Delhi District Court
Kwality Panel Products vs Picadely Hotel on 14 May, 2013
CS No. 938/12
IN THE COURT OF SH. SUSHANT CHANGOTRA, CIVIL
JUDGE 6,
WEST DISTRICT, TIS HAZARI COURTS, DELHI.
Suit No. 938/12
Kwality Panel Products,
A2/17, WHS Kirti Nagar,
Marbel Market,
New Delhi110015.
Through Shri Sunil Upadhyay.
.................. Plaintiff.
Versus
1. Picadely Hotel
C/o Hilton Hotel
District Center,
Janakpuri, New Delhi.
2. Mr. Kartik Sharma (MD/Director/Partner)
275/276, Caption Gour Marg,
Shriniwaspuri,
Near Okhla Subzi Mandi,
New Delhi.
.......... Defendants
1
CS No. 938/12
Date of filing of Suit : 25.08.2012
Date of decision : 14.05.2013.
Suit for recovery of Rs.2,97,769/
JUDGMENT
1. The case of plaintiff is for recovery of Rs.2,97,769/. The plaintiff has pleaded that the present suit has been filed through Sh. Sunil Upadhyay who is competent to file the suit. The defendant no. 1 is a company/proprietor/partnership and defendant no.2 is the MD/director/Partner of defendant no. 1 and he is responsible for day to day business of defendant no.1. Defendant no.2 is also authorized signatory of defendant no.1. The defendants have been purchasing goods from the plaintiff and the goods were supplied as per their specifications. The defendants placed an order of laminated donear, decorative woods, timber in different cuts, woods etc. on 03.03.2010 and 12.06.2010. The goods were duly received by the defendant. The defendant had requested that the amount of the goods would be paid during the course of business but the defendant did not pay the outstanding amount to plaintiff.
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2. The plaintiff requested the defendant to clear the outstanding amount of Rs.1,92,162/ against various bills but the defendant always assured that the outstanding amount will be cleared in future as his financial condition was not well. As per agreement/invoices /cash memo the defendant agreed to pay interest @ 24% p.a. on the outstanding amount for the late payment. The plaintiff sent a legal notice dated 06.07.2012 through his counsel but defendant refused to receive the notice. The plaintiff prayed a decree of Rs.2,97,769/ along with pendente lite and future interset @ 24% p.a.
3. Summons of the suit were given to defendants. Defendants appeared through their counsel. However, the defendants did not file the written statement and the defence was stuck off vide order dated 05.03.2013.
4. Thereafter the plaintiff examined PW1 Sh. Sunil Upadhyay who tendered his affidavit Ex. PW1/A along with documents Ex. PW1/5. Then the opportunity to crossexamine was given to defendant but it was not availed. Thereafter, the plaintiff evidence was closed on 20.04.2013.
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5. I have heard the arguments of counsel for plaintiff but none has appeared for defendant to advance arguments despite opportunities. I have considered the arguments of counsel for plaintiff and gone through evidence on record very carefully. Though the evidence of plaintiff has gone completely unrebutted and there is no defence on record but the perusal of the authority letter Ex. PW1/1 shows that the plaintiff is a partnership concern. However, in the entire plaint there is not even a whisper that plaintiff is a partnership concern or it is a registered partnership concern and the partners so authorizing are registered partners. Hence, on the face of it, there is nothing on record to show whether the plaintiff is a registered partnership firm.
6. I have also gone through the law laid down in this respect. In N.A. Munavar Hussain Sahib & Anr. Vs. E.R. Narayanan & Ors. AIR 1984 Madras 47 it has been held that, " under order 8 rule 2 of CPC the defendant must raise in his written statement all matters which could show how the suit is not maintainable and in this case, the written statement filed by the appellants in O.S. 4 CS No. 938/12 No. 671 of 1978 does not disclose that any objection had been raised by them regarding the maintainability of the suit based on Section 69 of the Indian Partnership Act. Mulla on Civil Procedure Code (19th Edition, page 769) states that a question of fact which had not been put forward in the written statement cannot be allowed to be raised later and cites as example the plea of nonregistration of a partnership. Further the plea regarding the maintainability of the suit by reason of operation of Section 69 of the Partnership Act is a mixed question of fact and law and if such a plea is not raised at all, there will be no evidence relating to the aspect with the result that facts necessary for its determination would be absent. It is on the account of this that courts have consistently taken the view that if the plea had not been raised in the written statement, it would not be allowed to be raised a a later stage in the proceedings. Further, unlike the provisions in the Limitation Act, there is no provision in the Partnership Act which compels the court to dismiss the suit on the ground of 5 CS No. 938/12 nonregistration of suo moto, even if no plea in that regard had been raised by the defendants in the suit. We may now briefly refer to a few decisions on this aspect. Abdur Rahman And Somayya, JJ. in Goverhandoss Takersey Vs. M. Abdul Rahiman, (AIR 1942 Mad 634) pointed out that it is not easy to accept the view that the court is bound to dismiss a suit on the ground of nonregistration of a firm suo moto, even if no plea had been raised by any of the defendants in the suit. In Mohmad Ali Vs. Kariji Kondhi Rayaguru (AIR 1945 Pat 286), the objection based on S. 69 of the the Partnership Act was not permitted to be taken on the ground that it was not taken before the lower courts and being a mixed question of fact and law, cannot be decided without a finding of fact on the basis of materials placed in that regard. Indeed, the decisions proceeds to the extent of holding that a defendant who intends to contest the performance of a condition precedent, viz., the registration of firm, should raise this point in the pleadings and if it was not so raised, the question was not before the court at all. Kalyan Sahai Vs. Firm Lachminarain Shambhulal (AIR 1951, 6 CS No. 938/12 Raj 11) had to deal with a similar question and it was pointed out that whether a firm is registered or not is a question of fact and unless this fact is enquired into and decided, the restrictions regarding the filing of suits under section 69 of the Partnership Act, cannot be invoked by any of the parties to the suit. The decision in Chiman Ram Bhatar Vs. Ganga Saha (AIR 1961 Orissa 94) also took the view that the plea that a suit as laid is not maintainable by reason of section 69 of the Partnership Act is a mixed question of fact and law and such a plea cannot be allowed to be raised, when it was not pleaded in the written statement. In Jalal Mohammand Ibrahim Vs. Kakka Mohammed Ghouse Sahib (84 Mad LW 654): (AIR 1972 Mad 86), a Divisional Bench of this court to which one of us was a party, the question arose whether the defence regarding the nonregistration of a firm and the invalidity of the decree passed in a suit relating to such a firm can be permitted to be raised in a separate suit. On a consideration of some of the decisions referred to earlier, the Divsion Bench held that the defence of nonregistration of a firm is a plea that has to be raised in the suit 7 CS No. 938/12 itself and if it had not been so raised, it oculd not be permitted to be raised for the first time and more so it cannot be permitted to be raised in a separate suit".
7. The Hon'ble Madras High Court also dealt with subject of maintainability of suit vizaviz Section 69 of the Partnership Act, when no defence regarding non maintainability of suit in this respect is raised. It was further held in Jalal Mohammed Ibrahim (died) & Ors. Vs. Kakka Mohammed Ghouse Sahbi & Anr. AIR 1972 Madras 96. (V.59 C 26) (1) that, "under order 7 rule 11 of CPC, the plaint shall contain the name, description and place of residence of the plaintiff and the facts showing that the court has jurisdiction. Under order 6 rule 6 of CPC any condition precedent, the performance or occurrence of which is intended to be contested, shall be distinctly specified in his pleading by the plaintiff or the defendant, as the case may be. Under order 8 rule 2 of CPC, the defendant must by his pleading raise all the matters which show the suit not to be maintainable and all such grounds of defences, if not raised, would be likely to take the opposite party by 8 CS No. 938/12 surprise, or would raise issues of fact not arising out of the plaint, as for instance fraud limitation etc. The maintainability of the suit is one of the grounds that will have to be specifically pleaded under order 8 rule 2 of CPC. The defendants in that suit had not raised that plea. The learned author Mulla in his book on Civil P.C., 13th Edition page no. 769 states that a question of fact, which had been put forward in the written statement, cannot be allowed to be raised later, for example, a plea that a partnership was not registered. In Chimanram Vs. Ganga Saha, AIR 1961 Orissa 94 it was held that the plea that the plaintiff's suit as laid was not maintainable by reason of Section 69 of the Partnership Act was a mixed question of fact and law and that such a plea could not be allowed to be raised in second appeal and when it was not pleaded in the written statement. These authorities clearly establish that the defence of nonregistration of the firm is a plea that will have to be raised in the suit itself, and if it had not been raised, it could not be permitted to be raised for the first in the second appeal. Such a plea could not be permitted to be raised in a separate suit is, 9 CS No. 938/12 in our opinion, a fortiori case. Learned counsel for the appellant drew our attention to Order 7 rule 11 (d) CPC which states that the plaint shall be rejected where the suit appears from the statement in the plaint to be barred by any law contended that section 69 of the Partnership Act being a provision barring a suit by an unregistered firm, the court could dismiss a suit suo mot and that therefore the decision in AIR 1942 Madras 634, required reconsideration. But we consider that it is not necessary to go into the aspect, because we are of the view that the maintainability of a suit is a plea that will have to be taken by a defendant in the suit, and, if such a plea had not been taken, it will not be open to him to raise that plea on any ground in a separate suit. Further, the decree passed in a suit instituted by an unregistered firm is not a nullity. The disability created by Section 69 of the Partnership Act is with regard to the right to institute a suit and not with regard to the power of the court to pass a decree. The object of this section appears to be protect public against a firm carrying on business under a name which does not disclose to the public the name of the 10 CS No. 938/12 actual partners. But still the objection as regards the maintainability of the suit on the ground that it is unregistered firm is one that is primarily available to the defendants in the suit. Therefore, the defendants could waive that objection".
8. In the present case there is no written statement of the defendant as the defence had been stuck off vide order dated 05.03.2013. Thus there is no defence qua suit being not maintainable U/s 69 of the Partnership Act. Thus, in view of the law as discussed above since there is no objection to that extent, the suit cannot be dismissed on this score only.
9. Now coming to the merits of the case, the plaintiff has proved the sales invoices Ex. PW1/2 collectively. The aforesaid invoices bears the receiving. Thus, the aforesaid document read with unrebutted testimony of plaintiff has proved that the defendant did not pay the sum of Rs.1,92,162/ to plaintiff.
10. The plaintiff is also claiming prelitigation interest @ 24% p.a. The plaintiff has placed reliance upon default clause as mentioned in invoice Ex. PW1/2. Section 3 of the Interest Act and 11 CS No. 938/12 section 34 of CPC deals with the interest to be awarded. Section 3 of the Interest Act is reproduced below:
Section 3. Power of Court to allow interest: (1) In any proceedings for the recovery of any debt or damages or in any proceedings in which a claim for interest in respect of any debt or damages already paid is made, the court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the following period, that is to say,
(a) if the proceedings relate to a debt payable by virtue of a written instrument at a certain time, then, from the date when the debt is payable to the date of institution of the proceedings;
(b) if the proceedings do not relate to any such debt, then from the date mentioned in this regard in a written notice given by the person entitled or the person making the claim to the person liable that interest will be claimed, to the date of 12 CS No. 938/12 institution of the proceedings:
Provided that where the amount of the debt or damages has been repaid before the institution of the proceedings, interest shall not be allowed under this section for the period after such payment."
11. Similarly Section 34 of CPC also deals with interest to be awarded at the time of decree. The law relating to grant of interest has been exhaustively laid down in Smt. Balwant kaur Vs. Life Insurance Corporation, AIR 2005 P & H 140. In this judgment while referring to the decision of the Hon'ble Supreme Court given in Central Bank of India Vs. Ravindra and Ors (200103) 129PLR 137 (SC), the Hon'ble Punjab and Haryana High Court held that, " in the aforesaid case the Hon'ble Apex Court has held that, Mulla on the code of CPC sets out 3 divisions of interest as dealt in Section 34 of CPC. The division is on, 1) an interest accrued prior to the institution of suit on the principal sum adjudged; 2) additional interest on the principal sum adjudged from the date of suit to the date of decree, at such rate as the court deems 13 CS No. 938/12 reasonable; 3) further interest on the principal sum adjudged from the date of decree to the date of payment or to such earlier date as the court things fit, at the rate court not exceeding 6% p.a.. Popularly three interests are called presuit interest, interest pendentelite and interest post decree or future interest. Interest for the period anterior to the institution of suit is not the matter of procedure; interest pendentelite is not the matter of substantive law.
Still further it has been held that presuit interests can be divided into two sub heads; (1) Where there is a stipulation for the payment of interest at fixed rate; (2) Where there is no such stipulation. If there is stipulation for the rate of interest, the court must allow that rate up to the date of the suit subject to three exceptions, firstly any provision of law applicable to money lending transactions, or usury laws or any other debt law governing the parties and having overriding effect on any stipulation for payment of interest voluntarily entered into between the parties; secondly if the rate is penal, the court must award at such rate as it deems reasonable; and thirdly if the rate is not penal, the court may reduce 14 CS No. 938/12 if the interest is excessive and the transaction was substantially unfair."
12. Section 74 of The Indian Contract Act deals with cases for compensation for breach of contract where the penalty is stipulated for. It is reiterated below:
" When a contract has been broken, if sum is named in the contract as the amount to be paid in case of such breach, or of the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for."
The explanation of this section provides that, " A stipulation for increase of interest from the date of default may be a stipulation by way of penalty".
13. Penalty or liquidated damages cannot be taken as such on merely being so described. A penalty is a sum of money so 15 CS No. 938/12 stipulated in terrorem, and liquidated damages are a genuine pre estimate of damages. They are to adjudged on the facts of each case. The question whether a particular stipulation in a contract is in the nature of penalty has to be determined by the Court against the back ground of various factors, such as character of transaction and its special nature, if any, the relative situation of the parties the rights and obligations accruing from such transaction under the general law , and the intention of the parties in incorporating in the contract the stipulation which is disputed as penal. If then the Court finds the real purpose for which the stipulation was incorporated in the contract was to be burdensome or oppressive, it may operate in terrorem over the promisor so as to drive him to fulfill th contract, then the provision has to be the one by way of penalty.
14. Since the aforesaid interest clause is in case of default. It is clearly in the form of penalty. It is further important to note that the plaintiff did not claim any interest in the notice Ex. PW1/4 dated 06.07.2012. Thus, the plaintiff is only entitled to a reasonable interest @ 6% p.a. from 01.08.2012 till the recovery of the suit amount.
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15. Thus, the suit of the plaintiff is partly decreed for a sum of Rs.1,92,162/ along with interest @ 6 % p.a. from 01.8.2012 till its recovery. Decree sheet be prepared. File be consigned to record room after due compliance.
Announced in the open court (SUSHANT CHANGOTRA)
On 14.05.2013 CIVIL JUDGE06 (WEST)
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