Delhi District Court
Sanjay Gupta vs Maruti True Value on 1 March, 2011
:1:
IN THE COURT OF CIVIL JUDGE-I, NEW DELHI DISTRICT, DELHI
Presided By : Sh. Jay Thareja, DJS
Civil Suit No: 145/10
Unique Case ID No. 02403C0310972010
1. Sanjay Gupta,
C-28, Golf View Appt.
DDA, MIG Flats
Saket, New Delhi-17 ...... Plaintiff
Versus
1. Maruti True Value
(Competent Motors)
Through its Manager
Mr. Varun Pathak
F-14, Competent House
Connaught Place, New Delhi-1 ... Defendant
SUIT FOR RECOVERY OF RS. 40,000/- (RUPEES
FORTY THOUSAND ONLY) ALONGWITH PENDENTE -
LITE AND FUTURE INTEREST
DATE OF INSTITUTION : 19.03.2009
DATE OF ARGUMENTS : 14.02.2011
DATE OF DECISION : 01.03.2011
JUDGMENT
1. The plaintiff has filed the present suit against the defendant company for recovery of Rs. 40,000/- alongwith costs and pendente- lite interest at the rate of 24% per annum.
2. The facts that have been pleaded in the plaint, as part of the cause of action are enlisted below:-
Date Fact 11.7.2008 The wife of the plaintiff sold her car, Maruti 800 to Civil Suit No.145/10 :2:
the defendant company for a price of Rs. 85000/-.
28.7.2008 The plaintiff offered to sell his car, Maruti Alto VXI (DL3CR-7518) to the defendant company. The defendant company, through Sh. Varun Pathak accepted the proposal of the plaintiff and agreed to purchase the car for a sum of Rs. 1,25000/-. Out of the said amount, a sum of Rs. 85000/- was paid by way of cash to the plaintiff and for the remaining amount, the plaintiff received from Sh. Varun Pathak, a cheque of Rs. 40,000/- drawn on State Bank of India, Rana Pratap Bagh Branch, Delhi.
22.8.2008 The plaintiff presented the cheque, but it was dishonored by the banker of Sh. Varun Pathak.
5.9.2008 The plaintiff again presented the cheque, but it was dishonored by the banker of Sh. Varun Pathak.
14.10.2008 The plaintiff again presented the cheque, but it was dishonored by the banker of Sh. Varun Pathak.
16.10.2008 The plaintiff wrote a complaint against Sh. Varun
Pathak and addressed it to the defendant
company and to the Station House Officer, PS
Cannaught Place.
4.12.2008 The plaintiff again presented the cheque, but it was
Civil Suit No.145/10
:3:
dishonored by the banker of Sh. Varun Pathak.
4.12.2008-19.3.09 The plaintiff repeatedly approached the defendant company for payment of Rs. 40,000/-.
3. On the aforesaid facts, the case of the plaintiff is that he is entitled to receive an amount of Rs. 40,000/- from the defendant company, as he had sold his car, Maruti Alto VXI (DL3CR-7518) to the defendant company on 28.07.2008.
4. Upon service of summons, the defendant company has entered appearance and contested this suit. In the written statement filed on behalf of the defendant company, the preliminary objection taken is that the suit is bad for non joinder of necessary party, Sh. Varun Pathak. In reply on merits, the defendant company has stated that it had never purchased the car of the plaintiff and that the plaintiff had an independent transaction with Sh. Varun Pathak, who was neither an employee of the defendant company nor had any authority to act on behalf of the defendant company. Further, the defendant company has stated that the plaintiff had presumably sold his car to Sh. Varun Pathak, who had paid the amount of Rs. 85000/- out of his own pocket and issued a cheque of Rs. 40,000/- drawn on his banker at State Bank of India, Rana Pratap Bagh Branch, Delhi. In addition to the aforesaid, the defendant company has expressly clarified that the cheque dated 05.08.08 was neither signed nor issued on behalf of the defendant company by Sh. Varun Pathak.
5. In the replication, the plaintiff has traversed the contents of Civil Suit No.145/10 :4: the written statement, denied the assertions made therein and reiterated and reaffirmed the contents of the plaint.
6. On the pleadings of the parties, the following issues were framed on 21.10.2010 :-
1) Whether the suit is bad for non-joinder of necessary party, Sh. Varun Pathak? OPD.
2) Whether the plaintiff is entitled to the amount of Rs. 40,000/-? OPP.
3) Whether the plaintiff is entitled to interest? If so, at what rate and for what period? OPP.
7. In support of the plaintiff's case, the plaintiff examined himself and tendered in evidence, the following documents:
(i) Delivery Receipt dated 11.7.2008 (EX.PW 1/1)
(ii) Delivery Receipt dated 28.7.2008 (EX.PW1/2)
(iii) Cheque dated 5.8.2008 (EX.PW 1/3)
(iv) Cheque Returning Memos dated 22.8.2008, 5.9.2008, 14.10.2008 and 4.12.2008 (EX.PW 1/4)
(v) Complaint to SHO, PS Connaught Place (EX.PW 1/5)
8. During cross-examination, the plaintiff admitted that the signatures at point X on EX.PW 1/3 are of Sh. Varun Pathak. The plaintiff stated that at the time of receiving the cheque, he did not know that the cheque had been signed by Sh. Varun Pathak in his personal capacity and not as authorized signatory of the defendant company. The plaintiff admitted that he had not issued any legal notice to the defendant company. Also, the plaintiff stated that in respect of the transaction done on 11.7.2008, he had received cash Civil Suit No.145/10 :5: payment from Sh. Varun Pathak and Sh. Harish. After cross- examination of the plaintiff, the plaintiff evidence was closed.
9. In support of its case, the defendant company examined, DW-1, Shri Surender Singh and DW-2 Shri Madan Mohan. DW-1 Shri Surender Singh tendered in evidence, the following document:
(i) Board Resolution dated 15.3.2010 (EX.DW1/1) (OSR)
10. During cross-examination, DW-1 Shri Surender Singh admitted that the stamp on EX.PW 1/1 looks similar to the stamp used by the defendant company and that the defendant company uses documents like EX.PW1/2 for its transaction. However, he did not confirm that the stamp and the document actually used, belonged to the defendant company. Further, DW-1 Sh. Surender Singh stated that the defendant company maintains the record of the vehicles dealt by it but he does not know whether the car of the plaintiff and his wife were purchased by the defendant company as they had been sold in July 2008 i.e. prior to his joining in October 2008. DW-1 Sh. Surender Singh admitted that the defendant company maintains the attendance record of its employees and that the same had not been placed on record of the Court file.
11. DW-2 Sh. Madan Mohan tendered in evidence, the following documents:-
(i) Board Resolution dated 30.10.2010 (EX.DW2/1) (OSR)
(ii) FIR dated 16.1.2009 (EX.DW2/2)
(iii) Supplementary complaint dated 25.1.2011 (EX.DW2/3) (OSR)
12. In cross examination, DW-2 Sh. Madan Mohan stated that the FIR EX..DW2/2 was drafted by Mr. Garg, Advocate and was Civil Suit No.145/10 :6: signed by him. Further, he admitted that he had identified the mistake made by Mr. Garg in 2009 and that the defendant company had not taken any action against Mr. Garg for negligence in service. DW-2 Sh. Madan Mohan also stated that Sh. Varun Pathak was an independent agent and was called for providing services as and when required by the defendant company. Upon being asked a Court question, Sh. Madan Mohan admitted that both EX.PW 1/1 and EX.PW 1/2 belong to the defendant. However, he clarified that EX.PW1/2 had been unauthorizedly taken by Sh. Varun Pathak. After cross-examination of DW2, Sh. Madan Mohan, the defendant evidence was closed.
13. I had heard Shri Pranav Kranti, Ld Advocate for the plaintiff and Ms. Sapna Sinha, Ld. Advocate for the defendant on 14.02.2011. The issue wise findings are as follows:
Issue No. 1 and 214. The onus of proving issue no 1 was on the defendant company and the onus of proving issue no. 2 was on the plaintiff. In respect of these issues, the case of the plaintiff is that Sh. Varun Pathak is not a necessary party to this suit as the plaintiff had privity of contract with the defendant company and that the defendant company is liable to pay Rs. 40,000/- to the plaintiff as it had purchased Maruti Alto VXI (DL3CR-7518) from the plaintiff. Per contra, the case of the defendant company is that Sh. Varun Pathak is a necessary party to this suit as the plaintiff had privity of contract with Sh. Varun Pathak and that the defendant company is not liable to pay Rs. 40,000/- to the plaintiff as it had not purchased Maruti Alto VXI (DL3CR-7518) from the plaintiff.
Civil Suit No.145/10 :7:15. In support of the case of the plaintiff, the Ld. Advocate for the plaintiff had drawn reference to delivery receipt dated 11.7.2008, (EX.PW 1/1). and pointed out that it bears the seal of the defendant company and the signatures of Sh. Varun Pathak as the Manager of the defendant company. Thereafter, the Ld. Advocate for the plaintiff had made alternative submissions. At the first instance, the Ld. Advocate had drawn reference to paragraph 3 of the plaint and paragraph 3 of the reply on merits in the written statement and submitted that by using the words, "Rest of the contents are matter of record", the defendant company has admitted the first transaction between the wife of the plaintiff and the defendant company, reflected in delivery receipt dated 11.7.2008, (EX.PW 1/1) as well as the authority of Sh. Varun Pathak to purchase cars on behalf of the defendant company.
16. At the second instance, the Ld. Advocate had drawn reference to the cross-examination of DW-1, Sh. Surender Singh, wherein the said witnesses had admitted that the defendant company maintains the attendance record of its employees as well as the record of the cars purchased and sold by it. Placing reliance on the said testimony of DW-1, Sh. Surender Singh, the Ld. Advocate had submitted that since the defendant company has not tendered in evidence, the attendance record of its employees as well as the record of the cars purchased and sold by it in July 2008, an adverse inference should be drawn against the defendant company and it should be presumed that Sh. Varun Pathak was an employee of the defendant company and that Maruti Alto VXI (DL3CR-7518) was purchased by the defendant company from the plaintiff.
Civil Suit No.145/10 :8:17. Thereafter, the Ld. Advocate for the plaintiff had drawn reference to delivery receipt dated 28.7.2008(EX.PW1/2). Placing strong reliance on the said document, the Ld. Advocate had submitted that the defendant company is liable to pay Rs. 40,000/- to the plaintiff as the said document had been executed by Sh. Varun Pathak as an employee/ manager of the defendant company.
18. While opposing the case of the plaintiff on these issues, the Ld. Advocate for the defendant company had drawn reference to the FIR dated 16.1.2009 (EX.DW2/2) and the supplementary complaint dated 25.1.2011 (EX.DW2/3) (OSR). Placing reliance on the said documents, the Ld. Advocate had submitted that Sh. Varun Pathak was an independent agent of the defendant company, whose services were being used by the defendant company for the purpose of selling the second hand cars purchased by the defendant company.
19. Thereafter, the Ld. Advocate had drawn reference to the delivery receipt dated 28.7.2008 (EX.PW1/2), the cheque dated 5.8.2008 (EX.PW1/3) and the cross-examination of the plaintiff, wherein the plaintiff admitted that at the time of receiving Ex.PW1/3, he had not noticed that Sh. Varun Pathak had signed Ex. PW1/3 in his personal capacity and not as authorized signatory of the defendant company. Placing reliance on the said documents and testimony, the Ld. Advocate had reiterated the stand of the defendant company that it is a complete stranger to the transaction reflected in the delivery receipt dated 28.7.2008 (EX.PW1/2) and is not liable to pay any amount to the plaintiff.
Civil Suit No.145/10 :9:20. After hearing the Ld. Advocates for the parties and carefully perusing the record of the Court file, I find it necessary and expedient to refer to the judgments of the Hon'ble Hon'ble High Courts in respect of suits relating to frauds committed by employees/agents of a company.
21. In, The Secretary, Naguneri Peace Memorial Cooperative Urban Bank Ltd. Naguneri v Alamelu Ammal, AIR 1961 Mad 419, the Hon'ble High Court of Madras after referring to the judgments of the House of Lords in Ruben v Great Fingell Consolidated, 1906 AC 439 and the judgments of Court of Appeal in Kreditbank Cassel v. Schenkers Ltd., 1927 All ER 425, South London Greyhound Racecourses Ltd. v Wake, 1931-1 Ch. 496 and Lloyd v. Grace, Smith and Co., 1912 AC 716, has observed, "9. All these cases cited above establish two principles. One is that the well established principle that strangers are entitled to assume that all things connected in the transactions and pertaining to the internal management of the company have been validly done has no application to fraud and forged instruments, as forged instruments are simply null and void. The other principle is : A secretary is a mere servant. His position is that he has to do what he is told and no person can assume that he has any authority to represent anything at all.
If the secretary is shown to have either express . authority to perform certain acts or implied authority by a course of dealing the company would be liable. In other words, if he is acting within Civil Suit No.145/10 :10: the scope of his authority, the actions of the secretary will bind the company, even if done tortiously or fraudulently and even though they enure not for the company's benefit but for the secretary himself.
10.These established rules and principles will equally apply whether in the Law of Agency, or in Law of Master and Servant."
22. In National Bank of Lahore Ltd., Delhi, Appellant v Sohan Lal Saigal and others, AIR 1962 Punjab 534, the Hon'ble High Court of Punjab, after discussing the entire law on liability of a company, in case of fraud committed by its employee or agent has quoted with approval the following principle of law, laid by the House of Lords in Lloyd v. Grace, Smith and Co., 1912 AC 716, "A principal is liable for the fraud of his agent acting within the scope of his authority, whether the fraud is committed for the benefit of the principal or for the benefit of the agent".
23. In Union of India, Appellant v Motilal Kamalia and Ors., AIR 1962 Patna 384, the Hon'ble High Court has observed, "There cannot be any doubt that where a principal gives an agent an express authority to do a particular act or class of acts on his behalf, the principal is bound as regards third persons, by every act done by the agent which is so authorised, or which is necessary for the proper execution of such authority, even though the existence of such Civil Suit No.145/10 :11: authority is unknown to the third person. Where a principal gives an agent general authority to conduct any business on his behalf, he is bound, as regards the third persons, by every act done by the agent which is incidental to the ordinary course of such business, or which falls within the apparent scope of the agent's authority. If a person has by words or conduct held out another person, or enabled another person, to hold himself out as having authority to act on his behalf, he is bound, as regards the third parties by the acts of such other person to the same extent as he would have been bound if such other person has in fact had the authority which he held out as having. (See 1 Halsbury's laws of England, 3rd edition page 208)."
24. Upon examining the facts and circumstances of the present case, in light of the aforesaid judgments, I find that the decision on the present issues depends on the following aspects:
a) Whether Sh. Varun Pathak was an employee/agent of the defendant company?
b) Whether the delivery receipt dated 28.7.2008 (EX.PW1/2) and cheque dated 5.8.2008 (EX.PW 1/3), had been executed by Sh. Varun Pathak within his authority as an agent/employee of behalf of the defendant company?
25. In respect of the first aspect, I find that in the FIR dated 16.1.2009 (EX.DW2/2) the defendant company has itself described Sh. Varun Pathak as its agent. In respect of this admission, the Ld. Civil Suit No.145/10 :12: Advocate for the defendant had drawn reference to the supplementary complaint dated 25.1.2011 (EX.DW2/3) (OSR) and the testimony of DW-2, Sh. Madan Mohan and submitted that on account of an error of an Advocate for the defendant company, Sh. Varun Pathak has been described as an agent of the company in EX.DW2/2. In my view, merely by filing EX.DW2/3, the defendant company cannot retract from the admission made in EX.DW2/2.
26. Even otherwise, in view of the judgment of the Hon'ble High Court of Delhi in Taneja Skins Co. Pvt. Ltd. v Bharath Skins Corporation, AIR 2002 Del 179 and Section 114(g) of Evidence Act, 1872, I find it appropriate to drawn an adverse inference against the defendant company and assume that Sh. Varun Pathak was an employee/agent of the defendant company.
27. In Taneja Skins Co. Pvt. Ltd.'s case (supra), the Hon'ble High Court while deciding whether a certain Mr. Rahim was an employee of the defendant, has made the following observation, "From the evidence on the record it is patent firstly that one Rahim used to act on behalf of the defendant though defendant asserts that he was only a commission agent. The plaintiff's contention is that he in fact was an employee of the defendant. The defendant feels shy of producing the employees register to indicate that he was not the employee and therefore necessary inference has to be drawn against the defendant in this regard. Rahim should be taken to be an employee acting on behalf of the defendant."
Civil Suit No.145/10 :13:28. Thus, in my view, Sh. Varun Pathak was an employee/agent of the defendant company at the time of execution of the delivery receipt dated 11.7.2008 (EX.PW 1/1), delivery receipt dated 28.7.2008 (EX.PW1/2) and cheque dated 5.8.2008 (EX.PW 1/3).
29. In respect of the second aspect, I find that by using the words, "Rest of the contents are matter of record" in paragraph 3 of the written statement, the defendant company has admitted the first transaction between the wife of the plaintiff and the defendant company and consequently it has admitted the authority of Sh. Varun Pathak to purchase cars on behalf of the defendant company.
30. Even otherwise, in view of the judgment of the Hon'ble Supreme Court of India in Gopal Krishnaji Ketkar v Mamomed Haji Latif and Ors, AIR 1968 SC 1413 and Section 114(g) of Evidence Act, 1872, I find it appropriate to presume that Sh. Varun Pathak was authorized to purchase cars on behalf of the defendant company.
31. In Gopal Krishnaji Ketkar v Mamomed Haji Latif and Others, AIR 1968 SC 1413, the Hon'ble Supreme Court has observed, "......Even if the burden of proof does not lie on a party, the Court may draw an adverse inference, if he withholds important documents in his possession which can throw light on the facts at issue. It is not, in our opinion, a sound practice for those desiring to rely upon a certain state of facts to withhold from the Court the best evidence Civil Suit No.145/10 :14: which is in their possession which could throw light upon the issues in controversy and to rely upon the abstract doctrine of onus of proof............"
32. In the present suit, the only evidence led by the defendant company regarding the scope and extent of the authority of Sh. Varun Pathak is the FIR dated 16.1.2009 (EX.DW2/2). In it, it is stated that Sh. Varun Pathak was appointed as a lawful agent by the defendant company and his work profile was inter-alia in the nature of receiving and collecting second hand cars from various showrooms of the defendant company and thereafter selling the second hand cars in the open market, after valuation was done by the officials of the defendant company.
33. In my view, the FIR dated 16.1.2009 (EX.DW2/2) cannot be relied upon to determine the exact scope and extent of the authority of Sh. Varun Pathak because it is a unilateral document and because during the course of this trial, the defendant company has itself attempted to retract from the said FIR. In my view, in the facts and circumstances of the present case, it was incumbent upon the defendant company to produce the original contract signed between the defendant company and Sh. Varun Pathak. Since the defendant company has withheld the said document, I find that this Court has no option but to presume that Sh. Varun Pathak had done both the transactions i.e. the transaction reflected in Ex. PW1/1 and Ex. PW1/2 on behalf of the defendant company.
34. Thus, as a net result of the aforesaid discussion, I find that Sh. Varun Pathak is not a necessary party to this suit as he had Civil Suit No.145/10 :15: executed the delivery receipt dated 28.7.2008 (EX.PW1/2) as an employee/agent of the defendant company. Further, I find that the defendant company is liable to pay Rs. 40,000/- to the plaintiff as its employee/agent, Sh. Varun Pathak had committed a fraud on the plaintiff, while acting within the scope of his authority.
Issue No. 335. The onus of proving this issue was on the plaintiff. By proving that the plaintiff is entitled to the suit amount, the plaintiff has established that he is entitled to interest.
36. In the prayer clause of the plaint, the plaintiff has claimed pendente-lite and future interest at the rate of 24% per annum. In my view, the rate of interest claimed by the plaintiff is excessive and the ends of justice would be met, if the plaintiff is granted pendente-lite and future interest at the rate of 9% per annum.
RELIEF
37. In view of the findings on the aforesaid issues, the suit of the plaintiff is decreed against defendant company for a sum of Rs. 40,000/-. (Rupees Forty Thousand Only) along with costs and pendente-lite interest and future interest at the rate of 9% per annum.
38. Before parting with this Judgment, I find it expedient to observe that on account of the negligence of the defendant company, Sh. Varun Pathak was able to occupy a position of ostensible authority and commit a fraud on the plaintiff. Thus, it is in the fitness of things that the defendant company indemnifies the plaintiff for the loss suffered on account of the fraud committed by Civil Suit No.145/10 :16: Sh. Varun Pathak.
Upon preparation of the decree sheet by the Reader, the file shall be consigned to the record room.
Announced in the Open Court (Jay Thareja)
On 1.03.2011 Civil Judge-I, New Delhi District
New Delhi/1.03.2011
Civil Suit No.145/10