Delhi High Court
Bpl Limited vs Hindustan Traders Co. & Ors. on 11 December, 2008
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 331/2005
%11.12.2008 Date of decision: 11.12.2008
BPL LIMITED ....... Plaintiff
Through: Ms. Jhuma Bose, Advocate
Versus
HINDUSTAN TRADERS CO. & ORS. .....Defendants
Through: None
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1. Whether reporters of Local papers may
be allowed to see the judgment? YES
2. To be referred to the reporter or not? YES
3. Whether the judgment should be reported
in the Digest? YES
RAJIV SAHAI ENDLAW, J.
1. The plaintiff has instituted the suit for recovery of Rs.25,28,847/- from the defendants jointly and severally together with pendente lite and future interest. The defendants were proceeded ex-parte vide order dated 25th April, 2007. The plaintiff has led its ex-parte evidence in the form of affidavit (Ex. PW1/A) by way of examination in chief of its sole witness Shri R. Sathyanarayanan. The witness has also tendered documents Exhibit P1/1, Exhibit P1/1A, Exhibit P1/2 - P1/61 and Exhibit P1/62 - Exhibit P1/64.
2. It is inter-alia in the case of the plaintiff and in evidence that the plaintiff is engaged in the business of manufacturing and CS(OS) 331/2005 Page 1 of 8 marketing of electronic goods; that the defendant No.1 of which the defendant No.2 is the sole proprietor was the dealer of the plaintiff; that the plaintiff used to supply electronic goods to the defendant No.1 and raised invoices on the defendant No.1; that the defendant No.1 was to pay the amount of the invoice on or before the due date; that it was however agreed by the defendants that if they fail to make the payments on time they will pay interest at 24% per annum on the value of the invoice; that the plaintiff effected the supply of goods on the defendants and the defendants used to make on account payments from time to time against the various invoices raised by the plaintiff; that the said payments were adjusted against the various invoices by the plaintiff after giving due credit as and when the payments were received; that the plaintiff filed CS(OS) No.2742/1999 in this court for recovery of Rs.39,67,465.19 then due from the defendants; that during the pendency of the aforesaid suit the matter was settled and the plaintiff agreed, against the then outstanding amount of Rs.29,17,253/- as on 25th January, 2001, to pay a sum of Rs.19,17,253/- only in full and final settlement; that the plaintiff in the circumstances withdrew CS(OS)No.2742/1999 on 3 rd September, 2001; that the plaintiff thereafter continued transacting business with the defendants and the defendants issued to the plaintiff various cheques for a total a sum of Rs.13,51,856/- towards outstanding for supplies made till the date of institution of this suit; that out of the total cheques for Rs.13,51,856/-, 28 cheques for a total of sum of Rs.7,77,795/- were returned dishonoured to the plaintiff for the reason of insufficiency of funds in the bank account of the defendants; that the plaintiff, in the circumstances did not even present the remaining 17 cheques for a total sum of Rs.5,74,061/-; that besides the cheques for a total sum of Rs.13,51,856/-, supplies against other invoices for a total sum of CS(OS) 331/2005 Page 2 of 8 Rs.5,04,671.33 were also made by the plaintiff to the defendants and for which no cheques were issued. The plaintiff, thus, claimed that a total principal sum of Rs.18,56,527.33 (Rs.13,51,856/- for which cheques were issued + Rs.5,04,671.33 for the balance amount for which cheques were not issued) was due from the defendants to the plaintiff. The plaintiff besides the said amount claimed interest of Rs.6,72,320.46 at 12% per annum on the outstandings, till the date of institution of the suit, making the suit for recovery of Rs.25,28,847/-. The plaintiff also claimed pendente lite and future interest.
3. Even though, the evidence aforesaid of the plaintiff remains unrebutted by the defendants but I find that the entire claim of the plaintiff in the present suit is not within time. Section 3 of the Limitation Act, 1963 provides that a suit instituted after the prescribed period "shall be dismissed, although limitation has not been set-up as a defence". Even in a matter where defendant is ex- parte, the claim which is found to be barred by time cannot be allowed.
4. Before discussing the aspect of limitation, I may also notice that the plaintiff besides the defendants No.1&2 (supra) has also impleaded defendant No.3 who is stated to be the authorized signatory of the defendant No.1. All the cheques aforesaid issued by the defendant No.1 to the plaintiff are signed not by the defendant No.2 as the proprietor of the defendant No.1 but by the defendant No.3 as the authorized signatory of the defendant No.1. Section 28 of the Negotiable Instruments Act, 1881 provides that an agent who signs his name to a promissory note, bill of exchange or a cheque without indicating thereon that he signs as agent or that he does not intend thereby to incur personal responsibility, is liable personally on CS(OS) 331/2005 Page 3 of 8 the instrument, except to those who induced him to sign upon the belief that the principal only would be held liable. Section 7 of the said Act defines the maker of a cheque as the drawer. Section 30 of the Negotiable Instruments Act makes a drawer of a cheque liable to compensate the holder. Thus, in the present case, as far as the claim on the basis of the cheques signed by the defendant No.3 is concerned, the defendant No.3 having signed as a cheque as authorized signatory and having not disclosed that he does not intend to incur personal liability, would be liable for the amount, if any, found due on the said cheques.
5. Coming back to the issue of limitation, the plaintiff has in the plaint set out a table of the cheques issued by the defendants and returned dishonoured to the plaintiff as under:-
Sr. Cheque No. Date Amount (Rs.)
No.
1. 252010 20.12.2001 25,921
2. 252012 22.12.2001 37,721
3. 252024 24.12.2001 40,000
4. 252023 23.12.2001 36,931
5. 252033 26.12.2001 14,520
6. 252038 28.12.2001 42,500
7. 252037 27.12.2001 26,380
8. 252048 29.12.2001 52,096
9. 252058 31.12.2001 21,779
10. 252059 08.01.2002 14,800
11. 252551 06.01.2002 11,739
12. 252550 05.01.2002 28,190
13. 252569 09.01.2002 30,000
14. 252568 08.01.2002 24,220
15. 252567 18.01.2002 14,800
16. 252581 19.01.2002 22,200
17. 252587 17.01.2002 32,240
18. 252595 18.01.2002 23,337
19. 252719 23.01.2002 56,980
20. 252752 22.12.2001 26,220
21. 252798 30.01.2002 45,545
22. 252022 02.01.2002 25,169
23. 252522 09.01.2002 17,580
24. 252068 09.01.2002 15,179
25. 252585 20.01.2002 15,179
26. 252031 07.01.2002 17,580
27. 252598 20.01.2002 43,948
28. 252049 09.01.2002 15,041
CS(OS) 331/2005 Page 4 of 8
Similarly, the plaintiff has in the plaint set out a table of the cheques issued by the defendants but not presented by the plaintiff as under:
Sr. Cheque No. Date Amount (Rs.) No. 1. 252562 07.01.2002 26,220 2. 252577 15.01.2002 17,480 3. 252586 16.01.2002 40,000 4. 252716 22.01.2002 24,357 5. 252722 24.01.2002 28,655 6. 252732 27.01.2002 35,000 7. 252733 28.01.2002 42,499 8. 586955 01.02.2002 59,339 9. 586954 31.01.2002 59,339 10. 586956 02.02.2002 40,000 11. 586957 03.02.2002 46,439 12. 252751 30.01.2002 45,545 13. 252725 26.01.2002 35,158 14. 252723 25.01.2002 17,579 15. 252724 25.01.2002 26,369 16. 252730 28.01.2002 15,041 17. 586976 05.02.2002 15,041
The plaintiff has in the plaint also set out a table of the invoices for the other supplies made by the plaintiff to the defendants and against which no cheques even were issued, as under:
Sr. Invoice No. Date Amount (Rs.)
No.
1. 204808 16.11.2001 20434
2. 204901 19.11.2001 97158
3. 205114 24.11.2001 34730
4. 205334 29.11.2001 29600
5. 205438 30.11.2001 26220
6. 205560 03.12.2001 26380
7. 205574 04.12.2001 58794.66
8. 205623 06.12.2001 14519.34
9. 205634 07.12.2001 11739
10. 205648 07.12.2001 60519
11. 205682 08.12.2001 29979
12. 205736 11.12.2001 45010
13. 205753 12.12.2001 30150.73
14. 205754 12.12.2001 17379
15. 255257 21.11.200,1 2058.60
CS(OS) 331/2005 Page 5 of 8
6. As far as the limitation qua the amount for which cheques were issued, the limitation prescribed in Article 14 of Schedule 1 of the Limitation Act for the recovery of price of goods sold and delivered, as the transaction between the parties herein was, where no fixed period of credit is agreed upon is prescribed as three years commencing from the date of the delivery of the goods. Article 15 concerns a suit for the price of goods sold and delivered, to be paid for after the expiry of a fixed period of credit. The limitation of three years in such cases commences from the date when the period of credit expires. Though, the witness of the plaintiff in his affidavit aforesaid deposed in para 14 that the defendants were liable to pay the amount of the invoices on or before the due dates, a perusal of the invoices-cum-challans proved by the plaintiff does not have a column of due date. It does have a column of payment terms, but nothing is filled therein. In the absence of any pleading or evidence to the effect that there was a fixed period of credit and in the absence of the invoices-cum-challans of the plaintiff showing so, there is no option but to hold that the case would fall in Article 14 (supra) and the period of three years would commence from the date of delivery of the goods.
7. Thus, as far as the claim for Rs.5,04,671.33 is concerned and for which as aforesaid, the defendants No.1&2 only and not defendant No.3 are liable, it has to be seen as to how many of the invoices-cum-challans are of a date within three years prior to the institution of the suit. The documents proved being invoices-cum- challans, the date thereof has to be taken as the date of delivery.
8. The suit was instituted on 12th January, 2005. A perusal of the invoices for total sum of Rs. 5,04,671.33/-as reproduced herein above would show that none of the invoices are within the period of three CS(OS) 331/2005 Page 6 of 8 years prior to the institution of the suit. Thus, the claim for Rs.5,04,671.33/- is barred by time.
9. As far as the claim for the price of invoices for which cheques aforesaid are stated to be issued, even though the date of invoices against which the cheques were issued may be of more than three years prior to the institution of the suit, issuance of the cheques for the same would give a fresh cause of action to the plaintiff. The next question which arises is as to from which day three years to be counted with respect to the cheques which have been dishonoured. It has been held in Ashok K. Khurana vs. M/s Steelman Industries AIR 2000 Delhi 336 DB and Technofab Engineering Ltd. vs. Nuchem Weir India Ltd. 136 (2007) DLT 223 that the limitation commences from the date of the cheque and not from the date of presentation or dishonor thereof. The relevant Article of Schedule 1 to the Limitation Act is Article 35. Thus, it has to be seen as to how many of the cheques, whether presented or not are of a date within three years prior to the institution of the suit on 12th January, 2005. I find only the cheques at serials No. 15,16 to 19, 21, 25 and 27 in the table of the cheques dishonoured and cheques at serials No. 2 to 17 in the table of the cheques not presented to be of a date within three years prior to the institution of the suit. Thus, the amount thereof only, total of which comes to Rs 8,02,070/- is within time. The plaintiff would thus be entitled to a decree in the said amount only towards principal, the balance principal amount being barred by time.
10. The next question is of the rate of interest. The plaintiff has in the plaint pleaded the agreement for payment of interest at 24% per annum. However, the witness of the plaintiff has not deposed of interest at such rate at any time in the earlier transactions between CS(OS) 331/2005 Page 7 of 8 the parties being paid. The plaintiff itself has claimed pre-institution interest @ 12% per annum only. The invoices-cum-challans of the plaintiff do not bear any provision for interest. However, transaction between the parties, even though, of sale of goods, being a commercial transaction, I find the claim for interest at 12% per annum to be reasonable. The plaintiff is held entitled to pre- institution interest at 12% per annum from the date of each of the cheques, claim where for is found to be within time, till the institution of the suit. However, post institution of the suit, the record reveals that the plaintiff has been highly negligent in prosecuting the suit. The plaintiff failed to take steps for service of the defendants after the institution of the suit till 12th September, 2006, as noticed in the order of that date. The plaintiff thereafter also sought adjournments at each and every stage. In the circumstances, I find the plaintiff entitled to interest pendente lite @ 6% per annum only in the principal amount found out as aforesaid.
11. As far as the future interest is concerned, the plaintiff would be entitled to interest on the principal amount at 6% per annum only from the date of the decree and for a period of 90 days, in which time the defendants are expected to pay the decretal amount. However, for the delay, if any, by the defendants in payment of decretal amount beyond 90 days, defendants shall be liable for interest on the principal amount at 18% per annum. The decree sheet be drawn upon accordingly. The plaintiff shall also be entitled to proportionate costs of the suit.
RAJIV SAHAI ENDLAW (JUDGE) December 11, 2008 PP CS(OS) 331/2005 Page 8 of 8