Delhi District Court
Shri M.L. Gupta vs Shri Kulanand Kumud on 3 September, 2016
IN THE COURT OF MS SUJATA KOHLI, ADDITIONAL
DISTRICT JUDGE CENTRAL DISTT. TIS HAZARI COURTS,
DELHI.
C.S. No.447/14/98
Case No.18275/16
Unique ID No.02401C0017082006
Shri M.L. Gupta
S/o Sh. Badri Parshad Gupta,
R/o A47, Gautam Nagar,
New Delhi. .... Plaintiff
VERSUS
Shri Kulanand Kumud
S/o Sh. Sambhu Sharan Yadav,
R/o F84, Sector20,
Noida201301. .... Defendant
Date of filing of the suit :30071998
Date of reserving the Judgment/Order :09082016
Date of passing the Judgment/Order :03092016
SUIT FOR RECVERY OF RS.4,11,750/(RUPEES FOUR LACS
ELEVEN THOUSAND SEVEN HUNDRED FIFTY ONLY) ON THE
BASIS OF TWO CHEQUES DATED 30.07.1995 AND 30.08.1995.
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JUDGMENT
1. The plaintiff stated to be one of the partners in a partnership firm
allegedly being run under the name and style of M/s Messers
Modern Glass Tiles Industries, with its office at Vigya Vihar, Delhi,
sought recovery of Rs.4,11,750/, way back in the year 1998 by
filing the present suit. The plaintiff has referred to the Partnership
Deed dated 01.09.1993.
2. It was alleged by the plaintiff that the dispute arose amongst the
partners of the said firm and consequently in the month of June,
2015, all the assets of the firm including the plant, machinery, stock
etc. were taken over by a new firm under the name and style of
Messers Maxton Glass Tiles Industries. It is alleged that the value of
the assets of the said M/s Modern Glass Tiles Industrial, at that time,
was assessed and the share of the plaintiff in the said assest was
settled as Rs.5,40,000/. It is further alleged that the defendant and
one Sh. Awadesh Kumar took responsibility to pay off the said sum
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in equal share of Rs.2,70,000/ each. As such, the defendant issued
two cheques bearing no.927504 dated 30.07.1995 and 927506 dated
30.08.1995 for a sum of Rs.1,20,000/ and Rs.1,50,000/,
respectively, both drawn on State Bank of India, Central Market,
Lajpat Nagar, New Delhi.
3. The plaintiff alleges that the said cheques upon being presented,
returned dishonoured with the remark that 'funds wree insufficient to
honour the said cheques'.
4. The plaintiff got issued a legal notice under Section 138 N.I. Act on
05.09.1995, but inspite of being served, defendant failed to pay up
the said amount. Ultimately, the plaintiff filed a complaint case,
under the above said provision, which was stated to be pending (as
per date on filing of this plaint). In the meantime, it has been
clarified that the counsel of the plaintiff had received a reply dated
11.10.1995 to the said legal notice and which reply was eventually
found not true and correct to the facts. It is allowed that plaintiff got
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another letter dated 20.11.1995 issued through the same counsel Sh.
O.P. Saxena to the defendant through his counsel.
5. Plaintiff alleged that inspite of several efforts made on his part, to
recover the amount due, there was no willingness on the part of the
defendant to keep his promise and to pay the money. The plaintiff is
alleged to have sent a legal notice in the present suit, separately on
15.07.1998 and it was served through the counsel of the defendant
but inspite of being duly served, the defendant failed to comply.
6. As per the plaintiff, the dues etc., against the defendant as on date of
filing of the suit came to Rs.4,11,750/ being interest thereon
calculated @ 18% p.a.
7. The plaintiff filed the suit as a summary suit under Section 37
C.P.C., stating therein, that to the knowledge of the plaintiff,
defendant had no defense to the suit, however, by the time the
procedure adopted for the summary suit, came at the crucial stage for
a decision on leave to defend application filed by the defendant, Ld.
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Counsel of the plaintiff by his submissions, as recorded before the
Ld. Predecessor, stated that he had no objection, if unconditional
leave to defend was granted and accordingly, leave was granted by
Ld. Predecessor vide order dated 15.03.2001.
8. In the Written Statement, as filed, several preliminary objections
have been raised, mainly that the suit is liable to be dismissed in
view of S.69(2) of Indian Partnership Act, 1932 as the plaintiff firm
is not stated to be a registered partnership and as such not entitled to
sue.
9. Further, the plea of non joinder of necessary party i.e. Awdesh
Kumar, the said other person was also raised, in view of the own
averments of the plaintiff.
10. As per the defendant, he suit was without any cause of action.
11. On merit, it was the version of the defendant, that the cheque which
was alleged by the plaintiff to have been issued by the defendant,
same had been procured by the plaintiff illegally upon false
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representation. It was stated tat the alleged two cheques, which were
given to the plaintiff were not in lieu of any due etc. in favour of the
plaintiff but on the contrary, it is the plaintiff who had desired to
borrow loan, from the defendant and it is towards that loan that the
two cheques were issued. It is towards that loan amount agreed to be
paid by the defendant, that the said two cheques were issued by the
defendant. Defendant also relied upon written agreement dated
24.06.1995, in this regard, which is stated to have been signed and
executed by both the parties to the suit.
12. Defendant further goes on to allege that, it had been assured by the
plaintiff that before presentation of the cheque in his bank, the
plaintiff would furnish suitable collateral security for the said loan,
and only after satisfaction of the defendant with regard to the said
security, provided by the plaintiff, that the said cheques were to be
presented by the plaintiff to his banker.
13. It is further alleged that since, the plaintiff miserably failed to
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provide collateral security, he lost the right to present the cheques
with his banker. In fact, as per the defendant, plaintiff is liable to be
prosecuted for cheating. As regard, the existence of th allege
partnership firm, and the alleged dissolution thereof etc., same has
been denied by the defendant for want of knowledge and in fact,
defendant has specifically pleaded that plaintiff has failed to disclose
as to what was the nature of the partnership, and who were the
partners, and even if it is assumed for a moment, that on account of
dissolution, all the assets were taken over by a new firm, there is no
material to show whether the original partnership was dissolved of
not, and in case of dissolution, why no dissolution deed would be
filed by the plaintiff.
14. Further, the defendant has also denied about the valuation of the
assets of the firm M/s Modern Glass Tiles Industries, whether it was
correctly assessed, and whether the share of the plaintiff therein was
to the extent of Rs.5,40,000/.
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15. It has further been specifically pleaded that M/s Modern Glass Tiles
Industries has not purchased any assets from M/s Maxton Glass Tiles
and hence there was no occasion or reason for the defendant to have
agreed to pay Rs.2,70,000/ to the plaintiff and in fact there was
absolutely no consideration for the issuance of the said cheques by
the defendant. The defendant reiterated that the cheques, though,
issued by the defendant, were to give loan to the plaintiff and not
towards any share in any partnership.
16. Plaintiff has, in his replication, denied the version of the defendant
and reiterated its own as correct.
17. The plaintiff denied the allegations made by the defendant and also
denied the objection raised to the maintainability of the suit and has
reiterated the contents of the plaint. He has mainly, stated that the bar
of S.69(2) Partnership Act would not apply to the present case. And
secondly, as regards the alleged loan agreement, relied upon by the
defendant was stated to be the forged and fabricated documents. As
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per the plaintiff, there was no question of any loan. The plaintiff
reiterated that the payment, which was made by the cheque in
question, was towards the price of the assets of the partnership assets
by the defendant which in part was only to the extent of the share of
the plaintiff.
18.On the face of the pleadings, the main question in this suit, which
seems to have arisen is, as to whether the cheque in question which
was dishonoured, was having a lawful consideration, as was being
claimed by the plaintiff, or whether the cheque had been issued only
for payment of a loan, as was being alleged by the defendant.
19.In other words, whether the amount contained in the cheque was
towards the price of the goods of the partnership firm and more
particularly towards the share of the plaintiff, or whether the amount
was only towards the loan.
20.Secondly, the question has also arisen regarding the maintainability
of the suit itself, in view of bar created by S.69(2) of Partnership Act.
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21.However, Ld. Trial Court has framed the following eight issues vide
proceedings dated 03.07.2001 as under :
1. Whether the suit is liable to be dismissed u/s
69 (2) of the Indian Partnership Act? OPD.
2. Whether the suit is bad for non joinder of
Awdhesh Kumar as necessary party?OPD.
3. Whether there is no cause of action against
the defendant?OPD.
4. Whether the cheque issued by the defendant
was for borrowing loan from the defendant vide
a written agreement dated 24.06.1995 and as
such, the said cheque was given by the
defendant to the plaintiff as loan? OPD.
5. Whether the plaintiff has presented the
cheque after furnishing a collateral security to
the satisfaction of the defendant? If so, its
effect? OPD.
6 Whether the plaintiff is entitled to the
amount claimed in the suit?OPP.
7. To what amount the plaintiff is entitled?OPP.
8. Relief.
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22.From the perusal of this file and file of other case titled as Sh. M.L.
Gupta vs. Awadesh Kumar it has come to my notice the Issues which
actually pertained to the defence raised by Sh Kulanand Kumud i.e.
defendant of this case, has been typed out by concerned staff and
placed in the file of case titled as M.L.Gupta vs. Awadesh Kumar,
while Issues which are pertaining to case of Awadesh Kumar have
been placed in the present file of defendant Kulanand Kumud.
23.Main difference between defence of Kulanand Kumud and Awadesh
Kumar was that while Kulanand Kumud was claiming that, he had
given the cheques by way of loan to the plaintiff, on the other hand,
Sh. Awadesh Kumar (defendant of other suit) was claiming that the
cheque had been stolen/misplaced and misused.
24.Therefore, in the context of the entire pleadings and proceedings,
said clerical error seems to have crept in. Since said issues pertained
to defence of Sh. Awadesh Kumar, same cannot be read in the
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proceedings sheet dt.03.07.2001 of this suit.
25.Therefore said issues (in another suit No.446/14/98) which actually
pertain to defendant Kulanand Kumud i.e. present case, shall be read
as Issues of the present case; while Issues as lying on record of this
case, which actually pertain to the case of Sh.Awadesh Kumar,
would simply be retyped and placed in the case file of Awadesh
Kumar.
26.During the evidence, one Mr. Om Prakash, Ahlmad from the court of
Sh. S.S. Bal, Ld. ASJ, Delhi was summoned and examined as PW1.
He proved the certified copiews of the cheque as Ex.PW1/1 and
Ex.PW1/2. The court file which he produced was containing original
cheque, was seen and returned. The certified copies of the return
memo were also proved by this witness as Ex.PW1/3 and 4,
respectively. Photocopy of the vouchers of a cheque from Indian
Overseas Bank was also exhibited as Ex.PW1/5, subject to the
produced of the certifeide copy thereof.
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27.The copy of the legal notice dated 15.09.1995 was exhibited as
Ex.PW1/6, the AD slip and the AD card pertaining to the said legal
notice was Ex.PW1/7 and 8, respectively. Further, there was also a
postal receipt at that time, which is exhibited as Ex.PW1/9.
28.Plaintiff examined himself as PW2 on his oral testimony and during
the course of which he has referred and relied upon certain copy of
the cheque already Ex.PW1/2 and 2, the return memo Ex.PW1/3 and
4.
29.He has mainly relied on all the documents already referred above
during the testimony of PW1. Besies, he also relied upon the reply
which he has received through the legal notice, which was
Ex.PW2/5. The said document was exhibited subject to production
of the certified copy thereof from the concerned court file.
30.The witness also referred to another legal notice dated 15.07.1998,
sent and copy of which was exhibited as Ex.PW2/6, its postal
receipts were also exhibited as Ex.PW2/7 till Ex.PW2/9.
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31.Besides, Sh. Suresh Chand, son of the plaintiff was examined as
PW3 on his affidavit dated 12.10.2006 i.e. Ex.PW3/A, wherein he
also relied upon the same documents already referred above.
32.In turn, the defendant examined himself as DW1 on his affidavit
DW1/B and besides he relied upon agreement dated 24.06.1995
which was mentioned in his affidavit as Ex.DW1/A, which was
already put across to the PW2, the plaintiff, during his own cross
examination at the instance of the defendant and which is already
exhibited as such Ex.PW2/D1. The defendant claimed to have signed
the agreement at point X and that the said agreement had been signed
by the plaintiff at point Y. He also identify his signature of the
witness Sh. Ashok Pandey at point Z thereon.
33.The defendant then examined Sh. Ashok Pandey the said signatory
to the agreement, who was also given the same number as DW1,
however, and his affidavit was exhibited as Ex.DW1/1 (be read as
Ex.DW2/1).
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34.Arguments in this case proceeded over a considerable number of
days and elaborated in much details, however, throughout these
arguments, what emerged as a significant point, is that still, the main
thrust of the arguments addressed on behalf of the plaintiff revolved
more on merits of the case, the course of which, Ld. Counsel of
plaintiff took the court through the entire records of the testimony on
the point of defense as raised on merit, and highlighted not one, not
two, but various self contradictions, on the part of the defendant, in
so far as his version of the loan having been extended, to the plaintiff
by him was concerned.
35.While, on the other hand, the main thrust of arguments as addressed
on behalf of the defendant, as a contrast, ranged mainly on the legal
objection raised regarding the maintainability of th suit, in as much
as it has been forcefully urged on behalf of the defendant throughout,
that neither there was any partnership concern in existence, as was
being alleged by the plaintiff, and even if the concern wsa there, it
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was not registered firm, as required u/s 69 of Partnership Act, and
that as such the suit itself could not have been maintainable.
36.The second leg of the arguments was that, there was in fact no lawful
consideration in respect amount entered in the cheque, in as much as
the very basis and the genesis of the story of the plaintiff regarding
there being a partnership firm, regarding the assets being sold,
regarding the division of the share of the firm, has not been
established at all, and therefore when there was no consideration
attached to the cheque, the claim of the plaintiff as based on the said
cheque itself would not be maintainable.
37.From both the aspects, Ld. Counsel for the defendant has throughout
tried to show, that neither there was any partnership firm, nor there
was any such assets sold as was being claimed, nor there was any
division of shares, neither any taking over of the firm nor any
dissolution thereof, and that in view of the vague pleadings of the
plaintiff, he has failed to establish his own case itself. Therefore, in
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case the firm, was not registered, the suit would not have been
maintainable as filed, and in case the firm was not there and there
would not have been any question for taking over, or being
dissolution or there being any division of the share of the partners. In
that event, the entire foundation of the version of the plaintiff itself
would have failed.
38.Heard at length. I proceed to give my findings issuewise as under :
Issue no.1: Whether the suit is liable to be dismissed u/s 69 (2) of
the Indian Partnership Act?OPD
39.Though, no doubt Ld. Counsel for the defendant has taken much
pain, to base most of his arguments on this aspect, that the
partnership firm was not registered, or in fact it was not even in
existence, and the suit was not even maintainable, but one point,
appears to have been ignored in the entire course of arguments over
several dates, seems to be, that the cheques in question were not
issued in the favour of any firm. The cheques in question was in
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favour of the individual name of the plaintiff. The suit was also filed
by the plaintiff in individual capacity, and not by the firm.
40.The onus to prove this objection has been placed somehow on the
plaintiff, but, however, in the context, since this like objection would
go to the root of the suit, it would normally have been the plaintiff,
who should have been bearing the onus to show that they were duly
registered, as it is the party who asserted the existence of a fact, who
is burdened with the onus to establish the existence of the such fact.
41.In these circumstances, the court is of the considered view that the
initial onus on this aspect would have been of the plaintiff to
discharge.
42.However, even this view, would have been applicable, and held
good, only if the plaintiff who had been suing, had been a
partnership firm through partner and not through the plaintiff who is
suing as an individual, in the present case. Though, no doubt, the
plaintiff has stated in his averments, that by virtue of a partnership
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deed dated 01.09.1993, the plaintiff was one of the partners in a firm
known as M/s Modern Glass Tiles Industries having its office at 129,
Vigyan Vihar, Delhi, and thereafter, he gone on to para2 of the
plaint, that the dispute arose amongst the partners of the said firm,
and thereafter, the plaintiff averred significantly, that in the month of
July 1991, all the assets including the plaint, machinery, stocks of the
said firm, were taken over by the new firm under the name and style
of M/s Maxton Glass Tiles Industries.
43.In para3, the plaintiff further averred that the value of the assets of
the aforesaid firm namely M/s Modern Glass Tiles Industries had
been assessed, and the share of the plaintiff in the said assets has
been settled as Rs.5,40,000/, and in consideration thereof, the
defendant and one Sh. Avdesh Kumar had taken upon themselves, to
pay all, the said sum of Rs.5,40,000/ in equal shares i.e. of
Rs.2,70,000/ each and as such the present defendant had issued two
cheques as per the price stated, both dated 30.07.1995 for a sum of
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Rs. 1,20,000/ and Rs.1,50,000/, both drawn on State Bank of India,
Central Market, Lajpat Nagar, New Delhi.
44.Ld. Counsel of defendant has further urged that, first and foremost,
the pleadings of the plaintiff itself is not clear and most vague, and it
cannot be ascertained, even, as to whether, the partnership firm,
initially referred to M/s Modern Glass Tiles Industries, had been
dissolved, after a dispute or whether it was taken over by another
firm. In case, it was a dissolution, a dissolution deed would surely
have been there. In case, it was taken over, the deed of assignment or
scheme of amalgamation would certainly have been there and apart
from there being no such document, plaintiff has not even referred
to there having been either any dissolution deed executed, or to any
amalgamation scheme, far from having proved, the same.
45.No doubt it cannot be disputed, that the plaint as filed, with all its
contents relating to the beginning part of the version, it is suffering
from ambiguity in this respect and it is indeed not been made out, at
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all as to whether the alleged firm stood dissolved or it was taken
over.
46.Further, the argument has also been addressed by Ld counsel for the
defendant, to the effect, that even if it is taken that the firm was
indeed taken over, in that case, the assets of the earlier alleged firm
would have been taken over by the second firm only, and not that
they would have been sold to other person.
47.Ld. Counsel for the defendant has further referred to the extreme
ambiguity of the pleading itself, wherein it does not even become
clear, as to how the defendant even stepped in, as to whether he had
been a partner in the second alleged firm, or whether he has come in
his individual capacity, whether some amalgamation had taken
places relating to the assets of the earlier alleged firm or otherwise.
48.Despite these forceful contentions, towards the end of the arguments,
Ld. Counsel for the defendant has further also referred to the
criminal complaint case which also stood dismissed, and wherein the
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accused had been acquitted, mainly on the premise that the accused
in his own evidence, therein, has been able to adduce probable
evidence in his favour. Considering the of proof in a criminal case
and the standard being much stricter, the same standard would not be
applicable in the given case.
49.However, the arguments, as raised by Ld. Counsel for the defendant
have much force, but unfortunately, Ld. Counsel for defendant
appears to have missed out the contents of the judgment, relied upon
by him, in the said criminal complaint case, wherein in para13, it is
stated therein itself, that the plaintiff in his cross examination had
admitted, that the cheque in question had been given to him by the
accused at the time of settlement of accounts of M/s Modern Glass
Tiles Industries.
50.This, then, would clearly imply, firstly that as per the suggestion
given by the accused itself, M/s Modern Glass Tiles Industries had
existed as a firm, secondly, there had been some dispute leading to a
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settlement of accounts of the said firm, thirdly, that the cheques in
question had been given by the accused to the plaintiff (plaintiff
herein) at the time of settlement of accounts of the said firm itself.
51.That the accused (defendant herein) itself, gave the suggestion to the
plaintiff (plaintiff herein), this proposition coming from the mouth of
the defendant itself, would ultimately have no further doubt in
holding, that the firm with the name of M/s Modern Glass Tiles
Industries actually did exist, that a dispute had taken place, the
settlement of accounts had also taken place, and that the cheques had
already been given by the defendant to the plaintiff at that very point
of time.
52.Simply because, the plaintiff was not able to produce the documents
of the existence of the firm, and because the plaintiff could not
produce any dissolution deed and other related documents, would
lose any significance, in the face of suggestion, coming from the
side of the defendant itself, regarding the facts, which were being
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averred by the plaintiff itself.
53. In fact, it was the whole case of the plaintiff (even though, a bit
vaguely pleaded, which could have been attributed to other factors
like defective drafting or other reasons) and the entire case coming
from the mouth of the defendant, in the form of suggestion, put on
behalf of the defendant to the plaintiff, would naturally have invited
an admission only and not a denial.
54.Therefore, Ld. Counsel for the defendant, lay emphasis, on the major
part of his arguments, that the firm M/s Modern Glass Tiles
Industries did not exist and that there was no question of any
dispute, or dissolution and that the very genesis of the story of the
plaintiff was missing. This arguments would lose all force, in the
face of this suggestion as above referred, in the judgment cited, and
relied upon by the defendant itself.
55.The only question then, that would remain, would be, as to whether
the plaintiff firm was or was not registered. But in my considered
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view, even this question would have had relevance, only, had it been
the firm, which had been suing or it had been the case of the plaintiff
that the cheque had been issued in the name of the firm. The plaintiff
has made the averment only about the own share of the stock of the
firm, which was sold off, and it is only his share which he had to
receive, and which he has alleged to have received from the
defendant, by way of two cheques.
56.As regards the averments, whether the plaintiff firm or defendant
was taken over, it could have even been a possibility that the plaintiff
firm may have been dissolved after a dispute, and their assets sold
off by their partners, and each one might have attributed the proceeds
and that thereafter a new firm might have started under a new name,
with some of the partners of the original firm. However, in the
absence of any such material, this court cannot draw any such
inference or presume any such event, but the fact remains that the
defendant itself has suggested to the plaintiff (accused in the said
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other criminal complaint case) that he had given the cheques in
question to the plaintiff (defendant) at the time of settlement of
accounts of M/s Moderan Glass Tiles Industries.
57.It is a settled legal position, that a fact admitted needs not to be
proved further, and here was a case, where it was much more than an
admission. It was a suggestion given from the side of the defendant
itself, regarding the existence of the firm, and regarding settlement of
account, and this would then dispense with further proof of the said
fact.
58.Further, apart from this, there are also certain materials admitted,
during the cross examination of witness of the defendant i.e. DW1
during cross examination admitted, that he knew Sh. Suresh Gupta
i.e. son of the plaintiff, and further admitted that, he is acquainted
with Sh. Suresh Gupta in respect of financial transactions, while they
both were at Noida. DW1 further replied that he met Sh. Avdesh
Kumar (defendant in the other suit no.446/14/98) through Sh. Suresh
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Gupta.
59.Though, DW1 in support of the case of the defendant, stated that Sh.
Suresh Gupta had approached him for helping him in getting loan
from any person who could lend money, and that he happened to
know defendant Kulanand Kumud, who used to give loan to persons
in market, this witness was not able to reply, as to whether said
defendant Kulanand Kumud had any money lending licence for this
purpose or not.
60.DW1/defendant himself, during his cross examination, expressed
lack of knowledge about the Certificate and Article of Association of
MMG Tiles India Ltd. However, he did not deny the same
specifically, and infact, he was shown page no.26 of the document
i.e. Memorandum of Association, wherein name of Ms. Urmila Devi,
Smt. Shanti Devi and Sh. Kulanand Kumud (defendant) had been
listed as Directors therein. Defendant/DW1 denied the said list.
61.Ld. Counsel for the defendant has put a question to plaintiff/PW2, as
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62. to whether the firm M/s Modern Glass Tiles Industries had sold the
assets of firm or it was the individual partners who had sold the
assets to the extent of their shares; to which the plaintiff gave an
answer that the firm stood dissolved, and he himself received
cheque, and came back. This answer of the witness itself would
imply, that it is individual partners who had sold the assets to the
extent of their share, and that is why cheques in question were drawn
in the name of the plaintiff, and not in the name of the firm.
63.However, going through the provisions of the said Act, it cannot be
held, to be applicable to the situation, where the suit has been filed
by an individual person, and with only grievance that his share,
which was paid, by the defendant in the form of cheques had
remained unpaid, on account of dishonour of the said cheques.
64.Infact recently Hon'ble Apex Court has been pleased to strike down
the provisions of subsection 2A of Section 69 as was introduced by
Maharashtra Legislature, as clearly violative of Article 14, 19 (1)(g)
C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 28
and 300 A of the Constitution, and Their Lordships were of the
considered view that in their considered opinion, the said provision
was ultra virus, and as such was declared unconstitutional, and
consequently, the appeal in that case was allowed, and the impugned
judgment of Hon'ble Bombay High Court was set aside. It was
further held, that the suit could then proceed, ignoring subsection
2A of Section 69, which the Hon'ble Supreme Court declared
invalid.
65.The said appeal arose out of a suit filed before the Bombay City
Civil Court instituted by the appellant praying inter alia for
dissolution of an unregistered partnership firm between the appellant
and the respondent.
66.In that suit a defence taken was that the suit was not maintainable in view of subsection (2A) of Section 69 of the Indian Partnership Act, 1932 (hereinafter referred to as `the Act').
67.The Bombay City Civil Court was of the view that the said sub C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 29 section 2A, which was introduced by the Maharashtra Amendment to Section 69 of the Act, being the Maharashtra Act no.29 of 1984 (which received assent of the President of India) was unconstitutional being violative of Articles 14 and 19 (1)(g) of the Constitution of India. Hence the Bombay City Civil Court by order dated 16.8.1999 had made a reference to the High Court under Section 113 of C.P.C.
68.The Hon'ble High Court, however, in the impugned judgment held that the said subsection 2A of Section 69 of the Act was not unconstitutional.
69.Their Lordships of the Apex Court referred to the provisions of the Act as under:
"(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 30 shown in the Register of Firms as a partner in the firm:
(2) No suit to enforce a right arising from a contract shall be instituted in any court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of firms as partners in the firms."
Subsection 2A which was introduced by the Maharashtra Amendment 1984 states as follows : "(2A) No suit to enforce any right for the dissolution of a firm or for accounts of a dissolved firm or any right or power to realize the property of a dissolved firm shall be instituted in any court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or have been a partner in the firm, unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm:
Provided that the requirement of registration of firm under this subsection shall not apply to the suits or proceedings instituted by the heirs or legal representatives of the deceased partner of a firm for accounts of a dissolved firm or to realize the property of a dissolved firm."
C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 31 Their Lordships were also pleased to mention that the Maharashtra Amendment of 1984 not only inserted subsection 2A in Section 69, it also substituted the original subsection (3)(a) to Section 69 by an altogether different subsection (3)(a).
8.The original subsection (3)(a) of Section 69 in the Partnership Act read as follows :
"(3) The provisions of subsections (1) and (2) shall apply also to a claim of setoff or other proceeding to enforce a right arising from a contract, but shall not affect:
(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realize the property of a dissolved firm."
9. The Maharashtra Amendment of 1984 substituted clause (a) of Section 69(3) of the original Act by the following subsection (a) :
"The firms constituted for a duration of six months or with a capital upto Rs.2000/"
10. The Maharashtra Amendment also added a proviso to Section 69(1) which reads as follows:
C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 32 "Provided that the requirement of registration of firm under this subsection shall not apply to the suits or proceedings instituted by the heirs or legal representatives of the deceased partner of a firm for accounts of the firm or to realize the property of the firm"
70.The relevant extracts of the said judgment are referred to as under in order to refer to the bearing and the underlining objects of the statute as described therein as under:
11. The English law in so far as it makes registration compulsory for a firm and imposes a penalty for nonregistration was not followed when the Partnership Act was made in India in 1932 as it was considered that this step would be too drastic and would introduce several difficulties. Hence registration was made optional at the discretion of the partners, but following the English precedent, any firm which was not registered by virtue of sub sections (1)& (2) of Section 69 disabled a partner or the firm (as the case may be ) from enforcing certain claims against the firm or third parties (as the case C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 33 may be) in a Civil Court.
12. An exception to this disability with regard to an unregistered firm was made in subsection (3)(a) to Section 69, and this clause enabled the partners in an unregistered firm to sue for the dissolution of the firm or for accounts or for realizing the property of the dissolved firm.
13. This exception in clause (a) of Section 69(3) was made on the principle that while registration of a firm is designed primarily to protect third parties, the absence of registration does not mean that the partners of an unregistered firm lose all rights in the said firm or its property and hence cannot sue for accounts or for its dissolution or for realizing their property in the firm.
14. It may be mentioned that a partnership firm, unlike a company registered under the Indian Companies Act, is not a distinct legal entity, and is only a compendium of its partners. Even the registration of a firm does not mean that it becomes a distinct legal entity like a company. Hence the partners of a firm are coowners of the property of C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 34 the firm, unlike shareholders in a company who are not coowners of the property of the company.
15. Till the Maharashtra Amendment of 1984 came into force on 1.1.1985, a partner in a firm could file a suit for dissolution of an unregistered partnership firm or for accounts of the dissolved firm or to recover the properties of the dissolved firm. However, in view of sub section 2A of Section 69, since 1.1.1985 a partner in an unregistered partnership firm in the State of Maharashtra cannot file a suit for dissolution or for accounts of a dissolved firm or realize properties of a dissolved firm, unless the duration of the firm was only six months or it's capital is upto Rs.2000/. The question before us is whether subsection 2A of Section 69 inserted by the Maharashtra Amendment is constitutionally valid.
16. In our opinion subsection 2A of Section 69 inserted by the Maharashtra Amendment violates Articles 14, 19(1)(g) and 300A of the Constitution of India.
17. It has already been mentioned above that a partnership firm, whether registered or unregistered, C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 35 is not a distinct legal entity, and hence the property of the firm really belongs to the partners of the firm. Subsection 2A virtually deprives a partner in an unregistered firm from recovery of his share in the property of the firm or from seeking dissolution of the firm.
18. Article 300A of the Constitution of India states :
"No person shall be deprived of his property save by authority of law."
19. It is by now well settled that a law to be valid has to be non arbitrary vide the 7Judge Bench decision of this Court in Maneka Gandhi vs. Union of India and another AIR 1978 SC 597.
20. Subsection 2A virtually deprives a partner of a firm from his share in the property of the firm without any compensation. Also, it prohibits him from seeking dissolution of the firm although he may want it dissolved.
21. Deprivation of property may take place in various ways, such as `destruction' vide this Court's decision in Chiranjit Lal Chowdhuri vs. Union of India AIR C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 36 1951 SC 41 or `confiscation' vide this Court's decision in Ananda Behera vs. State of Orissa AIR 1956 SC 17, or revocation of a proprietary right granted by a `private proprietor' vide this Court's decision in Virendra Singh vs. State of U.P. AIR 1954 SC 447, `seizure of goods' vide this Court's decision in Wazir Chand vs. State of H.P. AIR 1954 SC 415 or `immovable property' vide this Court's decision in Virendra Singh vs. State of U.P. (supra) from the possession of an `individual' vide this Court's decision in Wazir Chand vs. State of H.P. (supra) or `assumption of control of a business' vide this Court's decision in Virendra Singh vs. State of U.P. (supra) in exercise of the `police power' of a State. Thus, there is a `deprivation' where a municipal authority, under statutory power, pulls down `dangerous premises' vide decision in Nathubhai Dhulaji vs. Municipal Corporation AIR 1959 Bom. 332 or an insolvent is divested of his `property' vide decision in Vajrapuri Naidu, N. vs. New Theatres, Carnatic Talkies Ltd. 1959(2) MLJ 469.
22. The appellant challenges the Amendment as violative of Articles 14 and 19(1)(g) of the Constitution. Article 14 guarantees the right to C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 37 equality and states that "The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India." Equal protection means the right to equal treatment in similar circumstances. In other words there can be classification for legitimate purposes, but it is well settled that the classification must be reasonable i.e. based on intelligible differentia and having nexus between the basis for classification and the object of the legislation.
23. Under Article 19(1)(g) of the Constitution all persons have the right to practice any profession or to carry on any occupation, trade or business. Clause (6) of that Article enables the State to make any law imposing, in the interest of general public, reasonable restrictions on the exercise of the right conferred under subclause (g) of Article 19(1).
24. In Chintamanrao and another vs. The State of Madhya Pradesh AIR 1951 SC 118 this Court observed :
"The phrase `reasonable restriction' connotes that the limitation imposed on a person in enjoyment of the C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 38 right should not be arbitrary or of an excessive nature, beyond what is required in the interest of the public. The word `reasonable' implies intelligent care and deliberation, that is the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the equality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in Article 19(1)(g) and the social control permitted by clause (6) of Article 19, it must be held to be wanting in that quality."
25. Similarly in M.C.V.S. Arunachala Nadar vs. State of Madras and others AIR 1959 SC 300 where the constitutional validity of the Madras Commercial Crops Markets Act was challenged, as violative of Article 19(1)(g), while considering the test of reasonableness to be applied this Court observed as under :
"It has been held that in order to be reasonable, a restriction must have a rational relation to the object which the legislature seeks to achieve and must not go in excess of that object (Chintamanrao and another vs. The State of Madhya Pradesh (supra). The mode of approach to ascertain the C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 39 reasonableness of restriction has been succinctly stated by Patanjali Ssastri, C.J. in State of Madras vs. V.G. Row AIR 1952 SC 196 :
"It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict."
26. The primary object of registration of a firm is protection of third parties who were subjected to hardship and difficulties in the matter of proving as to who were the partners. Under the earlier law, a third party obtaining a decree was often put to expenses and delay in proving that a particular person was a partner of that firm. The registration of a firm provides protection to the third parties against false denials of partnership and the evasion of C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 40 liability. Once a firm is registered under the Act the statements recorded in the Register regarding the constitution of the firm are conclusive proof of the fact contained therein as against the partner. A partner whose name appears on the Register cannot deny that he is a partner except under the circumstances provided. Even then registration of a partnership firm is not made compulsory under the Act. A partnership firm can come into existence and function without being registered. However, the Maharashtra Amendment effects such stringent disabilities on a firm as in our opinion are crippling in nature. It lays down that an unregistered firm cannot enforce its claims against third parties. Similarly, a partner who is not registered is unable to enforce his claims against third parties or against his fellow partners. An exception to this disability was a suit for dissolution of a firm or a suit for accounts of a dissolved firm or a suit for recovery of property of a dissolved firm. Thus a partnership firm can come into existence, function as long as there is no problem, and disappear from existence without being registered. This is changed by the 1984 Amendment extending the bar of the proceedings to a suit for dissolution or recovery of property as well. C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 41 The effect of the Amendment is that a partnership firm is allowed to come into existence and function without registration but it cannot go out of existence (with certain exceptions). This can result into a situation where in case of disputes amongst the partners the relationship of partnership cannot be put an end to by approaching a court of law. A dishonest partner, if in control of the business, or if simply stronger, can successfully deprive the other partner of his dues from the partnership. It could result in extreme hardship and injustice. Might would be right. An aggrieved partner is left without any remedy whatsoever. He can neither file a suit to compel the mischievous partner to cooperate for registration, as such a suit is not maintainable, nor can he resort to arbitration if any, because the arbitration proceedings would be hit by Section 69(1) of the Act (Jagdish Chandra Gupta vs. Kajaria Traders (India) Ltd. AIR 1964 SC 1882).
27. In our opinion the restrictions placed by sub section 2A of Section 69 introduced by the Maharshtra Amendment Act, for the reasons given above, are arbitrary and of excessive nature and go beyond what is in the public interest. Hence the C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 42 restrictions cannot be regarded as reasonable.
28. In the Constitution bench decision of this Court in Maneka Gandhi vs. Union of India and another (supra) it has been held that arbitrariness and unreasonableness violates Articles 14 and 19(1)(g) of the Constitution. The said provision is clearly unreasonable and arbitrary since by prohibiting suits for dissolution of an unregistered firm, for accounts and for realization of the properties of the firm, it creates a situation where businessmen will be very reluctant to enter into an unregistered partnership out of fear that they will not be able to recover the money they have invested in the firm or to get out of the firm if they wish to do so. As already stated above there is no legal requirement, unlike in England, which makes registration of a firm compulsory, rather in India it is voluntary. Both registered and unregistered are legal though of course registration and non registration have different legal consequences as stated above.
29. The High Court was of the view that the object of the Maharashtra Amendment was to induce partners to register and it was intended to protect third party C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 43 members of the public. We cannot see how sub section 2A of Section 69 in any way protects the third party members of the public. It makes it virtually impossible for partners in an unregistered firm to dissolve the firm or recover their share in the property of the firm. Hence it is totally arbitrary.
30. It is true that it has been held by this Court in Government of Andhra Pradesh & Others vs. P. Laxmi Devi AIR 2008 SC 1640 that the Court should not lightly declare a statute to be unconstitutional as it expresses the will of the people through its elected representatives. However, that does not mean that a statute can never be declared as unconstitutional. In fact the aforesaid decision this Court has held that in some circumstances a statute can be declared as unconstitutional, namely, where it clearly violates some constitutional provision. Since in our opinion subsection 2A of Section 69 as introduced by the Maharashtra Legislature clearly violates Articles 14, 19(1)(g) and 300A of the Constitution, it is in our opinion ultra vires and is hence declared unconstitutional. Consequently this appeal is allowed and impugned judgment of the Bombay High Court is set aside.
C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 44
71. Accordingly, the objection raised by the defendant, that the suit was barred u/s 69 of the Partnership Act is not sustainable, and the same has to be discarded.
Issue No.1 is accordingly decided against the defendant, and in favour of the plaintiff.
Issue No.2: Whether the suit is bad for non joinder of Awdesh Kumar as necessary party?OPD.
72.Ld. Counsel for the defendant has also contended that Sh. Avdesh Kumar, with respect to whom also there were averments in the plaint, as being part of one and the same transaction, said Sh.Avdesh Kumar should also have been joined as necessary party in the present suit.
73.Though, no doubt, in view of the averments in the plaint, and also C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 45 reply of the defendant, said Sh. Avdesh Kumar would have been a necessary party in the present suit, but the fact that plaintiff had already filed a separate suit against said Sh.Avdesh Kumar, would have met with the objection raised.
74.No doubt, as per plaintiff's averments, it was part of one and the same transaction, but it was in view of the kind of replies as sent to legal notice of the plaintiff by both the said persons, being based on a totally different and opposite line of defence, that probably the plaintiff decided to file two separate suits, one against each.
75.In the present case at hand, defendant had taken a stand that he had only given a loan in the form of cheques in question, while defendant of other suit i.e. Sh.Avdesh Kumar raised a defance that, his cheque had been stolen, and misused by the plaintiff. Issues which were to be involved would have been different, and were different, and for this purpose, two separate suits came to be filed by the plaintiff against the defendant, one could not be joined with the other. C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 46
76.Even otherwise the onus to prove this issue was upon the defendant, and towards this, not much argument was even addressed, and as regards evidence, defendant has failed to show by way of any evidence or document that, said Sh. Avdesh Kumar was necessary to be impleaded in this suit as codefendant. When the defence is different at the initial stage i.e. on sending reply to the legal notice itself, the plaintiff deemed it more appropriate to file separate cases for the recovery against separate persons, and in the given facts and circumstances, where defendant Kulanand Kumud alleged the transaction to be one of a loan, and the other defendant in other suit Sh. Avdesh Kumar alleged there being no transaction at all, except theft of the cheques in question, and misuse thereof, two cases would have been most appropriate, to be filed separately, and the joinder of cause of action would not have been possible, and might have resulted in misjoinder of the causes of action.
77.In any case, and the two cases were being taken up together at each C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 47 stage, therefore, no prejudice could be said to have resulted by absence of defendant namely Sh.Avdesh Kumr of the other case. Said Sh. Avdesh Kumar very well participated as defendant and contested the cae i.e. other case, and therefore, objection regarding nonjoinder of party can safely be said to have been dealt with.
78.Objection regarding non joinder of said Sh. Avdesh Kumar in the present suit cannot sustain in the given circumstances. Issue No.2 is accordingly decided against the defendant. Issue No.3: Whether there is no cause of action against the defendant?OPD
79.As before, the onus to prove this objection also lay upon defendant who had raised it. Neither any such evidence was led to show, that there was no cause of action available to the plaintiff to have come to the court nor any such arguments have been addressed on this issue, and in view of the averments of the plaint, and the documents in C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 48 question, it cannot be said that the plaintiff had no cause of action to come to Court or that the plaint did not disclose any cause of action. Issue No.3 is accordingly decided against the defendant.
80.Issue No.4:Whether the cheque issued by the defendant was for borrowing loan from the defendant vide a written agreement dated 24.06.1995 and as such, the said cheque was given by the defendant to the plaintiff as loan?OPD Main defence as raised was that, the cheques issued by defendant were towards borrowed loan amount from the defendant vide written agreement dated 24.06.1995, and therefore, there was no consideration for cheques in question as was being alleged by the plaintiff.
81.Onus to prove this issue was again on the defendant. In order to discharge his onus, defendant examined himself as DW1 as well as one Sh. Ashok Pandey who was again numbered as DW1, who C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 49 claimed to have signed loan agreement as a witness thereon.
82.DW1 has stated in in para 5 of his affidavit that the cheques in question had been procured by the plaintiff by false representation in as much as, said two cheques had been given by defendant to the plaintiff, as plaintiff had sought to borrow loan from the defendant. For confirmation of the said loan, a written agreement was stated to have been executed between the parties. Said agreement is Ex.DW1/A. Defendant claimed to have signed it at point X and the plaintiff at point Y. DW1/defendant himself further also stated that, the document had been executed in the presence of Sh. Ashok Pandey s/o Sh. Damodar Pandey.
83.Said witness Sh. Ashok Pandey in his own affidavit on the other hand stated that, he had even signed as a witness to the agreement/undertaking dated 24.06.1995, executed between plaintiff and defendant.
84.This itself was in contradiction to the case of the defendant himself. C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 50 It was not even case of the defendant, as per his own affidavit, that said Sh. Ashok Pandey had also signed the agreement as a witness. Defendant as DW1 in his affidavit stated only that, the agreement was executed in the presence of Sh. Ashok Pandey, and that is all. There is no reference or claim on the part of the defendant that Sh. Ashok Pandey had even signed the said agreement as a witness. Whereas, witness Sh.Ashok Pandey seems even more active, and more keen, and he went ahead and claimed in para 11 that, he had signed as a witness to the agreement dated 24.06.1995. However, defendant himself referred in para 5 of his affidavit only to written argument, while witness Sh. Ashok Pandey referred to the said document as being AgreementcumUndertaking.
85.If said Sh.Ashok Pandey had indeed signed Agreement, nothing would have prevented the defendant to state in his affidavit this fact. The omission of this part i.e. of signing of Agreement by Sh. Ashok Pandey, as a witness is quite conspicuous, and apart from the self C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 51 contradictions, with his own witness, it just reflects that there was no truth in the claim of defendant regarding execution of Agreement itself.
86.Defendant himself stated that same had been executed in the presence of said Sh. Ashok Pandey, and no more, while said Sh. Ashok Pandey while going a step further, stated, that he had even signed agreement as a witness. The genuineness and authenticity of the agreement fails on this ground alone.
87.Further, to add to this self contradiction, both witnesses could not withstand the test of cross examination. Defendant in his own cross examination has tried to explain away the fact that, the cheque was given, even before collateral security could be given by the plaintiff for the loan, and volunteered that it was an understanding between the parties that before collateral security was given, the defendant was not to deposit the amount relating to the cheques in his bank.
88.There was no reason, which could be explained as to why cheques in C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 52 question would have been handed over by defendant, before receiving a collateral security by the plaintiff to the satisfaction of the defendant. Said agreement nowhere mentions that the plaintiff shall not present the cheques in questions until and unless, he furnishes collateral security.
89.Defendant, however, admitted that he had not lodged any complaint with the police against the plaintiff for not having furnished the collateral security, and for having presented the cheques in violation of the alleged agreement.
90.Defendant goes on to claim that, he had been told by the plaintiff himself about his business, and his capacity to repay, but defendant again admitted that he even did not know about name and place of business of the plaintiff. He had not even been to the residence of the plaintiff.
91.Therefore, his claim that, he had given cheques even prior to obtaining any collateral security from the plaintiff does not hold C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 53 much weight.
92.Defendant has thereafter tried to explain that witness Sh. AshokPandey/PW1 had conveyed him about Sh. Suresh Gupta, son of plaintiff, and on this basis he had given loan to the plaintiff.
93.Defendant in the same breath, thereafter, goes on to state that, he had not asked Sh. Suresh Gupta to furnish any kind of security, in view of the loan being extended to his father. Witness was repeatedly asked about this aspect, and he has simply admitted that he had not asked the plaintiff or his son to submit any security money.
94.Defendant admittedly did not even ask Sh.Suesh Gupta to stand as a witness to the alleged loan by signing on the Agreement. Suggestion was put to defendant, that the document i.e. alleged agreement did not bear signatures of Sh. Suresh Gupta, for simple reason that said Sh.Suresh Gupta was neither present, nor any document had been prepared as alleged.
95.In view of the said contradictions between statement of defendant, C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 54 and his own witness Sh. Ashok Pandey, on the point of signing of the alleged agreement, as a witness by Sh. Ashok Pandey, i.e. when Sh. Ashok Pandey himself has claimed that he had signed agreement as a witness, while there is no such statement made by defendant in his affidavit. Agreement in question is treated as not merely a document unproved, in terms of Section 139 of the NI Act , but one as disproved.
96.For an easy reference section 139 of the NI Act is reproduced as under: Presumption in favour of holder. It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in apart, of any debt or other liability.
97.To make case worse for the defendant, his own witness Sh. Ashok Pandey has totally destroyed the claim of the defendant, in whatsoever little way any doubt had remained, when the witness was found to be more active than the party itself, as when said Sh.Ashok C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 55 Pandey goes on to state that, as many as four persons were present at the time of execution of the alleged agreement, namely Smt. Urmila Devi, Smt.Shanti Devi,Sh. Kulanand Kumum and himself.
98.If Sh. Suresh Gupta was indeed present at the time of the alleged agreement, there was no good reason why the defendant would not have obtained signatures of said Sh. Suresh Gupta on the said agreement. As far as defendant himself was concerned, here is a case that either one of these two persons, whether Sh. Ashok Pandey or Sh. Suresh Gupta even signed agreement as a witness. If going by replies given by this witness, he has stated that Sh. Suresh Gupta and Sh. M.L.Gupta got agreement typed, and that four persons, referred above, including Sh. Suresh Gupta had been present at the time of agreement, then what was the reason for defendant, not to ask Sh.Suresh Gupta to sign the alleged agreement as a witness, has not been explained anywhere.
99.Witness Sh. Ashok Pandey has not been able to describe the plaintiff C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 56 by his approximate age. Witness was not able to tell what was the approximate age of the plaintiff. Had he been actually present and signed as a witness, it is not that he could not even have answered approximate age of the plaintiff. He even could not tell the year in which the cheques had been drawn, and later he referred to the year as 1995. Witness surprisingly was able to state different amounts of the said two cheques. He, however, admitted that he had not written details, and made note of the said details, and he claimed to be just remembering the details mentally.
100.Alleged agreement pertains to the year 1995, while this witness was being examined in the year 2009 i.e. about 14 years later, and it is not really natural for any witness to remember even the split amount of the two cheques, and other details surrounding said agreement, unless and until he was tutored, and determined to speak in favour of the defendant.
101.Even assuming that memory of a particular person may be extra C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 57 ordinary, certain questions were put to the said witness by Ld. counsel for the plaintiff regarding dates of the festivals of last ten years, and naturally he was not able to tell.
102.DW1 Sh. Ashok Pandey was also not able to tell meaning of small cross under signatures of Sh. M.L. Gupta on the alleged agreement. Suggestion was put to witness, which he denied to the effect that the signatures of Sh. M.L. Gupta were obtained in blank, while papers were blank and that is why small cross was put, just to indicate as to where Sh.M.L. Gupta was meant to sign. Witness has gone on to speak one lie after another, and was unable to face the cross examination. Witness simply stated that he did not know anything that happened between parties. He did not know, when he was told about non furnishing of the security by defendant Kulanand. He could not tell approximate time, month or year. He is stated to have signed the agreement at the instance of defendant.
103.He is stated to have signed the agreement at the instance of C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 58 defendant, and thereafter, he again changed the answer by stating that he had signed on the asking of Sh. Suresh Gutpa and Sh. M.L. Gupta as well. Witness clearly admitted that the alleged agreement did not bear signatures of Sh. Suresh Gupta.
104.This witness who though initially was summoned, he was not present on the date in question i.e. 07.03.2009. He acknowledged that he had been telephoned on the previous date by Ld counsel for the defendant, asking him to appear before the Court on the said date. Thereafter, even if a summon was got issued by defendant for this witness initially, reality is quite clear, that the witness was coming at the instance of th defendant, and was in touch with defendant, and he could not even be said to be an impartial witness, and this in view of the self contradictions in his testimony, already referred above.
105.Though, plaintiff/PW2 has indeed admitted that agreement in question was bearing his signatures at point X, but witness has C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 59 thereafter stated that though agreement was admittedly bearing his signatures, and the same was marked as Ex.PW2/D1, but the witness has, thereafter, stated that though the agreement was admittedly bearing his signatures, but no agreement had indeed been executed, and claimed that his partners had obtained his signatures on some blank documents on the pretext, that they had to file a case of Patents in Hon'ble High Court of Allahabad.
106.Plaintiff claims to have given notice in the year 1995 to his partners through Advocate asking them to return the said blank papers, and the plaintiff claimed that said papers stood misused by defendant.
107.Though, plaintiff admitted that he has not mentioned this fact either in the plaint or replication, and not filed copy of the said notice on the court file, and also admittedly, he had ultimately not taken any action against the defendant for misuse of the blank paper, and not even after agreement had come to be filed in the Court in the present case, but this aspect has been dealt with during the cross examination C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 60 of the defendant himself, wherein reference was made to this point, which were seemed to be bearing cross marks, and which normally are often used by people or lawyers to use blank papers for the purpose of adding pleadings, etc, and they send such like blank papers to their clients with instructions to put their signatures at the desired point like X and Y, etc, with the material still to be typed out, and this practice is common in countries like India which are suffering with large scale illiteracy, and this practice is common even in the case of quite educated litigants. Cases are not rare when various documents, even such like papers are obtained from the clients on the pretext of preparation of pleadings, etc, and filed, but few of them develop malafide and use such documents later on, though percentage of misuse may be quite less, but percentage of persons adopting practice of asking for signatures on blank documents, and the persons readily and willingly giving their signatures on blank papers, in good faith, is certainly not rare in C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 61 India, but rather same is quite common and frequently adopted practice.
108.Besides Ld counsel for the plaintiff further raised very valid points as under: (1)The date of one chque is 30.07.1995 and another cheque is 30.08.1997. If the agreement is executed in the year 1995 than how cheque of year 1997 can be issued?
(2)If such an agreement is executed and collateral security is to be furnished than the cheque should have been returned for the reason stop payment but the same was dishonoured for insufficient funds (3)Plaintiff proved the list of invesntory which was duly signed by the defendant. The defendant was not able to answer why he has signed on the list, if no such list was ever prepared. (4)Plaintiff proved thte issuance of cheques and return of the same for insufficient funds.
(5)Defendant at page 683 in cross examination in CC No.1558/1 C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 62 (certified copy on record) admits that cheques were issued towards purchase of plaintiff share i.e. "it is correct that the cheques were issued by me to Sh.ML Gupta towards purchasing his share in the firm.
Coming to the evidence and cross examination of the defendant, the following things are relevant in the testimony of DW2: (1)At page 213 in cross examination, the defendant starts with ignorance of having any acquaintance with the plaintiff prior to the present case, however, the plaintiff duly proved various documents to show that the defendant along with plaintiff and family members of defendant in connected suit are having business relations i.e. Mark X1 and X2 at 443 (already Ex.DW1/P7 @ 643, Ex.DW1/P8@653 in the file of Awadhesh's case).
(2)Similarly in the entire cross examination, the witness tried to show that he does not know about defendant Awadhesh Kumar or his family in the other suit but he is unable to prove the sane and C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 63 loses credibility.
(3)At page 215 the defendant admits that he has not given any notice to plaintiff for non furnishing of collateral security or presenting of cheque in violation of agreement before police or court. (4)At 219 DW2 states that agreement is not signed bySuresh Gpta, whereas DW1 specifically states that Suresh Gupta also signed the agreement.
(5)In para 2 at page 197, DW1 states that firstly Kulanand signed the agreement and then ML Gupta but in cross examination at 203 he states that Sh. ML Gupta signed the agreement thereafter Kulanand signed the agreement.
(6)At page 203 DW1 states that Suresh Gupta approached him for taking loan but in para 5 at page 209 DW2 states that plaintiff wanted to borrow loan. If Suresh Gupta wanted loan as stated by DW1 why loan was given to Sh. ML Gupta or no document was executed by Suresh Gupta?
C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 64 (7)DW1 states that he knows Suresh Gupta and introduced him to Kulanand and he rarely meet Avdesh Kumar and Kulanand but still he signed on the agreement on the request of Kulanand (8)DW1 being interested witness and having made contradictory statements hence reliance cannot be placed on his testimony.
109.Defendant Sh. Kulanand Kumud just miserably failed to prove, that the cheques issued by the defendant were for the purpose of giving loan by defendant to plaintiff. Defendant has filed to prove due execution of written agreement, and authenticity of the said document. From the facts and circumstances, this court does not believe, that the said agreement was ever actually executed at all whatsoever.
Issue No.4 is accordingly decided against the defendant. Issue No.5: Whether the plaintiff has presented the cheque after C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 65 furnishing a collateral security to the satisfaction of the defendant? If so, its effect?OPD
110.In view of findings on issue no.4 above, there would have been no question for the plaintiff to have furnished collateral security to the satisfaction of the defendant, as the court has already held that, there was no such agreement of loan ever executed between the parties, and there was no such loan transaction as was being claimed by the defendant.
Therefore, Issue no.5 is also disposed of accordingly as against defendant.
Issue No.6: Whether the plaintiff is entitled to the amount claimed in the suit?OPP
111.Onus of this issue was naturally upon the plaintiff. Plaintiff/PW2 in his examination in chief, has started his testimony with the statement that the firm M/s Modern Glass Tiles Industries was not a registered C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 66 firm. However, this witness also stated that, the firm was dissolved in June, 1995. Plaintiff firm had four partners including plaintiff himself. He has further stated the names of other three partners, and further stated that other partners did not want to carry on the business with the plaintiff any further, and therefore, the firm was dissolved.
112.There is no doubt that there is ambiguity in the pleadings, but can be attributed to ill drafting, as otherwise it stood well explained as to what the case of the plaintiff was.
113.He has himself stated in chief that no dissolution deed was written. List of raw materials, finished goods, machinery, furnitures, etc was prepared at the time of dissolution. Original list was kept by other three partners, and copy of said list had been given to the plaintiff.
114.Plaintiff states that he had already served notice upon the defendant through his counsel to produce original list of goods, prepared at the time of dissolution, as one list was with the defendant as well, and he had also issued cheques in favour of plaintiff at the time of C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 67 dissolution.
115.Defendant, according to plaintiff/PW2 was nephew of Sh. Akhilesh Yadav i.e. other partner in the said firm, and the said defendant also happened to be present at the time of dissolution, but defendant still failed to produce the said list.
116.Plaintiff/PW2 proved the said notice dated 14.02.2001 which is referred as Ex.PW2/1 along with postal receipts being Ex.PW2/2 and Ex.PW2/3. Plaintiff has also proved the list as Ex.PW2/4.
117.Plaintiff stated that defendant had issued two cheques i.e. cheques in question, which were drawn in favour of the plaintiff, at the time of dissolution of partnership firm by way of a settlement of his share. Cheques had been issued by the defendant for consideration of share of plaintiff. Machinery, furniture, raw material and finished goods were kept by the defendant. It is only when plaintiff presented the cheques in question to his own bank that they were dishonoured vide return memo dated 06.09.1995. Plaintiff had also proved certified C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 68 copy of the cheques and return memo, through the court file as produced, through PW1, referred above, as PW1/1, x.PW1/2, Ex.PW1/3 and Ex.PW1/4.
118.Legal notice dated 15.09.1995 also came to be duly proved by the plaintiff as Ex.PW1/6, postal receipts were Ex.PW1/7 and AD card Ex.PW1/8. Said notice was otherwise even proved, since there was a reply received to the said notice, which reply was proved as Ex.PW2/5. This reply was not even disputed or denied by defendant at any point of time. As such being undisputed document, same did not need not to be proved any further. Plaintiff even proved second notice Ex.PW2/6 along with its proof of its dispatch being Ex.PW2/7 to Ex.PW2/9.
119.As regards the extensive cross examination, as conducted by Ld defence counsel, the plaintiff inspite of advanced age etc, being in 70s, faced cross examination quite well, and the defendant has not been able to create any kind of doubt about the genuineness of the C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 69 claim of plaintiff in a totality.
120.PW2/plaintiff has well explained that, after dissolution of the earlier firm, he started business of sale of titles, and the same was under the name and style of M/s Master Glass Enterprises. He used to take tiles from one of the two firms located at Delhi.
121.Though, witness could not orally remember as to how valuation of assets was done, but he stated that, he had already filed a list of machinery, which was also valued. Machinery, furniture, etc. had been assessed for the purpose of valuation.
122.Though, the plaintiff could not recall as to what was the amount/value as assessed, but he volunteered that, he was called by his partners who told him that, they had already assessed the value of the said assets, and that his share had fallen to Rs.5,40,000/. Plaintiff himself had not participated in the valuation of the said properties.
123.As regards lack of knowledge of the plaintiff regarding sales tax C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 70 record of the firm, the plaintiff was not knowing about the same, and infact he explained this, by replying that, all these aspects were being looked after by his other partners. Though, he has admitted; and Ld counsel for defendant has rushed to point out his admission; that firm was being managed by all the partners including plaintiff, the plaintiff in the next breath explained it away by volunteering that the other partners only used to obtain his signatures, as and when and where they used to be required. Plaintiff/PW2 stated that at the time of sale of the entire machinery, his signatures had been obtained by his partners, but the same had been without his participation and consent.
124.Though, no doubt, there are minor discrepancies in the testimony of the plaintiff, but in view of relevant sections of Negotiable Instruments Act, presumption under law is, that the holder of a chque in due course is holding cheque in due course and that there is lawful consideration behind the issuance of the cheque. This presumption is C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 71 rebuttable and could have been rebutted by the defendant. In view of findings on issue no.4, above, whereby the defendant failed to establish, that the amount mentioned in the cheques had been paid in lieu of a loan allegedly granted to plaintiff by defendant, there is no other material on court file to rebut the said presumption under law.
125.Defendant has never disputed his signatures on the cheues in question, and all that his defence was about granting of loan, which fell through in view of findings on Issue No.4, above.
126.Therefore, whether plaintiff could recall exact number of machinery or their exact value, etc, would not have been even of much relevance for that matter.
127.As regards documents relating to dissolution deed, also as above referred, it is defendant (accused in the complaint case) who put this suggestion to plaintiff (complainant in the criminal proceedings) that cheques in question had been given by defendant to plaintiff at the time of settlement of account of the said firm. By this kind of C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 72 suggestion, it stood established that there was a firm in the name and style of M/s Modern Glass Tiles Industries, subsequently that the said firm had suffered from dispute between partners, and thirdly that, the said dispute had been settled, and as part of the said settlement, some of the machineries had been sold, and in lieu of which, defendant had admittedly made payment by cheques in question to the plaintiff.
128.Reference by Ld counsel for the defendant to certain portions of the cross examination i.e. inability of the plaintiff to have produced documents relating to dissolution deed, and details of investments in the firm, all these would lose any relevance in view of the fact, that signatures on the cheques were not disputed. Presumption under provisions of the Negotiable Instruments Act could not be rebutted by defendant, and therefore what stands established is, that the cheques were issued by defendant towards lawful consideration i.e. sale price of machinery, etc, sold at the time of settlement of C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 73 account. Presumption could not be rebutted, and therefore, claim of the plaintiff, based on two cheques, in view of dishonour of the said two cheques, has to be accepted.
129.Ld. Counsel for the defendant has put much emphasis on the fact that, inspite of order of the court, and even of the Hon'ble High Court as well as Hon'ble Supreme Court, the plaintiff could not produce documents relating to partnership deed, etc and the Income Tax Returns, etc, was a little disproportionate, in view of the fact that, the factum of the existence of the firm has also stood established by own suggestion of defendant given during the cross examination of the plaintiff in the criminal complaint case concerned. The factum of existence of firm, arising of the dispute and the settlement of the dispute needs no further proof, being admitted and undisputed case at both sides, as per the suggestion given by defendant to the plaintiff in the criminal proceedings.
130.Plaintiff has even otherwise successfully explained that, though it C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 74 was correct that, he had not filed any document in the court, despite said order, the said documents were not in his possession. He could not tell the sales tax number , ward number, etc, even if particulars were to be given to him. Witness sounds quite convincing, when he stated that he made efforts to trace out the sales tax ward number of the firm, but the same was not disclosed to him by the erstwhile partners. Firm was being actively looked after by other partners, and hence, the plaintiff could not know through whom they used to file the same. Plaintiff was clear in his mind that atleast he himself did not use to file said returns.
131.Though the witness admitted that, earlier in his deposition, he had stated that, he had not filed income tax returns, but witness then explained this by stating that this had been so deposed by him under impression that, he was being asked about returns of the firm, and not his individual returns. As far as question regarding his individual interest was concerned, he has quite candidly acknowledged that, he C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 75 had never filed in person IT returns ever since he was inducted as partner in the firm since the year 1993 - 1994. Prior to this order, he filed IT returns for one or two financial yeas.
132.But all these questions hardly even had any relevance or bearing on the issue at hand. Only issue at hand was that, while defendant was claiming that, the cheques had not been paid towards the sale price of machinery, etc, but had been issued towards a loan; defendant also having failed in his defence, it is the presumption under the law i.e. Negotiable Instruments Act, which should prevail.
133.In other words, there is no material before the court to treat the presumption as having been rebutted by any material to the contrary, and therefore it has been established at the end of plaintiff, that defendant by his own admission had indeed issued the cheques in question, for valid consideration, attached to them. Since said two cheques were admittedly dishonoured, the plaintiff would naturally be entitled to the said amount.
C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 76
134.Witness has strongly denied suggestion being put to him repeatedly that, he was not deliberately disclosing record of IT Returns or that he was not entitled to any amount. Taken in a totality, by his own testimony, witness has well explained the reason for non production of the said documents on the record, mainly that the firm had already been dissolved on account of dispute between partners, three partners being on one side and plaintiff left alone on the other side, three partners seem to have had access over the records of the firm, and they simply did not allow the fourth partner into the operation of the firm, including at the dissolution stage, and they simply seem to have obtained his signatures, more by way of formality as and when they were required. In these circumstances, it was natural, that once the firm got dissolved, the plaintiff was simply handed over his share as assessed by the other three partners, which the plaintiff quietly accepted, without any protest or questions raised; and he went and presented the cheques in question, which bounced. C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 77
135.Defence of the defendant regarding story of the loan allegedly extended by him, already having fallen through, relevance of question regarding IT returns, etc already lost any significance whatsoever.
136.Cheques in question were drawn in the individual name of the plaintiff being towards his share in the sale proceed of the machinery, etc, which he quietly accepted, but when he could not encash the amount of the cheques, he filed the suit for recovery in his individual capacity.
137.Plaintiff denied suggestion that neither any list had been prepared nor it had any signatures of Kulanand Kumud or Avdesh Kumar. Witness has explained, thereafter, that the original copy containing list of goods was with Sh. Avdesh Kmar (defendant in other suit) and Kulanand Kumud (defendant of the present case), and though he admitted that neither Kulanand Kumud nor Avdesh Kumar were partners , but he came up with a reasonable explanation by way of C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 78 volunteering , that it was the brothers of Sh. Avdesh Kumar i.e. one Sh. Madhu Bansal and Sh.Subhash Yadav who were partners, and that is how and why copies of the list were in his possession.
138.Upon perusal of the main issue involved in the suit, and main defence on merit, the entire length of cross examination of PW2/plaintiff seems to have totally diverted to an irrelevant path, wherein main question has been left far behind, and this cross examination has not much relevance, and should be ignored in the light of the simple fact that, defendant failed to rebut the presumption of law raised u/s 139 of the NI Act, inspite of sufficient opportunities. He was not able to prove that the transaction was one of the loan, and that money had been given towards loan, and that collateral security was to be furnished by the plaintiff, after giving of the cheque, and which security was not so furnished, and that is why cheques got stopped. This version of defence seems to be hollow on the face of self contradictions, already discussed at length under C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 79 relevant issues i.e. issue no.4, and findings thereon.
139.Infact all the endless questions being put to the plaintiff/PW2 regarding his income returns, sales tax returns, etc running into several pages, lost all importance and relevance in the light of evidence already on record, and the same should be ignored, and not relevant to the controversy any more.
140.PW1, however, has examined his son Sh. Suresh Chand as DW3 and who has examined himself on his affidavit in support of claim of the plaintiff, and he has clarified certain ambiguity in the claim by stating in para 1 of his affidavit that his father was a partner in firm M/s Modern Glass Tiles Industries having its office at Vigyan Vihar, Delhi, and said partnership was comprising four partners namely Smt.Veena Bansal, Shri Akhilesh Kumar Yadav, Shri Subhash Kumar and plaintiff himself. A partnership deed had been duly executed between them in the year 1993 i.e. on 01.09.1993. Due to differences, partnership could not continue, and as a result C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 80 whereof the firm had been taken over by defendant Sh. Kulanand and Sh. Avdesh Kumar (defendant of other suit), and they had given three cheques for a sum of Rs.5,40,000/ towards full and final settlement of the claim of his father i.e. plaintiff in the said firm, and out of the said amount of Rs.5,40,000/, two cheques i.e. Rs.1,20,000/ and Rs.1,50,000/ had been issued by defendant Sh Kulanand, and for remaining sum of Rs.2,70,000/ cheques had been issued by Sh. Avdesh Kumar (defendant in another suit), and as such total amount of Rs.5,40,000/ was towards full and final settlement towards share of the plaintiff in the said business. Said PW3 claimed to have been present at the time when cheques were handed over.
141.PW3 upon was cross examined, but nothing much could be elicited from the witness, which can be said to be of any help to the defendant's case. Witness replied that he did not know if the firm had not dissolved, then the machinery would have been sold in the name of the firm.
C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 81
142.But this kind of reply are not of much help to the case of the defendant, as the defendant himself has issued cheques in question, in the individual name of the plaintiff, and not in the name of the firm, and if the firm was still in existence, the cheques would not have been issued by defendant in the name of the plaintiff.
143.The material on record speaks otherwise, and only goes on to establish that the firm had been dissolved on account of a dispute, and later on some of its partners or their relatives had taken over the business, and continued with it under different name and style i.e. Maxton Glass Tiles Industries. What in the present case only seems is that operation of the original business was being carried on by three other partners to the exclusion of the plaintiff, keeping him in dark, and after the quarrel occurred, the three partners simply assessed the share of the plaintiff, and the plaintiff accepted the same without any protest or any question whatsoever. But what all emerged is that the plaintiff seems to have been dputed, and he was C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 82 deprived even of the share which he had accepted without any protest or question, and in an under hand manner.
144.Ld. Counsel for the plaintiff during course of arguments has raised many valid points, firstly, that if the plaintiff had indeed misused the cheques issued by the defendant as was being alleged, and if indeed he failed to furnish collateral security to the satisfaction of the defendant as was being alleged, the defendant would atleast have lodged a complaint against the plaintiff with the police or some authority, but he admittedly never filed any such complaint.
145.Even otherwise, the defendant Kulanand's claim that he had stopped payment of the cheques in question, was belied by actual document referred i.e. in the form of Ex.PW1/3, which referred to the return memo, and containing reason as being Funds Insufficient, and not the payment stopped. Therefore, as correctly contended by Ld counsel for the plaintiff, the entire foundation of the defence versions has been quite self contradictory at the initial stage itself. C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 83
146.Infact, there is a document filed, which is certified copy at page 453 of the court file, and which happens to be an Article of Association, and containing the list of names and descriptions of the Directors and which list containing names of defendant Sh. Kulanand Kumud and as also defendant of the other case i.e. Awadesh Kumar, which would go to a large extend to show that assets had been bought by another company of whom the defendant of this case and of the other case happens to be directors.
147.Ld counsel for the plaintiff has very well pointed out to the self contradictions between the statement of defendant Sh. Kulanand Kumud, which was recorded as being accused in a connected criminal proceedings as DW2, certified copy of which was at page 683 of the court file, and as per which DW2 therein had stated that he had no business with Sh. Awadhesh Kumar, the defendant of the other suit at any point of time. In order to contradict this, Ld counsel for the plaintiff referred to page 453, wherein both of the said C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 84 defendants of separate cases were shown as directors in one and the same company i.e. MMG Tiles Pvt Ltd,.
148.It is on the same page that DW2 Kulanand Kumud also admitted it as correct that cheques in question were issued by him to plaintiff towards purchasing his share in the firm Modern Glass Tiles Pvt Ltd in this case (page 683).
149.From the testimony of the plaintiff and from the entire evidence, coming up in this case, in totality, it does seem that the present case was one such case, where the plaintiff signed certain blank papers, and gave them to his partners in good faith, who later on worked out a share from the sale of machinery, etc and informed it to the plaintiff, who accepted the same without any question, and later on even the blank papers obtained from him, also came to be misused. Thus, even the share that was worked out for him by other three partners and which was accepted by him, without any protest, even that share he was got deprived of by way of a dishonour of the C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 85 said cheques.
150.It is an admitted fact that the defendant had not denied his signatures on the cheques, and the same shows that defendant of the present case and the said three partners happened to be hand in glove in this entire episode, wherein plaintiff seems to have been taken for a ride, and blank papers were later on misused, as for the purpose of drawing an agreement (alleged loan agreement).
151.Ultimate object of the entire legal proceedings is to do justice, by appreciating the testimony of the witnesses and the surrounding materials which come up on record, and from which, in the present case, it can be said that, the plaintiff was holder of the cheques in question, in due course, and defendant failed to rebut the said presumption. Since the cheques were got dishonoured by defendants, and the plaintiff was deprived of his rightful money, there was no reason why plaintiff should be denied the relief as sought. Accordingly, Issue No.6 is decided in favour of plaintiff, and the C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 86 plaintiff is held entitled to the amount of the said two cheques. Issue No.7: To what amount the plaintiff is entitled?OPP
152.In view of my findings on issues no.4 and 6 above, the plaintiff is held entitled to a sum of Rs.2,70,000/ in principal, being amount of said two cheques, besides pendentelite and future interest @ 12% per annum, till realizataion.
Relief:
Suit is decreed in favour of the plaintiff for a sum of Rs.2,70,000/ in principal, besides pendentelite and future interest @ 12% per annum, till realizataion.
Decree sheet be prepared accordingly.
File be consigned to record room.
Announced in the open court on 03.09.2016 (SUJATA KOHLI) Additional District Judge, Central District, Delhi C.S. No. 447/14/98 Case No.18275/16 M.L. Gupta vs. Kulanand Kumud Page no. 87