Delhi District Court
Sh. R.K. Bhatia vs Container Corporation Of India Ltd on 14 August, 2014
IN THE COURT OF SH BALWANT RAI BANSAL,
ADDITIONAL DISTRICT JUDGE02, SOUTH EAST,
SAKET COURTS, NEW DELHI
Civil Suit No. 502/12
Sh. R.K. Bhatia
R/o B1/27, UGF,
Malviya Nagar, New Delhi 110017
.......... Plaintiff
Versus
Container Corporation of India Ltd.
(A Govt. of India Undertaking)
Concer Bhawan, C3, Mathura Road,
Opposite Apollo Hospital,
New Delhi - 110076
Also at:
Corporate Office
Lee Meridian Hotel, Janpath
......... Defendant
Suit for recovery of Rs. 3,05,000/
(Rupees Three Lacs Five Thousand only)
(a) Date of institution : 11.02.2009
(b) Date when judgment reserved : 11.08.2014
(c) Date of Judgment : 14.08.2014
CS No. 502/12
R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 1 of 30
JUDGMENT:
1. Vide this judgment I shall dispose of the present suit filed by the plaintiff against the defendant for recovery of Rs. 3,05,000/ alongwith pendente lite and future interest @ 18% per annum from the date of filing of the suit till realization of the amount.
2. Briefly stated the facts of the present case are that the plaintiff is a Civil Contractor and is involved in the business of contractors and developers of priorities. The defendant is a company (A govt. of India Undertaking) registered under the Companies Act. The plaintiff has executed number of project works on different contract for the defendant since the year 199394. The plaintiff used to engage his own labourer on the request of the defendant company since 1998 for various works of the defendant company on noprofit, noloss basis. It is stated that the defendant company requested the plaintiff to provide some workman/helper from his construction company to its corporate office. In the month of August, 2003 the plaintiff entered into a verbal agreement with the defendant for providing helpers for arrangement of tea coffee at Corporate Office of the defendant at LeMeridian Office, New Delhi. The plaintiff engaged his six persons/helpers namely Virender Singh Rawat, Satyapal, Ajay Pal, Amar Singh Bisht, Amarjeet and Degember Singh CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 2 of 30 Bisht in the corporate office of the defendant at the prevailing Minimum Wage Act Delhi. The plaintiff used to pay the wages to the above said helpers on monthly basis in accordance with their number of working days and used to raise the bills against the payment made to the above stated persons on no profit no loss basis. It is stated that the plaintiff received last payment for a sum of Rs. 16,163/ vide cheque no. 966607 dated 10.10.2003 on account of above services rendered in the month of August, 2003 against the bill raised for the month of August 2003 for Rs. 16,493.40/. Thereafter, the plaintiff raised bills for the months of September, 2003 to March, 2004 against which no payment was made by the defendant. The defendant has regularized the services of the above six persons w.e.f. April 2004 without intimating the plaintiff.
3. It is stated that plaintiff visited several times to the office of the defendant and met Mr. Manocha, Mr. Dang and Mr. Sanjay Narwade Manager(Civil) and requested them to release the outstanding bill amount of Rs. 1,13,257/, but none paid any heed to release the outstanding payment despite submitting the copy of 7 bills and documents showing payment of wages to the aforesaid labourers/helpers. After several request, Mr. Sanjay Narwade, Manager (Civil) forwarded the bills to DGM and GGM for approvals, but no payment was released by the defendant despite repeated CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 3 of 30 letters/reminders to GGM (Engg.) and DGM (Engg.) of the defendant. The plaintiff also served a demand/legal notice dated 22.09.2008 upon the defendant demanding the payment of outstanding bills, but despite service of legal notice, the defendant has failed to make the outstanding payment to the plaintiff. Hence, the present suit.
4. The plaintiff has prayed for passing a decree in his favour and against the defendant for a sum of Rs.3,05,682.80/ i.e. Rs. 1,13,257.80/ towards total bill amount, Rs. 1,11,925/ towards interest on the outstanding bill amount @ 18% p.a., Rs. 25,000/ towards litigation expenses, Rs. 50,000/ towards compensation on account of harassment and mental agony and Rs. 5500/ towards miscellaneous expenses. The plaintiff has also prayed for pendente lite and future interest @ 18% p.a. on the aforesaid amount of Rs. 3,05,682.80/ from the filing of the suit till realization of decreetal amount.
5. The defendant has filed the written statement contending that suit is barred by limitation. It is further contended that this court has no territorial jurisdiction to entertain the present suit. It has not been denied that plaintiff provided six helpers to the defendant at its corporate office at Le Meridian Hotel, New Delhi, but it is contended that defendant company demanded to submit the relevant documents regarding the statutory liabilities i.e. EPF account, ESIC, payment CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 4 of 30 details register etc. according to the Contract Labour (Regulation and Abolition) Act, 1970 from the plaintiff for further agreement. The plaintiff assured the defendant that all relevant documents regarding statutory liabilities of supplying helpers would be submitted as soon as possible. On the assurance of the plaintiff, the defendant verbally allowed the plaintiff to supply six helpers at its corporate office. It is further contended that after one month, the plaintiff raised the bill against the supply of six helpers to the defendant company but failed to submit the relevant documents regrading the statutory liabilities according to the Contract Labour (Regulation and Abolition) Act, 1970. However, on the request and assurance of the plaintiff to submit all the relevant documents, the defendant company released a sum of Rs. 16,163/ against the bill for the month of August, 2003 vide cheque.
6. The defendant has not denied that the plaintiff has raised bills for the month of September 2003 to March 2004 for a total sum of Rs. 1,13,257/, but contended that plaintiff always failed to comply the demand of the defendant for providing relevant documents regarding statutory liabilities according to the Contract Labour (Regulation and Abolition) Act, 1970. It is contended that when the plaintiff failed to submit any documents demanded by the defendant company for the agreement, the defendant company took over the CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 5 of 30 payment of six persons for the services rendered by them in the month of April, 2004 and therefore the plaintiff is not entitled to any relief. Other contents of the plaint are stated to be wrong and denied and the defendant has prayed for dismissal of the suit.
7. The plaintiff has filed replication to the written statement of the defendant reiterating the averments made in the plaint and controverting the averments made in the written statement.
8. From the pleadings of the parties, the following issues were framed for adjudication by the Ld. Predecessor of this court vide order dated 31.07.2012:
1. Whether the plaintiff is entitled to recover a sum of Rs. 3,05,000/ from the defendant? OPP
2. Whether the suit filed by the plaintiff is barred by limitation? OPD
3. Whether the plaintiff is entitled to recover interest from the defendant, if so, at what rate? OPP
4. Relief
9. Thereafter, in order to prove his case, the plaintiff has examined himself as PW1 and filed his evidence by way of affidavit which is Ex. PW1/A wherein he reiterated the averments made in the plaint. During his deposition, he has also placed on record the CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 6 of 30 photocopy of work order dated 02.01.1997 and 02.12.1999 as Mark PW1/1 (Colly), photocopy of bill dated 03.10.2003 as Mark PW1/3, photocopy of the payment register showing payments to the helpers from September, 2003 to March, 2004 as Mark 1/4 (Colly), photocopy of office note given by Mr. Narwade as Mark PW1/5, copy of letter dated 28.03.2007 written to GGM (Engg) as Ex. PW1/6 asking for release of payment of outstanding bills, copy of letter/reminder dated 22.06.2007 as Ex. PW1/61, copy of letter dated 07.12.2007 written to DPS (Engg) as Ex. PW1/7, copy of letter/reminder dated 11.02.2008 written to GGM (Engg.) as Ex. PW1/71 and copy of demand notice dated 22.09.2008 as Ex. PW1/8.
10. On the other hand, the defendant has examined its General Manager (Engg) Sh. Muntkeem Ahmed as DW1 who filed his evidence by way of affidavit which is Ex.DW1/A wherein he has deposed more or less as per the averments made in the written statement.
11. I have heard the Ld. Counsel for the parties. I have also gone through the written submissions filed by the defendant and perused the record carefully.
12. On the basis of material available on record, my issuewise findings are as under: CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 7 of 30 Issue No. 1 & 3.
13. I take up these issues together for discussions being interlinked.
14. The facts of the present case are within narrow compass. The plaintiff has claimed that he is involved in the business of contractors and developers and executed number of project works for the defendant and used to provide his own workers/labourers for various works of the defendant on noprofit, noloss basis. In the month of August, 2003, at the verbal request of the defendant, the plaintiff provided six persons as helpers in the corporate office of the defendant at the prevailing Minimum Wages Act, Delhi. The plaintiff used to pay wages to the said helpers and raised bills accordingly on the defendant against the payment made to the helpers. The plaintiff raised bills/invoices on the defendant for the period August, 2003 to March, 2004 for a total sum of Rs. 1,29,420.90/, out of which the defendant paid only Rs. 16,163/ through cheque against the bill for the month of August, 2003 for Rs. 16,493.40/ and did not make the remaining payment of outstanding bills of Rs. 1,13,257.80/ on one pretext or the other. Therefore, by way of present suit the plaintiff has claimed the recovery of payment made by him to the helpers as wages who worked for the defendant.
CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 8 of 30
15. The defendant in the written statement has not disputed the factum of providing six helpers by the plaintiff at its corporate office. Defendant has also not disputed the bills raised by the plaintiff for the period August, 2003 to March, 2004 totaling to Rs. 1,29,420.90/ and making of payment of Rs. 16,163/ to the plaintiff. However, the defendant has contended that plaintiff was required to submit the statutory liabilities of supplying labours according to the Contract Labour (Regulation and Abolition) Act, 1970, but since the plaintiff despite several assurances, failed to supply the relevant documents regarding statutory liabilities i.e. EPF account, ESIC, payment details register etc., therefore plaintiff is not entitled to any relief.
16. In order to prove his case, the plaintiff has examined himself as PW1 and has deposed in his examinationinchief as per the averments made in the plaint. In his crossexamination, he categorically stated that his firm M/s Raj Kamal Bhatia is not registered with any government authority. He further stated that the defendant has not asked him to comply and submit the statutory liabilities i.e EPF Account, ESIC, payment details, register etc. He denied the suggestion that the defendant has passed one bill raised by him subject to the condition that he shall comply with the statutory liabilities and would submit with the defendant. Voluntarily, he stated CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 9 of 30 that he had employed six helpers only, therefore, there could not have been registration with the ESIC or EPF as minimum requirement is of 20 employees. He further stated that since inception of dealings with the defendant no occasion arose for compliance of aforesaid statutory liabilities because he was a small time civil contractor. He denied the suggestion that the defendant has regularized the six helpers according to the Contract Labour (Regulation and Abolition) Act 1970 which were provided by him as per law.
17. From the aforesaid crossexamination of PW1, it is apparent that plaintiff is not registered with any government authority. The plaintiff has categorically stated that he was not asked by the defendant to submit the statutory liabilities. He has further taken a stand that since he had employed only six employees, therefore he could not have registered with the ESIC or EPF for which minimum requirement is of 20 employees. The defendant has only taken a bald plea that the plaintiff has not complied the statutory liabilities according to the Contract Labour (Regulation and Abolition) Act, 1970. In the entire written statement, it has not been disclosed by the defendant that which provision of the aforesaid Act has been violated by the plaintiff or how the plaintiff was under legal obligation to provide statutory liabilities according to aforesaid Act. CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 10 of 30
18. It is not in dispute that plaintiff had supplied only six employees and when the plaintiff has claimed that to register with the EPF and ESIC, minimum requirement is of 20 employees, then the onus was on the defendant to prove that ESIC or EPF Act were applicable to the plaintiff and he was required to submit the relevant documents regarding statutory liabilities i.e. EPF Account, ESIC, payment details register etc. for supplying helpers.
19. In support of its case, the defendant has examined Sh. Muntkeem Ahmed, its General Manager (Engg) as DW1 who in his examinationinchief has deposed as per the averments made in the written statement. In the crossexamination DW1 admits that he knows the six labourers supplied by the plaintiff to the defendant. He has further categorically admitted that they are working since August, 2003. He stated that he does not remember that who has paid the wages to the labourers for the month of August, 2003. He further stated that he does not know if the plaintiff had been supplying the six labourers as regularized now by the defendant since 1998. He further stated that he does not know if the defendant had demanded the PF/ESIC document from the plaintiff since 1998.
20. Except DW1, the defendant has not examined any other witness and has not led any evidence to prove that plaintiff was required to submit relevant documents to meet out the statutory CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 11 of 30 liabilities according to the Contract Labour (Regulation and Abolition) Act, 1970. Except taking a bald plea that plaintiff was required to submit the relevant documents regarding the statutory liabilities as per aforesaid Act, nothing has been shown or disclosed that what were the liabilities which the plaintiff was required to fulfill and on account of failure of the plaintiff to fulfill the statutory requirements, the defendant was justified in withholding the payment to the plaintiff.
21. Since there is no dispute that plaintiff had supplied six labourers to the defendant at its corporate office and also raised bills on the defendant as per the payment made to the said helpers for the period August, 2003 to March, 2004, out of which the defendant has paid only Rs. 16,163/ against the bill for the month of August, 2003 of Rs. 16,493.40/ and did not make the payment of remaining bills, the plaintiff is entitled to recover the amount of outstanding bills for the period August, 2003 to March, 2004 totaling to Rs. 1,13,257.80/ after deducting the amount of Rs. 16,163/ paid by the defendant.
22. The plaintiff has also claimed Rs. 25,000/ towards litigation expenses, Rs. 50,000/ towards compensation on account of harassment and mental agony and Rs. 5500/ towards miscellaneous expenses. But the plaintiff has not led any evidence to prove that defendant is also liable to pay the aforesaid amounts on account of litigation expenses, harassment and mental agony or miscellaneous CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 12 of 30 expenses. Even in his evidence filed by way of affidavit Ex. PW1/A, the plaintiff has not claimed specifically the amounts so claimed in the plaint towards compensation and miscellaneous expenses. Only a self serving statement has been made by the plaintiff that defendant is also liable to pay the compensation on the aforesaid counts. But, in the absence of any evidence, the plaintiff cannot be said to be entitled to recover the aforesaid amounts so claimed in the plaint from the defendant.
23. So far the issue of interest is concerned, the plaintiff has claimed interest @ 18% p.a. and has calculated the interest of Rs. 1,11,925/ on the outstanding bill amount. However, there is no agreement or any stipulation regarding rate of interest in case of default in the payment by the defendant. In the absence of any agreement, the interest claimed by the plaintiff @ 18% p.a. seems to be on higher side. It would meet ends of justice if the plaintiff is awarded interest @ 12% p.a. in view of the fact that the defendant has withheld the payment of the labours supplied by the plaintiff. Hence, plaintiff is entitled to interest @ 12% p.a. on outstanding bill amount of Rs. 1,13,257.80/ from 01.04.2004 till filing of the present suit. The plaintiff is also entitled to pendente lite and future interest @ 6% per annum. Accordingly, issue no. 1 & 3 are decided in favour of the plaintiff.
CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 13 of 30 Issue No. 2
24. The onus to prove this issue was on the defendant. The defendant has taken a plea in the written statement that the present suit is barred by limitation. Ld. Counsel for defendant has argued that present suit filed by the plaintiff for recovery of amount of invoices raised by him upon the defendant is apparently time barred as suit has not been filed within the period of three years from the date of invoices raised by the plaintiff.
25. Perusal of the record reveals that present suit filed by the plaintiff is based on the invoices raised for the period August, 2003 to March, 2004 for providing six helpers to the defendant. Admittedly, the last transaction between the parties took place in the month of March, 2004. The present suit has been filed on 11.02.2009. As such, apparently the present suit filed by the plaintiff for recovery of amount of invoices has not been filed within the period of three years from the last transaction or from the date of invoices as per law of limitation and appears to be barred by limitation.
26. Ld. Counsel for plaintiff has vehemently argued that present suit is not barred by law of limitation as same is covered under Section 18 of Limitation Act. In this regard, he has heavily relied upon the letter dated 12.12.2006 which is an official noting made by Mr. Sanjay Narwade, Manager of the defendant company, wherein as CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 14 of 30 per the claim of the plaintiff, the Manager of the defendant company has acknowledged the outstanding dues payable to the plaintiff. On the basis of said letter/official note dated 12.12.2006, the Ld. Counsel for plaintiff has argued that letter/official note dated 12.12.2006 written by Mr. Sanjay Narwade, Manager (Civil) of the defendant company amounts to acknowledgment of debt in terms of Section 18 of Limitation Act and hence period of limitation for filing the suit would start from 12.12.2006 and thus suit filed by the plaintiff is within limitation. In support of his contention, Ld. Counsel for plaintiff has relied upon catena of judgments.
27. On the contrary, Ld. Counsel for defendant has argued that the official note/letter dated 12.12.2006 is merely a notesheet prepared by the Manager of the defendant company for approval of same by competent authorities and same has not been sanctioned or approved by the competent authorities of the defendant company. He further argued that Mr. Sanjay Narwade was not authorized or competent person to make such an acknowledgment and it was subject to approval of the competent authority and the letter dated 12.12.2006 would not come within the ambit of acknowledgment of debt as same has not been approved or sanctioned by competent authority. He further argued that defendant is a government undertaking and there is a hierarchical system where an official noting does not become final CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 15 of 30 unless same is approved or sanctioned by competent and higher authorities. In support of his contentions, he has relied upon various judgments reported in Central Coal Fields Ltd. & Ors. Vs. Nawajiwan Trading Company1991 (2) PLJR 713, Kalpana Trading Co. Vs. Executive Officer, Town PanchayatAIR 1999 Madras 371, Nand Lal Thanvi Vs. LRs of Goswami Brij BhushanAIR 2003 NOC 52 (Raj), M/s Bharat Heavy Electricals Ltd. Vs. M/s Dowel Erectors (2005) 1 MLJ 532.
28. The plaintiff in para no. 10 of the plaint has pleaded that in the month of May, 2006 he visited the office of defendant and met Mr. Sanjay Narwade. Manager (Civil) and submitted copy of 7 bills and the documents showing payment of wages to the aforementioned persons from September 03 to March 04. It was further pleaded in para 11 of the plaint that after several request made by the plaintiff to the defendant, on 12.12.2006, Mr. Sanjay Narwade Manager (Civil) forwarded the bills to DGM and GGM respectively for approvals . The plaintiff has reproduced the said official noting written by Mr. Sanjay Narwade, wherein the factum of supply of six helpers by the plaintiff, payment of wages to said helpers by the plaintiff, raising of bills by the plaintiff for the period from September, 2003 to March, 2004 and outstanding amount of Rs. 1,13,257.80/ payable to the plaintiff for the CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 16 of 30 aforesaid period was written. The said noting was put to DGM (Engg) and GGM (Engg) for their approval for releasing the payment of aforesaid bills to the plaintiff.
29. Before proceeding further, let us examine relevant provision of law. Section 18 of Limitation Act reads as under: Effect of acknowledgment in writing : (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received.
Explanation For the purpose of this section
(a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to setoff, or is address to a person other than a person entitled to the property or right;
(b) the word "signed" means signed either personally or by an agent duly authorized in this behalf; and
(c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right.
30. Ld. Counsel for plaintiff has vehemently argued that the defendant does not dispute the official noting dated 12.12.2006 written CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 17 of 30 by Mr. Sanjay Narwade Manager (Civil), therefore the defendant cannot say that it has not been written by the competent or authorized person and it amounts to acknowledgment of debt as per section 18 of Limitation Act. Of course, the defendant has not disputed the official noting/letter dated 12.12.2006 in the written statement it being a matter of record. But the question still remains as to whether the said official noting would amount to acknowledgment of debt by the defendant company as per Section 18 of The Limitation Act.
31. The official noting put by Mr. Sanjay Narwade dated 12.12.2006 is not conclusive and he being the Manager has put the same for approval by DGM and GGM in a hierarchical system of the defendant company. There is nothing in the said letter that proposal put by Mr. Sanjay Narwade was approved by the competent and authorized person of the defendant company. Similarly, there is nothing on record to show that Mr. Sanjay Narwade was the competent or authorized person to make such an acknowledgment of debt on behalf of defendant company. As per Explanation (b) to Section 18 of Limitation Act, an acknowledgment of debt may be signed either personally or by an agent duly authorized in this behalf. But, in this case Mr. Sanjay Narwade who is Manager of defendant company cannot be said to be an agent. There is nothing on record to show that there was relationship of principal and agent between the defendant CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 18 of 30 company and Mr. Sanjay Narwade. Mr. Sanjay Narwade was working as Manager (Civil) in the defendant company. As such he was merely an employee of the defendant company and not an agent on behalf of the defendant and was not authorized to acknowledge the debt on behalf of the defendant company. Where an officer of corporate body is not empowered to acknowledge debt on its behalf, mere recommendation on the office note sheet that amount claimed by the plaintiff should be paid to him or that payment shall be made as soon as sanction is received would not constitute an acknowledgment within the meaning of Section 18 of the Act. In the present case also, Mr. Sanjay Narwade has put only an official note for approval of same before DGM (Engg) and GGM (Engg), therefore, unless the said proposal put forth by Mr. Sanjay Narwade is approved by the competent and authorized person of the defendant company, same cannot be said to be an acknowledgment of debt as envisaged u/s 18 of Limitation Act.
32. In Central Coal Fields Ltd. & Ors. Vs. Nawajiwan Trading Company (supra), the respondent/plaintiff which is a partnership firm entered into a contract with the appellants/defendants to give on hire bulldozers to level the coal dumps @ Rs. 140/ per hour. The bulldozers of the plaintiff worked for 1288.16 hours and the plaintiff raised a bill accordingly, but despite receipt of the said bill, CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 19 of 30 its lawful dues were not paid by the defendants. The plaintiff claimed that the defendants acknowledged their liabilities to pay outstanding amount vide Ex. 3/1 which was a notesheet dated 29/30.09.1977. In those circumstances, the Hon'ble High Court of Ranchi after perusing the notesheet Ex.3/a, observed that Ex. 3/a is merely a notesheet. There is nothing on record to show that the defendant/appellant no. 2 was duly authorized by the appellant no. 1 to make any acknowledgment on its behalf. Such a note sheet was issued for internal use of the office of the defendantappellant no. 1. Therein, merely a recommendation was made by defendants no. 3 and 4 that the amount claimed by the plaintiff should be paid to it. With these observations, the Hon'ble Ranchi High Court held that notesheet Ex. 3/a cannot constitute an acknowledgment withing the meaning of Section 18 of the Act.
33. Similar are the facts in the present case. In the present case also, the plaintiff pleaded in the plaint that Manager of the defendant company Sh. Sanjay Narwade put an official note for approval on 12.12.2006 in which the plaintiff claims that payment of debt was acknowledged by the defendant. However, there is nothing on record to show that Mr. Sanjay Narwade was authorized person to make any such acknowledgment on behalf of the defendant company. Therefore, merely on the basis of notesheet dated 12.12.2006 put by CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 20 of 30 Mr. Sanjay Narwade which was subject to approval by DGM (Engg) and GGM (Engg) who were the competent authority, it cannot be said that it would constitute an acknowledgment under Section 18 of Limitation Act.
34. So far as the case laws relied upon by the Ld. Counsel for the plaintiff are concerned, in Mohta Alloy & Steel Works Vs. Mohta Finance & Leasing Co. Ltd. (1997) 89 CompCas 227 (Delhi), a petition under section 33 of the Arbitration Act was filed by the petitioner challenging the existence and validity of the arbitration clause forming part of the lease agreements entered into between respondent no. 1 and the petitioner company. One of the issue, inter alia, before the Hon'ble High Court of Delhi was as to whether the agreement was not entered into by a person authorized in accordance with law. It was claimed that there was no resolution passed by the board of directors of the petitioner authorizing Sh. M.C. Aggarwal to execute the alleged agreements with the respondent company and there being no such resolution by the board of directors authorizing Sh. M.C. Aggarwal, he was neither competent nor had any power to enter into the aforesaid lease agreements on behalf of the petitioner. However, as per article 121A of the Articles of Association of the petitioner company, the directors and the managing directions were vested certain powers. Subclause 18 therein provided that the CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 21 of 30 directors shall have power to enter into all such negotiations and contracts etc. on behalf of the company. In those facts, doctrine of indoor management was applied observing that various powers could be delegated to the managing director or directors and also because the director had the authority to enter into contracts, the respondent could validly rely on the doctrine of indoor management. The Hon'ble Delhi High Court relying upon the said provisions of Articles of Association of the petitioner company, held that Sh. M.C. Aggarwal, who was one of the director of petitioner company was competent and properly and validly authorized to enter into the lease agreements.
35. But the facts in the present case are entirely different and doctrine of indoor management is not applicable in the present case. In the present case, Sh. Sanjay Narwade was neither the Managing Director nor the Director of the defendant company. He was merely an employee of the defendant company working as Manager and was not competent to acknowledge the debt on behalf of the defendant company. Hence, this authority would not applicable in the facts and circumstances of the present case.
36. In case of Prabhudas Gurmukhsingh & Sons Vs. G.V. Films, Sujatha Films and Sujatha Venkateswaran, the plaintiff was engaged in various business activities including money lending. Sh. G Venkateswaran was the Chairman and Managing Director of 1st CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 22 of 30 defendant company. Sh. G. Venkateswaran being the Manging Director of defendant no. 1 company had borrowed various amounts from the plaintiff on various dates against the property held by defendant no. 2 company as security. The defendant no. 3 who was wife of Sh. G. Venkateswaran stood guarantor in her personal capacity for the amount borrowed by the defendant no. 1 company. The defendant company failed to pay the borrowed amount to the plaintiff and hence plaintiff sued the defendants. In the meanwhile, Sh. G. Venkateswaran died and the defendant company was taken over by new management pursuant to the directions of the court. After taking over the management of defendant company by the new board of directors, it was contended that there was no valid contract between the plaintiff and late Sh. G. Venkateswaran as late Sh. G. Venkateswaran was not authorized by the 1st defendant company to get loan from the plaintiff and there was no resolution empowering him to incur loan. However, the contention of the defendant no. 1 that there was no privity of contract between plaintiff and them was not accepted by the Hon'ble High Court of Madras observing that there had been a valid contract between the plaintiff and G. Venkateswarran in the capacity of Chairman and Managing Director of both the defendant companies. Further, on the basis of doctrine of indoor management, it was held that the plaintiff bona fide believed that G. Venkateswaran CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 23 of 30 represented both 1st and 2nd defendant in getting the loan from him and in this context the plaintiff need not be expected to probe into all internal affairs of the companies.
37. However, in the present case doctrine of indoor management is not applicable as discussed herein above and hence this authority would also not be applicable in the facts and circumstances of the present case.
38. In another case Michael Hart Vs. Ninestars Information Technologies Ltd. 2013) 179 CompCas 187 (Mad), a petition was filed by the petitioner praying for an order directing the winding up of the respondent company and for an order appointing the liquidator attached to this court, as the liquidator of the respondent company, with all the necessary powers under the provisions of the Companies Act. In the said case, respondent company had engaged the petitioner as a consultant vide Consulting Agreement dated 21.05.2004 for a period of six months which was extended for a further period of six months vide another Consulting Agreement dated 19.11.2004. The respondent company was irregular in making the payments to the petitioner and as the respondent company was not in a position to pay the amount due to the petitioner, it had executed a Promissory Note in favour of the petitioner on 31.03.2005, stating therein that outstanding amount was due and payable to the petitioner on or before 31.10.2005. CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 24 of 30 The Promissory Note was signed by the Chairman/Managing Director of the respondent company. But in spite of signing of the Promissory Note, the respondent company had failed to make the payments to the petitioner. The petitioner issued a legal notice to the respondent company demanding the amount due to him. On receiving the legal notice, an Email dated 01.04.2008 had been sent on behalf of the respondent company requesting the petitioner to settle the dispute and had also accepted and acknowledged that the promissory note was issued to the petitioner in good faith and the respondent company had intended to pay the amount due to him. The issue was whether the petition filed by the petitioner was barred by limitation. The Hon'ble Madras High Court after observing that the email dated 01.04.2008 amounts to an acknowledgment of the liability by the respondent company as required under Section 18 of the Limitation Act, 1963 and hence fresh limitation period had started from the date of such acknowledgment i.e. from 01.04.2008 and held that the petition filed by the petitioner was within limitation.
39. The said authority was on its own facts and is again of no help to the plaintiff. In the said case, there was an acknowledgment of debt by the respondent company by way of email which is not so in the present case.
CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 25 of 30
40. Reference of other judgments is also made in the said authority, one of which is Bhajan Singh Samra Vs. Wimpy Internationals Ltd., 2012 (1) BC 502, wherein it was held that admission of debt either in the balance sheet or in the form of a letter/communication would amount to an acknowledgment extending the period of limitation in terms of Section 18 (1) of the Limitation Act, 1963. However, there is no such communication/ email/ letter between the plaintiff and the defendant in the present case by which the defendant has accepted its liability thereby extending the period of limitation.
41. Another judgment referred by the Hon'ble Madras High Court in the aforesaid judgment is of Sampuran Singh Vs. Niranjan Kumar, AIR 1999 SCC 1047, wherein it was held that the acknowledgment, if any, has to be made prior to the expiration of the prescribed period for the filing of the suit. If the limitation had already expired the acknowledgment made thereafter would not revive the claim, as it would be hit by the law of limitation. There is no dispute from the law laid down in the said judgment. But, in the present case the letter/note dated 12.12.2006 put by Sh. Sanjay Narwade, Manager of defendant company would not constitute an acknowledgment as per Section 18 of Limitation Act as discussed herein above and hence it cannot be said the acknowledgment was made by the defendant before CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 26 of 30 expiry of limitation period.
42. In another judgment Nand Lal Thanvi Vs. Legal Representatives of Goswami Brij Bhushan, 2002 (5) WLN 630, question was whether acknowledgment given by agent of debtor shall be treated as if it is given by the debtor himself in person. In the said case, the defendant through his Advocate had acknowledged the fact of part payment to the plaintiff in reply to legal notice. The acknowledgment of the defendant through his Advocate was held to be acknowledgment by the defendant himself and period of limitation was held to start from the date of acknowledgment of part payment by the defendant to the plaintiff.
43. Again, there is no such issue involved in the present case. The letter/notesheet dated 12.06.2006 put by Sh. Sanjay Narwade was subject to approval from the higher and competent anchorites of the defendant company and Sh. Sanjay Narwade cannot be said to be an agent of the defendant. Hence, this authority is also not applicable in the facts of the present case.
44. In Ernst and Young Pvt. Ltd. Vs. Jagson International Ltd. 200 (013) DLT 429, a petition under Section 433 (e) r/w Section 434 (1) (a) of the Companies Act was filed by the petitioner seeking winding up of the respondent on the ground of its inability to pay its debts. It was claimed by the petitioner that there was a clear admission CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 27 of 30 of liability by the respondent as was evident from its letter dated 27.01.2011. Petitioner also referred to the emails sent to the respondent and the reply thereto by Mr. Pradeep Gupta, the Director of the respondent company. The Hon'ble High Court of Delhi after perusing the correspondence exchanged between the parties observed that there is an unequivocal admission of liability by the respondent in its letter dated 27.01.2011 while acknowledging receipt of the invoice from the petitioner. In his email of 09.10.2001 sent to the petitioner, Mr. Pradeep Gupta made a reference to the meeting held with the Chairman of respondent when he requested for some more time to make the payment and similarly by way of another email dated 26.05.2011 some more time was sought to make the payment. It was held that Mr. Pradeep Gupta had written those letters as Director of Respondent with the authorization of the Chairperson of the respondent, therefore the said admission could not now be resiled from by the respondent.
45. Again, the facts in the aforesaid judgment are distinguishable from the facts in the present case. In the present case, no such letters/ communications/ emails were exchanged between the parties and this authority would also not assist the plaintiff.
46. In Yogesh Kumar Gupta Vs. Anuradha Rangrajan, 139 (2007) DLT 71, the parties were running a partnership business and CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 28 of 30 the partnership deed contained an arbitration agreement. Certain disputes arose between the parties and the respondent issued a notice of dissolution on 27.03.2002. The plaintiff also agreed that firm be dissolved and proposed for mutual appointment of an Arbitrator to resolve the disputes and filed the petition u/s 11 of Arbitration and Conciliation Act seeking appointment of Arbitrator . The respondent raised an objection that petition is barred by law of limitation. The Hon'ble High Court of Delhi observed that both the parties acknowledged their respective liability in respect of the other to render accounts, in relation to the partnership business, by rendering accounts and offering to render further accounts. Both the parties also asserted their respective rights to demand the rendition of accounts from the other and therefore a fresh period of limitation started since there was an acknowledgment of liability and obligation on either side to render accounts of the partnership business to the other partner when the parties exchanged communications. In those facts, it was held that communications on both sides constitute acknowledgment of liability to render account to the other within the meaning of Section 18 of the Limitation Act.
47. Again this authority would not applicable in the facts of the present case as there is no communications exchanged between the parties by which the defendant company has acknowledged the debt. CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 29 of 30
48. In view of aforesaid discussions, it is held that letter/ notesheet dated 12.12.2006 put by Sh. Sanjay Narwade would not constitute an acknowledgment of debt in terms of Section 18 of the Limitation Act as he was neither authorized nor competent to make such an acknowledgment on behalf of the defendant company. The letter dated 12.12.2006 was only a notesheet put by Sh. Sanjay Narwade to higher authorities for their approval. No approval or sanction has been granted by the competent and higher authorities of the defendant company. Therefore, suit filed by the plaintiff on the basis of invoices for the period August, 2003 to March, 2004 is beyond the period of limitation. Consequently, the present suit is hopelessly time barred. Accordingly, this issue is decided against the plaintiff.
RELIEF
49. As a sequel to my findings under Issue No. 2, the suit of the plaintiff is dismissed being barred by limitation. No order as to cost. Decree sheet be prepared accordingly.
File be consigned to Record Room.
Announced in open Court (Balwant Rai Bansal)
on 14th August, 2014 Addl. District Judge 02 (SouthEast)
Saket Courts, New Delhi
CS No. 502/12
R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 30 of 30
CS No. 502/12
R.K. Bhatia Vs. M/s Container Corporation of India Ltd 14.08.2014 Present: None for the plaintiff.
Sh. J.K. Sharma, Counsel for the defendant.
Vide my separate judgment of even date, the suit of the plaintiff is dismissed. No order as to cost. Decree sheet be prepared accordingly.
An application u/s 340 Cr.P.C. moved by the defendant is pending disposal. Let said application be segregated from this file and be registered as separate miscellaneous file.
Separate miscellaneous file be fixed for arguments on the application u/s 340 Cr.P.C. on 23.09.2014.
Present file be consigned to record room.
(Balwant Rai Bansal) ADJ02/SE/Saket/New Delhi 14.08.2014 CS No. 502/12 R.K. Bhatia Vs. M/s Container Corporation of India Ltd. Page 31 of 30