Delhi District Court
M/S Karamsar Electronics Private ... vs Delhi Public School, Ghaziabad And Anr on 6 December, 2023
IN THE COURT OF MR. ANIL KUMAR SISODIA
DISTRICT JUDGE (COMMERCIAL COURT)-
04,CENTRAL, TIS HAZARI COURTS, DELHI
CS (Comm.) No. 2310/2018
M/S KARAMSAR ELECTRONICS
PRIVATE LIMITED,
203, II Floor, 4575/15
Onkar House,
Darya Ganj,
Delhi-110002 ..........PLAINTIFF
Versus
1. DELHI PUBLIC SCHOOL
Plot no. SCH/01
Sidharth Vihar,
Sector-8,
Ghaziabad, UP-201010
2. SH. BRAHM SINGH YADAV
Chairman, Delhi Public School
Plot no.SCH/01,
Sidharth Vihar,
Sector-8,
Ghaziabad, UP-201010 .........DEFENDANTS
Date of filing of the suit : 31.07.2018
Date of reserving judgement : 20.11.2023
Date of judgement : 06.12.2023
Judgement
1. This is a suit for recovery of Rs.7,50,908.27/-
(Rupees seven lacs fifty thousand nine hundred eight and
twenty seven paise only) filed by plaintiff against
defendants.
CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 1 of 32
2. Briefly stated the facts of the case are that plaintiff
is a private limited company and deals in the business of
supply of electronics goods and equipment i.e. CCTV
cameras including Network Video Recorder, HDIP Dome
Cameras and HDID Box Cameras etc and their installation
in Delhi and other parts of the country.
3. It is stated that defendant no.1 is a school situated in
Sidharth Vihar and defendant no.2 is a powerful politician
and he is chairman/owner of defendant no.1. Defendant
no.2 is responsible of all transactions carried out between
plaintiff and defendant no.1 and he also looks after the day
today affairs of defendant no.1.
4. It is stated that in April, 2016 defendant no.1 i.e.
Delhi Public School, Sidharth Vihar, Ghaziabad
approached plaintiff at his office in Daryaganj, Delhi for
supply of electronic goods and equipments i.e. speakers,
amplified, CCTV cameras, cables etc. at its destination and
installation of those goods and equipments in the school.
Before placing orders for supply of goods, plaintiff had
appraised defendants about the terms and conditions for
supply of goods which were duly agreed by defendants.
Thereafter, plaintiff had supplied goods as per orders
placed by defendants. Defendant no.2 was instrumental for
all transactions carried out by defendant no.1 with plaintiff
company.
5. As per order placed by defendant no.1, plaintiff had
CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 2 of 32
supplied goods vide 17 tax/retail invoices at the destination
of defendant no.1 which are mentioned in para 4 of plaint.
Plaintiff had issued a bill worth Rs.2,26,435/- to defendant
no.1. As on 01.04.2017 there was a credit balance of
Rs.1,78,857.12 in account of defendant in the book of
account of plaintiff. From 01.04.2017 to 31.03.2018
plaintiff had supplied goods and provided service of
installation of equipment worth Rs.22,29,765.39 to
defendant no.1. It is stated that plaintiff was supplying
goods along with tax invoices which were duly endorsed
by officials of defendant no.1 after receipt of consignment
of goods. Plaintiff has supplied goods along with tax
invoices and delivery challans. Plaintiff has go installed all
electronic equipments in the school with absolute
satisfaction of defendants.
6. It is stated that plaintiff maintained a ledger in the
name of defendant no.1 in its books of account. During the
period, defendant no.1 had made part payment of Rs.13
lacs to plaintiff. As on 31.03.2018 total outstanding against
defendant no.1 to plaintiff was Rs.7,50,908.27.
7. It is stated that inspite of repeated requests and
demands made by plaintiff, defendants have not made
payment to plaintiff and avoided payment on one pretext
or other. Defendants have failed to make payment of
outstanding amount after supply of goods by plaintiff.
Defendants are also liable to pay interest @ 24% per
annum on the outstanding amount to plaintiff.
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8. It is stated that on 08.05.2018 plaintiff sent a legal
notice to defendant no.1 demanding outstanding amount
but in spite of receipt of notice, defendants did not pay
outstanding amount to plaintiff nor he send any reply to
the legal notice. Plaintiff has prayed for a decree of
Rs.7,50,908.27 against the defendants along with interest
@ 24% per annum and cost.
9. Defendants have filed separate written statements.
10. Defendant no. 1 in its WS has taken preliminary
objections that this court does not have territorial
jurisdiction to try the case. No cause of action has arisen
within Delhi as purchase orders were issued by M/s
Nathiya Charitable Trust (hereinafter referred to as
"NCT") which is situated at Ghaziabad, goods were
supplied at Ghaziabad and payments were made by the
Trust from its bank account situated at Ghaziabad. There
is no privity of contract between plaintiff and defendant
nos. 1 & 2 as orders for purchase of goods were placed by
NCT. Defendant no.1 is not a juristic person and no case
can be filed against it. The plaintiff had concealed various
payments made by the Trust of defendant no.1. It was
stated that plaintiff had raised invoices amounting to Rs.
40,18,197/- between 11.05.2016 till 29.03.2018 and out of
the said amount, an amount of Rs. 34,19,159/- was paid to
the plaintiff and the remaining amount was withheld as
plaintiff had failed to install the goods supplied by it,
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invoices for labour charges were issued without actual
measurement of work carried out by the plaintiff and some
of the goods supplied by the plaintiff were defective and
defendants had to engage third party contractor to supply
the goods and carry out the work. It was stated that no
amount is due and payable by defendant no.1 to the
plaintiff.
On merits, the contents of the plaint have been
denied. It was denied that defendant no. 2 is responsible
for day to day affairs of defendant no.1. It was stated that
defendant no.1 is a school established by NCT. Defendant
no. 2 is the trustee of the said Trust and Vice Chairman of
defendant no.1. Defendant no. 2 is a separate legal person
and not personally liable for the liabilities of the
school/trust. It was stated that purchase orders were
placed by NCT. It was further stated that the plaintiff
never installed the goods supplied and is not entitled to
receive any money from the defendant no.1. On the
contrary plaintiff is liable to pay an amount of Rs.
4,65,390/- towards the cost incurred by the defendant in
installation of the goods supplied by the plaintiff. Other
contents of the plaint were denied and a prayer was made
for dismissal of the suit.
11. Defendant no. 2 filed the separate WS and raised
preliminary objections that this court does not have
territorial jurisdiction to try the suit. Defendant no. 2 is not
liable as there is no privity of contract between plaintiff
and defendant no. 2. Defendant no. 2 is a separate entity
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from defendant no. 1 and their trust. The defence raised by
defendant no.1 were reiterated by defendant no. 2 in its
WS and prayer was made for dismissal of the suit.
12. Plaintiff filed separate replications for the WS filed
by defendants. In both the replications, plaintiff has denied
the claim of the defendants and has reiterated that initially
orders were placed by NCT but later plaintiff used to
receive purchase orders from defendant no.1. Plaintiff has
already received the money for the purchase orders placed
by NCT. It was stated that defendant no. 2 had apprised the
plaintiff that he was the owner of defendant no. 1 and main
trustee of NCT and was running both the entities. It was
also submitted that defendants are responsible for subject
matter of the present suit and are liable to pay the
outstanding amount. On merits, the contents of the WS
have been denied and the contents of the plaint are
reaffirmed.
13. From the pleadings, the following issues were
framed on 01.04.2022:-
1. Whether this court has no
territorial jurisdiction to entertain
the present suit, as alleged by the
defendant?(OPD)
2. Whether the plaintiff has no
cause of action against the
defendants, as alleged by the
CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 6 of 32
defendants?(OPD)
3. Whether the present suit is not
maintainable against the defendant
no.1, as the defendant no.1 is not a
juristic person, as alleged by the
defendant no.1?(OPD1)
4. Whether the suit is bad for non-
joinder of necessary parties i.e.
Nathiya Charitable Trust, as
alleged by the defendant?(OPD)
5. Whether the plaintiff is entitled
for recovery of the decreetal
amount, as prayed for ?(OPP)
6. Whether the plaintiff is entitled
for the interest, if any. If so, at
what rate and which period?(OPP)
7. Relief.
14. To prove its case, plaintiff has examined PW-1 Sh.
Ajay Sharma, Director of the plaintiff company. PW-1
has filed his examination-in-chief by way of affidavit Ex.
PW-1/A and has reiterated the facts stated in the plaint.
The witness has proved the following documents.
S.No. Documents Exhibits
1 Copies of certificate of PW1/1.
incorporation
2 Form no.32 PW1/2
3. GST certificate PW1/3
4. Copies of invoices Mark A-1 to
CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 7 of 32
Mark A-17
5. Copies of Delivery challans PW1/4-A1 to
(carbon copies seen and Ex.PW1/4-A36
returned)
6 Email conversations between PW1/5A1 to
the parties PW1/5A10
7 Ledger Account PW-1/6
8 Office copy of legal notice PW1/7
9 Postal receipts PW1/8
PW-1 was cross examined by counsel for defendants at
length and thereafter, PE was closed.
15. To prove its case, defendants have examined two
witnesses.
DW-1 Sh. Brahm Singh Yadav, Vice Chairman of
defendant no. 1. DW-1 has filed his examination-in-chief
by way of affidavit Ex. DW-1/A and has reiterated the
facts stated in the WS. The witness has proved the
following documents:-
S.No. Documents Exhibits
1 Copies of purchase orders DW1/1 to
DW1/5
2 Registered trust deed of NCT DW1/6
(OSR)
3 Joint Venture agreement dated DW1/7
03.11.2017 (OSR)
4 Self Declaration filed by NCT with DW1/8
CBSE
5 Statement of account maintained by DW1/9
NCT for the work carried out by the
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plaintiff
6 Performa Invoices/invoices issued DW1/10 to
by the plaintiff. DW1/39
7 Ledger account maintained by DW1/40
defendant no.1 for 5S. Solutions
from 01.04.2016 to 02.01.2019
8 Invoices issued by 5S Solutions DW1/41 to
DW1/46
DW1 was cross examined by counsel for plaintiff at
length.
16. DW2 Kamal Singh Rana filed his examination in
chief by way of affidavit Ex. DW-2/A and relied upon the
documents already exhibited by DW-1. DW-2 was also
cross examined by counsel for plaintiff and thereafter, DE
was closed.
17. Arguments were advanced on behalf of plaintiff by
Sh. M.K. Pathi Advocate. Mr. Rahul Jain Advocate argued
the case of defendant. Parties have filed their written
submissions. I have heard counsels for the parties and
have perused the record carefully.
18. On the basis of evidence and arguments issue wise
findings are as under:-
ISSUE NO. 1:
Whether this court has no territorial jurisdiction to
entertain the present suit, as alleged by the defendant?
(OPD)
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19. The onus of proving of this issue was on the
defendants. Ld. Counsel for the defendants has argued that
this court does not have territorial jurisdiction as neither
the defendants reside or work for gain or carries on
business within the local limits of the jurisdiction of this
court nor any part of cause of action has arisen within the
jurisdiction of this court.
20. He has argued that the orders were placed on the
plaintiff through email and the goods were supplied by the
plaintiff at Ghaziabad. It has been argued that the
payments were made to the plaintiff through cheques from
the bank account of NCT. Hence, no part of cause of
action accrued at Delhi. It has been argued that defendants
have nowhere acknowledged the liability and hence, the
principle of debtor must seek creditor does not apply.
Reliance was placed on the judgment of Aruna Oswal Vs
Gen Y Commodities Pvt. Ltd. & Ors., 2020 (267) DLT719
in support of his arguments.
21. Per Contra, the counsel for the plaintiff has argued
that the plaintiff company is running its business from
Daryaganj Delhi. The plaintiff supplied the goods to the
defendant from its Daryaganj office which is evident from
the delivery challans Ex.PW-1/4A1 to Ex. PW-1/4A36. It
was argued that the payment was also received in the bank
account of plaintiff which is situated in Delhi. He argued
that the tax invoices issued by the plaintiff Ex.DW-1/16 to
Ex. DW-1/39 contains the terms and conditions and
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condition no. 3 specifies "Subject to Delhi jurisdiction
only". It was argued that part of cause of action has arisen
within the territorial jurisdiction of this court. Hence, this
court has territorial jurisdiction to try the present suit.
22. Section 20 of the CPC is the relevant provision
which deals with the jurisdiction of the court in respect to
the suit for recovery of money. Section 20 CPC is
reproduced herein below:-
"20. Other suits to be instituted where defendants reside or cause of
action arises.--Subject to the limitations aforesaid, every suit shall
be instituted in a Court within the local limits of whose jurisdiction
--
(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises. Explanation.--A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place."
23. From the perusal of Section 20 , it is clear that the plaintiff can file suit against the defendant at the place where ;
(i) Defendant voluntarily resides or works for gain or carries on business;
(ii) Where there are more than one defendants, either of CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 11 of 32 them resides or works for gain or carries on business; &
(iii) Where the cause of action has arisen, either in whole or in part.
24. Plaintiff has examined PW-1 Ajay Sharma in support of his case. Perusal of his cross examination shows that he has deposed that 90% of the goods were taken up by the Trust from the office of plaintiff only and other items were supplied to DPS premises in Ghaziabad.
25. Defendants have themselves proved on record various invoices issued by plaintiff company as Ex.DW- 1/10 to Ex. DW-1/39 which contain the aforesaid conditions. Defendants have not disputed the correctness of invoices in the written statement. Perusal of the invoices issued by the plaintiff would show that the invoices contained a term "SUBJECT TO DELHI JURISDICTION ONLY". DW-1 in his cross examination has admitted that after 02.08.2016 plaintiff issued all invoices in the name of Delhi Public School Sidharth Vihar. He also admitted that Pramod Kumar is an employee of Delhi Public School Sidharth Vihar but was unable to say if all deliveries were taken by Pramod Kumar from the plaintiff company. However, perusal of the delivery challans would show that the delivery challans issued by the plaintiff bears signature of Pramod in acknowledgement of receipt of the goods and DW-1 has nowhere disputed the signature of Pramod Kumar in his CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 12 of 32 testimony.
26. This clearly shows that the plaintiff company had office within the jurisdiction of this court and goods were supplied by the plaintiff from Delhi. Therefore, part of cause of action arose within the territorial jurisdiction of this court. In case titled as M/s Harit Polytech Pvt. Ltd. Vs M/s Colt Cables Pvt. Ltd. & Anr., FAO 48/2016, Hon'ble High Court of Delhi relying upon the judgment of Hon'ble Supreme Court in ABC Laminart Pvt. Ltd. Vs AP Agencies AIR 1989 SC 1239 held that part of cause of action arises where money is expressly or impliedly payable under a contract. It was held by Hon'ble High Court of Delhi that an important part of cause of action arose within the territorial jurisdiction of Delhi Courts and Trial Court has erred in solely relying upon the jurisdictional clause in the invoice although, it did not oust the jurisdiction of other courts and accordingly set aside the findings of Ld. Trial Court on jurisdictional issue.
27. In the present case, not only the invoices issued by the plaintiff mentions "subject to Delhi jurisdiction only"
but part of cause of action has also arisen within the territorial jurisdiction of this court as the goods were supplied to the defendants from the office of plaintiff situated at Delhi but payments were also received in the bank account of the plaintiff which is situated within the local limits of this court.
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28. Hence, in view of the aforesaid discussion, the issue is decided against the defendant and in favour of the plaintiff and it is held that this court has territorial jurisdiction to try and entertain the present suit. The issue stands disposed off accordingly.
ISSUE NO. 2:
Whether the plaintiff has no cause of action against the defendants, as alleged by the defendants?(OPD)
29. The onus of proving of this issue was on the defendants. Counsel for the defendants has argued that the plaintiff has no cause of action against the defendants as there is no privity of contract between the parties. The orders were placed on the plaintiff by NCT and the goods were supplied by the plaintiff to the NCT at the school premises run by NCT. The payments were also made by NCT. Hence, the plaintiff has no cause of action against the defendants.
30. Per Contra, Counsel for plaintiff has refuted the claim of the defendants and it has been argued that the invoices were issued in the names of defendant no. 1 at the instance of defendant no.2 and the goods were also delivered at the premises of defendant no.1 and the same were also received by one employee of the defendants. Hence, it cannot be said that there was no cause of action against the defendants.
31. Perusal of the pleadings of the parties and evidence CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 14 of 32 led by them would show that plaintiff has filed the present suit claiming the amount from defendant nos.1 & 2 on the basis of goods supplied to defendant no.1 against invoices. PW-1 has also deposed in his evidence that the ledger account of NCT was closed after it made the complete payment and thereafter ledger account was opened in the name of defendant no. 1 and goods were supplied to the defendants as per the orders placed by them against invoices which were collected by defendant no.1. PW-1 in his cross examination has reiterated these facts. He, however, admitted that there was no contract between plaintiff and defendant no. 1 in his personal capacity. DW- 1 Brahm Singh Yadav in his cross examination admitted that after 02.08.2016 plaintiff had issued all the invoices in the name of defendant no. 1 and he was pro vice chairman of defendant no. 1. He also admitted that he was the signatory of bank account of defendant no. 1. From the aforesaid facts, it cannot be said that plaintiff has no cause of action against the defendants. The plaintiff has cause of action at least against the defendant no. 1 to whom the goods were supplied by it. Accordingly, the issue is decided against the defendants and in favour of plaintiff.
ISSUE NO. 3:
Whether the present suit is not maintainable against the defendant no.1, as the defendant no.1 is not a juristic person, as alleged by the defendant no.1?(OPD1)
32. The onus of proving this issue was on the defendant no. 1. Counsel for defendants has argued that defendant CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 15 of 32 no. 1 i.e. Delhi Public School Siddharth Vihar, Ghaziabad, UP is not a legal entity, existing separately from NCT which is running the school. It is stated that NCT is registered under UP Basic Education Act, 1972. Counsel for defendants argued that various High Courts as well as Hon'ble Supreme Court of India has held that school is not a juristic entity separate from the society/trust which operates it. Reliance was placed on the following judgments:-
(i)Saraswati Vidya Mandir Vs State of UP & Ors., 2003 (3) AWC 1917 ALL, wherein Hon'ble Allahabad High Court held that the school is not a legal entity. It was held that school has no locus standi to maintain the petition.
(ii) Committee of Management, Ganga Bux Kanoria Gandhi Inter College Deoria Vs Dy Director of Education, Gorakhpur, 2000 (40) ALR 314 wherein it was held that the petition was not maintainable at the instance of Ganga Bux Kanoria Gandhi Inter College Deoria which was not a legal entity and appeal ought to have been preferred by the Committee of the Management of the College.
(iii) Education Supplies Depot Trivendram Vs Vithoba High School & Ors., 1970 ALJ 43, wherein it was held that no decree can be passed against a school as it is not juristic entity much less a person with right to hold property.
(iv) Cambridge International Public School Vs State of Haryana & Anr, CWP NO. 2958/2011, decided on 23.03.2011 by Punjab & Haryana High Court wherein DB CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 16 of 32 of Hon'ble High Court held that no relief could be granted to the petitioner school as it was not a legal entity and there was nothing on record to show that it was being run by a society as alleged in the writ petition.
(v)MCD Vs The Children Book Trust, AIR 1992 SC 1486 wherein it was held that Delhi School Education Act does not create the school into a specific juristic entity different from the society. The Act only makes regulations in the matter of running the school and service conditions of the employees. Indeed the Act itself imposes a condition that the school must be run by a society or a body under Rule
50. Further, the managing committee of the school shall act under the control and supervision of the society which runs the school.
33. Per Contra, counsel for plaintiff has argued that the school and defendant no. 2 are the parties in the present suit. Defendant no. 2 has signed the WS filed on behalf of defendant no. 1 school and if the school is not a legal entity how defendant no. 2 is authorized to file WS on behalf of defendant no.1. It has been argued that defendant no. 2 is the pro vice chairman of defendant no.1 Delhi Public School. It was also argued DW-2 in his cross examination dated 30.09.2023 deposed that there was no Chairman in the management committee of the school. In order to support of his arguments that school is a legal entity, reliance has been placed by counsel for plaintiff on the following judgments:-
(i) Arvind Kumar Vs Delhi Sikh Gurudwara CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 17 of 32
Management in WP ( C) NO. 13032/2006 decided on 25.01.2017 (DHC)
(ii)Ranjit Singh Vs Guru Har Krishan Public School in WP (C ) NO. 2642/2017 decided on 22.03.2017 (DHC)
(iii) Satbir Singh & Anr. Vs Delhi Sikh Gurudwara Management Committee & Anr., WP (C ) No. 8060/2007 decided on 01.05.2013 (DHC)
(iv)Tarun Jeet Kaur Vs School Management of GHPS, WP (C ) NO. 7635/2013 decided on 17.03.2015 (DHC)
34. It was further argued by counsel for plaintiff that judgments relied upon by the defendants are distinguishable on facts and are not applicable to the present set of facts.
35. During the course of examination in chief, DW-2 Brahm Singh Yadav has placed and proved on record the registered Trust Deed of NCT as Ex. DW-1/6. He has also proved and placed on record joint venture agreement between Delhi Public School society and NCT as Ex. PW- 1/7 and copy of self declaration filed by NCT with Central Board of Secondary Education. Perusal of these documents would show that NCT is a registered trust having three trustees namely Brahm Singh Yadav (D-2), Smt. Sumitra Yadav and Sh. Aakash Yadav. The trust was created with the object to impart education and training in all the fields and one of the objects of the trust is to established and manage school, college, institution etc. The said trust entered into an agreement with Delhi Public CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 18 of 32 School society on 03.11.2015 for setting up a school at Sector 8, Siddarth Vihar, Ghaziabad in the name of Delhi Public School and NCT was duly authorized to use the name and logo of Delhi Public School by Delhi Public School Society vide this agreement Ex. DW-1/7. NCT also filed self declaration showing that school was being run by NCT. From the perusal of these documents, it is crystal clear that defendant no. 1 school is being run and managed by NCT and defendant no. 2 was the pro vice chairman of the school during the period 2016 to 2018.
36. The submission of counsel for defendants appears to be correct that defendant no. 1 is not a juristic person as it is being run by NCT. The school not being a juristic person is incapable to sue or being sued and no decree can be passed against it. The judgments relied upon by the counsel for plaintiff are distinguishable on the facts as these judgments were passed in relation to dispute between the employees of the school and the school/its management committee and in that context it was held that each school in Delhi was a separate legal entity, even though it may be a branch under the same management and the employee of the school is not the employee of the society which runs the school.
On the other hand, there are judgments of various High Courts and Hon'ble Supreme Court wherein it has been held that a school is not a juristic person and no decree can be passed against it. Reliance can be placed in this regard on the judgment of Hon'ble Kerala High Court, CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 19 of 32 in the case of Educational Supplies Depot, Trivandrum v. Vithoba High School and others, [1970] Kerala Law Journal Reports 43 which held that a decree could not be passed against a school as it was not a juristic entity much less a person to hold property. This proposition was further reiterated in the case of Mahalo Harijan Primary School Vs. West Bengal State Electricity Board & Anr, 2012 SCC OnLine Cal 2912; The Correspondent, St. Thomas M. S. C. Middle School, Manuzhi, Adaikakuzhi, kanyakumari Vs. The State of Tamil Nadu, WP No. 8895/2016 decided on 13.04.2017 by the Madurai Bench of Madras High Court and Amity Business School Vs. P.K. Gupta, CA (M) No. 843/2005 decided on 17.09.2009 by the Delhi High Court and MCD Vs Children Book Trust (supra) wherein Hon'ble Supreme Court has relied upon the provisions of Delhi School Education Act and Rules to hold that school is not a separate juristic entity.
37. Thus, in view of the aforesaid discussion, I am of the considered opinion that defendant no. 1 has discharged the onus cast on it and accordingly, it is held that the suit is not maintainable against defendant no. 1 as defendant no. 1 is not a juristic person and no decree can be passed against it. The issue is accordingly decided in favour of defendant no. 1 and against the plaintiff.
ISSUE NO. 4:
Whether the suit is bad for non-joinder of necessary parties i.e. NCT, as alleged by the defendant?(OPD) CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 20 of 32
38. The onus of proving this issue was on the defendants. Counsel for the defendants has argued that the suit of the plaintiff is bad for non joinder of necessary party i.e. NCT and the suit is liable to be dismissed for non joinder of necessary party. It was argued that defendants in their WS had categorically taken a plea that the purchase orders were issued by NCT and the plaintiff supplied the goods to the NCT and there was a privity of contract between plaintiff and NCT. Therefore, NCT was a necessary party in the suit. The plaintiff did not implead NCT inspite of taking objections at the initial stage by the defendants and therefore, the suit of the plaintiff is bad for non joinder of necessary party and the plaintiff is not entitled to any relief.
39. Counsel for plaintiff, on the other hand, has vehemently argued that the suit of the plaintiff is not bad for non joinder of necessary party. It was argued that initially the orders were placed by NCT but at the instance of defendant no. 2 invoices were issued by the plaintiff in the name of defendant no. 1 school. It was argued that defendant no. 2 was responsible for all the transactions between plaintiff and defendant no. 1 and the goods were supplied to defendant no. 1 as per the orders placed by it.
Defendant no. 1 also made a part payment of Rs. 13 lakh to the plaintiff and as such there is no mis joinder of necessary party.
40. Perusal of cross examination of PW-1 Ajay Sharma CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 21 of 32 would show that in his cross examination dated 30.08.2022, he admitted that NCT placed orders with the plaintiff for public address system and CCTV cameras to be installed at DPS Siddarth Vihar and plaintiff completed the orders by installing the requisite equipments and cleared the payment but they also gave instructions that for future payment or bill, plaintiff should contact defendant no. 1 and thereafter all future orders were placed with the plaintiff by defendant no. 2 who was the Chairman of defendant no.1 as well as the Chairman of NCT and invoices were raised against the defendant no. 1 and several payments were received by the plaintiff from defendant no. 1 Delhi Public School. DW-1 Brahm Singh Yadav on the other hand in his cross examination deposed that payment of Rs. 2 lakh on 19.09.2016 was made by NCT and defendant had never asked the plaintiff to start new ledger in the name of defendant no. 1. He further admitted that after 02.08.2016 plaintiff had issued all the issues in the name of defendant no. 1. He further admitted that there was only one account in the name of defendant no. 1 and also admitted that defendant no. 1 had its own management apart from NCT.
41. However, in view of the documents placed by defendant no. 1 as noted in the foregoing issue, it is clear that NCT was running and managing the affairs of defendant no. 1 school. Defendant no. 1 not being a juristic person could not hold any properties in its name. The plaintiff was also aware that defendant no. 1 was CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 22 of 32 being run and managed by NCT, the goods ordered by NCT were being utilized in the premises of defendant no. 1 school and orders were being placed by NCT. Hence, in my considered opinion, NCT is a necessary to the suit as no decree can be passed against defendant no. 1 as it is not a juristic person and PW-1 Ajay Sharma in his cross examination dated 30.08.2022 categorically admitted that there was no contract between plaintiff and defendant no. 2 in his personal capacity. Hence, NCT is a necessary party to the suit as in its absence the dispute in the suit could not be adjudicated effectively and in the absence of NCT, it will not be possible to pass an effective decree in the suit.
42. In view of the aforesaid discussion, I am of the considered opinion, the defendants have discharged the onus cast on them and the issue is accordingly decided in favour of defendants and against the plaintiff.
ISSUE NO. 5 & 6:
5. Whether the plaintiff is entitled for recovery of the decreetal amount, as prayed for ?(OPP)
6. Whether the plaintiff is entitled for the interest, if any. If so, at what rate and which period?(OPP)
43. These two issues are taken up together as they can be disposed of by common discussion. The onus of proving these issues was on the plaintiff.
44. Counsel for the plaintiff has argued that the plaintiff had supplied electronic goods to the defendants as per the CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 23 of 32 orders placed by defendant no. 1 through defendant no. 2. It has been argued that plaintiff had supplied the goods on the basis of 17 invoices during the period November, 2016 to March, 2018 totaling to Rs. 22,29,765.39 to defendant no.1 against delivery challans which were duly acknowledged by the employee of the defendants. It was stated that defendant no. 1 had also made part payment of Rs. 13 lakhs to the plaintiff and as such a sum of Rs. 7,50,908.27 was due and outstanding against the defendants as on 31.03.2018. It was argued that since the defendants failed to make the payments, they are liable to pay interest @ 24% p.a.
45. It was further argued by the counsel for plaintiff that in order to prove its case, plaintiff has examined PW-1 who has proved the invoices as Mark A-1 to Mark A-17 and copies of the delivery challans as Ex. PW-1/4-A-1 to Ex. PW-1/4-A-36 and the ledger account has been proved by plaintiff as Ex. PW-1/6 which shows the outstanding amount against the defendants. It was also argued that plaintiff has also proved the copy of legal notice as Ex. PW-1/7 and its postal receipt as Ex. PW-1/8. Counsel for plaintiff has further argued that defendants have not denied the receipt of the goods but they have taken a false plea that the plaintiff has not completed the installation work and the goods were found defective whereas no such complaints were made by the defendants till the filing of the suit. It has been argued that plaintiff is entitled for the suit amount along with interest as prayed for.
CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 24 of 32
46. Per Contra, counsel for defendants has argued that defendants are not liable to pay any amount to the plaintiff. It was argued that there was no privity of contract between plaintiff and the defendants. It was argued that the suit has not been filed by duly authorized person and the suit itself is not maintainable. Reliance has been placed by counsel for the defendants on the judgments of Raj Cylinder & Containers Pvt. Ltd. Vs Hindustan General Industries, 2013 LAW PACK (Delhi) 53557, Weston Tubes Pvt. Ltd. Vs National Insurance Company, 2013 LAW PACK (Delhi) 52365 and Nibro Ltd. Vs National Insurance Company Ltd., 1990 (41) DLT 633.
47. Counsel for defendants further argued that plaintiff has also not been able to prove its case on merits. It has been submitted that plaintiff has not produced the original invoices relied upon by it nor there is any certificate u/s 65 B in support of the ledger. There is no averment made in the plaint or evidence regarding the custody of the original invoices. These documents are secondary evidence and the same cannot be relied upon in the absence of fulfilling the conditions of Section 65 of Indian Evidence Act.
48. It was argued that the total value of the goods supplied was Rs. 40,18,197/- out of which an amount of Rs. 38,69,159/- was paid by NCT and the remaining amount was withheld for defective supply and non installation of the materials. It was argued that DW-1 has CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 25 of 32 proved the invoices of M/s 5 S Solution as Ex. DW-1/41 to Ex. DW-1/46 and the ledger account maintained by defendant no. 1 for M/s 5 S Solution from 01.04.2016 to 02.01.2019 as Ex. DW-1/40. It was argued that DW-2 Kamal Singh Rana has also testified that M/s 5 S Solution was engaged to complete the installation of work which was left incomplete by the plaintiff.
49. In rebuttal, counsel for plaintiff has vehemently argued that the suit has been filed by director of the plaintiff company Sh. Ajay Sharma and no authority is required to file the present suit as Sh. Ajay Sharma being the Managing Director, is competent to file the suit on behalf of the plaintiff under Order 29 Rule 1 CPC. It was also argued that no issue was framed regarding the verification of the plaint by a competent person and the same was not objected to by the defendants in their WS and it was only during the arguments that this issue has been raised. Hence, this issue has no merits that suit has not been filed by authorized person of the plaintiff. It was also argued that PW-1 in his cross examination has already deposed that the transactions between plaintiff and NCT were duly concluded and the complete payment was made by NCT in November, 2016 and thereafter, the ledger account of NCT was closed and at the instance of defendant no. 2 invoices were raised against defendant no.
1. It was argued that the present suit is only w.r.t the invoices raised against defendant no. 1 and has nothing to do with NCT. Counsel for the plaintiff also argued that CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 26 of 32 defendants have not disputed the supply of goods by the plaintiff and have also proved the invoices issued by the plaintiff as Ex. DW-1/16 to Ex. DW-1/39.
50. Even though no issue has been framed regarding the filing of the suit by duly authorized and competent person but the issue raised by counsel for defendants goes to the root of the matter and involves a legal question about the maintainability of the suit and therefore, such question can be raised at any stage and the court cannot ignore such a vital issue which has far reaching effects. Perusal of the plaint would show that the same has been signed and verified by Sh. Ajay Sharma as Director of the plaintiff company. Affidavit in support of plaint has also been signed by Sh. Ajay Sharma as Director of the plaintiff company.
51. No doubt, Order 29 Rule 1 CPC provides that in suit filed by or against the corporation, any pleading may be signed and verified on behalf of the corporation by the Secretary or by any Director or other principal officer of the corporation who is able to depose to the facts of the case. However, the question which requires consideration is whether the suit can be filed by the Director of the plaintiff company without any Board Resolution or any other documents authorizing him to file the suit on behalf of the company.
In this regard, it would be relevant to refer to the judgment of Hon'ble Delhi High Court in Weston Tubes CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 27 of 32 Pvt. Ltd. Vs National Insurance Company Ltd. (supra) wherein it was held in para 18 that :-
".........as per Order 29 Rule 1 CPC, the Director of the plaintiff company, at best be said to be authorized to sign and verify the plaint on behalf of the plaintiff. It is well settled under Section 291 of the Companies Act, except where the express provision is made that the powers of the Board in respect of the particular matters are to be exercised by the company in general meeting-in all other places, the Board of Directors are entitled to exercise all its powers. The individual Directors have only such powers which are vested in them by the Memorandum and Articles.
There is no doubt that the courts ordinarily do not non-suit anyone on account of technicalities. However, it is trite that the question of authority to institute a suit on behalf of the company is not a technical matter as it has far reaching effects. Thus, unless the power to institute the suit is specifically conferred on particular director by the company, he has no authority to institute a suit on its behalf. Needless to say that such a power can be conferred on the Directors by the Board of Directors only by passing a resolution in that regard"
52. Similarly, in Nibro Ltd. Vs National Insurance Company Ltd. (supra), it was held that unless a power to institute a suit is specifically conferred on a particular Director, he has no authority to institute a suit on behalf of the company.
53. In the present case, perusal of the record would CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 28 of 32 show that no power of attorney authorizing Sh. Ajay Sharma to institute the present suit has been filed by the plaintiff along with plaint or at the time of evidence. In the cross examination, PW-1 Ajay Sharma deposed that both the Directors have authority to file case in the courts. He further deposed that memorandum of the company authorized him to file legal cases in the courts but no such memorandum of association of the company was available on record. During the course of arguments, counsel for plaintiff has filed a letter dated 14.08.2023 issued by Kamlesh Sharma, other Director of plaintiff company authorizing Sh. Ajay Sharma to file legal cases on behalf of the plaintiff company in the court but that does not fulfill the legal requirement. As noted above, the power to institute a suit can only be conferred by the Board of Directors only by passing the resolution in this regard. Mere issuance of authority letter is not sufficient compliance of the legal requirement. Further, the Board of Resolution is required to be proved by producing the original Minute Book in the court during the course of evidence which has not been done in the present case. Hence, the argument advanced by the counsel for defendants has to be accepted that the present suit has not been filed by duly authorized person on behalf of the plaintiff and as such the suit itself is not maintainable.
54. Apart from the aforesaid technical aspect, perusal of the record would show that plaintiff has also not been able to prove its case on merits. The entire suit is based on CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 29 of 32 17 invoices Mark A-1 to Mark A-17. The plaintiff has not produced the original invoices before the court. Only the copies of invoices have been produced and marked during the course of evidence. The photocopies of the invoices are secondary evidence and the same are not admissible in evidence unless the plaintiff fulfills the conditions mentioned in Section 65 of Indian Evidence Act. During the course of arguments, counsel for plaintiff has argued that the original invoices were misplaced. However, there is no such averments in the pleadings of the plaintiff or in the evidence by way of affidavit filed by PW-1 Ajay Sharma. Hence, in the absence of plaintiff fulfilling the conditions for leading secondary evidence, the secondary evidence placed on record is not admissible.
The argument advanced by the counsel that defendants themselves have proved the invoices issued by the plaintiff which proves the case of the plaintiff is without any merits. Firstly, the burden of proving its case is always on the plaintiff and plaintiff is required to stand on its own legs. Secondly, bare perusal of the invoices exhibited by the defendants would show that invoices Ex. DW-1/16 to Ex. DW-1/26 are issued in the name of NCT and even as per the case of the plaintiff, the payments of those invoices have already been received by it. The invoices Ex.PW- 1/28 to Ex. PW-1/33 are not even relied upon by the plaintiff in its pleadings. Hence, only the invoices Ex.DW-1/27, Ex. DW-1/33 to Ex. DW-1/39 are the invoices which have been exhibited by defendants but defendants have not admitted their liability to pay the CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 30 of 32 amounts of those invoices. Hence, the onus is on the plaintiff to prove those invoices as well as to prove the liability of the defendants to pay the amounts mentioned in those invoices which the plaintiff has failed to establish.
55. The plaintiff has also relied upon the ledger account Ex.PW-1/6 and copies of delivery challans Ex.PW-1/4-A-1 to Ex. PW-1/4-A-36 in support of its case. At the outset, it may be mentioned that the ledger account filed by the plaintiff is incomplete as it only reflects the entries for the period 01.04.2017 to 29.03.2018 whereas the case of the plaintiff is that the transactions with the defendants took place from November, 2016 to March, 2018. In the absence of plaintiff filing the complete ledger account of the transactions between the parties, it cannot be concluded that the entries in the ledger account are true and correct. The ledger account filed by plaintiff is a computer printout of information contained in electronic record but plaintiff has not filed any certificate u/s 65 B of Indian Evidence Act in support of the said ledger account. Hence, in the absence of certificate u/s 65 B of the Indian Evidence Act, the said ledger account is also inadmissible in evidence and the same cannot be looked into for any purposes whatsoever.
56. In view of the aforesaid facts and circumstances, I am of the considered opinion that plaintiff has not been able to prove its case against the defendants. Once the plaintiff is unable to establish that it is entitled to recovery CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 31 of 32 of the suit amount from the defendants, the question of awarding any interest does not arise at all. Accordingly, the issues are decided against the plaintiff and in favour of defendants.
ISSUE NO. 7: Relief
57. In view of my findings on issue nos. 3 to 6 herein above, I am of the considered opinion that plaintiff has failed to establish its case against the defendants. The suit of the plaintiff is accordingly dismissed. No order as to cost.
Decree sheet be prepared accordingly.
File be consigned to record room after due compliance.
(ANIL KUMAR SISODIA) District Judge(Commercial Court)-04 Central/Delhi Announced in open court on 6th December, 2023 CS (Comm.) No. 2310/2018 M/S KARAMSAR ELECTRONICS PRIVATE LIMITED, Vs Delhi Public School & Anr. Page No. 32 of 32