Delhi District Court
M/S Sawhney Brothers vs M/S Orient Enterprises on 12 December, 2018
IN THE COURT OF MR. SUNIL BENIWAL, ADDITIONAL
DISTRICT JUDGE -02, ( CENTRAL), DELHI
Suit no. 509/16
Case No. 9637/16
M/s Sawhney Brothers
A-14, Nizamuddin West, New Delhi,
by Shri Trilok Singh Sawhney, Partner
...........Plaintiff
Versus
1 M/s Orient Enterprises
W-36, Greater Kailash-I, New Delhi-48.
(Service to be effected through the
person in management and control
of business)
2 Shri Ramesh Suri
Son of Sh. K.L Suri
W-36, Greater Kailash-I, New Delhi-48
3 Shri Mahinder Suri
Son of Sh. K.L Suri
W-36, Greater Kailash-I, New Delhi-48
4 Shri Krishan Lal Suri
Son of Sh. K.L Suri
W-36, Greater Kailash-I, New Delhi-48 .........Defendants
Date of Institution of Suit : 04.01.1982
Date of pronouncement of judgment : 12.12.2018
CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 1/37
SUIT FOR RECOVERY OF RS.15,37,245-67 P.
1 This is the judgment of the case titled as M/s Sawhney Brothers
vs M/s Orient Enterprises & Ors. Case has been filed by Sh. Trilok Singh
Sawhney, partner on behalf of plaintiff against four defendants. Defendant
no.1 is M/s Orient Enterprises, defendant no.2 is Sh. Ramesh Suri, defendant
no.3 is Sh. Mahender Suri and defendant no.4 is Sh. Krishan Lal Suri. This
is a suit for recovery of Rs.15,37,245-67 paise under Order 37 CPC. Facts
stated in the plaint are as follows :-
2 Plaintiffs are a business house engaged in export and import
trade. Plaintiff is a registered partnership firm and Sh. Trilok Singh Sawhney
is authorized to file the suit on behalf of the plaintiff. Defendants no. 2 to 4
claim to be carrying on business in partnership with each other under the
name and style of Orient Enterprises. Defendants approached the plaintiffs
with representation that they had arranged for an indent for the import of
Brass scrap/cloves of C.I.F value of approximately Rs.40 lacs but the
defendants were not in a position to open a letter of credit for that amount
and requested the plaintiffs to arrange for credit facility and other facilities
in consideration of a service charge. Defendants also represented that they
will sell the cloves on high sea sale basis. In this manner, they re-presented
that no risk will be of the plaintiffs and plaintiffs will be getting only profit
by way of service charge for arranging credit facilities. Based on these
representations, plaintiffs entered into an agreement with defendants on
CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 2/37
26.07.1979 by which plaintiffs agreed to provide credit facilities through
their bankers. Plaintiffs were to be paid net service charges and other
expenses also were to the account of the defendants. A copy of agreement is
annexure P-1. A sum of Rs.1,80,900/- and another Rs.80,000/- was paid by
the defendants to the plaintiffs on 27.07.1979 by means of two cheques of
Karnataka Bank Ltd. New Delhi bearing no. 008745 and 008748. These
cheques were encashed. These were towards service charges of the plaintiffs.
On 28/29.07.1979, the defendants (Ramesh Suri) approached the plaintiffs
with a contract on a form printed in green ink, which was type written and
purporting to be signed and asked the plaintiffs to sign a copy of the same.
Plaintiffs signed it and retained one copy and gave the other to the
defendants. A photocopy of the contract is Annexure P-2. Defendants also
took insurance with Oriental Fire and General Insurance Company Ltd. On
30.07.1979, plaintiff had approached the Central Bank of India with request
for opening a letter of credit. Central Bank of India established a letter of
credit no. 05/164 dated 10.08.1979 in favour of Bentrex (Foreign suppliers)
for a sum of US 4,86,800 dollars on C & F basis. Copy of letter of credit is
Annexure P-8. Letter of credit was advised through HSBC, Singapore on
28.08.1979, plaintiffs wrote to the Central Bank of India instructing an
amendment to the letter of credit by which the Merchandise quality approval
before shipment from LOC opener (plaintiffs) as well as the indenters
(defendants) was made obligatory. Photocopy of letter is Annexure P-9. In
pursuance of these instructions, Central Bank of India cabled the HSBC
CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 3/37
Singapore carrying out the amendment to the letter of credit. Copy of
amendment cable is Annexure P-10. On 29.08.1979, plaintiffs also wrote to
the defendants requesting for copies of correspondence with bentrex (foreign
supplier) and also advising them of the amendment. Copy of letter is
Annexure P-11. On 03.09.1979, defendants (Ramesh Suri) approached the
plaintiff and requested to withdraw the amendment. They represented that
proper goods had been shipped. Since the plaintiffs were not inclined to
withdraw the amendment on the basis of representations and assurances
alone, defendants offered to give advance reimbursement of the credit
arranged by the plaintiffs which would be also in a nature of further part
payment/additional security and for this purpose issued cheque no. 909690
post dated to 30.09.201979 drawn on Karnataka Bank, New Delhi for Rs.10
lacs. On receipt of this cheque, plaintiffs also wrote and handed over to the
defendants a letter dated 03.09.1979. copy of this letter is Annexure P-14.
On the faith of the representations made by the defendants and the delivery
of the cheque abovementioned and in consideration of this cheque, plaintiffs
wrote to Central Bank of India requesting them to withdraw the amendment
of 29.08.1979. Accordingly, Central Bank deleted the amendment by a cable
dated 04.09.1979. Copy of cable is Annexure P-15. On 16.09.1979, it was
learnt that the ship OH DAI which claimed to be carrying the goods had
sunk on 08.09.1979. On 25.09.1979, defendants wrote to the plaintiff that
they were trying to arrange for funds and that the plaintiff should forbear.
Copy of letter is Annexure P-24. On 03.10.1979, cheque for Rs.10 lacs (P-
CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 4/37
13) was presented to Karnataka Bank. It was returned unpaid with remarks
"refer to drawer". Abovementioned cheque was given in consideration of the
plaintiff's withdrawing the amendment and as part payment of the dues of
the plaintiffs. It was after receiving this cheque that the plaintiffs withdrew
the amendment to the letter of credit. On its dishonor, plaintiffs requested the
defendants to pay the amount with interest but the defendants failed. The
Central Bank under whom the LOC was established is claiming interests @
19.5 % per annum with quarterly rests from the plaintiffs. Plaintiffs claim
interest at the same rate from the defendants. So calculated it comes to
Rs.5,37,245-67 upto the date of suit. Cause of action arose in favour of the
plaintiff on 03.09.1979 when the cheque was executed and delivered.
Facts stated in the written statement of defendant are as follows:-
Preliminary objections:
3 The cheque in the suit is dated 30.09.1979 for Rs.10 lacs and is without consideration. Admittedly, no money was paid by the plaintiff to the defendants. No money was payable by the defendants to the plaintiff either on 03.09.1979 when the cheque was drawn or on 30.09.1979. The cheque in the suit constitutes a purely gratuitous instrument which is legally un-
enforceable. Even if the cheque was obtained by way of collateral security to ensure that the defendants carry out their obligations under the agreement dated 26.07.1979, it remains a purely gratuitous instrument because the agreement in question is a comprehensive document which fully deals with the rights and obligations of the parties and does not entitle the plaintiff to CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 5/37 demand any collateral security. The cheque was given to the plaintiff on 03.09.1979. Letter of defendants dated 03.09.1979 with which the cheque was given contains the reason why the cheque was demanded and the conditions imposed for its encashment. The letter shows that the additional security was demanded for the quality of the goods. Under the agreement dated 26.07.1979, plaintiff was entitled to sell the goods only if the defendants failed to do so. Therefore, the additional security was meant to safeguard the plaintiff in the event of the defendants' failure to sell or pay for the goods even after their arrival and the plaintiff being obliged to sell the same resulting in loss. The cheque was postdated to 30.09.1979 by which time the goods were expected to arrive at the destination and be available for disposal. Object of making the cheque postdated was to make its encashment conditional/contingent on the defendants failure either to arrange disposal or to pay for the goods even after their arrival at destination, which contingency never arose. Hence, the plaintiff was not entitled to present the cheque for payment. On the plaintiff's own showing, shipment documents relating to the goods covered by the letter of credit are defective and not binding on the plaintiff. For the same reason, they are estopped from enforcing the cheque.
4 Suit of the plaintiff is also barred by provisions of Order 2 Rule 2 CPC by virtue of explanation of the said rule. By virtue of its explanation, an obligation and a collateral security for its performance and successive claims arising thereunder constitute one cause of action.
CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 6/37 Transaction represented by the cheque in suit is completely covered by the agreement dated 26.07.1979 as also the claim arising thereunder. In the earlier suit filed by the plaintiff against the defendants and others, plaintiff has claimed damages on account of alleged breach of the agreement dated 26.07.1979. In the earlier suit, plaintiff omitted to seek leave of the court for filing a separate suit on the basis of cheque which forms part of same transaction. Therefore, the present suit is barred. The suit is also not maintainable unless the plaintiff firm is registered and the person suing has been shown as a partner in the register of firms. Parawise reply on merits :-
5 It is denied that the plaintiff is a registered partnership or that the person suing is entitled to institute the suit. It is admitted that defendant no.1 is partnership firm of which the other defendants are partners. On 26.07.1979, parties entered into two agreements which were to govern their dealings and consequences flowing therefrom. These agreements were based on the plaintiff's representation that it had been granted an import license. One of the conditions of which was that the goods after importation will be sold to actual users. The plaintiff approached and asked the defendants to arrange indent in the plaintiff's name for importation of permissible items under the license to which the defendants agreed. By these agreements, defendants undertook to provide the necessary indent and also to deposit with the plaintiff, a specified amount to enable it to import the goods. Defendants also undertook to dispose off the goods after these were CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 7/37 imported by the plaintiff. In the event of the defendants' failure to dispose off the goods, amount deposited with the plaintiff was to stand forfeited and the plaintiff was entitled to sell the goods at the risk and account of the defendant firm. On 27.07.1979, in terms of above agreements, defendants provided to the plaintiff an indent for importation of cloves of the value of Rs.40 lacs from Singapore to Bombay. On the same day i.e. on 27.07.1979, defendants deposited with the plaintiff a sum of Rs.80,000/- by way of 2% service charges and another sum of Rs.1,80,900/- to enable the plaintiff to open a letter of credit. This latter amount was to serve as a security and was liable to be forfeited in the event of defendant's failure to dispose off the goods even after their arrival at destination. It is denied that both the cheques were towards service charges of the plaintiff. Rs.80,000/- were paid towards service charges. Other amount of Rs.1,80,900/- were advanced by way of deposit and not as a service charge. This sum of Rs.1,80,900/- was advanced to serve dual purpose of enabling the plaintiff to open a letter of credit and security for due performance of the terms of agreement by the defendants in the matter of sale of goods on their arrival. In the event of failure on the part of defendants to dispose of the goods, plaintiff was given liberty to forfeit the amount and to sell the goods at the risk and account of the defendants. The defendants submit that the indent of cloves of the value of Rs.40 lacs in the name of the plaintiff was provided to the plaintiff on 27.07.1979 and not on 28/29.07.1979 as alleged. It is submitted that insurance was affected in the name of plaintiff as desired by the CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 8/37 plaintiff. Insurance cover note thus obtained was forwarded by the plaintiff to his bank and on its basis, the bank agreed to open a letter of credit in favour of the plaintiff. It was on 29.08.1979 that the plaintiff advised its bank to make amendment to the letter of credit to the effect that weight and quality certificate in respect to the goods be obtained from an independent surveyor. Even before the proposed amendment was communicated by the plaintiff's bank to its correspondent bank in Singapore, draft of the beneficiary i.e. M/s Bentrex and company stood negotiated and payment had been made to them on 30.10.1979 in terms of letter of credit. Copy of the amendment cable was never shown nor furnished to the defendants. Letter alleged to have been written by the plaintiff to the defendants was never received by the defendants and no copy of the alleged cable was furnished to them.
6 It is denied that the defendants or Ramesh Suri approached the plaintiff on 03.09.1979 and requested the plaintiff to withdraw the amendment. It is also denied that the defendants or Ramesh Suri represented that proper goods had been shipped. It is also denied that the defendants gave assurance to the plaintiff. Therefore, the statement that the plaintiff was not inclined to withdraw the amendment on the basis of representations and assurances alone is totally false and baseless. It is also denied that the defendants offered to give advance reimbursement of the credit arranged by the plaintiff which would be also in the nature of further part payment/additional security as alleged. It is also denied that the cheque in CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 9/37 suit was drawn in the context and for the purpose as alleged by the plaintiff. The real facts leading to the drawing and giving of post date cheques are as follows:-
7 On 03.09.1979 defendant no.2 Ramesh Suri was called by the plaintiff to its office where he was informed that the plaintiff had received a cable informing the plaintiff that the conditions of amendment sent by its bank could not be forfeited as the shipment had already been affected. Plaintiff insisted that as the goods had been shipped without inspection, defendant must provide additional security to ensure that the defendants shall accept the goods on their arrival regardless of their quality. The additional security was demanded to safeguard the interests of the plaintiff in the event of defendants failing to sell the goods and the plaintiff being obliged to sell the same which might result in loss to the plaintiff. Even though, the agreement between the parties did not entitle the plaintiff to claim additional security yet the defendants gratuitously gave the cheque in question on the condition that it will be encashable only if the defendants failed to arrange disposal of the goods on their arrival at destination. It was in this context that the cheque was made post-dated to 30.09.1979 by which time the goods were in any case expected to reach destination. The cheque was given with a forwarding letter which contains the reasons for giving the cheque and the conditions for its encashment. If the conditions imposed by these defendants while giving the cheque and which conditions are set out in the defendants' letter dated 03.09.1979 were unacceptable to the plaintiff, CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 10/37 then the plaintiff should have said so and returned the cheque to the defendants.
8 Defendants made no representations and the plaintiffs' letter to its bank was not based on any representation alleged to have been made by the defendants. In its letter, plaintiff informed the bank of having received a cable that the conditions of the amendment could not be fulfilled as the shipment had already been affected. On 13.09.1979, plaintiff had lodged a claim with the insurance company for U.S 4,86,540 dollars on account of total loss of goods covered by letter of credit as a result of sinking of the ship OHDAI. Plaintiff did not inform the defendant about this fact. Therefore, the statement made in para 20 of the plaint that the plaintiff learnt about the sinking of the ship on 16.09.1979 is altogether false. It is submitted that having learnt about the sinking of the ship, Central Bank of India asked the plaintiff to discharge its obligations under the letter of credit. By this letter dated 18.09.1979, bank also informed the insurance company of its financial interest in the consignment and asked the insurance company that all communications pertaining to the consignment and the cover under the policy of insurance be sent to the bank. This was tantamount to stoppage of payment of money due under the insurance cover. Faced with this situation, plaintiff made frantic efforts to find a scapegoat to fasten the liability to whatever extent it was possible by suppressing material facts and making misrepresentations. Plaintiff threatened to involve defendants in civil and criminal cases on the basis of agreement dated 26.07.1979 and the CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 11/37 postdated cheque in question unless a letter was issued in its favour. Till then the defendants were not aware of all the relevant facts and their true legal position. They were afraid lest they should be involved in the threatened litigation. They were coerced to issue letter dated 25.09.1979. Defendants submit that the statements made in the said letter are not correct and they are not bound by the same. No liability can be legally fixed on the defendants on the basis of the said letter. After procuring letter dated 25.09.1979, plaintiff wrote to the Central Bank on 28.09.1979 pointing out numerous discrepancies in the bill of lading and other documents pertaining to the shipment of the goods. Plaintiff contended that on account of patent discrepancies in the bill of lading and other shipping documents, same should not have been negotiated. They accordingly asked the Central Bank to disown liability under the letter of credit and to claim reimbursement. On 29.09.1979, Central Bank sent a cable to its corresponding bank in Singapore claiming reimbursement. It was wrong on the part of the plaintiff to present the cheque for payment. On 08.10.1979 plaintiff wrote another letter to the Central Bank pointing out more vital discrepancies in the bill of lading and asked it for claim refund/reimbursement. On the same day i.e. 08.10.1979 plaintiff wrote letter which was ante-dated to 28.09.1979 enquiring from the defendants when the cheque dated 30.09.1979 should be presented. The said letter dated 28.09.1979 was received by defendant on 08.10.1979. By their letter dated 09.10.1979, defendant inter alia replied that the arrival of goods at Bombay was a condition precedent for presentment of CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 12/37 cheque for payment and therefore, plaintiff committed breach of trust in sending the cheque for collection knowing fully well that the plaintiff was not entitled to do so. Plaintiff has no cause of action against the defendants. Facts stated in the replication are as follows:-
9 The cheque in question of the post date was received by the plaintiff for good consideration as disclosed in the plaint. Plaintiff agreed to withdraw the amendment dated 29.08.1979 only as a result of the confidence created by cheque given by the defendants. It was an independent transaction. There was no question of goods being available for disposal. Cheque was accepted by the plaintiff subject to the conditions mentioned in letter dated 03.09.1979 (Ex.P-14) written by the plaintiff after the receipt of letter dated 03.09.1979. Suit is not barred as claimed by the defendants in any manner. Plaintiff is a registered firm. Reply on merits:-
10 Written statement is correct to the extent that two cheques were received by the plaintiff. Rest is denied. Plaintiff was cheated. The telex had reached Singapore. Fraud was played by the defendants in conspiracy with bentrex and company. In rest of the replication, plaintiff has reiterated the contents and averments of his plaint to be true and has denied everything that is contrary to his plaint.
11 Pleadings are complete. Following issues were framed on 26.07.1988:-
1. Whether the plaintiff is a partnership firm registered CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 13/37 under the provisions of Indian Partnership Act and Sh. Trilok Singh Sahni was registered partner at the time of filing of the suit?
2. Whether the defendants had made representations as alleged in para 3 & 4 of the plaint?
3. Whether the sum of Rs.1,80,900/- was paid by the defendants to the plaintiff as collateral security charges and not by way of service charges as alleged?
4. Whether the defendants had approached the plaintiff on 03.09.1979 for withdrawal of proposed amendment of the letter of credit and it was agreed to, if so, under what conditions?
5. Whether the letter dated 25.09.1979 was issued under coercion, as alleged?
6 Whether the plaintiff is not entitled to enforce the cheque?
7. Whether the suit is barred under Order 2 Rule 2 CPC?
8. To what amount, if any the plaintiff is entitled to in the suit?
9. To what interest, if any, the plaintiff is entitled to?
10. Relief.
12 Plaintiff examined two witnesses in support of its case namely Mr. T.S Sawhney, partner of the plaintiff firm and Mr. Bhupinder Singh Suri. 13 In his evidence affidavit, PW1 deposed that he is one of the CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 14/37 registered partners of the plaintiff firm and is fully conversant with the facts and circumstances of the case. Plaintiff is a business house engaged in export and import trade and registered partnership firm and the deponent is authorized to file the present suit. Ex.PW1/1 form A and Ex.PW1/2 form B being the registration certificates issued by Registrar of firms. Rest of the deposition of PW1 is exactly the same as that of the plaint. In para no. 26 of the evidence affidavit, it is deposed that Hon'ble Justice Santosh Duggal of High Court has passed judgment on 24.05.90 on the criminal revision petition no. 178/85 filed by defendant no.2 against the order dated 28.02.1985 of Ld. MM Sh. S.K Kaushik, Patiala House dismissing the petition with the observation that cheque of Rs.10 lacs was given in consideration of withdrawal of letter of credit amendment. Copy of judgment is Ex.PW2/13. Defendant no. 2 & 3 late K.L Suri have been convicted and sentenced to 3 years and five months under Section 420 read with 120B IPC by Ld. MM Sh. Dharmesh Sharma through order dated 09.11.1998. Copy of this order is Ex.PW2/14.
14 PW1 was cross examined by counsel for defendants. During his cross examination, PW1 deposed that he does not remember as to when partnership came into existence. The partnership was in writing and the partnership deed was executed. Initially there were four partners. Partnership firm was registered with income tax authority. He deposed that he knew Mr. K.L Suri from 26.07.1979. He had met Mr. K.L Suri one or two days earlier.
Firm was having an import license. Negotiations about the cloves were held CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 15/37 on 26.07.1979 and on the same day, the agreement was entered into. PW1 is in the field of import and export since 1968. However, the agreement was the first transaction for imports. Insurance premium was paid by the defendant. PW1 maintained book of accounts. All the inflows and out flows of money are reflected in accounts of books. Accounts books were destroyed in firm during 1984 riots. Balance sheet also destroyed in the fire. It is correct that PW1 had filed insurance claim but the same was filed at the instance of the defendant. PW1 had not obtained any instructions in writing from the defendant to file insurance claim. PW1 had filed insurance claim on 13.09.1979. Again said, on 13.09.1979, PW1 had requested the insurance company to issue a claim form. PW1 had lodged a complaint (FIR) of fire during 1984 riots but no list of documents destroyed in the fire were prepared and submitted to the police as it was not possible. PW1 had given list of goods destroyed in 1984 riots to the insurance company. The instant claim was paid on the basis of documents of the firm. Insurance company did not issue any claim form to PW1 despite his request dated 13.09.1979 but he was informed that the ship had sunk on the high seas on 08.09.1979. Insurance company returned premium of about Rs.40,000/- to PW1 which he returned back to the insurance company. Imported goods were insured. Beneficiary under the insurance cover of the subject goods was the plaintiff firm. However, there was a clause in agreement dated 26.07.1979 that whatever insurance claim the plaintiff firm received, the same shall be handed over to the defendant. It is wrong to say that the bankers requested CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 16/37 the insurance company not to proceed with the claims in respect of the goods loaded in the vessel Oddai. Subject goods were also loaded. LC was for Rs.40 lacs. He was given Rs.80,000/- by the defendant as service charges at 2% for entering into agreement. He was also given Rs.1,80,900/- towards service charges at 5% for establishing the LC.
15 All the money was given to him in pursuance of agreement dated 26.07.1979. The stake of the plaintiff firm in the subject goods was to extent of LC amount. PW1 was to take charge of the goods after landing in India but that was on behalf of the defendant. Same is also stated in the agreement. After the discharge of cargo in India, the goods were to be sold by the defendant on high sea sale basis. All the port charges duty etc. in respect of the subject goods was to be paid by PW1 but on the behest of the defendant in terms of the agreement. PW1 was put a specific question as to how the proceeds of the goods were to be accounted for to which PW1 replied that after the arrival of goods, PW1 was to intimate to the defendant regarding arrival of documents in the bank and defendant was to open a local letter of credit in favour of PW1 within 10 days from such intimation and after the opening of such local letter of credit, PW1 was to give an authority letter to the defendant to get the release of the goods. Plaintiff firm was not authorized to sell the goods in terms of the agreement. PW1 had lien over the goods as PW1 had opened the LC. LC was paid on 30.08.1979 against export import documents by the foreign bank to the exporter under reserve. 16 PW1 does not know whether he had mentioned the date of CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 17/37 encashment of LC in the plaint. It is incorrect to say that LC was not encashed on 30.08.1979. PW1 was informed by foreign bank that LC had been encashed on 30.08.1979. Again said, that PW1 was not given any such intimation in writing, however, it was given to Central Bank of India. All the correspondences between the plaintiff firm and the establishing bank M/s Central Bank of India were in possession of PW1 which have been filed in another case no. 1/82 instituted by the plaintiff against the present defendant and the bank and others. PW1 has stated in his suit no. 01/82 that a fraud has been committed by the banker in connivance with the exporters and defendant no. 2 to 5 in that suit. The claim in that suit is also on the basis of same letter of credit established by Central Bank of India. Cheque for Rs.10 lacs which is the subject matter was given to PW1 as consideration for withdrawal of LC amendment along with letter dated 03.09.1979 of the defendant.
17 PW1 deposed that he is a complainant in criminal case titled "T.S.Sawhney Vs Ramesh Suri and Anr." where his statement was recorded on various dates. IT is correct that in his statement recorded on 12.07.1984, he had stated that whatever is written in portion A to A in Ex. PW-2/DX-1 at page 2. HE volunteered to depose that there is a typographical mistake in the said portion of Ex. PW-2/DX-1. PW1 had himself argued that complaint case. He had not brought it to the notice of the court at any point thereafter till date that there is a typographical mistake in the portion from A to A in Ex. PW-2/DX-1 because he considered it to be insignificant when the entire CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 18/37 statement was read in totality. It appears that on cross examination dt. 28.08.2004, PW1 was mistakenly labeled as Pw2 and cross examination was carried on further. During further cross examination, it was further deposed by PW1/PW2 that correspondences with the insurance company were made in consultation with Ramesh Suri. It is correct that PW1/PW2 got issued a notice dated 05.01.1980 to M/s Oriental fire and insurance company through advocate. PW1/PW2 cannot say whether notice Ex. PW-2/DX-2 is the same. Witness was asked a specific question whether he had ever been informed in writing or verbally that K.L. Suri had inspected the goods before loading in the ship to which the witness replied that he was informed in writing that the representative of defendant has inspected before loading, however, he was informed verbally that the said representative was the father of Ramesh Suri i.e. namely Mr. K.L. Suri. Said writing is in possession of the witness and has been filed on the court record. Mr. K.L. Suri was prosecuted for the alleged sinking of the ship. Extra premium of Rs. 14,250/- was paid for coverage of the over aged ship. This premium was paid by the defendants. Documents Ex. PW2/3 and Ex. PW2/4 are not original documents and the originals have been filed in other suit pending in hon'ble High Court. These are certified copies issued by copying agency of hon'ble High Court. Document Ex. PW2/3 signed by Mr. Ramesh Suri, one of the defendants and one Mr. Bhupender Suri, a witness in presence of PW1/PW2 T.S. Sawhney and was also signed by PW1/PW2. Witness Mr. Jagdish Thukral did not sign in presence of PW1/PW2 as the same was already signed by him before CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 19/37 PW1/PW2 signed the same. PW1/PW2 has claimed interest @ 19.5% per annum with quarterly rests because the bank of the plaintiff was charging the same from the plaintiff. Same rate of interest is claimed by Central Bank in the other suit no. 01/1982. It is correct that defendant nos. 2 and 3 were convicted but that conviction was compounded/settled by PW1/PW2. This was done on humanitarian grounds as mother of defendant no. 2 was on death bed and defendant no. 2 requested for pardon from PW1/PW2. Document Ex. PW1/2 is a certified copy and not a photocopy of certified copy. It is wrong to suggest that the goods were not shipped in presence of K.L. Suri at Singapore. Postdated cheque of RS. 10,00,000/- was given voluntarily by Mr. Ramesh Suri and PW1/PW2 did not misuse his position to obtain the said cheque.
18 On 18.05.2006, a statement was given by counsel for plaintiff that plaintiff shall not be examining Mr. Bhupendra Suri as a witness on behalf of the plaintiff and plaintiff evidence was closed after examination of Mr. T.S Sawhney, PW1.
19 Thereafter, evidence affidavit of Mr. Surendra Mohan, Administrative Officer was filed on behalf of M/s Oriental Insurance Ltd. He deposed that M/s Oriental Insurance Company Ltd. is a public sector company and earlier it was known as the Oriental Fire and General Insurance Co. Ltd. As per their records, the summoned policies were never issued by Oriental Insurance Company Ltd. And that is why they could not be produced in Court despite being summoned.
CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 20/37 20 Thereafter, evidence affidavit of Ramesh Suri S/o late K.L Suri was filed as Ex.DW1/X1. He deposed that plaintiff has suppressed the fact that earlier suit no. 01/1982 was filed by him against HSBC & Ors. Suit of the plaintiff is barred under Order 2 Rule 2 CPC by virtue of its explanation. He deposed that a collateral security for its performance and successive claims arising there under constitutes one single cause of action. Transaction represented by the cheque in question is covered by agreement dated 26.07.1979 as also the claim arising in suit no. 01/1982. In suit no. 01/1982, plaintiff has claimed damages on account of alleged breach of agreement dated 26.07.1979 in the earlier suit, the plaintiff omitted to seek leave of the court for filing a separate suit on the basis of the cheque in this suit which forms part of the same transaction making it barred under Order 2 Rule 2 CPC. Plaintiff also filed a suit against Central Bank of India & Ors. for recovery vide suit no. 509/80. Suit was contested. WS was filed by defendant no.1 CBI. Same is on record as Ex.DW1/2. Subsequently, plaintiff withdrew the said suit without liberty to file a fresh one through order dated 04.08.1981. Copy of order is Ex.DW1/3. The impugned cheque was obtained as collateral security to ensure that the defendants carried out their obligations under the agreement dated 26.07.1979. It remains a purely gratuitous instrument because the agreement in question is a comprehensive document dealing with rights and obligations of each party and does not entitle the plaintiff to demand any collateral security of any kind. On the basis of the plaintiff's own showing, shipment documents related to the CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 21/37 goods covered by letter of credit are defective and not binding on the plaintiff. For the same reason, plaintiff is also estopped from enforcing the cheque. Plaintiff firm is not registered under the Indian Partnership Act and the persons suing are not shown as partner in the registry of firms. 21 On 26.07.1979, parties entered into two agreements which were to govern their dealings and all consequences flowing from them. These agreements were entered into on the representation of the plaintiff that they have been granted an import license. One of the conditions of which was that the goods after importation will be sold to the actual user. Plaintiffs approached and asked the defendants to arrange indent in the name of the plaintiff for importation of permissible items under the license to which the defendants agreed. By this agreement, the defendants undertook to provide necessary indent and also to deposit with the plaintiff a specified amount to enable it to import the goods. Defendants undertook to dispose off the goods after they were imported by the plaintiff. In the event of the failure of the defendants to do so, amount deposited with the plaintiff was to stand forfeited and plaintiff was entitled to sell the goods at the risk of account of defendant firm. Accordingly, the defendant provided an indent for importation of cloves of the value of Rs.40 lacs from Singapore to Bombay. On 27.07.1979, defendant deposited with the plaintiff a sum of Rs.80,000/- by two cheques as service charges and another cheque of Rs.1,80,900/- to enable the plaintiff to open a letter of credit. Amount of Rs.1,80,900/- was to serve as a security and was liable to be forfeited in the events of the failure CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 22/37 of the defendant to dispose off the goods even after their arrival at the destination. This is the subject matter in the suit of 01/1982 pending before High Court. It is denied that both the cheques of Rs.1,80,900/- and Rs.80,000/- were towards service charges. Only cheque of Rs.80,000/- was towards service charges. Sum of Rs.1,80,900/- was to serve a dual purpose, one it was to enable the plaintiff to open a LOC and secondly, it was for security in case the defendant was unable to sell the goods on their arrival. 22 The plaintiff was at liberty to forfeit the amount and to sell the goods at the risk and on account of the defendant in case the defendant failed to do so. Insurance was bought in the name of the plaintiff as desired by the plaintiff but the premium was paid by the defendants. Insurance cover note was forwarded by the plaintiff to his bank upon the basis of which the bank of the plaintiff i.e. CBI agreed to open LOC. LOC was opened by CBI bearing no. 05/156 dated 10.08.1979 in favour of Bentrex for a sum of US 4,86,800 dollars on C & F basis. LOC was advised through HSBC Singapore. On 28.08.1979, plaintiff wrote to CBI for an amendment to the LOC on its own and without the knowledge of the defendant to the effect that weight and quality certificate in respect of the goods be obtained from independent surveyors and merchandise quality approval be obtained before shipment from LOC opener. It is denied that the defendant or DW1 approached plaintiff on 03.09.1979 with request to withdraw the amendment. It is denied that any assurance was given to the plaintiff by any of the defendants. No such representation CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 23/37 was ever made. It is specifically denied that the defendant offered to give any advance reimbursement of the credit arranged by the plaintiffs which would also be in the nature of further part payment/additional security as alleged. It is denied that the cheque in the present suit was drawn in that context and purpose as alleged by the plaintiff. It is wrongly stated that goods were inspected before shipment by the deceased father of DW1 at Singapore. It is alleged that in fact Mr. T.S Sawhney has played a fraud on DW1 as well as the court as he was fully aware that the goods were shipped much prior to 03/09/1979. Impugned cheque is without consideration and now plaintiff through T.S Sawhney has put up a false version that consideration of the cheque was the withdrawal of the amendment in the LOC marked as Ex.PW2/9. The fact that the impugned cheque was issued under threat and as alleged consideration for withdrawal of the alleged amendment is a complete non-est. The alleged amendment could not have been fulfilled as the shipment had already been dispatched on 30.08.1979. It is denied that any such amendment as alleged was deleted by CBI through a cable/telex dated 04/09/1979. The fact that the goods were dispatched on 30.08.1979 is so admitted by Mr. T.S Sawhney in writing in letter dated 01.09.1979. It is alleged that the plaintiff learnt about the sinking of the ship OHDAI on 16.09.1979 whereas in fact, on 13.09.1979, plaintiff had already lodged a claim with the insurance company for US 4,86,540 dollars on account of total loss of goods covered by the LOC as a result of sinking of OHDAI. Plaintiff did not inform the defendant about the lodging CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 24/37 of the said claim with the insurance company.
23 After learning about the sinking of the ship, Central Bank asked the plaintiff to discharge its obligation under the LOC. By letter dated 18.09.1979, bank also informed the insurance company of its financial interest in the consignment and asked the insurance company and all communications pertaining to the consignment and the cover under policy of insurance be sent back to the bank. This tantamount to stoppage of payment of money due under the insurance cover. Faced with the situation, plaintiff made frantic efforts to find a scapegoat to fasten the liability by suppressing material facts and making misrepresentations. Plaintiffs threatened to involve the defendant in civil and criminal cases on the basis of agreement dated 26.07.1979 and the postdated cheque in question unless the letter was issued in its favour. Defendants were not aware of all the relevant facts and their correct legal position and were afraid of being framed in threatening litigation. Therefore, in this context, defendants were coerced to issue letter dated 25.09.1979. Statements made in the said letter are not correct and defendants are not bound by the same. No liability can be legally fixed on the defendants on the basis of said letter. After procuring letter dated 25.09.1979, plaintiff wrote to CBI on 28.09.1979 pointing out numerous discrepancies in the bills of lading and other documents pertaining to shipment of goods. Plaintiff contended that on account of patent discrepancies in the bill of lading and other shipping documents, same should not have been negotiated. Plaintiff accordingly asked the Central CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 25/37 Bank to disown liability under the LOC and to claim reimbursement. On 29.09.1979, Central Bank sent a cable to its correspondent bank in Singapore claiming reimbursement. It was wrongful on the part of plaintiff to present a cheque of Rs.10 lacs on 03.10.1979 for payment. Cheque was issued as additional security to safeguard the interests of the plaintiff in the event of failing to sell the goods by the defendant on their importation. It has been falsely stated by the plaintiff that post dated cheque of 30.09.1979 was given as consideration of withdrawal of amendment of letter dated 04.08.1981.
24 Plaintiff played a fraud as he was fully aware that the goods had already been shipped on 30.08.1979 and as such the alleged amendment has lost its significance. On 08.10.1979, plaintiff wrote a letter which was ante dated 28.09.1979 inquiring from the defendant when the cheque dated 30.09.1979 should be presented.
25 Additional affidavit was filed by DW1 in which DW1 deposed that during the course of admission/denial of documents in the suit filed before Hon'ble High Court of Delhi, plaintiff has admitted all six documents filed by the defendant as per index dated 19.03.1982. Same are exhibited as Ex. D1 to D6. Second agreement dated 26.07.1979 between the plaintiff and the defendant is Ex. D1. This witness was cross examined. During cross- examination, DW1 deposed that letter dated 01.09.1979 was admitted by the plaintiff during his cross-examination. He deposed that on 29.08.1979, plaintiff on his own amended the letter of credit without consulting either the CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 26/37 beneficiary or the defendants. It is deposed that no amendments with regard to letter of credit can be carried out without the consent of all the parties concerned. Plaintiff has received the insurance policy in which it was mentioned that shipment should be made in first class and approved vessel. Plaintiff deliberately did not incorporate this requirement in his LC opening form submitted to CBI. Subsequently, in the amendment dated 29.08.1979, plaintiff failed to incorporate the abovesaid requirements. Plaintiff knew about the sinking of the ship much earlier than the defendant but kept the defendant in dark. Plaintiff filed insurance claim on 13.09.1979 and by misrepresentation, plaintiff took the letter from the defendant on 25.09.1979. Plaintiff obtained the letter dated 25.09.1979 from the defendant by misrepresenting that the plaintiff was in difficulty with the bank. 26 During cross-examination, DW1 was put a very specific question as to why the impugned cheque was issued by DW1 in favour of plaintiff, to which, witness replied that the cheque was demanded by Mr. Sawhney to cover up his negligence and lapses before the banker. Cheque was given alongwith a covering letter which clearly states "as is required by you". DW1 was pressurized to issue the cheque and was told by Mr. Sawhney that if the cheque was not issued alongwith letter, then he would be in trouble with his banker and thereafter, Mr. Sawhney would see to it that the defendant also falls in trouble and Mr. Sawhney threatened that he will stop co-operating with the defendants with respect to the agreement and their deposits already made by them that the plaintiff will get stuck. The CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 27/37 impugned cheque was not for any consideration. Nothing was delivered to the defendants against the said cheque. Cheque was issued alongwith covering letter dated 03.09.1979 already Ex. D3 which is self explanatory. He deposed that the defendants were not a party to either the alleged amendment or the alleged withdrawal thereof. He deposed that Mr. Sawhney was asked not to present the impugned cheque through letter dated 25.09.1979. The ship ODHAI sunk by that time, agreement became frustrated. Therefore plaintiff was not entitled to encash the impugned cheque for payment. Also, prior to the presentation of the impugned cheque, plaintiff had disputed the documents by pointing out various discrepancies in the documents. Therefore, if the said documents were not binding on the plaintiff, they were equally not binding on the defendant. Therefore, plaintiff had no right to present the cheque for encashment. He deposed that the value of amendment to any revocable letter of credit is governed by the uniform customs and practice governing the whole gambit of issuance of LC and their negotiations. This being the law, witness did not comment on this. 27 Witness Mr. Surendra Mohan mentioned earlier was also cross examined on 06.03.2017. In the opinion of the Court, his testimony is irrelevant to the present case.
Now, I shall decide the issues.
Issue No.1: Whether the plaintiff is a partnership firm registered under the provisions of Indian Partnership Act and Shri Tarlok Singh Sawhney was the registered partner thereof at the time of filing of the suit?
CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 28/37 28 With respect to issue no.1, plaintiff witness Mr. T.S Sawhney deposed in his evidence affidavit that he is one of the partners of the plaintiff which is a registered partnership firm. Form-A of the firm is Ex.PW2/1 and Ex.PW2/2 is Form B being the registration certificate issued by registrar of firms. These documents were neither objected to nor denied by the defendants. Therefore, this stands proved. Moreover, Hon'ble Delhi High Court in suit bearing CS(OS) No. 01/1982 has held that the plaintiff is a registered partnership firm. Copy of order dated 07.03.2018 passed by Hon'ble High Court is Annexure A. therefore, in view of the above, it stands proved that the plaintiff is a partnership firm registered under Indian Partnership Act and it is also proved that Sh. Tarlok Singh Sawhney was a registered partner of the firm at the time of filing of the suit. Therefore, this issue is decided in favour of the plaintiff and against the defendants. Issue No.2: Whether the defendants had made representations as alleged in para 3 and 4 of the plaint?
29 There is no documentary evidence that these representations were made by any of the defendants to the plaintiff at any point of time. The testimony of the plaintiff is merely verbal. Defendants have categorically denied this averment of the plaintiffs having made these representations as alleged in para 3 & 4 of the plaint. Throughout the suit, the defendant has never admitted either expressly or by way of implied admission that they ever made such representations to the plaintiff as are alleged to have been made in para 3 & 4. So, it all boils down to a matter of he said and she said CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 29/37 without there being any documentary proof of the same. The suit of the plaintiff must stand on its own legs and burden of proving any fact alleged by a party is upon the party who alleges it, the plaintiff being the party in this case. There being no documentary evidence and the defendants categorically and unequivocally refuting the claim of the plaintiff about the representations as alleged in para 3 & 4 of the plaint, plaintiff has failed to prove this fact. Therefore, this issue is decided against the plaintiff and in favour of the defendants.
Issue no.3: Whether the sum of Rs.1,80,900/- was paid by the defendants to the plaintiff as collateral security charges and not by way of service charges, as alleged?
30 Plaintiff has alleged that a sum of Rs.80,000/- was paid to the plaintiff as service charge @ 2% on the total CIF value of Rs.40 lacs and the sum of Rs.1,80,900/- was made as a further deposit of 5% in the CIF value of LC amount. Therefore, even as per the case of the plaintiff and as per the agreement dated 26.07.1979 Ex.PW2/3 executed between the plaintiff firm and defendant no.1, clause 3 of the said agreement stipulates that Rs.1,80,900/- was paid as further deposit of 5% in the CIF value of the LC amount thereby meaning that it was paid by way of collateral security charges. It is the case of the defendant that the sum of Rs.1,80,900/- was advanced to the plaintiff so as to enable the plaintiff to open a letter of credit with his banker. So, this deposit of 5% of CIF value of the LC amount as per Clause 3 of agreement dated 26.07.1979 Ex.PW2/3, it appears that this CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 30/37 amount was paid so as to enable the plaintiff to open a LOC with their bankers and not as a collateral security charge. Therefore, this issue is decided against the plaintiff and in favour of the defendant. Issue no.4: Whether the defendant has approached the plaintiff on 3rd September 1979 for withdrawal of proposed amendment of the letter of credit and it was agreed to, if so under what conditions?
31 It is not in dispute that the letter of credit bearing no. 05/164 Ex.PW1/C was an irrevocable letter of credit. It is also not in dispute that the letter of credit was covered by uniform customs and practices which is accepted within the international trade practice. Moreover, there is an endorsement on the letter of credit that it is subject to uniform customs and practice for documentary credits. As per article 3(c) of the UCP, no amendments either in whole or in part to such letter of credit can be effected without agreement of all parties. Defendant was conscious of the fact that the LC was subject to UCP and therefore, no amendment could have been effected in the letter of credit without the consent of all the parties to the letter of credit. Since the plaintiff tried to amend the LC unilateral without the consent of all the concerned parties, therefore the amendment was not permissible. Therefore the averments that the handing over of the cheque by the defendants was for withdrawal of the so called unilateral amendment sought to be effected in the LC does not carry any weight that demand for amendment was made by the plaintiff without the knowledge or the consent of the defendants. Even otherwise, the plaintiff had received a cable dated CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 31/37 01.09.1977 from the exporter stating that the goods had already been shipped on 30.08.1977. It is the claim of the plaintiff that the impugned cheque was given towards advance reimbursement of the credit arranged by the plaintiff. In this regard, the defendants submits that the credit arranged by the plaintiffs was Rs.40 lacs and the impugned cheque is of Rs.10 lacs. Therefore, the reason given by the plaintiff that he became agreeable to withdraw the amendment because defendant gave this cheque towards advance reimbursement of the credit arranged by him defies logic. The plaintiff while filling up proposal form part of Ex.DW2/6 (colly) (OSR) at serial no.2 of index dated 09.09.2003 filed by plaintiff in suit no. 01/1982 for opening LC omitted to mention the most dominant condition as provided under the cover note/policy that the shipment should be through "any first class and/or approved steamer". The abovesaid deliberate/negligent omission by the plaintiff, the banker of the plaintiff did not incorporate this condition of shipment of LC Ex.PW1/C. Therefore, LC was defective. Defendants were not a party to the opening of LC, neither this defect was brought to the notice or knowledge of defendants. Later on, when the plaintiff realized that the LC was defective, plaintiff tried to amend the LC unilaterally and illegally on 29.08.1979 by writing letter dated 28.08.1979. This amendment was rejected by M/s Bentrex because by the time it was communicated shipment was already dispatched on 30.08.1979. Also because the amendment was not possible in view of UCP Article 3(c). the plaintiff stated that they were in serious problem with their bank and if the CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 32/37 defendants did not co-operate, plaintiff would also not co-operate with the defendants and the defendants would not get charge of the cargo upon its arrival. Being constrained by this situation, defendants were left with no option but to issue the impugned cheque alongwith the covering letter dated 03.09.1979 Ex.DW1/P-3 where it was clearly mentioned that the cheque was given as an additional security and in case defendants failed to either retire the documents or provide local LC for the full amount within 10 days from the date of receipt of intimation from plaintiff's banker, plaintiff would be entitled to get the cheque encashed. Encashment of the cheque was contingent upon defendants failure to do the needful as per the terms of contract even after the arrival of goods. Since the contingency never arose because the ship sank on the high seas plaintiff is not entitled to encash the cheque. The plaintiff acknowledge the receipt of impugned cheque vide letter dated 03.09.1979 Ex.PW2/10. In the said letter the plaintiff clearly mentioned that the impugned cheque will be returned on receipt of letter of credit of Rs.40,000/- to the value of shipment from Singapore. 32 From the facts and evidence available on record, the plaintiff has not been able to prove that he had instructed such an amendment to his bankers or that this amendment or subsequent withdrawal was ever in the knowledge of the defendants at any point of time. There is no documentary evidence to this effect to support the case of the plaintiff. These are mere oral assertions of the plaintiff that they had instructed an amendment by way of merchandise quality approval which was subsequently withdrawn after CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 33/37 the defendant tendered cheque of Rs.10 lacs by way of additional security/advance payment. The story given by the defendant as to why the impugned cheque was tendered appears to be more probable when the entire evidence is seen in the light of pleadings. Plaintiff has not been able to show any document on record which has been proved that such alleged amendment was instructed and the knowledge thereof was given to the defendants at any point of time. Therefore, this issue is decided against the plaintiff and in favour of the defendants.
Issue no.5: Whether the letter dated 25th September 1979 was issued under coercion, as alleged?
33 Defendants have alleged that letter dated 25.09.1979 was issued under threats and coercion made by the plaintiffs to the defendants. There is nothing on record to show that such allegation is true. Apart from mere allegations and bald assertions, defendants have not been able to show that the impugned letter dated 25.09.1979 addressed to the plaintiffs by the defendants was issued under coercion. No evidence of coercion or misrepresentation has been proved on record by the defendant regarding this letter. In the absence of any cogent documentary evidence or some admitted testimony of any of the witnesses to throw any light on this fact, this issue is decided in favour of the plaintiff and against the defendants that the letter dated 25.09.1979 was not issued under coercion.
Issue No. 6:Whether the plaintiff is not entitled to enforce the cheque? And CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 34/37 Issue no.7: Whether the suit is barred under Order 2 Rule 2? And Issue no.8: To what amount, if any, the plaintiff is entitled to in this suit?
34 Order 2 Rule 2 says as under:-
Suit to include the whole claim- (1) Every suit shall include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action; but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court. (2) Relinquishment of part of claim- Where a plaintiff omits to sue in respect of, or intentionally relinquishes, any portion of his claim, he shall not afterwards sue in respect of the portion so omitted or relinquished. (3) Omission to sue for one of several reliefs- A person entitled to more than one relief in respect of the same cause of action may sue for all or any of such reliefs; but if he omits, except with the leave of the Court, to sue for all such reliefs, he shall not afterwards sue for any relief so omitted.
Explanation- For the purposes of this rule an obligation and a collateral security for its performance and successive claims arising under the same obligation shall be deemed respectively to constitute but one cause of action. 35 Now, even as per the case of the plaintiff, the impugned cheque was issued by way of collateral security so as to secure the plaintiff regarding their investment of letter of credit which they got issued to service the defendants. Service charge of 2% was taken in advance by way of CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 35/37 cheque by the plaintiffs. An additional amount of Rs.1,80,900/- is also admitted by the plaintiffs to have been received from the defendants. The court has already ruled that this amount of Rs.1,80,900/- was given by the defendants to enable the plaintiffs to open a letter of credit with their bankers i.e. Central Bank of India. From the entire evidence on record brought by both the parties, it is clear that the act of issuing the impugned cheque was part of a single transaction, which transaction is subject matter of the suit bearing no. 01/1982 titled as M/s Sawhney Brothers vs HSBC Corporation & Ors. which has been decreed in favour of the plaintiffs. Plaintiff has not been able to show and prove that the impugned cheque was tendered by way of a separate transaction independent of the first transaction and agreement dated 26.07.1979 Ex.PW2/3. Even as per the averments of the plaintiff in the plaint and the evidence led by them, this argument is reinforced that the impugned cheque is a part of same transaction arising out of agreement dated 26.07.1979. Therefore, clearly, the present suit is barred by provisions of Order 2 Rule 2 CPC. Since the present suit is barred, then, the plaintiff is not entitled to enforce the cheque as plaintiff should have pleaded this relief in the original suit bearing CS (OS) No. 01/1982. A separate suit for enforcing the present cheque does not lie and cannot be decreed being barred by provisions of Order 2 Rule 2 CPC. Therefore, the answers to all these issues is against the plaintiff and in favour of the defendants. In view of abovementioned, it is clear that plaintiff is not entitled to any amount whatsoever in the present case.
CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 36/37 Issue No.9: To what interest, if any, the plaintiff is entitled to?
36 The impugned cheque is for Rs.10 lacs. Plaintiff has also charged an interest of Rs.5,37,245.67/- @ 19.5% with quarterly rests upon the amount of Rs.10 lacs which the plaintiff believed himself to be entitled to. Since the court has already arrived at the conclusion, the plaintiff is not entitled to this amount of Rs.10 lacs of the impugned cheque. Therefore, plaintiff cannot also be entitled to interest on the said amount and plaintiff is not entitled to any interest whatsoever. This issue is accordingly decided against the plaintiff and in favour of the defendants.
Relief:-
37 In view of my abovementioned observation on issue no. 1 to 9, it is held that the plaintiff is not entitled to any relief whatsoever. Hence, the suit of the plaintiff is dismissed. Since the plaintiff believed himself to be entitled to the amount prayed for, parties are left to bear their own costs. Decree sheet be prepared accordingly. File be consigned to Record Room.
File be consigned to record room after due compliance.
Digitally signed by SUNIL SUNIL BENIWAL
BENIWAL Date: 2018.12.13
Announced in open court 16:02:06 +0530
on 12.12.2018 (SUNIL BENIWAL)
ADJ-02, Central,THC/Delhi
CS No. 9637/16 M/s Sawhney Brothers vs M/s Orient Enterprise & Ors. 37/37