Delhi High Court
S.V. Electricals Ltd. vs M/S. Sylvania & Lakshman Ltd. on 29 November, 1999
Equivalent citations: 2000IAD(DELHI)75, AIR2000DELHI156, 83(2000)DLT9, 2000(52)DRJ177
Author: Vikramajit Sen
Bench: Vikramajit Sen
ORDER Vikramajit Sen, J.
1. This suit for the recovery of Rs. 48,89,814/- (Rs. Forty Eight lakhs Eighty Nine Thousand Eight hundred Fourteen only) has been filed under the summary procedure contained in Order xxxvII of the Code of Civil Procedure 1908. Plaintiffs were in the business of manufacturing and marketing of brass nickel plated and aluminum caps in different grades and filament from pure tungsten for use in fluorescent tubes and bulbs. Pursuant to written/telephonic verbal orders supplies were made by it to the Defendant. Payment of the goods so supplied by the Plaintiff was to be made within a period of 45 days from the date of bill challan voucher failing which interest at the rate of 21% per annum was payable . As per the books of accounts of the Plaintiff. A total sum of Rs.33,16,270/-.(Rupees Thirty three lakhs Sixteen thousand Two hundred Seventy only) along with interest at the aforesaid rate of 21% per annum, (constituting the claim in the suit) is stated to be outstanding for 31 separate deliveries carried out between 25.3.1994 and 9.8.1995, in respect of bills of which details have been given in the Plaint. In the Plaint it is further pleaded that cheques of the Defendants for the aforesaid outstanding amount had been kept with a certain Mr. Natarajan and were to be released to the Plaintiffs from time to time. It has been stated that the cause of action arose when the cheques issued by the Defendant Company were dishonoured by their Bankers. It is further averred that the entire claim of the Plaintiff is an admitted amount in view of the fact that the Defendant had already issued "C Forms" to the Plaintiff. It is further pleaded that "the suit is for the recovery of Debt/Liquidated demand in money payable by then Defendant Company in terms of the written contract."
2. The Defendant has filed an application under Order xxxvII Rule 3(5) of the Code of Civil Procedure for the grant of leave to defend. The submissions are that the suit was not maintainable under the provisions of Order xxxvII; that inasmuch as a complete paper book along with the documents had not been supplied, service had not been properly effected; that the amounts were not payable as the alleged goods were not supplied by the Plaintiff to the Defendant; the documents on the basis of which the suit is predicated were not filed along with the Plaint; that identical facts were pleaded in the Winding Up Petition and were duly controverted by the Defendants in those proceedings; that even oral orders have not been placed by the Defendants on the Plaintiff; that the Defendants had taken supply somewhere till the middle of 1995 and the Defendants had also made up to date payment to the Plaintiff and that from 1.5.1995 till 20.9.1995 the Defendants had paid Rs. 8,82,296/- (Rs. Eight lakhs Eighty two thousand Two hundred Ninety Six only) to the Plaintiff and consequent upon these payments the accounts of the plaintiff was cleared and there was nothing outstanding; that the factory was lying closed since April, 1996; that there was no occasion for the Defendants to keep any cheque with Mr.Natarajan or to issue any cheque to the Plaintiff; that the Defendants had never admitted the false and frivolous claim raised by the Plaintiff; that since no amount was liable to be paid the question of interest did not arise.
3. The Defendants objection that he was not supplied copies of documnts and that the documents relied on the Plaint ought to have been filed at the time of the institution of the suit is not of substance. Non-supply of copies of documents is invariably taken. The answer, to obviate these controversies, is obviously that the Defendant could very easily have inspected the Court records, as was in fact done in this case. This observation is one restricted to the present case and is not in derogation of the necessity to serve the opposite party with copies required to be served under the High Court Rules & Orders. Learned counsel had argued that service was not proper since copies of the documents had not been supplied, and placed reliance on the Provisions of Order xxxvII itself. However, after the amendment carried out in this Order it is no longer mandatory that copies of documents be supplied. It is now mandatory to supply annexures and, therefore, even if it is assumed that the documents were not supplied, this would not render the service of summons under Order xxxvII nugatory. Learned counsel for the Plaintiff has also correctly drawn my attention to State Bank of India Vs. Trilok Singh. AIR 1992 Delhi 76 where it was held that the filing of original documents before the issue of summons for judgment was sufficient compliance with the provisions of law and that this controversy would not amount to a triable issue having been raised, as it did not go to the root of the case.
4. Arguments on the maintainability of the suit under Order xxxvII were addressed at considerable length. The statutory provisions are to be found in Order xxxvII 1(2) which reads as follows:
1 (2) Subject to the provisions of sub-rule (1), the Order ap plies to the following classes of the suits, namely:-
(a) suits upon bills of exchange, hundis and promissory notes;
(b) suits in which the Plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest arising,-
(i) on a written contract; or
(ii) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or
(iii) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only.
5. Mr. Sandeep Sethi, learned counsel for the Plaintiff has submitted that the suit is palpably maintainable and is to be tried under the summary procedure since it is based on dishonoured cheques, as also on Hundis and would therefore fall under Sub-rule (2)(a) of the Order. The averments in para 7 and para 13 were relied upon. Although there is a statement in the Plaint that the cause of action arose when the cheques issued by the Defendants were dishonoured by the Bankers not even one dishonoured cheque has been filed. there is therefore, no substance whatsoever in this argument that the suit is maintainable as a summary suit as it is not based on dishonoured cheques.
6. Thereafter, learned counsel drew my attention to the Hundis filed on the record. These Hundis are stated to corresponded to each of the consignments. However, not a single Hundi has been accepted by the Defendants, as envisaged under the Negotiable Instrument Act. Without its acceptance, as contemplated by that Act these documents would not constitute Hundis and, therefore, a summary suit can obviously not be maintainable on these documents. It appears that these documents been sent by the Plaintiff through its Bankers to the State Bank of Indore, Cannaught Circus, New Delhi. These alleged Hundis were invariably accompanied by an Invoice as well as a Lorry Receipt in the name of the Plaintiff in favour of the Consignee Bank, i.e. State Bank of Indore, Delhi. Some of the so called hundis contain an en-dorsement, presumably of the State Bank of Indore, New Delhi, to the effect that it has been returned unpaid. The Defendant was expected to collect these documents from that Bank after negotiations, and since there is no controversy that this did not occur, obviously these cannot be binding on it. As in the case of the acceptance of the 'Hundis' this endorsement would not constitute a dishonour as contemplated under the Negotiable Instrument Act and would not justifying the filing of the suit under the Summary Procedure established in Order xxxvII. For these reasons the claims in the suit certainly do not fall in the class of actions envisaged in Order xxxvII(1)(2)(a).
7. Learned counsel for the Plaintiff there upon attempted to bring the suit within Order xxxvII (1)(2)(b). It has been pleaded that written orders have been placed by the Defendant on the Plaintiff. Since these written orders are not available on the record, I understand the contention of the Plaintiff to be predicated on the sundry invoices/bills issued in respect of each consignment. Reliance was placed by Learned Counsel for the Plain-tiff on M/s. Punjab Pen House Vs. M/s. Samrat Bicycle Ltd. wherein a learned Single Judge of this Court has held that the terms of a contract could be extracted from the Bills themselves and, therefore, the case did not fall within the prescription contained in West Bengal Decorating Co. Vs. M/s. Damodar Das Daga , in which, a case simplicitor of supply of goods, was held not to fall within Order xxxvII. Learned counsel thereafter cited Corporate Voice (Pvt.) Ltd. Vs. Uniroll Leather India Ltd. where another learned Judge followed the . Even in this case also it has been observed that "in the affidavit it is not disputed that the Bills, Invoice and Statement of Accounts were not received."
8. In Beekam Electricals Vs. Sylvania and Laxman Ltd. 1998 (3) Appex Decision (Delhi) the Court followed the decision in Punjab Pen House(Supra). However, it was specifically pleaded that the Plaintiff supplied goods which were duly received by the Defendants against Bills Challans over a long period but these averments had not been effectively traversed on the grounds that the records maintained by the Defendant Company were not accessible because of the sealing order of the Defendant Company. The learned single Judge observed that "if the relevant record itself was not available due to the sealing of the factory premises, latter part of the defense denying the Plaintiff's claim based on the Bills is a disclosed attempt to evade the liability on the part of the Defendants".
9. I am in respectful agreement with the ratio established in these cases. But a Bill/Invoice can be construed as a written contract only if the terms are clearly contained there in if, and only if, these terms in the Bill/Invoice have been accepted - expressly, impliedly or by acquies-
cence. In the Punjab Pen Case it was observed that the terms and conditions agreed to between the parties had been given in the bills, which contained an endorsement on behalf of the Defendants about the receipt of the goods. In the case in hand, the entire documentation, including the so called Hundi, Invoice and Lorry Receipts were negotiated through the Bank. These documents were not directly or indirectly received by the Defendant. There cannot even be an acquiescence on behalf of the Defendants in these circumstances.
10. A written contract need not have a particular form or contain any legalise or forensic esoterics to constitute a contract. On first principles, all that should happen is that an offer should be conveyed in writing, which offer, either in its original form or as may subsequently be varied in case of negotiations, should be accepted by the other party. If the offer in writing, containing all the relevant conditions necessary for deciding the litigation is shown to have been accepted either expressly, or impliedly (for example by the acceptance of goods) or by acquiescence (by none traverse or failure to object after receipt of the Bill), a contract would come into effect. But this proposition cannot be inordinately stretched to the extent to hold that a contract can come into existence unilaterally, i.e. by the mere issuance of a bill or an invoice or a written offer which does not even reach the other party. Therefore the now well established position enunciated in Punjab Pen House case would not apply in the present case.
11. The Plaintiff reliance on Food Corporation of India Vs. Bal Krishan which is a Division Bench judgment of this Court, is also misplaced. A reading of this decision discloses that 500 Rolls of black polythene film had been supplied pursuant to tender. The defense against payment was, inter alia, that Order xxxvII did not apply since the goods supplied, upon subsequent examination, were found deficient and inferior in quality, and that interest had not been agreed upon in writing. These objections were negatived and the relevant paragraphs reads as follows:
"Regarding the objection as to the maintainability of the suit raised by the appellants, we are of the view that where the suit is for recovery of the price of the goods, it should be construed as a suit for enforcing payment of a dept, within the amended clause (b) of sub-rule (2) of Rule 1 of Order 37 C.P.C. which covers a few more categories of suits and not being inconsistent with Rule 1 of Chapter XV of the Original Side Rules will govern the present suit, vide Rule 12 of the said Rules, as explained in M/s. Printack Machinery Ltd. Vs. M/s. Jay Kay Paper Congeters, , Avadh Behari J. in Sushila Mehta Vs. Shri Bansi Lal Arora & another, I.A.3032/81 in suit No. 93/81, decided on 26.10.1981, has held that the amendment of Order 37 C.P.C. is neither repugnant nor inconsistent with Chapter XV of the Original Side Rules, and a suit on a debt arising out of a written contract can be brought under the summary procedure. We are in respectful agreement with that view.
What then, is a debt?. Relying in Webb Vs. Stenton (1883) 11 OBD 518 it was held in Commissioner of Wealth Tax Vs. Pierce Leslie & Co. Ltd. , that the essential requisites of a debt are: (1) an ascertained or readily calculable amount; (2) an absolute unqualified and present liability in regard to that amount with the obligation to pay forthwith or in future within a time certain; (3) the obligation must have accrued and be subsisting and should not be that which is merely accruing. A contingent liability or a contingency debt is, therefore, neither a liability nor a debt. A debt is a 'debitum in praesenti,solvendrum in future.' We, therefore, hold that the amount covered by the suit is an ascertained amount payable under an unqualified present liability. The obligation has accrued and subsists. It is a debt accruing under a written contract. The learned counsel for the defendant wanted to urge that the words "arising on a written contract" must be read along with the word "interest" and since no interest was payable under the contract the suit is not cov ered by clause(b) of Rule 2 of Order 37 C.P.C. This is an argument totally unsupportable. The words '"rising on a written contract" apply to the word "debt" which may be "with or without interest". We therefore, without any hesitation reject this contention of the appellant".
12. These observations, however, would not be applicable to the facts of the present case because no written contract had come in to effect and because the supply of goods has been seriously and plausibly disputed.
13. Learned counsel for the Plaintiff thereafter submitted that in as much as Sales Tax "C Forms" had been issued by the Defendants to the Plaintiffs this constituted an acknowledgment of the debt as well as of receipt of the goods. However, the Learned Counsel for the Defendant has countered this argument by stating that consequent upon disputes having arisen with its employees these three "C Forms" had been unauthorisedly issued by some of its disgruntled ex-employees, who are/were in litigation with the Defendants. It has been further argued that a perusal of these documents would show that they had been obtained from the Sales Tax Department in August and September, 1997 and thereafter backdated by the person purporting to have issued them on behalf of the Defendants. The genuineness and authenticity of these documents had been vehemently denied. It has further been submitted that these "C Forms" ought to have been obtained against each consignment and the very fact that they have been obtained from the Sales Tax Department in August and September 1997 and issued against a number of Invoices shows that they had been manufactured by unauthorised persons in support of the Plaintiff. In the circumstances of the case I am unable to agree with the Plaintiff that these three documents conclusively prove the delivery of the consignment or that they would amount to an acknowledgment of a debt as envisaged in Order xxxvII Rule 1(2)(b). In any event the Debt or liquidated demand in money has necessarily to arise on a written contract and I have already held above that this written contract in the shape and form of Bills has not come into effect in the present case.
14. Learned counsel for the Plaintiff next submitted that the Plaint specifically mentions the Bills and amount of the goods delivered to the Defendants and that there had been only an omnibus denial of these averments. He had relied on Punjab and Sind Bank Vs. Ram Prakash 1990 (18) DLJ 265 which laid down that where the Defendants failed to point out any discrepancy in the Bank's Statement of Accounts, but only raised the plea that his signatures were obtained on the blank papers, then there is no case for grant of leave to defend. He also relied on Defendant's letter dated 5.8.1995 which reads as under:
15. We regret that due to oversight the following bills were returned unpaid.
Bill No. Date Amount Due Date. 46 08.03.95 2,59,506.00 07.05.95 20 07.02.95 3,52,901.00 08.04.95 27 14.02.95 2,79,509.00 15.04.95 47 08.03.95 3,59,506.00 07.05.95 70 31.03.95 3,59,506.00 30.05.95 71 31.03.95 3,59,506.00 30.05.95
We have already paid some of the bills directly to you and the balance will be paying shortly. We are taking steps to avoid recurrence in future.
16. The Defendant's explanation is that, as has been pleaded and argued on behalf of the Plaintiff itself, the documents were negotiated through Bank. From a perusal of these documents it will be clear that the Hundis were not accepted since that was a pre-condition for delivery. The fact that the Lorry Receipts were in the name of the Consignee Bank would also show that delivery of the consignment, even if duly despatched by the Plaintiffs, had not been taken by the Defendant, obviously because of the upheavals faced in its own functioning. Learned counsel for the Defendant has explained the words "bills were returned unpaid" not to be an acknowledgment that bills were due but that these bills were not negotiated and delivery not obtained by the Defendant and hence the bills were not paid. This could have been a moonshine defense had the Plaintiff not adopted the procedure of negotiation of documents through the Bank. Since acceptance of the documents and delivery is itself is serious and preponderant doubt, I cannot help but accept, for the present, the explanation given by the Defendants. The nontraverse rule, with its stringent application, would also not apply at the present stage since it is the Defendants' case that they have paid for all the outstanding. It must be kept in perspective that these arguments may be relevant in the instance of an ordinary suit, but not where it has been effectively submitted that no written contract had come into existence and that the action was not predicated on either a cheque or a hundi and therefore the suit was not maintainable under Order xxxvII.
17. In conclusion I am of the considered opinion that the present suit does not fall within any of the categories and classes contemplated by Order xxxvII and, therefore, not maintainable under those provisions. Accordingly, the application seeking unconditional leave to defend is allowed.