Delhi District Court
Snb Sales Udyog vs Durga Industries And Anr on 29 August, 2024
IN THE COURT OF RAJESH KUMAR GOEL
District Judge (Commercial Court) -02,
Central, Tis Hazari
DLCT010077422018
CS (COMM.) No. 913/2023
CNR No.DLCT010077422018
M/S S.N.B Sales Udyog,
2618-19, Maruti Bhawan
Mazine Floor, Naya Bazar
Delhi 6, through its proprietor
Sushil Kumar Mittal ......Plaintiff
Versus
Praveen Kumar Garg
Proprietor of M/s Durga Industries,
E-12, Sector 17, Kavi Nagar,
Industrial Area, Ghaziabad (UP)
Also at:
2637 (FF), Sarai Fasil, Naya Bazar,
Delhi 6,
Also at:
r/o 72, Villa Anandam,
Raj Nagar, Meerut Road,
Ghaziabad-201001 (UP) ......Defendant
M/s S.N.B Sales Udyog
vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 1 of 39 )
Date of filing of suit : 04.06.2018
Date of Argument : 12.08.2024
Date of Judgment : 29.08.2024
JUDGMENT
1. Vide this judgment, I shall dispose of the present suit for recovery of Rs. 20,00,000/- (Rs twenty Lakhs Only) filed by the plaintiff through its proprietor Sushil Kumar Mittal (herein after referred to as "plaintiff ") against the defendant namely Praveen Kumar Garg, proprietor of M/s Durga Industries (hereinafter referred to as "defendant").
FACTUAL MATRIX
2. The brief facts of the case, as mentioned in the plaint are that the plaintiff is a reputed Proprietorship firm and is engaged in the business of Grain Merchants & Commission Agents; the defendant and his authorized signatory namely Sh.Prashant used to purchase the Grains from plaintiff through Dalal/broker namely Arun from 19.03.2018 onwards, on credit basis against which bills were raised by the plaintiff.
M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 2 of 39 )
3. It is the case of the plaintiff that on 12.06.2017 the defendant sent an amount of Rs. 20,00,000/- (rupees twenty lakhs) through RTGS, in the bank A/C of the plaintiff against the goods to be sent to the defendant. But later on, the defendant showed his inability to purchase the same and took the proprietor of the plaintiff in his confidence to sent back an amount of Rs. 25,00,000/- (rupees twenty five lakhs) with an assurance that the extra amount of Rs 5,00,000/- shall be adjusted when the plaintiff would purchase the goods from the defendant.
4. According to the plaintiff the defendant purchased the goods from the plaintiff through broker/dalal Arun vide following bills/invoices:-
(a) Bill No. 175 dated 19.03.2018 in the sum of Rs 7,28,774.90/-.
(b) Bill No. 176 dated 20.03.2018 in the sum of Rs 7, 69, 082.35 /-.
(c) Bill No. 178 dated 21.03.2018 in the sum of Rs 7, 08,519.90/-
(d) Bill No. 179 dated 21.03.2018 in the sum of Rs 6,28,247.50 /-
(e) Bill No. 181 dated 22.03.2018 in the M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 3 of 39 ) sum of Rs 7,24,584.20/-.
(f) Bill No. 182 dated 22.03.2018 in the sum of Rs 7, 03, 272.90/-
(g) Bill No. 190 dated 23.03.2018 in the sum of Rs 3, 89,232.80/-
5. It is also the case of the plaintiff that the plaintiff had also purchased the goods from the defendant vide Bill no.641 dated 27.03.2018 in the sum of Rs. 3,13,198/- and vide bill no.644 dated 27.03.2018 in the sum of Rs. 8,05,368/-. It is stated that the plaintiff has been maintaining the running account of the defendant. A sum of Rs. 14,537/- is said to have been paid by the plaintiff to Sh. Arun, Dalal, through the cheque bearing no. 001099 dated 16.04.2018.
6. It is further stated that the defendant used to make the payments through RTGS or through cheque; the defendant and his above-named authorized signatory Sh.Prashant had issued three cheques i.e (i) cheques no. 561571 of Rs. 10,00,000/- dated. 02.04.2018) (ii) cheque no. 012557 of Rs. 10,00,000/- dated. 02.04.18 & (iii) cheque no. 007904 of Rs. 10,00,000/- dated.
M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 4 of 39 ) 02.04.2018, all drawn on AXIS BANK, in discharge of their legal liability, to the plaintiff; according to the plaintiff, the defendants are also liable to pay the interest @ 18% per annum to the plaintiff on the outstanding amount. .
7. It is further stated that out of the above three cheques,the plaintiff -firm presented the cheque no. 007904 dated 02.04.2018 of Rs. 10,00,000/- for encashment which was honoured; when the plaintiff presented the remaining other two cheques no. 012557 of Rs. 10,00,000/-dated 02.04.2018, and other cheque no. 561571 of Rs. 10,00,000/- dated 02.04.2018 for encashment the same were dishonoured vide memos dated 12.04.2018, with the endorsement that 'PAYMENT STOPPED BY DRAWER' .
8. A legal notice dated 21.04.2018 was served upon the defendant asking him to make the payment of both dishonoured cheques but the defendant has neither bothered to give the reply of said notice nor he paid the amounts of dishonoured cheques in question; the plaintiff has filed a criminal complaint case against the defendant under section 138 NI Act M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 5 of 39 ) and the same is pending for trial but despite that no payment was made by the defendant. Hence the present suit was filed.
9. The plaintiff had filed the present suit under order XXXVII CPC. Accordingly, vide order dated 9.7.2018, summons under order XXXVII CPC were directed to be issued against the defendant by the Ld Predecessors of this court.
10. Here it is pertinent to mention that originally the present suit had been filed against two defendants arraying M/s Durga Industries, a proprietorship firm as defendant No.1 and Praveen Kumar Garg, its proprietor as defendant No. 2. On 23.7.2018 Ld Predecessor of this court observed that since the proprietorship firm has no separate legal entity, therefore, plaintiff was directed to file an amended memo of parties arraying Praveen Kumar Garg as proprietor of the said firm. Accordingly, an amended memo of parties was filed by the plaintiff.
11. On the summons of appearance issued under M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 6 of 39 ) order XXXVII CPC being served, the defendant entered the appearance on 26.7.2018. On 12.9.2018 Ld counsel for the defendant present in the court accepted the summons for judgment and consequently leave to defend application came to be filed, which was contested by the plaintiff by filing the reply to said application. Leave to defend application was allowed by the Ld Predecessor of this court vide order dated 28.11.2018 and defendant was granted time to file the written statement and accordingly written statement was filed by the defendant.
12. In the written statement it is stated that the present suit is a false and frivolous suit and the same has been filed on the basis of false documents in order to extort money from the defendant.
13. It is stated that the defendant is engaged in the trade and manufacturing of pulses and his firm is currently holding a reputable name and position in the market; the plaintiff is also engaged in the trade of pulses, supply of raw material and purchase of finished product; plaintiff and defendant were M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 7 of 39 ) having business relations since the year 2008.
14. It is further stated that the defendant used to buy raw material from the Plaintiff and the same was manufactured at factory premises of the defendant and thereafter sold as a finished product in the market; earlier the parties to the instant suit used to trade with each other through security Cheques, which were to be encashed only if there was a default of payment by the defendant; one such instance happened in the year 2013 when the defendant had provided two undated security cheques to the plaintiff; the raw material was supplied against these security cheques in the year 2013, and since the payments were duly made through RTGS/NEFT to the plaintiff therefore, need for the encashment of the above cheques did not arise; the defendant requested the plaintiff to return the security cheques but the plaintiff kept on delaying the matter on one pretext or the other; even after repeated reminders, the security cheques were not returned by the plaintiff on the pretext that the cheques were lost and same are not traceable; falling for the assurances of the plaintiff and taking M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 8 of 39 ) into consideration the old relations with the plaintiff, the defendant did not press for the return of security cheques.
15. It is also stated that in the year 2017, on 12.06.2017 the defendant provided the plaintiff with a credit of Rs 20,00,000/- (Twenty Lac Only) for the supply of pulses; for the next two months, the defendant waited for the delivery of the raw material, but the plaintiff was not able to supply the same; the plaintiff being unable to supply the raw material, returned the money of the defendant (Rs 20,00,000/-) on 01.08.2017 along with an additional advance amount of Rs 5,00,000/- and informed the defendant that the advance of Rs 5 lakh would be adjusted in the future purchase; in the month of December, 2017, the plaintiff requested the defendant for supply of raw material; plaintiff demanded a security cheque for the same and accordingly, cheque No.561571 for Rs 10 Lac drawn on Axis Bank was given to the plaintiff and against the same an amount of Rs 10,00,000/- was transferred to the account of plaintiff on 22.01.2018. It is stated that the raw material in lieu of the above M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 9 of 39 ) payment is yet to be received by the defendant and even after repeated reminders no supply has been made to the defendant.
16. It is averred that meanwhile in the month of March, 2018, in lieu of the additional advance payment of Rs 5 lac, as given by the plaintiff firm, a purchase order for Dal Malka Masoor (Ex. UP) was placed upon the defendant; the defendant, accordingly vide Invoice No. DI-17/18-641 dated 26.03.2018 and Invoice No. DI-17/18-644 dated 26.03.2018 supplied the requisite Dal Malka Masoor to the plaintiff; the invoices were raised for amounts of Rs 3,13,198/- and Rs 8,05, 368/- respectively. The goods were duly delivered to the registered address of the plaintiff through transporter on 26.03.2018; Since the goods were duly delivered to the plaintiff and there were outstanding against the plaintiff, the defendant immediately gave instructions to the bank to stop payment of the security cheques given to the plaintiff and accordingly, two of the above mentioned cheques were stopped on 26.03.2018 and 3.04.2018.
M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 10 of 39 )
17. It is stated that in the month of April, 2018, the defendant demanded its payments from the plaintiff; defendant was shocked to know that one of the security cheques bearing No. 7904 for Rs 10,00,000/- (Ten Lac Only) which were given by him to the plaintiff in the year 2013, was encashed by the plaintiff; on query being made from the plaintiff for such encashment, defendant came to know that plaintiff had filed a false complaint U/s 138 Negotiable Instruments Act, against the defendant for the dishonoring of the other two remaining cheques; not only that, the plaintiff further demanded the payment of Rs 20,00,000/- from the defendant towards security cheques.
18. It is further stated that defendant having understood the malafide intentions of the plaintiff filed a suit O.S No. 2205 of 2018 for recovery of an amount of Rs 26,18,566/- which is pending before Learned ADJ Tis Hazari Courts, Delhi; the present suit has been filed by the plaintiff in order to harass the defendant and to avoid the payment of Rs 26,18,566/-.
M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 11 of 39 )
19. While replying on merits, defendant has admitted to the extent that the defendant had paid an amount of Rs 20,00,000/- vide RTGS to the plaintiff on 12.06.2017. It is stated that plaintiff failed to provide the raw Material to the defendant; it was the plaintiff who insisted that he was sending Rs 5 lac as, he wanted to buy finished pulses from the defendant; the bills as raised by the plaintiff are fictitious and forged; the cheques as mentioned in the plaint were never issued against any liability by the defendant and same were issued as security cheques which have been misused by the plaintiff; the signatures on the aforesaid cheques belong to the defendant but the particulars have been filled by the plaintiff.
20. The plaintiff filed the replication denying the allegations made in the written statement and reiterated the facts as mentioned in the plaint.
21. Thereafter vide order dated 6.2.2019, from the pleadings of the parties following issues were framed by the Ld. Predecessor of this Court :-
i. Whether the three cheques in quesiton were M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 12 of 39 ) given by the defendant only by way of security, as referred in para-D and I of the WS, as claimed by the defendant?(OPD) ii. Whether the plaintiff is entitled to the suit amount or to any other amount?(OPP) iii. Whether the plaintiff is entitled to receive interest, if so, for what period and at what rate? (OPP).
iv. Relief.
22. On 6-2-2109 itself Ld predecessor of this court observed that since the onus of main issue has been placed on the defendant, therefore the defendant was directed to lead evidence first.
23. Evidence of the defendant by way of affidavit was filed on 28.3.2019. Subsequently, on 28.5.2019, Ld counsel for the defendant made a request to allow him to withdraw the said affidavit as he wanted to replace it , but it was not allowed as the Ld predecessor of this court observed that evidence by way of affidavit is nothing but the examination-in-chief of a witness and the same can not be allowed to be withdrawn. However the defendant was allowed to file the additional affidavit in continuation of the earlier one.
M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 13 of 39 )
24. From the record it is evident that thereafter, the present case was got adjourned for various dates for evidence of the defendant on one pretext or other i.e for 27.7.2019, 26.8.2019, 07.11.2019, 14.1.2020, 21.1.2020, 22.4.2020 and then for 28.2.2022.
25. Here it is also pertinent to mention that originally the preset case was assigned to the court of Ld ADJ-05, Central District Tis Hazari Court. Vide order dated 25-8-2022, Ld court of ADJ observed the the dispute between the parties is a commercial dispute within the meaning of section 2(1) (c) of the Commercial Court Act, 2015 , therefore the same is required to be tried by the commercial court only, Accordingly the matters was directed to be placed before the Ld Principal District & Session Judge (central). Vide order dated 27-8-2022 of the Ld Principal District & Session Judge (central), the present case came to be assigned to this court being a commercial court.
26. Subsequently also the present case came to be adjourned for defendant evidence by the Ld M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 14 of 39 ) predecessor of this court for 07-11-2022, 12-01- 2023 and then for 27-03-2023.
27. On 27-03-2023, Ld predecessor of this court noted that the present case was instituted in the year 2018 but it is still at the stage of the evidence and keeping in view that examination of witnesses would consume lot of time, therefore, Court Commissioner was appointed to record the evidence of both the parties and the schedule of Second Case Management hearing was fixed which was modified subsequently twice.
28. From the record it is evident that the Ld Court Commissioner has filed two reports i.e. dated 27.05.2023 and 31.08.2023.
29. As per the first report dated 27.05.2023, the defendant has examined himself as DW1. DW1 tendered his evidence file by way of affidavit as examination-in-chief and he was cross examined by the Ld counsel for the plaintiff. Plaintiff has examined Sushil Kumar Mittal as PW1, who also tendered his evidence filed by way of affidavit as M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 15 of 39 ) examination-in-chief. PW1 was also cross examined by the Ld counsel for the defendant.
30. On 29.05.2023, plaintiff moved an application under section 151 CPC seeking permission to lead additional evidence but the said application was disposed of by the Ld predecessor of this court vide order dated 13.07.2023 as withdrawn.
31. On 10.08.2023, an application under order XI Rule 1 (5) CPC was filed on behalf of the defendant seeking permission to place on record the Bank Statement duly certified under the Banker's Book of Evidence Act. The said application was allowed by the Ld.Predecessor of this court and defendant was given opportunity to lead further evidence for exhibiting the said document with a liberty to the plaintiff to lead evidence in rebuttal, if any.
32. Pursuant to the aforesaid order dated 10.08.2023, said report dated 31.08.2023 came to be filed by the Ld Court Commissioner.
33. In the second report 31.08.2023, it is stated M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 16 of 39 ) that further evidence of the DW1 Praveen Kumar Garg was recorded and he was cross examined by the Ld counsel for the plaintiff.
34. PW1 Sushil Kumar Mittal has relied upon/proved the following documents:
i. Statement of account issued by HDFC Bank ExPW1/1.
ii. Cheque bearing no.012557 dated 02.04.2008 ExPW1/2 (Colly) iii. Cheque bearing no.561571 dated 02.04.2018 ExPW1/3 (colly) iv. Copy of the passbook ExPW1/4 v. Certified copy of registration certificate of the plaintiff ExPW1/5.
vi. Certified copy of GST Form ExPW1/6. vii. Copy of bills/invoices ExPW1/7 (colly). viii. Copy of bills/invoices raised by the defendant ExPW1/8 (colly).
ix. Statement of account ExPW1/9 (colly) x. Certificate u/s 65 B of the Indian Evidence Act ExPW1/10.
xi. Notice dated 21.04.2018 ExPW1/11.
35. Here it is pertinent to mention that while tendering the affidavit in evidence, no documents have been given exhibit marks by the defendant and only the documents were given the "MARK" as the same were the photocopies.
36. Written synopsis of final arguments have been filed by the Ld Counsels of both the parties M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 17 of 39 ) and they have argued the matter orally as well. Both the Ld. counsels have argued on the lines of their written synopsis which is in turn based upon their respective stand as taken by them in their pleadings.
37. Ld counsel for the plaintiff made the following submissions:-
i. By referring to the order dated 06.02.2019, Ld counsel submitted that Ld predecessor of this court, while framing the issues, observed that there is no dispute of delivery and no such issue was framed.; vide this Order the opportunity was given to the defendant to move an appropriate application, if the defendant want modification in this order but the defendant has not taken any step as the defendant was satisfied qua the order dated 06.02.2019.
ii. The stand of the defendant that earlier the parties to the instant suit used to trade with each other through security cheques,is without any basis;the defendant has badly failed to show either in its written statement or in his evidence at any stage indicating that the plaintiff had ever issued a single alleged security cheque to the defendant at the time when the plaintiff had purchased the goods from the defendant.
iii. The defendant has taken a contradictory stand regarding issuing of the cheques. In the written statement,it was stated that in the year 2013 the defendant had provided the plaintiff with two undated security cheque where as in the evidence by way of Affidavit of defendant, the defendant took M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 18 of 39 ) a false and contradictory plea,while deposing that instance happened in the year 2013 when the Deponent had provided the plaintiff with three undated security cheques, iv. The conduct of the plaintiff is visible from the facts that the plaintiff returned the amount of Rs.20,00,000/- to the defendant along with a further advance of Rs. 5,00,000/-, to buy the goods from defendant at latter stage. Meaning thereby, the business was being done on the basis of advances and not on the basis of security cheques, as alleged by the defendant.
v. The defendant admits that there were business dealing between both the parties since the year 2008. The defendant has not alleged that during the said period from 2008 upto the year 2012 the business dealings were being dealt between both parties on the basis of alleged security cheques, meaning thereby the defendant issued the cheques to the plaintiff to discharge his legal liability.
vi. It has come on the record that the defendant has received the notice dated 21.04.2018 issued by the plaintiff upon the defendant, but the defendant has not bothered to send the reply thereof.
vii. In the notice framed U/s 251 Cr. P.C. by the Ld. M.M. in the case filed under section 138 of Negotiable Instrument Act by the plaintiff, Ex.DW-1/P, the defendant has admitted his signature on cheques in question; defendant replied that he Cheques bearing no. 012557 was handed over to the plaintiff in the year 2013 whereas the other M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 19 of 39 ) cheque was handed over in 2016. The defendant came with a different story of issuing one security cheque in the year 2013 and other cheque was handed over in the year 2016.
viii. No complaint or report regarding the alleged Cheques, with the plaintiff, has ever been made either to the police or to the any Association.
ix. In his written statement as well as in his examination in chief, the defendant alleged that the business has been carried on between the plaintiff and defendant since the year 2013. During the process of cross- examination of defendant/DW-1, it has come on record that the business between the plaintiff and defendant started from the year 2008; prior to 2013, meaning thereby during the period from 2008 to 2013 the alleged security cheque was not in picture.
38. Ld counsel for the defendant made the following submissions:-
i. The parties to the instant suit used to trade with each other through security Cheques; the defendant for the purchase of the raw material from the Plaintiff used to provide Security Cheques which were to be encashed only if there was a default of payment by the defendant. One such instance happened in the year 2013 when the defendant had provided the plaintiff with two undated security cheques.
ii. Raw material was supplied against these security cheques in the year 2013, and the payments were duly made through RTGS/NEFT to the plaintiff and the need for the encashment of the above cheques did not M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 20 of 39 ) arise. The defendant requested the Plaintiff to return the security cheques but the Plaintiff kept on delaying the matter and the cheques were not returned by the Plaintiff on the pretext that cheques were lost and therefore the same are not traceable.
iii. In the month of December, 2017, the defendant requested for the supply of raw material and a cheque No.561571 (EX PW1/3) in the sum of Rs 10 Lac was given to the plaintiff, as demanded and Rs 10 lakh was credit in the account of the plaintiff on 22.01.2018 but the defendant is yet to receive any raw material from the plaintiff.
iv. In the month of April, 2018, when the defendant demanded its payments from the plaintiff defendant came to know that one of the security chequesNo. 7904 for Rs 10,00,000/-(Ten Lac Only) was encashed by the plaintiff and plaintiff had filed a false complaint U/s 138 Negotiable Instruments Act, against the defendant.
v. The plaintiff has filed a suit u/s 138 N.I Act with ulterior motive and only in order to avoid his legal liability .
vi. The counsel for the plaintiff is placing reliance on the order dated 06.02.2019, however, that order was modified on 11.03.2019 and in view of the modification of the order dated 06.02.2019, the objections by the counsel for the plaintiff were uncalled for and liable to be struck down.
M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 21 of 39 ) vii. By referring the cross examination of PW1, Ld. Counsel vehemently urged that the proprietor of the defendant had taken the goods personally, however the bills/invoices do not carry any receipt or acknowledgment. He submitted that the plaintiff has not been able to prove the delivery of the goods as the invoices are neither supported by any builty/ transportation documents or receiving by the defendant, which is sufficient to show that invoices are fake .
viii. He pointed out that as per the case of the plaintiff, plaintiff was providing Raw material (Sabut Masoor) to the defendant and the defendant was supplying polished daal to the plaintiff and as such there has to be a difference of Rs 800 to 1200/- between the two products. However, as per admitted documents EX PW 1/7 and EX PW 1/8 of the plaintiff, there was no difference in the rates of the two goods supplied. The plaintiff was supplying @ Rs 4051 per quintal and the Defendant firm was supplying @ 4350/- per quintal i.e. only a difference of Rs 200-300/-. As per the own averments of the plaintiff during cross examination the same is not possible as the difference was to be more than Rs 800/-.
ix. Ld. Counsel for the defendant submitted that the bills, as filed on record are printed electronically. By referring the cross the PW1, Ld. Counsel submitted that PW1 has accepted that the bills had been printed by the accountant and therefore the certificate under section 65(b) could not have been proven by the PW 1.
M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 22 of 39 )
39. I have perused the records and heard the Ld counsels of both the parties.
Issue No.1 Whether the three cheques in question were given by the defendant only by way of security, as referred in para-D and I of the WS, as claimed by the defendant?OPD Issue No.2 Whether the plaintiff is entitled to the suit amount or to any other amount?OPP
40. Since, both these issues are interconnected therefore, the same are being decided together. The case of the plaintiff is primarily based upon the cheques in question which according to the plaintiff, had been issued in discharge of the legal liability against the supply of the goods made by the plaintiff to the defendant vide various invoices. The defence of the defendant is that the cheques in question were given as a security. The burden has been placed upon the defendant to prove that the cheques in question were given by the defendant as security and in case the defendant fails to discharge the said burden then the plaintiff would be entitled to recovery of the suit amount.
M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 23 of 39 )
41. Before proceeding further here it is pertinent to mention that both the parties have examined one witnesses each. Plaintiff has examined Sushil Kumar Mittal, proprietor of the plaintiff as PW1 and defendant Praveen Garg has examined himself as DW1. Both these witnesses have filed their evidence by way of affidavits. A careful perusal of their affidavits would reveal that they have deposed absolutely on the lines of their stand as taken by them in their respective pleadings. In a way, their evidence by way of affidavit is reproduction of the pleadings in the form of affidavit, which has already been noted by this court in the preceding para's. Therefore, for the sake of brevity, the examination in chief of these witnesses filed by way of affidavits, is not being reproduced again. However, their cross examination would be referred to wherever relevant and necessary.
42. Here it is also pertinent to mention that even the cross examination of these witnesses by both the parties is on the admitted facts also, therefore, I would be referring to the relevant cross examination touching the controversy involved between the M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 24 of 39 ) parties and not otherwise.
43. From the very beginning, the case of the plaintiff is that the defendant used to purchase grains from the plaintiff through /broker namely Arun which has been denied by the defendant but during the cross examination of PW1 Sushil Kumar Mittal, one of the answer given by the witness is "it is correct that dealings which took place with the Durga Industries, they were conducted through broker namely Arun Dalal". PW1 further replied that " it is correct that there is nothing in writing however, Arun Dalal was visiting his shop and he enquired about the business dealing and the deal was done with him after settling the rate". Regarding this, one of the question asked from PW1 Sushil Kumar Mittal was "what rates were settled between you and Arun Dalal". PW1 Sushil Kumar Mittal replied that " somewhere about Rs 4000/- per quintal". The answers given by the PW1 Sushil Kumar Mittal suggests that the defendant used to have the dealings with the plaintiff through the broker/Dalal Arun Dalal.
44. The main contention of the Ld. Counsel for the defendant is that three cheques in question had M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 25 of 39 ) been issued as security cheques. In para 2 B of preliminary objections of the written statement, defendant had admitted that defendant was having business relations with the plaintiff since the year 2008. During the cross examination PW1 Sushil Kumar Mittal also replied that plaintiff and defendant have been transacting with each other since the year 2008 and the transactions between them were used to be in pulses. Meaning thereby, both the parties were in business relations since the year 2008.
45. According to the defendant two cheques bearing no. 012557 and 007904 had been given in the year 2013 and the third cheque bearing no. 561571 was given in the year 2017 as a security cheques but there is contradiction in the stand of the defendant in this regard. In the written statement, it is stated by the defendant that the cheque bearing no. 012557 and 007904 were issued in the year 2013 whereas the other cheque bearing no. 561571 was issued in the year 2017 but in the evidence filed by way of affidavit ExDW1/1, DW1 Praveen Kumar Garg in para no.5 deposed that parties used M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 26 of 39 ) to trade with each other through security cheques; defendant used to provide security cheques to the plaintiff with the understanding that the same are to be encashed only if there was a default of payment on the part of the defendant; one such instance happened in the year 2013, when the defendant had provided the plaintiff three undated security cheques. In the said affidavit, DW1 Praveen Kumar Garg deposed that the aforesaid three cheques were issued in the year 2013, whereas as per the written statement, only two cheques as noted herein above had been issued in the year 2013 and third cheque was issued in the year 2017.
46. During the cross examination, DW1 Praveen Kumar Garg has admitted that plaintiff has filed a complaint case against the defendant wherein a notice under section 251 CrPC ExDW1/P was framed against the defendant. The copy of the said notice ExDW1/P is on the record. From the said notice it is evident that Ld. Court of Magistrate has framed the notice against the defendant u/s 251 CrPC in respect of the cheque bearing no. 012557 and 561571. While replying the said notice, the M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 27 of 39 ) defendant submitted that cheque bearing no. 012557 was handed over to the plaintiff in the year 2013, whereas the other cheque (bearing no. 561571), was handed over in the year 2016. This all indicate that the defendant has taken different stand at different occasions regarding issuance of the cheque bearing no. 561571 ExPW1/3 (colly) in the sum of Rs 10,00,000/-. At the cost of repetition, I may mention that in the written statement it is claimed by the defendant that the said cheque was issued in the year 2017 but in the evidence filed by way of affidavit ExDW1/1, the said cheque is stated to have been issued in the year 2013, whereas in the notice framed u/s 251 CrPC ExDW1/P the stand taken was that the cheque was issued in the year 2016.
47. It is an admitted fact that the defendant had made a payment of Rs 20,00,000/- on 12.6.2017. That being so, it has not been explained what was the occasion for issuing the aforesaid cheques in question in the year 2013. Further, in case the aforesaid cheques had been issued, as claimed by the defendant, as a security, then it is unbelievable M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 28 of 39 ) that defendant would make payment of Rs 20,00,000/- subsequently on 12.6.2017 without asking for returns of the said cheques. Moreover, in case the security cheques given in the year 2013 were already with the plaintiff, there was no need to give any advance in the year 2017. Further, there is nothing on record suggesting that there were transactions between the parties during the period from 2013 to 2017.
48. One of the contentions of the defendant is that they used to issue security cheques as an advance payment to ensure the timely payment of the goods to be supplied by the parties to each other but except the aforesaid cheques in question there is nothing on record indicating that it was practice in use, as claimed by the defendant. It is also an admitted fact that the aforesaid advance of Rs 20,00,000/- was returned back to the defendant by the plaintiff and not only that an additional amount of Rs 5,00,000/- advance was also paid. It is also an admitted fact that defendant had supplied the goods to the plaintiff vide two invoices i.e Invoice No. DI- 17/18-641 dated 26.03.2018 and Invoice No. DI-
M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 29 of 39 ) 17/18-644 dated 26.03.2018 for an amount of Rs 3,13,198/- and Rs 8,05,368/- respectively but for that also no security cheques were demanded or given. During the cross examination of PW1, although few suggestions were put to the witness but nothing could be elicited to suggest that the cheques in question were issued as a security cheques and in this regard, the testimony of PW1 Sushil Kumar Mittal has gone unbreached. This supports the story of the plaintiff that the cheques in question had been issued by the defendant in discharge of his legal liability.
49. Here I may mention that in a significant departure from the general rule applicable to contracts, Section 118 of the Negotiable Instrument Act provides certain presumptions to be raised. This section lays down some special rules of evidence relating to presumptions. The reason for these presumptions is that, negotiable instruments pass from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible, unless certain presumptions are made. The presumption, therefore, is a matter of M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 30 of 39 ) principle to facilitate negotiability as well as trade. Section 118 of the Act provides presumptions to be raised until the contrary is proved (i) as to consideration, (ii) as to date of instrument, ( iii) as to time of acceptance, (iv) as to time of transfer, (v) as to order of indorsements, (vi) as to appropriate stamp, and (vii) as to holder being a holder in due course.
50. It goes without saying that the presumptions are devices by use of which the courts are enabled and entitled to pronounce on an issue notwithstanding that there is no evidence or insufficient evidence. Under the then Evidence Act all presumptions must come under one or the other class of the three classes mentioned in the Act, namely, (1) "may presume" (rebuttable), (2) "shall presume" (rebuttable), and (3) "conclusive presumptions" (irrebuttable). The term "presumption" is used to designate an inference, affirmative or disaffirmative of the existence of a fact, conveniently called the "presumed fact" drawn by a judicial tribunal, by a process of probable reasoning from some matter of fact, either judicially noticed or admitted or established by legal evidence M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 31 of 39 ) to the satisfaction of the tribunal. Presumption literally means "taking as true without examination or proof".
51. Here I may note the observations made by Hon'ble Supreme Court in the case of Official Receiver v. Abdul Shakoor, 1964 SCC OnLine SC 172, which are as under:-
"16. Section 114 of the Indian Evidence Act authorises the Court to presume the existence of any fact which it thinks likely to have happened, regard being had to the common course of natural events, human conduct and public and private business in their relation to the facts of the particular case. Under the third illustration of Section 114 the Court may presume that a bill of exchange accepted or endorsed was accepted for good consideration. But the section provides, that the Court shall also have regard to other material facts in considering whether the maxim does or does not apply in the particular case before it, it is therefore open to the Court to consider in its proper setting, the fact that the drawer of a bill of exchange was a man of business, and the acceptor was a young and ignorant person completely under the former's influence. This is one illustrative fact which the Court may consider in raising the presumption. There may be other circumstances which may also justify the Court in declining to raise the presumption. Mr Pathak for the respondents urged that the Indian Evidence Act was enacted in 1872 and the Negotiable Instruments Act having been enacted in 1881, and as the two provisions conflict or overlap, Section 118 of the Negotiable Instruments Act must supersede Section 114 of the Evidence Act. We are unable to accept that contention. Undoubtedly Section 114 of the Evidence Act is a general provision which enables the Court to presume, though not obliged to do so, that a bill of exchange or a promissory note was founded on a good consideration. Section 118 of the Negotiable Instruments Act, however, enacts a special rule of M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 32 of 39 ) evidence which operates between parties to the instrument or persons claiming under them in a suit or proceeding relating to the bill of exchange and does not affect the rule contained in Section 114 of the Evidence Act, in cases not falling within Section 118 of the Negotiable Instruments Act."
52. Hon'ble Supreme Court in the case of "Kalamani Tex and Another vs. P. Balasubramanian"
(2021) 5 SCC 283, examines the scope and ambit of the presumption under Sections 118 and 139 of the N.I. Act, to hold:
" 14. Once the 2nd appellant had admitted his signatures on the cheque and the deed, the trial Court ought to have presumed that the cheque was issued as consideration for a legally enforceable debt. The trial Court fell in error when it called upon th e respondent complainant to explain the circumstances under which the appellants were liable to pay. Such approach of the trial Court was directly in the teeth of the established legal position as discussed above, and amounts to a patent error of law.
xx xx xx
17. Even if we take the arguments raised by the appellants at face value that only a blank cheque and signed blank stamp papers were given to the respondent, yet the statutory presumption cannot be obliterated. It is useful to cite "Bir Singh v. Mukesh Kumar", where this court held that:
"Even a blank cheque leaf, voluntarily signed and handed over by the accused, which is towards some payment, would attract presumption under Section 139 of the Negotiable Instruments Act, in the absence of any cogent evidence to show that the cheque was not issued in discharge of a debt."
M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 33 of 39 )
18. Considering the fact that there has been an admitted business relationship between the parties, we are of the opinion that the defence raised by the appellants does not inspire confidence or meet the standard of 'preponderance of probability'. In the absence of any other relevant material, it appears to us that the High Court did not err in discarding the appellants' defence and upholding the onus imposed upon them in terms of Section 118 and Section 139 of the NIA."
53. In addition to that, plaintiff has been able to establish its case. It is the case of the plaintiff that the defendant had purchased the goods against the various bills/invoices, as referred to in para no.4 of the plaint. In order to prove its case, the plaintiff has examined PW1 Sushil Kumar Mittal, who has deposed more or less in consonance with the averments made in the plaint. In his evidence filed by way of affidavit ExPW1/A, he deposed that defendant used to purchase the goods from the plaintiff vide bills ExPW1/7 (colly). He further deposed that payments were to be made by the defendant through RTGS or through the cheques and defendant had issued the cheques in question ExPW1/2 (colly) and ExPW3 (colly) in discharge of their legal liability.
54. PW1 Sushil Kumar Mittal was cross M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 34 of 39 ) examined by the Ld. Counsel for the defendant. During his cross examination, PW1 admitted that the bills ExCW1/7 (colly) do not have receiving of the defendant but he has explained that there was no such practice in their trade. Regarding the mode of transport of the goods, PW1 Sushil Kumar Mittal replied that defendant came and took the goods from the godown. PW1 denied the suggestion that no goods were ever delivered to the defendant vide bills ExPW1/7 (colly). Regarding the raising of the bills ExPW1/7 (colly), PW1 replied that these bills are computer generated and same were got printed through a computer by the Accountant from the shop of the plaintiff.
55. Plaintiff has also placed on record the statement of account ExPW1/9 (colly) pertaining to the defendant alongwith the certificate under section 65 B g that "the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities.".
56. The statement of account of defendant maintained by the plaintiff stands proved by the M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 35 of 39 ) PW1 Sushil Kumar Mittal as ExPW1/9 (colly). A careful examination of the said statement of account would reveal that there are the entries pertaining to the returning of cheques in question ExPW1/2 (colly) and ExPW1/3 (colly) and also the part payments made by the defendant.
57. The normal rule which governs civil proceedings is that a fact will be said to be proved if it's proved by a preponderance of probabilities. The principle of preponderance essentially requires the Plaintiff to introduce more or even slightly better evidence than the defence. In other words, this principle could also refer to a more probable and rational view in adjudicating a specific fact/issue. The Merriam Webster Dictionary defines it as the "standard of proof in most civil cases in which the party bearing the burden of proof must present evidence which is more credible or convincing than that presented by the other party or which shows that the fact to be proven is more probable than not.
58. The concept has been very succinctly explained by the Hon'ble Supreme Court in the M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 36 of 39 ) case of Narayan Ganesh Dastane v. Sucheta Narayan Dastane [AIR (1975) (SC) 1534] by observing as follows:-
"The normal rule which governs civil proceedings is that a fact can be said to be established if it is proved by a preponderance of probabilities. This is for the reason that under the Evidence Act, section 3, a fact is said to be proved when the court either believes it to exist or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. The belief regarding the existence of a fact may thus be founded on a balance of probabilities. A prudent man faced with conflicting probabilities concerning a fact- situation will act on the supposition that the fact exists, if on weighing the various probabilities he finds that the preponderance is in favour of the existence of the particular fact. As a prudent man, so the court applies this test for finding whether a fact in issue can be said to be proved. The first step in this process is to fix the probabilities, the second to weigh them, though the two may often intermingle. The impossible is weeded out at the first stage, the improbable at the second. Within the wide range of probabilities the court has often a difficult choice to make but it is this choice which ultimately determines where. the preponderance of probabilities lies."
59. In the present case the plaintiff has been able to pass the said test of preponderance of probabilities as the Plaintiff's evidence is better than the stand taken by the defence. The case as set by the plaintiff is more credible or convincing than that presented by the defendant .
M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 37 of 39 )
60. In view of aforesaid discussion, the defendant has miserably failed to prove that cheques in question had been issued as security cheques. Hence, the plaintiff is entitled for recovery of Rs 20,00,000/- ( Rs Twenty Lakh only), which is the suit amount. Hence, issue no 1 and 2 are decided in favour of the plaintiff and against the defendant .
Issue No.3.
Whether the plaintiff is entitled to receive interest, if so, for what period and at what rate? OPP.
61. The plaintiff has claimed the pendentelite and future interest at the rate of 1.5% per month. Keeping in view the overall facts and circumstances of the case, this Court is of the view that interest of justice would be met by awarding pendentelite and future interest @ 8% per annum .
Issue No.4 Relief
62. In view of my aforesaid discussion, the Court is of the view that the plaintiff has been able to prove its case against the defendant. Thus, the suit is decreed in favour of plaintiff and against the M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 38 of 39 ) defendant and following reliefs are granted:-
i. The plaintiff is entitled to recover Rs 20,00,000/( Rs Twenty Lakh only) from the defendant.
ii. The plaintiff is also awarded pendentelite and future interest @ 8 % per annum .
iii. Cost of the suit is also awarded in favour of the plaintiff.
63. Decree sheet be prepared accordingly.
64. File be consigned to Record Room, as per rules.
Digitally signedRAJESH by RAJESH KUMAR GOEL KUMAR Date:
GOEL 2024.08.31 16:16:15 +0530 (Rajesh Kumar Goel) District Judge (Commercial)-02 Central, Tis Hazari Courts 29.08.2024 Announced in the Open Court today i.e: 29.08.2024 M/s S.N.B Sales Udyog vs. Praveen Kumar Garg Date of decision 29.08.2024 (page no. 39 of 39 )