Bangalore District Court
Indras Agencies Private Limited vs A) To Pay The Plaintiff A Sum Of ₹ on 31 January, 2023
IN THE COURT OF LXXXIX ADDL.CITY CIVIL & SESSIONS
JUDGE, BENGALURU. (CCH-90)
Present: Sri.S.J.Krishna, B.Sc., LL.B.,
LXXXIX Addl.City Civil &
Sessions Judge, Bengaluru.
Dated: 31st JANUARY 2023
Com.O.S.No.264/2019
PLAINTIFF : Indras Agencies Private Limited, R
a company incorporated and registered .
under the Companies Act, 1956,
having its registered office at
No.285, 1st Floor, Wall Tax Road,
Chennai-600 003.
and branch office at:
No.6, 4th Cross Street,
5th Main Road, Chamarajpet,
Bangalore-560 018.
Represented herein by its authorized
signatory
Mr.R.Jagannathan.
(By M/S.MD &T PARTNERS, Advocates)
-Vs-
1. M/s.Krish Food Technologies Private
Limited,
A Companies Act 1956,
having its registered office at
2, and 2/1, Doctor Marigowda Road,
Lalbag North Gate,
New Hosur Road, Bangalore-560 027.
Also at: No.15/A, Krishna Rao Road,
/2/
Com.O.S.264/2019
Basavanagudi, Bangalore-560 004
Represented by its Managing Director
Mr.S.M.Sathyanarayna
2. Mr.S.M.Sathyanrayana,
Managing Direcotr of defendant No.1,
Aged 75 years S B M Shetty,
Residing at 15/A, Krishna Rao Road,
Basavanagudi, Bangalore-560 004.
3. Mr.Nikhath Sultana,
Director of defendant No.1,
Major,
Residing at 2 & 2/1, Dr.Mari Gowda Road,
Lalbagh North Gate, New Hosur Road,
Bangalore-560 002.
(D1 & D3 exparte;
D2-M/S.Kamath & Kamath)
Date of Institution of : 16.09.2019
suit
Nature of suit : Recovery of money
(suit on pronote, suit
for declaration and
possession suit for
injunction, etc.,)
Date of : 23.06.2022
commencement of
recording of evidence
Date of judgment : 31.01.2023
Total duration : Year/s Month/s Day/s
03 04 15
(S.J.KRISHNA)
LXXXIX ADDL.CITY CIVIL &
SESSIONS JUDGE, BENGALURU.
(CCH-90)
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Com.O.S.264/2019
JUDGMENT
The plaintiff has filed this suit against the defendants praying the Court to pass a Judgment and decree directing the defendant
a) to pay the plaintiff a sum of ₹.1,18,91,630/- together with interest from the date of suit until realization @ 18%p.a.; costs and such other reliefs.
The summary of the case of the plaintiff is as follows:
02. The Plaintiff is engaged inter-alia in the business of distribution and trading of food and pharma ingredients and is an established player in the said business for over 30 years.
The Plaintiff is the preferred partner of over 2000 marquee customers across the food, aroma, pharma and distillery enzymes segment. One of the major players in India, Plaintiff has over the last many years won the trust of its customers and suppliers with its disciplined, dedicated and ethical business approach.
03. The Defendant No.1 is engaged in the business of retailing Bakery Products including imported Bakery Products and also trading in Bakery raw materials. The Defendant No.2 and 3 are the Directors of Defendant No.1 and are involved in the day to day business of the defendant No.1 Company. In /4/ Com.O.S.264/2019 May 2013 Mr. Sathyanarayana, the Managing Director of the Defendant No.1 Company approached the Plaintiff to sell instant dry yeast which he had imported from Turkey. The Plaintiff purchased a small quantity between June and October 2013. On or about October 2013, the Defendant No.1 requested the Plaintiff to import the said instant dry yeast from a manufacturer by name of Istanbul DOSU Maya (hereinafter referred to as "Dosumaya" for brevity) having it's office at Yukari Dudullu Organize Sanayi Bolgesi, 2.Cadde No:25 /34775, Umraniye, Istanbul, Turkey. The Defendant No.1 Company had represented to the Plaintiff that the Defendant No.1 was the agent of Dosumaya pan India and that the Defendant No.1 had imported the product of Dosumaya, known as "Hasmaya Dry Yeast" to India earlier. The Defendant No.1 had further represented that the Defendant No.1 did not have adequate financial resources to import from Dosumaya for all its requirements (including that of its customers/ vendors) and requested the Plaintiff to import the product Hasmaya Dry Yeast directly from Dosumaya (based in Turkey) and that the Defendant No.1 would in turn buy its requirements from the Plaintiff. The Defendant No.1 also requested the Plaintiff to open a Letter of Credit for the purposes of importing Hasmaya dry yeast from Dosumaya, based in Turkey. The Defendant No.1 had made some representations and assurances, on the basis of which, the /5/ Com.O.S.264/2019 Plaintiff had agreed to the same. It was represented and/or assured by the Defendant No.1 as follows:
i. The defendant No:1 was the agent for DOSUMAYA Pan India and had previously imported Hasmaya Dry yeast from Turkey and that the defendant No:1 would guarantee the quality of the Hasmaya Dry yeast. ii. The Plaintiff could directly import Hasmaya Dry Yeast from Turkey by opening a Letter of Credit with Dosumaya; iii. The Defendant No.1 would buy a "committed quantity"
of Hasmaya Dry Yeast from the Plaintiff and pay the price for the same immediately on supply; and iv. The Plaintiff would be entitled to sell the rest of its import of the Yeast to its customers.
04. Based on the aforesaid representations and assurances of the Defendant No.1, the Plaintiff established a Letter of Credit in favour of Dosumaya Turkey in November 2013, May 2014 and November 2014 and imported the Hasmaya Dry Yeast, including the quantity committed by Defendant No.1 that it would purchase.
05. The Hasmaya Dry Yeast was supplied to the Defendant No.1 as agreed. However, the Defendant No.1 was not prompt in payment and has made only partial payments /6/ Com.O.S.264/2019 against one batch of supply. The details of supply of the product and the payment pending are detailed as under:
Sl. Material Quantify Value Date of Pending Days of No. Supplied in Kgs Supply payment Delay in payment 1 Hasamaya 10,000 22,33,435 03.09.2014 12,17,085 1655 Dry Yeast 2 Hasamaya 9,000 20,10,092 17.04.2015 20,10,092 1429 Dry Yeast 3 Hasamaya 10,000 22,33,435 29.04.2015 22,33,435 1417 Dry Yeast 54,60,612
06. Against each supply, the Plaintiff has raised an Invoice and the amount under each Invoice fell due the following day (very next day of the Invoice). As such, the Defendant No.1 is also liable to pay interest on delayed payments. Office Copies of the invoices No.BLR/00044/14-15 dated 03.04.3014, No.BLR/01827/14-15 dated 26.06.2014, No.BLR/01923/14-15 dated 03.09.2014, No.BLR/00281/15- 16 dated 17.04.2015 and No.BLR/00458/15-16 dated 29.04.2016, duly acknowledged by the Defendant No.1 as received, are herewith produced as Document No.2, 3, 4, 5 and 6 respectively.
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07. The Defendant No.1 did not honor its commitment and failed to make payment for the Dry Yeast that it had received from the Plaintiff. The Defendant No.1 had only made partial payments. The Plaintiff repeatedly followed up on the payments via e-mail, telephone and personal meetings and the Defendant No.1 kept on requesting for some time on one pretext or the other. The Defendant No.1 had enjoyed more than 60-90 days of credit period and the Plaintiff Company had repeatedly reminded and requested the Defendant No.1 to make payments towards the outstanding sums due and payable to it. However, the Defendant No.1 had failed to make payments due and payable to the Company. The Plaintiff even visited the office of the Defendant No.1 at Bangalore and requested for a schedule of payment and accordingly, the Defendant No.1 made a partial payment of ₹.6 lakhs on 30 th April 2016 and assured that the payments would be made in a week's time. However, the Defendant No.1 has failed to keep their promise and had not made any payments even as on May 2016.
08. As on May 2016, for supply of the product from the Plaintiff to the Defendant No.1, after deducting the partial payment of ₹.6,00,000/- (Rupees Six Lakhs Only) made by the Defendant No.1, a total sum of ₹.54,60,612/- (Rupees Fifty Four lakh Sixty Thousand Six Hundred and Twelve only) was /8/ Com.O.S.264/2019 due and payable by the Defendant No.1 to the Plaintiff. The Plaintiff wrote an e-mail to the Defendant No.1 on 02.05.2016, therewith attaching a statement reflecting the outstanding as on the date and requesting the Defendant No.1 to make the payment. Prints of the said email dated 02.05.2016 and the statement annexed therewith are herewith produced as Document No. 7 and Document No. 8 respectively.
09. That neither did the Defendant No.1 respond to the said e- mail, nor did the Defendant No.1 make any payments. The Plaintiff kept following up on the payments. Print of two e- mails dated 06.06.2016 and 18.07.2016 are herewith produced as Document No.9 and Document No. 10 respectively. The Defendant No.1, through its Director Mr. S. M. Satyanarayana on 23.09.2016 wrote e-mail, inter-alia apologizing for the undue delay and also stating that the reason he did not respond to the calls was not to get into arguments. Print of the e-mail dated 23.09.2016 is herewith produced as Document No.11. However, the Defendant No.1 did not make any payments as promised. The Customer Outstanding report up to 25.10.2016 and 31.10.2016 in respect of Defendant No.1, maintained electronically by the Plaintiff in its usual course of business is produced herewith as Document No.12 and 13 respectively. The statement reflects the amounts due as on 31.10.2016. Even as on 1 st December /9/ Com.O.S.264/2019 2016, there were no payments forthcoming and the Plaintiff was constantly following up. However, the Defendant No.1 had stopped to queries regarding payments. Print of the e-mail dated 01.12.2016 (together with trail mails dated 16.11.2016, 14.0.2016 and 02.08.2018) and Customer Outstanding report up to 01.12.2016 in respect of Defendant No.1, maintained by the Plaintiff in its usual course of business (attached with the email) are produced herewith as Document No.14 and Document No.15 respectively.
10. In the Meanwhile, the Defendant No.1 through Mr. Sathyanarayana vide an e- mail dated 17.11.2016 wrote to the Plaintiff, inter-alia, stating that he has been dealing with Dosumaya for last 4-5 years and that he personally visited Turkey to get a representative of Dosumaya to check the quality complaints of some of Hasmaya yeast, because of which Dosumaya gave the plaintiff a discount of USD 30000 of which, the Defendant No.1 is entitled to USD 15000. It was also stated therein that there was an agreement for commission, which has not been paid. Print of the e-mail dated 17.11.2016 is produced herewith as Document No.16. While the Defendant No.1 did work along with the Plaintiff with regard to compensation for bad stocks of yeast, the Defendant No.1 had done so as an obligation for he had acted on behalf of Dosumaya (as an agent) and as it was on his account that /10/ Com.O.S.264/2019 Plaintiff started to deal with Dosumaya's yeast. It is pertinent to note here that, it was for the first time ever that such a claim was made by the Defendant No.1. There never was an agreement for commission payable to Defendant No.1 on the products imported by the Plaintiff from Dosumaya. As a matter of fact, the Defendant No.1 had requested the Plaintiff to import directly and assured that a committed quantity from the import would be purchased by the Defendant No.1. There was never an understanding for payment of commission or for sharing of compensation that was owed by Dosumaya to the Plaintiff. As admitted by the Defendant No.1 in the e-mail dated 17.11.2016, Dosumaya has compensated the Defendant No.1 for whatever losses accrued to it on account of bad quality product Plaintiff is not liable to pay any compensation or commission to the Defendant No. 1 for the same. In the said e-mail dated 17.11.2016, for the first time ever, the Defendant No.1 had raised these totally untenable frivolous claims and sought for compensation, which the Plaintiff is not liable to pay.
11. That it was thus obvious that the tone and tenor of Defendant No.1 had changed and Defendant No.1 had started to make false claims, instead of making payments legitimately due by it to the Plaintiff. The Defendant No.1 abused the faith and trust placed by the Plaintiff and has attempted to deceive /11/ Com.O.S.264/2019 the Plaintiff. This was further evident when the Plaintiff received a set of Caveat petitions filed by the Defendant No.1 in various courts at Bangalore on 18.01.2017. On 17.01.2017, much to its shock and surprise, the Plaintiff, received a legal notice dated 16.01.2017, issued on behalf of the Defendant No.1, making false claims and demanding USD 15,000 towards discount, USD 26250 being discount on 5 containers and USD 21429 towards discount of 10 containers. These discounts were offered by the Supplier Dosumaya, Turkey on future purchase. USD 250 per MT for 105 MT (5 FCL) out of which USD 150 per MT for Krish Foods and USD 100 per MT towards general discount and USD 102 for next 210 MT (10 FCL) out of which USD 50 per MT for Krish Foods and USD 50 MT towards general discount. These discounts are applicable for the future stocks imported and Krish Foods take their committed quantities. In this case, Indras not imported fresh containers and Krish Foods also not taken any stocks. USD 15000 was 50% of the Credit Note received from Dosumaya, Turkey towards the charges incurred by Plaintiff of which Krish Foods is not eligible for any amount. The Legal Notice dated 17.01.2017 is produced herewith as Document No.17. The said demand is illegal and without any basis and the Defendant No.1 has adopted a crafty method to avoid making the payments due by it to the plaintiff.
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12. As on 31.10.2016, a total sum of ₹.54,60,612/- was outstanding and due from the Defendant No.1s to the Plaintiff company against the running account maintained with the Defendant No.1s, after deducting the payment of ₹.6,00,000/- (Rupees six lakhs only) made on April 2016. A statement reflecting the above is produced above as Document No.12 and 13. However, the Defendant No.1 has failed to make any payments till date.
13. The statements maintained by the Plaintiff in its usual course of business, reflects a sum of ₹.54,60,612/- as outstanding and interest payable on delayed payments is 64,06,018/-. The Plaintiff was regularly following up on the payments through telephone and by personally visiting the Defendant No. 1's office, all in vain.
14. The Defendant No.1 had only made a part payment was made by the Defendant No.1s, that is a sum of ₹.6,00,000/- in the month of April 2016. The Defendant No.1 vide e-mail dated 29.09.2016 has admitted the debt due by it and has also assured to make payment. However, the Defendant No.1 has failed to make payments and has instead issued a baseless notice on January 2017 referred to above.
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15. The Defendant No.1 is due and liable to pay to the Plaintiff Company a sum of ₹.54,60,612/- (Rupees fifty four lakhs sixty thousand six hundred and twelve only) along with interest at the rate of 24% per annum on the amounts that have remained unpaid beyond the due date. The actions of the Defendant No.1 in failing to pay the Plaintiff the sums lawfully due to the Plaintiff, despite the numerous demands, is clearly with an intent to defraud the Plaintiff and deprive the amount legitimately due to Plaintiff and to make wrongful gain at the cost and expense of the Plaintiff.
16. That the Defendant No.1 has defaulted in making payments of the sums legally due to the Plaintiff and when the Plaintiff demanded the amounts, the Defendant No.1 has refused to make the payments. Hence the suit. The Defendant No.1 is due to the Plaintiff the following sums:
Particulars Amount
Total amount due and payable towards ₹.54,60,612/-
products supplied
Interest payable (approx), as on date, ₹.64,06,018/-
at 24% p.a (calculation provided in
Document No.17)
Legal expenses ₹. 25,000/-
Total ₹.1,18,91,630/-
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17. The cause of action for the relief sought in prayer No.
(i), in the present suit arose on 29.09.2016 when the Defendant No.1 admitted to delay in payment and assured to pay the amount; on various dates between November 2016 to 2017 when the Plaintiff demanded the payments, and continues till date as the Defendants have not yet paid the outstanding amounts. The suit is filed within time.
18. The Defendants are jointly and severally liable to pay the amounts to the Plaintiff. The Defendant No.1 carries on its business in Bangalore, the Defendant No.1 purchased the Product in Bangalore and Invoices were raised by the Plaintiff from its office in Bangalore, and the entire cause of action has arisen in Bangalore, within the territorial jurisdiction of this Hon'ble Court, and hence this Hon'ble Court has jurisdiction to try the suit.
19. The Plaintiff prays that this Hon'ble Court may be pleased to pass a judgment and decree in favour of the plaintiff; a. Directing the Defendants to pay a sum of ₹.1,18,91,630/- (Rupees One Crore eighteen lakhs ninety one thousand six hundred and thirty only) together with interest from the date of suit till the date of realization at the rate of 18% per annum;
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20. Even after the repeated attempts to serve the summons and after paper publication in Kannada Prabha dated:07.03.2020 and Indian Express dated:07.03.2020, the defendants remained absent and are placed exparte. Subsequently, the defendant No:2 appeared before the Court through his advocate and has filed I.A.No:2 under Order IX Rule 7 CPC. I.A.No:2 was allowed vide order dated:27.09.2021. The defendant No:2 has filed his written statement.
THE SUMMARY OF WRITTEN STATEMENT OF DEFENDANT NO.2 IS AS UNDER:
21. The suit filed by the Plaintiff is neither maintainable in law nor on facts and is liable to be dismissed in limine. The suit filed by the Plaintiff is hopelessly barred by Law of Limitation and it cannot be entertained. On this ground alone, the suit is liable to be dismissed.
22. The Plaintiff has not paid the adequate Court fee. Therefore, the suit is liable to be dismissed for non-payment of adequate Court fee. The suit filed by the Plaintiff is against a juristic person which is a corporate entity which has been arrayed as Defendant No.1. This Defendant No.2 was the Managing Director at the time of inception of the company. Therefore, the individual name reflected as Defendant No.2 is /16/ Com.O.S.264/2019 highly objected by this Defendant for making him as personal party. The 2nd Defendant submits that he was one of the directors of a company incorporated under the Indian Companies Act, in the name and style of Krish Food Technologies Pvt Ltd. At the time of obtaining the registration for the formation of the company in the year 2000, there were no premises available in the name of the Company and it was yet to occupy any leased premises. As such, for the purpose of initial correspondence the address of No.15/A, Sir MNK Road, Basavanagudi, Bengaluru was furnished. Thereafter, the Company started its business activities and was situated in different place and started commercial activities in the usual course of business. The business of the Company was functioning until a few years ago and in view of severs financial crisis and heavy loss in the business, the activities came to a standstill and the company became defunct and in the year 2016, for non operation purpose, the company got de-registered and eliminated from the active status. As per the balance sheet for the year end 31st March 2016 the company did not possess any assets in its records and had incurred huge financial loss. The liabilities of the companies were more than its assets.
23. The said Company tried its best to obtain financial assistance from the Banks and other financial institutions for /17/ Com.O.S.264/2019 revival of the company which was fondly nurtured by the Petitioner herein by making huge investments from his personal source and also borrowing from relatives and friends. But in view of the adverse market conditions and bad debts, the financial recovery did not take place and the company dived in the deep.
24. This defendant was one of the directors of the company. During the year 2010 there were two directors on the board and on 10.04.2019, the other director Smt. Nikhath Sultana resigned from the board and left the company. Thus, the petitioner being the lone director could not take up any revival activities. By virtue of severe losses suffered by Defendant No.1, the company became defunct and has been delisted by the operation of law under Companies Act and at present there are no assets in the name of the company.
25. The 2nd Defendant's personal address has been shown to that of the 1st Defendant by mentioning "also at". This Defendant objects for incorporating wrong address of the first Defendant. By virtue of the company becoming total defunct, the second Defendant is not in possession of any documents related to the first Defendant.
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26. The second Defendant denies all the allegations made in the plaint as far as this Defendant is concerned and the Plaintiff is put to strict proof of the same, except those which are expressly admitted in this written statement. This Defendant offers its paragraph wise remarks to the plaint filed by the Plaintiff which is as follows:
27. Regarding Para 3 and 4 of the Plaint: The statement made herein is a matter of record and this Defendant has no comments for the same.
28. Regarding Para 5 of the Plaint: It is true that the Defendant No.1 was engaged in the business of retailing bakery products. It is false to say that this Defendant and Defendant No.3 who are Directors involved in the day to day business of Defendant No.1, without quoting the dates since the company became defunct long time ago, the statement of the plaintiff is denied as false.
29. Regarding Para 6 of the Plaint: The averments that this Defendant approached the Plaintiff to sell some of its products during May 2013 and the Plaintiff placed orders, are all denied as false. The Plaintiff is put to strict proof of the same.
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30. Regarding Para 7 of the Plaint: The averments made therein that the 1st Defendant had represented that it did not had adequate financial resources to import of its requirements and requested the Plaintiff to import product and the 1 st Defendant in turn would buy the same from the Plaintiff, is hereby denied as false. The further statement made in the same paragraphs about the alleged representation assured by 1st Defendant, is also hereby denied as false and the Plaintiff is put to strict proof of the same.
31. Regarding Para 8 of the Plaint: The averments made herein that the Plaintiff supplied the Defendant No.1 certain materials and it was not prompt in making the payment and has made only partial payment, is hereby denied as false. All necessary payments were made within time permitted for payment of amount after raising the invoices.
32. Regarding Para 9 of the Plaint: The averments that the Plaintiff raised invoice for each of the supplies and amounts were due when such invoices were raised and the 1 st Defendant was liable to pay interest on the delayed payment, is hereby denied as false. Further, the alleged acknowledgment as stated in the document No.2, 3, 4, 5 & 6 are hereby denied and the same is not obtained from the /20/ Com.O.S.264/2019 authorized person of the 1st Defendant. Therefore, this Defendant denies these averments.
33. Regarding Para 10 of the Plaint: The averments made herein that the 1st Defendant did not honor his commitment and made only partial payment and had failed to make the payment, is hereby denied as false.
34. Regarding Para 11 of the Plaint: The averments made herein that the 1st Defendant is liable to pay a sum of ₹.54,60,612/- to the Plaintiff is hereby denied as false and the Plaintiff is put to strict proof of the same.
35. Regarding Para 12 of the Plaint: The averments made in respect of 2 emails produced as Document No.9 and 10 and subsequent documents wherein it is alleged that this 2 nd Defendant apologized for delayed payment and promised to make the payment, is hereby denied as false. The Plaintiff is put to strict proof of the same. The averments made by the plaintiff that it has maintained customer outstanding report in the usual course of business in respect of second defendant are denied as false.
36. Regarding Para 13 of the Plaint: The averments made in this paragraph are subject to production of appropriate /21/ Com.O.S.264/2019 documents before this Hon'ble Court and the information provided therein are insufficient to offer its reply. But however, this Defendant submits that the goods supplied by the Plaintiff were all highly sub-standard materials and the same was informed and brought to the notice of the Plaintiff, soon after receipt of such products and this Defendant had raised a serious objection which was overlooked by the Plaintiff and these aspects are not forthcoming in the plaint averments. Therefore, the Plaintiff is put to strict proof of the same.
37. Regarding Para 14 of the Plaint: The averments made herein that the 1st Defendant started to make false claims instead of making payments due to the Plaintiff, is hereby denied 2002 as false. The averments in respect of registration of KVATS against the Plaintiff are a matter of record. In view of the threat issued by the plaintiff that it would launch false prosecution against the Defendant, as a matter of abundant precaution, certain actions were initiated.
38. Regarding Para 15 and 16 of the Plaint: The averments that a total sum of ₹.54,60,612/- was outstanding is hereby denied as false.
39. Regarding Para 17 of the Plaint: It is submitted that any legitimate dues were pending has been made by the /22/ Com.O.S.264/2019 Defendant to the Plaintiff, but it is false to say that the Defendant has paid only a sum of ₹.6,00,000/- towards arrears. The Plaintiff has miserably failed to reflect the true accounts that it has received every payment from the 1 st Defendant.
40. Regarding Para 18 and 19 of the Plaint: It is false to state that this Defendant is liable to pay interest at the rate of 24% p.a. There was no such agreement and the Plaintiff is put to strict proof of the same.
41. Regarding Para 20 of the Plaint: There is no cause of action for presenting this suit and the alleged cause of action dated 29.09.2016 about the assurances of the Defendant is all a created and concocted for the purpose of presenting this suit. The suit is hopelessly barred by limitation and this has to be tried as a preliminary issue by this Hon'ble Court. Therefore, the Plaintiff is not entitled for any reliefs as prayed for in the plaint.
42. The second Defendant seriously objects for including this Defendant in the prayer column for seeking a Judgment and Decree, when his name has been individually added as 2 nd Defendant. In his individual capacity as a former Director, this /23/ Com.O.S.264/2019 Defendant is not liable for any arrears of the 1st Defendant to any extent of whatsoever in nature.
43. The Second Defendant has categorically stated that the 1st Defendant did not possess any assets in its final stages before it went as dormant company. As such, the 2nd Defendant has not benefited or inherited any assets of the 1st Defendant. Therefore, in all probabilities, this Defendant should be excluded from the above suit in the above circumstances.
44. The Plaintiff was liable to pay huge commissions to this Defendant in respect of the sales undertaken for the Plaintiff. Without paying the commission, the Plaintiff went on delaying the same, on one or the other pretext. Therefore, the materials delivered by the Plaintiff were also sub- standard one, which could not fetch any commercial value and it was a total loss to this Defendant. When all these matters were brought to the notice of the Plaintiff, it went on assuring but did not take any action and sometimes thereafter, the first Defendant also became defunct and there were no persons to carry out the follow up action. The Plaintiff by taking this advantageous situation has come up with the above suit.
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45. The second defendant due to old age and health related issue, never functioned as a Director of first defendant for several years and the third defendant was a director had also resigned from the Board and virtually there was no one to speak on behalf of the first defendant.
46. The second defendant is not liable to any extent to answer the claim of the plaintiff. The entire averments made in the plaint are only against first defendant which is a corporate entity. As an individual the second defendant is not liable to any extent in respect of alleged arrears of the plaintiff. Accordingly the suit filed by the plaintiff is liable to be dismissed with exemplary cost.
47. On the basis of rival pleadings the following Issues are framed.
ISSUES
01. Whether the Plaintiff proves that the defendant No.1 represented by defendant No:2 and 3 is liable to pay a sum of ₹.1,18,91,630/- to the plaintiff?
02. Whether the Plaintiff proves that defendant No.1 represented by defendant No:2 and 3 is liable to pay interest at the rate of 18% p.a. on the outstanding amount of ₹.1,18,91,630/- from the date of suit till the date of payment to the plaintiff?
03. Whether the defendant No:2 proves that the defendant No:1 Company is now defunct /25/ Com.O.S.264/2019 and de-registered and not in existence, as such the suit is not maintainable?
04. What Order/decree?
48. The Plaintiff examined authorized signatory Sri.R.Jagannathan as PW1. In view of the statement of admission and denial of documents filed by the defendant No:2 the plaintiff exhibited Ex.P1 to Ex.P3; PW1 exhibited Ex.P4 to Ex.P19 in his evidence.
49. The second defendant Sri.S.M.Sathyanarayan adduced his evidence as DW1. He has not exhibited any documents.
50. After the completion of the trial I have heard the arguments addressed by the learned Counsel for the Plaintiff and second defendant. The learned Counsel for the plaintiff and second defendant has also submitted their respective written arguments.
51. The learned Counsel for the plaintiff has relied on the decision of Hon'ble Supreme Court of India reported in (2004) 10 SCC 549 Syndicate Bank, Chennai Vs. Mohan Brothers and Others and also furnished copy of Master Data of the Defendant No:1 Company.
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52. The learned Counsel for the second defendant relied on the following decisions in support of his case.
1. RFA14/2010 & CM No.495/2010 Mukesh Hans & Ors Vs. Uma Bhasin & others Hon'ble High Court of Delhi. D.D.16.08.2010.
2. C.R.P. No.365/2006 Tristar Consultants Vs Customer Services India Pvt.Ltd., & Ors Hon'ble High Court of Delhi. D.D. 05.03.2007.
53. I have gone through the materials available on record. I have carefully followed the ratio of the decisions relied on by the parties. My findings on the above Issues are as under:
ISSUE No.1 : IN THE AFFIRMATIVE
ISSUE No.2 : IN THE AFFIRMATIVE
ISSUE No.3 : IN THE NEGATIVE
ISSUE No.4 : As per final order
for the following
REASONS
54. ISSUE No.1 and 2: These two issues are
interconnected to each other as such they are taken together for discussion to avoid repetition of facts.
55. The plaintiff has filed this suit against the defendants praying the Court to pass a Judgment and decree directing the defendant /27/ Com.O.S.264/2019
a) to pay the plaintiff a sum of ₹.1,18,91,630/- together with interest from the date of suit until realization @ 18%p.a.; costs and such other reliefs.
56. The Plaintiff examined authorized signatory Sri.R.Jagannathan as PW1. In view of the statement of admission and denial of documents filed by the defendant No:2 the plaintiff exhibited Ex.P1 to Ex.P3; PW1 exhibited Ex.P4 to Ex.P19 in his evidence.
Sl. Particulars of Documents Ex.P.
No.
1. Letter dated:17.11.2016/e-mail Ex.P1
addressed to Sri.Srinivas Rao by PW1
2 Notice dated:16.01.2017 issued by Ex.P2
defendant No:1 to the plaintiff
2(A) Notice dated:16.01.2017 issued by Ex.P2(A)
defendant No:1 to the plaintiff
3 Certificate U/S.65B Evidence Act Ex.P3
4 Resolution of the Board dt 27-03- Ex.P.4
2019/24-03-2019
5 Invoice bearing no. BLR/00044/14-15 dt Ex.P.5
03-04-2014
6 Invoice bearing no. BLR/01827/14-15 dt Ex.P.6
26-06-2014
7 Invoice bearing no. BLR/01923/14-15 dt Ex.P.7
03-09-2014
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8 Invoice bearing no. BLR/00281/15-16 dt Ex.P.8 17-04-2015 9 Invoice bearing no. BLR/00458/15-16 dt Ex.P.9 29-04-2015 10 Reply notice dt 16-01-2017 issued by the Ex.P.2(A) defendant 11 Copy of Email dt 02-05-2016 Ex.P.10 12 Copy of statement annexed with Ex. P10 Ex.P.11 13 Copy of Email dt 06-06-2016 Ex.P.12 14 Copy of Email dt 18-07-2016 Ex.P.13 15 Copy of Email dt 23-09-2016 Ex.P.14 16 Copy of customer outstanding report as Ex.P.15 on 25-10-2016 17 Copy of customer outstanding report Ex.P.16 upto 31-10-2016
18. Copy of Email dt 01-12-2016 along with Ex.P.17 trial mails dt 16-11-2016, 14-09-2016 and 02-08-2018
19. Copy of customer outstanding report as Ex.P.18 on 01-12-2016
20. Customer outstanding report as on 11- Ex.P.19 03-2017
57. The PW1 has reiterated the plaint averments in his affidavit evidence. It is the case of the plaintiff that the Defendant No.1 Company had represented to the Plaintiff that the Defendant No.1 was the agent of Dosumaya pan India and /29/ Com.O.S.264/2019 that the Defendant No.1 had imported the product of Dosumaya, known as "Hasmaya Dry Yeast" to India earlier. The Defendant No.1 had further represented that the Defendant No.1 did not have adequate financial resources to import from Dosumaya for all its requirements (including that of its customers/ vendors) and requested the Plaintiff to import the product Hasmaya Dry Yeast directly from Dosumaya (based in Turkey) and that the Defendant No.1 would in turn buy its requirements from the Plaintiff. The Defendant No.1 also requested the Plaintiff to open a Letter of Credit for the purposes of importing Hasmaya dry yeast from Dosumaya, based in Turkey. The Defendant No.1 had made some representations and assurances, on the basis of which, the Plaintiff had agreed to the same. It was represented and/or assured by the Defendant No.1 as follows:
i. The defendant No:1 was the agent for DOSUMAYA Pan India and had previously imported Hasmaya Dry yeast from Turkey and that the defendant No:1 would guarantee the quality of the Hasmaya Dry yeast.
ii. The Plaintiff could directly import Hasmaya Dry Yeast from Turkey by opening a Letter of Credit with Dosumaya;
iii. The Defendant No.1 would buy a "committed quantity"
of Hasmaya Dry Yeast from the Plaintiff and pay the price for the same immediately on supply; and /30/ Com.O.S.264/2019 iv. The Plaintiff would be entitled to sell the rest of its import of the Yeast to its customers.
58. Based on the aforesaid representations and assurances of the Defendant No.1, the Plaintiff established a Letter of Credit in favor of Dosumaya Turkey in November 2013, May 2014 and November 2014 and imported the Hasmaya Dry Yeast, including the quantity committed by Defendant No.1 that it would purchase.
59. The Hasmaya Dry Yeast was supplied to the Defendant No.1 as agreed. However, the Defendant No.1 was not prompt in payment and has made only partial payments against one batch of supply. The details of supply of the product and the payment pending are detailed as under:
Sl. Material Quantify Value Date of Pending Days of No. Supplied in Kgs Supply payment Delay in payment 1 Hasamaya 10,000 22,33,435 03.09.2014 12,17,085 1655 Dry Yeast 2 Hasamaya 9,000 20,10,092 17.04.2015 20,10,092 1429 Dry Yeast 3 Hasamaya 10,000 22,33,435 29.04.2015 22,33,435 1417 Dry Yeast 54,60,612 /31/ Com.O.S.264/2019
60. The plaintiff has raised invoices and the amounts under each invoice fell due the following day. The defendant No.1 is also liable to pay interest at 24% p.a. on delayed payments. The defendant No;1 has paid ₹.6,00,000/- towards partial payment of outstanding dues. In spite of repeated requests and demands the defendant No:1 has failed to clear the outstanding dues. The defendants are jointly and severally liable to pay ₹.54,60,612/- towards products supplied; ₹.65,06,018/- towards interest at 24% p.a. and ₹.25,000/- towards legal expenses. The defendants are jointly and severally liable to pay ₹.1,18,91,630/- along with current and future interest at 18% p.a. from the date of suit till the date of realization.
61. The defendant No:2 Sri.S.M.Sathyanarayana adduced his evidence as DW1. He has not exhibited any documents. The defendant No:2 has denied all the averments made in the plaint. The transaction was between the plaintiff and the defendant No:1 who are separate juristic entities. He is not liable to answer the suit claim in his individual capacity. He has stated that he is not liable to pay any amount to the plaintiff and is not liable to pay any interest as claimed by the plaintiff. He has stated that the goods supplied by the plaintiff were all highly sub-standard materials and the same was informed and brought to the notice of the plaintiff, soon after /32/ Com.O.S.264/2019 the receipt of such products and the defendant No.2 has raised serious objection which was overlooked by the plaintiff and the plaintiff has suppressed all these facts. The Defendant No:2 has stated that it is false to say that the defendant has paid only a sum of ₹.6,00,000/- towards arrears. The Plaintiff has miserably failed to reflect the true accounts that it has received every payment from the 1st defendant.
62. The defendant No:2 is contending that due to financial crisis the activities of the defendant No;1 came to a standstill and the Company became defunct in the year 2016 for non operation purpose the Company got de-registered and eliminated from the active status. As per the Balance sheet for the year end 31st March 2016 the Company did not possess any assets in its records and had incurred huge financial loss.
63. From the above evidence it is evident that there is no dispute between the parties regarding the suit transaction that transpired between the plaintiff and defendant No:1. The defendant No:2 has deposed on behalf of defendant No:1 also. The defendant No:2 has admitted that he has paid ₹.6,00,000/- towards partial payment of outstanding dues. He is contending that the plaintiff has not furnished true state of accounts. The defendant No:2 has not furnished any books of /33/ Com.O.S.264/2019 account to show that the accounts furnished by the plaintiff are incorrect.
64. The PW1 in his cross examination deposed that 'Since 33 years I have been working in the plaintiff company as General Manager. The plaintiff is engaged in distribution of Food and Pharmaceutical raw materials. During 2013-14 we transacted with the defendant company. The defendants are engaged in the business of manufacturing bakery products and distributors of dry yeast. Dry yeast was manufactured by DOSUMAYA. The defendant no.1 approached the plaintiff in 2013. It is not true to suggest that the plaintiff has purchased dry yeast from May-2013 till October 2013.
65. We used to purchase dry yeast from Turkey and sell in India. It is not true to suggest that the plaintiff Company was not doing any business with DOSUMAYA. It is true that the plaintiff came to know about DOSUMAYA only through defendant no.1 Company. It is true that plaintiff and defendant no.1 did not have any written agreement.'
66. The Defendant No;2 in his cross examination has deposed that 'I was the Managing Director of defendant No.1 Company. The defendant No.1 Company was the 1 st Company which has established business relationship with Istanbul Dosu /34/ Com.O.S.264/2019 Maya in India. It is not true to suggest that the defendant No.1 has 1st approached the plaintiff Company for business. Between September-2014 and April-2015 the plaintiff Company had supplied Dry Yeast to defendant No.1. In April- 2016 the defendant No.1 Company made a partial payment of ₹.6,00,000/- to the plaintiff Company. I do not remember the mode of payment. Defendant No.3 was looking after financial affairs of defendant No.1 Company. My advocate has prepared Statement of admission and denial of documents filed by me as per my instructions. E-mail ID at Ex.P.14 i.e. [email protected] was used for communication purposes by defendant No.1. The witness denies the contents of Ex.P.14. E-mail ID [email protected] shown in Ex.P.1 and Ex.P.14 are one and the same. In Ex.P.1 I have shown my designation as the Managing Director and I have issued letter as per Ex.P.1 to the plaintiff. I had been using [email protected] for communication purposes. I have not furnished any documents to shown that defendant No.1 Company is now defunct and de- registered. I don't know the meaning of de-registration. We have not initiated winding up proceedings of defendant No.1 Company we have just stopped all the business of defendant No.1 Company. I am not aware whether I have furnished copies of balance sheet for the years 2014-15, 2015-16 before the Court. I can furnish copy of balance sheet for the year 2014-15 and 2015-16. During the said financial years I was not /35/ Com.O.S.264/2019 attending day to day affairs of defendant No.1 Company due to my ill health.'
67. The Plaintiff has exhibited Ex.P5 to P9/invoices to evidence the supply of Hasamaya Dry yeast to the defendant. The DW1 in his cross examination has deposed that 'I have stated in Para.14 of my written statement that 'All necessary payments were made within time permitted for payment of amount after raising the invoices'. I admit that the plaintiff has supplied yeast to the defendant No.1. I have not furnished any documents to show that I have raised quality issues with the plaintiff regarding the materials supplied by the plaintiff. I have not furnished any statement of accounts to show the payments made and the payment outstanding towards the materials supplied by the plaintiff. The defendant No:2 has not exhibited any documents that he has cleared the outstanding dues to the plaintiff. The averments made in the written statement by defendant No:2 show that the defendant No:1 made partial payment of ₹.6,00,000/- only towards outstanding due and the plaintiff has acknowledged the payment of ₹.6,00,000/- from defendant No:1.'
68. The Plaintiff has exhibited Ex.P10, Ex.P11, Ex.P12 and Ex.P13 to show that the defendant No:1 is due in a sum of ₹.54,60,812/-. The defendant No:2 vide e-mail communication /36/ Com.O.S.264/2019 dated:23.09.2016/Ex.P14 has admitted his liability to the plaintiff and sought for time to clear the dues as he is suffering financial constraints.
69. The defendant No:2 has clearly admitted the suit transaction and deposed that he has no documents to show the payments were made to the plaintiff. The plaintiff by adducing cogent and convincing evidence has proved the liability of defendant No.1. The defendant No:2 has failed to prove the plea of discharge.
70. The Plaintiff is claiming interest at 24% p.a. on delayed payment. The Plaintiff vide Ex.P11, Ex.P15, Ex.P16 has notified and demanded the defendant No:1 to clear the outstanding dues along with interest at 24% p.a. for belated period. The defendant No;2 has not issued any communication denying his liability to pay the interest on belated payment.
71. The plaintiff has furnished the details regarding number of days delayed and quantified the interest at 24% p.a. The transaction between the plaintiff and defendant No:1 is a commercial transaction. The plaintiff is entitled to charge interest at 24% p.a. on belated payment till the date of suit as the defendant has failed to clear the overdue amount within stipulated time.
/37/ Com.O.S.264/2019
72. The Plaintiff is claiming pendent lite interest at 18% p.a. In view of Section 34 CPC the defendant No:1 is liable to pay interest at the contractual rate of interest on overdue amount of where there is no contractual rate is agreed at the rate which moneys are let or advanced by nationalized banks in relation to commercial transaction. The suit transaction between the plaintiff and defendant is a commercial transaction. In this case, the plaintiff has established that the contractual rate of interest is 24% p.a. However, the plaintiff is restricting its claim of interest at 18% p.a. on overdue amount from the date of suit till the date of realization. In view of nature of suit transaction and the period of overdue it is just and necessary to award interest at 18% p.a. on overdue amount from the date of suit till the date of realization. Thus the defendant No:1 is liable to pay ₹.1,18,91,630/- along with interest at 18% p.a. on ₹.54,60,612/- from the date of suit till the date of realization. Accordingly, ISSUE No.1 and 2 are answered in the AFFIRMATIVE.
73. ISSUE No.3. The defendant No:2 in the cross examination of PW1 tried to introduce a theory that there was an agreement between the Managing Director of the Plaintiff and the defendant No;1 Company to share the commission amount.
/38/ Com.O.S.264/2019
74. PW1 in his cross examination deposed that 'It is not true to suggest that I am not aware of the agreement entered into by the Managing Director plaintiff company with defendant no.1 Company. I have no difficulty to furnish documents to evidence the agreement entered into by the Managing Director plaintiff company with defendant no.1 Company to share the commission. The defendant No:2 is contending that the plaintiff has failed to pay ₹.46,81,560/- to the defendant No;1 Company towards discount and commission as per the agreement between the Managing Director of the Plaintiff Company and defendant No;1 Company.'
75. The PW1 in his cross examination deposed that he is aware that no such agreement to pay 2% commission to the defendant No;1 by the plaintiff is in place. He denied that the Managing Director of the Plaintiff Company is liable to pay ₹.1,24,00,000/- and ₹.4,50,000/- to the defendant No.1 Company.
76. The Plaintiff has exhibited Ex.P2 and Ex.P2(A) notices issued by the defendant No:2 calling upon the plaintiff to pay ₹.46,81,560/-. The PW1 has deposed that "there is no sharing Commission agreement between the Managing Director of plaintiff Company with defendant no.1 Company. I am fully /39/ Com.O.S.264/2019 aware of conversation that took place between the Managing Director of plaintiff Company with defendant no.1 Company. We have imported 5 containers from DOSUMAYA, Turkey. There was no payment regarding Commission made by the plaintiff Company to the 1st defendant. We were supplying dry yeast in good condition to the defendant No.1 Company. We will not sell the dry yeast if it is not in good condition.
77. We have not supplied any material to the defendant no. 1 Company in the year 2017. It is not true to suggest that we have supplied good quality materials to the 1 st defendant Company subsequent to 2017. It is not true to suggest that we have not supplied good quality materials between 2013-19 to the defendant no.1 Company, the witness volunteers to depose that we have supplied good quality materials only to the defendant no.1 Company.
78. I am not aware who AJALLI is. The witness volunteers to depose that Ajalli is known to me and she is from Turkey and she is working in DOSUMAYA. Ajalli had come to India to meet Mr. S. M. Satyanarayana/Defendant No.2. It is not true to suggest Ajalli had not met Mr. S. N. Satyanarayana. It is not true to suggest that Ajalli had come to India to inspect the quality of goods. She had come to India for development of DOSUMAYA's business (dry yeast).
/40/ Com.O.S.264/2019
79. It is not true to suggest that out of 5 containers of dry yeast imported by the plaintiff two containers were of not good quality. The witness volunteers to depose that all the 5 containers were of good quality. It is false to suggest that DOSUMAYA had paid compensation of 30,000 US dollars as compensation towards damage of 2 containers.
80. The witness volunteers to depose that DOSUMAYA had paid 30,000 US dollars towards price difference and the expenses incurred by the plaintiff. We have not furnished any document regarding payment of 30,000 US dollars made by DOSUMAYA to the plaintiff Company, before the company.
Q: Are you aware that the MD of plaintiff Company has received 15,000 US dollars from DOSUMAYA ?
A: The plaintiff has not received any such payments from DOSUMAYA.
81. It is false to suggest that in-spite of receiving 15,000 US dollars from DOSUMAYA the plaintiff has failed to pay ₹.9,90,000 to the defendant No. 1 Company a per the agreement entered into between the MD of plaintiff company and defendant No.1 Company.
82. It is false to suggest that in-spite of receiving 26,250 US dollars from DOSUMAYA towards discount in respect of 5 /41/ Com.O.S.264/2019 containers, the plaintiff has failed to pay ₹. 17,85,000/- to the defendant No. 1 Company a per the agreement entered into between the MD of plaintiff company and defendant No.1 Company.
83. The plaintiff had been maintaining regular books of accounts in respect of transactions conducted with DOSUMAYA. Q: Have you furnished any documents for having received benefits, discount from DOSUMAYA, before the Court? A: We have not received any benefits or discount from DOSUMAYA. We have furnished invoices before the Court. It is false to suggest that we have imported 10 containers from DOSUMAYA.
Q: To avoid payment of 21,420 US dollars (₹.14,56,560/-) towards Commission to the defendant No.1 Company you are denying import of 10 containers from DOSUMAYA?
A: We have not imported 10 containers from DOSUMAYA, we have not availed any such discount as suggested. We have not imported any dry yeast from DOSUMAYA before 2012.
It is not true to suggest that the plaintiff Company was obliged to supply yeast towards the advance amount of ₹. 1,24,00,000/- paid by 1st defendant Company.
/42/ Com.O.S.264/2019 I am still working as a General Manager in the plaintiff Company. It is false to suggest that the plaintiff got 2000 customers only after the plaintiff entered into agreement with defendant Company.
Q: You are not aware that the MD of plaintiff Company had entered into an agreement with defendant No.1 Company that the plaintiff Company would pay 2% commission to the defendant No.1 Company for every transaction? A: I am aware that no such agreement was in place between the MD of plaintiff Company and defendant No.1 Company.
84. It is not true to suggest that the MD of plaintiff Company is liable to pay ₹. 1,24,00,000/- and ₹. 4,50,000/- to the defendant No.1 Company.
Q: You, the plaintiff has failed to pay ₹. 46,81,560/- to the defendant No.1 Company towards discount and commission as per the agreement between the MD of plaintiff Company and defendant No.1 company?
A: There is no such agreement as suggested and the plaintiff is not liable to pay any such amount as suggested.
85. We have not issued any reply notice to the notice dated 16-01-2017 issued by the defendant No.1 (as per Ex. P2 and Ex. P2(A)). It is not true to suggest that after receipt of /43/ Com.O.S.264/2019 legal notice dated 16-01-2017, the plaintiff came to know that it was liable to pay commission to defendant No.1. No such commission was payable by the plaintiff to the defendant No.
1.'
86. The cross examination of PW1 by second defendant shows that the attempts made by defendant No:2 to elicit the answers/admission from PW1 regarding the alleged agreement entered into between the Managing Director of the Plaintiff Company and Defendant No:1 Company did not yield the desired results.
87. The DW1 in his cross examination deposed that 'I have not entered in to any written agreement with the Director of plaintiff regarding payment of commission at 2% by the plaintiff to the defendant No.1 Company. The 2% commission was payable by the plaintiff Company to the defendant No.1 Company. Usually the companies enter into transactions through written agreements/written communications. Usually the defendant No.1 Company used to transact with other through verbal communications.'
88. The defendant No:2 has failed to furnish any written agreement between the Managing Director of the Plaintiff Company and defendant No:1 Company regarding Commission sharing. The defendant No:1 has not followed up the claim /44/ Com.O.S.264/2019 made under Ex.P2 and Ex.P2(A). The defendants have not made any counter claim seeking recovery of alleged commission amount. Moreover, the defendant No:2 has not taken up any plea regarding the entitlement of defendant No:1 to recover alleged Commission Amount from plaintiff Company in his written statement except making passing reference that the plaintiff is liable to pay huge commission to defendant No:1 without furnishing the details of the claim. In the absence of pleadings and evidence, the claim made by the defendant No:2 remains as a claim and the defendant No:1 is not entitled to seek recovery of alleged Commission amount from the plaintiff Company.
89. The defendant No;2 is contending that the defendant No:1 is defunct and de-registered as such the suit is not maintainable.
90. The defendant No.2 in his cross examination deposed that 'I have not furnished any documents to show that defendant No.1 Company is now defunct and de-registered. I don't know the meaning of de-registration. We have not initiated winding up proceedings of defendant No.1 Company we have just stopped all the business of defendant No.1 Company. I am not aware whether I have furnished copies of balance sheet for the years 2014-15, 2015-16 before the /45/ Com.O.S.264/2019 Court. I can furnish copy of balance sheet for the year 2014-15 and 2015-16. During the said financial years I was not attending day to day affairs of defendant No.1 Company due to my ill health. Defendant No.3 was looking after day to day affairs of defendant No.1 Company. It is true that my name is still shown as the Managing Director of defendant No.1 Company in the records of Registrar of Companies. It is not true to suggest that I have willfully failed to put appearance for defendant No.1 Company though under law I am obliged to represent defendant No.1 Company.'
91. 'The defendant No.3 is not accessible since 2016. I made attempts to contact her but in vain. I have no documents to show that the defendants are not liable to pay the suit claim. I have filed my written statement and also affidavit evidence on behalf of defendant No.1 also. In my affidavit evidence I have deposed that I am giving evidence in my personal capacity. I have deposed in para.6 of my affidavit that I am not in possession of books of accounts of defendant No.1 Company. It is not true to suggest that the defendant No.1 Company is liable to pay the suit claim to the plaintiff Company. It is not true to suggest that I am falsely deposing that the defendant No.1 Company is not liable to pay the suit claim to the plaintiff Company. It is not true to suggest that the /46/ Com.O.S.264/2019 defendant No.1 Company is not still wound up and I am still the Director of defendant No.1 Company.'
92. The Plaintiff has furnished copy of Company Master Data, which shows that the defendant No:1 Company is ACTIVE Non-Compliant. The evidence adduced by defendant No:2 shows that the defendant No:1 Company is not doing any business at present. However, the defendant No:1 Company is not wound-up. The defendant No:2 has not furnished copies of balance sheet of defendant No.1 to show that it has no assets as of now. In the absence of any declaration made by the competent authority that the defendant No:1 Company is wound-up or defunct the liability of defendant No:1 Company towards plaintiff company subsists.
93. The defendant No:2 is contending that no averments are made by the plaintiff against defendant No;2 and 3 and all the averments are directed against defendant No;1, as such the defendant No;2 in his individual capacity is not liable to answer suit claim.
94. It is well settled law that a body corporate incorporated under the provisions of Companies Act is a juristic person independent of its members capable of suing or be sued in its own name. The Company functions through its /47/ Com.O.S.264/2019 Board of Directors. An individual director is not entitled to act on behalf of the Company without proper authority conferred on him either by the Articles of Association of the Company or by the resolution of the Board. An individual director owes a fiduciary duty to the Company and no contractual obligation to third parties. An individual director is answerable only if he bounds himself to indemnify any third party by offering personal guarantee or surety on behalf of the company; or in a circumstance where an individual director has induced third parties to enter in to contract by playing fraud or misrepresentation. It is not the case of the plaintiff that defendant No:2 and 3 have offered personal guarantee for the liabilities of defendant No:1 Company or defendant No;2 and 3 have induced the plaintiff Company to enter into contract by employing fraudulent means or by misrepresentation. Under these circumstances, the defendant No;2 and 3 are not liable to answer suit claim in their individual capacity. The defendant No: 1 Company alone is liable to satisfy the suit claim made by the plaintiff. Hence, the suit against defendant No:1 is maintainable in law. Accordingly, ISSUE No.3 is answered in the NEGATIVE.
/48/ Com.O.S.264/2019
95. ISSUE No.4: In view of above discussion and findings on Issue No.1 to 3 I pass the following ORDER The suit filed by plaintiff is hereby decreed with costs.
The defendant No:1 Company is liable to pay the plaintiff ₹.1,18,91,630/- (Rupees One Crore Eighteen Lakhs Ninety One Thousand Six Hundred Thirty only) along with interest at 18% p.a. on ₹.54,60,612/- (Rupees Fifty Four Lakhs Sixty Thousand Six Hundred Twelve only) from the date of suit till the date of realization.
The suit against defendant No:2 and 3 dismissed.
Draw decree accordingly.
The office is hereby directed to send a copy of the judgment to the plaintiff and second defendant through e-mail as per Order XX Rule 1 CPC as amended by Section 16 of Commercial Courts Act, 2015.
(Dictated to the Stenographer, corrected, signed and then pronounced by me in the open court on 31st day of JANUARY 2023) (S.J.KRISHNA) LXXXIX ADDL.CITY CIVIL & SESSIONS JUDGE, BENGALURU.
(CCH-90) /49/ Com.O.S.264/2019 ANNEXURES List of witnesses examined for the plaintiff:
P.W.1 : Sri.R.Jagannathan List of documents exhibited on behalf of the plaintiff:
Sl. Particulars of Documents Ex.P.
No.
1. Letter dated:17.11.2016/e-mail Ex.P1
addressed to Sri.Srinivas Rao by PW1
2 Notice dated:16.01.2017 issued by Ex.P2
defendant No:1 to the plaintiff
2(A) Notice dated:16.01.2017 issued by Ex.P2(A)
defendant No:1 to the plaintiff
3 Certificate U/S.65B Evidence Act Ex.P3
4 Resolution of the Board dt 27-03- Ex.P.4
2019/24-03-2019
5 Invoice bearing No.BLR/00044/14-15 dt Ex.P.5 03-04-2014 6 Invoice bearing No.BLR/01827/14-15 dt Ex.P.6 26-06-2014 7 Invoice bearing No. BLR/01923/14-15 dt Ex.P.7 03-09-2014 8 Invoice bearingNo. BLR/00281/15-16 dt Ex.P.8 17-04-2015 9 Invoice bearing No. BLR/00458/15-16 dt Ex.P.9 29-04-2015 10 Reply notice dt 16-01-2017 issued by the Ex.P.2(A) /50/ Com.O.S.264/2019 defendant 11 Copy of Email dt 02-05-2016 Ex.P.10 12 Copy of statement annexed with Ex. P10 Ex.P.11 13 Copy of Email dt 06-06-2016 Ex.P.12 14 Copy of Email dt 18-07-2016 Ex.P.13 15 Copy of Email dt 23-09-2016 Ex.P.14 16 Copy of customer outstanding report as Ex.P.15 on 25-10-2016 17 Copy of customer outstanding report Ex.P.16 upto 31-10-2016
18. Copy of Email dt 01-12-2016 along with Ex.P.17 trial mails dt 16-11-2016, 14-09-2016 and 02-08-2018
19. Copy of customer outstanding report as Ex.P.18 on 01-12-2016
20. Customer outstanding report as on Ex.P.19 11-03-2017 List of witnesses examined for the defendant/s:
DW.1 Sri.S.M.Sathyanarayana List of documents marked for the defendant/s:
NIL (S.J.KRISHNA) LXXXIX ADDL.CITY CIVIL & SESSIONS JUDGE, BENGALURU.
(CCH-90) ****