Delhi District Court
M/S. Rohini Traders vs M/S. J.K. Lakshmi Cement Ltd on 4 March, 2017
IN THE COURT OF MS. PREETI AGRAWAL GUPTA:
ADDITIONAL DISTRICT JUDGE (CENTRAL) 10: DELHI
Suit No. : 22/15.
Regd. No. : 13931/16.
[ 12 Year Old Case ]
M/s. Rohini Traders
A 5/3 Main Kanjhawla Road
Krishana Vihar, Delhi. ....Plaintif
VERSUS
M/s. J.K. Lakshmi Cement Ltd.
Nehru House, 4 Bhadurshah
Zafar Marg, Delhi.
Registered Office at:
Jayakaypuram,
Sirohi, Rajasthan. ...Defendant
Date of Institution of suit : 11.05.2004
Reserved for Judgment on : 28.02.2017
Date of pronouncement of judgment : 04.03.2017
J U D G M E N T:-
01. The present case is a remanded back case for redeciding the matter afresh. The earlier judgment dated 14.03.2007 passed by the then Ld. ADJ has been set aside vide orders of Hon'ble High Court of Delhi in RFA No. 406/07 vide orders dated 07.11.2008. With the directions that DW-1 who was examined at the first trial be recalled for cross examination on or with respect to the documents which were produced by him on 10.11.2006.
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02. There were series of proceedings before the Hon'ble Superior courts after the orders passed by Hon'ble High Court of Delhi dated 07.11.2008 by which the case was directed to be remanded back for re-trial to the extent directed by the Hon'ble High Court of Delhi. The review application was filed before the Hon'ble Division Bench in RFA No. 406/07 vide RP No. 415/08 and the same was disposed of vide orders dated 16.12.2008 whereby review petition was dismissed. Both the orders dated 07.11.2008 in RFA No. 406/07 and 16.12.2008 in RP No. 415/08 of Hon'ble High Court of Delhi were challenged before the Hon'ble Supreme Court by the plaintiff herein which was disposed of by the Hon'ble Apex Court in Civil Appeal no. 40041-42 of 2010 vide judgment dated 03.02.2015. Vide detailed orders of the Hon'ble Apex court considering the settled law applicable in the facts of the case for production of documents u/O 12 Rule 8 CPC, observed that directions gien by Hon'ble court do not call for any interference. The appeal before the Hon'ble Supreme Court of India failed and thus, orders of Hon'ble High Court of Delhi dated 07.11.2008 in RFA No. 406/07 attained finality.
03. It is further important to consider the proceedings before the Hon'ble Superior courts in regard to the directions issued by the Hon'ble High Court of Delhi vide orders dated 07.11.2008 in RFA No. 406/07 for directions upon the respondent (Rohini Traders) to deposit the decretal amount before the Trial court (this court) which the respondent (Rohini Suit no. 22/15 (13931/16) Page no.2 of 33 04.03.2017 Traders) has withdrawn on being deposited by the applicant/J.K. Lakshmi Cements before the Hon'ble High Court of Delhi, in compliance of the conditional orders. The applicant (J.K. Cements Ltd.) has been granted permission to withdraw the said amount/decretal amount unconditionally. After disposal of the appeal vide order dated 03.02.2015 by the Hon'ble Supreme Court, applications bearing CM No. 9486/15 and CM No. 9485/15 were filed on behalf of the respondent (plaintiff herein Rohini Traders) seeking extension of time to deposit the decretal amount withdrawn by him in terms of the orders of the Hon'ble High Court dated 07.01.2008. The Hon'ble High Court of Delhi disposed of the misc. application vide order dated 21.05.2015 allowing the plaintiff herein to deposit back the decretal amount of Rs. 18,61,635/- for onward release in favour of the defendant herein (M/s. J. K. Lakshmi Cement). The Hon'ble High Court of Delhi observed that in the event of respondent's suit (plaintiff herein) being ultimately dismissed by the ld. Trial Court, the respondent shall be liable for interest on Rs.18,61,635/- for a period from the date of withdrawal of the said amount in terms of order dated 11.12.2007 upto the date of redeposit back, at such rate as the Trial Court shall determine. Respondent was under direction to pay interest upon failure to give requisite undertaking, which situation did not arise. It is further relevant to observe that the appellant (M/s. J. K. Lakshmi Cement) is not liable to pay interest from the date of withdrawal of Rs.18,61,635/- upto the date of re-deposit by the respondent, in case the plaintiff succeeds in the suit.
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04. The court is lastly in receipt of orders of Hon'ble High Court of Delhi dated 11.01.2017 in CM Appeal no. 9486/15 and CM Appeal No. 9485/15. The orders of this Court dated 18.10.2016 by which application under Order 6 Rule 17 CPC of the defendant (M/s. J. K. Lakshmi Cement) was allowed, have been challenged. The appeal has been disposed of by Hon'ble High Court of Delhi granting liberty to the appellant/plaintiff to raise all the issues on merits at the time of final adjudication of the suit with further directions to this Court to make an endeavour for expeditious disposal of the case in a time bound manner. Accordingly, additional issue of 'equitable set off' in modification of the issues of the suit vide orders of this court dated 18.10.2016, are under consideration for adjudication.
05. The present suit is a remanded back case for fresh adjudication whereby the suit was disposed of as decreed in terms of judgment/decree of the competent Ld. Additional District Judge, Delhi dated 14.03.2007. Thereafter, in compliance of the aforesaid directions, detailed cross- examination of DW1 Mr. R. K. Gupta has been recorded to the extent of production and cross-examination upon the documents produced by DW1/Mr. R. K. Gupta on 10.11.2016. Thereafter, arguments addressed by ld. Counsels afresh have been heard as per the issues of the suit re-modified as on 18.10.2016.
06. The concise facts, as averred in the plaint are that the plaintiff is a sole proprietorship concern which was working as Third Party Commission Agent of the defendant company Suit no. 22/15 (13931/16) Page no.4 of 33 04.03.2017 since 1996-97. The defendant company is a public limited company engaged in the business of manufacturing of cement. It is the case of the plaintiff that it was giving regular good business to the defendant company for orders of cement from various customers and that these orders were placed upon the defendant regularly and the orders were placed directly in the name of the customers.
07. A suit for Recovery for a sum of Rs.14,21,250/- along with pendentelite and future interest @18% per has been filed against the defendant on the basis of the ledger of the plaintiff as on 31.03.2004 whereby the balance recoverable amount on account of alleged commission accrued upon the plaintiff over a period of time by way of mutual, open and current account maintained between the parties, was of the tune of Rs.12,45,100/-, due and payable by the plaintiff. An interest @18% p.a. to the tune of Rs.1,75,600/- computed from 1.4.2004 till the date of filing the suit has also been claimed as the suit amount, along with Rs.550/- as legal charges.
08. It is the case of the plaintiff that defendant company has discontinued making payment to the plaintiff and has been faltering in issuance of TDS Certificate alleging that the TDS Certificate for the last year 2002-03 was provided by the defendant after a gap of one year and has not been supplied for the relevant financial year(s). Despite repeated visits, requests, meetings and assurances, defendant has failed to pay the outstanding amounts to the plaintiff, hence the suit.
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09. The suit is contested on behalf of the defendant with legal objections pertaining to maintainability of the present suit for want of locus-standi of the plaintiff and on the ground of limitation. Amended written statement has been filed on behalf of defendant on 18.01.2017, in terms of the orders of the Court dated 18.10.2016 by which, additional issue of 'equitable set off' has been framed by the Court. There are no formal orders of the court allowing any other factual amendment in the original written statement filed on behalf of the defendant and accordingly, the defence available with the defendant in the original and amended written statement is the same, albeit the additional issue dated 18.10.2016. On merits, the claim of the plaintiff is denied and stated that the plaintiff failed to procure payment from its parties due and payable to the defendant company, claiming the liability of the plaintiff to pay an amount of Rs.4,62,000/- alongwith interest, to the defendant. Vide detailed orders of this court dated 18.10.2016, the amendment to claim set-off has been disallowed and the additional issue, as per law, for 'equitable set-off' has been incorporated and issues of the suit re-modified.
10. The defendant has outrightly denied that the plaintiff was continuing to work as a third party commission agent for the defendant company, at the time of filing the suit and also denied that the plaintiff was giving regular business of cement orders for various parties in favour of the defendant. It is alleged that the plaintiff failed to ensure and procure payment from the parties from time to time and the ledger of the plaintiff, as on 31.03.2004, as claimed has been disputed. It is Suit no. 22/15 (13931/16) Page no.6 of 33 04.03.2017 also denied that there were any mutual, open and current account between the parties to the suit. The receipt of legal notice is admitted and replied, while denying any liability to pay recoverable amount, as claimed by the plaintiff. It is further denied that there were any meetings or assurances between the parties for settlement of account and outrightly denied any liability to pay any amount to the plaintiff. Its own assertion of outstanding amount recoverable from the plaintiff for Rs.4,62,000/- is maintained. It is denied that the defendant did not issue requisite TDS Certificate and Statement of Account relied upon by the plaintiff and any claim of interest is also denied.
11. By way of rejoinder and replication to the amended written statement of the defendant, the averments of the plaint are reiterated and the claim of set-off of the defendant is specifically denied on the ground that there was any balance recoverable from the parties of the plaintiff in favour of the defendant for the goods supplied by the defendant to respective parties. It is further the defence of the plaintiff on the aspect of 'equitable set-off' that the collection of payment from the parties was never the responsibility of the plaintiff. The Statement of Account maintained by the defendant is denied and the claim of Rs.4,62,000/- by the defendant is alleged to be fictitious and bogus, thereby denying any case of the defendant to get the amount adjusted against the recoverable amount in favour of the plaintiff and has also denied any liability to pay any interest thereupon.
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12. The issues of the suit are modified issues, as per order dated 18.10.2016, which are as under:-
1. Whether the plaintiff has locus-standi to file and maintain the present suit ? OPP.
2. Whether the suit is barred by limitation ? OPD.
3. Whether the plaintiff is entitled to a decree of Rs.14,21,250/- as prayed for ? OPP.
4. Whether the defendant is entitled to equitable set-
off of Rs.4,62,000/- against the Decree of Recovery, if passed in favour of the plaintiff, as prayed for ? OPD.
5. Relief.
13. The trial of the case was complete upon which detailed judgment dated 14.03.2007 was pronounced as per issues of the suit dated 14.01.2005 which have been remodified by introduction of Issue no.4 herein-above. As already considered, the earlier judgment dated 14.03.2007 has been set-aside vide orders of the Hon'ble High Cout of Delhi dated 07.11.2008, affirmed by dismissal of the review petition vide orders dated 16.12.2008 and further confirmed by Hon'ble Apex Court vide orders dated 03.02.2015. Accordingly, in strict compliance of the directions of the Hon'ble Superior Court, DW1 / Mr. R. K. Gupta has been recalled for cross-examination on and with respect to the documents which were produced by him upon notice under Order 12 Rule 8 CPC served by the plaintiff and complied by the defendant by way of production of the documents on 10.11.2006. The defendant witness, upon Suit no. 22/15 (13931/16) Page no.8 of 33 04.03.2017 remand of the case for readjudication, has been cross-examined at length in respect of the documents produced on 10.11.2006 and his detailed cross-examination has been recorded on 31.01.2017, in two sessions and the remaining cross- examination has been completed on 02.02.2017, in conclusion of recording of evidence in the case.
14. In plaintiff evidence, proprietor of the plaintiff firm Mr. Praveen Gupta has been examined as PW1 who has tendered his chief-examination by way of affidavit which is Ex.PW1/A. The deposition in Ex.PW1/A is by way of reiterating the averments in the plaint on the facts of the case. The ledger of the plaintiff as on 31.03.2004 has been tendered as Ex.PW1/A comprising of 8 sheets. TDS Certificate issued by the defendant for the year 2002-03 is relied upon as Ex.PW1/B. Legal notice on behalf of plaintiff dated 09.04.2004 is Ex.PW1/C with its postal receipt and AD Card as Ex.PW1/D and E respectively. PW1 has admitted receipt of reply dated 18.05.2004 from the defendant, to the legal notice of the plaintiff, but has not relied upon the same with the testimony in support of claimed entitlement of the plaintiff to the Decree on the basis of outstanding liability of Rs.12,45,100/- against the defendant.
15. In cross-examination, PW-1 has denied contrary suggestion about the lack of sanctity of his affidavit of chief- examination Ex.PW1/A. He explained that the document to show the relationship of plaintiff as 'third commission agent' of the defendant was by way of the TDS Certificate and denied Suit no. 22/15 (13931/16) Page no.9 of 33 04.03.2017 that the plaintiff had any responsibility to procure or collect payment from different parties regarding their purchase of cement from the defendant. He was cross-examined regarding various entries of disputed ledger account relied upon by the plaintiff. PW1 clarified absence of any written contract between the parties for payment of interest upon delayed payments and deposed in favour of claim of the plaintiff.
16. In defence evidence, Mr. R. K. Gupta, General Manager of the defendant has been examined as DW1, who has tendered his chief examination by way of affidavit of evidence Ex.DW1/A, reaffirming the denial and allegations of the written statement. Without producing any document in chief- examination, DW1 claimed recovery of a sum of Rs.4,62,000/- from the plaintiff reserving defendant's right for separate legal action. DW1 put forth the case of the defendant for unpaid supplies of cement to the parties introduced through the plaintiff. Reply dated 18.05.2004 to legal notice of the plaintiff is tendered as Ex.DW1/1. During the first recording of trial, DW1 has been cross-examined to elicit if there was any letter of appointment issued by the defendant in favor of awarding Third Party Commission (TPC) agency in favour of the plaintiff. DW1 failed to produce any document in respect of the plaintiff or any other TPC agent, but admitted plaintiff as its TPC agent.
17. The remaining cross-examination of DW1 was conducted on 10.11.2006 when DW1 produced the documents sought by the plaintiff vide notice under Order 12 Rule 8 CPC dated 05.07.2006. DW1 has been materially cross-examined Suit no. 22/15 (13931/16) Page no.10 of 33 04.03.2017 on these documents after the remand of the case for readjudication. At the earlier instance, on 10.11.2006, DW1 was cross-examined in detail about any legal action, agreement or past precedent to show that TPC agent was responsible to collect the payment of goods supplied by the defendant to the parties, through the plaintiff. DW1 also admitted that there was no demand made by the defendant company to recover the outstanding unpaid amount of buyers, from the plaintiff as their TPC agent and admitted that the payments were made to the plaintiff from time to time.
18. In re-trial, DW1 asserted that he had produced the documents in pursuance of notice under Order 12 Rule 8 CPC dated 05.12.2008 and relied upon the Statement of Account of the defendant dated 31.03.2004 as ExDW1/P1, to answer the amount of last debit entry as Rs.4,56,376/- at Point A thereof. The witness was confronted with TDS Certificate Ex.PW1/B, to highlight the TDS amount of Rs.2,210/- deducted against the account of the plaintiff, corroborating with Ex.PW1/A at Point X. DW1 denied that Ex.DW1/P1 was a fabricated document. He was further cross-examined regarding the alleged collated debit entry at point B in Ex.DW1/P1, not specifically describing the name of parties against whom the outstanding liability has been claimed by the defendant, as introduced through the plaintiff. DW1 produced copy of letter dated 31.03.200 as Mark DW1/P3 upon failure to bring its original. Further DW1 testified regarding various entries in Ex.DW1/P1 with respect to alleged parties introduced by the plaintiff to the defendant as TPC agent and entries pertaining to the transporter for goods Suit no. 22/15 (13931/16) Page no.11 of 33 04.03.2017 supplied by the defendant as per orders through the plaintiff. DW1 reaffirmed various disputed entries of Ex.DW1/P1 as correct. Another letter Mark DW1/P4 was produced as that issued by ex employee of the defendant to show supply of statement of account to the plaintiff. DW1 deposed in support of its Statement of Account Ex.DW1/P1 stating that final negotiated price against goods supplied were recorded and maintained by the defendant unilaterally, denying that s/A Ex.DW1/P1 and ledger book Ex.DW1/P2 were false and fabricated.
19. Upon completion of trial, arguments addressed by ld.counsels have been appreciated in light of the entire evidence, documents produced and tendered on record, facts of the case and applicable law for determination of the issues of the suit. The issue-wise finding, afresh, upon remand of the case, as per directions are as under:-
20. Issue No.1.
Whether the plaintiff has locus-standi to file and maintain the present suit ? OPP.
Plaintiff has filed the suit as sole proprietor of the plaintiff firm. As per law, proprietorship firm is a legal entity for the purpose of commercial existence by way of requisite certification, taxation and other government compliances. The very inherent nature of proprietorship establishment is its creation by its proprietor for the purpose of conducting business Suit no. 22/15 (13931/16) Page no.12 of 33 04.03.2017 in the name and style of the proprietorship business concern. However, the legal existence of the proprietorship concern is through its proprietor who is not only the authorised signatory for conducting the business of proprietorship concern but also the master who is in helm of affairs for conduct of business of the firm. The term 'sole proprietor' is generally used in ordinary business parlance for single business enterprises since the ownership by more than one person are generally by way of other legal modes such as partnership or as the case may be. It is not the case of the defendant that there was any other person dealing with the defendant, on behalf of the plaintiff firm. During evidence, DW1 has admitted dealings of defendant company with Mr. Praveen Gupta, for and on behalf of the plaintiff firm M/s. Rohini Traders. In these facts and circumstances, the suit of the proprietorship firm, instituted through its sole proprietor is within the legal rights of the proprietorship concern and there is no legal impediment in filing the suit through sole proprietor.
Issue no.1 is accordingly decided in favour of the plaintiff.
21. Issue No.2.
Whether the suit is barred by limitation ? OPD.
It is the case of the plaintiff that it was working as Third Party Commission (TPC) agent of the defendant company since 1996-97 and was giving regular business to the defendant by placing orders for supply of cement directly in the name of Suit no. 22/15 (13931/16) Page no.13 of 33 04.03.2017 parties. The nature of maintenance of account between the parties is mutual, open and current, as per the case of the plaintiff and that the parties have been having long business relationship had a current and mutual account of transaction, on regular basis. The defendant, in written statement has evasively denied that the account between the parties were mutual, open and current or that there was any regular business between the parties, as claimed by the plaintiff. On the other hand, it is the case of defendant itself that defendant company supplied cement to the customers of the plaintiff from time to time but the plaintiff failed to procure payments from its parties, payable to the defendant, against the goods sold. Defendant itself has claimed outstanding liability against the plaintiff as on 31.03.2004 on the basis of its statement of account.
22. The objection of limitation is unfounded and unsupported. The Statement of Account Ex.PW1/A relied upon by the plaintiff relate to the periods 01.04.1998 to 31.03.1999, 01.04.1999 to 31.03.2000, 01.04.2000 to 31.03.2001, 01.04.2001 to 31.03.2002 and 01.04.2002 to 31.03.2003. As per the testimony of PW1, Ex.PW1/A was maintained by the plaintiff against the outstanding commission recoverable from the defendant company against its services w.e.f.01.04.1998 to 31.03.2003. It has also placed one TDS Certificated dated 30.04.2003 allegedly issued by the defendant for the year 2002-03 as Ex.PW1/B. In cross-examination, PW1 has reiterated the conduct of regular business transactions with the defendant and has denied that Ex.PW1/A was not a reliable Suit no. 22/15 (13931/16) Page no.14 of 33 04.03.2017 document. The document is challenged by the defendant as unverified and disputed in respect of various outstanding entries claimed by the plaintiff. However, the existence of business relationship since 1998 or since long before filing of the suit, is not challenged by the defendant.
23. DW1 has placed on record its own Statement of Account as Ex.DW1/P1. Also relevant is Statement of ledger Ex.DW1/P2. Also relevant is reply dated 18.05.2004 issued on behalf of the defendant to the legal notice dated 09.04.2004 by the plaintiff. DW1 has tendered the reply of legal notice as Ex.DW1/1 wherein the claimed outstanding in favour of the plaintiff is denied but the business dealings between the parties is admitted as a fact of record and even speaks of mutual agreements of reciprocal rights and duties between the parties. DW1 has brought the accounts vide Ex.DW1/P1 and Ex.DW1/P2, which have been denied by the plaintiff as unreliable but bare perusal of alleged accounts of the defendant for its business relations with the plaintiff are since 1998, whereby even TDS deduction has been entered as on 31.03.1998. The defendant has claimed set-off on the basis of outstanding unpaid amount by various buyers who were introduced to the defendant by the plaintiff, also on the basis of running and continuing business relationship between the parties admitted upto 31.03.2004 as per entry at point A on Ex.DW1/P1. It is not denied by the defendant that the plaintiff was entitled to payment of commission on the purchase orders placed upon the defendant in respect of supply of cement by various parties, through the plaintiff.
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24. It is crystal clear that there was regular continuous business between the parties since 1998 uptill the financial u years ending on 31.03.2004 on the basis of mutual, open and current account. There are regular business transactions and running account with each of the parties relying upon its own statement of account, showing credit and debit entry claiming recoverable obligations against the other party. The nature of relationship with the plaintiff as Third Party Commission (TPC) agent for bringing orders from different parties for purchase of cement from the defendant company, is admitted and proved fact. It is also not denied by the defendant that plaintiff was entitled to receive commission against the value of orders of various parties placed upon the defendant and that the defendant was making the payment of commission in favour of the plaintiff in intermittently. The dispute remains in respect of the claimed responsibility of the plaintiff to procure or collect or ensure the payment from the parties who placed orders upon the defendant, through the plaintiff.
25. The disputed facts of reciprocal obligations shall be examined in the subsequent issue. For the purpose of the present issue, the present suit was filed on 07.05.2004. The applicable provision for computation of limitation is Article I of Limitation Act which provides as under:-
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"Description of suit Period of limitation Time from which period
begins to run
For the balance due on a Three years The close of the year in
mutual, open and current which the last item
account, where there admitted or proved is
have been reciprocal entered in the account;
demands between the such year to be computed
parties as in the account."
Article 1 is clearly applicable to the facts of the present case. Suit is filed clearly within the prescribed period of limitation.
Issue no.2 is decided accordingly against the defendant and in favour of the plaintiff.
26. Issue no.3.
Whether the plaintiff is entitled to a decree of Rs.14,21,250/- as prayed for ? OPP.
A suit for recovery for a sum of Rs.12,45,100/- is claimed as principal due and payable amount from the defendant as on 31.03.2003 and interest @18 % p.a. upto date of filing of the suit has been claimed. The amount is claimed by plaintiff as allegedly accrued in its favour while working as a Third Party Commission (TPC) Agent of the defendant company. Recovery suit of the plaintiff is based on the statement of account vide Ex.PW1/1 stated to be maintained by the plaintiff in regular course of business. The plaintiff admittedly sent a Suit no. 22/15 (13931/16) Page no.17 of 33 04.03.2017 legal notice dated 09.04.2004, tendered as Ex.PW1/C, dispatched vide postal receipt and AD Card Ex.PW1/D and Ex.PW1/E. In response to the said notice, the defendant sent a reply dated 18.05.2004, which is Ex.DW1/A as tendered by DW1, wherein, defendant denied his liability to pay the demand raised in the notice.
27. PW1 has contended in favour of the authenticity of its statement of account Ex.PW1/A deposing that the plaintiff was maintaining actual and regular accounts in respect of the payable commission for all business transactions with the defendant and has sought support from TDS Certificate dated 30.04.2003 for the year 2002-03 tendered as Ex.PW1/B. It is asserted by the plaintiff, by way of testimony of PW1, that dealings of the plaintiff firm, with defendant company, started in 1997-98 and continued till 31.03.2002. Statement of account as on 31.03.2003 is relied upon wherein it is reflected that there was no business transaction between the parties during the financial 2002-03 and that the last closing debit balance of Rs.12,47,309.50, was outstanding against the defendant, as on 31.03.2002 and carried forward as opening balance as on 01.04.2002. The TDS deduction of Rs.2210/-, on 31.03.2003 is credited in favour of the defendant, and supported by TDS Certificate Ex.PW1/B. In cross-examination, no breach to the testimony of PW1 could be brought forth despite contrary suggestion. However, PW1 admitted that the Statement of Account Ex.PW1/A was not reconciled or cross checked by the defendant.
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28. The defendant company has tendered its evidence by way of the witness Mr. R. K Gupta, its General Manager, who has tendered his affidavit of affidavit as Ex.DW1/A and has been cross-examined at length upon remand of the case, in respect of the documents that were produced by him in pursuance of the notice under Order 8 CPC and were produced and available, as on 10.11.2006. Chief-examination by way of affidavit Ex.DW1/A has been led denying the claim of the plaintiff and the claim of the alleged liability of the plaintiff shall be dealt with in the next issue. The liability of the defendant company to pay has been denied and the Statement of Account maintained by the defendant in respect of business dealings of the plaintiff is tendered in cross-examination as Ex.DW1/P1. It is admitted that there were business dealings between the parties since 1997-98 and role of the plaintiff as TPC Agent is not disputed. Infact, defendant has claimed recoverable amount from the plaintiff against alleged failed payments from various parties to whom defendant sold cement against orders procured by the plaintiff. The receipt of legal notice Ex.PW1/C and its reply by the defendant Ex.DW1/1 are proved documents. Although, DW1 suggested that a letter of appointment as Third Party Commission Agent was normally issued by the defendant company to the concerned party, in this case, DW1 failed to recollect or produce any such letter of appointment in favour of the plaintiff as Third Party Commission (TPC) agent of the defendant.
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29. During re-cross examination upon fresh remand of the case, in respect of the documents available with DW1 as on 10.11.2006, detailed cross-examination has been recorded. The statement of account of the defendant qua plaintiff is Ex.DW1/P1 and various entries have been confronted to DW1 to dispute the veracity and genuineness of Ex.DW1/P1. The entries pertaining to name of the parties in Ex.DW1/P1 have been disputed and upon checking records, DW1 has testified that all parties entered in Ex.DW1/P1 were those pertaining to the references by the plaintiff and only one entry of a transporter Ganesh TPT was not that of a party. One letter mark DW1/P4 was confronted to the witness but could not be proved by the plaintiff, as per law for want of inadmissibility, in view of disputed execution of the letter by a third person. As such, the statement of account Ex.DW1/P1 and the ledger accounts Ex.DW1/P2 claimed by the defendant as accounts against plaintiff business are denied as false and fabricated documents by the plaintiff who has relied upon its own accounts Ex.PW1/A to support its claim.
30. The documents Ex.DW1/P1, Ex.DW1/P2 and Ex.PW1/A are Statement of accounts which need to be examined for deciding if outstanding amount is recoverable by the plaintiff from the defendant company. Interestingly, both the sides have placed reliance upon the statutory legal provision under Section 34 of Indian Evidence Act, 1872 which reads as under:-
"34. Entries in books of account, including those maintained in an electronic form when relevant-
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Entries in books of account, including those maintained in an electronic form, regularly kept in course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not along be sufficient evidence to charge any person with liability."
31. It is the contention of the plaintiff that the statement of account Ex.PW1/A is unchallenged and stands corraborated vide TDS Certificates Ex.PW1/B which are not disputed by the defendant as these are debit entries deducted from the outstanding liability of the defendant in favour of the plaintiff. The defendant has objected on reliability of Ex.PW1/A contending that same is not corroborated and is an unreliable document. Both the sides have placed reliance on the provisions under Section 34 Indian Evidence Act as reproduced herein-above.
32. The well settled legal position has been appreciated and relevant extracts of some of the binding judgments to guide the legal preposition under Section 34 Indian Evidence Act, are being considered. In State Bank Of India vs Yumnam Gouramani Singh, AIR 1994 SC 1644, the Hon'ble Supreme Court of India upheld the findings of the trial court. The Hon'ble Apex Court held :-
"......It is thus obvious that apart from the entries of the books of account there was ample evidence on the record to corroborate Suit no. 22/15 (13931/16) Page no.21 of 33 04.03.2017 the said entries. P.Ws. 5, 7 and 8 have in their detailed deposition corroborated the entries in the books of account. Even otherwise, issues Nos. 3, 4 and 7 were not contested by the respondent defendant. In his written statement, he admitted that he took the alleged loans from the Manipur State Bank which merged in the State Bank of India."
33. Law on the aspect has been well laid in Madras Cements Limited vs T.M.T.Kannammal Educational ... on 27 November, 2014., wherein it has been held :
"Evidence Act (1872), S.34 Entries in Account books corroborative evidence. Section 34 of the Evidence Act does not require any particular form of corroborative evidence, and where in a suit the plaintiff produces books of accounts and a witness on his behalf gives evidence in support of the entries and there is no cross- examination of the witness with respect to his personal knowledge of the facts stated, that is sufficient corroboration."
It is further held :
"....decisions would leave no doubt in the mind of the Court that even if the original account books are produced, it would not constitute reliable evidence within the meaning of Suit no. 22/15 (13931/16) Page no.22 of 33 04.03.2017 Section 34 in support of the statement of accounts, there should be some evidence to prove that the entries are reflecting the genuineness and honesty of the transactions concerned A person who wrote the entries or a person who has knowledge of them, should appear and depose before the Court...."
34. In the present case, PW1 is the sole proprietor of the plaintiff who has tendered the statement of account Ex.PW1/A and the TDS Certificate Ex.PW1/B which is an unchallenged document corraborates the statement of account Ex.PW1/A. The testimony of PW1 explicitly explains the case of the plaintiff as TPC Agent of defendant, who procured purchase orders from the parties and was entitled to receive 'commission' for reference of the parties to the defendant for placing orders for purchase of cement from the defendant. Vide Ex.PW1/A, there are regular entries of recoverable commission, in regular course of business, w.e.f.financial years 1998-99 and in continuam upto financial year 2002-2003. Each entry in the ledger / statement of account Ex.PW1/A for dealings with the defendant, shows debit entry for recoverable 'commission' amount from the defendant and credit entries against 'received' amounts, by cheque or cash. Further deduction against TDS for the corresponding year is also duly entered in the Statement of account, from time to time.
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35. In cross-examination of PW-1, there are no entries against debit or credit which have been challenged by the defendant. Although, PW1 has admitted that statement of account Ex.PW1/A was not reconciled from the defendant, the very sanctity of Ex.PW1/A remains unbreached and unchallenged, except by way of bald denial of any outstanding by the defendant, in its reply to legal notice, Ex.DW1/1. The legal notice of the plaintiff is not denied and also corroborates Ex.PW1/A. Defendant has not raised any challenge to the alleged 'commission' payable to the plaintiff but has only put forth a defence that there were outstanding payments from parties procured by the plaintiff, which were adjusted against the accounts of the plaintiff. Neither of the parties have produced any written document, contract or appointment letter in respect of mutual business dealings between them.
36. It is also worth consideration that defendant did not produced its own statement of account until notice under Order 12 Rule 8 CPC was served upon him. It is also manifest from the defence put forth by way of testimony of DW1 who has produced its own statement of account vide Ex.DW1/P1, even the admitted TDS deduction vide Ex.PW1/B is not reflected in Ex.DW1/P1. Defendant has not countered the statement Ex.PW1/A with corresponding entry in Ex.DW1/P1 to show that commission payments were made in favour of the plaintiff regularly. There is no evidence on record to suggest that any outstanding payment shown in Ex.PW1/A were already paid to the plaintiff by the defendant. Defendant has not placed any counter statement of account and has not cross-examined PW-1 Suit no. 22/15 (13931/16) Page no.24 of 33 04.03.2017 to suggest that there were any wrong claim of commission charges by the plaintiff or that the commission claimed by the plaintiff is not as per the agency entitlement for introduction of a party to the defendant.
37. The other defence taken against the statement of account relied upon by the plaintiff is that defendant was entitled to adjust outstanding payment of third party which were introduced by the plaintiff, against the accounts of the plaintiff. This aspect shall be considered in detail while discussing the next issue. For the purpose of this issue, the plaintiff has been able to prove its entitlement for recovery of outstanding dues against the defendant vide Ex.PW1/A. The minor discrepancies in the last entry in Ex.PW1/A in deduction of a sum of Rs.2210/- against the TDS for the year 2002-03 is reflected but is a minor clerical error and does not vitiate the sanctity of Ex.PW1/A as the claim of the plaintiff has been made after deducting the requisite amount of TDS. Plaintiff has been able to duly prove the issue in its favour and is entitled to a Decree of Recovery in the sum of Rs.12,45,100/- in favour of the plaintiff and against the defendant.
Issue no.3 is disposed of in favour of the plaintiff as per the decreed entitlement.
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38. Issue no.4.
Whether the defendant is entitled to equitable set-off of Rs.4,62,000/- against the Decree of Recovery, if passed in favour of the plaintiff, as prayed for ? OPD.
In consideration of this issue, it is first pertinent to mention that 'equitable set off' has been allowed to be incorporated in the issues of the suit which as the name suggests, is founded on the fundamental principles of equity, justice and good conscience. It is different from 'legal set-off'. Therefore, the aspect of limitation in belated claim of seeking adjustment of alleged recoverable liability is distinct and involve examination of equitable rights of the claimant. It is settled law that 'right of set-off' exists in cases of mutual debits and credits and in cases where cross demands arise in running transactions between the parties. Therefore, even when a counter-claim of set-off by virtue of provisions under Order 8 Rule 6 CPC would have failed owing to limitation, the issue under discussion would entitle the defendant for adjustment of dues, if proved, against the plaintiff. It is further relevant that the concept of equitable set-off shall mean and imply that only if there is an outstanding liability against the defendant, then the defendant shall be entitled for adjustment/ set-off against the liability against the defendant. In case the suit of the plaintiff failed on issue no. 3 herein-above, defendant would not have been entitled to equitable set-off against the plaintiff. In view of the findings of the court on preceding issue, fastening Suit no. 22/15 (13931/16) Page no.26 of 33 04.03.2017 the recoverable liability against the defendant, the issue is relevant and needs consideration.
39. Defendant has claimed an outstanding liability of Rs.4,62,000/- along with interest, against the plaintiff, for which its statement of account Ex.DW1/P1 has been brought forth on record during cross-examination of DW1 on fresh re-cross- examination of the defendant witness. In the written statement itself, defendant has denied any liability towards the plaintiff and has raised a counter defence of outstanding liability of the plaintiff in view of unpaid payments by the parties to whom supplies were made by the defendant and it is claimed that the plaintiff was liable and responsible to ensure payments recoverable from the parties which were introduced by the plaintiff to the defendant. The onus to prove the contractual obligation of ensuring or indemnifying the defendant's outstanding recovery from third party which were procured by the plaintiff, lies upon the defendant. The plaintiff has outrightly denied any such contractual obligation between the plaintiff and defendant in this regard.
40. The plaintiff PW-1 has been cross-examined who stated that there was no written contract of agency between the plaintiff and defendant and that the purchase orders of parties were given in writing to the defendant. However, no such written document has been presented by the plaintiff to substantiate any term and condition that may have come up by way of writing during the regular course of business between the parties. One such document is a letter Mark DW1/P4 Suit no. 22/15 (13931/16) Page no.27 of 33 04.03.2017 which was confronted to DW1 in his cross-examination to show direct communication between the purchaser party and defendant but this document has been denied and hence, not proved. Neither the original thereof has been produced nor the executing person has been examined by either party.
41. DW1, in his examination, has reiterated the demand of the defendant showing last debit entry of Rs.4,56,376/- at Point-A dated 31.03.2004 vide Ex.DW1/P1. There is no written contract, any written communication between the plaintiff and defendant or any other material or document brought forth by the defendant to prove the claimed liability against the plaintiff to make good uncleared payments in respect of supplies made by the defendant to the parties who were procured by the plaintiff. DW1 has failed to produce any letter of appointment in favour of the plaintiff as TPC Agent, though, it is his own case that such appointment letters were issued in other cases. Even any letter of appointment for any other TPC agent has not been produced to show that any such business practice was being followed by defendant at the relevant time, whereby the agent was responsible as a guarantor to ensure payments from the parties introduced by the agent, to the extent of personal liability. It may be a matter of common understanding that the role of agent between seller- purchaser would be that of a facilitator whose services may be invoked by the seller in persuading parties who failed to make payment despite receiving the goods. There is no such averment or assertion by the defendant that any such talks took place between the plaintiff and defendant, prior to receipt Suit no. 22/15 (13931/16) Page no.28 of 33 04.03.2017 of legal notice from the plaintiff which is Ex.PW1/C.
42. Defendant has issued reply of legal notice Ex.DW1/1 which is admitted by both the parties and there is no counter demand of any kind except blatant denial of the claim of the plaintiff in its legal notice. It is for the first time by way of written statement that this counter-claim of Rs.4,62,100/- was raised against the plaintiff for which, no document including the statement of account was produced. Even the averments in the written statement clearly demonstrate that the defendant envisaged initiating separate legal action for claiming outstanding dues for unpaid amounts for goods supplied to various parties procured by the plaintiff. Even the statement of account relied upon has been presented upon notice under Order 12 Rule 8 CPC from the plaintiff.
43. It is further worth consideration that none of the third parties who are stated to be defaulters against the supplies made to them, are a party or witness in the suit. There is no evidence or material to substantiate and support the case of the defendant for want of necessary accounts of each of the defaulting party vis-a-vis the defendant. There is no concrete details of all business dealings of the defendant with third parties to show whether any amounts that were pending and recoverable against goods supplied, were eventually cleared and paid to the defendant or not. The plaintiff is an alien to the transactions of exchange of payment between the defendant and his buyers as it is not the case of the defendant itself that parties were making payment to the defendant, through the Suit no. 22/15 (13931/16) Page no.29 of 33 04.03.2017 plaintiff. Defendant has failed to bring any reliable evidence to prove the liability of the plaintiff against any amounts that may remain outstanding and recoverable from the third parties which were introduced by the plaintiff to the defendant. It is also not the case that the plaintiff was not entitled to its agency charges once the introduction of a customer was complete when it placed order upon the defendant for supply of goods.
44. Let us now consider the statement of account Ex.DW1/P1 which is seriously denied and disputed by the plaintiff. The last debit entry at point A dated 31.03.2004 is pointed out to be different from the claimed sum of Rs.4,62,100/-. To contradict Ex.DW1/P1, collated entries at point-B are challenged, which are allegedly for different parties, procured by the plaintiff, who are also denied by the plaintiff. Even though the plaintiff has denied the names of different parties that are reflected in Ex.DW1/P1, defendant has failed to bring any material or document to prove that these were the parties introduced by the plaintiff. Even otherwise, the relevance of entries of outstanding payment of different parties in the account of the plaintiff, as maintained by the defendant, is not established as the defendant has failed to prove contractual obligation of the plaintiff to make good the outstanding recoverable dues from the parties, who were procured by the plaintiff.
45. Now, let us examine the sanctity of Ex.DW1/P1 which is heavily relied upon by the defendant with the claim that requisite certificate under Section 65 B has been filed as Suit no. 22/15 (13931/16) Page no.30 of 33 04.03.2017 per law and that the accounts are admissible accordingly. The admissibility of the statement of account is not objected to by the plaintiff and on the contrary, plaintiff has cross-examined DW1, at length to breach the credibility of Ex.DW1/P1. A very important aspect is the recording of the changed incorporated company name of the defendant in the title of Ex.DW1/P2 which is the allegedly supporting document of Ex.DW1/P1. DW1 has tried to explain during his deposition that the print out of ledger book copy Ex.DW1/P1 were taken out in 2007, after changing the name of the company. It is admitted that the name of Lakshmi Cement was changed to J. K. Lakshmi Cement in the year 2005. The alleged accounts are from the period 1998 to 2004. Therefore, the sanctity of Ex.DW1/P1 and Ex.DW1/P2 which are interdependent lacks credence as there can be no reasonable assumption that only the name of the company has changed without changing any entries in the statement. There has been detailed cross-examination in respect of different entries in the statement of accounts of defendant which are denied and disputed. There is no corresponding material by way of communication, acknowledged letters or tripartite documents to show that the third party liability in favour of the defendant was the liability of the plaintiff, as entered in the accounts maintained by the defendant.
46. The judgments relied upon by the plaintiff are Jayanti Lal Vs. Anbdul Aziz ; AIR 1956, SC and Raja Bhupendra Narain Singha Bhadur Vs. Maharaj Bahadur Singh & Ors. ; AIR 1952 SC 782. It has already been considered that it is settled law that the concept of equitable Suit no. 22/15 (13931/16) Page no.31 of 33 04.03.2017 set-off is founded on the fundamental principles of equity, justice and good conscience. The statement of account relied upon by the defendant are not proved as per law. Defendant has not only denied any liability in favour of the plaintiff against outstanding commission agent payment but has gone further to bring an unsubstantiated and unbelievable defence of having an entitlement of recovering outstanding dues from the plaintiff. Case of the defendant is unproved, as against the plaintiff. Defendant is not entitled to set-off or equitable set-off of any amount against the decretal amount in favour of the plaintiff.
Issue is decided against the defendant.
47. Issue no.5 Relief.
In view of the detailed findings above, plaintiff is entitled to a Decree of Recovery of outstanding principal amount of Rs.12,45,100/-. As such, there is no separate issue for interest. However, as per law, adequate interest is to be awarded for the decretal principal amount as per statutory law as well as common law. Plaintiff has claimed an interest @18% p.a. There is no written contract or document proved in this regard. The statement of account Ex.PW1/A is lastly for the financial year 2002-03 with closing balance as on 31.03.2003 which starts with the opening balance, same as the last balance of financial year 2001-2002. It shall be appropriate to grant Suit no. 22/15 (13931/16) Page no.32 of 33 04.03.2017 interest upon the decretal amount w.e.f.01.04.2002 since when, there has been no further transaction between the parties and shall be deemed to be the closing balance. An interest @9% p.a. is deemed just proper and recoverable upon the decretal amount, w.e.f. 01.04.2002 till the date of realisation, after deducting the time period from date of withdrawal of Rs.18,61,635/-, upto date of redeposit, by the plaintiff, in terms of the directions of Hon'ble High Court of Delhi dated 21.05.2015 in RFA No.406/2007 in CM application no.9485/2015.
48. No order as to costs.
49. Decree sheet be prepared accordingly.
50. File be consigned to Record Room.
Announced in the open court on 4th March, 2017 (Preeti Agrawal Gupta) Addl. District Judge (Central)-10 Delhi Suit no. 22/15 (13931/16) Page no.33 of 33 04.03.2017