Bangalore District Court
The India Cements Ltd vs M/S Safalaakar Buildtech Llp (Unit Of on 10 January, 2022
1
Com.O.S.No.25803/2018
In the Court of LXXXIV Additional City Civil and Sessions
Judge (CCH-85) (Commercial Court), Bengaluru
Dated this the 10th day of January 2022
Present: Smt.H.R.Radha B.A.L., LL.M.
LXXXIV Addl. City Civil and Sessions Judge,
(CCH-85 Commercial Court) Bengaluru
Com.O.S.No.25803/2018
Plaintiff: The India Cements Ltd., (RMC Division), Having
its registered office at 'Dhun' Buildings,
No.827, Anna Salai, Chennai - 600002, Tamil
Nadu, Regional Marketing Office at No.106 &
107, Midford House, No.1, Midford Gardens,
M.G.Road, Bengaluru - 560001, represented
by its Executive President & Authorized
Signatory Mr.Rakesh Singh
(By Sri.S.Shivaprasad, Advocate)
Vs
Defendants: 1. M/s Safalaakar Buildtech LLP (Unit of
Unishire Promoters Pvt. Ltd.,), No.36,
Munirathnam complex, Railway Parallel Road,
Nehru Nagar, Kumarapark (West), Bengaluru -
560020, represented by its Chairman : Mr.Kirti
K Mehta,
2. Mr. Kirti K Mehta, Chairman, M/s Safalaakar
Buildtech LLP (Unit of Unishire Promoters Pvt.
Ltd.,), No.36, Munirathnam complex, Railway
Parallel Road, Nehru Nagar, Kumarapark
(West), Bengaluru - 560020
3. Mr.Pratik K Mehta, Managing Director, M/s
Safalaakar Buildtech LLP (Unit of Unishire
Promoters Pvt. Ltd.,), No.36, Munirathnam
complex, Railway Parallel Road, Nehru Nagar,
Kumarapark (West), Bengaluru - 560020
(D2 & D3 by Sri.G.S.Venkat Subba Rao,
Advocate and D1-exparte)
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Com.O.S.No.25803/2018
Date of Institution 07.07.2018
Nature of the suit Recovery of money
Date on which First Case
Management Hearing took 08.10.2021
place
Date of Commencement
of recording of evidence 29.10.2021
Date on which judgment
pronounced 10.01.2022
Time taken for disposal YEARS MONTHS DAYS
1) Total duration 03 06 04
2) From the date of first
case management 00 03 03
hearing
LXXXIV Addl. City Civil & Sessions Judge
(CCH-85 Commercial Court) Bengaluru
JUDGMENT
This is a suit for recovery of Rs.20,33,300/- from the defendants with interest at 21% p.a. from the date of suit till realization.
2. This suit was transferred from CCH-22 to CCH-83 (Commercial Court) by notification dated 17.08.2020 and then to this court by a subsequent notification dated 22.12.2020. 3
Com.O.S.No.25803/2018
3. The plaintiff's case in brief is that it is a company carrying on the business of manufacture and sale of cement and Mr. Rakesh Singh, the executive president is authorized to file the suit by virtue of Board Resolution dated 27.01.2017. The 1st defendant is a limited liability partnership firm and a unit of Unishire group carrying on business as builder, promoter and developer and as contractor for construction of building under the supervision and control of defendants 2 and 3 who are the Chairman and Managing Director of Unishire Group. The 1 st defendant purchased M-25 and M-40 grade Coromandal brand ready mix concrete (RMC for short) for Unishire project at Arakere and Kumarapark in Bengaluru between 27.08.2015 and 10.03.2017 from Trishul Concrete Products and was due a sum of Rs.36,96,550/- as on 31.03.2017 towards the same. The 1 st defendant's representative confirmed the balance on furnishing a copy of the ledger account extract and part payment of Rs.16,62,250/- was made from 01.04.2017 to 31.07.2017. Towards payment of the balance amount of Rs.20,33,300/-, two cheques bearing No.001015 dated 25.07.2017 and 001016 dated 25.08.2017 signed by the 2 nd defendant was issued by the 1st defendant for Rs.10,17,150/- and Rs.10,16,150/- respectively. On presentation, the said cheques returned unpaid with the 4 Com.O.S.No.25803/2018 endorsement "Payment stopped by the drawer" on 01.09.2017. Thereafter legal notice dated 05.09.2017 was issued through RPAD demanding the cheque amount with interest at 21% p.a; and the defendants replied disputing the dues on untenable grounds. Criminal proceedings U/s 138 of NI Act is pending adjudication. The defendants are intentionally avoiding payment of the balance amount. By virtue of the order of the company law board dated 20.04.2017 Trishul concrete Products merged with the plaintiff and therefore they are entitled to recover the amount due from the defendants with interest at 21% p.a., as per the provisions of Sale of Goods Act, customs and trade usage and in terms of the invoice.
4. The 1st defendant is placed exparte.
5. The defendants 2 and 3 have filed common written statement contending that they are not aware of the plaintiff carrying on manufacture and sale of cement. The suit is filed without proper authorization and therefore not maintainable. The plaintiff is an utter stranger and has no locus standi to file the suit for and behalf Trishul concrete Products. They did not have any transaction either with the plaintiff or Trishul concrete Products and they were not supervising or controlling the 1 st defendant's business. They are not the chairman and the 5 Com.O.S.No.25803/2018 Managing Director of Unishire group as alleged. They are unaware of the 1st defendant purchasing Coramandal RMC from Trishul concrete products, for Unishire projects at Arakere and Kumarapark or making part payment of Rs.16,62,250/- towards RMC supplied between 27.08.2015 and 20.03.2017. 5(a). That they outsource construction activity to several building contractors on turnkey basis and had entrusted some construction activity to the 1st defendant under a separate contract and paid amounts incurred by the 1 st defendant for the construction and the raw material. They never had direct nexus with the supplier of raw materials. If at all the 1 st defendant procured any material either from the plaintiff or M/s Trishul Concrete Products, they are not responsible for the same. They are not proper or necessary parties to the suit. The 1 st defendant is represented by a different person and the suit is filed against wrong persons. The 1st defendant is not a unit of Unishire group. The plaintiff has wrongly described them with the oblique motive of obtaining a decree.
6. Based on the above, this court has framed the following ISSUES
1. Whether the plaintiff proves that the 1st defendant is a unit of Unishire 6 Com.O.S.No.25803/2018 Promoters Pvt Ltd., and carrying on the business under the supervision and control of defendants 2 and 3?
2. Whether the plaintiff proves that the 1st defendant was supplied RMC on credit from Thrishul Concrete Products Ltd. between 27.08.2015 and 10-03-2017 for the construction of Unishire Spacio and Unishire Laxmi Vilas?
3. Whether the plaintiff proves that Thrishul Concrete Products Ltd.
merged with their RMC Division as per the order of the Company Law Board dated 20-04-2017?
4. Whether the plaintiff proves that the 1st defendant has acknowledged the outstanding dues of Rs.20,33,000/- towards the above transaction as on 31-07-2017?
5. Whether The plaintiff proves that the 1st defendant issued cheques bearing No.001015 dated 25-07-2017 and 001016 dated 25-08-2017 for discharging the liability?
6. Whether defendants 2 and 3 prove that the suit is defective as stated in para 5 of the written statement?
7. Whether the defendants 2 and 3 prove that the description of the defendants in the plaint cause title is wrong?
8. Whether the plaintiff is entitled to recover Rs.20,33,300/- with interest at 21% p.a. from the defendants?
9. What order or decree?
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Com.O.S.No.25803/2018
7. The plaintiff have examined their authorized representative as Pw1 and got marked Ex.P1 to P94 through him. Ex.P95 and P96 were got marked through Dw1 during his cross examination.
8. On behalf of defendants 2 and 3, the 3 rd defendant has filed affidavit in lieu of examination in chief, examined himself as Dw1 and got marked Ex.D1 and D4.
9. The plaintiff has filed written arguments.
10. Heard the learned counsel for the defendants 2 and 3.
11. My findings on the above issues are:
Issue No.1: Partly in the affirmative Issue No.2: In the affirmative Issue No.3: In the affirmative Issue No.4: In the affirmative Issue No.5: In the affirmative Issue No.6: In the negative Issue No.7: Partly in the affirmative Issue No.8: Partly in the affirmative Issue No.9 : As per the final order for the following REASONS
12. Issues No.1 and 7: Since inter related these issues are taken up together for discussion for the sake of convenience and 8 Com.O.S.No.25803/2018 to avoid repetition.
13. Pw1 has filed affidavit reiterating that the 1 st defendant is a unit of Unishire group of companies carrying on business under the supervision and control of defendants 2 and 3 and that they are the Chairman and Managing Director respectively. The plaintiff places reliance on Ex.P6 and P7 dated 25.07.2017 and 25.08.2017 to substantiate the same and Pw1 states that these cheques signed by the 2nd defendant were issued by the 1 st defendant towards payment of the balance amount.
14. Ex.P10 is the notice dated 05.09.2017 issued by Trishul Concrete Products Ltd.'s to defendants 1 and 2, and one Anand S., a partner of the 1st defendant. The 2nd defendant is described as the chairman of the 1st defendant in this notice. Ex.P11 to P13 and Ex.P14 to P16 establish that Ex.P10 sent through RPAD was duly served on defendants 1 and 2 and Anand S. In Ex.P17, reply dated 05.10.2017 issued on their behalf, 2 nd defendant's description as the Chairman of the 1 st defendant is neither denied nor disputed.
15. Ex.D4 dated 18.02.2014, the certificate of incorporation of the 1st defendant goes to show that it is duly registered under Section 12(1)(b) of the Limited Liability Partnership Act. Ex.D1, 9 Com.O.S.No.25803/2018 the LLP agreement speaks to the effect that defendants 2 and 3 were the partners of the 1st defendant. It is relevant to note that the terms of Ex.D1 provide for election of the chairman. If at all the 2nd defendant was not the chairman of the 1st defendant at the relevant point of time, nothing prevented him from taking such a contention while issuing the reply at Ex.P17 on 05.10.2017.
16. That apart as seen from the written statement, the defendants 2 and 3 do not dispute the 1 st defendant being a limited liability partnership firm carrying on business as builder, promoter and developer and also as contractor for construction of building for its clients and also for group of companies in Bengaluru. As seen from Dw1's cross examination the 2 nd defendant is none other than the 3rd defendant's father.
17. If at all the 3rd defendant had no nexus with the 1 st defendant at the relevant point of time, the 2 nd defendant could have treated the same in the reply at Ex.P17. On the other hand, the defendants 1 and 2 have not even denied or disputed issuance of cheques under the 3rd defendant's signature, but only claim that the same was issued as security. From this, it can be safely concluded that the 2nd defendant, as the authorized signatory and chairman of the 1 st defendant, was responsible for 10 Com.O.S.No.25803/2018 day to day conduct of business of the 1 st defendant a limited liability partnership firm, at the relevant point of time.
18. At the same time, the plaintiff has not offered any explanation as to why the notice at Ex.P10 was not issued to the 3rd defendant. Nor is there any acceptable and convincing documentary evidence to establish that the said defendant was the managing director of the 1st defendant. Likewise, there is nothing on record to establish that the 3 rd defendant was the Managing director of the 1st defendant as on the date of suit.
19. However, as seen from Ex.D2 dated 31.07.2015, M/s Unicasa Dwellings Pvt. Ltd. a company was appointed as the nominee partner of the 1st defendant. This substantiates the claim of the plaintiff that the 1st defendant is a unit of Unishire Group and Pw1's evidence in this behalf is not seriously challenged by defendants 2 and 3. In the absence of contest by the 1st defendant, I have no reason to disbelieve Pw1's evidence that the said defendant was a unit of Unishire group of companies at the time of supply of RMC between 27.08.2015 and 10.03.2017.
20. Dw1 has sworn to affidavit for himself and on behalf of the 2nd defendant, but no authorization or GPA issued by the 2 nd 11 Com.O.S.No.25803/2018 defendant is produced. Dw1's cross examination reveals that the 2nd defendant is into real estate business and they were the partners of the 1st defendant during initial stages. Dw1 has admitted that his father has signed Ex.P6 and P7 and these cheques were issued to the 1st defendant towards supply of concrete.
21. The 2nd defendant has not entered the witness box to explain the capacity or the circumstances under which he issued the cheques at Ex.P6 and P7. No suggestion is made to Pw1 to deny that the 2nd defendant was the chairman of the 1 st defendant at the relevant point of time. Therefore, issue No.1 and 7 are answered partly in the affirmative holding that the 1 st defendant is a unit of Unishire group of companies and the 2 nd defendant was its chairman. Though the 3 rd defendant retired from the 1st defendant LLP on 31.07.2015, he is wrongly described as the managing director.
22. Issues 3 and 6 : These issues are also inter related and therefore taken up together for discussion for the sake of convenience.
23. The learned counsel for the defendants 2 and 3 strongly argues that the plaintiff has no locus to institute the suit, 12 Com.O.S.No.25803/2018 whether the amount due to the transferor company is included in the scheme of amalgamation is not proved by the plaintiff and Ex.P2 is a general authorization and does not authorize the signatory to the plaint to institute suit against the 1 st defendant LLP.
24. Order XXIX CPC provides for signing and verifying of the pleadings on behalf of the company by the secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case. The plaint is signed by one Rakesh Singh, Executive President of the plaintiff and Ex.P2, certified extract of the minutes of meeting of the Board of Directors of the plaintiff dated 27.01.2017 goes to show that he is authorized to initiate and prosecute any legal or other proceedings for and on behalf of the company and to delegate all or any of the powers conferred on him to any official, external consultant, professional, counsel in the overall interest of the company. The said Rakesh Singh has issued Ex.P1 authorizing Pw1 to appear, depose and file affidavits on behalf of the plaintiff in this suit filed against the defendants. Therefore, the argument that the suit is not properly instituted cannot be accepted.
25. Ex.P3 is the order passed by NCLT Chennai Bench U/s 232 of the Companies Act in the matter of scheme of amalgamation 13 Com.O.S.No.25803/2018 between Trinetra Cement Ltd. and Trishul Concrete Products Ltd. with the plaintiff company. The same provides for transfer of all rights and powers of the transferor company to transferee company without further act or deed and also for vesting of the estate and interest of the transferor company in the transferee company.
26. As discussed earlier, the notice at Ex.P10 was issued by M/s Trishul concrete products Ltd. demanding the amount due from the defendants 1 and 2 and one S.Anand. Therefore the suit claim in my opinion forms a part of the estate of the transferor company i.e., Trishul Concrete Products Ltd. Therefore, there is no merit in the arguments assailing the maintainability of the suit on this ground. The plaintiff being the transferee company is entitled to recover the same by virtue of the amalgamation order at Ex.P3. Accordingly, issue No.3 is answered in the affirmative and issue No.6 is answered in the negative.
27. Issues 2, 4 and 5: These issues involve discussion of common facts and therefore are taken up together for consideration to avoid repetition.
28. To prove supply of RMC on credit basis to the 1 st defendant by Trishul concrete products ltd., the plaintiff relies on ledger 14 Com.O.S.No.25803/2018 extract at Ex.P18 and the Tax invoices at Ex.P19 to P94. Pw1 states that the accounts of the 1 st defendant as maintained by Trishul concrete products Ltd., for the two projects was duly acknowledged as per Ex.P4, confirmation of accounts for the period from 01.04.2016 to 31.03.2017.
29. Dw1 too admits that the cheques at Ex.P6 and P7 were issued by his father, the 2nd defendant towards supply of concrete to the 1st defendant and the drawer of the cheque has not entered the witness box to dispute or deny the same. Ex.P8 and P9 are the memos issued by ICICI Bank on 01.09.2017 stating that the cheques could not be cleared for the reason that the payment was stopped by the drawer. Thereafter the plaintiff has issued the notice at Ex.P10 on 05.09.2017 to the defendants 1 and 2 and one Anand S, calling upon them to pay the cheque amount with interest.
30. Ex.P95 and P96, the certified copies of the judgment dated 10.01.2019 and order sheet in C.C.28657/2017 show that the 2 nd defendant had pleaded not guilty and the 3 rd defendant was even not a party to the said proceedings. Admittedly, the judgment Ex.P95 is not a fact in issue and therefore not admissible in view of the provisions under section 43 of the Evidence Act and the ratio in Seth Ramdayal Jat Vs 15 Com.O.S.No.25803/2018 Laxmiprasad reported in (2009)11 SCC 545 that only the admission made by a party in a previous proceedings is admissible.
31. However, Ex.P17 amounts to admission of the 1 st defendant approaching Trishul Concrete Products Ltd. for supply of Coramandal RMC and that it was supplied on credit basis. But due to slump in the real estate market post demonetization and introduction of RERA in 2016, defendants 1, 2 and Anand S., were unable to clear the dues towards supply of goods, and issued cheques as security agreeing to pay the outstanding amount at the earliest. Further it is claimed that in spite of repeated requests not to present the cheques, Trishul Concrete Products presented the same for encashment and therefore, instructions were issued to the bank to stop payment.
32. It is also interesting to note that the defendants 1, 2 and Anand S., state in one breath in the reply at Ex.P17 that they do not have the intention not to make payment towards the materials supplied and at the same time, they also claim to have paid the entire amount. However, no documentary evidence is adduced by the 2nd defendant to substantiate that the amount is already paid. Nor has he entered into the witness box to speak with that effect. The 1st defendant has remained exparte and the 16 Com.O.S.No.25803/2018 defendants have not attempted to examine S.Anand to prove the payment of the amount which is acknowledged in Ex.P4 to be due.
33. When Ex.P6 and P7 are issued by the 2 nd defendant towards supply of RMC to the 1 st defendant, as admitted by Dw1 and considering that the 2nd defendant has not stepped into the witness box either to deny issuance of these two cheques or to explain the circumstances under which they were issued, and also having regard to the admissions contained in Ex.P17 it can be safely concluded that Ex.P6 and P7 were issued towards discharge of liability. By virtue of the amalgamation order at Ex.P3 the plaintiff who has stepped into the shoes of the drawee of Ex.P6 and P7 is therefore entitled to recover the same. Accordingly, issues 2, 4 and 5 are answered in the affirmative.
34. Issue No.8: The Tax invoices at Ex.P19 to P94 provide for levying of interest at 15% p.a. on delayed payments. The defendants have not at all disputed the invoices. In view of the same and the findings on issue No.1 to 5 and 7, I am of the considered opinion that the plaintiff being the transferee company is entitled to recover Rs.20,33,300/- due to the transferor company Trishul Cement Products, from defendants 1 and 2 with interest at 15% p.a., from 31.03.2017 till the date of 17 Com.O.S.No.25803/2018 suit and further interest at 9% p.a. from the date of suit till the date of realization together with cost of the proceedings and notice charge of Rs.5,000/-; and the suit against the 3 rd defendant is liable to be dismissed. Accordingly, this issue is answered partly in the affirmative.
35. Issue No.4: In the result, I pass the following ORDER Suit of the plaintiff is partly decreed with cost.
The plaintiff is entitled for recovery of Rs.20,33,300/- from the defendants 1 and 2 with interest at 15% p.a., from 31.03.2017 till the date of suit and further interest at 9% p.a. from the date of suit till the date of realization and notice charge of Rs.5,000/-.
The suit against 3rd defendant is dismissed.
Draw decree accordingly.
Issue copy of the judgment to the parties through e-mail as provided U/o XX 18 Com.O.S.No.25803/2018 Rule 1 of CPC if mail ID is furnished.
(Dictated to the stenographer, transcribed and typed by her, corrected and then pronounced by me in the open court on this the 10th day of January 2022) (H.R.Radha) LXXXIV Addl.City Civil and Sessions Judge, (CCH-85 Commercial Court) Bengaluru ANNEXURE List of witnesses examined for the Plaintiff:
Pw1 Sri. B.Shankar List of documents marked for the plaintiff:
Ex.P1 Authorization letter dated 10.12.2018 Ex.P2 Board resolution dated 10.04.2017 Ex.P3 Cc of amalgamation order dated 20.04.2017 Ex.P4 Confirmation of accounts Ex.P5 Copy of plaintiff's letter dated 26.08.2017 Ex.P6 & P7 Cc of cheques dated 25.07.2017 and 25.08.2017 Ex.P8 & P9 Cc of cheque return memos dated 01.09.2017 Ex.P10 Cc of legal notice dated 05.09.2017 Ex.P11 to P13 Cc of postal receipts Ex.P14 to P16 Cc of postal acknowledgments Ex.P17 Cc of reply dt. 05.10.2017 Ex.P18 Cc ledger extract as on 09.04.2018 Ex.P19 to P94 76 Invoices Ex.P95 Cc of Judgment in C.C.No.28657/2017 Ex.P96 Cc of the Ordersheet in C.C.No.28657/2017 19 Com.O.S.No.25803/2018 List of witnesses examined for the defendants 2 and 3:
Dw1 Prathik K Mehta List of Documents marked for the defendants 2 and 3:
Ex.D1 LLP agreement dt. 19.02.2014
Ex.D2 3rd Supplemental cum Addendum Agreement
Ex.D3 Company Master Data
Ex.D4 Certificate of Incorporation
(H.R.Radha)
LXXXIV Addl.City Civil and Sessions Judge, (CCH-85 Commercial Court) Bengaluru.