to be a mischievous document, the service of which is not denied. It is averred that defendant no.1 had refunded Rs.10,00,000/ as advanced on 18.10.1999 by two cheques one for Rs.5,00,000/ dated 04.11.1999 Result: Suit decreed. Page 7 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 and another for Rs.5,03,466/ dated 17.11.1999 drawn on Canara Bank, Chandni Chowk, Delhi. No other amount is stated to be due and payable.
17. The replication to this written statement is a reiteration, reassertion and renarration of the contents of suit plaint as correct. It is specifically denied that plaintiff is illegally in possession of any merchandise of defendant no.1 as all such merchandise of defendant no.1 lying with the plaintiff for storage in its Cold storage facility were finally withdrawn by the last withdrawal made on 29.02.2000. It is clarified that defendants had made payment only Rs.7,00,000/ by a cheque no.509175 dated 04.01.2000 besides a sum of Rs.51,353/ on account of interest by cheque no.517232 dated 07.2.2000 drawn on Canara Bank, Chandni Chowk, Delhi.
18. The defendant no.2 has taken a different stand in the written statement. The suit is said to be a result of collusion between the plaintiff and the remaining defendants. It is averred that D2 was a partner in defendant no.1 vide Partnership Deed dated 07.1.1987 to the extent of 30 per cent of share and losses while the remaining 70 per cent was that of defendant no.3. Defendant no.3 was the Result: Suit decreed. Page 8 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 controlling partner of defendant no1 and conducted its business accordingly. It is averred that defendant no.3 began misusing assets of the partnership concern despite objection of defendant no.2. Thus, dissolution of partnership took place on 31.3.2000 regarding which defendant no.2 gave notice to defendant no.1 and defendant no.3 on 22.4.2000. The defendant no.3 did not render any account and illegally retained Books of Accounts etc, of the defendant no.1. It is claimed that the firm has now been converted into a proprietorship concern by defendant no.3 but running in the same name and style as a partnership firm. It is averred that defendant no.3 opened an account in name of defendant no.1 as a proprietory concern with Tamilnadu Mercantile Bank Ltd., Chandni Chowk, Delhi110 006. It is submitted that after 31.03.2000, defendant no.3 and one Smt. Promila Arenja (mother of defendant no.3) remained the continuing partners of defendant no.1. It is submitted that factum of retirement was brought immediately to the notice of the bank.
19. This defendant also claimed that plaintiff is also in possession of merchandise of erstwhile defendant no.1 firm of more than Rs.1,20,00,000/. this defendant has denied that he is in collusion with anyone and claims that he has been subject to a fraud by defendant nos.
Result: Suit decreed. Page 9 of 90M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 1 & 3.
20. It is claimed that defendant no.2 never requested plaintiff for loan of Rs.25,00,000/. It is averred that plaintiff is in lending business for last ten years and while lending money it keeps possession of goods as security.
21. This defendant refers to a suit of defendant nos. 1 & 3 bearing no.1974/2002 titled Madhukar Arenja & anr. v. M/s Indraprastha Ice & Cold Storage Ltd. for recovery of Rs.1,22,00,000/ with interest and defendant no.2 was served with copy of the plaint and summons, it is then that he came to know for the first time, that the goods of the partnership firm were lying with the plaintiff besides also learning about the claim of the erstwhile partnership firm against this plaintiff that it has committed acts of misappropriation, cheating, falsification of documents and wrongly holding goods of erstwhile defendant no.1 to the tune of Rs.1,22,00,000/. Further, books of accounts of the firm in possession of defendant no.1 and defendant no.3 were filed in that suit. The written statement provides the tabulated details of the goods of erstwhile defendant no.1 stored in illegal possession of plaintiff company. It is, therefore, claimed by way of denial that defendant no.2 got the goods Result: Suit decreed. Page 10 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 released on 19.2.2000, as alleged.
22. On merits, the above preliminary objections have been given a build up. This defendant also challenges the competence of Sh.Sanjay Aggarwal to sign and verify as well as institute this suit.
23. The plaintiff also filed replication to this written statement denying the defence set up by defendant no.2 in the same manner as it is denying the defence set up by defendant no.1 and defendant no.3.
24. Regarding suit no. 1974/2002, it is submitted that the plaintiff did file the said suit on 22.05.2000 many weeks after the money from the defendants was already due and the defendants had made no complaint to any authority against plaintiff for nondelivery goods from 22.5.2000 to December, 2002 and therefore, this plea itself is an after thought.
25. After completion of the pleadings of the parties, the following issues were culled out on 14.08.2007 which are as under:
1.Whether the plaintiff has a cause of action for filing the present suit? OPD Result: Suit decreed. Page 11 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016
2.Whether the plaint has been signed and verified by a competent and authorized person? OPP
3.Whether the suit has been filed by the plaintiff in collusion with the defendant no.1 and 3 or the defendant no.2? OPD
4.Whether the defendant no.2 ceased to be a partner of the defendant no. 1 with effect from 21.03.2000? If so, its effect. OPD.
5.If the issue no.4 is decided in affirmative, what was the arrangement between the old and new partners qua the existing members of the defendant no. 1 and whether the plaintiff was informed about the same? OPD.
6.Whether the loan given to the defendant no.1 was supported by such documents so as to bind the defendant no.1 (partnership firm as well as partners i.e. defendant no. 2 and 3)? OPP.
7.Whether the alleged promissory note or the receipt was ever executed by the defendants? OPP.
8.Whether the alleged promissory note and the receipt have been validly executed and properly stamped? OPP.
9.Whether the plaintiff is guilty of wrongly withholding the goods of the defendant worth Rs.1.22 crore without Result: Suit decreed. Page 12 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 any authority? If so, its effect. OPD.
10.Whether the payment as alleged by the defendant no. 1 and 2 in para no. 8 of the written statement have been made to the plaintiff against the loan in question? OPD.
11.Relief.
PLAINTIFF'S EVIDENCE
26. There are two witnesses examined at the behest of the plaintiff. Sh.Sanjay Aggarwal Director of the plaintiff company filed his affidavit in evidence Ex.PW1/A as the first witness while the second summoned witness on their behalf is one Mr.Anand Deputy Branch Manager, ICICI Bank Ltd, Connaught Place, New Delhi as PW2.
27. As a matter of fact, PW1 has filed two affidavits in evidence. His first affidavit dated 27.10.2007 was tendered in evidence during his examination in chief on 01.11.2010. His second affidavit in evidence which is Ex.PW1/A dated 18.11.2013 was tendered in evidence on 17.12.2013. It was filed on 19.11.2013 and is, therefore, the relevant affidavit that is to be looked into for the purposes of evidence of the plaintiff.
Result: Suit decreed. Page 13 of 90M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016
28. Thus, PW1, Sh.Sanjay Aggarwal deposes as per pleadings. He seeks to prove Promissory Note and the Receipt dated 22.12.1999 as Ex.PW1/1 and Ex.PW1/2 respectively. The statement of account maintained by the plaintiff in respect of the loan transaction is Ex.PW1/3. Besides the above documents, PW1 also sought to exhibit the legal notice dated 30.4.2000, original postal receipts as well as the acknowledgment card as Ex.PW1/4 to Ex.PW/1/6 respectively, but the same have been marked as Mark A to C along with an objection of the defence qua admissibility and mode of proof. The witness was cross examined by counsel for all the defendants.
29. On the other hand, the PW2 produced bank record Ex.PW2/1 as per which a sum of Rs.25,00,000/ was debited from the account of the plaintiff and paid by way of three cheques in favour of the defendant no.1 company. The cheque numbers are 885329, 885351 and 885340. The requisite certificate in accordance with the Section 65B of the Indian Evidence Act is also Ex.PW2/1. This witness was not cross examined. Evidence of the plaintiff was thereafter closed, in view of the statement of the counsel for the plaintiff dated 24.9.2017.
Result: Suit decreed. Page 14 of 90M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 DEFENDANTS' EVIDENCE
30. The defendant no.3 has filed his affidavit in evidence for himself as also for defendant no.1 and was examined as D1W1. He also deposes in accordance with the defence as taken by him in the written statement and seeks to prove certified copy of reconstituted partnership deed dated 07.1.1987 as Ex.DW1/1. It is towards proof of the fact that Sh.Jodh Ram Bhatia father of defendant no.2 who was initially partner in the erstwhile defendant no.1 firm along with D1W1, his mother and defendant no.2, died in January 1987 and the firm was re constituted. D1W1 and his mother remained partners to the extent of 70% while 30% was taken over by defendant no.2.
31. Since the witness sought to rely upon the copy of the plaint in suit No.1974/2002 filed before Hon'ble High Court of Delhi by himself and his mother against plaintiff and defendant no.2 as Ex.DW1/2 but since the document was not on record, it was not exhibited. Similar is the position with respect to the written statement filed in the said suit which were sought to be exhibited as Ex.DW1/3 and 4 but as the same were not on record, they were also not exhibited.
Result: Suit decreed. Page 15 of 90M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016
32. Qua withdrawal of the goods from the godown of the plaintiff, the D1W1 referred to copy of a Gate pass dated 29.2.2000 vide which the plaintiff allowed and the defendant no.2 received 32 consignments of material valued at Rs.1,22,20,000/. However, copy of this document was also not filed and therefore not exhibited.
33. In the same context, this witness did exhibit documents Ex.DW1/6 (collectively) which are copies of Gate passes for deposit of goods from 12.5.1999 till early 2000. The witness relied upon the legal notice sent by him to the defendant no.2 on 31.5.2000 which is Ex.DW1/7. Two more such notices dated 30.7.2000 and 19.9.2000 are Ex.DW1/8 and 9 respectively.
34. D1W1 also sought to prove two letters dated 21.4.2000 and 02.5.2000 written by him to the defendant no.2 and exhibited as Ex.DW1/10 (collectively).
35. This part of examinationinchief was objected to by the plaintiff on the ground that it is beyond pleadings and the observation was left open for determination at the stage of final arguments.
36. The witness was duly cross examined by the plaintiff as Result: Suit decreed. Page 16 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 well as by the counsel for defendant no.2.
37. The defendant no.2 also led evidence and filed his affidavit sworn on 16.10.2017 which is Ex.D2W1/A and examined himself as D2W1. He also deposes as per the defence taken by him in the written statement. He produced copy of the Partnership Deed dated 01.4.1992 which has been marked as Mark A. The notice was issued to the defendant no.1 upon his retirement on 21.4.2000 (wrongly mentioned in the affidavit as 22.4.2000) and is already Ex.DW1/10. He places reliance on the certified copy of the letter dated 19.5.2000 written to the Sales Tax Office as Ex.D2W1/9; copy of the letter dated 29.5.2000 written by him to the Registrar of Firms as Mark B; certified copies obtained from the Hon'ble High Court of Delhi of the LIC Loan Papers as D2W1/12 (collectively); and certified copies of the Income Tax Returns filed by him for the year 200001 onwards as Ex.D2W1/13 (collectively).
38. The witness has also referred to the postal receipts in support of the legal notice as Ex.D2W1/3 to 5 along with the AD cards which are referred as Ex.D2W1/6 to 8 which were not exhibited as the same were not on record. Likewise, the postal receipt in support of Result: Suit decreed. Page 17 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 Ex.D2W1/10 was also not exhibited being not on record. This witness was cross examined only on behalf of the plaintiff.
39. No further witnesses were examined on either side even though the plaintiff had also filed an affidavit of its Store Incharge Sh.Jaipal and the defendants had also filed an affidavit of Ms.Monika Arenja wife of defendant no.3.
40. This Court has heard Sh.Vijay K Gupta, Advocate learned counsel for the plaintiff and Sh.Sanjay Dua, Advocatelearned counsel for the defendant no.2. It was submitted on behalf of counsel for defendants no.1 and 3 namely Sh.Deepak Dhingra, Advocate, that written submissions on record may be perused. As a matter of fact, written submissions have been filed by all the parties which have also been perused.
41. It has been argued by Sh.Vijay K Gupta, Advocate learned counsel for the plaintiff that the defence disclosed by neither of the defendants is standing on merits except an illusive plea of lack of authority of Sh.Sanjay Aggarwal who signed and verified the plaint. It has been brought to the notice of the Court that not only the Result: Suit decreed. Page 18 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 Resolution passed in this regard by the Board Members of the plaintiff company in its meeting convened on 06.4.2000 has been filed on record, even original Minute Book was also produced during the course of cross examination of PW1 on 16.8.2016.
42. Regarding the above noted plea, it has been argued that onus of it has been wrongly placed upon the plaintiff although it is a plea which has been taken by the defendants no.1 and 3 as well as defendant no.2. It is submitted that nevertheless, the plaintiff has proven the fact that the suit has been signed and verified by a competent and authorized officer on behalf of the plaintiff company.
43. It has been sought to be demonstrated that it is an admitted fact that the plaintiff company as well as the defendant no.1 company both are duly incorporated companies. It has not been disputed that Sh.Sanjay Aggarwal in his independent capacity is one of the directors of the plaintiff company.
44. Sh.Vijay K Gupta, Advocate, has also argued and sought to demonstrate from a reading of the issue that it it not based on the "institution" aspect of the suit as it specifically caters to signatures and verification of the plaint by an authorized and competent person.
Result: Suit decreed. Page 19 of 90M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016
45. It has been therefore argued that numerous case laws relied upon by Sh.Sanjay Dua, Advocate for the defendant no.2 (which I shall refer to later) are not attracted to this case as "institution" of the suit itself is not a disputed fact. While arguing that "institution" is in accordance with Order IV CPC, it is argued that Order XXIX Rule 1 CPC sets out that Director of a Corporation is a person who is competent to sign and verify the pleadings.
46. It is contended that it is not a case where someone who signed and verified the plaint has not appeared as a witness on behalf of the plaintiff. Sh.Sanjay Agarwal himself has appeared as plaintiff's witness being PW1. It is submitted that production of original Minutes Book dated 06.4.2000 nails the issue in favour of the plaintiff, but still the defendants failed to cross examine Sh.Sanjay Aggarwal on this aspect.
47. As a matter of fact, learned counsel for the plaintiff made it a point to set out a comparative reading of the contents of the plaint with the written statement of the defendant in order to demonstrate that majority of the facts set out in the plaint have met only with an evasive denial. It has been specifically pointed out that the relevant pleadings Result: Suit decreed. Page 20 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 pertaining to this issue are set out in para 1 of the plaint and in its response defendants no.1 and 3 have stated that the said contents are matter of record and on the other hand, defendant no.2 has responded to the contents of para 1 by way of evasive denial only without specifying as to how there is any doubt about the competence of Sh.Sanjay Aggarwal to sign and verify the pleadings. It is also pointed out that in the suit filed by defendants no.1 and 3 bearing No.1974/2002, Sh.Sanjay Aggarwal has been sued along with the company as director and has been termed as Authorized Representative of the same. It is submitted that the plea of the defendant no.1 is only an afterthought as no such plea was raised in the application for leave to contest and even this Court had held the Board Resolutions etc to be irrelevant while deciding the application under Order XIII Rule 1 CPC vide order dated 25.9.2013.
48. This court has been urged to note the fact that evasive denial by the defendants tantamount to admission of this fact under Order VIII Rules 3, 4 and 5 CPC.
49. It has been argued per force that admittedly legal notice was duly served upon the defendants and the fact that no reply to it was admittedly sent again demonstrates to an admission of the plaintiff's Result: Suit decreed. Page 21 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 case including authority of Sh.Sanjay Aggarwal,
50. Regarding Issue no.1, 3, 4, 5, 9 and 10, it is submitted at the behest of the plaintiff that these issues are for determination of dispute and the averments made are inter se between the defendants. It is urged that these issued are neither relating to the plaintiff nor affecting any of its right for recovery of the amount in the suit. To substantiate these argument, it is contended that it is not a disputed fact that the defendants no.2 and 3 were both partners of defendant no.1 firm when the loan was advanced by virtue of three cheques against which a Pronote Ex.PW1/1 and Receipt Ex.PW1/2 were executed on 22.12.1999. It is contended that the plea raised by the defendant no.2 stands unproved having regard to the date of advancement of the loan. It is submitted that the plea of retirement taken by the defendant no.2 from the partnership firm has never been acknowledged by the defendant no.3.
51. It is specifically pointed out that the Dissolution deed has not been placed on record to show that the defendant no.1 firm dissolved with effect from 31.3.2000. As an alternative argument, it is submitted that the plaintiff is not privy to such arrangement of alleged dissolution of the firm and in any case, it is not binding upon it. Once Result: Suit decreed. Page 22 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 again, attention of the Court is drawn to the fact that no reply was sent to their legal notice dated 30.4.2000 (Ex.PW1/4) when an opportunity was available to the defendants to take plea of such dissolution of the firm at the first instance. Another alternative arrangement in this context is suit of the defendant no.3 filed against the defendant no.2 and this plaintiff, copy of which is Ex.DW1/2 which is still subjudice. It is contended that issues no.1, 3, 4, 5, 9 and 10 can be adjudicated by the Hon'ble High Court of Delhi in the said suit.
52. So far as Issue no.6 is concerned, it is contended that transaction of the loan itself is not in dispute as defendant no.2 had duly acknowledged the same vide execution of Pronote and Receipt. Moreover, the defendants made part payment to the plaintiff company and therefore, the amount claimed in the suit is lesser than the amount due after adjustment.
53. It is therefore argued that the defendant no.3 can not escape liability only on the ground that he is not a signatory to the Pronote and Receipt as loan was admittedly paid through three cheques which were mentioned in the preceding paragraphs. Thus, a legal argument is presented that in the above scenario, one partner can not plead that the other partner was not authorized for the transaction or Result: Suit decreed. Page 23 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 viceversa. It is pointed out that at the relevant time, the defendants no.2 and 3 were partners of the defendant no.1 and receipt of the loan amount by the defendant no.1 binds its partners owing to jural relationship of partnership. It is contended that in such case, partners are only representing the firm which is a non legal entity and therefore they are responsible jointly and/or severally to discharge debts or liability of the firm.
54. So far as Issue no.7 is concerned, it is contended that PW1 has duly proved the Promissory Note as well as Receipt and has also proven that part payments were made which is evident from the account statement Ex.PW1/3. It is submitted that since legal notice has not been responded to, it stands admitted that as on 30.4.2010 i.e. the date of legal notice, there was no dispute of liability at all.
55. So far as Issue no.8 is concerned, it is submitted that it is duly stamped as per Article 49 of the Indian Stamps Act. It is also submitted that the amount was received by the defendant no.1 through cheques. It is therefore, contended that the plaintiff is entitled to the suit amount and so far as interest component is concerned, it is submitted that the plaintiff is also entitled to the agreed rate of interest mentioned Result: Suit decreed. Page 24 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 in Ex.PW1/1 in accordance with Section 80 of the Negotiable Instruments Act and Section 34 of the CPC. The transaction is said to be commercial. It is also contended that the Usurious Loan Act does not apply to commercial transactions.
56. On this aspect, reliance is placed by the plaintiff on the judgment dated 17.12.2013 in the case titled Canara Bank versus Auto Pick Up Products passed in RFA No.318/2012 where the plaintiff claimed interest at the rate of 24 per cent per annum i.e. 2 per cent per month in a suit for recovery of money regarding grant of overdraft facility to the defendant and was eventually granted unconditionally to the plaintiff.
57. On the other hand, it is the case of the defendants no.1 and 3 that the plaint is silent about any Resolution or authority in favour of Sh.Sanjay Aggarwal and so is position with respect to his affidavit in evidence, and therefore, it is contended that the suit has not been signed and verified by a competent person.
58. Regarding the aspect of plea of the defendants no.1 and 3 that they did not execute any document in favour of the plaintiff, it is Result: Suit decreed. Page 25 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 urged that the plaintiff has not contended that its officials ever checked and/or verified if the defendant no.2 was authorized on behalf of the firm to execute any loan.
59 Reference is also made to clause 12 of the Deed of Partnership dated 07.1.1987 and according to it, the defendant no.2 will devote whole of his time in the business and the other partner being defendant no.2 and then his mother Ms.Promilla Arenja will devote such time in the business as may be required. It is argued that the factum of the alleged loan was never brought to the notice of other partners and the defendant no.2 never had any occasion to take any loan in the name of the firm. The entire transaction is said to be nothing but an act of collusion. Further, reference is made to the Suit No.1974/2002 filed by the defendant no.3 his mother (Ex.DW1/2).
60 It is also contended that the defendant no.2 claims that the plaintiff withdrew their goods from the Cold Storage of defendant no.1 for the value of Rs.1,22,00,000/ which was done in a clandestine manner without informing other partners. It is also pointed out that the PW1 admits in his cross examination that he has no relation with the defendant no.3 personally and moreover, PW1 never knew as to who were actual partners of the defendant no.1, as to what was its Result: Suit decreed. Page 26 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 constitution and what changes were made.
61. It is also pointed out that the PW1 admits of dealing with the defendant no.2 only, and therefore, no occasion arose to ask for any document or letter of authority in favour of the defendant no.2 to seek loan. According to the defendants, defendant no.1 admits that he was not aware if the defendant no.2 was partner of the defendant no.1 and that he never obtained any document from the defendant no.2 in respect of his request for a loan.
62. It is further pointed out that admittedly, there were 33 withdrawals of the stock from their godown on 29.2.2000 which took place under the signatures of the defendant no.2. It is, therefore, contended that the plaintiff was not authorized to lend any money; that no debtorcredit relationship is established between plaintiff and the defendant no.1; and the defendants no.1 and 3 never executed or authorized anyone to execute Pronote and Receipt and that the suit being a result of collusion, should be dismissed.
63. Sh.Sanjay Dua, Advocate for defendant no.2 has tried to establish that no liability can be fastened upon this defendant as he retired from the partnership business and that he was not signatory to Result: Suit decreed. Page 27 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 the Pronote and the Receipt upon which this case is based. He has tried to establish that after his retirement the remaining partner(s) had taken over entire assets and liabilities of the defendant no.1 company. According to him, the plaintiff failed to lead evidence to prove that the suit has been signed, verified and instituted by a duly authorized person, in response to the plaintiff's argument that the issue no.1 has not dealt with the plea of institution of the suit but only deals with an objection regarding signatures and verification thereupon. Mr.Sanjay Dua, Advocate, further submits that even if the issue no.1 does not deal with the aspect of due institution of the suit, yet the plaintiff is duty bound to establish that the suit was duly instituted as per paw.
64. Thus it is contended that the PW1 has not filed/exhibited any document to prove issue no.1. It is urged that Order XXIX CPC only deals with authorization for signatures and verification of a plaint and question does not arise qua "institution" of the suit.
65. To establish this proposition of law, Sh.Sanjay Dua, Advocate for the defendant no.2 has also referred to Section 291 of the Companies Act.
66. The following judgments are relied upon in support of Result: Suit decreed. Page 28 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 this argument by and on behalf of defendant no.2
(a) R.Narain Dyeing & Printing Mills v Parvinder Diwan reported as 2005(83) DRJ 465 (DB). In this judgment, it was observed by the Hon'ble High Court of Delhi that the person filing his affidavit in support of the application under Order XXXIX Rules 1 & 2 CPC in a suit instituted on behalf of a corporation claims himself to be Director of it but has not placed on record any material to show that he was either a Director or authorized by the company to move the application. No document from the office of Registrar of Companies was filed to show the change in the constitution of the company, and therefore, it was held that the said person had no locus to file the application especially in view of Section 291 of the Companies' Act.
(b) Rob Mathys India Pvt Ltd v Synthes AG Chur reported as 1998(1) RAJ 396. The petitioner, in this case, is a corporation and the issue regarding competence of a person acting on behalf of a company qua institution of the suit was involved. It was observed that Order XXIX Rule 1 CPC does not authorize persons mentioned therein to institute on behalf of the company. It only authorized them to sign and verify on behalf of the company. It was also observed that under Section 290 of the Companies' Act except where express provision is Result: Suit decreed. Page 29 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 made that the power of a company in respect of a particular matter are to be exercised by the company in its general body meeting, in all other cases, the Board of Directors are entitled to exercise its powers. The individual directors have only such powers as are vested in them by the Memorandum and Article of Association. It was held that "However, the question to institute a suit on behalf of a company, having far reaching effect, is not a technical matter. It often affects policy and finance of the company. Thus, unless the power to institute a suit is specifically conferred on a particular Director, he has no authority to institute a suit on behalf of the company. Needless to say that such a power can be conferred by the Board of Directors on any person only by passing a resolution in that regard."
(c) Vimal Telektronics Pvt Ltd v M/s Tata Telecom Ltd reported as 2013 IX AD 62. In this matter also, the plaintiff was a incorporated company and an objection was taken that the plaint has not been signed and verified and filed by a duly authorized person. In this case, the defendant took specific objection that Resolution of the Board relied upon by the plaintiff did not specifically authorize its director Sh.Vimal Gupta to institute a suit. Reliance was placed on the judgment titled "Mahanagar Telephone Nigam Ltd v Smt.Suman Result: Suit decreed. Page 30 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 Sharma" reported as 2011 AD (Delhi) 331, wherein it was held as under :
"Reading Order VI Rule 14, together with Order XXI 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 XXIX can, by virtue of the office which he holds, sign and verify the pleadings on behalf of the corporation".
Hon'ble High Court of Delhi also relied upon the judgment in the case of M/s Nibro Ltd v National Insurance Co. reported as AIR 1991 Delhi 25 which refers to Chapter IV of the Delhi High Court (Original Side) Rules 1967, as per which "a suit can be presented by a duly authorized agent or by an Advocate duly authorized by him for the purpose. The authorization, in the case of a company, can be given only after a decision to institute suit is taken by the Board of Directors of the Company, the Board of Directors may in turn authorize a person, particular Director, Principal Officer or Secretary to institute a suit". Thus, it was held in the case of Vimal Telektronics (supra), after going through the contents of the Resolution therein, that the said resolution did not specifically authorize Sh.Vimal Gupta to institute the suit.
Result: Suit decreed. Page 31 of 90M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016
(d) State Bank of Travancore v M/s Kingston Computers (I) Pvt Ltd reported as JT 2011(3) SC 66. This is a case involving a Corporation with the pleadings that its Director Sh.Ashok Shukla was authorized by the company as per Authority letter by its Chief Executive Officer to sign, verify and file a recovery suit. This person admitted in the cross examination that he was given Power of Attorney on behalf of the company and that no resolution was passed by the Board of Director authorizing him to sign and verify and file the suit. The Trial Court relied upon the ratio of the judgment in M/s Nibro Ltd (supra) and held that the suit was not instituted by a duly authorized person. The Division Bench of the Hon'ble High Court of Delhi reversed the findings of the Trial Court on the issue of authority letter issued by Mr.Shukla besides two other Resolutions that authorized some persons to operate their bank accounts. The Apex Court set aside the Division Bench judgment as the respondent failed to produce any evidence to prove that Sh.Ashok Shukla was appointed as a Director of the Company and that a Resolution was passed by the Board of Directors of the Company authorizing him to institute the suit. The authority letter was termed as a scrap of paper for want of Resolution by the Board of Directors.
Result: Suit decreed. Page 32 of 90M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016
(e) M/s Nibro Ltd v National Insurance Co. reported as AIR 1991 Delhi 25. This judgment was relied upon in the case of M/s Rob Mathys India Pvt Ltd v Synthes AG Chur (supra) and various other judgments that followed later and the judgment is constituting the same ratio to the effect that for instituting a suit, official of the Corporation concerned must be specifically authorized for that purpose by a Board Resolution.
(f) Lucas Indian Services Ltd v Sanjay Kumar Aggarwal reported as 173(2010) DLT 438. In this judgment also, the appellant is a Limited Corporation wherein authority of Sh.K.K.Sen to sign, verify and file the plaint was challenged. The Hon'ble High Court of Delhi discussed the ratio of judgment in Union Bank of India v Naresh Kumar & others reported as (1996) 6 SCC 660 wherein the Apex Court took a view that in cases where suits are instituted or defended on behalf of the petitioner corporation, the public interest should not be permitted to be defeated on mere technicalities. Reliance on this judgment was placed before the Hon'ble High Court of Delhi by the counsel for the appellant on the ground that the Trial Court dismissed the suit on this technicality that the suit was not instituted by a duly authorized person. While deciding the issue, reliance was placed on the judgment in M/s Nibro Result: Suit decreed. Page 33 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 Ltd (supra) and distinction was made between the appellant in this RFA and the respondent in Naresh Kumar (supra) to the effect that the appellant in this matter was a Private Company and a Public Body/Corporation in the case of Naresh Kumar (supra). It was basically held thereafter that the relevant Resolution of the Board empowering one Sh.S.Ramanathan (Financial Controller) was not proved on record as he did not enter in the witness box to prove the said authorization letter in favour of Mr.K.K.Sen who admittedly was not Principal Officer of the company.
(g) Raj Cylinder & Containers Pvt Ltd v Hindustan General Industries & Ors reported as MANU/DE/3253/2013. Here also, the question arose for consideration is as to whether concerned suit was instituted properly or not. Mr.R.K.Bhalla, Managing Director of the appellant deposed that a Resolution was passed in his favour and as per the defendant, the said resolution only authorized Mr.Bhalla to file a suit against only a Company that was arrayed as respondent no.2 and not the other corespondents. It was observed that contention of the defendant was correct. Reliance was placed on various cases including M/s Nibro Ltd (supra) and State Bank of Travancore v M/s Kingston Computers (supra).
Result: Suit decreed. Page 34 of 90M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016
67. It is, therefore, urged on behalf of defendant no.2 that the issue regarding institution of the suit i.e. issue no.2 may be decided against the plaintiff.
68. It is also a contention of defendant no.1 and 3 in their written argments that the plaint does not make any reference to any Resolution or other letter of authority faouring Mr.Sanjay Aggarwal. It is urged that under the Companies Act, it is imperative for a company registered under the Act, to file Resolution authorizing a person to sign on its behalf.
69. On issues No.4 and 5, which are pertaining to the defendant no.2, Mr.Sanjay Dua, Advocate, submits that Smt.Promilla Arenja who held remaining 70 per cent shares in the defendant no.1 company along with defendant no.3 has not been impleaded in the suit. It is argued that the defendant no.2 ceased to be a partner of the defendant no.1 with effect from 31.3.2000 after which the continuing partners were the defendant no.3 and his mother. It is submitted that there was an agreement that the continuing partners would discharge all liabilities of the defendant no.1 thereby absolving defendant no.2. Attention of the Court is drawn to the cross Result: Suit decreed. Page 35 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 examination of defendant no.3 dated 31.1.2018 wherein he admits to have taken over all the assets and liabilities of the defendant no.1.
70. This fact is also said to be established on the ground that mother of the defendant no.3 and he himself filed CS(OS) No.1974/2002 seeking to recover certain amount of money on behalf of the defendant no.1. It is pointed out that as per their case in the said Civil Suit, the defendant no.2 has 30% share in the amount that was sought to be recovered and on the contrary defendant no.2 was also impleaded as a codefendant in the said suit for recovery.
71. It is also argued that the defendants no.1 and 3 have never pleaded that the defendant no.2 was ever given any share of the profits of defendant no.1 establishing that on retirement, defendant no.2 ceased to be a partner and was absolved of all liabilities.
72. In the same context, it is also argued that the defendant no.1 was a tenant in premises No.537, Katra Ishwar Bhawan, Khari Baoli, Delhi, and when the defendant no.2 retired, he also relinquished his claim in the tenancy which establishes that the defendant no.2 was left with no claim even on the assets of the defendant no.1.
73. Qua issues No.7 and 8, it is argued that the Receipt and Result: Suit decreed. Page 36 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 the Promissory Note are fabricated as their original was never produced at the time of determination on leave to defend application about which litigation took place even upto the Apex Court. This document was filed after a lapse of substantial period after grant of leave to defend and that the said facts are clearly indicative of ingenuineness of this document. Further, it is argued that the document has not been proved. Its execution is not witnessed by anyone. Substantiating evidence that it was signed by the defendant no.2 has not been produced and circumstances as to when, how, where and in whose presence it was signed are missing in the affidavit of PW1.
74. Another plea by this defendant to show that these documents are forged, is that the name of the defendant no.2 is not correctly mentioned on them as it is his sworn testimony being D2W1 that he makes his signatures as "SUNEEL" whereas the signatures on these documents are forged as "SUNIL" A comparison of disputed signatures with the admitted ones on record is prayed under Section 73 of the Indian Evidence Act. It is pointed out that no cross examination was offered to the D2W1 on this part of the testimony, and therefore, it should be taken as admitted. It is also argued that burden of proving not only the documents but that it was signed by the defendant no.2 remained on the plaintiff but there is hardly any evidence in the form of Result: Suit decreed. Page 37 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 independent witness or a handwriting expert. Judgment in "Diwan Chand Batra and & others v Harish Tandon" reported as 2012 (130) DRJ 420 is relied upon.
75. It is lastly argued in this context that the plaintiff has failed to even establish that any loan was given to the defendant no.1. It is submitted that the onus of proof was upon the plaintiff and judgment in Joseph John Petr Sandy v Veronica Thomas Rajkumar & others reported as AIR 2013 SC 2028, is relied holding that the party who propounds a document will have to prove it. The defendant having denied such document the burden was upon the plaintiff to prove that defendant had executed the agreement and not on the defendant to prove in negative.
76. It is also argued that as being settled law, the Court will not look into any amount of evidence unless corresponding fact is pleaded. In this regard, the defendant no.2 places reliance on the judgment titled Khagendra Lall Dutta & others versus Jacob Sole Jacob reported as (1995) 5 SCC 446, Kirpa Ram versus M/s Jagdish & Khub Ram reported as ILR (1987) I Delhi; Vanita Khanna & another versus Rajeev Gupta & others reported as 2015 (10) AD Result: Suit decreed. Page 38 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 Delhi 469 and Hans Raj versus Jagminder Singh & others reported as 2017(8) AD (Delhi) 483.
77. So far as defendants no.1 and 3 are concerned, it is in their written arguments (qua this aspect of signatures on the Pronote and Receipt and the factum of advancing the loan) that PW1 never states to have checked or verified if the defendant no.2 was authorized on behalf of defendant no.1 to accept the alleged loan. Clause 12 of the Partnership Deed dated 07.1.1987 (Ex.DW1/1) is pointed out as per which defendant no.2 shall devote his time to the business of the firm and other partners being defendant no.3 and Ms.Promilla Arenja will devote such time as may be required from time to time. It is urged that the alleged loan was never brought to the notice of the other partners of the firm. It is averred that Defendant no.2 colluded with the plaintiff due to which the defendant no.3 filed Civil Suit for recovery against this plaintiff and defendant no.2 before the Hon'ble High court of Delhi which is pending disposal.
78. This collusion is stated to be further manifest from the fact that the defendant no.2 allegedly withdrew the goods belonging to the defendant no.1 firm worth Rs.1,22,00,000/ and that too, in a clandestine manner. Attention of the Court is drawn to the fact that Result: Suit decreed. Page 39 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 PW1 concedes in his evidence that he never met or knew the partners of the defendant no.1 firm including defendant no.3 in his cross examination dated 17.12.2013 and 05.10.2016. It is pointed out that the PW1 concedes that since the plaintiff was having dealings with the defendant no.2, there was no reason to ask for any document including letter of authority to seek loan. Nevertheless, the witness claims that he was not aware that the defendant no.3 was partner of the firm and that the PW1 never obtained any document from the defendant no.2 requesting for any alleged loan as evident from cross examination of PW1 dated 02.11.2016. Attention of the court is also drawn to the fact that the PW1 confirms that on 29.2.2000, 33 withdrawals of entire stock of the defendant no.1 firm took place from the godown in that single day.
79. Sh.Sanjay Dua, Advocate for the defendant no.2 has also argued that the transaction referred to in the alleged documents is illegal in as much as interest of 2 per cent per mensem i.e. 24 per cent per annum as mentioned in them, is hit by the provisions of Usurious Loans Act. The rate of interest is said to be excessive. The judgment in the case titled Vijay Mittal v Bajaj Products & others reported as MANU/DE/3182/2015 is relied upon on the aspect of prohibition of Result: Suit decreed. Page 40 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 excessive interest wherein it has been held as under :
"10. It can not be held that there was an agreement between the parties for the defendants to pay interest at 30% per annum simply and merely because the plaintiff has printed in the bill/invoice that 30% interest per annum will be payable on the balance due. A unilateral statement of one party in the facts of this case can not be taken as an agreement binding the parties. Also, rate of interest which is claimed by the plaintiff is usurious and in fact will be hit in spirit by the provisions of Usurious Loans Act, 1918 as applicable to Delhi. Further, a Division Bench of this Court in the judgment in the case of Pt.Munshi Ram & Associates (P) Ltd vs Delhi Development Authority (DDA), MANU/DE/2115/2010 : 2010(3) Arb. Law Reporter 284, has held that the Courts have power to interfere with the rate of interest if the rate of interest charged is found to be unduly excessive and usurious. Para 20 of the said judgment reads as under :
'20. We are unequivocally of the view that the authority of an arbitrator to grant compound interest can only be under a contract as the applicable statutes, as interpreted by the Supreme Court, permitting grant of interest by an arbitrator being Section 29 of the old Act, Section 34 of the said Code read with Section 41 of the old Act and Section 3 of the Interest Act do not permit specifically the grant of such compound interest. the position is thus same in respect of the authority to grant compound interest under the new Act and the old Act. We also make it clear that even where there is such a provision in the contract, the authority of the Court is not taken away Result: Suit decreed. Page 41 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 not to grant such compound interest if it is in conflict with or in violation of the public policy of India as observed in para 18.3 of State of Haryana & ors v S.L.Arora & Company's case (supra). As for the facts of the present case are concerned, as already noticed, there is no contact for compound interest and thus compound interest can not be awarded'. Accordingly, the Court granted simple interest at the rate of 12 per cent per annum.
80. In the case of "Sanjay Mittal v Sunil Jain", MANU/DE/4564/2018 [RFA 823/2006 and 74/2007 decided on 07.12.2018], the plaintiff claimed contractual rate of interest at the rate of 2 per cent per month. In this case also, the Court examined all the pleas including plea of interest and held as under :
"The appellant/plaintiff is not entitled to interest @ 2 % per month. This rate of interest is usurious and against the public policy. It has been held by the Division Bench of this court in the case of Pt.Munshi Ram & Associates (P) Ltd vs Delhi Development Authority (DDA), MANU/DE/2115/2010 that higher rates of interest which are against public policy can be struck down by the court by finding such rates of interest to be against public policy. Any contract which is against the public policy is void as per Section 23 of the Indian Contract Act, 1872. In my opinion, therefore, appellant/plaintiff is entitled to interest only @ 9 % per annum".Result: Suit decreed. Page 42 of 90
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81. In Videsh Sanchar Nigam Limited v UPI Bank reported as 2012 (132) DRJ 424, only 12 per cent per annum simple interest was prayed and it was noted that "I may note that actually the plaintiff may be entitled to interest at the rate of 18 per cent per annum in view of Section 80 of the Negotiable Instruments Act, 1881 which provides for grant of interest at the rate of 18 per cent per annum simple in case of a dishonoured negotiable Instruments, a bank guarantee being a negotiable instrument, however, the Hon'ble Supreme Court in a recent chain of judgments reported as Rajendra Construct Co. v Maharashtra Housing & Area Development Authority & others, 2005(6) SCC 678; McDermott International Inc v Burn Standard Co.Ltd & others, 2006(11) SCC 181; Rajasthan State Road Transport Corporation v Indag Rubber Ltd, (2006) 7 SCC 700; Krishna Bhagya Jala Nigam Ltd v G Harischandra, 2007(2) SCC 720 and State of Rajasthan v Ferro Concrete Construction Pvt Ltd, (2009) 3 Arb.LR 140(SC), has held that once the litigation remains pending for a long period of time, and since the change in economic scenario has resulted in the consistent fall in the rate of interest, the Courts are duty bound to reduce higher rates of interest".
Result: Suit decreed. Page 43 of 90M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016
82. In Geetu Lakhpat & another v Jaipal reported as 2011 (181) DLT 4, the Trial Court granted interest at the rate of 2 per cent per month which was found to be both exorbitant and usurious. The Hon'ble High Court of Delhi cited from various judgments including in the case of Pt.Munshi Ram & Associates (P) Ltd versus DDA reported as 2010 (3) Arb.L.R. 284 (Delhi), held that the Courts have power to reduce even the presuit rate of interest in case the same is found to be against the public policy considering the present economic scenario and the law settled by the Hon'ble Apex Court.
83. In rebuttal, it is contended that the factum of signing the Pronote and Receipt by the defendant no.2 as well as payment of Rs.25,00,000/ to defendant no.1 by way of loan is an admitted fact. It is specifically urged that both the documents Ex.PW1/1 and Ex.PW 1/2 are based on the remittance of the loan amount already made which is also an admitted fact. All arguments made by the defendants are categorically refuted on the ground that the defendant no.1 firm is controlled by the defendant no.3 alone and the plaintiff is not concerned at all by any arrangement made interse between its partners including the alleged plea of retirement of the defendant no.2. In any case, it is urged that defendant no.2 claims to have retired on 31.3.2000 but remittance of the loan amount was made much prior i.e. Result: Suit decreed. Page 44 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 on 22.12.1999. It is submitted that para 9 of affidavit of D1W1 is an admission that the Pronote was signed. It is submitted hat no document is produced by the defendants to show that the defendant no.2 had retired and therefore, the best evidence has not been produced. It is also submitted that Ex.PW1/4 (later marked as Mark A in the absence of original) i.e. legal notice is dated 30.4.2000 i.e. after the date of alleged retirement but in response, none of the defendant informed that defendant no.2 had already retired and therefore it is an afterthought. It is also submitted that the statement of account Ex.PW1/3 reflects part payments made towards the repayment of loan which is an admitted fact. The judgment dated 21.2.2014 in the RSA No.121/21013 titled Seritec Electronics Pvt Ltd v Computer Peripherial Solutions has been relied upon.
F I N D I N G S :
ISSUE No.1
1.Whether the plaintiff has a cause of action for filing the present suit? OPD
84. The onus is upon the defendants. As per the plaint, the cause of action accrued in favour of the plaintiff on 1st, 8th and 22nd December 2000 (read as 1999) when loan of Rs.25,00,000/ was given vide different cheques. It again arose on 05.1.2000, when the Result: Suit decreed. Page 45 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 defendants made onaccount payment of Rs.7,00,000/. It again arose in the month of February 2000, when the defendants failed to pay whole of the interest as per agreed terms. In the month of March 2000, it again arose when the plaintiff demanded payment of the outstanding dues. It also arose on 30.4.2000, upon issuance of legal notice demanding payment of outstanding within 15 days. It is stated to have arisen again on 15.5.2000, when time of 15 days expired without payment having been made. It is stated to be continuing.
85. The defendants no.1 and 3 denied accrual of cause of action calling the plaint as "tissue of lies" to misappropriate the goods of the defendants worth Rs.1,54,00,000/ entrusted to the plaintiff for cold storage.
86. According to the defendant no.2, the suit is without any cause of action as the plaint does not disclose the same. According to him, no genuine or real cause of action ever arose against any of the defendants as the suit is based on forged and fabricated documents.
87. PW1 categorically deposes that the cheques given towards the loan amount were issued by the plaintiff in favour of Result: Suit decreed. Page 46 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 defendant no.1 and drawn on Bank of Madura Ltd which was later on merged with ICICI Bank Ltd. All the cheques were encashed by the defendant no.1 and credited to their bank account after the sum equivalent in the three cheques was debited to the account of the plaintiff. These cheques are referred to as Ex.PW1/7, Ex.PW1/8 and Ex.PW1/9 but the same have not been filed and/or proven on record.
The same are pleaded in para 4 the plaint and para 6 of affidavit of evidence of PW1. In response, defendants no.1 and 3 submitted in their written statement that "contents of paragraph 4 are matter of record. The plaint has not however, furnished full details of the cheques in question as regards name of the bank and the branch".
88. The plaintiff has replied to it appropriately in the Replication and so does the PW1 in para 6 of the affidavit of evidence. The statement of account is Ex.PW1/2. Though certificate under Section 65B of the Indian Evidence Act was not produce yet there is no denial by the defendant firm that Rs.25,00,000/ were not received in its bank account.
89. So far as defendant no.2 is concerned, he denies that the defendants had any financial requirement of any alleged loan. He Result: Suit decreed. Page 47 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 denies that such loan was taken by the defendant no.1. He denies receipts of the cheques or utilizing the amount of the alleged cheques by him or any dues upon him whatsoever.
90. PW2 deposed that a sum of Rs.25,00,000/ was debited from the account of the plaintiff and paid by way of three cheques in favour of defendant no.1 and the record is produced as Ex.PW2/1. It is proven in view of the certificate under Section 65B of the Indian Evidence Act which is also Ex.PW2/1. No cross examination has been offered to PW2 by any of the defendants. The oral testimony of PW1 is, therefore, supported with the documentary evidence produced by PW2. Ex.PW1/3 is the statement of account of the defendant no.1 maintained in the books of the plaintiff company for the period from 01.12.1999 to 31.5.2000. It is the loan account of the defendant no.1 company. It shows payment of Rs.25,00,000/ on the dates corresponding with the details provided by the PW1 in Ex.PW1/A. It also shows payments made by the defendant no.1 in the account of the plaintiff on 05.1.2000 vide cheque No.509175. The amount is Rs.7,00,000/. It also shows payment of Rs.51,393/ adjusted towards interest component by way of cheque No.517232 on 07.2.2000. After adjusting the same, and levy of interest at the rate of 24 per cent per Result: Suit decreed. Page 48 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 annum from 01.12.1999 to 31.5.2000 the closing balance is Rs.19,80,994/.
91. Next, I will take up accrual of cause of action in regard to demand of the outstanding which is by way of legal notice dated 30.4.2000. Defendants no.1 and 3 have not denied its service as according to them it was mischievously served upon them for demanding the dues. Thus, service of Notice becomes an admitted fact qua defendants no.1 and 3. Defendant no.2, however, denies service of the legal notice. Nevertheless, it is his own case that the defendant no.1 firm dissolved on 31.3.2000 when defendant no.2 ceased to be a partner thereof. Evidently, the transaction of the loan took place prior to this date. So, denial of receipt of legal notice become in consequential.
92. Whether defendants succeed in establishing that the plaintiff withheld goods of substantial value of the defendant no.1 or not or whether the defendant no.2 executed Promissory Note or Receipt or not are not be decided while returning a finding on this issue.
93. The above state of admissions in the written statement on facts and the corresponding evidence on record therefore establishes Result: Suit decreed. Page 49 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 accrual of cause of action in favour of the plaintiff and against the defendants.
The issue is decided accordingly in favour of the plaintiff and against the defendants.
ISSUE No.2
2.Whether the plaint has been signed and verified by a competent and authorized person? OPP
94. The onus is upon the plaintiff. As per the plaint, it is signed and verified by Mr. Sanjay Aggarwal (PW1) not only as a Director but also an Authorised Signatory of the plaintiff company which is duly incorporated under the Companies Act and the defendants have not disputed that the plaintiff company is a duly incorporated Company.
95. The defendants No. 1 and 3 have challenged the authority of Mr. Sanjay Aggarwal stating that "present plaint has neither been filed nor has been signed and verified by the competent person."
96. The defendant No. 2 also challenges the authority of PW1 stating that, "suit is not instituted by a competent person, hence Result: Suit decreed. Page 50 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 the suit is liable to be dismissed on this ground alone. Furthermore the same has not been signed and verified by a competent person." In the parawise reply in the WS of this defendant, it is specifically pleaded that "Mr. Sanjay Aggarwal is not competent to sign and verify the pleadings or competent to file the suit against defendant No. 2."
97. In the Replication filed to the Written Statement, the plaintiff specifies that Mr. Sanjay Aggarwal is competent to sign, verify and file the suit vide Resolution dated 06.04.2000 of the plaintiff company.
98. In affidavit Ex.PW1/A of PW1 sworn on 27.10.2007, the plaintiff had intended to exhibit carbon copy of this Resolution as Ex.PW1/5, however, a specific order was passed on 02.11.2010 de exhibiting the documents tendered alongwith the said affidavit in the plaintiff's evidence due to the fact that the application under Order XIII Rule 1 read with Section 151 CPC was pending consideration. Hence, PW1 filed another affidavit dated 18.11.2013 sworn on 19.11.2013 which was tendered in his evidence on 17.12.2013. Incidentally, the plaintiff failed to realize that this affidavit is silent about the Board Resolution dated 06.04.2000. It is however on Result: Suit decreed. Page 51 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 record. As a matter of fact, the witness has been crossexamined by both the sides of defendants on his authorization to depose and the defendant No. 2 has also crossexamined the witness on his competence to have instituted this suit. In this context, defendants No. 1 and 3 ended up putting a specific question to PW1 on 16.08.2016 during his crossexamination which is as under : "Q. Have you brought any Resolution on behalf of the plaintiff company authorising you to appear in the matter today?
Ans. I have brought the original Minutes of Meeting dated 06.04.2000, thereby the Board of Directors authorised me to do so."
99. According to the counsel for plaintiffs, the burden of proving the issue should have been cast on the defendants and not on the plaintiff. This argument is outrightly rejected as the plaintiff being a Corporation, authority of the person instituting the suit and verify as well as signing the plaint is to be established by none other than the plaintiff itself. The onus has been rightly cast on plaintiff. Moreover, plaintiff never sought amendment to the issue in this context under Order XIV Rule 5 CPC.
100. Resuming back to the fact that PW1 produced the Result: Suit decreed. Page 52 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 original Minutes of meeting dated 06.04.2000, it would be very relevant to point out that none of the defendants considered it appropriate to crossexamine PW1 on the Minutes of Meeting that were produced in the Original before the Court on the asking of defendant No. 1 and 2.
101. The carbon copy of the Resolution aforestated was filed on 02.11.2007 and pleading to that effect is already there in the replications filed by the plaintiff to the written statements of the defendants. It is a true copy stating that PW1, Director of company was authorised to sign, verify, file all pleadings, suits, petitions, applications, appeals and all other documents as may be required to file the case in the Court against the defendant No. 1.
102. Accordingly, though the Resolution is not referred in the second affidavit of evidence of PW1 but it got introduced in the sworn testimony of PW1 dated 16.08.2016 that too, on the asking of the defendants No. 1 and 3 and despite it, the PW1 was not subjected to further crossexamination on this issue of production of original Minutes Book to the own peril of none other but the defendants themselves.
103. The plaintiff's plea is that the Court never cast an issue Result: Suit decreed. Page 53 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 regarding competence of PW1 to have "instituted" the suit and this issue under consideration pertains only to the competence of the witness to sign the plaint and verify the pleadings which is within his competence in accordance to Order XXIX Rule 1 CPC as PW1 is Director of the plaintiff company.
104. In this context, the plaintiff is correct in urging that as per Order IV Rule 1 CPC, every suit shall be instituted by presenting the plaint in duplicate to the court or such officer as it appoints in this behalf and that every plaint will comply with the rules contained in Order VI and VII CPC, so far as they are applicable. Order XXIX Rule 1 CPC is therefore, having no bearing on institution of the suit as it pertains only to the aspect of signatures and verification of any pleading on behalf of the Corporation and further specifies that such signatures and verifications may be made by its Secretary or by any Director or other Principal Officer who is able to depose to the fact of the case. It is not disputed that PW1 is a Director of the plaintiff Corporation. As a matter of fact, he has been arrayed as the authorised person through whom the plaintiff company was to be served as well as an independent Director of the plaintiff company in the suit No. 1974/2002 filed by defendant No. 3 and his mother Smt. Promila Result: Suit decreed. Page 54 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 Arenja, certified copy of the memo of Parties of which is Ex.DW1/D2.
105. This Court has already discussed the implication of non crossexamination of PW1 by any of the defendant when he deposed on oath that he had brought the original Minutes Book in pursuance to the Resolution of the Board of Directors dated 06.04.2000.
106. The plea made by the plaintiff that the denial of authority of the PW1 to sign, verify and institute the suit raised by the defendants tantamount to an evasive denial under Order VIII Rules 3, 4 & 5 of the CPC in the wake of the fact that the defendants did not reply to the Notice dated 30.04.2000 is a good plea as far as defendant No. 1 and 3 are concerned as they have not denied the receipt of legal notice. However, defendant No. 2 has denied the same and therefore, the plaintiff ought to have proved the legal notice, its mode of dispatch and factum of service upon defendant No. 2. I have already said that this document is referred as Ex.PW1/4 in the affidavit of PW1 but the same was deexhibited and marked as Mark A. This Court would hold the above noted plea as a good plea but qua defendant No. 1 and 3 only.
107. What is intended to be conveyed by above is that merely Result: Suit decreed. Page 55 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 because the legal notice was not replied to by defendant No. 1 and 3, this Court is not of the view that nonreply to it be taken as deemed admissions of the plaintiff's case by them.
108. Having said so, this Court is not oblivious to the core issue under determination which does not include the aspect of Institution of suit yet the fact remains that PW1 has signed and verified the plaint not only as a Director but also as an authorised representative. It could have been different if the plaintiff had omitted to produce the original Minutes of the Meeting dated 30.04.2000 which is not the case.
109. In Seritec Electronics (supra) which is relied by the plaintiff, the substantial question of Law under determination was "whether the finding with respect to suit not being validly filed is against the provision of Order XXIX Rule 1 of the CPC, and the Law in this regard declared by the Supreme Court as also this Court?"
110 The Hon'ble High Court of Delhi observed that the question needed to be answered in appellants/plaintiffs favour therein holding that the Courts below committed a gross perversity in holding that the suit was not validly filed because the coDirector was not proved to be the coDirector and a signatory to the Resolution for filing Result: Suit decreed. Page 56 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 the suit. The Court further referred to its own decision in Mahanagar Telephone Nigam Ltd. Vs. Smt. Suman Sharma, Manu/DE/3735/2010; 2011 (I) AD, Delhi 331 wherein the judgment of Hon'ble Apex Court in United Bank of India Vs. Naresh Kumar and Others (1996) 6 SCC 660 was further relied to hold that on technical ground suits should not be dismissed if they are contested to the hilt i.e. till last stage. It was specifically quoted by the Hon'ble High Court in Suman Sharma's (supra) that "I have also held in the judgment in the case of Suman Sharma (supra) that issue of authorisation for filing of the suit is only relevant when there are disputes inter se shareholders i.e. there are two groups of shareholders with respect to control of the company, and otherwise Order XXIX Rule 1 CPC empowers any principal Officer of the company to institute and continue the suit".
111. The Hon'ble High Court then quoted from the judgment in Suman Sharma (supra) as under : "4. This aspect, with respect to the authority to sign and verify the suit by a principal officer has been dealt with by a Division Bench of this Court in the case of Kingston Computers (I) P. Result: Suit decreed. Page 57 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 Ltd. Vs. State Bank of Travancore MANU/DE/1946/2008 : 153 (2008) DLT 239 (DB) and in which, it has been held that a principal officer is authorised by virtue of Order 29 Rule 1 CPC not only to sign and verify the pleadings, but also therefore to institute the suit. Paras 23 to 26 of this judgement are relevant and the same read as under :
23. This then is the short issue which needs to be considered by us exercising appellate jurisdiction.
24. Order 29 Rule 1 of the Code of Civil Procedure reads as under:
1. Subscription and verification of pleading :
In suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case.
25. Discussing Order 29 Rule 1 of the Code of Civil Procedure, in the decision in United Bank of India's case (supra), in para 10, Hon'ble Supreme Court held as under: Reading Order 6 Rule 14 together with Order 29 Rule 1 of the Code of Civil Procedure Result: Suit decreed. Page 58 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 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 officer 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 authorize 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.
26. Suffice would it be to state that in law, the Secretary, Director or a Principal Officer of a company would be treated as duly authorized to institute suit on behalf of a company. This flows out from a bare reading of Order 29 Rule 1 of the Code of Civil Procedure and as further explained in the decision in United Bank of India's case.
5. Reference may also be made usefully to the judgement of the Supreme court in the United Bank of India Vs. Naresh Kumar & others MANU/SC/0002/1997 : (1996) 6 SCC 660, in which, in para 13, it is said that there is a presumption of valid institution of a suit once the same is prosecuted for a number of years.
This test as laid down by the Supreme court is also satisfied in the present case inasmuch as Result: Suit decreed. Page 59 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 the suit in fact has been prosecuted for about two years by the appellant corporation for seeking an appropriate decree against the respondent by adducing evidence.
I may note that the appellant is a public sector undertaking and not a private company where there would be disputes between two sets of shareholders claiming right to management and one set of shareholders are opposing another set of shareholders with respect to control and management of the company. This thus is an additional fact that there can be no dispute as to the authority of the person signing/verifying the pleadings and instituting the suit."
112. The above judgment clearly establishes that this suit having been filed by one of the Directors in favour of whom the Board of Directors had passed the Resolution dated 06.04.2000 has been properly instituted even though the issue under determination is not questioning the authority of PW1 of instituting this suit.
113. On the other hand, the defendant No. 2 has relied upon as many as three judgments to support the contentions that Order 29 CPC does not authorize institution of the suit. These judgments are State Bank of Travancore (supra), Nibro Limited (supra) and Lucas Result: Suit decreed. Page 60 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 Indian Services Ltd. (supra). To further supplement this argument visavis Section 292 of the Companies Act, the defendant No. 2 has also relied on judgments in R. Naraian Dyeing and Printing Mills (supra), Rob Mathys India Pvt. Ltd. (supra) and Vimal Telektronix (supra). Also cited on the issue is the judgment in Raj Cylinder (supra).
114. In State Bank Of Travencor (supra) the Trial court had not framed the issue of signatures and verifications of the pleadings by an authorised person to include the aspect of "due institution" also. Nevertheless, the facts are distinguishable as the suit for recovery of money was filed through one Sh.Ashok K. Shukla, who described himself as one of the Directors of the company and claimed that he was authorised by one Sh.Raj K. Shukla, the CEO of the company vide an authority letter dated 02.01.2003 to sign, verify and file the said suit. Thus, an objection of preliminary nature was raised by the opposite party to the maintainability of the suit on the ground that Sh. Ashok K. Shukla was not authorised by the company to file the suit and the authority letter given by Sh. Raj K. Shukla was not sufficient to entitle him to do so. It is in this context that final observations were passed by the Hon'ble Supreme Court that the said authority letter was nothing but Result: Suit decreed. Page 61 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 a scrap of paper as admittedly, no Resolution was passed in this regard. Thus, the ratio of this judgment does not apply to the facts of this case.
115. In Nibro Limited (supra), Chapter IV of the Delhi High Court (Original side) Rules 1967 were quoted requiring Resolution by the Board of Director of company to authorise a person, a particular Director, Principal Officer or a Secretary to institute a suit. In the case at hand, not only the Board Resolution was passed in favour of PW1 but PW1 also produced the relevant Minutes Book.
116. In Lucas Indian Pvt. Ltd. (supra) the relevant Board Resolution empowering the S. Ramanathan (Financial Controller) was not proved on record as he did not enter in the witness box to prove the said authorization letter in favour of Mr. K.K. Sain, who was admittedly not a principal officer of the company. Thus, facts of this case are also distinguishable from the fact at hand.
117. In R. Narain Dyeing and Printing Mills (supra), the locus standi of the person swearing the affidavit on behalf of the company in support of the application under Order XXXIX Rules 1 and 2 CPC was examined as he claimed himself to be a Director of the company but failed to produce any material to show that he was either a Result: Suit decreed. Page 62 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 Director or authorised by the company to move the application. It is in this context that the Hon'ble Court held that the said person Sh. Randhir Singh Rana had no locus to file that application, especially in view of Section 291 of the Companies Act. Again, the facts are distinguishable from facts at hand and it is never a case of the defendant here that Section 291 or for that matter Section 290 of the Companies Act is of any application to this case.
118. In Rob Mathys India Pvt Ltd (supra), though it was held by the Hon'ble High Court of Delhi that Order 29 Rule 1 CPC does not allow a person to institute the suit on behalf of a Corporation. Yet, it was clarified that the Board of Directors can confer specific powers on any person only by passing a Resolution in that regard. It is in this context that Section 290 and 291 of the Companies Act were discussed. In the case at hand, PW1 produced original Minutes Book and was not crossexamined.
1198. The judgment in Seritec Electronics (supra) is later in point of time than the judgment in Rob Mathys India Pvt Ltd (supra) and in any case, the former judgment also clarifies that the issue of authorization of filing of suit is only relevant when there are disputes Result: Suit decreed. Page 63 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 interse the shareholders.
120. For the reasons as stated above, even the judgment in the case of Raj Cylinder (supra) is not attracted to the facts of the case at hand.
121 In view of the above detailed discussion and findings, it is held that the plaintiff has successfully proven the fact that PW1 was not only competent and authorized to sign and verify the plaint, but was also competent to institute the suit.
The issue is decided accordingly in favour of plaintiff.
ISSUES No.3 & 9Whether the suit has been filed by the plaintiff in collusion with the defendant no.1 and 3 or the defendant no.2? OPD AND Whether the plaintiff is guilty of wrongly withholding the goods of the defendant worth Rs.1.22 crore without any authority? If so, its effect. OPD."
Result: Suit decreed. Page 64 of 90M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016
122. These two issues are taken up together as they overlap each other. Onus to prove both these issues is on defendants. According to the defendant No. 2, the suit is result of collusion between the plaintiff and remaining defendants while as per the defendant No. 1 and 3, this suit is result of collusion between the plaintiff and defendant No. 2.
123. According to the defendant No. 1 and 3, the defendant No. 2 had withdrawn the goods of defendant No. 1 company from the cold storage facility of plaintiff company without any authority to do so and therefore the plaintiff and defendant No. 2 caused wrongful loss to the defendant No. 1 company. On the contrary, the case of the defendant No. 2 that he has never withdrawn any such goods of defendant No. 1 and was never a signatory to the Promissory Note and the Receipt. It is further his case that he ceased to be a partner of the defendant No. 1 w.e.f. 21.03.2000.
124. It is important to note that the defendant No. 3 and his wife Smt. Promila Arenja have already filed a suit in this regard against plaintiff company as well as the defendant No. 2 herein.
125. The averments of both the sets of defendants regarding collusion have remained bald averments which have not been Result: Suit decreed. Page 65 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 substantial, reliable, trustworthy, cogent evidence on record of this file. As a matter of fact, PW1 claims that defendant No. 2 and 3 are jointly and severally liable to pay the outstanding dues of the plaintiff alongwith the defendant No. 1 being its partners.
126. On the other hand, defendant No. 3, who deposes for himself and on behalf of defendant No. 1 firm, claims that he became aware of the collusion between plaintiff and the defendant No. 2 in respect of misappropriation of the goods of the firm and soon thereafter, they filed suit No. 1974/2002 , certified copy of which is Ex.DW1/2. He claims that goods of the value of Rs.1,22,20,000/ were in the custody of plaintiff company which authorised retrieval of goods validly on 20.01.2000. Thereafter, goods of value of Rs.1,22,20,000/ were allowed to be withdrawn in one single day i.e. 29.02.2000 and this withdrawal was made by defendant No. 2. It is claimed that if plaintiff had anything due against the defendants, it would not have allowed withdrawal of the entire material as in such case, the plaintiff would have kept a lien over these goods to ensure payment.
127. In order to prove this, DW1 refers to the gate passes for deposit of goods from 12.05.1999 till early 2000 as Ex.DW1/6 collectively. However, this part of evidence is found to be beyond pleadings. Moreover, the original or the carbon copies of these gate passes have not been produced and as a result of which mere photo copies of the same do not suffice.
Result: Suit decreed. Page 66 of 90M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 Certified copies of these gate passes obtained from the record of CS No. 1974/2002 are on record but the original file was never got summoned from the Hon'ble High Court of Delhi. The defendant No. 2 has categorically denied any such withdrawal. Evidence to prove that plaintiff wrongly withheld goods of the defendants has not been adduced. The best evidence could have been the stock registers and the balance sheet of the relevant year including the profit and loss accounts which have not been produced.
128. As a result of the above, neither issue No. 2 stands proved nor the issue No. 9. Both are decided respectively in favour of the plaintiff and against the defendants.
ISSUES No.4 & 54.Whether the defendant no.2 ceased to be a partner of the defendant no. 1 with effect from 21.03.2000? If so, its effect. OPD."
AND
5.If the issue no.4 is decided in affirmative, what was the arrangement between the old and new partners qua the existing members of the defendant no. 1 and whether the plaintiff was informed about the same? OPD."
129. Both these issues are related and the onus lay upon the defendants. Admittedly, no Dissolution Deed has been produced on Result: Suit decreed. Page 67 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 record. Further, the Dissolution of the partnership concern would follow a settlement of accounts. It is not so in this case as the defendant No. 2 claims as D2W1 that disputes arose between him on one part and defendant No. 3 and his mother Mrs. Promila Arneja on the other during the year 1999 and as a result of it, the existing partnership was dissolved with effect from 31.03.2000. After its dissolution, a new partnership came into existence with only two partners i.e. defendant No. 3 himself and his mother. It is further deposed by D2W1 that the parties agreed that new partnership shall discharge all kinds of liability of defendant No. 1 and thus D2W1 was fully absolved of any liability. It is further deposed that the fact of retirement was immediately brought to the notice of plaintiff as well as defendant No. 3 and his mother. D2W1 has referred to notice dated 22.04.2000 (Ex.D2W1/2). He deposes that the STO was also informed vide notice Ex.D2W1/9 and the Registrar of Firms was also informed vide letter dated 29.05.2000 which is Ex.D2W1/10. These documents are stated to be certified copies obtained from the record of Civil suit No.1974/2002. Again, the judicial file was not got summoned to prove the originals. Nevertheless, the letter dated 21.04.2000 (Ex.DW1/10) reveals that it is a notice given to defendant No. 3 only. There is no written notice given to the plaintiff to show that the alleged termination of partnership of defendant No. 2 was brought to the notice of the plaintiff. Accordingly, the factum of retirement of the defendant No. 2 from the partnership firm i.e. defendant No. 1 is a fact to which the plaintiff Result: Suit decreed. Page 68 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 was never a privy. There is dearth of supporting evidence to prove the above on record of this file. Nevertheless, during crossexamination on 31.01.2018, the defendant No. 3 admitted as D1W1 as under : It is correct that my partnership with the defendant No. 2 had been dissolved but I do not remember the date from which the partnership was dissolved."
130. The above admission is suffice to return a finding on the issue No. 4 that the partnership firm had ceased on 21.03.2000. The effect of retirement of defendant No. 2 is dependent upon the fact as to whether or not the defendant No. 2 specifically proves (in the absence of written contract/deed) that the continuing partners agreed to take over all liabilities of the firm thereby absolving defendant NO. 2 of all liabilities. It is important because the loan transaction alleged is of prior date i.e. much prior to the date of the retirement of defendant No. 2 from partnership of defendant No. 1.
131. The plaintiff has never admitted of the fact that any such retirement was communicated by either defendant No. 2 or defendant No. 3 or for that matter, any other representative of the firm. D2W1 was put specific questions on above aspect during his crossexamination dated 14.05.2018 and the relevant part of it is quoted below: "Q. You claim that it was agreed that the new partnership of defendant No. 3 and his mother shall discharge all kinds of liabilities of defendant Result: Suit decreed. Page 69 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 No. 1 and that you were fully absolved of any liability. Do you have any document to support your assertion?
Ans. I do not have any such documents.
It is correct that there is no written document to support the alleged agreement claimed in para No. 6 in my affidavit.
Q. You claim that you brought your retirement to the notice of plaintiff company. How did you bring to the notice?
Ans. I might have informed them verbally."
132. The above testimony is sufficient to establish two aspects. The first aspect is lack of any documentary evidence to show that the defendant No. 2 was discharged of all kinds of liabilities of the defendant No. 1 upon his retirement. The second aspect is that the witness is not even sure if he even verbally informed the plaintiff regarding his retirement.
133. Nevertheless, as far as the first aspect is concerned, D1W1 made another admission in his same crossexamination dated 31.01.2018 which is as under : "It is correct that I had taken over all the assets and liabilities of erstwhile partnership when I became the sole proprietor."
134. Ordinarily, this admission can be taken to be sufficient so far as the case of defendant No. 2 is concerned. There is a catch involved. Record shows the fact which is also an admitted fact amongst the defendants Result: Suit decreed. Page 70 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 that Smt. Promila Arneja was also a partner alongwith her son/ defendant No. 3. After retirement of defendant No. 2, the existing partners would be defendant No. 3 and his mother. If even this partnership was dissolved then same should have been pleaded by the defendant 1 and 3. Even if they did not plead so, it was required of the defendant No. 2 to have sought clarification from D1W1 during his crossexamination as to when was the existing partnership between the remaining partners came to an end. If that partnership continued for sometime, it is likely to have acquired certain more liabilities post retirement of defendant No. 2. It is not clear from record/evidence as to when the sole proprietorship under defendant No. 3 commenced. It was therefore absolutely necessary for the defendant No. 2 to have established that defendant No. 3 took over all the assets and liabilities of the erstwhile defendant No. 1 partnership firm including the transaction involved in this suit. Thus, the sole admission as above, which is contrary to all the pleadings previously made, will be of no assistance to defendant NO. 2 here.
135. Accordingly, the factum of retirement of defendant No. 2 does not affect plaintiff's case at all. The issue No. 4 is decided in favour of defendant No.2 accordingly.
136. Since the pleaded arrangements between the old and new Result: Suit decreed. Page 71 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 partners of defendant No. 1 has not been proved and since it also remains unproved that the defendants informed the plaintiff about the alleged retirement, the issue No. 5 remains unproved.
It is accordingly decided against the defendants.
ISSUES No.7 & 87.Whether the alleged promissory note or the receipt was ever executed by the defendants? OPP.
AND
8.Whether the alleged promissory note and the receipt have been validly executed and properly stamped? OPP.
137. Both these issues are also related to each other. The onus to prove lay upon the plaintiff.
138. The learned counsel for defendant No. 2 has cited from the judgment in Joseph John Peter Sandy (supra) to the effect that the party propounding a document is required to prove it. In the same context, on the aspect that only those facts which are pleaded can be proved, the defendant No. 2 has further relied on the judgments in Khagendra Lal Dutta (supra), Kirpa Ram (supra), Vanita Khanna Result: Suit decreed. Page 72 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 (supra) and Hans Raj (supra).
139. As per Section 60 of the Indian Evidence Act, oral evidence has to be direct and in the context of this case, if it refers to a fact which could be seen, it must be the evidence of a witness who says he saw it.
140. Defendant No. 2 is denying that Ex.PW1/1 and Ex.PW 1/2 were signed by him. Other defendants claimed that defendant No. 2 was not authorised to take any loan on behalf of defendant No.1 or to sign these documents. On 15.07.2010, the defendants No.1 and 3 denied execution of this document during the course of admission and denial of the documents. Its original was not filed with the suit but, that, in itself does not make the document as a fabricated one. Execution of it was duly pleaded in the plaint itself.
141. The document is dated 22.12.1999 acknowledging receipt of sum of Rs.25,00,000/ from the plaintiff by way of cheque Nos. 885329, 885340 and 885351. It is a promise to pay the said amount made by the defendant No. 1 firm (through defendant No. 2) alongwith interest at the rate of 2 per cent per mensem alongwith monthly rests Result: Suit decreed. Page 73 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 with effect from the said date till payment is made to the plaintiff company.
142. The affidavit of PW1 (Ex.PW1/A) contains a statement in para 5 that towards consideration of receiving the loan, the defendants executed Ex.PW1/1 and Ex.PW1/2 respectively and that these documents were signed by defendant No. 2 on behalf of defendant No. 1. He does not say that he was present when the defendant No. 2 signed on these documents and admittedly, he never enquired about the authority of defendant No. 2 to have signed such documents on behalf of the defendant No. 1 thereby binding it as well as other partner to the acts committed by him.
143. Of course, the defendant No. 2 denies to have signed on these documents and also draws attention of the Court to the fact that he signs as "Suneel" and not as "Sunil".
144. This ambiguity in the affidavit of PW1 regarding his silence of having seen the defendant No. 2 signing on the pronote has been clarified during the crossexamination of PW1 that was offered to him by the counsel for defendant No. 1 and 3 on 05.10.2016, when on a Result: Suit decreed. Page 74 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 specific question to that effect, the witness responded that the promissory note was signed by Mr. Sunil Bhatia, partner of the defendant No. 1. The last question put to PW1 on 02.11.2016 also extracted a reconfirmation of this fact. The third reconfirmation of this fact is clear from the answer of the witness during his cross examination dated 03.11.2016 when he again affirms that the pronote was duly executed by Mr. Sunil Bhatia and the said document is a document to show that the defendant No. 2 had consent and authority on behalf of defendant No. 1 regarding transaction in question. He admits that the pronote is not signed by any other partner but affirms that defendant No. 2 acted on behalf of the defendant No. 1 firm.
145. Further clarity of the aspect is brought out from the cross examination offered to this witness by counsel for defendant No. 2 on 16.2.2017 when the witness affirms that Ex.PW1/1 and Ex.PW1/2 were written in his presence even though he was unable to recollect as to whose writing is thereupon. He however volunteered that the signatures are of defendant No. 2 who may have also written part of the body of the text in those documents.
146. There is nothing further relevant in the lengthy cross examination of PW1 qua the issue at hand. Suffice is to say that the Result: Suit decreed. Page 75 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 witness never stated on oath that he saw the execution of the document with his own eyes. Section 67 of the Indian Evidence Act, 1872 mandates that if a document is alleged to be signed or to have been written wholly or in part by any person, the signature or handwriting of so much of the document as is alleged to be in that person's handwriting must be proved to be in his handwriting. The said proof is missing. No witness individually saw the execution of the document except PW1 who preferred to remain silent about the fact as to whether the defendant No. 2 signed on them in his presence or not.
147. The plea that the defendant No. 2 has been putting his signatures as "Suneel" rather than "Sunil" and since Ex.PW1/1 and Ex.PW1/2 are signed in the latter manner, they become doubtful and therefore fabricated is an impressive plea but it is missing in the pleadings. To add to it, the defendant No. 2 never pointed out to any specific document that would qualify as his "admitted signatures"
pertaining to the period contemporaneous to the date of advance of loan/execution of Ex.PW1/1 and Ex.PW1/2 respectively. Reference during arguments is made to the driving license and passport etc. so that the court may compare signatures thereupon with the signatures of disputed documents under Section 73 of the Indian Evidence Act but, Result: Suit decreed. Page 76 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 these documents are neither filed nor proved. This plea is therefore not proving out to be impressive for want of the above.
148. So far as the aspect of insufficient stamping on this document is concerned, this Court is in agreement with the plaintiff that appropriate stamp duty is paid on it in accordance with Article 49 of the Indian Stamps Act.
149 I shall part with the above said issue mentioning specifically that through strict proof of execution of pronote and receipt by defendant No.2 is not produced by plaintiff but it is equally relevant to note that there is no denial at all that the amount of Rs.25,00,000/ was not credited to the bank account of defendant No. 1 firm. This is subject matter of issue No. 6 and shall be dealt accordingly.
As a result of the above discussion, issue No. 7 is decided against the plaintiff while issue No. 8 is decided in plaintiff's favour.
ISSUE No.6
6.Whether the loan given to the defendant no.1 was supported by such documents so as to bind the defendant no.1 (partnership firm as well as partners i.e. defendant no. 2 and 3)? OPP.
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150. The onus of this issue lay upon the plaintiff and regardless to the fact that due execution of the promissory note and receipt by defendant No. 2 remained doubtful and thus unproved, the issue under determination pertains to documentary evidence in order to show that loan given to defendant No. 1 was supported by such documents so as to bind the defendant No. 1 as well as other partners.
151. Para 3 of the plaint is constituting of pleadings to the effect that defendants No. 2 and 3 requested the plaintiff to give a loan of Rs.25 Lacs to meet business requirements of the defendant No. 1. In reply to the corresponding para, the defendant No. 1 and 3 literally admit this averment stating that the contents are "matter of record". In evidence, PW1 admits that he never had the direct dealings with defendant No. 3. However, in view of absence of specific denial, the said lengthy crossexamination of PW1 regarding whether the plaintiff had dealings with defendant No. 3 or not become irrelevant.
152. Para 4 of the plaint describes the mode by which the amount of Rs.25,00,000/ was disbursed as loan to the defendant No. 1 and the details of the three cheques are provided therein.
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153. In reply to the corresponding paragraph, the defendant No. 1 and 3 again say that the same is matter of record. They also say that plaintiff has not furnished full details of the cheques as regards name of bank and the branch. The plaintiff did so by explaining about the above in the replication. Thus again, there is no specific denial to the fact that defendant No. 1 did not receive the amounts in the referred cheques in its bank account.
154. In para 8 of the written statement, defendants No. 1 and 3 have referred to a repayment made by them to the plaintiff for sum aggregating to Rs.10,03,466/ against a sum of Rs.10,00,000/ taken as advance by them on 18.10.1999. Its relevance with plaintiff's claim of having advance total loan of Rs.25,00,000/ is not explained anywhere.
155. Defendant No. 2 has, of course, denied that he ever requested plaintiff to advance loan of Rs.25,00,000/. He even denied that the money was paid by way of three cheques into the account of defendant No. 1 firm.
156. PW1 has reiterated the above facts regarding loan transaction in paragraph 3 and 4 of his affidavit in evidence Ex.PW1/A. He also refers to the statement of account Ex.PW1/3.
157. In crossexamination of PW1 on behalf of defendant NO. 1 and 3, plaintiff replied to a question of these defendants that he is signatory Result: Suit decreed. Page 79 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 of these cheques. He was suggested that the said three cheques are not the cheques by which alleged loan was given. This suggestion does not hold ground in view of the fact that they have never denied the transaction specifically. They have also not disputed that the amounts in the cheques were not credited in the account of the defendant No. 1 firm.
158. A case has been tried to be set up by defendants in the cross examination without realizing that no such defence was ever raised by them in their written statement and the same is to the effect that admittedly, the plaintiff company had lien over substantial quantity of goods of the defendant No. 1 firm and their value exceeded the amount of alleged loan but, the plaintiff allowed withdrawal of all the goods without withholding them to ensure payment. This line of crossexamination is also irrelevant as no such defence was ever taken.
159. PW1 referred to the balancesheet of plaintiff company as a document which shows the money advanced by the plaintiff company as loans to the defendant No. 1 firm. The witness was never suggested that it was wrong. He was never asked to produce the balancesheet for the relevant periods.
160. The crossexamination to PW1 constitutes of a major part dedicated to the questions pertaining to the satisfaction of PW1 regarding Result: Suit decreed. Page 80 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 competence of defendant No.2 to accept loan and execute documents on behalf of the defendant No. 1 firm, without realizing the fact that specific denial is missing at the first place. No dispute has been created at all that the amount of Rs.25,00,000/ was never credited to the bank account of defendant No.1 firm.
161. The relevant document in this context is the statement of account is Ex.PW1/3 as well as the documents produced and proven by PW2 to whom, no crossexamination has been offered at all. Ex.PW1/3 is not challenged as no crossexamination has been offered to PW1 on this document. It shows payment of Rs.25,00,000/ in the account of defendant No. 1 by the plaintiff company. It also shows that on 05.01.2000, a part payment of Rs.7,00,000/ and on 07.02.2000 a part payment of Rs.51,393/ were made into this account. The closing balance as on 31.05.2000 is Rs.19,80,994/.
162. Defendant No. 3 himself is one of the partner of defendant No. 1 and as D1W1, he was required to answer as to whether the loan was not advanced or advanced. As per him, "I am not aware if the plaintiff extended the loan amount of Rs.25 Lacs to the defendant No. 1 on the basis of receipt and a promissory note dated 22.12.1999............. It is correct that the account books showed the credit of the loan amount Result: Suit decreed. Page 81 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 extended by the plaintiff to the defendant No. 1."
163. So far as part payment towards the loan amount is concerned, on being asked, D1W1 stated that, "It is correct that a repayment of the principal amount alognwith the interest portion amounting to Rs.7 Lacs was paid by defendant No. 1 to the plaintiff towards the part discharge/repayment of the aforesaid loan amount."
164. Although the witness volunteered that he came to know of this fact after filing of this case, however, the same does not inspire confidence in view of the conflicting stand which the witness takes as defendant in the WS and as witness in the witness box.
165. The witness further admitted that a legal notice was served by the plaintiff before filing this suit.
166. The above therefore establishes that the defendants were partners of defendant No. 1 firm and therefore bound on its behalf. It is also established that the loans were advanced on three dates i.e. 01.12.1999, 08.12.1999 and 22.12.1999 and at the relevant time the partnership concern had not been dissolved. Admittedly, a part payment was of Rs.7,00,000/ was made in the loan account. None of the defendants had bothered to explain as Result: Suit decreed. Page 82 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 to who made this part payment and under what authority.
167. The conduct of D2W1/defendant No.2 of not initiating legal proceedings against remaining defendants or the plaintiff in respect of subject matters of this suit is also not sufficiently explained as evident from his crossexamination dated 06.3.2018. Merely because he claims in his crossexamination dated 14.5.2018 that he did not receive any profit from the firm for the year 19992000 does not absolve him of the liability of the firm, he being a partner at the relevant time.
168. It is therefore established that the loan was advanced to defendant No. 1 company and the other defendants are bound for repayment of balance amount.
The issue is decided in favour of plaintiff.
ISSUE No.10
10.Whether the payment as alleged by the defendant no. 1 and 2 in para no. 8 of the written statement have been made to the plaintiff against the loan in question? OPD.
169. The onus of this issue was on defendant s. According to the defendants No. 1 and 3, defendant No. 1 had refunded Rs.10 Lacs taken as Result: Suit decreed. Page 83 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 advance on 18.10.1999 by cheques - one for Rs.5,00,000/ dated 04.11.1999 and another for Rs.5,06,466/ dated 17.11.1999, drawn on Canara Bank, Chandni Chowk Branch, Delhi. The plaintiff has denied this averment stating that the alleged amount has been paid on account of an earlier transaction and has nothing to do with the transaction in the suit. The relevant witness is D1W1 of defendant No. 3 who deposes nothing about this averment in his affidavit Ex.D1W1/A. It was for the defendants to establish that these payments were made and to relate the payments with the transaction in question. It has not been done. Even the bankers concerned were not summoned.
This issue is therefore decided against the defendants and in favour of the plaintiff.
ISSUE No. 11 RE L I E F.
170. This aspect involves the principal sum adjudged in favour of the plaintiff, the liability of the defendants including that of payment of interest, the rate and the period.
171. The principal amount in the suit that is claimed is Rs.19,80,994/. This amount is substantiated in view of Ex.PW1/3 but Ex.PW1/1 i.e. Promissory Note and Ex.PW1/2 i.e. the Receipt Result: Suit decreed. Page 84 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 purported executed on 22.12.1999 stands unproved as much as its execution by defendant No. 2 is concerned. It is the sole document which relates the loan transaction with the agreed rate of interest which is claimed at 24% per annum i.e. 2 per cent per mensem from the date of execution i.e. 22.12.1999 until the date of payment in full with monthly rests. Apart from this document, there is no written agreement or contract between the parties with respect to the rate of interest. This Court is left with only the oral testimony of PW1 regarding the applicable rate of interest but it is unsubstantiated. In the same context, it is observed that the amount in suit is the aggregate sum total of the interest already levied by the plaintiff at the rate of 24 per cent per annum with effect from 01.12.1999 to 31.05.2000. This entry is with respect to interest of Rs.80,015/ for the period from 01.12.1999 to 31.01.2000, at the rate of 24 per cent per annum with effect from 01.02.2000 to 29.02.2000. This entry is with respect to interest of Rs.35,674/; at the rate of 24 per cent per annum with effect from 01.03.2000 to 31.03.2000. This entry is with respect to interest of Rs.38,529/; at the rate of 24 per cent per annum with effect from 01.04.2000 to 30.04.2000. This entry is with respect to interest of Rs.38,057/; and at the rate of 24 per cent per annum with effect from 01.5.2000 to 31.5.2000. This entry is with respect to interest of Result: Suit decreed. Page 85 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 Rs.40,112/.
172. Thus, the interest already charged at the rate of 24 per cent per annum on the principal amount of Rs.25,00,000/ aggregate to a sum of Rs.2,32,387/. Against this amount, a payment of Rs.51,393/ has been already credited to the account of defendant No. 1 by the plaintiff on 07.2.2000.
173. Thus, the principal sum remains Rs.25,00,000/ and the last installment of loan of Rs.5,00,000/ was debited to the account of defendant No. 1 on 22.12.1999. In the absence of any specific agreement, the plaintiff can only claim interest on the respective amounts debited to the loan account of defendant No. 1 with effect from the respective dates of the cheques which are 01.12.1999, 08.12.1999 and 22.12.1999. They have claimed the interest with effect from 01.12.1999 against their own document Ex.PW1/1 and Ex.PW 1/2, as per which, the payment of interest started from 22.12.1999.
174. Having established that the principal sum adjudged is Rs.25,00,000/ only, what remains to be determined is the quantum of interest thereupon and the period.
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175. Learned counsel for the defendant submits that the claim of the plaintiff over the interest component at the rate of 24 per cent per annum is not only exorbitant but also prohibited under the Usurious Loans Act, 1918 as applicable to Delhi. In this context, he has already cited from the judgments in cases titled Vijay Mittal (supra), Sanjay Mittal (supra), BSNL (supra) and Geetu Lakhpat (supra).
176. Conversely, the learned counsel for the plaintiff has argued that the provisions of the Usurious Loans Act, 1918 do not apply to commercial transactions. He also argued that the plaintiff is entitled to the agreed rate of interest mentioned in Ex.PW1/2 and Ex.PW1/3 in accordance of Section 80 of the Negotiable Instruments Act as well as Section 34 CPC.
177. The above contention is difficult to accept visavis applicability of Usurious Loans Act, 1918 in as much as the Act itself has no application to a case where there is no loan. The term "excessive" finds the definition in the Act itself in Section 3(2), (a), (b) to (d) of the Usurious Loans Act, 1918. It is imperative for a party pleading applicability of the provisions of this Act (defendant No. 2 Result: Suit decreed. Page 87 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 herein) to show that the entire transaction itself was unfair. In this case, the argument in this regard made for the first time during the course of final arguments only. A discretion is vested in the Court to award interest at a rate that balances the scales of justice in the wake of Usurious Contracts in which element of undue influence is established. In the instant case, there is nothing before the Court to come to a conclusion that the transaction in question is Usurious. Thus, the judgments cited on these aspects by the defendant No. 2 can only be taken as a guiding factor.
178. The question of applicability of Section 80 of the Negotiable Instruments Act therefore assumes importance. When no rate of interest is specified in the instrument, interest on the amount due thereon shall (notwithstanding any agreement relating to interest between any parties to the instrument) be calculated @ 18% per annum from the date at which the same ought to have been paid by the party charged, until tender or realization of the amount due thereon, or until such date after the institution of a suit to recover such amount as the Court directs.
179. It would be clear from Section 80 of the Negotiable Instruments Act itself that it presupposes existence of an Result: Suit decreed. Page 88 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 "instrument". In the instant case the only instrument is the Promissory Note Ex. PW1/1 which has not been proved for want of proof of signatures of defendant No. 2 thereupon. Thus, the plaintiff cannot claim interest @ 18% per annum as a matter of right.
180. Having regard to the fact that the transaction in the suit is not a commercial transaction and having regard to the provisions of Section 34 of the Interest Act visavis the fact that the business transactions between the parties ceased after the dispute, I am of the considered view that grant of bank rate of interest @ 6% per annum shall suffice.
181. The loan amount is Rs.25,00,000/. Out of this amount, a sum of Rs.7,51,393/ has been already paid as per Ex. PW1/3, leaving a balance amount of Rs.17,48,607/. This balance amount is the principal sum adjudged upon which the plaintiff is found entitled to interest at the rate of 6 per cent per annum with effect from 22.12.1999 till the date of suit till realization which shall include the pendente lite and future interest also.
182. The amount will be payable by the defendants jointly as Result: Suit decreed. Page 89 of 90 M/s Indraprastha Ice & Cold Storage Ltd. V M/s Arenja & Co & ors CS 12160/2016 well as severally, defendants No. 2 and 3 being partners of defendant No. 1 partnership firm at the relevant time.
183. Thus, the suit of the plaintiff stands decreed as under:
a) A money decree for a sum of Rs.17,48,607/ is hereby passed in favour of the plaintiff and against the defendants in their joint and several liability.
b) Simple interest at the rate of 6 per cent per annum is also granted to the plaintiff and against the defendants in their joint and several liability upon the sum of Rs.17,48,607/ with effect from 22.12.1999 till realization which shall form part of presuit interest as well as pendente lite and future interest till realization.
c) Costs of the suit are also awarded to the plaintiff.
184. Decree sheet be drawn up accordingly in the above terms.
185. File be consigned to the record room.
Announced in the open (MANISH YADUVANSHI)
Court on 27.09.2019 ADDL. DISTRICT JUDGE-11
CENTRAL DISTRICT
TIS HAZARI COURTS, DELHI.
Result: Suit decreed. Page 90 of 90