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HIGH COURT OF DELHI
JUDGMENT
26/2024 KULJIT SINGH ..... Appellant
For the Appellant : Mr Manmeet Singh Maini, Advocate.
For the Respondents : Mr Shobhik Tanwar, Advocate for R-1.
HON’BLE MR JUSTICE SACHIN DATTA
1. The appellant is an individual and a sole proprietor of concern named M/s G.F. Electronics. The appellant has filed the present appeal impugning a judgment/decree dated 30.05.2023 (hereafter the impugned judgment) delivered by the learned Commercial Court in CS(COMM) 205/2021 captioned Sh. Pawan Goyal v. Kuljit Singh and Another.
2. Respondent no.1, Pawan Goyal (hereafter the plaintiff), is a sole proprietor of a concern named Baba Trading Company. The plaintiff had filed the above-captioned suit for recovery of an amount of ₹8,23,677/- (Rupees eight lacs twenty-three thousand six hundred and seventy-seven only) along with future interest and costs against the appellant (hereafter referred to as defendant no.1) and respondent no.2, who was arrayed as defendant no.2 in the said suit.
3. The aforementioned suit was decreed in terms of the impugned judgment for a sum of ₹8,23,677/- along with pendente lite and future interest at the rate of 6% per annum till realisation of the entire amount. The record indicates that the suit was filed as a summary suit under Order XXXVII of the Code of Civil Procedure, 1908. However, the plaintiff had consented that the said suit be considered as an ordinary suit and be tried, accordingly.
4. The plaintiff claimed that he had been carrying on business with defendant no.1 for several years and used to supply material on credit against invoices. Defendant no.1 (appellant in the present case) used to make payments for the goods supplied in the normal course. The plaintiff claimed that he had in the normal course of business, supplied different articles on various dates against proper invoices. However, the said bills were not paid and resulted in an outstanding liability of ₹8,23,677/-, which was recoverable from defendant no.1. The plaintiff claimed that defendant no.1 had also issued a cheque (Cheque no.783042) dated 16.03.2020 drawn on Indian Overseas Bank for a sum of ₹9,83,677/- to clear his outstanding dues. However, the said cheque was dishonoured by the bank (Indian Overseas Bank) with the remarks “Exceeds Arrangements”. The plaintiff stated that in the circumstances, he issued a legal notice dated 10.06.2020 calling upon defendant no.1 to make the payments as due. Thereafter, the plaintiff and defendant no.1 entered into an agreement dated 07.07.2020, whereby defendant no.1 agreed to pay an amount of ₹9,83,677/- along with interest at the rate of 18% per annum and the costs of legal notice fees quantified at ₹11,000/-, on or before 31.12.2020. He claimed that the said agreement was witnessed by defendant no.2. However, defendant no.1 did not discharge his liability as agreed and apart from making the payment of ₹1,60,000 (Rupees one lac sixty thousand), he failed to pay the balance amount of ₹8,23,677/-.
5. Defendant no.1 filed a written statement contesting the suit. Defendant no.1 claimed that he had “nothing to do” with the transaction. Defendant no.1 alleged that the plaintiff had colluded with defendant no.2 and defendant no.2 had issued cheques without receiving any goods. He claimed that he was not involved in dealing with the plaintiff and only defendant no.2 was involved in the business dealings with the plaintiff. He claimed that certain cheques were signed by him but his signatures were forged on certain other cheques. He also claimed that the cheques were not written in his handwriting. It was defendant no.1’s case that he had no knowledge of the liabilities towards the goods as he had never received the goods and the liability had not been explained to him. He also alleged that there was a conspiracy between the plaintiff and defendant no.2 and immediately on becoming aware of the conspiracy, he made a police complaint and also filed a petition for registration of a case under Section 156(3) of the Code of Criminal Procedure, 1973. He claimed that the plaintiff had filed a suit with an ulterior motive of extorting money from him.
6. On the basis of the pleadings between the parties, the learned Commercial Court framed the following issues: “1. Whether the plaintiff is entitled to recover from the defendants a sum of Rs.8,23,677/- (Rupees eight lac twenty three thousand six hundred and seventy seven only), as prayed in the plaint? OPP.
2. If answer to issue no. 1 is in affirmative, whether the plaintiff is entitled to interest ? If so, at what rate and for which period ? OPP.
3. Relief.”
7. During the course of trial, the plaintiff examined himself as PW- 1 and tendered an affidavit by way of evidence. Defendant no.1 also examined himself as DW-1. Additionally, defendant no.1 also led the evidence of one Sh. Ramesh Lal Grover as DW-2.
8. In its affidavit by way of evidence (Ex.PW1/1), PW-1, essentially, affirmed the contents of the plaint. He also affirmed that the transactions were done between the plaintiff and defendant no.1 through Sunil Ahuja (defendant no.2).
9. He also produced the invoices raised in respect of the goods supplied (Ex.PW1/A Colly); the copy of the legal notice (marked AA); postal receipts (Ex.PW1/B); the Agreement/Undertaking dated 07.07.2020 (Ex.PW1/C); Cheque no.783042 dated 16.03.2020 drawn on Indian Overseas Bank, Vikas Puri Branch for a sum of ₹9,83,677/- (Ex.PW1/D); and the Memo dated 18.03.2020, whereby the cheque was dishonoured with the remarks “Exceeds Arrangement” (Ex.PW1/E). He was cross-examined by the learned counsel for defendant no.1. In his cross-examination, he confirmed that he had met defendant no.1 only twice. He testified that he had supplied the goods as mentioned in the bills (Ex.PW1/A colly) to defendant no.1. He also claimed that the goods were delivered by rickshawala, who was engaged by him. He further affirmed that the cheques for the payments were handed over to him by defendant no.2 (Sunil Ahuja). He was also cross-examined on the issue that he had ever returned the funds to defendant no.2 and he confirmed that on two occasions, the payments received from defendant no.1 had been paid to defendant no.2. He volunteered that this is because he had also received the payment from one M/s Surya Enterprises and such payments had been returned to defendant no.2 as he was told to do so by defendant no.1. In regard to the delivery of goods, he testified that he did not know the exact address where goods were delivered, but claimed that they were delivered to ‘two-three factories’ of defendant no.1 at Khyala. He denied the suggestion that he had played any fraud on defendant no.1.
10. Defendant no.1 was examined as DW1/1 and he too affirmed the averments made in the written statement. He affirmed that “defendant no. 2 was looking after the administrative and operational part of the business of defendant no.1”. He affirmed that all cheques that were issued on the Indian Overseas Bank were not issued by him. He denied that there was any outstanding liability of a sum of ₹8,23,677/- towards the plaintiff. He testified to the effect that he became aware of the dishonoured cheque by defendant no.2 and defendant no.2 assured him that he would manage the plaintiff and therefore, he need not to take the matter seriously. He also confirmed that he had received a legal notice dated 10.06.2020 (Mark-AA) and claimed that was shocked to receive it. He claimed that he immediately informed defendant no.2, who assured him that he would speak to the plaintiff. In addition, he testified that defendant no.2 had spoken to the plaintiff and forced him to agree to make a payment of ₹20,000/- monthly. However, subsequently he became aware that no goods had ever been supplied by the plaintiff to his premises. He claimed that he became aware of the conspiracy that all goods had been received by defendant no.2 and therefore, he made a complaint to the police.
11. Insofar as the Agreement/Undertaking dated 07.07.2020 (Ex.PW1/C) is concerned, defendant no.1 affirmed as under: “d. Agreement /undertaking dated 07.07.2020 which is exhibit herein exhibit PW-l/C. the defendant no.l was manipulatly deceived the defendant no.l as was not aware about the exact contents and later on came to know and false and frivolous contents.”
12. In his cross-examination, he admitted that the Agreement/ Undertaking (Ex.PW1/C) bears his signature. He also affirmed that he and defendant no.2 were partners in a firm named Parth Enterprises. He admitted that he had given the undertaking after the cheque (Ex.PW1/D) was dishonoured by the bank and he had paid an amount of ₹1,60,000/to the plaintiff thereafter from his current account. He also stated that he had a similar issue with another person (Sh. Grover), who had also showed him photocopies of bills and cheques and after examining the document, he found that the cheques did not bear his signatures. He testified that he realised that he had been cheated on that date. It is also important to note that in his testimony, he also affirmed that he “has also claimed GST on the bills raised by the plaintiff”.
13. Defendant no.1 also examined one Ramesh Lal Grover (DW-2), who testified that he was engaged in the business of iron plates and used to supply goods to Sunil Ahuja (Defendant no.2). He stated that defendant no.2 used to make payments by cheques signed by defendant no.1 on monthly basis. He stated that whenever he asked defendant no.2 for depositing the cheque, he would state that defendant no.1 was not in station. However, he never produced any document or any cheque, which were purportedly handed over by defendant no.2 to him.
14. It is apparent from the above that there is no real dispute that the plaintiff had supplied goods against the invoices raised against defendant no.1. The only defence sought to be raised by defendant no.1 is that the said goods were not delivered at his address, but to defendant no.2. And, defendant no.1 was not aware at the material time that the goods had not been supplied to him. The genuineness of the bills, which are exhibited (Ex.PW1/A colly) is also not in any serious dispute. The said bills are tax invoices and it was admitted by defendant no.1 in his cross-examination that he had availed of the GST credit as reflected in those bills. The plaintiff’s assertion that he and defendant no.1 were in business and in the past, had supplied goods and raised invoices was not seriously controverted. Thus, it is evident that in past, defendant no.1 made payments in respect of the invoices raised against the goods supplied.
15. Whilst, defendant no.1 asserts that the cheque for an amount of ₹9,83,677/- (Ex.PW1/D) was not issued by him, he did not seriously dispute that the signature on the cheque were his. It is, thus, established that not only had the plaintiff raised bills on defendant no.1, but he had received a cheque against the said bills in respect of goods supplied.
16. It is also admitted that the cheque issued was returned with the noting “Exceeds Arrangement” by defendant no.1’s banker (Indian Overseas Bank). Defendant no.1 admitted that he was aware that his cheque was bounced.
17. Defendant no.1 explanation regarding dishonour of the cheque is not consistent with his defence. His explanation for not taking any step at that stage was that defendant on.[2] had assured him that he would manage the affairs with the plaintiff. However, his case is that, he later became aware that cheques had been issued against goods that were not supplied by the plaintiff. Thus, on the date of dishonour of the cheque (Ex.PW1/D), defendant no.1 was not aware that the goods had not been supplied. However, if this was the case then there was no question of clarifying any confusion with the plaintiff because even according to defendant no.1, the said amount would have been payable to the plaintiff. However, he testified that he was not aware of the same and did not take any steps at the material time as he was assured by defendant no.2 that he would manage with the plaintiff.
18. However, defendant no.1 had subsequently entered into an Agreement/Undertaking acknowledging his liability to pay a sum of ₹9,83,677/- with applicable interest. The contents of the said undertaking are material and the same are reproduced below: “UNDERTAKING I, Kuljit Singh (Prop. G.F. Electronics, P-1A, Plot no. 78 Vishnu Garden, New Delhi -110018) is here upon sending this letter in reply to the notice dated 15.06.2020 received from Advocate Vikas Sharma on behalf of Mr. Pawan Goyal (Prop. Baba Trading Co., RZ-G-1, Thana Road, Nihal Vihar, New Delhi - 110041) 1 hereby agree for the following things:
1) That I was in business terms with Mr. Pawan Goyal since the last few years and all the transactions were done by Mr. Sunil Ahuja on my behalf and as of today my business firm M/s G.F. Electronics is liable to pay a sum of Rs 983677/- with applicable interest to M/s Baba Trading Co. against the purchase of different articles on different dates from them.
2) That 1 also agree that I failed to make the payments of the goods purchased on time and later issued a cheque, bearing number 783042, dated 16/3/2020 drawn on Indian Overseas Bank, Vikas Puri Branch, to Mr. Pawan Goyal against the outstanding Balance of 983677/- which also returned unpaid due to Exceeds Arrangements reason and the same was returned to Mr. Pawan Goyal from his banker on 03/06/2020 because of COVlD-19 pandemic. So, now I am requesting my supplier Mr. Pawan Goyal through this letter bearing 2 pages to kindly give me a time period of six months to make arrangement of balance in my bank account and I give full assurance to him that I will clear all the outstanding liability with applicable interest (i.e. Rs.983677/ + interest @18%) along with a legal notice fees of Rs. 11000 (for the above mentioned notice) on or before 31st December 2020 without any failure or further delay. I also have full knowledge that now if I fail to do so then my supplier Mr. Pawan Goyal have full rights to initiate criminal as well as civil proceedings against me at the competent court of law at my own cost and damages. Also, We ( Mr. Kuljit Singh and Mr. Sunil Ahuja) are signing this undertaking attached with a copy of the above mentioned returned cheque and return memo issued from the bank freely in all our senses and under no duress i.e. without any mental or physical pressure from Mr. Pawan Goyal or anybody else on his behalf at Bajrang Steel, Vishnu Garden, as this place was mutually decided between Mr. Sunil Ahuja and Mr. Mohit Goyal s/o Mr. Pawan Goyal on their telephonic conversation held on 03.07.2020 at 11:46 PM for having a meeting to discuss about this payment matter along with Mr. Sunil Ahuja. And following the protocol of law and order as I am liable to send a reply to Advocate Vikas Sharma also against the above mentioned notice that was served by him on behalf of Mr. Pawan Goyal, so I am sending a copy of this notice to Mr. Vikas Sharma as well on the address A-17, First Floor, Shankar Garden, Vikaspuri, New Delhi -
110018. Thanking you Date: 07.07.2020 S/d KULJEET SINGH PROP: G.F. ELECTRONICS AT, P-1A, PLOT NO 78, VISHNU GARDEN, NEW DELHI-110018 Witnesses: S/d
1. Mr Sunil Ahuja (D-118, Third Floor, Ajay Enclave Ashok Nagar, New Delhi-110018) (Signature)
2. Mr. Vinesh Garg B-1/192, Vishnu Garden, New Delhi – 110018 S/d (Signature)”
19. Defendant no.1 had admittedly executed the aforesaid undertaking and had acknowledged his liability to pay the amount of ₹9,83,677/- along with interest at the rate of 18% per annum. He had also agreed to pay the legal notice fees of ₹11,000/-. Defendant no.1 had sought six months’ time to make the aforesaid payments. Even, at that stage, no dispute was raised by defendant no.1 regarding nonreceipt of goods. However, defendant no.1’s testimony is wholly inconsistent with his conduct inasmuch as defendant no.1 claims that “no cheque of any amount was ever issued by defendant no.1” and he is a victim of a well-planned conspiracy. Clearly, if no cheque had been issued by defendant no.1, there was no reason for him to acknowledge the same at the material time and to enter into an agreement for making the balance payment.
20. According to defendant no.1, defendant no.2 used to transact business on his behalf. He had also acknowledged that he was his partner albeit in another firm named ‘Parth Enterprises’. Thus, clearly, defendant no.1 would be bound by all the acts of defendant no.2 done on his behalf. Defendant no.1’s case is that the cheques were issued by defendant no.2 but it is not disputed that the cheques issued to the plaintiff were signed by defendant no.1.
21. Defendant no.1’s claim that there was a conspiracy between the plaintiff and defendant no.2, cannot be readily accepted. This is because the evidence on record clearly indicates that (a) that defendant no.1 was fully aware of the bills raised and in fact, had acknowledged that he had availed the GST credit; (b) that defendant no.1 had issued a cheque for payment of the amounts due to the plaintiff; (c) that defendant no.1 was aware that his cheque had been dishonoured and had undertaken to pay the amount over a period of six months. In the given facts, defendant no.1’s claim that he was not aware that no goods had been delivered to him, is difficult to accept. Even if it is accepted that the goods had been delivered at another location, it is clear that it would have been at the instructions of defendant no.2, who was acting on behalf of defendant no.1, at the material time.
22. In the aforesaid facts, we concur with the decision of the learned Commercial Court that the plaintiff is entitled to recover an amount of ₹8,23,677/- along with pendente lite and future interest at the rate of 6% per annum till realisation of the entire amount.
23. Accordingly, the present appeal is dismissed.
ACTING CHIEF JUSTICE SACHIN DATTA, J DECEMBER 06, 2024