Delhi District Court
Vijay Garg Prop. M/S 123 Ply vs M/S Sfms Furniture Pvt Ltd on 31 August, 2024
DLSE010023522018
IN THE COURT OF SH. SACHIN MITTAL
DISTRICT JUDGE-03, DISTRICT: SOUTH-EAST,
SAKET COURTS, NEW DELHI
CS DJ No. 434/2018
In the matter of:
Vijay Garg, Proprietor of M/s 123 Ply
Having its office at:
Z-42, Okhla Industrial Area,
Phase-II, New Delhi-110020. .... Plaintiff.
VERSUS
M/s SFMS Furniture Pvt. Ltd.
Through its Director/Authorized Representative
Having office at:
1/138, Chittranjan Park,
New Delhi-110019
Also At:
D-66, Okhla, Phase-I,
New Delhi-110020. .... Defendant.
Date of Institution : 22.03.2018
Date on which arguments concluded : 21.08.2024
Date of Judgment : 31.08.2024
Result : Decreed
JUDGMENT
1. Vide this Judgment, I shall decide the suit, filed on behalf of the plaintiff, praying therein for the relief of recovery of an CS DJ No. 434/2018 Vijay Garg Proprietor of M/s 123 Ply Page 1 of 14 v.
M/s SFMS Furniture Pvt. Ltd.
amount of Rs. 12,69,069/- alongwith pendente-lite and future interest at the rate of 18% per annum.
PLAINT:
2. The necessary facts, as pleaded in the plaint, upon which the suit of plaintiff is based, can be summarized as under:
2.1. The plaintiff, a sole proprietor of a proprietorship firm, M/s 123 Ply, is engaged in the trading of particle boards, ply, flush door, NDF plywood, plastic sheets, teak margin, laminate etc. 2.2. The defendant company deals in the field of the interior/furniture work etc. 2.3. In April 2014, the defendant approached the plaintiff and then started purchasing on credit basis, under various invoices/vouchers/bills, raw material from the plaintiff. 2.4. The plaintiff has been maintaining the accounts of the defendant as a running account in his ledger books. As on date, there is an outstanding balance of Rs.12,69,069/- in the running account of the defendant.
2.5. The defendant was earlier on served with the legal notice on 17.04.2017. The defendant company requested for grant of six months' time for clearing the said outstanding balance. 2.6. The plaintiff then continued to supply the goods/raw material to the defendant. The defendant company continued to make part-payments against the goods purchased by it and the last payment was made on 12.01.2018.
2.7. However, the defendant has not yet cleared the entire outstanding balance.
2.8. The defendant was then served with another legal notice dated 26.01.2018, which was sent on 27.01.2018.CS DJ No. 434/2018 Vijay Garg Proprietor of M/s 123 Ply Page 2 of 14
v.
M/s SFMS Furniture Pvt. Ltd.
2.9. Various cheques issued by the defendant were dishonoured for the reason 'funds insufficient'. 2.10. The cause of action arose in April 2014 when the defendant approached the plaintiff and started purchasing goods/material; on various dates as and when the defendant purchased goods/material from the plaintiff on the credit basis; on various dates when the defendant made part-payments; on 17.04.2017, when the legal notice was served upon the defendant; on various dates when the defendant continued to purchase goods/raw material and also continued to make part-payments; on 12.01.2018, when part-payment through cheque was made by the defendant; and on 26.01.2018, when another legal notice was served upon the defendant. The cause of action is still continuing. 2.11. This Court has the territorial jurisdiction to entertain and try the present suit. The requisite court fees has been paid.
3. It is in the background of the aforesaid facts that the plaintiff has made following prayers in the plaint:
"It is, therefore, prayed that this Hon'ble Court may kindly be pleased to pass a decree for a sum of Rs.12,69,069/- (Rupees Twelve Lakh Sixty Nine Thousand and Sixty Nine Only) alongwith future and pendente-lite interest at the rate of 18% per annum till the realization of the amount;
Pass any other further order(s) which this Hon'ble Court may deem fit and proper in the facts and circumstances of the case, in the interest of justice".
WRITTEN STATEMENT:
4. The defence of the defendant as pleaded in the written statement can be summarized as under:
4.1. The plaintiff has suppressed the material and true facts.CS DJ No. 434/2018 Vijay Garg Proprietor of M/s 123 Ply Page 3 of 14
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M/s SFMS Furniture Pvt. Ltd.
4.2. In the year 2015, the directors of the defendant company, namely, Geeta Chima and Gautam Chima, had offered to sell an immovable property i.e. an apartment no. F-3/702, admeasuring 1550 sq. ft. in 'The Views at Mohali Hills', Sector 105, Chandigarh, towards full and final settlement of outstanding liability of the defendant company and the proprietorship firm, Supreme Furniture INC, whereof Gautam Chima was the sole proprietor. The said offer was accepted by the plaintiff and it was agreed to settle the outstanding liability of the defendant company as well as that of the proprietorship firm, Supreme Furniture INC. 4.3. Geeta Chima had paid an amount of Rs.42,66,061/- to the builder, Emaar-MGF Land Ltd. in respect of the aforesaid property. An agreement to sell dated 26.05.2015 for the sale of the said property at a consideration of Rs.42,66,000/-, was executed between the plaintiff and Geeta Chima. The said property was then mutated in the name of the plaintiff in the records of the builder, Emaar-MGF Land Ltd.
4.4. Out of the aforesaid sale consideration of Rs.42,66,000/-, the plaintiff had already paid an amount of Rs.5,79,840/- through cheque dated 25.03.2015 to Geeta Chima, i.e. prior to execution of the aforesaid agreement to sell dated 26.05.2015. 4.5. It was further agreed that out of the balance sale consideration of Rs.36,86,160/-, an amount of Rs.29,86,160/- would be adjusted towards full and final settlement of outstanding liability of the defendant company as well as that of the proprietorship firm, Supreme Furniture INC. It was further agreed that the balance sale consideration of Rs.7 lakhs would be paid by the plaintiff through a post dated cheque in favor of Geeta Chima. In May 2016, the plaintiff issued a post dated cheque dated 18.10.2018 of Rs.7 lakhs towards CS DJ No. 434/2018 Vijay Garg Proprietor of M/s 123 Ply Page 4 of 14 v.
M/s SFMS Furniture Pvt. Ltd.
full and final payment of sale consideration as was agreed in agreement to sell dated 26.05.2015. The said cheque of Rs.7 lakhs, upon presenting the same for encashment, was returned on 20.12.2018 unpaid for the reason 'others-dormant ISF'. 4.6. The plaintiff, thus, has made the payment of Rs.5,79,840/- only and has failed to adjust the amount of Rs.29,86,160/- towards the outstanding liability of the defendant company and proprietorship firm, Supreme Furniture INC and has also failed to clear the payment of the bounced cheque of Rs.7 lakhs. The plaintiff is, thus, liable to pay an amount of Rs.36,86,160/- to Geeta Chima in respect of sale of the property. 4.7. The statement of account filed with the plaint is incorrect as the aforesaid amount of Rs.29,86,160/- has not been adjusted herein.
4.8. It is denied that the legal notice dated 17.04.2017 was served upon the defendant, or that the defendant had requested for grant of six months' time for clearing the payment of outstanding liability. It is further stated that no outstanding amount from defendant to the plaintiff was due on 17.04.2017 and due to this reason the plaintiff had continued to supply the goods/material to the defendant, even after the alleged date of service of legal notice. The service of legal notice dated 26.01.2018 is also denied. 4.9. The defendant has already paid the payments in respect of the dishonoured cheques and that is why plaintiff had not filed any case against the defendant.
REPLICATION:
5. The plaintiff filed a replication, therein denying the allegations/averments in the written statement and reaffirming those made in the plaint. It has been pleaded in the replication that the sale CS DJ No. 434/2018 Vijay Garg Proprietor of M/s 123 Ply Page 5 of 14 v.
M/s SFMS Furniture Pvt. Ltd.
consideration in the agreement to sell dated 26.05.2015 was agreed to be adjusted towards the outstanding liability of the proprietorship firm, Supreme Furniture INC, not that of the defendant company herein. The said adjustment had taken place in May 2015. The defendant company, even after May 2015, issued cheques and purchased the goods/material under various invoices alongwith delivery challans. Geeta Chima had taken cheque dated 18.10.2018 of Rs.7 lakhs from the plaintiff for the purpose of mentioning the same in the sale documents with an assurance to return the same. However, she did not return the said cheque and misused the same. INTERIM/INTERLOCUTORY/MISC. APPLICATION(s):
6. The defendant, alongwith the written statement had filed an application under Order 8 Rule 1 CPC, therein seeking condonation of delay in filing the written statement. The said application was allowed by this Court vide Order dated 01.04.2019. MEDIATION EFFORTS:
7. The dispute between the parties was referred to mediation centre twice, first time on 04.03.2020 i.e. prior to framing of issues, and second time on 03.09.2020 i.e. during the stage of recording of evidence. The matter was, however, returned unsettled on both the occasions.
ISSUES:
8. On 23.10.2020, this Court framed following issues for trial:
Issue no.1: Whether plaintiff is entitled for recovery of the suit amount as claimed? OPP Issue no.2: Whether there is no liability of the defendant as claimed in the WS? OPD CS DJ No. 434/2018 Vijay Garg Proprietor of M/s 123 Ply Page 6 of 14 v.
M/s SFMS Furniture Pvt. Ltd.
Issue no.3: Whether the plaintiff is entitled to interest, if so at what rate and for which period? OPP PLAINTIFF'S EVIDENCE:
9. The plaintiff, in order to prove his case, examined himself as PW-1.
9.1 The plaintiff tendered his affidavit-in-evidence, Ex.PW- 1/1 towards his examination-in-chief, wherein he relied upon following documents:
Sr. No. Document Mark/Exhibit
1. Certificate under Section 65B of Ex. PW-1/A
Indian Evidence Act
2. Statement of account Ex.PW-1/B (Colly)
3. Copies of Bills/invoices alongwith Ex.PW-1/C (Colly) delivery note
4. A copy of Legal notice alongwith Ex.PW-1/D (Colly) postal receipt
5. Cheques dated 06.10.2015, Ex.PW-1/DA 03.11.2015, 06.11.2015 and (Colly) 31.01.2019
6. Statement of account of the defendant Ex.PW-1/E (Colly) company for the period 2015-16 and 2016-17 alongwith invoices/bills and delivery notes for this period 9.2. The plaintiff as PW-1 was cross-examined on behalf of the defendant on 08.03.2020 and on 21.10.2023 and then he was discharged. The testimony of the witness, PW-1 will be dealt with while returning the findings on the issues. Plaintiff did not examine any other witness and closed his evidence in affirmative on 21.10.2023.
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M/s SFMS Furniture Pvt. Ltd.
DEFENDANT'S EVIDENCE:
10. The defendant, in its defence, examined its Director Geeta Chima as the only witness.
10.1. Geeta Chima as DW-1 tendered her affidavit-in-
evidence, Ex.DW-1/1 towards her examination-in-chief, wherein she relied upon following documents:
Sr. No. Document Mark/Exhibit
1. Copy of the letter of Emaar-MGF Mark P
2. Acknowledgment cum Receipt dated Ex.DW-1/A
25.03.2015
3. Copy of advance receipt and Mark P1
agreement to sell and purchase dated
26.05.2015
4. Copy of application form dated Mark P2
26.05.2015
5. Copy of affidavit dated 26.05.2015 Mark P3
6. Acknowledgment cum receipt dated Ex.DW-1/B
08.01.2016 for Rs.88738/-
7. Acknowledgment cum receipt dated Ex.DW-1/C
08.01.2016 for Rs.299/-
8. Nomination letter dated 22.01.2016 Ex.DW-1/D
9. Copy of dishonored cheque of Rs.7 Mark P4
lakhs. (In the evidentiary affidavit
dishonored cheque amount of
Rs.7,000/- is incorrect as typing
error. The correct amount of
dishonored cheque amount of Rs.7
lakhs)
10. Copy of return cheque advice dated Mark P5
20.12.2018
11. Board Resolution Ex.DW-1/E
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10.2. Geeta Chima as DW-1 tendered her evidence by way of affidavit, Ex.DW-1/A. Defendant/DW-1 was cross-examined on behalf of the plaintiff on 24.02.2024 and then, she was discharged. The testimony of the witness, DW-1 will be dealt with while returning the findings on the issues. The defendant did not examine any other witness.
ARGUMENTS:
11. I have heard Sh. Mukesh Birla, Ld. Counsel for the plaintiff and Sh. Jai Gupta, Ld. Counsel for the defendant. I have carefully perused the judicial record as well. FINDINGS ON ISSUES:
12. Issue no.1: Whether plaintiff is entitled for recovery of the suit amount as claimed? OPP And Issue no.2: Whether there is no liability of the defendant as claimed in the WS? OPD 12.1. Both these issues are being taken up together as they can be determined on the basis of common findings. While the burden of proving the first issue was fixed upon the plaintiff, the burden of proving the second issue was fixed upon the defendant. 12.2. Plaintiff is seeking the recovery of an amount of Rs.12,69,069/-, which is reflecting against the date 12.01.2018 at the foot of the ledger account, Ex.PW-1/B, on the basis of claim that the said amount has accrued on account of the defendant failing to pay the price of the goods purchased by it on credit basis under various bills/vouchers/delivery challans, Ex.PW-1/C (Colly). On the other hand, the defence of the defendant is that it was agreed with the plaintiff that the said outstanding balance of Rs.12,69,069/- and the CS DJ No. 434/2018 Vijay Garg Proprietor of M/s 123 Ply Page 9 of 14 v.
M/s SFMS Furniture Pvt. Ltd.
outstanding liability of the proprietorship firm, Supreme Furniture INC, would be adjusted out of the sale consideration of the property agreed to be purchased, vide agreement to sell dated 26.05.2015, Mark P-1, by the plaintiff from the defendant. 12.3. At the outset, it is required to be noted that the defendant has neither specifically denied the purchase of the goods on credit basis under various bills/voucher/delivery notes, Ex.PW-1/C (Colly) from the plaintiff, nor has it specifically denied its outstanding liability of Rs.12,69,069/-, which is reflecting against the date 12.01.2018 at the foot of the ledger account, Ex.PW-1/B. The only defence of the defendant is that the said outstanding liability was agreed to be fully and finally settled and adjusted out of the sale consideration of the property agreed to be purchased by the plaintiff from the defendant, vide agreement to sell dated 26.05.2015, Mark P-
1. In view of Order 8, Rule 3 & 4 of the CPC, the defendant is required to deny the allegations/grounds in the plaint specifically, and not evasively. As per Rule 5, allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted. Further, as per Section 53 of the Sakshya Adhiniyam, 2023, a fact admitted needs not to be proved. Nevertheless, the plaintiff tendered in evidence the ledger accounts of the defendant as Ex.PW- 1/B & Ex.PW-1/E, examined himself as PW-1 to prove the said ledger accounts and also tendered in evidence various bills/invoices/delivery challans, Ex.PW-1/C, for the purpose of proving the entries in the said ledger accounts. The plaintiff, thus, has been able to prove the ledger accounts, Ex.PW-1/B & Ex.PW-1/E as well as the bills/invoices/delivery challans, Ex.PW-1/C. The CS DJ No. 434/2018 Vijay Garg Proprietor of M/s 123 Ply Page 10 of 14 v.
M/s SFMS Furniture Pvt. Ltd.
outstanding liability of Rs.12,69,069/-, the recovery of which has been sought against the defendant, thus, also stands proved. 12.4. Now, coming to the defence of the defendant, it is the case of the defendant that the said outstanding liability of Rs.12,69,069/- was agreed to be adjusted out of the sale consideration of the property agreed to be purchased, vide agreement to sell dated 26.05.2015, Mark P-1, by the plaintiff from the defendant. However, there is no such term, as alleged, in the said agreement to sell. It is also not the case of the defendant that the alleged agreement for adjustment of outstanding liability was reduced into any writing. By virtue of Section 94 & 95 of Sakshya Adhiniyam, 2023, the defendant cannot be allowed to plead oral agreement for the purpose of varying the terms of the said written agreement to sell dated 26.05.2015. Let me assume, though not pleaded, that the said oral agreement was entered into subsequent to the agreement to sell dated 26.05.2015, Mark P-1. As per Section 106 of Sakshya Adhiniyam, 2023, it was the burden upon the defendant to prove the said alleged oral agreement for adjustment of outstanding liability. The plaintiff's witness, PW-1, during his cross-examination on 21.10.2023, admitted to the limited extent that it was the outstanding liability of the proprietorship firm, Supreme Furniture INC, not that of the defendant company, which was agreed to be adjusted out of the said sale consideration. Thus, the burden of proving that the outstanding liability of the defendant company was also agreed to be adjusted, still remained upon the defendant. The defendant's witness, DW-1, who was one of the erstwhile directors, however, apart from alleging the said agreement in her affidavit-in-evidence, Ex.DW-1/1, has not led any evidence, oral or documentary, to prove the same.
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M/s SFMS Furniture Pvt. Ltd.
12.5. It was also the case of the defendant that the plaintiff, out of the total sale consideration of Rs.42,66,000/-, paid an amount of Rs.5,79,840/- only and that plaintiff's cheque for an amount of Rs.7 lakhs was returned dishonoured. The defendant, therefore, claims that the plaintiff is liable to pay an amount of Rs.36,86,160/- to defendant/its director. Pertinent to note here is that the defendant neither filed any counter claim, nor did it file any separate suit for the purpose of proving the said agreement of adjustment and/or for the recovery of the said amount.
12.6. The existence of the alleged agreement for the adjustment of outstanding liability is, therefore, held to be not proved as per law.
12.7. Ld. Counsel for the plaintiff has drawn the attention of the Court towards: (a) various entries in the ledger accounts, Ex.PW- 1/B & Ex.PW-1/E, of sale of goods made to the defendant; (b) various part-payments made by the defendant after the date i.e. 26.05.2015 of the alleged oral agreement of adjustment; (c) delivery notes/bills/vouchers, Ex.PW-1/C (Colly); and (d) three cheques dated 06.10.2015, 03.11.2015 & 06.11.2015, Ex.PW-1/DA, which were issued by the defendant after the date of the aforesaid alleged oral agreement of adjustment. By virtue of Section 118 of the Negotiable Instruments Act, 1881, there is a rebuttable presumption that the cheque was issued for consideration and another rebuttable presumption that the cheque was issued on the date which it bears. The defendant has failed to rebut the said presumptions. Here, the law explained by the superior Courts in the Judgments, Bharat Barrel and Drum Manufacturing Company v. Ameen Chand Pyare Lal, (1999) 3 SCC 35; Kundan Lal Rallaram v. The Custodian, Evacuee Property, AIR 1961 SC 1316; A.M. Amborse v. S. Jayaraj and Ors., 2011 SCC CS DJ No. 434/2018 Vijay Garg Proprietor of M/s 123 Ply Page 12 of 14 v.
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OnLine Mad 1723; M. Balasubramanium v. M. Rathma, 2014 (1) MWN (Civil) 787; and Milkimal Peshwani v. Sudhir Kumar Pradhan, 1992 SCC OnLine ORI 262, is relevant. The crux of these Judgments is that the presumption that the negotiable instrument was for consideration is a rebuttable presumption. The initial burden lies on the defendant to prove the non-existence of the consideration by bringing on record such facts and circumstances, which may lead the Court to believe non-existence of consideration, or non-existence so probable that a prudent man would act upon the plea that the consideration did not exist. This can be done either by direct evidence, or by preponderance of probabilities showing that existence of consideration was improbable, doubtful, or illegal. If the said initial burden is discharged, the onus shifts on the plaintiff to prove the passing of consideration as a matter of fact and failure to prove the same would disentitle him to the relief. In case of defendant's failure to discharge the initial burden, plaintiff would be entitled to benefit of presumption under Section 118(a). 12.8. I find merit in the submission made by the Ld. Counsel for the plaintiff that the outstanding liability of Rs.12,69,069/- sought to be recovered by way of the present suit has partly accrued as a result of further purchases made by the defendant, even after the agreement of adjustment, as alleged, though not proved. Further, there was no occasion for the defendant to issue the three cheques dated 06.10.2015, 03.11.2015 & 06.11.2015, Ex.PW-1/DA, after the alleged agreement of adjustment.
12.9. In view of the above discussion, while the issue no.1 is determined in favor of the plaintiff and against the defendant, the issue no.2 is determined against the defendant and in favor of the plaintiff.
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13. Issue no.3: Whether the plaintiff is entitled to interest, if so at what rate and for which period? OPP 13.1. The burden of proving this issue was fixed upon the plaintiff.
13.2. The plaintiff in the prayer clause of the plaint is praying for the award of pendente lite and future interest at the rate of 18% per annum. However, I find the same to be on disproportionately on higher side. I am of the view that the award of pendente lite and future simple interest at the rate of 10% per annum would meet the end of justice. Ordered accordingly.
14. CONCLUSION/RELIEF:
14.1. In view of the findings qua the issues as recorded herein above, a decree granting the relief of recovery of an amount of Rs.
12,69,069/- alongwith pendente-lite and future simple interest at the rate of 10% per annum, is passed in favour of the plaintiff and against the defendant.
14.2. Decree sheet be prepared accordingly. File be consigned to Record Room, after due compliance.
SACHIN Digitally signed by SACHIN MITTAL Announced & dictated in MITTAL 17:10:08 +0530 Date: 2024.08.31 the open Court on 31.08.2024 (Sachin Mittal) District Judge-03/South-East District Saket Courts, New Delhi/31.08.2024 Certified that this Judgment contains 14 pages and each page bears my signatures. SACHIN Digitally signed by SACHIN MITTAL MITTAL Date: 2024.08.31 17:10:17 +0530 (Sachin Mittal) District Judge-03/South-East District Saket Courts, New Delhi/31.08.2024 CS DJ No. 434/2018 Vijay Garg Proprietor of M/s 123 Ply Page 14 of 14 v.
M/s SFMS Furniture Pvt. Ltd.