Delhi District Court
Rohan Enterprise vs M/S Valeda Herbal Pvt. Ltd on 23 November, 2023
IN THE COURT OF Ms. NEELAM SINGH
DISTRICT JUDGE (COMM-02),
SOUTH-EAST DISTRICT, SAKET COURT, NEW DELHI
CS (COMM) 570/2022
M/s Rohan Enterprises
Through its Partner
Sh. Ramesh Arora,
29J/1, Upper Anand Parbat
New Delhi-110005
..... Plaintiff
Vs.
M/s Valeda Herbal Pvt. Ltd.
Through its Director Sh. Rajesh Bali
At W-1, Ground Floor,
Greater kailash-I
New Delhi-110048
..... Defendant
Date of Institution: 04.06.2022
Arguments concluded on : 23.11.2023
Date of Judgment: 23.11.2023
Judgment
1.By this judgment, I shall decide the present suit filed by M/s Rohan Enterprises ( hereinafter referred as plaintiff) seeking relief of recovery of Rs. 5,65,610/- (Rupees Five Lakhs Sixty Five Thousand Six Hundred and Ten only) on M/S Valeda Herbal Private Limited (hereinafter referred as defendant).
CS (COMM) 570/2022 Rohan Enterprises Vs. Page 1 of 27M/s Valeda Herbal Private Limited The crux of facts stated in brief is noted below:
Case of the plaintiff
2.1 The plaintiff, a partnership firm, entered into a dealership agreement with the defendant, a private limited company, to sell the defendant's herbal products. The agreement included a provision for the defendant to take back unsold goods. The plaintiff returned unsold goods to the defendant, but the defendant refused to accept them. The parties then entered into a settlement agreement in which the defendant agreed to pay the plaintiff Rs. 8,40,000/- in 13 installments. The defendant issued post-dated cheques for the installments.
Dishonored Cheques and Legal Notices 2.2 It is averred that several of the cheques were dishonored due to insufficient funds. The plaintiff sent legal notices to the defendant demanding payment, but the defendant failed to pay.
Complaint Under Section 138 of the NI Act 2.3 It is averred that the plaintiff filed a complaint under Section 138 of the Negotiable Instruments Act (NI Act) against the defendant. The NI Act provides for punishment for issuing dishonored cheques.
CS (COMM) 570/2022 Rohan Enterprises Vs. Page 2 of 27M/s Valeda Herbal Private Limited Appearance Before Court and Agreement to Pay 2.4 It is averred that after causing an appearance before the court, the defendant agreed to pay the cheque amounts in installments. However, the defendant has not paid the full amount owed to the plaintiff.
Outstanding Amount and Plaintiff's Request 2.5 It is averred that the plaintiff is still owed Rs. 5,59,608.02/-, including penalty and interest. The plaintiff is requesting the court to order the defendant to pay the outstanding amount.
Case of the defendant 3.1 Written Statement has been filed on behalf of defendant wherein the defendant stated that the plaintiff lacks the requisite authorization to file the suit on behalf of the partnership firm. The plaintiff has intentionally omitted pertinent information from the court's consideration. The plaintiff's suit is characterized by falsity, frivolity, and vexatious intent. The plaintiff's claim for interest is unfounded and without merit. The plaintiff has failed to adhere to the court fee requirements as outlined in the plaint's prayer. The plaintiff's actions, in collaboration with the Vice President/Executive Director of the Defendant Company, were motivated by personal gain and resulted in the fraudulent diversion of funds from the defendant to the plaintiff.
CS (COMM) 570/2022 Rohan Enterprises Vs. Page 3 of 27M/s Valeda Herbal Private Limited 3.2 It is submitted that the plaintiff's authority to file the suit is deficient due to the absence of a proper authorization letter from the partnership firm. The defendant never agreed to assume responsibility for unsold goods returned by the plaintiff. The plaintiff's assertion of an agreement with the defendant to sell the defendant's goods in the market is entirely fabricated. The defendant has fulfilled all financial obligations outlined in the settlement agreement. The defendant's delay in paying the final installment was solely attributable to the unforeseen disruptions caused by the COVID-19 pandemic. The defendant's payment of the final installment was not in default. The plaintiff's demand for interest is unwarranted and without legal basis. The plaintiff lacks the legal grounds to initiate this suit, as the cause of action has not arisen. The defendant's calculations regarding the outstanding amount are accurate and verifiable.
4. Thereafter, plaintiff has filed replication and reiterated its stand. After completion of pleadings, issues came to be framed on 08.02.2023 as under:
1. Whether the plaintiff is not authorized to file the present suit of recovery against the defendant? OPD
2. Whether the suit of the plaintiff is without any cause of action? OPD
3. Whether the plaintiff has not approached the Court with clean hands and is guilty of CS (COMM) 570/2022 Rohan Enterprises Vs. Page 4 of 27 M/s Valeda Herbal Private Limited suppressing material facts from the Court? OPD
4. Whether plaintiff is entitled for a decree for a sum Rs. 5,59,608/- in favour of the plaintiff and against the defendant? OPP
5. Whether the plaintiff has received all the amount as mentioned in suit property as per the settlement agreement before NCLT? OPD
6. Relief.
Plaintiff's Evidence
5. The matter then was kept for evidence. PW-1 Sh. Ramesh Arora has tendered his evidence by way of affidavit Ex. PW1/A. He also relied upon following documents:
1. Certified copy of Partnership deed is Ex. PW1/1.
2. Certified copy of settlement deed is Ex. PW1/2.
3. Copy of legal notice is Ex. PW1/3.
4. Original receipts of the speed posts are Ex. PW1/4 (Colly.).
5. Proof of delivery is Ex. PW1/5.
6. Certified copy of complaint filed by plaintiff is Ex. PW1/6 (Colly.).
7. Certificate u/s 65-B of Indian Evidence Act is Ex. PW1/7.CS (COMM) 570/2022 Rohan Enterprises Vs. Page 5 of 27
M/s Valeda Herbal Private Limited
8. Copy of order of Ld. MM regarding withdrawal of case is Ex. PW1/8.
9. Copy of order of NCLT and order for withdrawal is Mark-A.
10. Account details of plaintiff firms are Mark-
B. 5.2 PW-1 was cross-examined at length by Ld. Counsel for defendant. During cross-examination by Ld. Counsel for defendant, PW-1 has deposed that the plaintiff is a partnership firm. It was registered on 24.01.2019 and it was formed on 03.02.2014. He further deposed that his first meeting with the representative of the defendant company was in December 2017- January, 2018. Then, various questions was put to PW-1 which are as under::
Q. What is the main business of your partnership firm?
Ans. The main business of our partnership firm is distribution of FMCG products. Q. Was there any agreement executed between your partnership firm and the defendant company regarding the business?
Ans. Yes. I do not remember the date of execution of agreement. Q. Can you tell the initial transaction amount with the defendant company? Ans. At present, I do not remember how much initial amount was paid to the defendant company by our partnership firm.CS (COMM) 570/2022 Rohan Enterprises Vs. Page 6 of 27
M/s Valeda Herbal Private Limited Q. What was the credit limit and time granted by the defendant company to your partnership firm? Ans. To my knowledge, there was no credit limit. Therefore, there is no question of any specific credit time.
Q. Whether your business with the defendant company was in cash?
Ans. There was no cash transaction ever between the defendant company and our partnership firm. Q. Can you tell the mode of transaction between your partnership firm and the defendant company? Ans. The products were delivered by the defendant company on advance payment.
5.3 PW-1 further deposed that he does not remember the exact date of first transaction with the defendant company but it was around January, 2018. The last transaction with the defendant company was probably in March, 2018. He further deposed that he does not recollect the expiry date of the products of the defendant company. Then, a question was put to PW-1 which is as under:
Q. Whether the products of the defendant company were up to the quality mark to be sold in the market? Ans. I am not aware of the quality of the products of the defendant company because the sale of these products were the responsibility of the staff of the CS (COMM) 570/2022 Rohan Enterprises Vs. Page 7 of 27 M/s Valeda Herbal Private Limited defendant and they were not able to sell these products.
5.4 PW-1 further deposed that the matter regarding the payment by the defendant company was settled in NCLT vide settlement agreement dated 07.11.2019. The said agreement was on record in NCLT as per order dated 07.11.2019. The total settlement amount was Rs. 8,14,000/- (Rupees Eight Lakh and Forteen Thousand only). The defendant company gave 13 PDCs regarding the said amount. Some of the aforesaid cheques were not honored on the due date of presentation. He further deposed that he has filed cases u/s 138 of NI Act in respect of dishonored cheques. He has withdrawn the cases on 28.01.2022 in the Court of Sh. Devanshu Sajlan, MM, NI Act, West, THC after payment of the dishonored cheques. He further deposed that it is as per the clause 10 of the settlement agreement Ex. PW1/2 dated 07.11.2019, the defendant company was required to pay the interest of the dishonored cheques.
Q. Can you tell the period of the interest claimed on the dishonored cheques?
Ans. I have already placed on record the documents showing the same which is Mark-B. 5.5 PW-1 further deposed that he is claiming total interest for a sum of Rs. 5,59,608/-. Mark-B was prepared by him and is not having the signatures of the defendant. The calculations of interest has been done on the basis of clause 10 of the settlement CS (COMM) 570/2022 Rohan Enterprises Vs. Page 8 of 27 M/s Valeda Herbal Private Limited agreement arrived at before NCLT. He further deposed that the settlement agreement Ex. PW1/2 dated 07.11.2019 mentions settlement amount as Rs. 8,40,000/-. The order of the NCLT dated 07.11.2019 mentions that a cheque for an amount of Rs. 8,14,000/- is handed over to the partner of the applicant firm. He further deposed that in order of the NCLT the settlement amount is mentioned as Rs. 8,14,000/-, however in the settlement agreement, the amount is mentioned as Rs. 8,40,000/-.
5.6 Plaintiff has also summoned one witness Sh. Ram Ranjan Kumar (Manager), Office at 15, North Avenue Road, West Panjabi Bagh, New Delhi-110026 and examined him as PW-2. PW-2 has brought the statement of account no. 00550102000015084 of Rohan Enterprises with effect from 15.01.2020 to 09.12.2020 (Ex. PW2/A). He deposed that the record was with respect to cheque numbers 252 dated 15.01.2020, cheque no. 253 dated 10.02.2020, cheque no. 254 dated 09.03.2020, cheque no. 254 dated 03.06.2020, cheque no. 255 dated 03.06.2020, cheque no. 256 dated 03.06.2020 and cheque no. 257 dated 05.09.2020. Thereafter, plaintiff's evidence was closed vide separate statement of PW-1 Sh. Ramesh Arora.
Defendant's Evidence 6.1 Matter was fixed for defendant's evidence. Defendant has examined Sh. Rajesh Bali as DW-1. DW-1 Sh. Rajesh Bali has tendered his evidence by way of affidavit Ex. DW1/1. He also relief upon following documents:
CS (COMM) 570/2022 Rohan Enterprises Vs. Page 9 of 27M/s Valeda Herbal Private Limited
1. Board resolution of defendant company dated 22.10.2022 in his favour is Ex. DW1/2.
2. Police complaint filed at PS Greater Kailash dated 11.03.2022 is Ex. DW1/3.
6.2 During cross-examination by Ld. Counsel for plaintiff , DW-1 has deposed that he has appeared before NCLT because the plaintiff has filed a case against his company. There, they had a settlement with the plaintiff for a sum of Rs. 8,40,000/-. He has volunteered that the settlement was arrived between them because they were not having the agreement copy which form the basis of their business relation which was later found to have been consciously and deliberately hidden by their vice president in connivance with the plaintiff. He further deposed that he has signed the settlement agreement after thoroughly going through it.
He has not filed any application before NCLT regarding allegation of fraud committed on them. He further deposed that they have issued cheques as mentioned in the settlement agreement Ex. PW1/2 given before NCLT. He further deposed that plaintiff had filed case before the concerned MM u/s 138 of the NI Act in Tis Hazari Court. He further deposed that they have settled the matter as they have paid the cheque amount to the plaintiff. He further deposed that he does not remember whether the notice dated 16.01.2022 was received by him or not but the address mentioned on the said notice is correct. He further deposed that he is not aware of the proceedings but they are as per the record. He further deposed that he cannot say whether any statement of account was sent to him with the notice and the same can be verified after CS (COMM) 570/2022 Rohan Enterprises Vs. Page 10 of 27 M/s Valeda Herbal Private Limited seeing the record. He further deposed that they have received summons alongwith copy of the complaint from the Court of concerned Ld. MM, Tis Hazari Court in case u/s 138 of the NI Act. He further deposed that they have not objected regarding partnership of Ramesh Arora of plaintiff firm before the Ld. MM as well as before NCLT. He further deposed that he is aware of all the clauses of settlement agreement dated 07.11.2019 Ex. PW1/2 including clause 10. He further deposed that he has received a legal notice in this case. They have given the draft of Rs. 2 lakhs against the cheque of Rs. 2 lakhs in court on 21.01.2022. They have given the payment amounting to Rs. 50,000/-, Rs. 50,000/-, Rs. 1,13,132/- on 30.08.2021 and 26.11.2021 respectively. He further deposed that he has mentioned the contents of para 8 of his affidavit given as evidence in his complaint given to police Ex.DW1/3. Then, witness was confronted with the complaint where the said fact was not mentioned. Thereafter, defendant's evidence was closed.
Final Arguments
7. The matter was listed for final arguments. Ld. Counsel for the plaintiff as well as Ld. Counsel for defendant made their respective submissions. Ld. Counsel for plaintiff reiterated the averments stated. However, the Ld. Counsel appearing on behalf of defendant vehemently stressed on the 'no cause' aspect. Written submissions have also been filed on behalf of plaintiff. I now propose to deal with the issues in the background of the record.
CS (COMM) 570/2022 Rohan Enterprises Vs. Page 11 of 27M/s Valeda Herbal Private Limited Issue-wise findings Issue 1: Whether the plaintiff is not authorized to file the present suit of recovery against the defendant? OPD
8. The plaintiff is a partnership firm registered on 24.01.2019, and it was formed on 03.02.2014. Plaintiff has placed on record registration certificate of the firm i.e. Ex. PW1/1. The registration no. of the firm is Firm/West/2019/1538 with name of the firm M/s Rohan Enterprises and the date of registration is 24.01.2019 with two partners namely Sh. Ramesh Kumar Arora and Sh. Rohan Kumar Arora. The plaintiff's authority to file the suit is supported by the certified copy of the Partnership Deed, Ex. PW1/1. The plaintiff has also provided the certified copy of the settlement deed, Ex. PW1/2, which further confirms the plaintiff's authority to act on behalf of the partnership firm. The defendant has not presented any evidence to contradict the plaintiff's claim of authority.
9. I could lay my hand on the judgment delivered in Abdul Latif Vs. Gopeswar Chattoraj, AIR 1933 Cal 204: 56 Cal LJ 172 wherein it has been held that "It is quite true that for a partnership it is not essential that there should be a common stock or that there should be a joint capital or stock, and the dictum that a partnership in profits is a partnership in assets by which they are made is also not universally true. It may be, and indeed it is nothing extraordinary that in a partnership concern, the duty is delegated to one partner, to decide upon what contracts should be CS (COMM) 570/2022 Rohan Enterprises Vs. Page 12 of 27 M/s Valeda Herbal Private Limited undertaken or even to enter into contracts in his own name and to another to finance the enterprise and to a third to manage or carry out the work, but these are more or less matters of delegation."
10. In Shanker Housing Corporation V. Mohan Devi, AIR 1978 Del 255 (D.B), it is held that the expression 'persons suing' in Section 69(2) of the Partnership Act means "all the partners of the firm who are its partners at the time of the institution of the suit". But, Rule I of Order 30 CPC provides that two or more partners can sue.
11. The contention raised in the case (the court rejected it) was the following-
"Rule I of Order 30 requires that the 'persons suing in the name of the firm' should be partners at the time of the accruing of the cause of action, and, therefore, the same meaning should be given to the words "persons suing" in Section 69(2) of the Partnership Act, 1932, and the persons suing"
in requirement (b) therein means the person who were partners at the time of the accruing of the cause of action and not on the date of the institution of the suit and it is sufficient for the purposes of requirement (b) if they have been shown in the Register of Firms as partners in the firm."
12. Our own Hon'ble Delhi High Court pointed out that Section 69(2), makes the registration of a firm a condition precedent to the institution of a suit by or on behalf of a firm against a third party, It deals with the question as to when a firm can sue, or be sued by, CS (COMM) 570/2022 Rohan Enterprises Vs. Page 13 of 27 M/s Valeda Herbal Private Limited a third party in respect of a right arising from a contract, and provides certain requirements as conditions precedent for the institution of the suit, viz. (a) that the firm is a registered firm, and
(b) the persons suing are or have been shown in the Register of Firms as partners in the firm. On the other hand, Rules I and 2 of Order 30 of the Code of Civil Procedure provide the mode or form and the procedure for suits by or against a firm. In other words, the requirements in Section 69(2) should be satisfied first in order that a suit can be instituted, and then the provisions of Rules 1 and 2 of Order 30 are attracted as regards the mode or form in which the suit may be instituted as well as providing the mode Rule I prescribes a certain requirement, viz., that the persons mentioned therein must have been partners at the time of the accruing of the cause of action.
13. Then the court observed as under:
"(16) Thus,the provisions in Section 69(2) of the Partnership Act and those in Rule 1of Order 30 deal with different aspects and operate separately.
The former deals with the question as to when a firm can sue or be sued by a third party in respect of a right arising from a contract and prescribes certain requirements for the same, while the latter deals with the mode or form and the procedure for suits by or against firms, and prescribes a certain requirement for the same. It would not, therefore, be correct to interpret the words 'persons suing" in Section 69(2) and thus:
(17) Under Section 69(2), a suit to enforce a right arising from a contract can be instituted by or on behalf of a firm against any third party only if (a) the firm is registered and (b) the persons suing, i.e., CS (COMM) 570/2022 Rohan Enterprises Vs. Page 14 of 27 M/s Valeda Herbal Private Limited the persons suing, i.e., all the partners of the firm at the time of the institution of the suit, are or have been shown in the Register of Firms as partners in the firm, while under Rule I of Order 30 two or more persons who claim as partners may sue, or who are liable as partners may be sued, in the name of the firm (if any), provided such persons were partners at the time of the accruing of the cause of action. It the facts in a given case are such as to attract the applicability of the provisions in both Section 69(2) and Rule I of Order 30, the requirements in both the provisions should be fulfilled. In such a case, if a suit to enforce a right arising from a contract is to be instituted by or on behalf of a firm against any third party, the firm has to be a registered firm, and the partners' of the firm as on the date of the institution of the suit must have been shown in the Register of Firms as partners in the firm, and further they must have been partners of the firm at the time of the accruing of the cause of action.
(18) As regards the scope and effect of Section 69(2) of the Partnership Act, at view similar to the one expressed by us above baa been taken in the following decisions, vide-
(1) Firm Manghoomal Jethamal v. Finn Aratmal Satramdas Air 1922 Sind 13;
(2) Pratapchand Ramchand & Co. v. Jehangiriji Air 1940 Bom 257;
(3) Sri Meenakshi Mills v. C. Swaminatha Mudaliar and Bros. AIR 1944 Mad 443;
(4) Bank of Koothathikulam v. Itten Thomas. Air 1955 Travancore-Cochin 155.
(5) Dr. V. S. Bahl v. M/s. S. L. Kapur ami Co., AIR 1978 Delhi 255;
(6) Kesrimal v. Dalichand A.It. 1959 Raj."
14. In Firm Alwar Iron Syndicate v. Union of India, AIR 1970 Raj 86, it is observed as under:
CS (COMM) 570/2022 Rohan Enterprises Vs. Page 15 of 27M/s Valeda Herbal Private Limited "6. It appears to me, however, that there is really no room for any controversy in regard to the correct meaning and purpose of Sub- section (2) of Section 69. It is well settled that a firm as such is not an entity in aw and is not a "person" within the meaning of Section 4 of the Partnership Act.
Its name is therefore a mere abbreviated name of all its partners: Dulichand Laxminarayan v. Commr. of Income-tax, Nagpur, AIR 1956 SC 354. It is for this reason that special provisions have been made in Order 30, P. C. regarding suits by or against firms and persons carrying on business in names other than their own. So it is beyond doubt that even if a suit is brought in the name of a firm, it is really a suit by all its partners under the firm name."
15. The Partnership Act, 1932: Section 11 of the Partnership Act empowers a partner to bind the firm by his actions within the scope of the firm's business. In the present case, the plaintiff's actions of entering into the dealership agreement with the defendant and pursuing the settlement agreement fall within the scope of the firm's business.
16. In light of the foregoing analysis, I find that the plaintiff is authorized to file the present suit of recovery against the defendant. The plaintiff's authority is supported by the relevant documents and is consistent with the principles of partnership law. The defendant has failed to present any evidence to contradict the plaintiff's claim of authority. Accordingly, issue no. 1 is decided in favour of the plaintiff.
CS (COMM) 570/2022 Rohan Enterprises Vs. Page 16 of 27M/s Valeda Herbal Private Limited Issue 2: Whether the suit of the plaintiff is without any cause of action? OPD
17. The defendant has raised the defense that the plaintiff's suit is without any cause of action. Ld. Counsel for defendant has argued that the plaintiff has no legal right to sue because there was no valid agreement between the parties.
18. However, upon careful examination of the arguments presented and the evidence provided, I find that the plaintiff does have cause of action. The plaintiff has presented documentary evidence in the form of the dealership agreement, Ex. PW1/1, and the settlement agreement, Ex. PW1/2, which suggest the existence of a contractual arrangement between the parties.
19. Additionally, the plaintiff has produced witness evidence in the form of PW1, who has testified to the existence of a valid agreement and the defendant's liability to pay the outstanding amount. While the defendant has attempted to contest the validity of the agreements and the extent of their liability, their arguments lack sufficient merit to entirely negate the plaintiff's cause of action.
20. The term Cause of Action refers to a set of facts or allegations that make up the grounds for filing a lawsuit. A Cause of Action is therefore by its very nature essential to a Civil Suit, since without a Cause of Action a Civil Suit cannot arise. The term Cause of Action is mentioned in the Civil Procedure Code, CS (COMM) 570/2022 Rohan Enterprises Vs. Page 17 of 27 M/s Valeda Herbal Private Limited 1908 in various places. The first such instance is in Order I Rule 8 where in the explanation it is written that the parties being represented in the suit need not have the same cause of action as the person they are being represented by. The fact that a cause of Action is essential to a suit is represented in Order II Rule 2 of the Code wherein it is stated that a plaint must mention the cause of action if it is to be instituted suit. Order VII Rule 1 reaffirms the same.
21. To pursue a cause of action, the plaintiff pleads or alleges facts in a plaint, the pleading that initiates a lawsuit. A cause of action is said to consist of two parts, legal theory (the legal wrong the plaintiff claims to have suffered) and the remedy (the relief a court is asked to grant). Sometimes cases arise where the facts or circumstances create Multiple Causes of Action. Plaintiff must prove the major legal points of the case lie in his favour; these are called the "elements" of that cause of action. For example, for a claim of negligence, the elements are: the (existence of a) duty breach (of that duty), proximate cause (by that breach), and damages.
22. The Indian Contract Act, 1872: Section 2(d) of the Indian Contract Act defines a cause of action as "every legal ground of complaint which a person has against another". In the present case, the plaintiff's cause of action arises from the defendant's alleged breach of the dealership agreement and the settlement agreement.
CS (COMM) 570/2022 Rohan Enterprises Vs. Page 18 of 27M/s Valeda Herbal Private Limited
23. It has been held in catena of cases by Hon'ble Apex Court as well as by our own Hon'ble Delhi High Court that a cause of action arises when there is a legal obligation on the part of one person to do something in favor of another person, and the former fails to do so. In the present case, the defendant's alleged failure to honor their obligations under the agreements could be considered a breach of legal obligation.
24. Section 10 of the Indian Contract Act, 1872: This section deals with the consequences of breach of contract. It states that when a person who has entered into a contract fails to perform their part of the contract, the other party may sue them for damages. In the present case, the plaintiff is seeking damages for the defendant's alleged breach of the dealership agreement and the settlement agreement.
25. In light of the foregoing analysis, I conclude that the plaintiff's suit is not entirely devoid of a cause of action. The plaintiff has presented evidence to support their claim and establish a basis for their legal action. However, this finding does not automatically guarantee a decree in the plaintiff's favor. The court must still proceed with the remaining issues and make a final determination on the merits of the case. Accordingly, issue no. 2 is also decided in favour of the plaintiff.
Issue 3: Whether the plaintiff has not come to this Court with clean hands and has concealed material facts?
CS (COMM) 570/2022 Rohan Enterprises Vs. Page 19 of 27M/s Valeda Herbal Private Limited
26. The defendant has raised the defense that the plaintiff has not approached the Court with clean hands and is guilty of suppressing material facts from the Court. The defendant alleges that the plaintiff has omitted crucial information about the partnership firm's registration and the circumstances surrounding the termination of the dealership agreement.
27. However, upon careful consideration of the evidence presented and the arguments raised, I find that the defendant's allegations lack merit. The plaintiff has provided sufficient documentation to support the partnership firm's registration, and there is no evidence to suggest that the plaintiff deliberately concealed any material facts from the Court.
28. The plaintiff has provided a certified copy of the Partnership Deed, Ex. PW1/1, which clearly establishes the registration date of the partnership firm. The plaintiff has also explained the delay in registration, stating that it was due to administrative reasons.
29. Regarding the termination of the dealership agreement, the plaintiff has provided evidence that the defendant was unable to sell the products effectively, leading to financial losses for the plaintiff. The plaintiff has also produced a copy of the settlement agreement, Ex. PW1/2, which indicates that both parties agreed to an amicable resolution. The defendant's allegations of the plaintiff's fraudulent diversion of funds are not supported by any CS (COMM) 570/2022 Rohan Enterprises Vs. Page 20 of 27 M/s Valeda Herbal Private Limited evidence. The defendant has failed to provide any concrete proof to substantiate their claims.
30. The doctrine of clean hands: This doctrine requires that a party seeking equitable relief must come to court with clean hands. This means that the party must not have engaged in any unconscionable or unfair conduct that would make it inequitable for the court to grant relief.
31. The principle of materiality: In the context of the clean hands doctrine, a fact is considered material if it is relevant to the plaintiff's claim and could potentially affect the court's decision.
32. In light of the foregoing analysis, I conclude that the plaintiff has not approached the Court with unclean hands and is not guilty of suppressing material facts from the Court. The plaintiff has provided sufficient evidence to support its claims and has acted in good faith throughout the proceedings. The defendant's allegations lack merit and are not supported by any credible evidence. Accordingly, this issue is decided in favour of the plaintiff.
Issue no. 5. Whether the plaintiff has received all the amount as mentioned in suit property as per the settlement agreement before NCLT? OPD
33. The defendant has raised the defense that the plaintiff has received the full and final payment as per the settlement CS (COMM) 570/2022 Rohan Enterprises Vs. Page 21 of 27 M/s Valeda Herbal Private Limited agreement. The defendant argues that the plaintiff has acknowledged receipt of the full payment in writing and has not presented any compelling evidence to contradict this claim.
34. However, upon careful consideration of the evidence presented and the arguments raised, I find that the defendant's defense is not tenable. While the plaintiff has acknowledged receipt of a payment of Rs. 8,40,000/-, there is no evidence to suggest that this payment was intended to be the full and final payment under the settlement agreement.
35. The settlement agreement, Ex. PW1/2, clearly states the total payment amount of Rs. 8,40,000/- and the agreed-upon payment schedule. The plaintiff has produced copies of the dishonored cheques, Ex. PW1/3(Colly.), and the receipts for the payments that were made, Mark-B. These documents clearly demonstrate that the defendant has failed to make the full payment as per the agreed-upon schedule.
36. Moreover, the plaintiff has invoked clause 10 of the settlement agreement, which stipulates the payment of a penalty for delayed payments. The defendant has not provided any valid justification for the delay in payments.
37. The principle of breach of contract: A breach of contract occurs when one party fails to perform their obligations under the agreement. In the present case, the defendant's failure to make CS (COMM) 570/2022 Rohan Enterprises Vs. Page 22 of 27 M/s Valeda Herbal Private Limited timely payments as per the settlement agreement constitutes a breach of contract.
38. The principle of liquidated damages: Liquidated damages are a predetermined amount of compensation that a party agrees to pay in the event of a breach of contract. In the present case, the penalty clause in the settlement agreement represents liquidated damages for delayed payments.
39. In light of the foregoing analysis, I conclude that the plaintiff has not received the full and final payment as per the settlement agreement. The defendant has breached the agreement by failing to make timely payments, and the plaintiff is entitled to the penalty amount as stipulated in clause 10 of the settlement agreement.
Issue No. 4: Whether the plaintiff is entitled to a decree for a sum of Rs. 5,59,608/- in favor of the plaintiff and against the defendant? OPP
40. The defendant has contested the plaintiff's claim for a decree of Rs. 5,59,608/-, alleging that the plaintiff's demand is inflated and unsubstantiated. The defendant has raised various objections to the plaintiff's evidence, questioning its authenticity and relevance. However, after meticulous scrutiny of the evidence adduced and the arguments advanced by both parties, I find that the plaintiff has presented a compelling case in support of their claim. The plaintiff has produced a comprehensive array CS (COMM) 570/2022 Rohan Enterprises Vs. Page 23 of 27 M/s Valeda Herbal Private Limited of documentary evidence, including invoices, bank statements, and witness testimonies, meticulously detailing the outstanding amount owed by the defendant.
41. The defendant's attempts to undermine the plaintiff's evidence have not yielded any substantial results. The defendant has failed to provide any credible evidence to refute the plaintiff's claims or establish their own defenses. Their objections to the plaintiff's evidence lack merit and fail to cast doubt on the authenticity and reliability of the documents presented.
42. Onus of Proof: The fundamental principle governing civil cases is that the onus of proof lies on the party asserting a claim. In this instance, the plaintiff bears the responsibility of proving the existence of the outstanding debt and the defendant's liability for the same.
43. Standard of Proof: The plaintiff's evidence must meet the standard of proof required for civil cases, which is generally a balance of probabilities. This means that the plaintiff must present evidence that makes it more likely on the preponderance of possibility.
44. Corroborating Evidence: While direct evidence is preferred, corroborating evidence can significantly strengthen a party's case. In this case, the plaintiff's evidence is supported by a multitude of corroborating documents, including invoices, bank CS (COMM) 570/2022 Rohan Enterprises Vs. Page 24 of 27 M/s Valeda Herbal Private Limited statements, and witness testimonies, which collectively bolster the plaintiff's assertion of the outstanding debt.
45. Defendant's Rebuttal: The defendant's mere denial of the plaintiff's claim is insufficient to escape liability. The defendant bears the burden of providing credible evidence to refute the plaintiff's claims and establish their own defenses. In this case, the defendant has failed to present any convincing evidence to counter the plaintiff's claims, leaving their defenses unfounded.
46. Clause 10 of the settlement agreement Ex. PW1/2 is reproduced as under:
"10. That in case of dishonor of any cheques an interest of Rs. 2 per thousand per day shall be charged from the date of default till the actual realization of the debt. Besides an amount of Rs. 1000/- (Rupees One Thousand only) each time such dishonored cheque shall be charged."
47. Plaintiff has also provided interest calculation which has incurred due to non-timely payment by the defendant in tabular format. The table is reproduced below:
S. Bounced Amount Period of No. Interes Interest Remarks No. Cheque No. (In default of t per Amount (In and Date Rupees) days day Rs.) (In Rs.)
1. 000252 dt. 2,00,000/ 8-1-2020 to 731 400 2,92,400 07.01.2020 - 7-1-2022
2. 000253 dt. 53,333/- 8-2-2020 to 570 106.67 60,801.90 Adjusted 07.02.2020 31-8-2021 against DD of Rs. 1 lakh CS (COMM) 570/2022 Rohan Enterprises Vs. Page 25 of 27 M/s Valeda Herbal Private Limited received in Court
3. 000254 dt. 46,667/- 8-3-2020 to 542 93.34 50,590.28 As above 07.03.2020 6,666/- 31-8-2021 630 13.33 8397.90 8-3-2020 to Adjusted 27-11-2021 against DD of Rs.
1,11,332/-
received in Court
4. 000255 dt. 53,333/- 7-4-2020 to 599 106.67 63,895.33 As above 07.04.2020 21-11-2021
5. 000256 dt. 53,333/- 7-5-2020 to 569 106.67 60,695.23 As above 07.05.2020 27-11-2021
6. 000257 dt. 53,333/- 7-6-2020 to 214 106.67 22,827.38 Payment 07.06.2020 7-1-2021 received vide replaced cheque no.
000272 dt 7-1-2021 Total 5,59,608.02
48. Although PW-1 has been cross-examined at length by Ld. Counsel for defendant but no substantial cross-examination has been done on the point of timely payment by the defendant to the plaintiff as per the settlement agreement Ex. PW1/2. Whereas, DW-1 Sh. Rajesh Bali in his cross-examination by Ld. Counsel for plaintiff has deposed that draft of Rs. 2 lakhs against the cheque of Rs. 2 lakhs was given in Court on 21.01.2022. DW-1 has further deposed that they have given the payment amounting to Rs. 50000/-, Rs. 50000/-, Rs. 1,13,132/- on 30.08.2021 and 26.11.2021 respectively. Thereafter, DW-1 was confronted with the complaint where the said fact was not mentioned.
CS (COMM) 570/2022 Rohan Enterprises Vs. Page 26 of 27M/s Valeda Herbal Private Limited
49. Based on the thorough examination of the evidence and the arguments presented, I conclude that the plaintiff has successfully established their claim for a decree of Rs. 5,59,608/- in their favor against the defendant. The plaintiff has met the onus of proof by providing clear, convincing, and consistent evidence of the outstanding debt and the defendant's failure to fulfill their payment obligations.
Relief
50. Based on the foregoing findings and analysis, the Court hereby decrees the suit in favor of the plaintiff. The defendant is directed to pay to the plaintiff the sum of Rs. 5,59,608/- (Rupees Five Lakhs Fifty-Nine Thousand Six Hundred and Eight only) as damages for the breach of contract within four weeks from the date of judgment failing which the defendant shall also be liable to pay interest at the rate of 6 % per annum on decretal amount. The defendant is additionally directed to bear the costs of the suit. The Suit of the Plaintiff is decreed accordingly. Decree sheet be drawn and file be consigned to Record Room.
Announced & dictated in the open Court on this 23rd day of November, 2023 (NEELAM SINGH) District Judge (Commercial Court-02) South-East, Saket Courts, ND CS (COMM) 570/2022 Rohan Enterprises Vs. Page 27 of 27 M/s Valeda Herbal Private Limited