Delhi District Court
Judge -13 : Central District ; Tis Hazari ... vs Prabhat Zarda Factory Co on 17 March, 2018
IN THE COURT OF SH. HARISH KUMAR : ADDL. DISTRICT
JUDGE -13 : CENTRAL DISTRICT ; TIS HAZARI COURTS : DELHI
CS NO. 2461/17
In re :
Pawan Kumar Garg,
Proprietor of Rudraksh Marketing
102, Syndicate House,
3 Old Rohtak Road,
Inder, New Delhi
Also At:
B-45, Wazirpur Industrial Area
Delhi
Through his Attorney
Shri Suresh Garg
...... Plaintiff
VERSUS
Prabhat Zarda Factory Co.
Through its Partner
Smt. Manju Devi
A-194, Derawal Nagar
Delhi
.......... Defendant
Date of institution of present suit : 05.08.2008
Date of receiving in this court : 15.03.2017
Date of hearing arguments : 21.02.2018
Date of Judgment : 17.03.2018
SUIT FOR RECOVERY OF Rs. 59,71,647/- (Rs. Fifty Nine Lacs Seventy
One thousand Six Hundred and Forty Seven) along with pendente-lite and
future interest.
AND
CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 1 of 24
CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg
COUNTER CLAIM No. 06/18
In Re:-
Prabhat Zarda Factory Co.
Through its Partner
Smt. Manju Devi
A-194, Derawal Nagar
Delhi
............ Counter Claimant
VERSUS
Pawan Kumar Garg,
Proprietor of Rudraksh Marketing
102, Syndicate House,
3 Old Rohtak Road,
Inder, New Delhi
Also At:
B-45, Wazirpur Industrial Area
Delhi
Through his Attorney
Shri Suresh Garg
......Respondent/Plaintiff
Date of filing of Counter Claim : 05.08.2008
Date of Separate registration of CC : 21.02.2018
Date of receiving in this court : 15.03.2017
Date of hearing arguments : 21.02.2018
Date of Judgment : 17.03.2018
Counter Claim For Rs. 1,59,73,629/- (Rs. One Crore Fifty Nine Lacs
Seventy Three Thousand Six Hundred and Twenty Nine Only)
JUDGMENT
This common judgment shall dispose of the suit filed by the plaintiff for recovery of Rs. 59,71,647/- against defendant and Counter Claim filed by defendant for recovery of Rs. 1,41,86,171/- against the plaintiff. For CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 2 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg the sake of convenience plaintiff has been referred to as plaintiff both in the suit as well as in the Counter claim and defendant/counter claimant has been referred to as defendant both in the suit and Counter claim.
Plaintiff's Case
1. Briefly stated case of the plaintiff is the proprietor of proprietorship concern and appointed his elder brother Sh. Suresh Garg who is looking after the business and financial affairs of the firm of the plaintiff, to file the present suit vide Special Power of Attorney duly executed in his favour. Defendant is a partnership concern and Smt. Manju Devi is its partner and is carrying on the business of manufacturing and marketing of the various types of tobacco products and that the plaintiff is one of its Dealers / Distributors. The plaintiff has been carrying on the business as Distributors / Agents with the Defendant and that the Defendant has been supplying the goods namely Tabacco Products to the plaintiff and the plaintiff had been making regular payments to the defendant as per the agreed terms.
2. The business dealing of the plaintiff with the defendant had been to the total satisfaction of the defendant and as per the business practice the defendant had been supplying the goods to the plaintiff and it had been specifically agreed to by the defendant's partner Smt. Manju Devi and Sh. Purshotam Kumar Arya that plaintiff shall be entitled to a discount of 25% on the price so mentioned on the invoice (inclusive of all types of taxes). The plaintiff has been keeping a running Statement of Account of the defendant, as per which on 07.03.2008 the plaintiff had a credit balance of Rs. 59,71,647.16/- with the defendants. The plaintiff had issued a post dated cheque no. 982529 dated 27.02.2008 for a sum of Rs.15,00,000/- as Security for supply of the goods worth Rs.25 lakhs namely tobacco products which were to be supplied in future to the plaintiff. The cheque had been issued by CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 3 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg the plaintiff with an express understanding that the cheque shall be presented only after in case the amount of invoice is not paid by another cheque for the goods that were to be supplied to the plaintiff.
3. On 28.02.2008, the Central Excise Department had conducted a survey / raid of the plaintiff's premises and that subsequent to that the partners of the defendant were also summoned to appear by the Central Excise Department and huge demand was created on the defendant by the Central Excise Department. Subsequent to that Sh. Suresh Garg, AR of the plaintiff requested the defendant's partner to return the said cheque no. 982529 dated 27.02.2008. Sh. Purshottam Kumar Arya had informed that all the account books and other documents belonging to the defendant's firm have been seized by the Central Excise Department and the said cheque has been seized by them and the same shall be returned to the plaintiff on being released by the Central Excise Department. Believing the assurance and promise, plaintiff had not pressed for immediate return of the said cheque. The defendant fraudulently presented the cheque for payment, which had not been issued in discharge of any liability.
4. On receipt of false and frivolous legal notice dated 14.03.2008 from the defendant, the plaintiff replied the same vide notice dt 27.03.2008 demanding a sum of Rs.59,71,647/- being the credit amount so lying with the defendant as per the Statement of Account. The defendant did not reply the same nor comply it. Hence, the plaintiff filed the suit for recovery of said credit balance amount .
Defendant's Case
5. Upon service of summons of the suit defendants filed written statement-cum-counter claim thereby raising preliminary objection that CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 4 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg plaintiff is alleging that he has given a cheque of Rs.15,00,000/- as security to the defendant, however, no security amount was paid in the beginning of the business transaction started by the plaintiff with the defendant which itself falsify the case of that plaintiff. Plaintiff had paid Rs.7,00,000/- through his bank on 01.03.2008 in the bank account no. 27109 of Punjab National Bank, Gujrawala Town, Delhi of the defendant and therefore, the question of security amount does not arise, hence the suit of the plaintiff is liable to be dismissed with heavy cost.
6. The plaintiff has filed the present suit only after receiving the legal notice dated 14.03.2018 with motive to counter the claim of the defendant, however, the defendant claimed an amount of Rs.1,59,86,171.93/-. The plaintiff has given false reply of the notice on 27.03.2008. On merits, defendant denied the averments made in the plaint and specifically denied that there was any agreement for grant of discount of 25% on invoice amounts.
7. There was business disputes and litigations amongst family members of the defendant. The plaintiff was having business relation with Prabhat Zarda Factory (India) Pvt. Ltd. which is business rival of the defendant firm and on the insistence of some of the Directors of Prabhat Zarda Factory (India) Pvt. Ltd., the plaintiff has given false statement and statement of account to the officer of Central Excise Department with motive to implicate the defendant in false case which was registered and Purshottam Kumar Arya, the Managing Partner and K.N. Mehrotra, Manager of the defendant firm was arrested in the month of March, 2008.
8. Plaintiff is not entitled for the amount as claimed in the suit. In fact it is the defendant which is entitled for the amount claimed in the counter claim otherwise plaintiff could not have issued the cheque bearing no. 006352 CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 5 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg for amount of Rs.1,00,000/- and cheque no. 982529 for amount of Rs.15,00,000/- dated 27.02.2008 and has not transferred the amount of Rs.7,00,000/- on 01.03.2008. As the cheque of Rs.15,00,000/- was dishonoured, Smt. Manju Devi, partner of answering defendant sent legal notice on 14.03.2018 thereby claiming not only cheque amount but entire amount due from plaintiff to which plaintiff sent false reply. When the Managing Partner of the defendant was released on bail on 20.03.2008, he verified the statement of accounts of the plaintiff and found that the legal notice sent on the basis of statement of account has some discrepancy as some amount given by the plaintiff was not adjusted in the dues. After adjusting the amount, the defendant is entitled to claim Rs.1,41,86,171.93 instead of Rs.1,59,86,171.93 as claimed in the legal notice.
9. The defendant is entitled for claim of credit balance amounting of Rs.1,41,86.171.93 from the plaintiff. The fact is that plaintiff handed over the cheque of Rs.15 lakhs to the defendant as part payment of total outstanding amount of Rs.1,41,86.171.93 as the defendant refused to give further supply after 26.02.2008 to the plaintiff and therefore, the plaintiff along with the other enemies/business rivals with whom the litigations were pending at that time hatched a conspiracy in connivance with some officers of the Central Excise Department and given a false statement of account at the time of alleged raid on 28.02.2008.
10. Plaintiff started working as trader of plaintiff firm since 27.02.2007 till 26.02.2008. During the course of business transaction, the defendant company had issued a cheque for Rs.15 lakhs as part payment against the arrears of dues amount of Rs.1,41,86.171.93 but the same returned unpaid with remarks 'funds insufficient'. As per the Statement of Account, the counter claimant/ defendant is entitled for Rs.1,41,86.171.93 inclusive of CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 6 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg cheque of Rs.15 lakhs with interest @18% from 14.03.2008 till 26.11.2008 which is amounting to Rs.17,87,547/- which total comes to Rs.1,59,73,629/- which plaintiff is liable to pay with interest @ 18% w.e.f. 27.11.2008 till the date of payment to the plaintiff.
Replication as well as Written Statement to the Counter Claim
11. Plaintiff thereafter filed Replication as well as Written Statement to the Counter Claim reiterating the averments made in the plaint and denying the submissions made by the defendant in its written statement and counter claim.
Issues
12. From the pleadings of the parties following issues were framed by vide order dated 08.09.2011:
1. Whether the plaintiff is entitled to recovery of the sum of Rs. 59,71647/- or any portion thereof? OPP
2. Whether the defendant firm was registered in accordance with the Partnership Act? If not, to what effect? OPD
3. Whether the plaintiff is entitled to interest on the amount found due and payable from the defendant? If so, on what amount at what rate and for what period? OPP
4. Relief.
13. Vide order dt 18.04.2013 one more additional issue was framed to the following effect:-
"Whether the defendant/counter claimant is entitled for the decree of recovery of Rs 1,59,73,629/- with interest @ 18% p.a. w.e.f. 27 th November, 2008?
14. In support of his case, Plaintiff examined three witnesses.
CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 7 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg Attorney of plaintiff Sh. Suresh Kumar Garg examined himself as PW-1 who tendered his affidavit Ex PW1/A in examination-in-chief and relied upon following documents:-
1. Special Power of Attorney Ex. PW1/1
2. Copy of Legal Notice dated 14.03.2008 Ex. PW1/2
3. Copy of Reply cum Legal Notice Ex. PW1/3
4. Postal Receipts Ex. PW1/4 and Ex. PW1/5
5. UPC Postal Receipt Ex. PW1/6
6. Acknowledgment Card Ex. PW1/7 and Ex. PW1/8
7. Statement of Account Ex. PW1/9 8. Price List Ex. PW1/10
9. Provisional Balance along with annexures Ex. PW1/11
10. Audited Balance Sheet Ex. PW1/12
11. The Statement of Sh. K.N. Malhotra in counter claim Ex. PW1/13
12. The Statement of Sh. Purshottam Kumar Arya in counter claim Ex.PW1/14
13. The Statement of the deponent in counter claim Ex. PW1/15 He was cross examined by the defendant.
15. Plaintiff examined himself as PW-2 who tendered his affidavit Ex PW2/A in examination-in-chief and relied upon following documents:-
1. Special Power of Attorney Ex. PW1/1
2. Statement of Account Ex. PW1/9
3. Provisional Balance along with annexures Ex. PW1/11
4. Audited Balance Sheet Ex. PW1/12 He was cross examined by the defendant.
16. Plaintiff also examined Sh. Anjani Garg as PW-3 who tendered her affidavit Ex PW3/A in examination-in-chief. He was cross examined by CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 8 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg the defendant. Thereafter, plaintiff closed his evidence.
17. In defence and Counter claim, defendant have examined only one witness namely Purushottam Kumar Arya one of the partner of the defendant firm as DW-1 who tendered his affidavit Ex DW1/A in examination-in-chief. He relied upon following documents in his affidavit:-
1. Application for Amendment Ex. DW1/Mark A
2. Form A, Form B, Partnership Deed dated 15.03.2007 and Authority Letter dated 10.09.2008 Ex. DW1/1 to DW1/4
3. Original Cheque dated 27.02.2008 and Memorandum of Return Ex. DW1/5 and DW1/6
4. Order dated 19.03.2008 Ex. DW1/7
5. Legal Notice dated 14.03.2008 and Reply dated 27.03.2008 Ex.DW1/8 and DW1/9
6. Statement of Account Ex. DW1/10
7. Invoices Ex. DW1/11 to Ex. DW1/98
8. Letter dated 24.03.2008 and replies dated 11.04.2008 Ex.DW1/99 to DW1/102
9. Certificate Form RC Ex. DW1/103
10. Copy of order dated 26.02.10 Ex. DW1/Mark B At the time of recording of examination in chief, only following documents were exhibited:-1. Form A Ex. DW1/1 2. Form B Ex. DW1/2
3. Copy of Partnership Deed Mark DA
4. Authority Letter dated 10.09.2008 Ex. DW1/4
5. Cheque dated 27.02.2008 Ex. D1
6. Cheque Returning Memo Ex. D2 CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 9 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg
7. Legal Notice dated 14.03.2008 Ex DW1/8
8. Reply given by the plaintiff Ex. DW1/9
9. Statement of Account of the plaintiff company mentioned by the defendant Ex. DW1/10
10. Invoices Ex. D4 to Ex. D78
11. Copy of Certificate of Registration Mark DB He was cross examined by the plaintiff. Thereafter defendant closed its evidence.
Issue wise Findings
18. After going through the pleadings evidence and material on record and after appreciating the respective arguments of the parties issues wise finding are as under:-
ISSUE No. 1:- Whether the plaintiff is entitled to recovery of the sum of Rs. 59,71647/- or any portion thereof? OPP
19. Onus to prove this issue is upon the plaintiff. There is no dispute that defendant has supplied goods i.e. Tobacco Products manufactured by it to the plaintiff. There is no dispute that plaintiff has received goods under all the invoices raised by defendant upon the plaintiff. There is no dispute that after 28.2.2008 there has been no sale and purchase of goods between the parties. Plaintiff has set up the case that as per statement of account as on 07/03/2008 plaintiff had credit balance of Rs 59,71,647.16/-. Plaintiff had issued a cheque dated 27.2.2008 bearing no 982529 for a sum of Rs 15 lakhs as a security for supply of goods worth Rs 25 lakhs. It has been further pleaded that defendant was to give discount @ 25% on the invoice amount. It has been further pleaded that upon adjusting the discount @25% on the invoice amount there is credit balance of Rs 59,71,647.16 which plaintiff has claimed in the present suit. It has been further alleged that although the cheque of Rs 25,00,000/- was CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 10 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg given as security but defendant mischievously presented the same despite claiming that aforesaid cheque and books of account of the defendant has been seized by the Excise Department. Thereafter, defendant issued legal notice dated 14.3.2008 demanding not only the cheque amount but also an of Rs 1,59,86,171.93/- alleging outstanding against the plaintiff. Said notice was replied to by the plaintiff on 27.3.2008. Plaintiff in his reply denying his has liability claimed that after adjusting 25% discount plaintiff has excessive balance amounting to Rs 59,71,647/- with defendant which amount plaintiff has claimed in the present suit.
20. Case of the defendant is that plaintiff was having outstanding dues towards the defendant and in discharge of his liability plaintiff had issued the said cheque of Rs 15 lakh which was dishonoured on presentation. Defendant has further stated that on 01.03.2008 plaintiff had paid Rs 7,00,000/- through his bank which fact has been concealed by plaintiff. It has been further contended that when no security amount was taken at the start of the business on 27.02.2007 how defendant could have asked for security amount after almost one year. It has been further contended that plaintiff has woven false story to wriggle out of his liability to pay the balance amount of Rs. 1, 41,86,171.93/- which defendant has claimed in the counter claim. Defendant has denied that there was any agreement with respect to grant of any discount on the invoices amount.
21. The short question which needs adjudication is whether there was any agreement between the plaintiff and defendant for the payment of discount @ 25% on the invoice amount. For the aforesaid purpose plaintiff has strongly relied upon statement of Purshottam Kumar Arya and Manager of plaintiff K.N. Mehrotra recorded/given before the Excise Authority after their arrest on 07.03.2008. In the said statement Purshottam Kumar Arya is stated to CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 11 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg have admitted that discount of 25% on the invoice amount used to be given to the plaintiff.
22. Ld. Counsel for the plaintiff is repeatedly relied upon the said statement which was admittedly recorded after the arrest of Purshottam Kumar Arya, the partner of the plaintiff. Ld. Counsel for defendant has argued that said statement was immediately retracted by Purshottam Kumar Arya and Manager after having been released on bail on 20.03.2008 by the Court, for having been obtained under coercion/threat. It has been contended by him that alleged admission cannot be used against the defendant as the same has been obtained under threat/coercion and same has been retracted. He further contends that apart from the alleged admission there is nothing on record which could show that there was an agreement for allowing discount at the rate of 25% on the invoice amount.
23. It has been argued by the counsel for the defendant plaintiff has not explained that when there was credit balance why a cheque of Rs.15 lakhs was given to the defendant as a security. Plaintiff has also not explained in fact rather concealed why it make payment of Rs.7 lakhs on 01.03.2008. Similarly, it has also not been explained as to why it make the payment of Rs.10 lakhs on 27.02.2008 as seen from the statement of account of both. It has been not been explained that when no security was taken at the start of the business what forced him to give cheque of Rs 15 laks as security when plaintiff allegedly has credit balance. It has been further argued that no reasonable person having credit balance would issue cheque for security.
24. There is force in the contention of Ld. Counsel for the defendant that when business was started between the parties on 27.02.2007 no security was taken by the defendant or given by the plaintiff and therefore, it appears CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 12 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg very strange that plaintiff who was allegedly having excessive payment could be asked to give security and it is further strange that plaintiff would bow down to give security despite having made excessive payment.
25. In reply it has been argued by Ld. Counsel for the plaintiff that defendant enjoys monopoly in the market and if the terms of the defendant is not adhered to defendant would not supply the goods and it was because of this reason plaintiff issued a cheque towards security despite having credit balance. The argument put forth by Ld. Counsel for the plaintiff does not appear to be sustainable firstly for want of pleading to this effect and secondly for the reason that person having excessive balance cannot be forced and if at all he be forced he would ask for simultaneous supply of goods in exchange of payment. Apart from this despite having admitted about the payment of Rs. 7 lakhs on 01.03.2008 plaintiff has not been able to explain why this payment was made when neither any goods was supplied nor any amount was due (as per plaintiff). It also did not appeal to the conscience of the court why this payment of Rs. 7 lacs on 01.03.2008 was not pleaded. Further account of both also shows payment of Rs 10 lacs on 27.02.2008 by plaintiff which has also not been explained by plaintiff. On what account Rs 10 lacs was paid?
26. Coming to the accounts filed by the plaintiff Ex. PW1/9 and account Ex. DW1/10 filed by the defendant, both the accounts start w.e.f. accounting period 01.04.2007. Plaintiff's account begins with credit balance of Rs.74,11,623.78 whereas defendant's account begins with debit balance of Rs.72,81,092.56, which shows there is difference of Rs.1,30,531.22. Thereafter, so far as entries regarding invoice amount are concerned in both the accounts there is no difference except for bill no. 66 for which plaintiff has shown Rs. 9,20,640.38 and defendant has shown less amount Rs. 9,11,433.98, bill no. 67 for which plaintiff has shown more amount i.e. Rs. 2,87,876/- and CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 13 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg defendant has shown less amount i.e. Rs. 2,84,997.49, bill no. 224 for which plaintiff has shown more amount i.e. Rs. 3,81,150 whereas defendant has shown less amount i.e. Rs. 3,08,475/-. Thus, it is noted that for above noted three bills plaintiff has shown more amount and defendant has shown less amounts which means as per plaintiff's account plaintiff's liability towards the above noted three bills are more but as per defendant plaintiff's liability for those three bills were less. So far as payments are concerned both accounts tally with payments made by the plaintiff. It also reveals that plaintiff has paid Rs 10,00,000/- to defendant on 27.02.2008 on which day plaintiff has stated to have issued cheque for Rs 15 lac towards security. Why Rs. 10 lacs was paid by the plaintiff on 27.02.2008 when there was credit balance has not been explained by plaintiff? Further, it was concealed by plaintiff that he paid Rs 10 lacs on 27.02.2008 and Rs 7 lacs on 1.03.2008.
27. Moreover, plaintiff's account for the period 01.04.2007 to 31.03.2008 begins with debit entry for Rs 21.84,838/- toward discount at the rate of 25 % for transaction taken place between 27.02.2007 to 31.03.2007. If at all there had been any agreement for grant of discount on invoice amount this debit entry should have been shown in the previous accounting period than in the current one. This leads to the possibility that plaintiff might came up with the idea of grant of 25% discount on the invoice amount only when defendant's partner Purushottam Kumar and his manager made statement before Excise Authority may be under coercion as alleged by the defendant or may be to reduce liability of penalty.
28. Ld. Counsel for plaintiff has drawn attention of this Court to Bill No. 800 dt 13.03.2007 Ex DW1/P-1 and DW1/13, Ex. DW1/P-2 and Ex. DW1/14, Ex. DW1/P-3 and Ex. DW1/15, Ex. DW1/P-4 and Ex. DW1/16, Ex. DW1/P-5 and Ex. D-4, Ex. DW1/P-6 and Ex. D-5, Ex. DW1/P-6 and Ex. D-5, CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 14 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg Ex. DW1/P-7 and Ex. D-7, Ex. DW1/P-8 and Ex. D-12, Ex. DW1/P-9 and Ex. D-13, Ex. DW1/P-10 and Ex. D-14, Ex. DW1/P-11 and Ex. D-21, Ex. DW1/P- 12 and Ex. D-22, Ex. DW1/P-13 and Ex. D-49 and Ex. DW1/P-14 and Ex. D- 72, to show discrepancy etc in support of plaintiff's contention.
29. Ex DW1/13 is the subsidiary invoice whereas Ex DW1/P-1 is the transporter copy and both bears same bill number and date and are bills for same goods. Ld. Counsel for plaintiff has drawn attention to the value of the invoice to convey that defendant was not maintaining proper account or was maintaining different invoices. Similar, discrepancy is found between subsidiary Ex DW1/14 and corresponding transporter copy Ex DW1/P-2, between Ex D-21 and corresponding transporter copy Ex DW/P-11 and between Ex D-22 and corresponding transporter copy Ex DW/P-12. Between Ex D-72 and corresponding transporter copy Ex DW/P-14 there is difference of rate but D-72 is for lesser amount and Ex DW1/P-14 is for higher amount. Ld. Counsel for defendant has submitted that no hue and cry is required to be made as both invoices are meant for different person one is transporter copy and other is meant for plaintiff. Invoice meant for transporter does not contain "deduction of Freight and Transport Expenses" and "Cash Discount" which was to be made in the invoices meant for plaintiff. He submits that Transporter Copy is for higher amount as it do not contain the said deduction but plaintiff should be concerned with its own copy which fixes liability of the plaintiff and which copy are certainly for low amount.
30. In invoices Ex DW1/16 and Ex DW1/P-4 only difference is that of invoice number and P.S. Number which has been interchanged in subsidiary copy but not done in transporter copy. Similar discrepancy is found in subsidiary invoice Ex DW1/16 and transporter copy Ex. DW1/P-4.
CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 15 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg
31. Between subsidiary invoice Ex D-4 and transporter copy Ex DW1/P-5 there is difference only of non mentioning of fact who prepared the invoices as mentioned in the subsidiary invoice. So is the discrepancy between subsidiary Ex D-5 and corresponding transporter copy Ex DW1/P-6 and between subsidiary copy D-7 and corresponding transporter copy Ex DW1/P7. Between subsidiary invoice Ex D-12 and corresponding transporter copy Ex DW1/P-8 and Between subsidiary invoice Ex D-13 and corresponding transporter copy Ex DW1/P-9, there is only slight format difference. Between subsidiary invoice Ex D-14 and corresponding transporter copy Ex DW1/P-10 and between Ex D-49 and corresponding transporter copy Ex DW/P-13, there is hand written correction in the subsidiary copy confirming to EX. DW1/P-
10.
32. Even if the alleged discrepancy as pointed out by the Ld. Counsel for plaintiff between the above noted subsidiary invoices and their corresponding transporter invoices, are taken note of then also said fact either alone or alongwith other circumstances do not lead to prove that there was an agreement between the parties for grant of 25% discount on invoice amount. It is to be kept in mind that between the accounting period w.e.f. 01.4.2007 to 28.02.2008 there is no dispute/mis-match with respect to purchases made by plaintiff except three invoices noted above for which plaintiff have made entry for higher value but defendant have made entry for lesser value. Payments made during the aforesaid accounting period tallies with each other.
33. Ld. Counsel for plaintiff has drawn attention of the court to the testimony of DW-1 recorded in cross-examination which is quoted here under for better appreciation:-
"The copy of the invoice which was taken by the Excise Department was the copy in which the discount had been mentioned and not the copy of the invoice given to the plaintiff.
CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 16 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg (Vol. The copy sent to the plaintiff is the same as the copy retained by us. The transferred copy does not have discount".
.......... It is wrong to suggest that I had stated to the Excise Department on 29.2.2008 that we give 25% discount on the list price to the plaintiff. Confronted with portion B to B of Ex. PW1/14 where it is so recorded. It is wrong to suggest that I have deposed falsely before this court. (Vol.) we were not giving any discount of 25% this statement was taken from the forcibly)........... It is correct that it is written in Ex. PW1/14 at portion C to C that the statement was correct and was given voluntarily. (Vol. This statement was taken immediately after I was arrested and threatened by Commissioner Central Excise with 3rd degree treatment. Immediately after my release with withdraw this statement). .......... It is correct that the discount of 25% as stated by me in Ex. PW1/14 is not reflected in our statement of account. It is correct that my manager must have given a similar statement as given by me. (Vol. He was in the same position as I was). ...........It is wrong to suggest that I used to give 25% discount on price list to the plaintiff and for this reason the plaintiff had given such a statement to the Central Excise Department".
34. Citing the testimony "that the discount of 25% as stated by me in Ex. PW1/14 is not reflected in our statement of account", Ld. Counsel for plaintiff has argued that defendant has admitted that 25% discount was not reflected in the statement of account. The interpretation of aforesaid statement as given by counsel for plaintiff is not correct. When defendant is taking stand that no discount was agreed to be given and that his statement of discount noted in Ex. PW1/14 was given under forcible circumstances there do not appears to be any reason for showing such discount in the statement of account of the defendant and accordingly, DW-1 rightly admitted that aforesaid discount was not reflected. The said testimony of the DW-1 is of no help to the plaintiff in proving that there was an agreement for grant of 25% discount on the invoice amount.
35. Now coming to the retracted confession made in Ex. PW1/14, CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 17 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg DW-1 categorically deposed in his examination in chief that aforesaid statement was withdrawn by him and Sh. K.N. Mehrotra by their letters dated 24.03.2008 sent to Central Excise Department which was received and replied by the Central Excise Department vide its letter dated 11.04.2008 and letters were exhibited as DW-1/99 to DW-102. In cross examination DW-1 admitted that he had received reply Ex. DW1/100 (wrongly typed as PW-1/100).
36. Ld. Counsel for plaintiff has cited judgment showing that afore said statement is admissible in evidence about which there is no doubt. Question here is what is the effect of retracted confession/admission? Law is well settled with respect to retracted confession. It is settled that retracted confession cannot be made sole and only basis for holding a person guilty. Retracted confession has got to be evaluated in the light /background of other inculpatory/ exculpatory material/evidence to hold a person guilty. Confession are mainly used in Criminal Proceedings. In Civil Proceedings it is the admission which is relevant and Judicial admission are at higher pedestal than the admission made otherwise. Thus, in the present case, irrespective of whether the admission made by defendant in Ex. PW1/14 was voluntarily or under coercion, since defendant has withdrawn the said admission, plaintiff has got to prove his case from other material also so as to render the retracted admission a possible voluntarily statement.
37. It is settled law that plaintiff has to stand on his legs. The aforesaid retracted admission could have been taken into account if there had been any other material and may be along with those other material, it could have been held that there was an agreement for grant of 25% discount on invoice amount. But single retracted admission alone cannot be made basis for holding that there was an agreement for allowing discount as claimed by plaintiff. In the present case, plaintiff is trying to prove the agreement for grant CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 18 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg of 25% discount on the invoice amount by way of the admission of the defendant made in Ex. PW1/14. However, the conduct of the plaintiff in making payment of Rs. 10 lakhs on 27.2.2008, Rs. 7 lakhs on 1.3.2008 and not claiming the alleged discount pertaining to previous accounting period in the previous accounting period goes to show that entire story of grant of 25% discount on invoice amount was cooked up when plaintiff came to know that defendant had made such statement before the Excise Authorities. Plaintiff has failed to prove either by way of direct evidence or by way of preponderance of probabilities, the agreement for grant of 25% discount on invoice amount. Hence, plaintiff is not entitled for the amount claimed in the suit and accordingly, issue is decided against the plaintiff and in favour of defendant.
ISSUE No. 2:- Whether the defendant firm was registered in accordance with the Partnership Act? If not, to what effect? OPD
38. Onus to prove this issue is upon the defendant. Defendant has pleaded in his counter claim that defendant is a Registered Partnership Firm. DW-1 in his examination in chief deposed that partnership firm was registered under the Partnership Act, vide registration no. 518 dated 19.03.2004. He further deposed that after the death of one of the partner namely Sh. Pradeep Kuamr Arya who was father of the deponent, an application dated 13.4.2010 Ex. DW-1/Mark A vide diary No. 1172 was submitted before the Registrar of Firms for change of partners alongwith modified Partnership Deed. Defendant also exhibited Form A Ex. DW-1/1 and Form B Ex. DW-1/2. While tendering, it was found that document/aforesaid application referred to in affidavit as Ex. DW-1/Mark-A was not on record and hence, no document as such was marked.
39. Ld. Counsel for plaintiff has relied upon M/s Shri Ram Finance Corporation v. Waseem Khan & Ors. AIR 1989 SC 1769, Purshottam & Anr. v. Shiv Raj Fine Art Litho Works and Ors. VIII (2006) SLT 479, Loolkaran Sethia etc. v. Mr. Ivan E. Jhon & Ors. AIR 1977 SC 336, to CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 19 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg convey that defendant Firm being not registered cannot maintain counter claim in view of embargo contained in Section 69(2) of Indian Partnership Act, 1932.
40. Law is well settled that to institute a suit on behalf of Partnership Firm, the Firm must not only the registered but also all partners at the time of institution of the suit must be or have been shown as such in Register of Firms. Perusal of Ex. DW1/2 and DW-1/1 shows that Prabhat Zarda Factory (Co.) was registered with the Registrar Firm on 19.3.2004 with 10 partners including DW-1 out of which Sh. Pradeep Kumar Arya expired in February 2007. It is well settled Principal of Law that demise of any of the partner does not affect the registration provided demise of any partner did not bring out dissolution of the Firm.
41. As per Partnership Deed placed on record by the defendant, partnership comprises of six partners. Further perusal of the said partnership deed reveals that Purshottam Kumar Arya, Smt. Manju Devi, Pratibha Chaurasia, Preeti Chaurasia, Prabhati Chaurasia were doing a business under terms and condition of Partnership Deed dated 01.04.2006 in the name and Style Prabha Zarda Factory (co.). It has been further mentioned that Sh. Pradeep Kumar Arya who was first party in the partnership dated 01.04.2006 suddenly expired on 07.02.2007, therefore, all the parties to the Deed agreed to made a new partnership deed after taking all the capital, assets and responsibilities of the previous partnership firm. In the said partnership deed clause no. 7 mentions that all the assets, capitals and liabilities of the previous firm of partnership deed has been taken over by the deed of 07.02.2007.
42. Thus, it can bee seen that although the word dissolution of previous firm has not been used but in effect previous firms stood dissolved CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 20 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg and all assets, capital and liabilities of previous firm were taken over by this firm. Thus, the current partnership firm is not the same partnership firm which was formed vide partnership deed dated 01.04.2006. The Ex. DW-1/1 and Ex. DW-1/2 shows that the firm of the same name was registered on 19.03.2004 but the current partnership firm is the new partnership firm having come into existence on 02.07.2007 and therefore the registration carried out in 2004 cannot be taken to be registration of the firm formed on 07.02.2007.
43. Moreover, present partnership firm is taking over partnership firm which was formed on 1.4.2006. There is nothing on record to suggest that the firm registered on 19.3.2004 is the same firm which was formed on 1.4.2006. Defendant has not placed on record the partnership deed dated 01.04.2006 so as to show if the partnership created vide partnership dated 01.04.2006 was infact continuation of the partnership registered on 19.03.2004 vide Registration no. 518.
44. Perusal of these materials do not show continuity of the partnership firm created or formed and registered in 2004 vide registration no.
518. Further, perusal of the clause 7 of the partnership deed dated 15.03.2007 do not leave the court in doubt that firm formed vide partnership deed dated 01.04.2006 stood dissolved and all assets, liabilities and capital of the said partnership firm was taken over by the partnership firm created on 07.02.2007 reduced vide. writing on 15.3.2007. Thus, the registration certificate form A and B Ex. DW-1/1 and Ex. DW-1/2 respectively do not pertain to the present partnership firm, hence, defendant has failed to prove that it was at all registered with the Registrar of Firm not to speak of registration in accordance with the Partnership Act.
45. Counter claim is always a plaint in the eyes of law and in view CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 21 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg of Section 69(2) of the Partnership Act, a partnership firm is debarred from instituting a suit to enforce its contract with 3rd party if the firm is not registered with the Registrar of Firms. Hence, counter claim filed by the defendant is not maintainable. Issue not no. 2 is decided against the decided and in favour of the plaintiff.
ISSUE No. 3:-Whether the plaintiff is entitled to interest on the amount found due and payable from the defendant? If so, on what amount at what rate and for what period? OPP
46. Onus to prove this issues in upon the plaintiff. In view of the findings recorded on issue no. 1, issue no. 3 does not survive for adjudication. Hence, issue no. 3 is disposed of accordingly.
ADDITIONAL ISSUE No. 4:-Whether the defendant/counter claimant is entitled for the decree of recovery of Rs 1,59,73,629/- with interest @ 18% p.a. w.e.f. 27th November, 2008? OPD
47. Onus to prove this issues in upon the defendant. In view of the findings recorded on issue no. 2, counter claim of the plaintiff is not maintainable and no relief can to be granted to the defendant for the reasons mentioned in findings on issue no. 2.
48. Irrespective of aforesaid findings, it will not be out of place to mention that while discussing issue no. 1, it was noted that there is no dispute with respect to the goods received by the plaintiff under all the invoices raised by the defendant and entries qua purchases made by plaintiff from the defendant are tallying except for three bills noted above and initial discrepancies of Rs. 1,30,531.22. Payments made by the plaintiff to the defendant during the accounting period w.e.f. 01.04.2007 to 31.03.2008 is also matching with each other. Therefore, the amount which plaintiff has debited in its statement of account on account of discount of 25% on invoice amount CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 22 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg which plaintiff failed to prove becomes payable by the plaintiff to the defendant. Plaintiff has deducted following amounts on account of alleged discount:-
03.04.2007 21,84,838/-
18.04.2007 1,74,784/-
14.05.2007 3,03,948/-
04.06.2007 5,88,910/-
25.06.2007 13,09,953/-
11.07.2007 6,46,810/-
20.08.2007 19,44,788/-
25.09.2007 32,39,751/-
29.10.2007 15,35,020/-
28.11.2007 17,64,792/-
21.12.2007 18,53,650/-
03.01.2008 23,15,141/-
29.01.2008 10,36,291/-
03.03.2008 14,74,433/-
Total Rs. 2,03,73,109
49. Thus, as per the plaintiff's own statement of account, the aforesaid sum total of discounts debited by the plaintiff on account of discount @ 25% on invoice amount becomes payable once plaintiff failed to prove the agreement regarding payment of discount. Defendant, however, has claimed decree for recovery of Rs. 1,59,73,629/- which in these circumstance becomes recoverable from the plaintiff but in view of the findings recorded in issue no.
2, defendant cannot recover the same from plaintiff through the Court of Law. Hence, additional issue is decided against the defendant and in favour of the plaintiff.
CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 23 of 24 CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg Relief In view of the findings recorded on all issues, suit filed by the plaintiff and counter claim filed by the defendant are hereby dismissed.
Parties to bear their respective cost.
Separate Decree sheet be prepared accordingly in both files. Signed judgment be placed in each file whereafter both files be consigned to Record Room after necessary compliance.
Digitally signed by HARISH HARISH KUMAR
KUMAR Date: 2018.03.21
15:41:46 +0530
(Harish Kumar)
Announced in the open court ADJ-13(Central)/THC
(Judgment contains 24 pages) Delhi/17.03.2018
CS No. 2461/17 Pawan Kumar Garg Vs. Prabhat Zarda Factory Co. Page no. 24 of 24
CC No. 06/2018 Prabhat Zarda Factory Co. Vs. Pawan Kumar Garg