Calcutta High Court
Bijoy Nagar Tea Company Limited vs Subhas Agarwal on 19 February, 2010
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
CA No. 444 of 2009
CP No. 363 of 2007
IN THE HIGH COURT AT CALCUTTA
ORIGINAL JURISDICTION
IN THE MATTER OF:
BIJOY NAGAR TEA COMPANY LIMITED
-AND-
SUBHAS AGARWAL, PROP. OF M/S. ANKIT & CO.
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
Date: February 19, 2010.
Appearance:
Mr Jishnu Saha, Adv., Mr S. Dutt, Adv.
... For the Petitioner.
Mr Surojit Nath Mitra, Sr. Adv., Mr D.N. Mishra, Adv., Mr. V.N. Mishra, Adv.
... For the Company.
The Court: An utterly dishonest defence has been set up in a Court of law with full knowledge that it is dishonest and by relying on palpably false documents. It is unfortunate that there is no screening at any level to filter such untruthful stands for them to be weeded out before they actually reach the Court. It is a sad commentary on the state of affairs; as it has now come to pass, any frivolous claim or specious defence is thrown 2 at Court without the slightest hesitation or fear of the adverse consequences.
The petitioner has claimed on account of price of goods sold and delivered. The simple claim of the petitioner is that he supplied gunny bags to the company which carries on business of manufacture of tea. Over a period of time, the company, in purported discharge of its liabilities, issued seven several cheques amounting to a total of Rs.43,43,933/- as per the following particulars:
Date Cheque Nos. Amount
16.12.2005 430840 Rs.3,00,000/-
18.12.2005 430841 Rs.3,00,000/-
20.12.2005 430842 Rs.3,00,000/-
08.06.2006 430877 Rs.3,00,000/-
10.06.2006 430578 Rs.3,00,000/-
12.06.2006 430579 Rs.3,00,000/-
20.06.2006 120751 Rs.25,43,933/-
All the cheques save the last were drawn by the company on the State Bank of India, Dalhousie Square Branch, Calcutta. The last was drawn on ICICI Bank, R. N. Mukherjee Road, Calcutta.
Prior to the present petition being filed, the petitioner had instituted CP No.416 of 2006 on the self-same cause. At the hearing it was noticed 3 that the petitioner was unable to produce the acknowledgment card evidencing service of the statutory notice on which the previous petition was founded. An order dated August 27, 2007 recorded that since the service of the statutory notice was a precondition for a creditor invoking Section 434(1)(a) of the Companies Act and the petitioner had not satisfactorily demonstrated service of the statutory notice, the petition was liable to be stayed. Leave was given, however, by such order to the petitioner to file afresh and otherwise pursue the petitioner's claim in accordance with law.
On the same day that the order was made, a statutory notice was issued to the company claiming a sum of Rs.44,48,852/- as at June 31, 2006 together with interest thereon. The company responded to such statutory notice.
The elaborate defence set out and the pains taken by or at the behest of the company need to be noticed in detail; not the least for the effort expended. It must also be remembered that this second statutory notice was issued on a rebound, in the sense that a creditor's winding-up petition had been previously filed and lawyers had already come into the picture and that an affidavit had been filed by the company to the previous petition. The company's response to the statutory notice of August 27, 2007 runs into four long sheets of paper. The company attempted to deal 4 with every aspect of the matter. It is, in a sense, the ideal reply to a statutory notice that anyone trained in this branch of law would produce for a creditor's petition to be rejected on the basis of such reply. Yet, the reply must be considered in the context that the matter had by then reached lawyers and it was not a lay response of a company to an alleged creditor demanding payment.
There is one aspect of the matter that requires to be referred to before the reply to the statutory notice is taken up in detail and the allegations meticulously arranged therein considered. There is a small matter of the company having unequivocally admitted its indebtedness to the petitioner in the sum of Rs.43,43,933/- by a writing dated April 1, 2005, the execution whereof on behalf of the company is not questioned and stands virtually admitted even at this stage. The petitioner had apparently forwarded a balance confirmation of accounts for the period April 1, 2004 to March 31, 2005 claiming that a sum of Rs.43,48,130/- was due and owing from the company to the petitioner. The format of the balance confirmation letter reveals that there was a space left on the bottom right of the document for the company's rubber stamp and its officer's signature to be appended thereto. The signature on behalf of the company was to come below a line that confirmed the accounts on behalf of the company. It is the admitted position that upon the company receiving such 5 statement, the company's authorised officer disputed the quantum that had been claimed by the petitioner and wrote down the quantum that appeared from the company's version of the accounts before signing the document and affixing the company's rubber stamp thereon. The company's officer confirmed that the closing balance in favour of the petitioner as at March 31, 2005 was Rs.43,43,933/-. The writing on behalf of the company is in hand in a document which is otherwise printed except the signatures thereon.
To return to the yarn that has been spun in the reply to the statutory notice. The company was aware that there existed an indisputable document where the company had clearly and unequivocally acknowledged and admitted its indebtedness; where the company had consciously contested the balance amount that the petitioner had suggested and had put in the amount that appeared to be due to the petitioner from the company's books. Yet, there is a lot of imagination that has gone into the reply to the statutory notice, notwithstanding this debility on the part of the company, to wish away the unambiguous admission in the document of April 1, 2005.
Into the second paragraph of the reply to the statutory notice, the company questioned the propriety thereof since a company petition on the self-same ground was, as on the date of the issuance of the notice, pending 6 in Court. The initial niceties over, the company delved into the nitty-gritty of the matter. Into the fifth paragraph of the reply, the company referred to its alleged letters of September 2, 2005, December 19, 2003 and March 30, 2004 which the company claimed to have addressed to the petitioner apparently raising its objection against the rates quoted by the petitioner for supply of the gunny bags. The company insisted that it was liable to pay only to the extent of Rs.26.78 per bag and no more.
With the preliminaries as to questioning the rate having been taken care of in the fifth paragraph of the reply, the company introduced a debit note in the sixth paragraph thereof. According to the company the debit note was of value of Rs.33,78,597/- which had been issued after reckoning the accounts between the parties as at March 31, 2006. The company asserted that under cover of its letter of April 12,2006 it had duly intimated the petitioner that a sum of Rs.33,78,597/- had been adjusted in the final accounts as at March 31,2006. The company asserted that the letter of April 12,2006 had been duly received by the petitioner without raising any objection thereto.
At the next paragraph of the company's reply it suggested that the cheques bearing nos. 430840,430841 and 430842 had been forwarded to the petitioner under cover of the company's letter said to have been issued on December 16,2005 and such forwarding letter "in clear and 7 unequivocal terms stated that the said cheque should not be presented without the consent from the said company ..." The company also asserted that the letter of December 16,2005 had been duly received by the petitioner.
The company thereafter made out in its reply that since the aforesaid three cheques issued in the month of December,2005 were due to lose their validity in the middle of June,2006, the petitioner apparently requested the company to issue fresh cheques in lieu thereof and, accordingly, the company under cover of its letter said to have been issued on June 7,2006 forwarded three fresh cheques to replace the old cheques. The company again insisted that the letter of June 7,2006 also stipulated that these fresh cheques should not be deposited without (though the reply mistakenly used the word 'with') the prior approval of the company. The company claimed that the six cheques for Rs.3 lakh each were unfairly attempted to be encashed by the petitioner though the petitioner was aware that the three previous cheques were to be returned unencashed and the three subsequent cheques were not to be presented without the previous authority of the company. This is a hackneyed defence put up every so often to rebut the presumption that arises upon a cheque being issued; it is distressing that such line of defence continues to be repeated mindlessly.8
This story improves thereafter. Now that the first six cheques were apparently taken care of, one set of three having allegedly been furnished to replace the previous set of three, the company embarked on the more difficult task of trying to explain away the last cheque bearing a broken figure. The company suggested that it had a warehouse in Siliguri where blank signed cheques were kept to facilitate its employees to meet the day- to-day expenses at the warehouse. The company claimed that "in the usual course" a named representative of the petitioner called at the company's warehouse on June 20,2006 and collected a blank cheque where such named representative of the petitioner was to insert the figure of Rs.15,000/-, which the company claimed was then due and payable by the company to the petitioner. The company's reply asserted that instead of the figure of Rs.15,000/- being inserted in the cheque, the figure of Rs.25,43,933/- was inserted therein. The company insisted that the petitioner had practised fraud on the company.
Without going into the veracity of the other statements thus far noticed in the reply, it is necessary to concentrate on this aspect of the matter for the moment. Why was it necessary for the company to issue a blank cheque and leave the petitioner's employee to fill in the figure therein ? Why, indeed, would the company trust the petitioner or its representatives so when the company by then willy-nilly been cheated by 9 the petitioner in the petitioner having fraudulently raised excess bills to the extent of over Rs.33 lakhs ( it should be remembered that the debit note is said to have been issued to the petitioner and received by the petitioner on or about April 12,2006) ? There is also another question that arises. Why would the company be paying a sum of Rs.15,000/- to the petitioner in end-June, 2006. The sum would not represent the settlement of the balance dues of the petitioner, even if the company's version of things were to be believed.
To proceed with the rest of the story made out in the company's reply. Into the third page of the company's letter, it claimed that "by its letters" the company had apparently called upon the petitioner "to explain the cheating and fraud" apparently practised by the petitioner on the company. These letters have not seen the light of day. Mercifully, these have not been brought on record.
The rest of the letter petered out after repeating the denials and insisting that a fraudulent claim had been made by the petitioner and malicious prosecution had been launched in respect of the dishonour of cheques under Section 138 of the Negotiable Instruments Act.
The company's affidavit filed in the present proceedings has next to be assessed. Ignoring, for the moment, the averments contained in the affidavit, one can skip over the 25 pages and reach the annexures thereto. 10 The first annexure to the company's affidavit is a letter of April 12,2006 which is professed to have been sent both by the registered post and by hand. The copy of the letter appearing at page 26 of the company's affidavit is alleged to have been received by the petitioner with a rubber stamp affixed thereto and one Baboo Lal having allegedly signed on behalf of the petitioner in Hindi. The letter proclaims to be a covering letter for forwarding a debit note dated March 31,2006 for Rs.33,78,597/-. Page 27 of the company's affidavit reflects a copy of the debit note. Such debit note also calls for a second look. There are seven financial years which are indicated in the first column of the debit note. The second column indicates the alleged overcharging of rates in the gunny bags. The third column details the numbers of bags that were apparently sold by the petitioner to the company during the relevant financial years and the fourth column records, possibly, the excess payment made to or demanded by the petitioner. Save an amount of Rs.76,544/-, the balance amount in the total claim in the debit note of Rs.33,78,597/- pertains to the previous financial years ending with the year 2004-05.
At page 28 of the company's affidavit there is another copy of the letter dated April 12,2006 which was purportedly sent by the registered post. The acknowledgement due card is not evident, but there is a 11 photocopy of a piece of paper at the foot of page 28 which would suggest that the postal article had been sent.
At page 29 of the company's affidavit there is the copy of a letter dated September 2,2005; at the next page there is a copy of a letter dated December 19,2003 and at page 32 there is a copy of a letter dated March 30,2004. The letters said to have been issued on September 2,2005 and March 30,2004 also suggest that they were issued under registered post. Again, the relevant acknowledgement due cards or copies thereof do not find any place in the company's affidavit. But the copies of the postal receipts apparently showing despatch of the postal articles have been appended at the foot of the said two letters. There is no attempt to explain or demonstrate the receipt of the letter dated December 19,2003 by the petitioner. In the letter said to have been issued on September 2,2005, the company referred to its previous letters of December 19,2003 and March 30,2004 (the copies whereof appear at pages 30 and 32 of the company's affidavit). In the letter purportedly written out and issued by the company on September 2,2005, the company complained that "even after so many letters" the petitioner had not paid any attention and there had been a sharp decline in the company's business during the year. The company alleged, if it indeed issued such letter, that other manufacturers of gunny bags were charging at much lower rates than the petitioner. The company 12 hoped that upon receiving the letter the petitioner would revise the rates and amend "all previous bills submitted" without any delay. There was an indication given in the exit line of the letter that the company would consider raising a debit note in future.
It is necessary to see why the letter said to have been issued on September 2,2005 needed to be included in the company's documents as an integral part of the defence thought out on its behalf. There are only two possibilities. Either the letter is genuine or the letter has been forged, fabricated or manufactured for the purpose of a dishonest defence being set up to meet an otherwise unimpeachable claim of the petitioner. If the letter of September 2,2005 had not been there, and had not indicated what it has, the company's defence would have been hollow. On any intelligent reading of the letter of September 2,2005 which the company claims to have issued, it is obvious that the company has obliquely attempted to take care of the admission of indebtedness that the company issued on April 1,2005. For a first, there is a challenge to the rates at which the petitioner charged. Secondly, the company advised the petitioner to amend its bills already raised on the company. Thirdly, the letter indicated that a debit note would subsequently be issued. Any person with ordinary intelligence would see through the dubious design of the company and not read the purported letter of September 2, 2005 to be anything but an 13 attempt to create a false and dishonest defence. The petitioner has denied the issuance and receipt of the letters which have been relied upon in the company's affidavit.
The letter said to have been issued on December 19,2003 does not appear to have been served on the petitioner. The company appears to have sent it by courier without the company bothering to append the proof of delivery or proof of despatch that courier companies ordinarily furnish. The alleged letters of December 19, 2003 and March 30, 2004 enclosed purported copies of bills of third party manufacturers of gunny bags quoting their rates therein. In the game that the company had embarked upon, these were vital cogs that were necessary for the company to carefully put in place to sustain its contrived defence that the petitioner had overcharged and the petitioner was liable to revise the bills.
There is a minor matter that the company appears to have overlooked. Even in the seemingly completeness of the dishonest picture that the company has put in place, the company overlooked that its letter said to have been issued on September 2,2005 referred to the earlier letters said to have been issued on December 19,2003 and March 30,2004. By March 30,2004 latest, the company was already aware, if the letters are to be believed, that the petitioner had overcharged and that there were other manufacturers in the industry who were charging much lesser rates 14 than those quoted by the petitioner. If despite the company having such information, its officer chose to unreservedly acknowledge the indebtedness of the company to the extent of Rs.43,43,933/- against the balance confirmation of accounts for a larger figure of Rs.43,48,130/- indicated in the document of April 1,2005, the defence which has been attempted to be set up by the palpably false and fabricated letter of September 2,2005 falls flat.
There are several other purported letters, copies whereof have been appended to the company's affidavit. There are first the letters said to have been issued by the company on December 16,2005 and June 7,2006 which had been referred to in the reply to the statutory notice. These were apparently the letters under which the first lot of three cheques and the second lot of three cheques (all of them of value of Rs.3 lakh each) had been forwarded by the company to the petitioner. The only purpose for which these letters have been sought to be relied upon is the apparent assertion therein that the petitioner was not to deposit the cheques without previous approval of the company. Both the letters of December 16,2005 and June 7,2006 bear the purported rubber stamp of the company and apparently bear the signature of one Phool Kumar, an employee of the petitioner. The petitioner has categorically denied the receipt of such letters and the existence thereof and the petitioner has 15 referred to such documents as having been manufactured and brought into existence for the purpose of present proceedings. The petitioner has also denied the existence and receipt of the letters said to have been issued by the company on December 19, 2003, March 30, 2004, September 2, 2005, April 12, 2006 and the debit note of March 31, 2006. The petitioner has disowned the purported rubber stamp bearing the name of the petitioner's proprietorship concern that the company has relied on to claim service of some of these letters on the petitioner.
The next set of documents that appears in the company's affidavit comprises letters allegedly issued on June 17,2006, July 7,2006, July 29,2006 and July 29,2006. The first three purported letters referred to the petitioner having wrongfully deposited the six cheques each of value of Rs. 3 lakh. The second purported letter of July 29,2006 referred to the final cheque for Rs.25,43,933/-. The company appears to have asserted that such cheque had never been issued by it and a blank cheque issued by the company kept at its Siliguri Tea House had been made over to Phool Kumar who was a representative of the petitioner and instead of filling in Rs.15,000/- therein, he had fraudulently misused the cheque and inserted the figure of Rs.25,43,930/-.
In the company's affidavit the company has criticised the petitioner not having been relied on the accounts for the previous financial years. 16 After the petitioner had filed his affidavit-in-reply, he obtained leave in August, 2009 to use a supplementary affidavit. The supplementary affidavit discloses documents running from pages 5 to 19. These, according to the petitioner, are the balance confirmation of accounts for the several financial years preceding 2004-05 and including 2004-05. A copy of such supplementary affidavit had been contemporaneously served on the company. The company has acknowledged receipt of the supplementary affidavit and has chosen neither to deal with the same nor seek any leave even at the conclusion of the final hearing to respond thereto.
The supplementary affidavit reveals that the accounts for each financial year have been confirmed with the company's rubber stamp affixed thereon for the year ended March 31,2002 and for the years ended March 31,2003 and March 31,2004. As At March 31,2004 a sum of Rs.37,80,992/- remained due and owing from the company to the petitioner according to the accounts that had been confirmed by the parties. At pages 13 to 15 of the supplementary affidavit, the petitioner has detailed the transactions between the parties during the financial year 2004-05 and at the end of it, according to the petitioner, there was a sum of Rs.43,48,130/- which was shown to be due and payable by the company to the petitioner. The petitioner is, however, agreeable to accept the company's confirmation figure of Rs.43,43,933/- and the corroboration of 17 such figure in the seven several cheques detailed at the beginning of this judgement which had been issued by or about June 20,2006.
At paragraph 3(c) of the company's affidavit it has claimed that it "had raised debit notes for a total sum of Rs.33,78,597/- such debit note issued by the company has been duly received by the applicant without raising any objection whatsoever." There is a contradiction in the relevant sentence as to whether there was one debit note that the company raised on the petitioner or more than one debit note. At the following sub- paragraph the company has pleaded that the bills submitted by the petitioner were received in good faith and on the impression that they were on the basis of the agreed rates, "however during audit, it was discovered that the bills submitted by the (petitioner) were not raised in accordance with the rates agreed ..." Audits of companies are statutorily required to be held every year for the relevant financial year. If the company was aware in December, 2003 or even in March, 2004 that the petitioner had overcharged it, there was no question of the company confirming the accounts as at March 31, 2005 prepared on the basis of the petitioner's rates.
At paragraph 3(d) of the company's affidavit, it has said that payments were made by it to the petitioner at the agreed rates and not on the basis of the rates quoted by the petitioner in the invoices that have 18 been relied upon in the petition. There is no denial of the receipt of the invoices by the company. There is no letter of protest relating to the invoices, save the contrived and utterly incredulous letters of December 19, 2003 and March 30, 2004. It is also inconceivable that the company would sign and accept the balance confirmation of accounts year after year till the year ended March 31, 2005 without any reservation as to the rates indicated in the balance confirmation documents. Either the company did not protest the rates, which would imply that the letters of December 19, 2003 and March 30, 2004 have only now been brought into existence; or in the company accepting the balance confirmation of accounts at the end of every subsequent financial year, it waived or is deemed to have waived the objections that it apparently raised in the letters of December 19, 2003 and March 30, 2004. In either case, the letters of December 19, 2003 and March 30, 2004 cannot detract from the petitioner's claim or be legally relied upon by the company to resist such claim.
In the company's affidavit, there is no assertion at paragraph 3(e) or at paragraph 3(f) that the petitioner received the letter dated December 16, 2005 or the letter dated June 7, 2006. At paragraph 3(g) of the company's affidavit there is a statement that after receipt of the fresh cheques issued in June, 2006 allegedly in lieu of the cheques issued in December, 2005, the petitioner "with a malafide motive and intention failed to return the 19 earlier cheques ..." Yet the company did not deem it necessary or make it convenient to contemporaneously issue a letter of protest or a reminder to the petitioner that the petitioner was obliged to return the old cheques immediately upon receipt of the new cheques. The purported letters in such regard are said to have been issued after the company claims that it was made aware by its bankers that the relevant cheques had been dishonoured upon their presentation. At the second paragraph 3(k) of its affidavit (there are two sub-paragraphs marked (j) and two sub-paragraphs marked (k) in paragraph 3 of the company's affidavit), the company has alleged that the petitioner (though it has been mistakenly referred to as the company) adopted "illegal practices" and "foisted a claim ... with a threat to proceed under Section 138 of Negotiable Instrument Act ..." The company has not, however, disclosed how it dealt with the notices that were issued by the petitioner prior to launching criminal proceedings for the dishonour of the cheques.
At paragraph 6 of its affidavit the director of the company who has affirmed the affidavit has alleged that "the price/ rate was not agreed and as such the petitioner (sic, the company) by its letter dated 19th December, 2003 30th March, 2004 and 2nd September, 2005 duly requested to the applicant to amend the rate ..." For the reasons discussed earlier, it impossible to believe that these letters were issued on the dates claimed or, 20 in any event, that they had been received by the petitioner. In any event, since it is irrelevant after the company admittedly confirmed the balance of Rs.43,43,933/- in the document dated April 1, 2005 as to whether it issued the previous letters said to be dated December 19, 2003 and March 30, 2004, it is the letter said to have been issued by the company on September 2, 2005 that will require a closer scrutiny.
In the sixteenth paragraph of the petition, it has been averred that in the letter dated April 1, 2005 the company had confirmed that a sum of Rs.43,43,933/- was then due and payable to the petitioner. A copy of the document appears as annexure "D" to the petition, at page 536 thereof. The company has dealt with paragraphs 15 and 16 of the petition at paragraph 9 of its affidavit. There is no denial in the company's affidavit dealing with the petition that the admission in the document dated April 1, 2005 was not made by or on its behalf. In paragraph 9 of the company's affidavit there is only a bald and unembellished denial of the statements contained in paragraph 16 of the petition:
"9) With reference to the allegations made in paragraphs 15 and 16 of the said application, save what are matters of record and save what appears therefrom. I deny and dispute each and every allegations made in aforesaid paragraphs. It is specifically denied that despite repeated demands the said company has failed and neglected to pay of the dues of the petitioner to the tune of Rs.44,48,852.20 or that the company by its letter dated April 1, 2005 duly confirmed a sum of Rs.44,43,933/- being due and payable to your petitioner. I say that the said applicant had not disclosed the entire statement of Accounts in respect of the transactions 21 commencing on and from 4th April, 2001 up till 31st March, 2006 disclosing the entire payments made by the Company and adjustments towards the debit notes issued by the said Company.
The said company has from time to time had raised debit notes for a total sum of Rs.33,78,597/- such debit note issued by the said company has been duly received by the applicant without raising any objection whatsoever. The said company has adjusted a total sum of Rs.33,78,597/- in its final account as on 31st March, 2006 raised towards the debit notes."
If it is evident, as it obviously is from the company's affidavit, that the company had, indeed, admitted its indebtedness to the petitioner in the sum of Rs.43,43,933/- as at March 31, 2005 by consciously inserting the figure and by disputing a larger amount that the petitioner had claimed, there ought to have been a reference to such admission and a retraction therefrom in correspondence issued by the company to the petitioner prior to the issuance of the letter said to have been issued by the company to the petitioner on September 2, 2005. The letter said to have been issued by the company on September 2, 2005 opens with a reference to the two other questionable letters of December 19, 2003 and March 30, 2004. It would be naïve to accept the letter said to have been issued by the company on September 2, 2005 as genuine if it did not allude to the unequivocal admission made by the company in the document dated April 1, 2005. The letter said to have been issued by the company on September 2, 2005 proceeds as if there was no admission of indebtedness by the company to the petitioner prior thereto. The petitioner has disclosed documents, copies 22 whereof have been appended to the petitioner's supplementary affidavit, to show that after December 19, 2003 and after March 30, 2004 there were two documents where the company had categorically admitted its liability, if not to the exact extent of the petitioner's claim, at least to an extent which would be incongruent with the assertions contained in the letters said to have been issued by the company on December 19, 2003, March 30, 2004 and September 2, 2005. There is no attempt to explain this glaring anomaly in the letter said to have been issued by the company on September 2, 2005.
Again, if it is to be believed that the petitioner had overcharged the company and the company had protested by its letters said to have been issued on December 19, 2003, March 30, 2004 and September 2, 2005, it would be hard to digest that the company would still accede to the petitioner's request for furnishing security as allegedly demanded by the petitioner in December, 2005 and referred to at paragraph 3(e) of the company's affidavit.
Paragraph 14 of the petition recounts the notices issued on behalf of the petitioner following the dishonour of the cheques. The petitioner avers that such notices "were duly received" by the company. Copies of the relevant notices are appended to the petition and form annexure 'B' thereto. The first notice (a copy whereof is at pages 492-493 of the petition) 23 is dated July 8, 2006 and it is addressed to the company and to Subhojit Ghose. The petitioner has specifically referred to the acknowledgement due card (though it should be cards) at paragraph 14. The copies of the postal acknowledgement cards in respect of the first notice covering the first five of the seven cheques appear at pages 494 and 495 of the petition. It is evident therefrom that the two addressees received the notices by July 12, 2006. The second notice is dated August 12, 2006 and a copy thereof appears at pages 496-497 of the petition. The notice appears to have been addressed to the company and to Ravi Shankar Chatterjee and Subhojit Ghose. The copy of only one of the acknowledgment due cards has been included in the petition: the one relating to Subhojit Ghose which was received on behalf of the addressee on August 16, 2006.
Paragraph 14 of the petition has been dealt with in paragraph 8 of the company's affidavit. The company has altogether glossed over the notices of dishonour referred to in the petition. The company has side- stepped the petitioner's assertion of the receipt of such notices by the company. Lest the quality of the denial is diluted in the paraphrasing thereof, paragraph 8 of the company's affidavit is quoted:
"8.). With further reference to allegations made in paragraphs 12 and 13 and 14 of the said application, save what are matters of record and save what appears there from. I deny and dispute each and every allegations made in aforesaid paragraphs. it is specifically 24 denied that after the said cheques being dishonoured, the applicant made requests to the said company to liquidate its dues by paying the amount for which the said cheques were dishonoured or that the said company failed to accede such requests of the petitioner. To avoid prolixity and repetition I repeat and reiterate the statement made in sub paragraph (c),(d) (e)(f), (g), (h) and (i) of paragraph 3 and deny all allegations contrary thereto. I say that the said company by practicing fraud and adopting such illegal practices foisted a claim for a sum of Rs.18 lacs and after receipt of the blank cheque the said applicant with a malafide motive and intention filled the said cheque for a sum of Rs.25, 43,933/- instead of Rs.15,000/- and got it dishonoured with a threat to proceed under Section 138 of the Negotiable Instrument Act by suppressing the fact that the aforesaid cheques were not payable inasmuch as no consideration was passed for the purpose of issuance of the said cheques which will be crystal clear from the letters issued by the Company and received by Ankit and Company I reserve my right to make appropriate submission in respect of the 138 proceedings at the time of hearing of the said application."
The paragraph has been quoted verbatim as it appears in the company's affidavit, complete with the mistakes in form and otherwise. Without digressing to mention the carelessness with which pleadings are recklessly hurled at court these days, the substance of the stand may now be scrutinised. The expression "further reference" that has been used in the opening words is misleading since it gives the impression that paragraphs 12, 13 and 14 of the petition have been dealt with by the company earlier in the affidavit. That is not the case. Paragraph 12 of the petition has also been dealt with at paragraph 7 of the company's affidavit, but not paragraphs 13 or 14 of the petition. In fact, paragraph 7 of the company's affidavit covers paragraphs 10, 11 and 12 of the petition and, in 25 the context of the company seeking to explain the "circumstances leading to (the) issuance of the aforesaid cheques," sub-paragraphs (e) to (l) of paragraph 3 of the company's affidavit have been repeated as the ten sub- paragraphs under paragraph 7 with the numbering now in Roman figures rather than English alphabets. The entirety of nearly seven pages has been robotically copied and pasted under paragraph 7 and even the annexures referred to earlier have been repeated. To come back to paragraph 8 of the company's affidavit, if the full-stop after the word "from" that seemingly ends the first sentence is disregarded then there is a bald denial of the statements in the three paragraphs of the petition under reference in the whole of the first sentence. In the next sentence (never mind that it does not begin with a capital letter) there is a specific denial that the petitioner (referred to as "the petitioner" or "the applicant" inter-changeably) requested the company to pay the amounts covered by the cheques. Such denial, however, is meaningless since the company's affidavit does not deny receipt of the notices of dishonour of the cheques that have been specifically pleaded in paragraph 14 of the petition and copies whereof with the receipts have been appended to the petition. In the various sub- paragraphs of paragraph 3 of the company's affidavit, the contents whereof have been repeated by reference in paragraph 8, the company has not referred to the notices of dishonour dated July 8, 2006 and August 12, 26 2006 or the acknowledged receipts relating thereto. For the company's defence to be taken seriously or given any credence, the receipt of the notices ought to have been specifically denied, if the company did not receive them, or the company's reaction to the notices should have been elaborated on. If the company's letter of September 2, 2005 was genuine and had been issued to the petitioner when the company alleges it was and if the company's letters of April 12, 2006 enclosing the debit note of March 3, 2006 had been served on the petitioner, then the company ought to have charged the petitioner with such facts immediately upon receiving the notices of dishonour. Indeed, the company's angst against the petitioner as is evident from the purported letters of September 2, 2005 and April 12, 2006 is completely inconsistent with the company having made over cheques by way of security to the petitioner thereafter. Then again, if the company's letter said to have been issued to the petitioner on June 17, 2006 (Annexure 'E', page 36 of the company's affidavit) was authentic, it would defy logic for the company to have trusted the petitioner or its employees thereafter to make over a blank cheque on June 20, 2006. All of these only point to the purported letters that the company has relied on in its affidavit having been manufactured and ante-dated to give the illusion of a defence. The contents of the purported correspondence now relied upon by the company and not referred to in any of the admitted 27 documents are so utterly inconsistent with the contemporaneous conduct of the company that there is almost no doubt that these purported letters have been fabricated by the company.
Upon a person issuing a cheque, there is a presumption in law that it has been issued for consideration received. No doubt, such presumption is rebuttable but the court would not easily accept a version to explain away the dishonoured cheque. The company in this case has made out a dubious explanation it its attempt to rebut the presumption that has arisen upon the cheques having been issued. The seven cheques issued by the company and dishonoured upon presentation, mostly for insufficient funds, add up to a total value of Rs.43,43,933/- which exactly reflects the company's admission of the extent of its indebtedness to the petitioner in the document dated April 1, 2005.
The company says that there is no effective denial in the affidavit-in- reply used by the petitioner to the stand taken in the company's affidavit. The company has drawn attention, particularly, to paragraph 6 of the affidavit-in-reply that deals with sub-paragraphs (a) to (d) of paragraph 3 of the company's affidavit. According to the company, the petitioner did not deny that it did not receive the debit note which had been forwarded to the petitioner by registered post under cover of the letter dated April 12,2006. The company is obviously incorrect in such assertion. There is a 28 categorical denial into the fourth line of the fifth page of the petitioner's reply that the petitioner had never received the debit note.
There is a further argument made on behalf of the company that the company's stand qua the cheque for Rs.25,43,933/- which is reflected in subparagraph (l) of paragraph 3 of the company's affidavit has not been dealt with in the reply filed by the petitioner. Again, the company is incorrect in such submission. Paragraph 7 of the petitioner's reply deals with the company's story made out in its affidavit and attempted to be buttressed by the copies of documents that have been appended to the company's affidavit. Paragraph 7 of the reply denies the company's version of things, after dealing with the statements contained in the immediate preceding sub-paragraph of the company's affidavit and suggesting that the company's defence was utterly false and the documents that the company had relied on had been forged or fabricated or manufactured for embellishing its dishonest defence, the petitioner categorically asserted that " the entire story set up by the company in sub-paragraph (l) of the said affidavit is false, mala fide and made with an intent to mislead this Court."
There is nothing of any merit that the company has been able to show in support of its bogus defence. On any reading of the company's affidavit and the detailed stand taken in its response to the statutory 29 notice, it is palpably clear that the company has set up a moonshine defence which the company has fraudulently invented for the purpose of seeking to resist the valid claim of the petitioner. There is no explanation as to why the rate differences which were allegedly noticed prior to the company acknowledging its indebtedness on April 1,2005 had not been pointed out at the time of the admission. The company's letter of September 2,2005 has been attempted to be brought on record seeking to demonstrate that it was only around such time that the company was aware that the petitioner's bills were inflated. However, even assuming that the other documents which have been referred to in the company's letter of September 2,2005 are genuine, it would demonstrate that the company was aware long prior to March 30,2004 that the petitioner had apparently overcharged.
The company petition is admitted in the sum of Rs.43,43,933/- together with interest at the rate of 12 per cent per annum from June 20,2006 which is the date on which the last of the seven cheques was issued by the company to the petitioner. In the event the company pays off the entire amount, inclusive of interest and costs assessed at 5000 GM within a period of six weeks from date, CP No. 363 of 2007 will remain permanently stayed.
30
In default of the payment as directed in the immediate preceding paragraph being made within the time permitted, the petitioner will advertise the petition once in "The Statesman" and once in "Pratidin". Publication in the Official Gazette will stand dispensed with. The advertisements should indicate that the matter will appear before Court on the first working day after the expiry of four weeks from the date of publication.
A petition of this nature and the defence that has been set up by this company were not required to be taken up in such detail. Considerable court time has been expended only to demonstrate the frivolous nature of the defence that has been unscrupulously set up and to call attention to a malaise that seems to have overwhelmed the judicial process.
There is an idea that appears to have gained currency that any frivolous claim and every deceitful defence will be tolerated by the Indian courts and even if they fail there will be no follow-up action. Unscrupulous litigants prey on the docket-fatigued system to create the chimera of a cause of action or defence to keep a deserving opponent at bay for the seemingly infinite period that the matter remains pending in the courts. The constitutional mandate that the judiciary carries is a great deal more than mere conflict resolution. There are instructive dicta from the Supreme Court that may be profitably invoked in the present context. 31
In the wake of a bogus claim having been carried to court, the Supreme Court (S.P. Chengalvaraya Naidu v. Jagannath, (1994) 1 SCC 1) described such action to be fraudulent as it was an "act of deliberate deception with the design of securing something by taking unfair advantage of another." There is no reason to not apply the same test to a deceitful defence founded on palpably false and fabricated documents. The following passage from paragraph 5 of the report is relevant:
"5. ... The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax-evaders, bank- loan-dodgers and other unscrupulous persons from all walks of life find the court-process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation."
There are many instances of deponents of false affidavits being sent to the criminal courts for appropriate action. To cite but one, the judgment reported at (2001) 5 SCC 289 (Suo Motu Proceedings against R. Karuppan, Advocate) may be referred to:
"13. Courts are entrusted with the powers of dispensation and adjudication of justice of the rival claims of the parties besides determining the criminal liability of the offenders for offences committed against the society. The courts are further expected to do justice quickly and impartially not being biased by any extraneous considerations. Justice dispensation system would be wrecked if statutory restrictions are not imposed upon the litigants, who attempt to mislead the court by filing and relying upon false evidence particularly in cases, the adjudication of which is dependent upon 32 the statement of facts. If the result of the proceedings are to be respected, these issues before the courts must be resolved to the extent possible in accordance with the truth. The purity of proceedings of the court cannot be permitted to be sullied by a party on frivolous, vexatious or insufficient grounds or relying upon false evidence inspired by extraneous considerations or revengeful desire to harass or spite his opponent. Sanctity of the affidavits has to be preserved and protected discouraging the filing of irresponsible statements, without any regard to accuracy."
"15. In India, law relating to the offence of perjury is given a statutory definition under Section 191 and Chapter XI of the Indian Penal Code, incorporated to deal with the offences relating to giving false evidence against public justice. The offences incorporated under this Chapter are based upon recognition of the decline of moral values and erosion of sanctity of oath. Unscrupulous litigants are found daily resorting to utter blatant falsehood in the courts which has, to some extent, resulted in polluting the judicial system. It is a fact, though unfortunate, that a general impression is created that most of the witnesses coming in the courts despite taking oath make false statements to suit the interests of the parties calling them. Effective and stern action is required to be taken for preventing the evil of perjury, concededly let loose by vested interest and professional litigants. The mere existence of the penal provisions to deal with perjury would be a cruel joke with the society unless the courts stop to take an evasive recourse despite proof of the commission of the offence under Chapter XI of the Indian Penal Code. If the system is to survive, effective action is the need of the time. The present case is no exception to the general practice being followed by many of the litigants in the country."
At the invitation of Court, the documents on which the Company has relied have been produced in Court. The Registrar, Original Side, will seal these documents immediately. The original copy of the affidavit-in- opposition affirmed on behalf of the company by Subhojit Ghose on February 14, 2008 will also be sealed by the Registrar, Original Side. The company's said affidavit and the following documents, the originals 33 whereof have been handed over, should be forwarded by the Registrar, Original Side to the appropriate forum as subsequently directed:
(1) The letter dated April 12,2006 said to have been sent by hand; (2) Letter dated April 12,2006 said to have been sent by registered post, including postal receipt therefor;
(3) Debit note dated March 31,2006;
(4) Letter dated September 2,2005 said to have been sent by registered post, including the postal receipt therefor; (5) Letter dated December 19,2003 said to have been sent by courier service ;
(6) Letter dated March 30,2004 said to have been sent by registered post, including the postal receipt therefor;
(7) Letter dated December 16,2005 said to bear the rubber stamp of the petitioner;
(8) Letter dated June 7,2006 said to bear the rubber stamp of the petitioner;
(9) Letter dated June 17,2006 said to bear the rubber stamp of the petitioner;
(10) Letter dated July 7,2006 said to bear the rubber stamp of the petitioner;34
(11) Two letters dated July 29,2006 both said to bear the rubber stamp of the petitioner.
The original documents along with the affidavit affirmed by Subhojit Ghose on February 14, 2008 will be sent by the Registrar, Original Side to the appropriate criminal forum for initiation of proceedings for perjury against the deponent of the affidavit upon it prima facie appearing to this Court that false statements have been made on oath to Court knowing the same to be false and documents have been manufactured, forged and/or brought into existence for the use in proceedings before Court with intent to substantiate a false and dishonest defence.
An affidavit is evidence within the meaning of Section 191 of the Indian Penal Code and a person swearing to a false affidavit is guilty of perjury punishable under Section 193 Indian Penal Code. The deponent of the company's affidavit herein, being legally bound by an oath to state the truth, is prima facie held to have made false statements and relied on fabricated documents which constitute offences of giving false evidence as defined under Section 191 of the Penal Code and of fabricating documents as defined under Section 192 of the Penal Code, punishable under Section 193 thereof. It is also expedient in the interest of justice to make an enquiry against such deponent in relation to the offences committed by him. The Registrar, Original Side, will file a complaint under Section 193 of 35 the Indian Penal Code against Subhojit Ghose, the deponent of the company's affidavit, before a magistrate of competent jurisdiction in Kolkata within eight weeks from date and take all steps necessary for prosecuting the complaint.
The company seeks a stay of the operation of this order which is unhesitatingly declined.
The application for the appointment of a provisional liquidator, CA No. 444 of 2009, will appear on February 23, 2009.
Urgent certified photocopies of this order, if applied for, be supplied to the parties subject to compliance with all formalities.
(SANJIB BANERJEE, J.) bp/skc 36