Delhi High Court - Orders
Ashwani Kumar Bhatia vs J.K Arora on 1 August, 2022
Author: Neena Bansal Krishna
Bench: Neena Bansal Krishna
$~15
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 319/2011
ASHWANI KUMAR BHATIA ..... Plaintiff
Through: Mr. Kuljeet Rawal, Mr. Vikram
Alung & Mr. Aditya Joshi,
Advocates.
versus
J.K ARORA ..... Defendant
Through: Mr. Preet Pal Singh & Mr. Saurabh
Sharma, Advocates.
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
ORDER
% 01.08.2022 I.A. 5274/2019 (U/S 151 of CPC for leading re-examination/rebuttal)
1. The present application has been filed under Section 151 of the Code of Civil Procedure, 1908 on behalf of the plaintiff seeking to lead re-examination/rebuttal of PW-1.
3. It is submitted in the application that the plaintiff has filed a Suit for recovery, which is pending adjudication. The evidence has been concluded on behalf of the plaintiff and the defendant recently. During the cross-examination, DW-1-Jagjiv Kumar Arora deposed that the Share Certificates had been issued in the name of the "Leading Estate Company"
on the premise that the plaintiff, Ashwani Kumar Bhatia had not paid any money, so there was no question of allotment of any shares to the plaintiff.
4. It is submitted that in fact, Leading Estate Limited is a deemed Signature Not Verified Digitally Signed CS(OS) 319/2011 Page 1 of 8 By:NIRMLA TIWARI Signing Date:10.08.2022 11:50:05 Limited Company, which is closely held family Company of the plaintiff. Over the course of time, the plaintiff had advanced personal resources as unsecured loan to Leading Estate Limited, which is duly reflected in the ledger account. The plaintiff had paid Rs. 2,00,00,000/- to the defendant under an Memorandum of Understanding Exhibit PW-1/1 from the account of Leading Estate Limited against adjustment of unsecured loan given by the plaintiff to the Leading Estate Limited.
5. It is asserted that the since this aspect has arisen only during the course of cross-examination, PW-1 may be permitted to lead evidence in rebuttal/re-examination.
6. The defendant by of his reply has taken preliminary objections that under the garb of present application, not only does the plaintiff wish to fill up the lacuna in his case but also is trying to set up altogether a new case and also intends to introduce new and fresh documents at the fag end of the trial of this case. It is submitted that the defendant in his evidence or cross-examination has not set up any new case nor has he pleaded any new facts but has stood the test of cross-examination in line with his defence and Written Statement. It is submitted that the application does not meet the requirements of law and the plaintiff has not made out any case for rebuttal evidence and the application is liable to be dismissed.
7. On merits, the averments made in the application are denied and it is asserted that a new case is being made out by the plaintiff which cannot be permitted.
8. Learned counsel on behalf of the plaintiff has argued that it was his case that a loan of Rs. 2,00,00,000/- had been given to the defendant and the issues were framed accordingly on 07th November, 2012. Issue No. 2 Signature Not Verified Digitally Signed CS(OS) 319/2011 Page 2 of 8 By:NIRMLA TIWARI Signing Date:10.08.2022 11:50:05 reads as under:
"2. Whether the payments for purchase of shares were made by the company M/s Leading Estates Pvt. Ltd.? If so its effect? OPD."
9. The onus of proving the Issue in affirmative was on the defendant. Now, the plaintiff has a right to lead the evidence in rebuttal since the plaintiff had reserved his right and had closed his evidence only in affirmative. It is further submitted that no new case has been set up by the plaintiff. It has always been his case that he had given the loan of Rs. 2,00,00,000/-in his individual capacity to the defendant and the same was routed through Leading Estate Limited Company, which is closely held family Company of the plaintiff. It was specifically averred that the Agreement was between the plaintiff and the defendant in their individual capacity and it was the outlook of the plaintiff how to arrange funds and merely issuing of cheque by the plaintiff from his Company, namely, Leading Estate Private Limited, does not mean that Leading Estate Private Limited is the party to the MoU. It was never consented to issue shares in the name of M/s. Leading Estate Private Limited. The assertion of the defendant in the reply to the Legal Notice of the plaintiff and also in the Written statement about allocation of shares to Leading Estate Limited Company was erroneous and fabricated and contrary to the terms of MoU. It was further argued that the allotment of equity procedure is set out in the Companies Act, 1956 and the allocation of shares can be made only if an application is made to Company in the prescribed form. No such application was ever made by Leading Estate Private Limited.
10. In the light of his specific case, he has a right to lead evidence in Signature Not Verified Digitally Signed CS(OS) 319/2011 Page 3 of 8 By:NIRMLA TIWARI Signing Date:10.08.2022 11:50:05 rebuttal/re-examination in terms of Order 18 Rule 3 of the Code of Civil Procedure, 1908. It is, therefore, requested that plaintiff may be allowed to lead re-examination/rebuttal evidence by examining PW-1.
11. Learned counsel on behalf of the defendant has submitted that the case of the plaintiff all throughout in his plaint as well as in his replication was that he had given the loan in respect thereof an MoU was executed. It was nowhere the plaintiff's claim that the loan had been routed through his Leading Estate Limited Company, which is closely held family Company of the plaintiff.
12. In fact, the defendant had taken a specific defence that 37474 equity shares have been duly allotted to Leading Estate Limited Company, from which Rs. 2,00,00,000/- had been received and nothing was payable to the plaintiff. The evidence which has been led by the defendant is also confined only to this aspect and no new case has been set up. In fact, the plaintiff now wishes to bring in additional documents, which were never placed on record to set up a new plea of the loan having been routed through Leading Estate Limited Company, a closely held family Company of the plaintiff.
13. It is submitted on behalf of the defendant that the present application is nothing but an endeavor on behalf of the plaintiff to bring in a new case, which cannot be allowed.
14. Submissions heard. My observations are as under:
15. The first aspect for consideration is the circumstances in which the party has a right to lead rebuttal evidence. The Division Bench of the High Court of Andhra Pradesh in its decision in Nalajala Narasayya vs. Nalajala Sitayya and Others AIR 1992 AP 7, while considering the scope of the Order XVIII Rule 3 of the Code of Civil Procedure, 1908 had observed as Signature Not Verified Digitally Signed CS(OS) 319/2011 Page 4 of 8 By:NIRMLA TIWARI Signing Date:10.08.2022 11:50:05 under:
"The plaintiff has the right to begin unless the defendant admits the facts alleged by the plaintiff and contends either on the point of law or on some additional facts urged by the defendant, the plaintiff is not entitled to any part of the relief which he seeks but defendant may begin with the evidence. However, Order XVIII Rule 3 does not mention in what manner the option has to be exercised by either party or as to when such a reservation is to be made. In several cases, option has been exercised by a party at the beginning at the time, when he commences evidence and that other time, it is exercised after the closure of his evidence. There should be express reservation of the right to adduce rebuttal evidence. Though in some cases, it may not be expressly reserved and can be implied from the facts and circumstances of the case".
16. This judgement was quoted with the approval of the Division Bench of this Court in FAO (OS) 45/2015 titled Y.S. Manchanda vs. Jitender Chopra.
17. Punjab and Haryana High Court in Kashmir Kaur vs. Bachan Kaur 1999 SCC Online P&H 1300 observed that "the procedure prescribed under Order XVIII is based on common sense, while the plaintiff is examining his evidence in affirmative, he has no evidence of what the defendant shall produce in his evidence, though the defendant is aware of the case of the plaintiff, since the plaintiff has already led the evidence. The plaintiff, therefore, must be given a right to rebuttal so as to address the entire case".
18. High Court of Punjab and Haryana in its subsequent decision in Avtar Singh vs. Baldev Singh and Ors. CR No. 2203/2010, again reiterated that "the right of the plaintiff to lead evidence also extends an option to the plaintiff to either lead his entire evidence on all the issues or he may intend to lead rebuttal evidence after the defendant has led evidence on the issue, Signature Not Verified Digitally Signed CS(OS) 319/2011 Page 5 of 8 By:NIRMLA TIWARI Signing Date:10.08.2022 11:50:05 the onus of which has been put on the defendant".
19. Thus, in so far as the proposition of law is concerned, it is the settled law that when the onus has been put for an Issue on the defendant, the plaintiff has a right to lead rebuttal evidence in respect of said Issue if the right has been reserved. The logic behind this rule is that when the evidence is being led by the defendant, his defence may not be known to the plaintiff and he must be given an option to rebut the evidence so brought on record by the defendant. What now needs to be considered is whether in the circumstances and the pleadings, the plaintiff is entitled to lead rebuttal evidence.
20. It is an admitted case of the parties that an MoU dated 26th June, 2008 was entered into between the plaintiff and the defendant wherein the defendant agreed to dilute his 5% subscription in Indian Exchange of Metal Ltd. (IEM) against a consideration of Rs. 2,00,00,000/- through a holding Company to be incorporated by the defendant. If the plaintiff exercised his Exit option within 9 months as provided in the MoU, the defendant was to refund the amount of Rs. 2,00,00,000/- with interest @ 18% per annum. Pursuant to the MoU the plaintiff the paid the sum of Rs. 2,00,00.000/- by cheque in the name of M/s Leading Estates Private Limited which was encashed on 03rd July, 2008.
21. The plaintiff's case is that the option of exit was exercised on 02 nd February, 2009, but no refund the amount of Rs. 2,00,00,000/- in terms of the MoU was made despite due service of the Legal Notice dated 23 rd July, 2010. He is entitled to recovery of his money and the allocation of 39474 equity shares to M/s Leading Estates Private Limited of which plaintiff was Director and Shareholder, was erroneous and fabricated.
Signature Not Verified Digitally Signed CS(OS) 319/2011 Page 6 of 8 By:NIRMLA TIWARI Signing Date:10.08.2022 11:50:0522. The only defence set up by the defendant in his Reply dated 19th August, 2010 and the written statement that 5% shares totalling 39474 were issued to theplaintiff's company M/s Leading Estates Private Limited in whose name the subscription amount had been paid.
23. To state concisely, the suit has been filed by the plaintiff to seek refund the amount of Rs., 2,00,00,000/- with interest @ 18% per annum as given by the plaintiff as he exercised his exit option within nine months.
24. It emerges from the pleadings that it was the specific case of the plaintiff that the MoU was entered between the parties in their individual capacity and M/s. Leading Estate Private Limited was never a party to MoU; hence, no shares could have been allotted in the name of the Company in discharge of its liability to repay Rs. 2,00,00,000/- as had been claimed by the defendant.
25. The plaintiff by way of the present application intends to lead evidence to explain and clarify that the amount of Rs. 2,00,00,000/- was paid on his own behalf from the account of M/s. Leading Estate Private Limited which is a closely held family Company of the plaintiff to which he had advanced unsecured loan in the sum of Rs. 5,73,00,000/- from his personal resources over a period of time.
26. However, this was precisely his case in the plaint. It is an admitted case of the parties that the Cheque of Rs. 2,00,00,000/- was given by the plaintiff in the name of its Company M/s. Leading Estate Private Limited.
27. The proving of the ledger accounts of M/s. Leading Estate Private Limited to establish that it is a closely held family Company of the plaintiff or that the plaintiff had given unsecured loans to this Company from time to time against which it had taken the cheque of Rs. 2,00,00,000/- to give to the Signature Not Verified Digitally Signed CS(OS) 319/2011 Page 7 of 8 By:NIRMLA TIWARI Signing Date:10.08.2022 11:50:05 defendant, is not relevant since the defendant has admitted that the cheque of Rs. 2,00,00,000/- was issued by the plaintiff from the account of M/s. Leading Estate Private Limited. To permit proving of Ledger Accounts would lead to the realm of evidence which is neither in issue nor relevant for the present case.
28. The only moot point is whether the said amount of Rs. 2,00,00,000/- had been given by the plaintiff on his own behalf in individual capacity and not for and on behalf of M/s. Leading Estate Private Limited. It may be observed that under the Indian Contract Act, the doctrine of privity of contract and not privity of consideration is recognized. Admittedly the contract/ MoU between the parties was signed in their individual capacity. This is a matter of argument and interpretation on the basis of facts which are not in dispute. The rebuttal evidence sought to be produced is in respect of admitted facts which is not material. Further, no new evidence has been brought on record in the evidence of DW-1 which was not already in the knowledge of the plaintiff. In fact, the plaintiff now intends to bring on record additional documents and evidence which is not relevant for the present suit.
29. The application is, therefore, dismissed in the above terms.
NEENA BANSAL KRISHNA, J AUGUST 1, 2022 S.Sharma Signature Not Verified Digitally Signed CS(OS) 319/2011 Page 8 of 8 By:NIRMLA TIWARI Signing Date:10.08.2022 11:50:05