Delhi District Court
M/S Prabhu Dayal Lachhmi Narain vs M/S Shri Sai Corporation on 9 June, 2017
IN THE COURT OF SH. HARISH KUMAR : ADDL. DISTRICT
JUDGE -13 : CENTRAL DISTRICT ; TIS HAZARI COURTS :
DELHI
CS NO. 18618/16 (Old No. 874/16)
In re :
1.M/s Prabhu Dayal Lachhmi Narain,
5179, Naya Bazar,
Delhi- 110 006
(Through plaintiffs 2 & 3)
2.Shri Radha Kishan
S/o Late Shri Prabhu Dayal,
5180, Naya Bazar,
Delhi-110 006.
3. Shri Jugal Kishore
S/o Late Shri Prabhu Dayal,
5180, Naya Bazar,
Delhi-110 006.
........ Plaintiffs
Versus
1.M/s Shri Sai Corporation,
Commission Agents and Merchants,
Vinkar Bhawan Gandhi Bagh,
Nagpur-440 002.
2. Shri Chiman Lal Singhee,
Vinkar Bhawan, Gandhi Bagh,
Nagpur-440 002.
3. Shri Girdhar Lal Singhee,
Vinkar Bhawan, Gandhi Bagh,
Nagpur-440 002.
4. Shri Shanti Lal Singhee,
Vinkar Bhawan, Gandhi Bagh,
Nagpur-440 002.
CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 1 of 29
5. M/s Sohan Lal Shanti Lal,
Commission Agents and Merchants,
Vinkar Bhawan, Gandhi Bagh,
Nagpur-440 002.
6. M/s. Swastik Roller Floor Mills,
Tolaram Building, Patel Market,
Hyderabad-500 002.
7. M/s Narasingi Roller Flour Mills,
Tolaram Building, Patel Market,
Hyderabad-500 002. .......... Defendants
Date of institution of present suit : 09/14.12.1992
Date of receiving in this court : 22.09.2016
Date of hearing arguments : 24.05.2017
Date of Judgment : 09.06.2017
SUIT FOR RECOVERY OF RS. 11,93,887.79 (RUPEES ELEVEN
LACS NINETY THREE THOUSAND EIGHT HUNDRED EIGHTY
SEVAN AND PAISA SEVENTY NINE ONLY) CONSISTING OF
PRINCIPAL SUM AND INTEREST THEREON AS ON 07.12.1992
WITH INTEREST PENDENTELITE AND FUTURE @21% PER
ANNUM AND COST OF THE SUIT AGAINST DEFENDANTS
ABOVENAMED LIABLE JOINTLY AND SEVERALLY.
JUDGMENT
1. This judgment shall disposed of suit for recovery of money filed by the plaintiffs against the defendants stating therein that plaintiff no. 1 is a registered partnership firm and plaintiff no. 2 and 3 are its partners carrying on business as a dealers and commission agent in food grains, pulses, rice etc. It has been stated that suit has been filed by the plaintiffs to recover sums of outstanding against the defendants in the books of account of plaintiff no. 1 firm. It is has been further stated that suit has been filed in the name of plaintiff firm as well as in the name of partners CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 2 of 29 i.e. plaintiff no. 2 and 3 after the death of one of its partners Sh. Lachhmi Narayan on 12.07.1992 and therefore, partnership firm in the suit is represented by its partners plaintiff no. 2 and 3 which have signed and verified the plaint being conversant with the facts.
2. It has been further stated that defendant no. 1 is business name constituted/owned by defendant No. 2 to 4 and such defendants no. 2 to 4 are also managing businesses constituted under the name and style of defendants no. 5 to 7 as well. Thus, the business in the name of defendant no. 1 and that in the name of defendant no. 5 to 7 is being transacted by defendants no. 2 to 4 individually and jointly.
3. It has been further stated that during the month of May, 1989 and onward at the request of either of defendant no. 2 to 4, the plaintiff firm supplied goods which were received by said defendants in the name of business set up in the name and style of defendant no. 1 and defendant no. 5 to 7. Plaintiff firm dispatched such goods through RAKES (Railway Wagon) and through Trucks (Road Transport). Such supplies were made on credit and were made to either of defendants and were entered in the account maintained in the books of plaintiff firm in the name of defendant no. 1 business. Payments were made by defendants and received by plaintiffs against goods so supplied. Last supply was made by the plaintiff on 06.10.1989 and the last payment was received by plaintiffs from the defendants on 12.12.1989. Copy of account of supplies made and of the payments received against such supplied is annexed as Annexure A which shows that a sum CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 3 of 29 of Rs. 5,58,967.32/- remained outstanding against the supplies made through RAKES and a sum of Rs. 82,930.47/- against goods supplies through Trucks.
4. It has been further stated that payments made by the defendants through account payee installments in the name of plaintiff firm were accompanied by covering letter from either of defendant no. 2 to 4 in the name of respective defendant businesses remitting payment. Liability to pay amount under goods received was also acknowledged and reiterated while making payments.
5. It has been further stated that in August, 1990 plaintiff business ran into some financial difficulties and demand notices were sent to defendant no. 1 through Crime Branch of Delhi Police. Notice dated 20.12.1990 so sent was duly received by the defendant whereby informing that as per books of plaintiff business an outstanding of about Rs. 6 lakh with interest continued to be outstanding against defendants. It has been further stated that although defendants did not dispute their liability to pay and assured to liquidate the sum outstanding but no steps was taken by the defendants to make the payment which consisted of Rs. 6,41,627.7/- by way of principal as on 12.12.1989 when the last payment was received from defendant. It has been further mentioned that in the bills an interest @ 21% per annum would be charged on the delayed payment and therefore, a sum of Rs. 5,52,260/- became recoverable by way of interest up to 07.12.1992 on the said principal amount. Thus, plaintiff has filed the present suit for recovery of Rs. 11,93,887.79/- from the CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 4 of 29 defendant individually and jointly along with pendente-lite and future interest.
6. Defendant no.1 and 3 filed joint written statement. Similarly, each of the defendants no. 2, 4, 5, 6 and 7 filed separate written statement. The contents of the written statement of defendant no. 2, 4 and 5 are verbatim same and similarly, contents of written statement of defendant no. 1 and 3 and 6 and 7 are also verbatim same. Overall, the written statement of all the defendants are same to the effect that the entire transaction was carried out by defendant no. 1 through defendant no. 3 and defendant no. 2, 4, 5, 6 and 7 have nothing to do with the transaction. It has been further stated that mere supply of goods to defendant no. 5 to 7 at the direction of defendant no. 1 does not make them necessary party in the present suit. In the light of the fact that contents of all the written statement is same, therefore, cumulative stand of the defendant is noted down as under:-
As per the defendants the entire transaction was only with defendant no. 1 firm which had entered into transaction for supply of wheat and therefore, entire liability/right out of the transaction is that of defendant No. 1 and 3. Defendant no. 2 and 4 are not the partners of defendant no. 1 firm and merely because they have extended help to defendant no. 3 do not make them liable. Similarly, merely because goods have been supplied to defendant no. 5 to 7, also do not make them liable. Defendants have submitted that the contents of annexures A are wrong and denied. It has been further submitted that it was repeatedly pointed out to the plaintiffs that the material supplied by them was short and weighed less and further that the same was of inferior CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 5 of 29 quality, thus causing great loss to the defendants. It was further pleaded that defendant no. 1 and 3 had purchased wheat from the plaintiffs for about Rs. 1,40,00,000/- (One Crore and Forty Lakhs Only) and the loss which defendant no. 1 and 3 suffered on account of the shortage, inferior supplies etc. amounted to about Rs. 15 lakh. Plaintiff had promised that they would issue credit note but they themselves fallen on bad days and therefore, plaintiffs did not issue the same, in fact no amount is due against the defendants nor any interest is payable on that account. It has been further stated that plaintiff have over charged the defendants by an amount of over more than Rs. 15 lakh and plaintiffs failed to supply their statement of account for tallying purposes despite repeated demands and to adjust in future supplies the amount which had already been received in excess. Defendant no. 1 and 3 have given details of all the shortage as well as loss due to putrefaction, rotten and torn gunny bags in all the RAKES and Trucks. Similar detail regarding loss was also given by defendant no. 6 and 7 in their written statement.
Defendants have further raised preliminary objection to the effect that suit is barred under Section 69 of Partnership Act and suit is not maintainable in the absence of legal heirs of alleged deceased partner Sh. Lachhmi Narayan. Defendants have furhter rasied objection to the effect that suit is barred by limitation having not been filed within limitation period and suit is also not maintainable for the reason that heir of late joint promisee Sh. Lachhmi Narayan have not been impleaded and is bad for mis- joinder of the defendant no. 2 and 4 to 7.
7. Plaintiffs filed replications to all the written statements CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 6 of 29 of the defendants thereby denying the averment made in the plaint and reiterating the contents of the plaint.
8. From the pleadings of the parties following issues were framed vide order dated 20.08.1998
1. Whether the plaintiff no. 1 is a registered partnership firm and the suit has been signed, verified and filed by a registered partner?
2. Whether the suit is maintainable without impleading the heirs of deceased partner Shri Lachhmi Narain?
3. Whether the suit is within time?
4. Whether the plaintiff is entitled to interest? If so, to what rate and to what amount?
5. Whether the plaintiff are entitled to recover the suit amount? If so, from which of the defendant?
6. Whether there is any privity of contract in between the plaintiff and defendants Nos 6 and 7? If so, its effect?
7. Whether the defendants suffered any loss on account of shortage in supply made by the plaintiff? If so, its effect?
8. Relief, if any?
9. In support of its case, plaintiff examined Sh. Radha Krishan as PW-1 who filed his affidavit Ex. PW-1/A and relying upon the documents i.e. certified copy of registration certificate Ex. PW-1/1, copies of letter dated 19.06.1989, 21.06.1989, 17.08.1989, 23.08.1989, 15.09.1989, 20.09.1989, 29.09.1989, 17.10.1989 and 18.10.1989 Ex. PW-1/2 to PW-1/10 respectively, copies of accounts in respect of supplies made and the payments received against such supplies Ex. PW-1/11, copy of letter dated 08.12.1989 from defendant no. 6 and copy of letter dated 08.12.1989 from defendant no. 7 Ex. PW-1/12-15, copy of letter dated 11.12.1989 from defendant no. 1 to plaintiff firm signed by defendant no. 3 asking for statement of account Ex. PW-1/16, copy of letter dated 20.12.1989 from defendant no. 7 to plaintiff CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 7 of 29 forwarding therein an order for supplies Ex. PW-1/17, copy of letter dated 20.12.1990 Ex. PW-1/18 and copy of letter dated 23.12.1991 the plaintiff no. 1 from have requested defendant no. 3 to settled their accounts with the plaintiff Ex. PW-1/19. Plaintiffs have relied upon photocopies of documents referred to as exhibit in the affidavit, however, exhibition of which was objected to by the defendant. Ex PW1/1 no other documents bears the mark of the exhibits given by plaintiff. Record is silent as to whether these documents were not permitted to be exhibited or plaintiff forgot to put exhibit mark on the documents. He was cross-examined by the defendants, after which, plaintiff evidence was closed.
10. In its defense, defendants examined defendant No.2 Sh. Chiman Lal Singhee as DW-1 who filed his affidavit in examination in chief and relied upon letters Ex PW1/D2 and Ex D- 1 to D-4. He was cross-examined by the plaintiff. Thereafter, defendant evidence was closed.
11. Ld. Counsels for the parties have been heard and record perused. After going through the argument, pleading, evidence and material on record, issues wise findings are as under:-
ISSUE NO.1. Whether the plaintiff no. 1 is a registered partnership firm and the suit has been signed, verified and filed by a registered partner?
12. From the way issue has been framed onus to prove is obviously upon the plaintiff. It has been the claim of the plaintiff that plaintiff no. 1 is the registered partnership concern and CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 8 of 29 plaintiffs no. 2 and 3 are the partners. It has been further claimed that third partner namely Sh. Lachhmi Narayan had died on 12.07.1992 just few months before the institution of the present suit. It has been stated that plaintiffs no. 2 and 3 represent the partnership firm and have signed and verified the plaint.
13. An objection was raised by the defendants that since no registration certificate has been filed by the plaintiff, therefore, the fact of plaintiff no. 1 being registered partnership concern was denied and plaintiffs were called upon to prove the same.
14. Plaintiff examined Sh. Radha Kishan the plaintiff no. 2 as PW-1 and in his examination-in-chief he categorically stated that plaintiff no. 1 is the partnership concern and plaintiffs no. 2 and 3 are its registered partners. He also placed on record the certified copy of Form A and B duly issued by the Registrar of Firms. No cross examination was conducted by the defendant on this point nor any suggestion to the contrary was given to the PW-
1. Under the Partnership Act the certified copy issued by the Registrar of Firms are perse admissible and stands proved. Ex. PW-1 i.e. Form A and B clearly shows that plaintiff no. 1 firm is the registered Partnership concern and plaintiffs no. 2 and 3 apart from deceased partner namely Lachhmi Narayan was its registered partner. Thus, the certified copy of Form A and B coupled with no cross examination on the part of the defendant on this aspect goes to show that plaintiffs have successfully proved that plaintiff no. 1 firm is the registered partnership concern.
Hence, issue no. 1 is decided in favour of the plaintiff and against the defendants.
CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 9 of 29 ISSUE NO. 2 Whether the suit is maintainable without impleading the heirs of deceased partner Shri Lachhmi Narain?
15. The way issue has been framed makes it clear that onus to prove this issue is upon the plaintiff. Plaintiff no. 1 is pleaded to be a partnership concern duly registered with Registrar of firm. It has been further pleaded that one of the partners namely Lachhmi Narain expired on 12.07.1992 and plaintiff no. 2 and 3 are the surviving partners. Defendants have raised objection that without impleading the legal heirs of deceased partner Lachhmi Narain, suit is not maintainable.
16. PW-1 deposed the same fact in his examination in chief. In cross examination he admitted that photocopy of partnership deed Ex. PW-1/D1 was filed by him and as per which there were three partners. Lachhmi Narain had expired before the filing of suit. He further deposed that no fresh partnership deed was constituted (wrongly typed as instituted) after the death of Lachhmi Narain between the surviving partners. He did not remember if the Registrar of firm was intimated about the change in the constitution of the firm. He further deposed that the partnership firm was in existence and was running its business at the time of the filing of the present suit. He denied the suggestion that there was no registered partnership firm consisting of himself and Sh. Jugal Kishore as partners on the date of filing of the present suit.
17. The objection of the defendant is to the effect that CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 10 of 29 without impleading the legal heirs of deceased partner the suit was not maintainable. Defendant have not cited any citation whereby showing that impleadment of legal heirs was necessary. Hon'ble Supreme Court in Sharad Basant Kotak & Ors. v. Ramnik Lal Mohan Lal Chawla & Ors. JT 1997(10) SC 174 took the view that the changes in the constitution of the firm may not affect the registration once made however information about the changes may be required to be given U/s 63 (1) of the Partnership Act. While approving the above observation in Maddi Sudershanam & Ors. v. Borgu Vishwanath Nadham & Ors. 1955 (5) SCR 171, the view of the Hon'ble Supreme Court appears to be that even the retirement or death of one or other partner is not likely to affect the registration.
18. U/s 42 (c) of the Partnership Act on death of the partner, partnership firm stands dissolved but this provision is subject to contract between the erstwhile partners. Thus, in case earlier partnership deed provides for continuation of the firm even after the death or for either inducting heirs of such partner in the firm or admitting them to the benefit of the firm, firm might not have dissolved.
19. Ex. PW-1/D1 is the partnership deed comprising of three partners including the deceased one. Perusal of the said deed shows that no provision has been made to cover the eventuality of death of a partner but PW-1 in his cross examination categorically deposed that partnership firm was in existence and was running its business at the time of filing of the present suit which fact was not disputed by the defendant by CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 11 of 29 giving contrary suggestion. Therefore, it goes to show that the surviving partners impliedly decided among themselves to continue with partnership firm among themselves.
20. No doubt account of the deceased partner of the firm has not been settled. However, the law in this regard is that if account of deceased partner has not been settled then the share of the deceased partner shall not be liable for any liability of firm arising subsequent to the death of the deceased partner. Since, in the present case as it is apparent that surviving partners i.e. plaintiff no. 2 and 3 is continuing with the partnership firm which goes to show agreement by conduct to continue with partnership, therefore, neither its registration gets affected nor the legal heirs of the deceased partner is required to be impleaded to claim recovery of amount outstanding against third party.
Hence, in view of the above discussion, issue no. 2 is decided in favour of plaintiff and against the defendant.
ISSUE NO. 3. Whether the suit is within time?
21. Onus to prove this issue from the manner it has been framed leaves no doubt that it rest upon the plaintiff. Plaintiff has pleaded in para no. 3 of the plaint that last supply of goods was made by the plaintiff on 06.10.1989 and last payment was received by the plaintiff from the defendant on 12.12.1989. Plaintiff again in para no. 6 of the plaint reiterated that it received last payment on 12.12.1989. All the defendants in their respective written statements did not specifically deny the factum of last supply and last payment in both the corresponding paragraphs. In view of the provisions contained in Order 8 Rule 5 of CPC CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 12 of 29 defendant is required to make specific denial of the averment made in the plaint failing which defendant is taken to have admitted the averment made in the plaint. Thus, so far as averment is concerned the defendant has not disputed that last payment was made on 12.12.1989.
22. Present suit has been filed on 09.12.1992 and was re- filed on 14.12.1992. It has been contended that 12.12.1992 was the second Saturday and as such was holiday. 13.12.1992 was Sunday and, therefore, suit having been filed on 14.12.1992 cannot said to be beyond the period of three years. In the present case there is no dispute that present suit was filed on 09.12.1992 and after removal of objection, if any, the same was re-filed on 14.12.1992. Legally the suit is deemed to have been instituted on 09.12.1992 i.e. well within three years from the date of last payment i.e. 12.12.1989.
23. It has been contended very strongly by the counsel for the defendant that last payment was not made on 12.12.1989 and since defendant has denied the payment on 12.12.1989, therefore, it was incumbent upon the plaintiff to prove that last payment was made on 12.12.1989 by proving the books of account. The contention of the Ld. Counsel for the defendant would have been of worth if there has been the specific denial in the written statement. As noted above the plaintiff specifically pleaded in para no. 3 and 6 of the plaint that it received last payment on 12.12.1989 but all the defendants in their written statement did not specifically denied this fact. Interestingly even during the cross examination of plaintiff witness not a single CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 13 of 29 suggestion was given on the part of the defendant that no payment was made on 12.12.1989. Strangely further, in the chief examination of defendant's witnesses it has not been deposed that no payment was made on 12.12.1989. Mere vague denial that extract of account filed by the plaintiff is incorrect will not ipso facto lead to the conclusion that defendant has specifically denied the payment on 12.12.1989.
24. In the present case the question of limitation is pure question of fact, a fact which has been specifically pleaded by plaintiffs but has not been denied by the defendants specifically neither in the pleading nor in the evidence. In these circumstances, it cannot held that question of limitation is seriously a issue and since payment on 12.12.1989 had not been disputed and the filling of the present suit on 09.12.1992 or on 14.12.1992 cannot be said to be beyond the period of 3 years from 12.12.1989.
25. Article 14 of the schedule to The Limitation Act 1963 prescribes that where good is sold and delivered on credit and no period of credit is fixed, limitation shall begin to run from date of delivery. It is case of neither party that payments were being made bill wise. Undisputedly, last supply was made on 6.10.1989, therefore limitation to file suit for recovery of price of good as per Article 14 began from the date of last delivery on 6.10.1989. Section 19 of The Limitation Act 1963 prescribes that where payment on account of debt is made before the expiration of the prescribed period by the person liable to pay the debt or by his agent on his behalf a fresh period of limitation be computed from CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 14 of 29 the time when the payment is made.
26. As discussed above, it has been found that last payment on 12.12.1989 has not been disputed and such payment was stated to have been paid by demand draft which fact was also not disputed by the defendants. Payments by demand draft has been held to have covers the requirement of acknowledgement in writing as required by the proviso to Section 19 of The Limitation Act 1963. Thus, in the present case limitation for the plaintiffs to file the present suit began on 12.12.1989 and suit having been filed on 9.12.1992 or on 14.12.1992 in the circumstance noted above cannot be said to be barred by limitation.
Hence, issue no. 3 is decided in favour of the plaintiff and against the defendant.
ISSUE NO. 7: Whether the defendants suffered any loss on account of shortage in supply made by the plaintiff? If so, its effect?
25. Issue No.7 is taken up ahead of issue No. 4, 5 and 6 as the findings on this issue will have an important bearing on the findings of issue No.5. Onus to prove this issue is obviously upon the defendant. All the defendants have pleaded that the transaction between the plaintiff and defendant was between defendants no. 1 and 3. Other defendants have either received goods or made payment only on the direction of defendants no. 1 and 3 and, therefore, any right or liability of defendant no. 1 and 3 is of defendants no. 1 and 3 only. Defendants no. 2 to 4, 5 and 4 have nothing to do with the said transaction with the plaintiffs. In CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 15 of 29 the written statement of defendants no. 1 and 3 and that of defendants no. 5 and 7 it has been pleaded that on account of shortage in supply, inferior quality of material, defendants no. 1 and 3 suffered loss to the tune of Rs.15,20,168/- including transport and insurance charges.
It was pleaded by defendants no. 1 and 3 that Rack no. 1 there was shortage of 709.28 quintals @ Rs.280 per quintal which works out to Rs.1,98,598/-. It was further pleaded that the gunny bags in Rack no. 1 bearing 15456 were putrefied, rotten and torn and, therefore, defendants debited the account of the plaintiffs @ Rs.5 per bag amounting to Rs.77,280/-.
26. It has been further pleaded by the defendant that defendant received invoices of Rack no. 2 as per which plaintiff charged 17,282 quintal whereas railway receipt showed weight 16,527 qunital. Thus, plaintiff excessively charged 755 quintals. It has been further stated that in fact there was further shortage of 174.3 quintal out of 16527 quintal. Hence, the total shortage was 929.3 quintal. Plaintiffs, thus, excessively raised bill by Rs.2,76,985/- @ 298 per quintal and since there was putrefaction etc. defendant debited Rs.5 per quintal amounting to Rs.87,170/-. It has been further pleaded that plaintiff further charged the wheat excessively @ Rs.4 per quintal and, therefore, excess amount of Rs.66,108/- was to be debited.
27. Similarly, in Rack no. 3 there was shortage of 432.22 qunital @ 298 per quintal amounting to Rs.1,29,463/-. Deduction of amount for inferior quality was worked out to be Rs.77, 376/- @ 12 per quintal and further debited amount for putrefaction, rotten CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 16 of 29 and torn gunny bags amounting to Rs.1,39,475/- @ Rs.5 per bag and excess rate charged by Rs.12 per quintal amounting to Rs.84,410/-.
28. In respect of Rack no. 4 there was shortage of 463.60 quintal @ Rs.308 per quintal amounting to Rs.1,42,672/-. Deduction of amount for inferior quality @ Rs.13 per quintal amounting to Rs.1,19,704/- and further deduction on account of putrefaction, rotten and torn gunny bags @ Rs.5 per bag amounting to Rs.46,360/- and excessive rate charge @ Rs.4 per quintal amounting to Rs.36,834/-.
29. It has been further pleaded by the defendant that invoices no. 874 and 875 were drawn in the name of 3 rd party M/s Anandi Roller Flour Mill and the bills were also drawn on the said party who was not making payment and clearing documents with the bank with the result the goods were deteriorating. The plaintiff requested defendants no. 1 and 3 to get the documents released from the bank so as to avoid further deterioration of the goods. Defendant got the documents released by paying a sum of Rs.1,28,250/- for honouring hundis, Rs.936 as bank commission charges, Rs.6,166/- as interest charge by the bank, Rs.3,185/- as lorry freight charges from Bibinagar to the Mill and Rs.21,980/- as railway freight and claim of railway for demurrages was still pending. It has been further pleaded that the contents of the wagon were examined and found to be of inferior quality not eatable by humans and were disposed of by the defendant to Fodder Manufacturer by reliasing amount of Rs.58,450/-. It has been stated that plaintiffs have credited in defendants account CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 17 of 29 only Rs.1,28,250/- whereas the correct amount should have been Rs.1,60,517/- and thus plaintiffs have excessively charged the defendants by Rs.1,02,267.60.
30. It has been further pleaded that plaintiff had drawn a hundi for the Rs.1,41,850/- in respect of 260 bags of wheat covered by invoice no. 1237 and another hundi for the sum of Rs.1,42,850/- in respect of 268 bags of wheat covered by invoice no. 1238. Both these hundis were drawn on Swastik Flour Mills, Hyderabad. It has been alleged that plaintiff drew these hundis invoices to effect of inflated credit from bank by working out to be price of wheat per quintal at about Rs.562.5 per quintal. Plaintiff requested defendant to cooperate to enable the firm overcome financial difficulty, defendants paid Rs.9,466/- but the same was not credited. It has been further pleaded by the defendant that a sum of Rs.800/- towards the transport charges and sum of Rs.1,700/- towards insurance charges have also not been credit into the defendants account.
31. The sum total of aforesaid amounts come to Rs.15,20,168/- which as per defendants suffered on account of short supply, poor quality, loss in transit, insurance etc. In the replication filed by the plaintiff, plaintiff has denied that there was any shortage of goods or any putrefaction etc and all other allegations were also denied by the plaintiff.
32. Defendant examined defendant no. 2 as DW-1. He filed his examination in chief by way of affidavit. In examination in chief he deposed on the lines of written statement. In cross CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 18 of 29 examination he deposed that he being the elder brother of Mr. Girdhari Lal defendant no. 3 has filed his examination in chief and deposed that he had no connection with defendant no. 1, however, he was aware of transaction between the parties. He deposed that he had on behalf of defendant no. 1 informed plaintiff abut the poor quality of goods supplied. Despite admitting he denied the suggestion that he used to talk to the plaintiff on behalf of defendant no. 1. He admitted that postal registration related to Ex. PW-1/D2 has not been filed on record but denied the suggestion that Ex. PW-1/D2 was not sent to the plaintiff or that same was false and fabricated.
33. He in cross examination further deposed that the goods used to be taken by the clearing agents as per the number of bags mentioned in railway receipts and if there was any discrepancy the same used to be mentioned to the Railway Authority. He did not remember as to who had paid freight charges for the transaction in question. He further deposed that no bills was received from the plaintiffs and payment were made on adhoc basis on the basis of quantity of goods sent.
34. He admitted that a proforma bill annexed to rack no. 1 was received but he could not tell whether the goods valuing Rs. 44,72,636.60/- were received in rack no. 1 as no bill for such an amount was given to them. He was also unable to tell whether goods valuing Rs. 51,51,223.20/- pertaining to rack no. 2, valuing Rs. 18,60,183.52/- pertaining to rack no. 3 and Rs. 28,36,950/- pertaining to rack no. 4 were received as no bills for these amounts were given to them. He was also unable to tell whether CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 19 of 29 defendants received goods by two wagons valuing Rs. 1,28,250 /- and Rs. 1,35,491/-. However, he was quick to deny the suggestion that goods worth Rs. 1,46,09,734.32/- was supplied to the defendants through Railways and goods worth Rs. 8,31,670.97/- were supplied to the defendant through road transport.
35. He did not remember if defendants reported any shortage in quantity to the Railway Authority. He further deposed that no claim was lodged with the Railways. He volunteered it was the duty of the consignee. He further deposed that delivery of bags were taken from the Railway in torned condition to save demurrage charges and mitigate the loss of the consignor. He denied all other suggestions given by plaintiff. He admitted that wheat was agreed to be purchased @ Rs. 264/- per quintal but volunteered that was in respect of B and C category of quality of wheat.
36. When the witness of plaintiff was in the witness box, he denied the suggestion that goods supplied to defendant used to be defective, deficient in quantity and the gunny bags booked were in torned condition. He volunteered goods to be weighed and loaded in proper condition in the presence of the representative of the defendants. He further deposed that goods were sent under insurance cover. He further deposed that whatever deficiency in quantity etc if any was there that may be due to the Railway. He further denied the suggestion that accounts were never settled by him intentionally as the outcome would be an outstanding more than Rs. 15 lakh against the plaintiff firm towards the defendant.
CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 20 of 29
37. Thus, it could be seen that when the plaintiff was in witness box the specific case of the defendant was not put to the plaintiff's witness as pleaded by the defendants in the additional plea. No such fact was put to him that invoice was raised against the 3rd party or that defendant was requested to cooperate to enable Swastik Flour Mills to tide over as there was financial difficulties. No specific suggestion regarding the actual shortage or putrefaction was put to the witness of the plaintiff. Apart from oral testimony with regard to suffering of loss nothing has been brought on record, although, defendant has claimed that there was shortage of supply but no record has been placed on record to show what was the actual weight of the goods or number of bags which were delivered by the Railway.
38. It is admitted fact that railway receipts were executed but defendant have not bothered to place on record or prove the railway receipts by calling witness from the Railway so as to show that there was shortage in the supply. In fact no complaint has been made to the Railway authorities about loss in transit or about the deteriorating condition of the gunny begs. Admittedly, goods were sent under insurance cover, therefore, if at all there was any shortage or putrefaction in transit the matter should have been reported to the Railways so that either party could have recovered the loss. No doubt the letters Ex D-1 to Ex D-4 sent by defendants to the plaintiff do show complaint about the shortage in supply or poor quality etc but these letters are not sufficient to prove the extent of damage, loss or putrefaction suffered. Hence, defendants failed to prove that there was any damage, loss of CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 21 of 29 goods or putrefaction to the extent of Rs. 15,20,168/-. It is also worthwhile to note here that defendants have neither claim set off nor has filed any counter claim.
Therefore, issue no. 7 is decided against the defendant and in favour of plaintiff.
ISSUE NO. 5.Whether the plaintiff are entitled to recover the suit amount? If so, from which of the defendant?
39. Onus to prove this issue is obviously upon the plaintiff. It is the claim of the plaintiff that plaintiff supplied goods by way of four Racks and two trucks to the defendants. The said goods were duly received and a sum of Rs. 6,41,627.79/- is outstanding against the defendant and thus plaintiff has claimed Rs. 11,93,887.79/- with interest accrued thereon @ 21% per annum. Along with plaint, plaintiff has also annexed extract of statement of account of goods supplied by way of Railways/Trucks and payment received which shows that between the period 04.07.1989 and 12.12.1989, plaintiff by Racks supplied goods worth Rs. 1,46,09,734.32/- out of which plaintiff had received Rs. 1,40,51,037/- leaving outstanding of Rs. 5,58,697.32/-. Between the period 30.05.89 and 15.06.89, plaintiffs by trucks supplied goods worth Rs. 8,31,670.97/- out of which he had received Rs. 7,48,740.50/- leaving outstanding of Rs. 82,930.47/-.
40. In the written statement defendant had admitted to have received the goods by way of four Racks and two trucks but has disputed the liability alleging shortage in supply, excessive rate charged, poor quality of materials, loss of gunny bags and expenses incurred on other accounts totaling to Rs. 15,50,167/-.
CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 22 of 29 While deciding issue no. 7 it was held that defendants failed to prove that defendant No. 1 and 3 suffered any loss.
41. Both plaintiff and defendant during course of arguments relied upon letter Ex D-4 to contend their respective submissions that is to say admission of receipt of goods and acknowledgement of liability to pay as contended by plaintiff and shortage, putrefaction, torn condition of gunny bags etc as contended by defendants. There are other letters Ex D-1 to Ex D- 3 which are written by defendants and are also not in dispute as plaintiffs admitted the same during course of admission-denial of documents. Letter Ex PW1/D-2 was not admitted by the plaintiff either during course of admission-denial or during the evidence. Defendants has not proved on record postal receipts etc to show the posting of letter Ex PW1/D-2 and thus defendants failed to prove the letter dt PW1/D-2.
42. Perusal of letter dt 18.10.89 Ex D-1 shows that defendants have asked for bills in particular manner for goods supplied through trucks and wagon. In the said letter it has also been informed that defendants have got weighed the good received till then and after receiving bills from plaintiff same will be tallied. It has been further acknowledged that total value goods received by Rack No. 1 to 4 is Rs. 97,38,000/-.
43. In letter dt 8.12.89 Ex D-2 defendant have disputed that claim of the plaintiff with respect to value of the goods supplied which as per plaintiff as mentioned the letter was claimed by plaintiff to be of Rs 1,43,00,000/- but as per defendant same CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 23 of 29 was approximately of Rs 1,40,00,000/- against which defendant has already made payment of Rs 1,34,70,000/- including value of two hundies amounting to Rs 3,00,000/- got released by defendants at request of plaintiffs. It was further informed that 5- 5.50 as appropriately due and defendant would be sending Rs 5,00,000/- from Nagpur within two/three days of the date of letter. It has been further mentioned in the letter that defendants after going through account ts had told plaintiff that in respect of trucks and wagon defendants were to give 70-75 thousands approximately . It further mentions that in defendants opinion not much is to be given or taken there yet they after completing the accounts they will send to plaintiffs in 1-2 days.
44. Letter Ex D-2 further reminds the plaintiffs that Chiman Lalji had informed plaintiffs bad and inferior quality of good received by RAKES No. 3 and 4 and there were shortage in weight of goods also. Plaintiffs were further called upon to prepare and send bills for the all 4 RAKES in the name of defendant No.1 and thereafter defendants would send statement of shortage.
45. In letter Ex D-3 which is also of 8.12.1989, it has been mentioned that hundies bearing No. 515 & 516 sent by plaintiff are not accompanied with RRs and on enquiry defendants came to know that RRs of above said hudies were in the name of one Anand Roller Flour Mills and were with hundies bearing No. 417 &
418. Said letter called upon the plaintiffs to issue direction to the Bank to release the RRs alongwith hundies to the defendants.
46. In the letter Ex 20.12.1989 Ex. D-4 defendants CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 24 of 29 reminded the plaintiff of his obligation to send the bills of the four Racks which was not sent till that day. Further it was mentioned that after letter dt 8,12.1989 two wagons from Bibinagar were cleared upon deposit of Rs 1,58,000/- and after adding all Rs 1,41,30,0000/- have been paid. It has been further mentioned that wagons contained wheat of very bad quality and requested the plaintiff to send its representative for inspection of goods.
47. Admittedly, plaintiffs have not sent any reply of these letters to dispute the averment made or to put across its own stand. In the letter Ex. D-4, defendants have stated that till then a sum of Rs. 1,41,30,000/- have already been paid and plaintiff has been requested to send bills of four Racks. Even this letter Ex D-4 was also not replied by the plaintiff thereby either questioning the contents thereof or taking its own stand with respect to averments made in the said letters.
48. In the above background, plaintiffs were required to prove that the goods which they sent by way of rails and truck was worth Rs. 1,54,41,405.29/- out of which they received payments of Rs 1,47,99,777.5 leaving outstanding of Rs. 6,41,627.79/- against defendant. Admittedly, books of account has not been brought on record to prove the same as per law.
49. The plaintiffs relied on annexure A which could at best be termed as extract of goods supplied and payment received but same cannot be acted upon in the absence of books of accounts. Plaintiffs have also not proved on record the all the bills showing the value/quantity of goods dispatched to the defendant.
CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 25 of 29 Photocopies of two bills are on record even if same is taken into consideration the total value of the goods sold through those bills are only 46,97,133.52/-. No doubt, defendants have admitted to have received the goods and therefore, dispatched and receipt of goods is not in dispute but defendants have also successfully proved the letters Ex. D-1 to D4 wherein defendants are disputing to the plaintiffs the value, quality and quantity of the goods supplied by plaintiff but plaintiffs have remained silent. Defendant has been continuously asking the plaintiff to send the bills so that shortage etc could be intimated but no bills was sent by plaintiffs as is clear from the letters Ex D-1 to Ex D-4.
50. Plaintiffs were required to prove on the record of this case that a sum of Rs. 6,41,627.79/- was outstanding which plaintiffs could have done by proving all the bills, railway receipts and books of account and other relevant material. It is not known as to what was the number of bags or quantities of goods were sent by way of rail/trucks and therefore, it could not be held as to what was the value of the goods sent by the plaintiff to the defendant. It is the settled preposition of law that plaintiff has to stand on its own legs. Plaintiffs cannot rely upon the letter of defendants to prove the quantities of goods and its value supplied. In the letter defendants have admitted only receipts of goods not the value or quantity or its worth. Defendants have been asking plaintiff to send bills in particular manner mentioning the details of weight etc but plaintiff neither disputed the contents of the letters nor brought on record any material to show that grievance of defendants was rectified. Plaintiffs failure to reply the above letters of the defendants despite the fact that defendant was questioning CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 26 of 29 the actual value/quantity of the goods supplied, calls for drawing of adverse inference against the plaintiffs. More over plaintiffs had another chance in the trial of the present matter to prove the quantity, quality and worth of the good supplied but plaintiffs have failed to prove its case by not proving all the bills, RRs and books of account.
51. PW1 had filed additional affidavit to the effect that original of documents was in possession of the plaintiffs but same was misplaced. In the said affidavit there is reference of only three bills but the third bill is not on record. In any case plaintiffs have failed to prove even by secondary evidence all the bills, RRs and books of account for goods supplied through Racks and Trucks as referred to in the extract of statements of account.
Accordingly, issue no. 5 is decided in favour of defendants and against the plaintiff.
ISSUE NO. 4 Whether the plaintiff is entitled to interest? If so, to what rate and to what amount?
52. In view of finding recorded on issue No.5 plaintiffs are certainly not entitled for any interest, hence issue No. 4 is decided against the plaintiffs and in favour of defendants.
ISSUE NO. 6 Whether there is any privity of contract in between the plaintiff and defendants Nos 6 and 7? If so, its effect?
53. Onus to prove this issue is upon the plaintiff. Defendants have raised objection that there is no privity of contract between the plaintiffs and the defendants no. 6 and 7 whereas case of the plaintiffs is that defendant no. 1 is a business CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 27 of 29 name being run by defendants no. 2 to 4 who are also running and managing a business under the name and style of defendants no. 5 to 7. It has been further the case of the plaintiffs that defendants no. 2 to 4 engaged in a transaction with plaintiff firm on behalf of and in the name of defendants no. 1, 5 to 7 by managing accounts with the plaintiff firm in the name of defendant no. 1 business. It has been further the case of the plaintiffs that at the request of either of defendants no. 2 to 4 plaintiff firm supplied goods which were received by the said defendants in the name of businesses set up in the name and style of defendant no. 1 and defendants no. 5 to 7.
54. In all the written statements it has been the case of the defendants that all the transactions have taken place between plaintiffs and defendant no. 1. Merely because at the direction of defendant no. 1 goods were dispatched by the plaintiff to defendant no. 6 and or 7 or that payments were also made at the direction of defendant no. 1 by the said firm or firms to the plaintiffs do not amount to creation of jural or contractual relationship between the plaintiffs and defendants no. 6 and 7.
55. Thus it is clear from the contents of the written statements that defendants have not denied that goods were supplied by the plaintiffs to defendants no. 6 and 7 or payment was received from defendants no. 6 and 7 albeit at the directions of defendant no. 1.
56. It is not in dispute that plaintiffs were maintaining accounts in the name of defendant no. 1, though goods were CS No. 18618/16 M/s Prabhu Dayal Lachhmi Narain & Ors. v. M/s. Shri Sai Corporation & Ors. Page No. 28 of 29 sometime supplied to defendants no. 6 and 7 and sometimes payments were received also from defendants no. 6 and 7 but at the direction of defendant No.1 and therefore it does not give rise to any jural relationship between plaintiffs and defendants No. 6&
7. But since defendant No.1 might have raised objection, therefore, plaintiffs being not aware of inter-se arrangement between defendants no. 1 to 7, were certainly required to implead all the persons necessary so as to avoid any technical objection in sustaining the suit for recovery against the defendant no. 1. Reading of the written statements filed by the defendants do not clarify the legal status of the firms defendants no. 1, 5, 6 and 7. In strict sense there is no privity of contract between the plaintiff and defendants no. 6 and 7 but the manner in which the transaction has taken place between the plaintiff and defendant as admitted by the defendants the presence of defendants no. 6 and 7 were necessary for the proper adjudication of the dispute involved between the parties.
Hence, in view of the above discussion, issue no. 6 is disposed of accordingly.
RELIEF In view of the findings recorded on all issues, suit of the plaintiff is dismissed.
Parties to bear their own cost.
Decree sheet be prepared accordingly.
File be consigned to Record Room after necessary compliance.
(Harish Kumar)
Announced in open Court ADJ-13(Central)/THC
(Judgment contains 29 pages) Delhi/09.06.2017
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