Delhi District Court
Rakesh Hastimal C Sanghvi vs First Plumbing Private Limited on 19 May, 2025
BEFORE THE COURT OF SH. SURINDER S. RATHI, DISTRICT JUDGE
(COMM.)-11 CENTRAL, THC, DELHI
CS Comm. No.1388/2023
Rakesh Hastimal C. Sanghvi
Prop. of M/s Reliable Metals (India),
Office at:
1396, Fasil Road, Ajmeri Gate, Delhi-110006
Through his SPA Holder Ashok Sanghvi .........Plaintiff
Vs.
M/s First Plumbing Private Ltd.
422, 4th Floor, Qutum Plaza, DLF,
Phase-1 Gurgaon-122022
Also At:
F-24, 1st Floor, Green Park, Delhi-1100016 ........Defendant
Date of Institution : 19.10.2023
Date of Final Arguments : 19.05.2025
Date of Judgment : 19.05.2025
Decision : Decreed
Judgment
1.This suit is filed by plaintiff for recovery of Rs.13,70,252/- alongwith interest @18% per annum as unpaid dues of goods sold. Case of the Plaintiff
2. Case of the plaintiff as per plaint and the documents filed is that he is proprietor of M/s Reliable Metals (India) at Ajmeri Gate, Delhi and is in the business of trading of stainless steel pipes, fitting and allied material. The suit is filed by plaintiff through his Special Power of Attorney holder Sh. Ashok Sanghvi. Perusal of the power of attorney shows that this document Ex.PW1/1 dated 10.10.2023 is executed on a non-judicial stamp paper of only Rs. 20/- even though as per Article 48 of Indian Stamp Act, 1899 Schedule 1A as applicable to NCT of Delhi the stamp duty payable is Rs. 50 and not Rs. 20. as such there is understamping of CS Comm No.1388/2023 page 1 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
Rs.30 and as per case titled M/s N.N. Global Mercantile Private Limited Vs. M/s Indo Unique Flame Ltd. & Ors., 2023 Latest Caselaw 368 SC this is a curable defect. As such in exercise of power under Section 35 and 38 of Indian Stamp Act, 1899 plaintiff is permitted to make good the deficiency of Rs. 30 apart from paying penalty equivalent to 10 times the proper duty i.e. Rs. 500/- totalling to Rs.530/-. However, during the course of final arguments the plaintiff has done the needful and paid deficient stamp duty of Rs.550/- which is accepted on record.
3. Defendant is said to be a duly incorporated private ltd. company. Although the plaint is silent but Court is apprised that F-24, First Floor Green Park, Delhi-110016 is its registered address. The plaint is silent as to who approached the other party for business relations. All that is stated is that in the course of business defendant purchased goods from the plaintiff through various bills as per terms and conditions printed on the invoices. Payments were supposed to be made within 15 days of purchase whereafter 18% interest was leviable. Sale was carried out by way of 31 invoices issued between 09.03.2019 to 23.10.2020 cumulatively valuing Rs.48,93,347/-. Out of the same defendant is said to have paid Rs. 40 lakhs leaving a debit balance of Rs.8,93,347/-.
4. Plaintiff has sought recovery of interest of Rs.4,76,905/-. The plaint is non-compliant of Order 7 Rule 2A CPC in so far as it does not disclose as to how the above interest component was arrived at i.e. the period for which the interest is calculated. It is pleaded that plaintiff was maintaining a books of account and there was outstanding debit balance of Rs.13,70,252/-. The debit balance was not cleared despite demands.
5. Plaintiff was constrained to issue legal notice dated 16.12.2022 which was duly served. The plaint is silent if this legal notice was replied by the CS Comm No.1388/2023 page 2 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
defendant or not. However, perusal of the WS shows that the plaintiff's legal notice was duly replied by the defendant vide reply dated 14.01.2023 which is now exhibited on record as Ex.DW1/2 and Ex.DW1/3. This fact is also mentioned in the para 9 of the WS but in the replication filed by the plaintiff the same has been categorically denied. Perusal of record also shows that no affidavit of admission denial of defendant's documents has been filed by the plaintiff as per Order 11 Rule 4 (2) and (3) CPC and as such repercussions as per Order 11 Rule 4 (5) CPC needs to visit the plaintiff.
6. As such per se plaintiff and his SPA have concealed a material fact from this Court even though as per statement of truth as provided under Appendix I under Order 6 Rule 15 CPC as amended for Commercial Courts the plaintiff through the SPA has deposed in para 4 as under:
"I say that there is no false statement or the concealment of any material fact, document or record and I have included information that is according to me, relevant for the present suit".
7. In the light of the above this Court finds it to be a fit case for issuance of notice under Section 379 BNSS (Section 340 Cr.PC) to plaintiff Rakesh Hastimal C. Sanghvi and his SPA Ashok Sanghvi as to why proceedings of perjury be not initiated against them for concealment of material facts from Court. Reader/Ahlmad is directed to prepare a separate file for this purpose.
8. Plaintiff carried out Pre-Institution Mediation as per Section 12A of Commercial Courts Act, 2015. The plaint does not disclose the date of Non-Starter Report but the same is placed on record with date of issuance as 08.07.2023. Although defendant had appeared through counsel Sh. Sachin Yadav, Advocate but no settlement was arrived at. In this backdrop, plaintiff has filed this suit for following reliefs:
CS Comm No.1388/2023 page 3 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
Prayer:
i. Pass a decree for the recovery of Rs.13,70,252/- (Rs. Thirteen Lakhs Seventy Thousand Two Hundred Fifty Two only) in favour of the plaintiff and against the defendants alongwith pendente lite and future interest @18% p.a. till the date of realization of the amount.
ii. Award cost of the suit in favour of the plaintiff and against the defendants; iii. Pass such other or further orders which this Hon'ble Court may deem fit and proper in the facts and circumstances of the case, in the interest of justice.
9. Summons of the suit was served upon the defendant on 17.11.2023 and Sh. Sachin Yadav, Advocate entered appearance on 17.12.2023. However, WS was filed with some delay which was condoned. Defendant's Case.-
10.Case of the defendant as per WS is that the suit deserves to be dismissed as it has been filed without any cause of action by misrepresentation and concealment of actual facts. In its preliminary submissions the defendant company accepted that it had business relations with the plaintiff. One of its directors Sh. Sundararaj used to deal with the plaintiff who expired during covid pandemic in April 2021. Thereafter, the defendant company requested all the vendors including plaintiff to tally their books of accounts so that dues can be cleared. However, successors of their late Director Sh. Sundararaj did not share the laptop and mobile of their director so that business details can be ascertained.
11.When the defendant company tallied the plaintiff's bills with the books of account available with the defendant company it was found that the bills were forged. Several requests were made to the plaintiff vide email dated 29.09.2022, 30.09.2022, 01.10.2022, 06.11.2022, 08.11.2022, 16.11.2022 (wrongly written as 16.11.2023), 24.11.2022 and 25.11.2022 to provide details of bonafide bills so that payments can be made. It is pleaded that the bills supplied by the plaintiff are forged and carried mismatched receiver's signatures. It is pleaded that all the payments used to be made by the defendant were on account and not bill wise. It is pleaded that CS Comm No.1388/2023 page 4 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
defendant did participate in Pre-Institution Mediation but none appeared from the plaintiff's side which led to issuance of Non-Starter Report.
12.In its reply to the plaint it is not denied that plaintiff is proprietor of M/s Reliable Metals (India) at Ajmeri Gate and is trader of stainless steel pipes and fittings. Authority of SPA is also not denied as also the fact that defendant is an incorporated company. It is not denied that defendant company had business relations with the plaintiff whereunder purchases were carried out, however, it is denied that 18% interest was leviable in case of delay of payments beyond 15 days. As regards the 31 bills tabulated in para 6 of the plaint it is pleaded that many of these bills are forged and carry mismatched signatures of unknown persons. Out of these 31 bills, bills at Sr. no. 2, 4, 5, 7, 9, 12, 15, 17 and 29 to 31 are said to be forged. It is pleaded that no material was delivered under bill at Sr. no. 3 for Rs. 3,32,333/-. Qua bill at Sr. no. 1 dated 09.03.2019 for Rs.7,48,396/- it is remarked that "plaintiff did not provide mandatory test certificate". Ld. Counsel could not explain as to which type of certificate was required or who was supposed to issue them. In any case delivery of the goods is not denied. Bills at Sr. no. 13, 14, 16, 23 and 26 are shown to have been paid and qua remaining bills it is mentioned that either no goods were received or if received, receiving was done by unknown person.
13.Defendant has created a table of 31 invoices alongwith their dates, numbers, value and specific remarks. It is denied that defendant is liable to pay Rs.13,70,252/- as claimed in the statement of account filed by the plaintiff. It is denied that plaintiff ever demanded this money. Receipt of legal notice dated 16.12.2022 is not denied. It is claimed to have been replied on 14.01.2023 to the Ld. Counsel for plaintiff wherein Ld. Counsel for the defendant requested for supply of documents to support CS Comm No.1388/2023 page 5 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
the claim of Rs.13,70,252/- but no reply was sent by the plaintiff. Defendant has expressed no objection to the jurisdiction of this Court.
14.In the affidavit of admission denial the tables containing the statements qua 36 documents of the plaintiff is neither signed nor sworn before the Oath Commissioner. It is shown as an attachment to a blank affidavit. In the attached unsigned statement several invoices have been admitted while rest are denied as per details discussed supra. Alongwith the WS defendant placed on record emails exchanged between the parties and a reply 14.01.2023 to plaintiff's legal notice 16.12.2022. Replication
15.Separate replication was filed by SPA of plaintiff wherein he reiterated his pleaded case and denied the contentions of the defendant. Such is the height of ex-facie perjury on behalf of the plaintiff that in reply to para 9 of the WS when the defendant apprised the plaintiff that plaintiff's legal notice dated 16.12.2022 was duly responded vide a reply dated 14.01.2023 but the SPA of the plaintiff insisted that this submission is wrong and reiterated that no such reply was sent by the defendant.
16.Interestingly plaintiff did not file any affidavit of admission denial to defendant's documents in terms of Order 11 Rule 4 (2) CPC and as such consequences as per Order 11 Rule 4 (6) and (7) CPC deserves to visit the plaintiff. For ready reference the same is reproduced as under:
Order 11 Rule 4 CPC : Admission and denial of documents (1) Each party shall submit a statement of admissions and denials of all documents disclosed and of which inspection has been completed, within fifteen days of the completion of inspection or any later date as fixed by the Court. (2) The statement of admissions and denials shall set out explicitly, whether such party was admitting or denying:-
(i) correctness of contents of a document;
(ii) existence of a document;
(iii) execution of a document;
(iv) issuance or receipt of a document;
(v) custody of a document...........
CS Comm No.1388/2023 page 6 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
Explanation: A statement of admission or denial of the existence of a document made in accordance with sub-rule (2) shall include the admission or denial of the contents of a document.
(3) Each party shall set out reasons for denying a document under any of the above grounds and bare and unsupported denials shall not be deemed to be denials of a document and proof of such documents may then be dispensed with at the discretion of the Court. (4) Any party may however submit bare denials for the third party documents of which the party denying does not have any personal knowledge of and to which the party denying is not a party to in any manner whatsoever.
(5) An affidvit in support of the statement of admissions and denials shall be filed confirming the correctness of the contents of the statement. (6) In the event that the Court holds that any party has unduly refused to admit a document under any of the above criteria, - costs including exemplary costs) for deciding on admissibility of a document may be imposed by the Court on such party. (7) The Court may pass orders with respect to admitted documents including for waiver of further proof thereon or rejection of any documents."
(Emphasis Supplied)
17.Upon completion of pleadings following issues were identified Ld. Predecessor on 28.08.2024:
Issues:
i. Whether the bills mentioned in Para no. 6 of the Para-wise Reply of the written statement are forged? OPD ii. Whether the plaintiff is entitled to a decree for recovery of Rs.13,70,252/-? OPP iii. Whether the plaintiff is entitled to interest, if so, at what rate and for which period? OPP iv. Relief Evidence
18.Evidence in this case was ordered to be recorded before Ld. LC Ms. Kirti Sethi Arora, Advocate for recording of evidence as per protocol created by this Court under Order 18 Rule 4 CPC read with Order 15A Rule 6(l) and (o) CPC as applicable to Commercial suits for the sake of timely disposal of this case.
19.To prove his case plaintiff examined his SPA PW1 Ashok Sanghvi. Vide Ex.PW1/A he deposed on the lines of plaint and exhibited following documents:
i. Copy of Special Power of Attorney and GST certificate is Ex.PW1/1 to Ex.PW1/2 (colly. running into 4 pages);
CS Comm No.1388/2023 page 7 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
ii. The computerized copy of bills are Ex.PW1/3 to Ex.PW1/33 (colly. running into 43 pages);
iii. The true copy of statement of accounts and certificate under Section 65B of Indian Evidence Act is Ex.PW1/34 to Ex.PW1/35;
iv. The copy of legal notice and postal receipt are Ex.PW1/36 to Ex.PW1/38 (colly.
running into 3 pages).
20.In his cross-examination done by Sh. Sachin Yadav, Advocate he claimed that he is SPA of the plaintiff since 2023 and is aware of the documents filed and facts pleaded. Defendant used to contact him or Rakesh for receiving orders. Parties have business relations since 2019. It is employees of the defendant company which reached the plaintiff's office. Thereafter, orders were placed via email. He expressed unawareness if such emails containing supply orders are filed with the suit. He denied having any standalone business agreement with the defendant. Defendant was quite regular in making payments and as such no interest was charged. Their invoices were signed by the Accounts Officer/Authorised person, however, the witness couldnot identify the signatory to invoices Ex.PW1/4 to Ex.PW1/33 and could recognise signatures appearing on Ex.PW1/6 and Ex.PW1/10.
21.Although he initially denied having any sister concern but upon being shown three additional documents which were not available on record which the PW1 accepted that they belong to M/s Sanghvi Metal House, a firm belonging to his father. He accepted that all the deliveries were made against signatures but accepted that some deliveries made at late hours do not have received signatures. He expressed unawareness if e-way bills were issued qua the supplies. He added that GST was paid for all the sales. He claimed that the suit in hand was filed only because the defendant did not make the payments. He accepted the emails ID of Sh. Vatsal Jain on which orders were placed.
CS Comm No.1388/2023 page 8 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
22.In order to prove its case defendant company examined DW1 Prakash Nayak, its AR. Vide affidavit Ex.DW1/X he deposed on the lines of WS and exhibited following documents:
i. Copy of Authority letter dated 18.12.2023 is Ex.DW1/1. ii. Copy of request Email dated 29.09.2022, 30.09.2022, 01.10.2022, 08.11.2022, 16.11.2023 and 25.11.2022 is Ex.DW1/2 (colly. running into 6 pages). iii. The copy of reply to legal notice dated 14.01.2023 and acknowledgement through email to the counsel of the plaintiff is Ex.DW1/3 and Ex.DW1/4.
23. In his cross-examination done by Ld. Counsel for plaintiff Sh. Mukesh Aggarwal he stated that he is working with the defendant company only for the last one year and no dealing with the plaintiff was carried out in his presence. He accepted that he has no personal knowledge about dealings with the plaintiff. He accepted that no resolution was passed by Board of Directors of the defendant company in his favour and that he is appearing on behalf of the defendant company on the basis of an authority letter issued by the Managing Director. He admitted that no ledger of the defendant company was placed even though it is available in office of defendant company. For this adverse inference under Section 119 of Bhartiya Sakshya Adhiniyam, 2023 (Section 114 (g) of Indian Evidence Act) deserves to be drawn against the defendant.
24.He accepted the suggestion that unpaid amount is not reflected in their ledger. He also accepted the suggestion that only a sum of Rs. 40 lakhs was paid by the defendant to the plaintiff. He added that he has no knowledge about the quantum and nature of the material purchased by the defendant to the plaintiff but admitted that it was supplied between March 2019 and October 2020. He accepted that the defendant company never raised any objection qua quantity and quality of the material. No document has been placed on record qua any objection. He also accepted that there are 31 invoices in this matter and defendant has claimed GST against 29 of them. He expressed unawareness if defendant consumed all CS Comm No.1388/2023 page 9 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
the 31 bills. He admitted that no goods were supplied back to the plaintiff. He accepted that he does not operate the computers in the defendant's office and is not authorised to issue Section 65B Indian Evidence Certificate.
25. I have heard arguments of Sh. Mukesh Aggarwal, Ld counsel for plaintiff and Sh. Sachin Yadav and Sh. Vikas Kumar, Ld. Counsels for defendant assisted by AR Prakash Nayak. I have perused the case file carefully.
26.Now I shall dispose of individual issues framed in this case.
Issue No.1, 2 and 3:
i. Whether the bills mentioned in Para no. 6 of the Para-wise Reply of the written statement are forged? OPD ii. Whether the plaintiff is entitled to a decree for recovery of Rs.13,70,252/-? OPP iii. Whether the plaintiff is entitled to interest, if so, at what rate and for which period? OPP
27.Before deciding the issues on merits it would be appropriate to cull out facts admitted by both the sides in pleadings, during evidence and also final arguments. It is admitted that plaintiff is a proprietorship firm trading in steel pipes and fittings and that defendant, a duly incorporated private ltd. company, had been carried out purchase of goods from the plaintiff. Both the sides had business relations since 2019 whereunder as per orders received from the defendant goods were sold and supplied through GST paid invoices. Both the sides were maintaining ledger of all the sales made and payments received on account. It is admitted case of both the sides that it is nobody's case that any payment made by the defendant was not credited by them in their ledger Ex.PW1/34.
28.Issuance of legal demand notice by the plaintiff dated 16.12.2022 Ex.PW1/36 to Ex.PW1/38 colly. is not denied by the defendant. However, the factum of its due reply by the defendant dated 14.01.2023 CS Comm No.1388/2023 page 10 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
Ex.DW1/3 and Ex.DW1/4 was not only concealed by the plaintiff in the plaint but has been categorically denied in the replication even though this fact was brought on record in the WS and for this separate perjury proceedings have already been initiated against the plaintiff Rakesh Hastimal C. Sanghvi and his SPA Ashok Sanghvi.
No Board Resolution in favour of Defendant's AR.-
29.Before appreciating the submissions made by both the sides on record in the light of pleadings and the material available it will be appropriate to initially deal with the aspect of AR of the defendant company Sh. Prakash Nayak, being not competent to sign or file the WS as also to depose as witness on behalf of the defendant company since neither passing of any resolution by the defendant's director is pleaded nor any copy thereof has been placed on record.
30.While opening his submissions in this regard Ld. Counsel for plaintiff submits that defendant is admittedly a duly incorporated private ltd. company and in the fitness of things it should have appointed an authorised person by passing a resolution by the appropriate corum of their board of directors. Not only no such resolution by the board is pleaded or placed on record but in his cross-examination while appearing as DW1 the AR conceded that no resolution was passed in his favour. DW1 further conceded that he only has a authority letter issued on the letterhead of the defendant company Ex.DW1/1 signed by the Managing Director and also that there is nothing in the text thereof that does not refer to any resolution of the board where a decision to appoint Sh. Prakash Nayak as authorised representative of the company was taken. The Section 179 of Companies Act, 2013 regard is very clear in this regard. For ready reference the same is reproduced hereunder:
Section 179. Powers of Board.--
CS Comm No.1388/2023 page 11 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
(1) The Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do:
Provided that in exercising such power or doing such act or thing, the Board shall be subject tothe provisions contained in that behalf in this Act, or in the memorandum or articles, or in any regulations not inconsistent therewith and duly made thereunder, including regulations made by the company in general meeting:
Provided further that the Boardshall not exercise any power or do any act or thing which is directed or required, whether under this Act or by the memorandum or articles of the company or otherwise, to be exercised or done by the company in general meeting.
(2) No regulation made by the company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made.
(3) The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely:--
(a) to make calls on shareholders in respect of money unpaid on their shares;
(b) to authorise buy-back of securities under section 68;
(c) to issue securities, including debentures, whether in or outside India;
(d) to borrow monies;
(e) to invest the funds of the company;
(f) to grant loans or give guarantee or provide security in respect of loans;
(g) to approve financial statement and the Board's report;
(h) to diversify the business of the company;
(i) to approve amalgamation, merger or reconstruction;
(j) to take over a company or acquire a controlling or substantial stake in another company;
(k) any other matter which may be prescribed:
Provided that the Board may, by a resolution passed at a meeting, delegate to any committee of directors, the managing director, the manager or any other principal officer of the company or in the case of a branch office of the company, the principal officer of the branch office, the powers specified in clauses (d) to (f)on such conditions as it may specify:
Provided further that the acceptance by a banking company in the ordinary course of its business of deposits of money from the public repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise, or the placing of monies on deposit by a banking company with another banking company on such conditions as the Board may prescribe, shall not be deemed to be a borrowing of monies or, as the case may be, a making of loans by a banking company withinthe meaning of this section.
Explanation I.--Nothing in clause (d) shall apply to borrowings by a banking company from other banking companies or from the Reserve Bank of India, the State Bank of India or any other banks established by or under any Act.
Explanation II.--In respect of dealings between a company and its bankers, the exercise by the company of the power specified in clause (d) shall mean the arrangement made by the company with its bankers for the borrowing of money by way of overdraft or cash credit or otherwise and not the actual day-to-day operation on overdraft, cash credit or other accounts by means of which the arrangement so made is actually availed of.
CS Comm No.1388/2023 page 12 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
(4) Nothing in this section shall be deemed to affect the right of the company in general meeting to impose restrictions and conditions on the exercise by the Board of any of the powers specified in this section.
31.In case titled Dale and Carrington Invt. P. Ltd. Vs. P. K. Prathapan and Ors., AIR 2005 SC 1624 Hon'ble Supreme Court has held that "A company is a juristic person and it acts through its Directors who are collectively referred to as the Board of Directors. An Individual Director has no power to act on behalf of a company of which he is a Director unless by some resolution of the Board of Dirrectors of the company specific power is given to him/her. Whatever decisions are taken regarding running the affairs of the company, they are taken by the Board of Directors."
32.It is vehemently argued by Ld. Counsel for plaintiff that even otherwise DW1 is an incompetent witness since he had no personal knowledge of any transaction entered between the parties as he admittedly joined the defendant company just a year ago while the transaction in question pertain to 5-6 years ago i.e. 2019-2020.
33.While opening his submissions in this regard Ld. Counsel for defendant submits that their late Director Sh. Sundararaj was dealing with the plaintiff and he had lately expired during Covid which created a huge handicap becuase all the documents and relevant material viz-a-viz the business carried out with the plaintiff and similar other suppliers was available with him and that his family did not co-operate. Despite being asked Ld. counsel for defendant company could not justify non- compliance of Section 179 of Indian Companies Act as to why no resolution was passed by the board of directors of the defendant company in favour of Sh. Prakash Nayak.
34.As such in the light of above factual and legal position the entire written statement of the defendant is rendered void and unacceptable simply because it has not been signed and duly sworn by affidavits of a competent person. Likewise, in the absence of any authority to step into the witness box on behalf of the defendant company, his deposition cannot be read and relied by the defendant company.
CS Comm No.1388/2023 page 13 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
Defendant's plea of Forged Bills.-
35.As far as issue no. 1 is concerned, it pertains to plea of the defendant that certain bills filed by the plaintiff are forged. As mentioned in para 6 of the WS the bills said to have been forged are at Sr. no. 2, 4, 5, 7, 9, 12, 15, 17, 29, 30 and 31 i.e. 11 in number. The onus of proving that these bills are forged was laid upon the defendant company. As concluded supra, the fact that defendant chose to defend itself through a unauthorised person has already led to a situation where neither its WS nor its evidence of DW1 can be read and relied by the defendant company.
36.Even if for arguments sake these pleas are concerned, plain reading of the WS nowhere shows as to how and why these bills are termed to be forged by the defendant. In the absence of any specific reason cited therein no document can be allowed to be tagged as forged without requisite specifications. Had the defendant company been diligent in defendant this suit and had they taken pains to elaborate their plea in this regard, plaintiff would have got an opportunity to refute these assertions. In the absence thereof bald flagging of 11 invoices out of 21 as forged has conclusively remained not proved. The bald plea that the receiver's signatures are different on different invoices or the contents do not match with the original invoices available with the defendant company have remained unsubstantiated.
37.Not only the defendant did not file all the 31 invoices available with them in original alongwith the WS but when their request for placing these original invoices on record at a belated stage was considered and allowed by this Court, still the defendant company chose not to file either of them. Having failed to do the needful, the onus to prove these invoices as forged remains undischarged. When couple of such invoices were shown to PW1 during cross-examination it was found that the contents of the invoices are CS Comm No.1388/2023 page 14 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
predominantly the same barring reference of a book number. When the date, bill number, particulars of the goods sold, value of the invoice and other necessary details are identical, by no stretch of argument they can be said to be forged.
38.In one such invoice Ex.PW1/31 dated 21.08.2020 is shown where at the bottom of the third internal page IGST of Rs.47,706.70p is shown to have been deducted at the rate of 18% but in the corresponding original said to have been supplied to the defendant same amount of GST is deducted but under the two heads of SGST/CGST. Admittedly, there is absolutely no other difference in the two bills qua the details of the goods sold, pricing of the goods and total cumulative value of the invoice of Rs.3,12,744/-. Once nothing is brought on record to show that the GST deducted of Rs.47,706.70 p was not deposited with the GST department and when the delivery of the goods under this bill stands duly received as per endorsement of "Deepak" on all the three pages, it cannot be conclusively stated that these invoices are forged. As concluded supra, neither the original bills sought to be relied by the defendant were brought on record procedurally nor any exhibit was given to them as per Indian Evidence Act.
39. Over and above the above flaws, DW1 in his cross-examination has conceded that it is not their case that there is under-supply or non-supply of material by the plaintiff to the defendant company. Failure of the defendant company to place on record its ledger also calls for drawing of an adverse inference under Section Section 119 of Bhartiya Sakshya Adhiniyam, 2023 (Section 114 (g) of Indian Evidence Act). For ready reference the same is reproduced hereunder:
Section 119 of Bhartiya Sakshya Adhiniyam, 2023: Court may presume existence of certain facts Illustration CS Comm No.1388/2023 page 15 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
The Court may presume-
(g) That evidence which could be and is not produced would, if produced, be unfavourable to the person who withholds it;
40. The law is well settled with regard to concealment of material facts and clever drafting. In case titled Krishan Dayal Vs. Chandu Ram, 1969 SCC Latest Caselaw 133 Del while discussing the effect of withholding of material documents like account book it was observed that:
"Question then arises as to what is the effect of the withholding of material account books. In this respect I find that according to illustration (g) under Section 114 of the Evidence Act, the evidence which could be and is not produced would, if produced, be unfavorable to the person who withholds it. The principle underlying the above illustration has been applied by their Lordships of the Supreme Court in cases wherein a party in possession of material document does not produce the same. It has accordingly been held that the non-production of a material document by a party to a case would make the Court draw an inference against that party. A Division Bench of the Calcutta High Court (Mookerjee and Panton, JJ.) in the case of Debendra Narayan Singh v. Narendra Narayan Singh and others held:- "In a suit for accounts, the non-production of account books by the party who has custody of them justifies the presumption under Section 114(g). Evidence Act, that they have been withheld, because if produced, they would have been unfavorable to his case. If he is the plaintiff and is claiming accounts though withholding papers, his suit is liable to be dismissed.
(Emphasis Supplied)
41. In case titled Union of India Vs. Mahadeolal Prabhudayal, 1965 Latest Caselaw 43 SC Hon'ble Supreme Court while discussing judgments passed by Privy Counsel ruled that:
"If it is found that a party to a suit breaches its application to give full disclosure of relevant facts and materials, the Court shall invoke the presumption attached to Section 114(g) of the Evidence Act."
Plea of Plaintiff not examined as witness.-
42. Another objection raised by Ld. Counsel for defendant is that plaintiff has not stepped into the witness box to prove his case and he simply examined his SPA Ashok Sanghvi it is argued that neither in the plaint nor in the special power of attorney there is any reference as to how Ashok Sanghvi is aware of the details of the business dealings between the parties and why he should be treated as a competent witness. The law in this regard is well-settled by Hon'ble Supreme Court in case titled Janki Vashdeo CS Comm No.1388/2023 page 16 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
Bhojwani and Anr. Vs. Indusind Bank Ltd. and ors., 2004 Latest Caselaw 697 SC wherein it is mandated that the power to depose in a particular case qua particular facts cannot be delegated by Attorner to the Attorney. The relevant paras are reproduced as under:
"This Court in the case of Vidhyadhar vs. Manikrao and Another, (1999) 3 SCC 573 observed at page 583 SCC that "where a party to the suit does not appear in the witness-box and states his own case on oath and does not offer himself to be cross-examined by the other side, a presumption would arise that the case set up by him is not correct".
On the question of power of attorney, the High Courts have of Rajasthan, 1986 2WLL 713 it was held that a general power of attorney holder can appear, plead and act on behalf of the party but he cannot become a witness on behalf of the party. He can only appear in his own capacity. No one can delegate the power to appear in witness box on behalf of himself. To appear in a witness box is altogether a different act. A general power of attorney holder cannot be allowed to appear as a witness on behalf of the plaintiff in the capacity of the plaintiff. The aforesaid judgment was quoted with the approval in the was held that the word "acts" used in Rule 2 of Order III of the CPC does not include the act of power of attorney holder to appear as a witness on behalf of a party. Power of attorney holder of a party can appear only as a witness in his personal capacity and whatever knowledge he has about the case he can state on oath but be cannot appear as a witness on behalf of the party in the capacity of that party. If the plaintiff is unable to appear in the court, a commission for recording his evidence may be issued under the relevant provisions of the CPC.
Dias reported in 2000 Vol.102 (1) Bom.L.R.908, the Goa Bench of the Bombay High Court held that a power of attorney can file a complaint under Section 138 but cannot depose on behalf of the complainant. He can only appear as a witness. Armando Luis & Anr. reported in 2002 (2) Bom.C.R.754 on which the reliance has been placed by the Tribunal in the present case, the High Court took a dissenting view and held that the provisions contained in order III Rule 2 of CPC cannot be construed to disentitle the power of attorney holder to depose on behalf of his principal.
The High Court further held that the word "act" appearing in order III Rule 2 of CPC takes within its sweep "depose". We are unable to agree with this view taken by the Bombay High Court in Floriano Armando (supra).
We hold that the view taken by the Rajasthan High Court in the case of Shambhu Dutt Shastri (supra) followed and reiterated in the case of Ram Prasad (supra) is the correct view. The view taken in the case of Floriano Armando Luis (supra) cannot be said to have laid down a correct law and is accordingly overruled."
43.While opposing this plea attention of this Court is drawn by Ld. counsel for plaintiff to para 1 of the SPA where it is mentioned, "That Sh. Ashok Sanghvi is very well aware fact of the case and transaction between me and M/s First Plumbing Private Ltd.". It is further pointed out that in para 1 of the SPA it is categorically mentioned that both the attorner and the attorney are sons of Sh. Hastimal C. Sanghvi and are as such brothers. It CS Comm No.1388/2023 page 17 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
is submitted that this fact has also come on record in the cross- examination of PW1 when he stated that "I am fully aware of the documents and the plaint filed by the plaintiff company. Rakesh and me both are contact persons for the plaintiff to receive the orders. I have business with the defendant since 2019". In this backdrop, I see no strength in the plea of Ld. Counsel for defendant that PW1 has no personal knowledge to depose in the matter. Moreover, no suggestion was made to PW1 that he has no personal knowledge or that he is not a competent witness.
Suit Claim on merits.-
44.Now coming to the merits of the matter qua plaintiff's claim of principal debit balance of Rs.8,93,347/-, as per Sale of Goods Act, 1930 all that is required to prove the sale is receipt of purchase orders, issuance of GST paid invoices, proof of actual delivery of goods and, lastly, the fact that payment qua delivered goods was not made by the defendant to the plaintiff.
45.As discussed supra, both the sides admittedly have business relations since 2019. It is not the case of defendant that they have not placed any order. The WS of the defendant is already ruled to be unacceptable since it has neither been signed nor supported with affidavit of duly appointed authorised person by the board of directors of the defendant company. Initially, a plea was taken that goods under several invoices did not reach the defendant but in his cross-examination DW1 categorically admitted that no communication was ever issued to the plaintiff for non-supply or short supply of goods. Plaintiff has filed and proved all the 31 invoices issued between the parties which cumulatively valued Rs.48,93,347/-.
46. It is pleaded that Rs.40 lakhs has already been received from the defendant and only a sum of Rs.8,93,347/- remained unpaid. Legally, it is CS Comm No.1388/2023 page 18 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
not obligatory on a plaintiff to file and prove all the invoices qua business carried out between the parties. Rather filing and proving of only unpaid invoices constituting the suit claim suffices. Thus the suit amount is covered only under last three sales made on 21.08.2020, 28.09.2020 and 23.10.2020 and partially out of invoice dated 13.06.2020. It is not the case of the defendant that they were not supplied with the original bills. The fact that all 31 original bills are in the possession of the defendant company ipso facto means the defendant is aware of details contained therein. As discussed supra the last payment made by the defendant to the plaintiff was of Rs.5 lakhs on 26.02.2021 i.e. after 4 months of the last sale made on 23.10.2020. Since the payments were being made in lumpsum amount, by virtue of Section 60 of Indian Contract Act it was sweet will of the plaintiff to adjust these payments on the oldest unpaid invoice. Section 60 of Indian Contract Act, 1872 is very clear in this regard, same is reproduced hereinunder:
"60. Application of payment where debt to be discharged is not indicated- Where the debtor has omitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitations of suits."
47. Plain reading of this statute shows that as and when in cases where payments are received without any indication or rider from the debtor then the creditor discretion to apply it against any lawful debt due and payable. The statue further provides that such payments can be adjusted even against the dues which are barred by limitation.
48.Evidently, this sum of Rs. 5 lakhs stood accepted against partial discharge of invoice dated 13.06.2020 for Rs.8,02,112/-. This fact coupled with the deposition of DW1 that there were no complaints or grivance qua quality or quantity and for non-supply or under supply of goods is sufficient to CS Comm No.1388/2023 page 19 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
discharge the onus of plaintiff to prove sale and delivery of goods to the defendant.
49.As regards the suit claim of principal sum of Rs.8,93,347/- the ledger Ex.PW1/34 shows that plaintiff has calculated interest components on bills as old as 27.05.2019. Since the suit in hand was filed in October 2023 and payments were received on account new routine calculation of interest was maintained or shared with the defendant and the three columns added in the ledger was apparently done for the purpose of filing of the suit in hand. Accordingly, the plaintiff is entitled to principal amount of Rs.8,93,347/- as on 01.11.2020 (As per last sale made on 23.10.2020). In the light of the above the above issues are answered in favour of plaintiff and against the defendant.
Interest.-
50. Plaintiff has claimed interest @ 18% per annum. The interest is payable as per Section 34 CPC. For ready reference, Section 34 CPC is reproduced hereunder:
Section 34 CPC: Interest
(i)"Where and in so far as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding 6% per annum as the Court deems reasonable on such principal sum from the date of the decree to the date of payment, or to such earlier date as the court thinks fit.
(ii).Provided that where the liability in relation to the sum so adjudged had arisen out of a commercial transaction, the rate of such further interest may exceed 6% per annum but shall not exceed the contractual rate or interest or where there is no contractual rate, the rate at which moneys are lent or advanced by nationalized banks in relation to commercial transactions.
Explanation (i) In this sub-section, "nationalized bank" means a corresponding new bank as defined in the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970.
Explanation (ii) For the purposes of this section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability.
Where such a decree is silent with respect to the payment of further interest (on such principal sum) from the date of the decree to the date of the payment or other earlier CS Comm No.1388/2023 page 20 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.
date, the Court shall be deemed to have refused such interest, and a separate suit therefore shall not lie.
(Emphasis Supplied)
51. Section 34 CPC provides that plaintiff will be entitled the interest at the rate at which Court finds reasonable. For a general suit, the rate of interest prescribed is 6% and for commercial suit, the Parliament promulgates that rate of interest may increase from 6% to a rate which is found reasonable. Plaintiff is accordingly entitled to only the rate at which RBI has issued Circular for Commercial suits.
52. As far as the interest is concerned, rate applicable to Commercial transaction shall be payable. As per RBI notification dated 30.08.2022 issued vide Press Release no.2022-2023/794 whereby advisory issued by RBI to Schedule Commercial banks of accepting deposit rates @ 9.05% per annum.
Relief
53. In view of the above, suit of the plaintiff is decreed with cost against the defendant for Rs.8,93,347/- + Rs.2,38,340/- (interest @9% w.e.f. from 01.11.2020 (as per last sale made on 23.10.2020) to 19.10.2023 i.e. date of filing of the suit = Rs. 11,31,687/- and further 9% interest on Rs. 11,31,687/- pendente lite and till realization. Lawyer's fees is assessed as Rs.25,000/-.
54. Decree sheet be prepared accordingly. File be consigned to Record Room after due compliance.
Digitally signed by SURINDER SURINDER S RATHI S RATHI Date:
2025.05.23 13:03:18 +0530 (SURINDER S. RATHI) District Judge, Commercial Court -11 Central District, THC Delhi/19.05.2025 CS Comm No.1388/2023 page 21 of 21 Rakesh Hastimal C. Sanghvi Vs. M/s First Plumbing Pvt. Ltd.