Delhi District Court
Mr. Mukesh Aggarwal vs M/S Tivoli Chits (P) Limited on 11 May, 2010
IN THE COURT OF MS. SANGITA DHINGRA SEHGAL,
ADDITIONAL DISTRICT JUDGE (CENTRAL - 11)
TIS HAZARI COURT : DELHI
Suit No. 471/04
Unique Case ID No. 02401C0039512004
Mr. Mukesh Aggarwal
Proprietor,
M/s Aggarwal Enterprises,
3/90, Roop Bhawan,
Nehru Street, Vishws Nagar,
Shahdra, Delhi - 110032. .............. Plaintiff
Vs.
M/s Tivoli Chits (P) Limited
Through its Directors
Mr. Rajat Singhal,
Mrs. S. Bala Singhal,
E-258, Shastri Nagar,
Delhi - 110052. .............. Defendant
Date of Institution of the Suit : 07.12.2004
Date on which order was reserved : 26.04.2010
Date of decision : 11.05.2010
Suit no. 471/04 1/16
JUDGMENT
M/s. Aggarwal Enterprises (hereinafter referred to as plaintiff) filed the present suit for Damages against M/s Tivoli Chits (P) Ltd. (hereinafter referred to as defendant) on the brief facts that plaintiff is a qualified engineer engaged in the business of import, trading of photo lab equipment; that defendant is a private limited company and is in the business of chit funds and running its business in Delhi having its registered office at Faridabad; that the defendant company was operating chits funds in Delhi and approached the plaintiff in the year 1994 to become its member and the plaintiff became a member with the defendant company; that dispute arose between the parties regarding payment of installments; that the plaintiff was approached by one Mr. R. C. Sharma who gave a letter to the plaintiff showing that he was the authorized representative of the defendant company and was empowered to settle the amount with the plaintiff; that after negotiations he took a sum of Rs. 30,000/- from the plaintiff and further adjusted a sum of Rs. 1,00,000/- in the cost of the machine delivered to the defendant; that Mr. R. C. Sharma was one of the partners with Mr. Rajat Singhal, Director of the defendant company; that after the settlement and receipt of payment Suit no. 471/04 2/16 from the plaintiff the defendant company referred the dispute to Mr. Naresh Bansal for arbitration; that Mr. Naresh Bansal, Ld. Arbitrator passed an award stating that the matter being of complex nature could not be decided in arbitration; that the defendant filed an application Under Section 14 of the Arbitration Act 1940 before the Hon'ble Court of Sh. S. N. Dhingra, ADJ, Delhi and the Hon'ble Court was pleased to appoint Sh. Vinod Gaur, Advocate as a new arbitrator in the matter; that the arbitrator initiated the proceedings and made 4 cases out of one case arbitrarily and fixed an exorbitant fee of Rs. 11,000/- per case; that the plaintiff moved an application before the Hon'ble Court of Sh. A. K. Garg, ADJ, Delhi for fixing a reasonable fee but Sh. Vinod Gaur, Arbitrator in undue haste and hurry proceeded ex-parte against the respondent / plaintiff herein and passed 4 awards against the plaintiff; that the defendant through its Counsel Sh. P. P. Tiwari filed 4 execution applications U/s 34 of the Arbitration and Conciliation Act 1996 knowingfully well that the awards passed by the Arbitrator Sh. Vinod Gaur were governed by the old Arbitration Act 1940 and got issued attachment warrants against the plaintiff; that the plaintiff was highly insulted and his reputation in the eyes of his family members and his relatives was Suit no. 471/04 3/16 lowered when the defendant alongwith the Court balliff came to the house of the parents of the plaintiff for recovery on the day of Holi; that the plaintiff on coming to know of the execution applications moved the Hon'ble High Court and obtained stay of the execution proceedings; that on 10.01.2002 all the 4 execution applications and corresponding applications were decided by Smt. Manju Goel, ADJ, Delhi and held that the execution applications are not maintainable as they had not been filed under the new Act whereas the Award passed by the Arbitrator was governed by the old Act; that Sh. P.P. Tiwari, counsel for the defendant company moved the Hon'ble High Court to consider the execution applications; that the executions applications were dismissed by the Hon'ble Court stating that the application U/s 14 of the Arbitration Act was time barred so the same could not be treated as an application U/s 14 of the Arbitration Act 1940; that the defendant in collusion with his counsel and the arbitrator only to harass and extort money from the plaintiff filed 4 applications U/s 14 of the Arbitration Act 1940 for making the award rule of the Court but the same were dismissed as barred by limitation; that the order of the Ld. ADJ, Smt. Manju Goel could not be challenged and became final and binding on the parties; that the defendant knowing fully well Suit no. 471/04 4/16 that the applications were not maintainable and time barred filed the same in court and the plaintiff was forced to defend the same for more than 2 years; that because of the defendant, the plaintiff was forced to defend a malicious litigation and had to undergo a lot of mental torture and spend a lot of money to defend himself for the false and merit less litigation; that Sh. P. P. Tiwari, counsel for the defendant kept aside his professional ethics and started acting as a servant of the defendant and in connivance with Sh. Vinod Gaur, Arbitrator filed the application only with a view to harass and extort money from the plaintiff; that for the mental torture and monetary loss, the plaintiff has assessed the claims and damages of Rs. 5,00,000/- from the defendant; that a legal notice was served upon the defendant on 18.08.2004.
The defendant filed the written statement stating that Sh. R. C. Sharma was never authorized to settle the dispute with the plaintiff nor any such letter was signed by the defendant or any such person was authorized. The defendant denied the allegation of the plaintiff that Sh. R. C. Sharma received a sum of Rs. 30,000/- from the plaintiff and adjusted a sum of Rs. 1,00,000/- towards the cost of the machine. The defendant also denied the allegation of the plaintiff Suit no. 471/04 5/16 that Sh. R. C. Sharma was one of the Directors of the defendant company. According to the defendant the matter was referred to the arbitrator in terms of the chit agreement and also for recovery of money legally due from the plaintiff to the defendant. According to the defendant, the plaintiff failed to appear and pay the fee fixed by the arbitrator, thus the Ld. Arbitrator passed awards in favour of the defendant and against the plaintiff.
In the replication plaintiff reiterated the contents of the plaint.
On the pleadings of the parties following issues were raised and framed.
1. Whether the plaintiff is entitled to recover damages to the tune of Rs.5 Lacs claimed by him in the present plaint?
2. Relief I heard the arguments and perused the record.
Plaintiff examined himself as PW-1 and defendant examined himself as DW-1.
ISSUE NO. 1 Whether the plaintiff is entitled to recover damages to the tune of Rs.5 Lacs claimed by him in the present plaint? OPP Suit no. 471/04 6/16 The onus of proving this issue was on the plaintiff. Plaintiff Mukesh Aggarwal examined as PW 1 admitted that he had subscribed to the Chits Fund floated by defendant and became its member and had received the maturity amount in respect of the four chits of the defendant. PW-1 admitted that he owed a sum of Rs.1 Lac including interest. M/s. Rohini Colur Lab was a Partnership Firm of Sh.R.C. Sharma and Sh. Rajat Singhal was one of the directors of the defendant who had placed an order upon him for import of machine from Japan, which was imported in due course of time for a sum of Rs.19 Lacs against which a sum of Rs. 1 Lac owed by him was adjusted. PW-1 deposed that Sh.R.C. Sharma was an authorized representative of the defendant and a letter of authorization in his favour to negotiate on behalf of the defendant has been proved as Ex.P-1 and the letter issued by Sh. R.C. Sharma on behalf of the defendant whereby he had received a sum of Rs. 1 Lac towards the Suit no. 471/04 7/16 full and final settlement of his dues has been proved as Ex.P-2 and the receipt thereof as Ex.P-3. PW-1 deposed that after disputes arose the matter was referred to Sh. Naresh Bansal, Ld. Arbitrator for recovery of outstanding amount in respect of the chits, who rendered an Award Ex.P-4. The certified copy of the application Under Section 14 of the Arbitration Act moved before Sh. Vinod Yadav, CJ has been proved as Ex.P-5. The copy of the legal notice dated 18.8.2004 has been proved as Ex.P-6. The certified copy of the order dated 26.3.2004 passed by Ms. Geetanjali Goel, Ld. Civil Judge has been proved as Ex.P-7. The witness has deposed that he is entitled to the damages to the tune of Rs.5 Lacs on account of the fact that on the festival of Holi in 2001, officials of the defendant company had reached his residence along with warrants of attachment and had insulted him in the eyes of his relatives and neighbours. He further deposed that he did not make any payment at that time and had to defend the said attachment Suit no. 471/04 8/16 proceedings in the court for 5 years and had to incur heavy expenditure. In the cross-examination, PW-1 admitted that the four chits had been got encashed by him in the first seven months and he had received a sum of Rs.3,90,000/- for three chits, whereas the maturity amount of Rs.1,30,000/- in respect of the remaining fourth was adjusted by the defendant about which there is no dispute. In the cross-examination, this witness deposed that he had paid the money to the defendant in respect of the remaining twenty installments in respect of each one of the chits and the defendant had given him in writing that the matter has been fully and finally settled vide Ex.P-1 to P-3. In the cross-examination, it is admitted that the disputes between the parties were referred for arbitration for arbitration proceedings to Sh.N.K. Bansal, Ld. Arbitrator. He also admitted that Sh. Vinod Gaur had been appointed as an Arbitrator by the Court to Sh. S.N. Dhingra, Ld. ADJ, (as His Lordship then was). PW-1 also Suit no. 471/04 9/16 admitted that the disputes which had been referred to the Ld. Arbitrator pertained to the 4 chits in question. This witness has also admitted that no break up of the damages has been given by him.
On the other hand, DW-1 Rajat Singhal deposed that the plaintiff had encashed all the 4 chits on discount and the entire amount after deducting the discount was paid to Sh. Mukesh Aggarwal through cheques and he was bound to make timely payments in respect of the remaining payments against the 4 chits encashed by him. This witness admitted that the disputes relating to 4 chit funds were referred to Sh. Naresh Kumar Bansal for recovery of money legally due from the defendant. DW-1 further deposed that Sh. R.C. Sharma was never appointed as an authorized representative of the defendant company to settle the disputes. DW-1 deposed that he was exercising his legal rights and pursuing his remedies before the court of law and in fact his applications were dismissed Under Suit no. 471/04 10/16 Section 14 of the Arbitration Act on the point of limitation and denied the suggestion that he dragged the plaintiff for three years in courts in false litigation.
It is admitted case of the parties that the plaintiff had encashed all the four chits. According to the plaintiff, out of the three chits, the payment of the four chits had been adjusted by the defendants towards the payment that he owed a sum of Rs.1,00,000/- including interest to M/s. Rohini Colour Lab, Partnership Firm of Sh. R.C. Sharma and Sh. Rajat Singhal against a machine and the payment of Rs.1,00,000/- had been adjusted against the same. The case of the plaintiff is that Sh.R.C. Sharma, who had been authorized to negotiate the matter had issued a receipt that the matter has been fully and finally settled whereas the defendant has denied the receipt and the fact that Sh.R.C. Sharma had been authorized on his behalf to negotiate the matter with the plaintiff. It is an admitted case of the Suit no. 471/04 11/16 parties that at this juncture disputes arose and it is not disputed that the chit agreement contained an arbitration clause and the matter was referred to the sole arbitrator, Sh. Naresh Kumar Bansal. It is also not disputed that subsequently Sh. Vinod Gaur was assigned arbitration proceedings, who passed 4 awards against the plaintiffs. The defendants thereafter filed execution proceedings, but the same were dismissed for the reason that the Arbitration Act, 1940 applied to the awards announced by Sh. Vinod Gaur, Advocate and even if it is treated as application U/s 14 of the Arbitration Act, they have become time barred and hence the awards filed by defendant / claimant company were returned. Thereafter the defendants in the present case, filed an application Under Section 14 of the Arbitration Act and the same was dismissed by Ms. Geetanjali Goel, Civil Judge, Delhi vide her order dated 26.3.2004.
In this background, the question therefore arises as to Suit no. 471/04 12/16 whether the plaintiff is entitled to damages from the defendant as the disputes were got referred to Sh. N.K. Bansal, Arbitrator and thereafter execution proceedings were filed in the court of Ms. Manju Goel, ADJ and thereafter application U/s 14 of the Arbitration Act was filed in the Court of Ms. Geetanjali Goel.
In order to initiate an action against malicious prosecution, the plaintiff must prove that the proceedings must have been instituted or continued by the defendants, that he must have acted maliciously and that the proceedings must have terminated in favour of the plaintiff. No action lies, if the legal proceedings are instituted, however malicious, unless they have been instituted without reasonable and probable cause. The burden of proving absence of reasonable and probable cause is on the plaintiff. Reasonable and probable cause means a genuine belief based on reasonable grounds that the proceedings are justified. Suit no. 471/04 13/16
In a civil suit for malicious prosecution, the civil court has to consider independently and come to a conclusion from the evidence before that all the necessary ingredients including want of reasonable and probable cause for establishing a claim for prosecution is present.
In the instant case, the fact that the matter was referred to the Arbitrator who passed an award stating that the matter being of complex nature could not be decided in arbitration and the fact that another arbitrator Sh. Vinod Gaur was appointed who proceeded ex- parte against the respondent / plaintiff and passed 4 awards on the basis of which the warrants of attachment were got issued against the plaintiff and the fact that the bailiff went to the house of respondent / plaintiff on the day of Holi on which the plaintiff obtained a stay of the execution proceedings and finally the four execution applications were decided by Ms. Manju Goel, ADJ, Delhi, who held the same to Suit no. 471/04 14/16 be not maintainable for the reason that the same had been filed under the new Arbitration Act whereas the award had been passed by the Arbitration was governed by the old case and finally the same were dismissed being barred by limitation could not be covered under malicious prosecution as the foundation of the action lies in abuse of the process of the Court by wrongfully setting the law in motion and it is designed to discourage the perversion of the machinery of justice for an improper purpose. The plaintiff has failed to prove that the proceedings instituted against him were malicious, without reasonable and probable cause, that they terminated in his favour and that he has suffered damage.
It is clear from the record that the defendant has been pursuing litigation and has been exercising his legal rights and the remedies available to him. It is another matter that the proceedings filed by him were dismissed being barred by limitation. Suit no. 471/04 15/16 Relief In view of my findings on the aforesaid issue, suit of the plaintiff is dismissed being not maintainable. Ordered accordingly. No order as to costs. Decree sheet be prepared accordingly. File be consigned to the records.
Announced in the SANGITA DHINGRA SEHGAL
open Court on 11.5.2010 ADDL. DISTT. JUDGE, DELHI
Suit no. 471/04 16/16