Delhi District Court
District Judge (Commercial Court)03 vs Ethenic Attire India Pvt Ltd on 1 August, 2022
In the Court of Shri Sanjiv Jain,
District Judge (Commercial Court)03, Patiala House Courts
New Delhi
CS (Comm)No. 642/21
Expo Freight (P) Ltd
Plot No. 9A, Road No. 4,
Mahipalpur Extension,
National Highway-8
New Delhi .......... Plaintiff
Versus
1.Ethenic Attire India Pvt Ltd.
Through its Managing Director, F-11, Sector -11, Gautam Budh Nagar, Noida, UP- 201301
2. Hira Singh Adhikari Director of M/s Ethenic Attire India Pvt Ltd.
R/o 11-C, Pocket-A/Z, Mayur Vihar, Phase-III, Delhi-110096
3. Udaybir Singh Director of M/s Ethenic Attire India Pvt Ltd R/o B-204, BS, GF, Allaha Mohalla, Vill. Tehkhand, New Delhi- 110020
4. Lavanya Naithani Director of M/s Ethenic Attire India Pvt Ltd R/o 434, Kanungo Apartments, Plot No. 71, IP Extension, Delhi-110092 ........ Defendants Date of institution : 18.12.2021 Date of decision : 01.08.2022 CS (Comm) No. 642/21 Expo Freight (P) Ltd v/s Ethenic Attire India Pvt Ltd & Ors Page No.1 of 6 JUDGME NT
1. This suit for recovery of a sum of Rs. 4,04,968/- along with interest has been filed by the plaintiff, Expo Freight (P) Ltd against the defendants Ethenic Attire India Pvt Ltd & ors.
2. Briefly, the facts as alleged in the plaint are that the plaintiff, an international freight forwarders handles International cargo for the exporters/importers. It also provides logistics to its agents/customers in the international trade market. Defendant no.1 is in the business of ready made garments etc. Defendant no.2 to 4 are its directors.
3. It is alleged that defendant no.2 to 4 had approached the plaintiff for clearance of the shipments from New Delhi IGI Airport to abroad, by air. It handled their shipments on the agreed terms, conditions and rates and raised the invoices. It sent the shipments to the destinations in good condition and got prepared the airway bills and house airway bills.
4. It is alleged that defendant no.1 failed to make the payments towards the outstanding dues despite repeated demands and requests. It got served a legal notice dated 15.07.2019 upon the defendants. The defendant no.1 in reply dated 22.07.2019 stated that it will make the payment. On 19.08.2019, defendant no.1 made the part payment of Rs. 52,177/- via NEFT. It is stated that as on date of filing of suit, an amount of Rs. 4,04,968/- became CS (Comm) No. 642/21 Expo Freight (P) Ltd v/s Ethenic Attire India Pvt Ltd & Ors Page No.2 of 6 due and payable.
5. Summons of the suit were sent to the defendants. They put their appearance through their counsel on 14.02.2022 but thereafter, they did not appear nor filed the written statement and were proceeded against exparte vide order dated 05.04.2022.
6. To prove its case, the plaintiff examined Sh. Sunil Thomas, its DGM (Accounts) as PW-1. He tendered his affidavit Ex. PW-1/X in evidence and proved the documents.
7. I have heard Ld. Counsel Sh. M. Asif Khan for the plaintiff and perused the evidence as well as the record.
8. A perusal of testimony of PW-1 and record reveals that defendant no.1 through its directors i.e. defendant no.2 to 4 had availed the services of the plaintiff who is an international freight forwarders for clearance of its shipments from New Delhi IGI Airport to abroad by air. It issued the commercial invoices for the delivery of the goods to its buyers vide Ex.PW-1/4 to Ex.PW-1/6. PW-1 proved the copy of importer-exporter code and commercial invoices Ex.PW-1/3. PW-1 has stated that the plaintiff had handled their shipments on the agreed terms and conditions/rates and accordingly, it raised the tax invoices from defendant no.1 from time to time. He stated that the shipments were sent to the destinations in the good condition and in time in respect of which, airway bills and house airway bills were got prepared. He proved CS (Comm) No. 642/21 Expo Freight (P) Ltd v/s Ethenic Attire India Pvt Ltd & Ors Page No.3 of 6 the tax invoices Ex.PW-1/7, Ex.PW-1/10, Ex.PW-1/13, airway bills Ex.PW-1/8, Ex.PW-1/11, Ex.PW-1/14 and house airway bills Ex.PW-1/9, Ex.PW-1/12 and Ex.PW-1/15 in this respect. He also placed on record the statement of accounts which the plaintiff had maintained in the name of defendant no.1 and as per the statement Ex.PW-1/16, an amount of Rs. 4,04,968/- was outstanding against the defendant. PW-1 has stated that the invoices were duly received and acknowledged by the defendant and the defendant had reiterated its commitment of making the payments. He stated that though the defendant had received the payments from the buyers but did not pay the outstanding dues. It, therefore, sent a legal notice Ex.PW-1/17 on 15.07.2019 which was duly served on the defendant vide postal receipts Ex.PW-1/18 as the report on the same was 'refused'. PW-1 has stated that on 22.07.2019, defendants sent the reply Ex.PW-1/21 whereby it had agreed to clear all the dues and in pursuant thereto, defendant made a part payment of Rs. 52,177/- on 19.08.2019 via NEFT. He stated that as per the statement, after adjusting the said amount, total outstanding amount against the defendant is Rs. 4,04,968/-.
9. In this case, before filing the suit, the plaintiff had resorted to pre-institution proceedings but the defendant despite service, did not participate in the proceedings and it resulted into non-starter vide report dated 15.01.2021 Ex.PW-1/22.
10. From the unrebutted testimony of PW-1 coupled with the CS (Comm) No. 642/21 Expo Freight (P) Ltd v/s Ethenic Attire India Pvt Ltd & Ors Page No.4 of 6 documents on record, it is proved that plaintiff is entitled to recover a sum of Rs. 4,04,968/- from the defendant.
11. Now coming to interest, the plaintiff has claimed pendente lite and future interest @ 24% per annum. The invoices however do not mention that in case of delay in making the payments, the plaintiff would be entitled to interest @24% per annum as claimed. Looking into the fact that transactions are commercial in nature, the interest @12% per annum would be a reasonable rate of interest as prevalent in the market.
12. In the instant case, defendant no.2 to 4 are the Directors of defendant no.1. The transactions had taken place between the plaintiff and defendant no.1. It is true that they being directors by virtue of their position are bound to be involved in day to day affairs of the company but they did not act in their personal capacity. They being the directors are not liable towards the debt of the company as they only acted as agents of the company. I get support from the judgment passed by the High Court in Five Star Consultants v/s Customer Services India Private Limited, AIR 2007 Del 157.
13. Section 230 of the Indian Contract Act,1872 clearly says that agent cannot personally enforce nor be bound by contracts on behalf of principal. The defendant no.1 is the company which has its own legal entity in the eyes of law and defendant no.2 to 4 have acted as agents on behalf of defendant no.1. The nuances of law are different in context to criminal proceedings as well as civil proceedings. In the CS (Comm) No. 642/21 Expo Freight (P) Ltd v/s Ethenic Attire India Pvt Ltd & Ors Page No.5 of 6 present proceedings, the concept of vicarious liability cannot be invoked as there is no guarantee or indemnity given by the directors to made themselves personally liable for the acts carried on behalf of defendant no.1. So, no liability can be fastened on defendant no.2 to 4.
14. For the aforesaid reasons, the suit of the plaintiff is decreed in its favour with costs and against the defendant no.1 for Rs. 4,04,968/- together with pendentelite and future interest @ 12% per annum (from the date of filing the suit till realization).
15. Decree sheet be prepared accordingly. File be consigned to record room.
Announced in open court (Sanjiv Jain)
today i.e. 01st August, 2022 District Judge
(Commercial Court)-03
New Delhi
CS (Comm) No. 642/21 Expo Freight (P) Ltd v/s Ethenic Attire India Pvt Ltd & Ors
Page No.6 of 6
CS (Comm) No. 642/21 Expo Freight (P) Ltd v/s Ethenic Attire India Pvt Ltd & Ors Page No.7 of 6