Delhi District Court
Mmtc Limited vs Girdhari Lal Soni on 5 January, 2019
Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019
IN THE COURT OF SH. VIDYA PRAKASH, PRESIDING OFFICER,
MOTOR ACCIDENT CLAIMS TRIBUNAL, ROHINI COURTS, DELHI
Suit No. 1601/16 (Old No. 416/06)
MMTC Limited
A Company incorporated and registered
under the Companies Act, 1956
having its registered and corporate
Office at : Core1, Scope Complex,
7, Institutional Area, Lodhi Road,
New Delhi110003
And at:
F811, Jhandewalan Flatted Factories Complex,
Rani Jhansi Road,
New Delhi
................Plaintiff
VERSUS
1. Girdhari Lal Soni
S/o Shri Bhola Ram Soni
189, Kalyan Vihar,
Delhi
2. Mr. Ranjay Kumar Jain
Proprietor
M/s S.R. Jewellers
83, Priyadarshni Vihar
New Delhi
...............Defendants
MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 1 of 16
Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019
Date of Institution : 06.03.2006
Date of Arguments : 05.01.2019
Date of Decision : 05.01.2019
APPEARANCES: Sh. Pushkar Sinha, Adv for plaintiff.
Defendant no.1 is exparte.
Legal Aid Counsel Sh. Ankur Jain Adv. for defendant
no.2.
Suit under Order 34 of the Code of Civil Procedure r/w
Section 67 & 68 of the Transfer of Property Act
JUDGEMENT
1. The plaintiff has filed the present suit for passing preliminary decree for sale of mortgaged property bearing no.120, Third Floor, forming part of Khasra No. 729/217, Khewat No. 113/145, Old Gupta Colony, Delhi with further prayer to pass final decree for sale of said mortgaged property in terms of Order XXXIV Rule 5 CPC in case the defendant no.1 fails to pay the dues of plaintiff and to apply for balance amount, if any, against the said defendant in terms of Order XXXIV Rule 6 CPC, alongwith costs. The case set up by the plaintiff is as under:
(i) It is a company incorporated under Company Act having its office amongst other places at F8/11, Jhandewalan Jewellery Complex, Rani Jhansi Road, New Delhi and it has authorised its Senior Manager, Sh.
MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 2 of 16Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019 Sanjay Anand to sign, verify and to institute the present suit on its behalf by virtue of board resolution passed by its Board of Directors.
(ii) It is engaged in various businesses including the business of exporting Gold Jewellery to different parts of the world. For the said purpose, it enters into an agreement/arrangement with various companies/firms/concerns which deals in manufacture and export of jewellery and also provides financial assistance to such unit in the shape of packing credit limit as also gold on loan for the purpose of manufacturing gold jewellery subject to the stipulation that the entire export of Gold Jewellery so manufactured by such unit, is exported within stipulated period in the name of the plaintiff only.
(iii) It is further case of the plaintiff that defendant no.2, who is proprietor of M/s S.R. Jewellers, represented himself as dealing in manufacturing and export Gold Jewellery and moved an application to become unit of plaintiff for the export of Gold Jewellery, whereby it indicated that it had huge requirement of gold for the purpose of export and also requested for grant of packing credit facilities both in cash as well as of gold. On his said representation, the plaintiff sanctioned packing credit facility in favour of M/s SR Jewellers and allowed it to export with the help of said packing credit. It is further the case of plaintiff that in order to secure the said credit facility granted to defendant no.2, he furnished various securities including creation MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 3 of 16 Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019 of mortgage vide deposit of title deeds of property bearing no.120, Third Floor, forming part of Khasra No. 729/217, Khewat No. 113/145, Old Gupta Colony, Delhi by defendant no.1 in favour of plaintiff. They also entered into an agreement for export of Gold Jewellery. As per clause 1 thereof, M/s SR Jewellers undertook to procure all export orders or contracts in the name of the plaintiff only. In terms of clause IV thereof, said firm stood guarantee for full realization of sale proceeds from the foreign buyers. In terms of clause X thereof, the said firm undertook to give the sole selling agency for entire exports made by it, to the plaintiff for a minimum period of five years.
(iv) It is further the case of plaintiff that M/s S R Jewellers approached them from time to time for release of gold and Packing Credit and the plaintiff were supplying the same to it regularly in accordance with the said Agreement. However, despite the fact that exports made were on COD basis, payments against various invoices in respect of Gold Jewellery exported by M/s S R Jewellers, were not forthcoming even after lapse of due dates of various invoices. A total sum of Rs. 42,70,288/ including interest as on 31.10.1998, was due and payable by M/s S R Jewellers to the plaintiff against Packing Credit, interest, TR6 charges, etc. in spite of repeated requests and reminders, the defendant no.2 failed and neglected to pay the outstanding amount. Consequently, the plaintiff invoked Arbitration clause of the abovesaid agreement and also filed suit for permanent injunction against the defendant no.2 before the Hon'ble Delhi MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 4 of 16 Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019 High Court. The said suit was subsequently transferred to District Courts on account of enhancement of pecuniary jurisdiction and said suit is still pending. It is further averred that Award dated 13.06.2002 has been passed by Arbitral Tribunal in favour of the plaintiff and against the defendant no.2. However, the defendant no.2 has still failed to make the payment under subject award to the plaintiff.
(v) It is also the case of plaintiff that the liability of defendant no.1 as mortgager is absolute as that of defendant no.2, sicne defendant no.1 had created mortgage by deposit of title deeds of the aforesaid immovable property on 21.05.1993, wherein sum assured was Rs.25 lacs. Since the defendant no.2 failed to pay the outstanding amount, the present suit came to be filed before Hon'ble Delhi High Court. Same was transferred to District Courts in view of enhancement of pecuniary jurisdiction of District Courts, vide order dated 18.03.2016.
2. The defendant no.1 filed his written statement, wherein he raised preliminary objection that there is no privity of contract between him and the plaintiff as the contract, if any, took place between plaintiff and the defendant no.2. He has claimed that he has no relation whatsoever with defendant no. 2 and not even a single document has been filed by plaintiff to show that he had either endorsed or sanctioned the transactions between plaintiff and the defendant no.2. it is further claimed that the Arbitration proceedings were also initiated by plaintiff against the defendant MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 5 of 16 Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019 no.2 and award has been passed only against the defendant no.2. it is further claimed that the plaintiff has no locus standi to file the present suit against him as no such transaction took place between him and the plaintiff company. The defendant no.1 has further claimed that he was working as a job worker and is entitled to labour charges/making charges and no liability can be fastened upon him. He has further claimed that the plaintiff has filed the present suit in order to extort money from him and there is no occasion for invocation of guarantee against him. On merits, he has admitted the contents of para no.5 of the plaint regarding deposit of title deeds of his property bearing no.120, Third Floor, forming part of Khasra No. 729/217, Khewat No. 113/145, Old Gupta Colony, Delhi with plaintiff company as security against grant of packing credit facility to defendant no.2. He has either admitted the other contents of the plaint or has simply denied rest of the averments made in the plaint. He has averred that all the invoices and documents were raised and forwarded by plaintiff to the foreign buyers and were presented to the bankers for encashment of export proceeds. All the exports were made in the name of plaintiff and remittance thereof have also been received by plaintiff itself and nothing remained due and payable by the foreign buyers. He has denied that plaintiff is legally entitled to enforce the arbitration award as a decree. On the basis of aforesaid defence/pleas raised in his written statement, he has prayed for dismissal of the suit.
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3. The plaintiff filed replication to the written statement of defendant no.1, wherein the defence raised by said defendant has been denied and the averments made in the plaint have been reiterated.
4. In his separate written statement filed by defendant no.2, he has averred that he was working as supervisor with defendant no.1 for one year and said defendant got certain documents fraudulently signed from him in the year 1992 and deliberately showed him as proprietor of M/s S.R. Jewellers. It is further averred that defendant no.1 is beneficiary of all the transactions held with the plaintiff and defendant no.2 is being used as a tool. It is further claimed that said fraud came to the notice of the defendant no.2 only when decree was passed against him and all his movable property was attached in Execution Petition No. 301/2003 on 03.11.2006 in pursuance of order passed by Hon'ble Delhi High Court. However, there is no specific denial to the relevant averments made in the plaint regarding grant of packing credit facility by plaintiff in favour of M/s S.R. Jewellers and execution of relevant agreement between the parties in that regard and creation of mortgage in respect of property bearing no.120, Third Floor, forming part of Khasra No. 729/217, Khewat No. 113/145, Old Gupta Colony, Delhi by deposit of its title deeds by defendant no.1. The defendant no.2 has, however, averred that petition u/s 7 & 10 of Insolvency Act has already been filed which is pending disposal before the concerned court. On the basis of these averments, he has prayed for dismissal of the suit.
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5. The plaintiff filed replication to the written statement of defendant no.2, wherein the defence raised by said defendant has been denied and the averments made in the plaint have been reiterated.
6. Vide order dated 14.12.2016, my ld. Predecessor framed the following issues:
i) Whether the plaintiff is entitled for decree of sale of mortgaged property as prayed for in prayer clause (a)? OPP
ii) Relief
7. It is pertinent to note that defendant no.1 stopped appearing during pendency of the suit and consequently, he was proceeded against exparte on 14.12.2016 by my ld. Predecessor.
8. Before proceeding further, it may be noted that additional issue was framed on 27.02.2018 regarding maintainability of the present suit and it was treated as preliminary issue. The said issue reads as under:
"Whether the present is maintainable in its present form in view of bar contained in Order 2 Rule 2 CPC? OPP"
9. After hearing detailed arguments on the aforesaid preliminary issue on behalf of both the sides, the said issue was decided in favour of plaintiff MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 8 of 16 Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019 vide detailed speaking order passed on 18.05.2018. Said order has not been challenged by either of the defendants till date.
10. In support of their case, the plaintiff has examined only one witness namely PW1 Sh. Roshan Lal Gautam, Additional General Manager, MMTC Ltd. Its evidence was closed vide order dated 11.09.2018 passed by ld. Predecessor. On the other hand, no evidence whatsoever was sought to be led on behalf of defendant no.2 who closed his DE through counsel on 11.09.2018 itself.
11. I have already heard the arguments raised on behalf of both the sides. I have also perused the material available on record as well as the written arguments filed on behalf of plaintiff and the authority cited at the Bar. My issue wise findings is as under: Issue no.1. Whether the plaintiff is entitled for decree of sale of mortgaged property as prayed for in prayer clause (a)? OPP
12. The initial burden to prove this issue was placed upon the plaintiff. In order to prove this issue, the plaintiff has examined PW1 namely Sh. Roshan Lal Gautam who is its Additional General Manager. He deposed in his evidence by way of affidavit (Ex.PW1/A) on the lines of averments made in the plaint. He testified that he is the authorised representative of MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 9 of 16 Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019 plaintiff company, being its Additional General Manager and he has been duly authorised by the Board of plaintiff company to sign, institute and to prosecute the present suit on its behalf, vide Order No. DOP/REVISED/1/98 for Delegation of Power dated 30.12.1998. He exhibited certified copy thereof as Ex.PW1/1. He further deposed that the plaintiff entered into an agreement dated 21.05.1993 with defendant no.2 for providing financial assistance / packing credit facility, on written application dated 04.04.1993 moved by defendant no.2 through its proprietor Sh. Ranjay Kumar Jain and defendant no.1 had created mortgage by deposit of title deeds in respect of his property bearing no.120, Third Floor, forming part of Khasra No. 729/217, Khewat No. 113/145, Old Gupta Colony, Delhi as security against grant of aforesaid facilities to defendant no.2. He further deposed that according to relevant terms and conditions of the said agreement, defendant no.2 through its proprietor Sh. Ranjay Kumar Jain had undertaken to procure all export orders or contracts in the name of plaintiff and all the shipping documents were to be made on behalf of plaintiff and had also undertaken the responsibility for satisfactory shipment of goods as per the orders and to ensure that the goods shipped were in conformity with the agreed quality and specification. He also deposed that plaintiff company supplied gold and also advanced packing credit facility to defendant no.2 from time to time as per their request but despite the fact that exports were made on COD basis, payment against invoices in respect of gold jewellery exported MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 10 of 16 Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019 by defendant no.2, were not forthcoming even after lapse of due dates. He further deposed that a sum of Rs. 42,70,288/ including interest and TR6 charges etc. was outstanding against the said defendant as on 31.10.1998 and despite repeated requests and reminders, the said defendant failed and neglected to make the payment, on which arbitration clause contained in the aforesaid agreement, was invoked by the plaintiff and consequent thereto, Arbitral Award dated 13.06.2002 was passed in favour of plaintiff and against the defendant no.2. He further deposed that since defendant no.2 failed to make the payment and the liability of defendant no.1 as mortgager is absolute as that of defendant no.2, the plaintiff company has right to sell the mortgaged property to recover its outstanding dues. He has proved application dated 04.04.1993 made by defendant no.2 as Ex.PW1/2, title deeds dated 29.04.1993 in respect of property bearing no.120, Third Floor, forming part of Khasra No. 729/217, Khewat No. 113/145, Old Gupta Colony, Delhi as Ex.PW1/3 (colly), agreement of guarantee dated 21.05.1993 as Ex.P2/D2, agreement dated 21.05.1993 to commence work (export of gold jewellery) as Ex.P1/D2 and Arbitral Award dated 13.06.2002 as Ex.PW1/6.
13. PW1 has not been crossexamined at all on behalf of defendant no.1, he being already exparte. In other words, the entire testimony of this witness remained unchallanged and uncontroverted from the side of defendant no. 1. During his crossexamination on behalf of defendant MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 11 of 16 Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019 no.2, he deposed not to have personal knowledge of the facts of the case but testified that he was deposing on the basis of record available in their office. He denied the suggestion that he he did not have authority to depose in the present case or that document Ex.PW1/1 was never submitted with the office of registrar of Companies. He further deposed that documents Ex.PW1/3(colly) were deposited by defendant no.1 in their office and defendant no.2 had accompanied him at that time. He denied the suggestion that plaintiff and defendant no.1 had connived and entered into transaction in the fake name of defendant no.2 or that defendant no.2 had no liability towards plaintiff or that no transaction took place between plaintiff and said defendant.
14. While opening the arguments, counsel for plaintiff argued that there is admission on the part of defendant no.1 to create mortgage by him in favour of plaintiff as security against the credit facility provided to defendant no.2. He further submitted that the testimony of PW1 could not be impeached by defendant no.2 and no evidence in rebuttal has been led by said defendant during the course of trial. Thus, the plaintiff has been able to prove this issue and is entitled to the decree under the law. Per contra, counsel for defendant no.2 argued that the present suit is liable to be dismissed as the plaintiff has failed to discharge the burden of proving this issue even on the basis of preponderance of the probabilities. He further submitted that the plaintiff has to stand on its own legs and even if MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 12 of 16 Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019 the said defendant has not led any evidence, it is of no relevance at all. He therefore urged that this issue may be decided against the plaintiff and consequently, the suit may be dismissed.
15. I have bestowed my thoughtful consideration to the aforesaid rival submissions made on behalf of both the sides in the light of evidence available on record. Before discussing the evidence, oral as well as documentary, brought on record, it may be noted at the cost of repetition that the defendant no.1 has admitted the creation of mortgage in favour of plaintiff by deposit of title deeds concerning property bearing no.120, Third Floor, forming part of Khasra No. 729/217, Khewat No. 113/145, Old Gupta Colony, Delhi as security against the packing credit facility provided by plaintiff to defendant no.2. In fact, the original title deeds of said property alongwith NOC creating charge on said property, have been proved as Ex.PW1/3 (Colly) by PW1 during his testimony. The relevant portion of his testimony as well as the said documents, more particularly NOC executed by defendant no.1 in favour of plaintiff, have virtually gone unchallenged and unrebutted from the side of defendants. A bare perusal thereof would make it crystal clear that the defendant no.1 had created mortgage in respect of aforesaid property in favour of plaintiff company. In the cited decision reported at MANU/DE/4871/2013 titled as "MMTC Ltd. Vs Raj Rani Gulati and Ors.", it has been held in para 32 of the judgment by Hon'ble Delhi High Court that even if it were to be believed that the MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 13 of 16 Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019 initial deposit of title deeds of property of respondent no. 1 with the appellant was without the consent of respondent no.1, the respondent no.1 by allowing the said title deeds to remain with the appellant for a period of over three years and by allowing the appellant to rest secured in the knowledge of holding mortgage of the property of the respondent no.1 as security for recovery of its dues against the appellant, created / ratified such mortgage. It further held that Section 58 of Transfer of Property Act does not require any MOM to be executed and all that is required is delivery to a creditor of documents of title of immovable property with intent to create a security thereon.
16. In the present case, it is an admitted position on record that the defendant no.1 had deposited the title deeds of his aforesaid property with the plaintiff to secure packing credit facility provided to defendant no.2 in the year 1993. It is an admitted position that arbitration clause was invoked by plaintiff and arbitral award dated 13.06.2002 came to be passed but the defendant no.1 never raised any kind of objection before any forum whatsoever. The present suit was filed on 06.03.2006 and even after being put to notice, the said defendant has not taken recourse to any legal remedy available to him under the law till date. Rather, he stopped contesting the present suit and allowed himself to be proceeded exparte on 14.12.2016.
MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 14 of 16Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019
17. As regards defendant no.2, it may be noted that although he raised defence that he had nothing to do with the transactions which took place between plaintiff and M/s S.R. Jewellers and he was made to sign certain documents by defendant no.1, wherein he was shown as proprietor of said firm but it is pertinent to note that said defence could not be substantiated by him during trial. It is important to note that not even a suggestion was put to PW1 on his behalf on said aspect, apart from the fact that no evidence whatsoever has been led by said defendant towards DE.The said defendant has nowhere denied or disputed the execution of agreement of guarantee dated 21.05.1993. Rather the execution of said documents was admitted by him during the course of admission denial stage and said document was exhibited as Ex.P2/D2 at that time itself. The perusal of said document would leave no scope for any doubt that the plaintiff company had extended packing credit facility to said defendant. The relevant portion of the testimony of PW1 whereby he deposed that a sum of Rs. 42,70,288/ was outstanding as on 31.10.1998 against defendant no.2 also remained unchallenged and unrebutted from the side of defendants. Moreover, Arbitral Award (Ex.PW1/6) which has already attained finality being not challanged by defendant no.2 till date, would clearly proved that there has been decree in favour of plaintiff and against defendant no. 2 holding therein that a sum of Rs. 42,70,288/ was outstanding as on 31.10.1998. In view thereof, I am of the considered opinion that plaintiff company has been able to prove that it has to recover MMTC Ltd. vs Girdhari Lal Soni & Ors. Page 15 of 16 Suit No.1601/16 (Old No.416/06) DOD: 05.01.2019 a sum of Rs. 42,70,288/ alongwith further interest from defendant no.2 and since said defendant failed to pay the said amount to the plaintiff even after passing of arbitral award dated 13.06.2002, it is entitled to decree for sale of mortgaged property bearing no.120, Third Floor, forming part of Khasra No. 729/217, Khewat No. 113/145, Old Gupta Colony, Delhi. Accordingly, this issue is decided in favour of plaintiff and against the defendants.
Issue no. 2: RELIEF
18. In view of findings on issue no. 1, the suit of the plaintiff is hereby decreed with costs. A preliminary decree is hereby passed for sale of mortgaged property bearing no.120, Third Floor, forming part of Khasra No. 729/217, Khewat No. 113/145, Old Gupta Colony, Delhi in terms of Order XXXIV CPC and the defendant no.1 is directed to pay the outstanding amount in terms of arbitral award dated 13.06.2002 to the plaintiff within 6 months from the date of passing of this decree. In case, the amount is not paid by the said defendant to the plaintiff, then the plaintiff shall be entitled to apply for passing of final decree for the sale of aforesaid mortgaged property in accordance with law. Preliminary decree shall be prepared accordingly. File be consigned to record room after necessary compliance.
VIDYA Digitally signed by
Announced in open
VIDYA PRAKASH
PRAKASH Date: 2019.01.05
13:00:06 +0530
Court on 05.01.2019 (VIDYA PRAKASH)
Judge MACT2 (North)
Rohini Courts, Delhi
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