Sonu v. Pritika Fashions Pvt Ltd & Ors.

1. Plaintiff has filed the present suit under the provisions of Order XXXVII of the Code of Civil Procedure for recovery of Rs.31,00,000/- together with pendente lite and future interest. The present suit is based on five cheques total amounting to Rs.31,00,000/-, which were dishonoured on presentation due to insufficient funds.

2. Despite the order dated 7.11.2014 passed by the learned Joint Registrar, the defendants have failed to trace and place the application stated to have been filed by the defendants no.1 and 2 under Order XXXVII of the Code of Civil Procedure seeking leave to defend on record. A carbon copy of this application has been handed over in Court today. According to this application, the present suit is liable to be dismissed as it is not maintainable under the provisions of Order XXXVII of the Code of Civil Procedure.

3. Learned counsel for the defendants submits that the defendants are 2014:DHC:7254 entitled to unconditional leave to defend as the plaintiff did not comply with the terms and conditions of the Agreement dated 1.8.2011 and on this ground the present suit is not maintainable and, thus, no amount is payable by the defendants to the plaintiff. It is also contended that the present suit is an abuse and misuse of the process of law and the plaintiff is not entitled to any relief. Learned counsel for the defendants has placed reliance on the Memorandum of Understanding signed between the parties, the original of which has been handed over in Court today. It is also contended that the Memorandum of Understanding filed by the plaintiff is fabricated and the plaintiff has intentionally erased certain clauses from the Memorandum of Understanding.

4. It is also submitted by the counsel for the defendants that the plaintiff has failed to return goods worth Rs.10 lacs to the defendants. Reliance is placed by counsel for the defendants on a legal notice dated 29.5.2013 issued by the defendants to the plaintiff calling upon the plaintiff to return the goods worth Rs.10.00 lakhs, which were illegal withheld by the plaintiff and the plaintiff did not respond to the legal notice and, thus, a triable issue has been raised by the defendants as the defendants would be entitled to adjustment of Rs.10.00 lakhs, if at all the plaintiff is able to prove that he is entitled to a sum of Rs.31.00 lakhs from the defendants.

5. Learned counsel for the plaintiff submits that the defendants had approached the plaintiff and offered the plaintiff to become their selling agent. The defendants had shown the plaintiff some of their showrooms and informed the plaintiff that their showrooms were earning huge profits. Pursuant to the discussion and negotiations, the parties entered into a Memorandum of Understanding dated 1.8.2011. The plaintiff was appointed as their selling agent in respect of the defendants company i.e. M/s Pritika Fashions. Counsel further submits that the defendants had taken a showroom at Shop No.209, Gandhi Nagar, Ghaziabad, Uttar Pradesh, on lease from Mr.Shivam Goel and Mrs.Shika Goel, for the purpose of selling ready made garments, accessories, leather garments, shoes, watches, etc.

6. Counsel also contends that pursuant to the said Agreement, the plaintiff vide Cheque Nos.174227 and 17423 dated 6.6.2011 and 3.9.2011, respectively, made payment of Rs.25,00,000/- to the defendants towards refundable security. It is further submitted that a minimum payment of Rs.50,000/-, per month, was guaranteed to the plaintiff from 1.6.2011. Since the defendants did not pay the agreed sum of Rs.50,000/-, the defendants in discharge of its admitted debts, handed over following five cheques to the plaintiff, as detailed in para 11 of the plaint, however, the said cheques were dishonoured on account of insufficient funds:

(i) Cheque No.10001 dated 1.5.2013 for a sum of

(ii) Cheque No.10002 dated 1.5.2013 for a sum of Rs.5,00,000/-, drawn on Axis Bank Limited, Karkardooma Branch, New Delhi.

(iii) Cheque No.200396 dated 1.5.2013 for a sum of Rs.50,000/-,

(iv) Cheque No.200397 dated 1.5.2013 for a sum of Rs.50,000/-,

(v) Cheque No.200395 dated 5.6.2013 for a sum of

7. Learned counsel for the plaintiff submits that the defence sought to be raised with regard to the alleged goods handed over is false as the defendant was in possession of the shop, in question and, thus, he had full control over the goods and stocks. Counsel for the plaintiff has drawn the attention of the Court to various clauses of the Memorandum of Understanding in support of his arguments. It is further submitted that as per the terms of the Memorandum of Understanding the defendant company was to remain in exclusive possession of the showroom and the plaintiff being the selling agent had no role to claim tenancy over the premises in terms of Clause 1 of the Agreement. The plaintiff also had no right over the stock, which was to be provided by the defendants in terms of Clause 4 of the Agreement. Counsel further submits that the legal notice sought to be relied upon by the defendants was not received by the plaintiff nor the defendants have not placed any proof to show that either the said legal notice was dispatched to the plaintiff or the same was received by the plaintiff.

8. Learned counsel for the plaintiff submits that in the proceedings initiated under Section 138 of the Negotiable Instruments Act the defendants did not lead evidence and the only defence raised by the defendants was that the Memorandum of Understanding between the parties had not been terminated and the security amount was to be paid only after the termination of the Memorandum of Understanding, besides the fact that the plaintiff has misused the blank cheques, which was handed over to them and, thus, the argument was rejected by the trial court. Reliance is placed by counsel for the plaintiff on para 6, 10, 11, 14 and 15 of the judgment of the trial court, which reads as under: “6. Complainant’s evidence was followed by the statement of accused U/s 313 CrPC, wherein, the entire incriminating evidence was put to the accused. During the statement, the accused stated that refundable security amount was to be repaid after termination of the agreement and the agreement was not terminated. Further stated, the complainant misused the security cheques before the payment became due. Accused also stated that cheque Ex.CW1/4 to Ex.CW1/6 were issued for payment of minimum guarantee amount but allegedly minimum guarantee amount was paid in cash. Accused opted to lead evidence in his defence. But the defence was not lead despite given sufficient opportunities. Hence, the opportunity was closed.

10. The first defence pleaded by the accused is that cheques Ex.CW1/2 and Ex.CW1/3 were issued undated on 4.10.2012 as a security towards the refundable amount of Rs.25,00,000/-. The contention of the accused is that the undated security cheques were presented by the complainant before the agreement was terminate and before the payment became due. In simple words, defence is that security cheques were misused.

11. To support of the above contention, the complainant was confronted with the photocopies of the impugned cheques (Ex.CW1/2 and Ex.CW1/3) during his cross examination. The same were admitted by him, hence, the photocopies were Ex.CW1/X-1 & Ex.CW1/X-2. By producing these photocopies, ld. Counsel for the accused sought to establish that cheques were issued undated and same were for security. Now, the legal question is that whether this fact alone is sufficient to arrive at a finding that cheques Ex.CW1/2 & Ex.CW1/3 were issued for purpose of security.