The India Fitness Connect Pvt Ltd v. Ozone Spa Pvt Ltd & Anr

1. The present intra court appeal under Order XLIII of the 2018:DHC:3501-DB Code of Civil Procedure, 1908, read with Section 13 of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, is directed against the order dated 15.1.2018 passed by the learned Single Judge in IA No.7012/2017

2. The appellant herein, The India Fitness Connect Pvt. Ltd. has filed CS(Comm) 421/2017 against Ozone SPA Pvt. Ltd. and Naveen Khandari, Promoter and Managing Director of the former, who are the defendant Nos.[1] and 2 in the suit and respondent Nos.[1] and 2 in the present appeal. The suit is for declaration that the agreement with defendant No.1 (Ozone SPA Pvt. Ltd.) is null and void ab initio, being without consideration and induced by fraud and deception; a decree of mandatory injunction directing the defendants to handover all cheques issued by the plaintiff and to injunct the defendants, their representatives and assigns from presenting the cheques issued for payment. In the alternative, it is prayed that a decree of mandatory injunction be passed directing the defendants to forthwith deliver and destroy the cheques issued by the plaintiff. Lastly, prayer has been made to pass a decree for recovery of money of Rs.28,44,180/- in favour of the plaintiff and against the defendants along with pendent lite and future interest @ 18% p.a.

3. The impugned order rejects the application for interim injunction filed by the appellant, after referring to the agreement dated 21.4.2016, which is rather a short one and reads as under:

“A. WHEREAS First Part/OSPL is the absolute owner and in peaceful possession of D27 Defence Colony (hereinafter referred to as "the Land") and has developed and constructed a building thereon known as "Ozone Spa Pvt Ltd" (the "Building").

B. WHEREAS as per the discussion and meeting held on 14.04.2016 at Ozone Spa Pvt Ltd, Defence Colony, New Delhi, wherein it was CS(COMM) 421/2017 discussed and agreed that Second Part will use the space at Ozone Spa Pvt Ltd herein referred to as First Part for advertising its equipments till 01st September 2020 and that the Second Part in return will pay Rs. 2,51,23,590/- for 53 months i.e.Rs. 4,74,030/- per month including service tax @14.5% as expenses/rent for the usage of space for advertising the equipments at the premises of First Part i.e. D-27, Defence Colony, New Delhi 110024 till 53 months.

C. WHEREAS if there is any change in the service tax as per the guidelines of Government of India then in that case the Second Part agrees to pay the differential amount of the service tax and all other applicable taxes to the First Part.

D. WHEREAS it is of the essence of this agreement that the said agreement can neither be revoked nor terminated until entire payment i.e. Rs. 2,51,23,590/inclusive of service tax is paid.

4. The appellant accepts and admits execution of the agreement and that they had issued 53 cheques of Rs.4,74,030/-, inclusive of service tax @ 14.5% payable each month as expense/rent for use of space for advertisement and equipment, in terms of the said agreement. Six cheques of Rs.4,74,030/each have been encashed and the appellant has accordingly sought recovery of Rs.28,44,180/- from the defendants.

5. Learned counsel for the appellant has drawn our attention to the e-mails exchanged between the appellant and their principal, namely, M/s. Precor Inc., a company based in U.S.A., who, it is stated, are manufacturers and suppliers of gymnasium equipment. It is submitted that the first defendant is liable to make substantial payment to the earlier distributor of M/s. Precor Inc., namely, M/s. Gympac Fitness Systems Private Limited. The submission is that there was a connect between the agreement dated 21.4.2016 executed between the appellant and the first defendant and payment due and payable by the first defendant to M/s. Gympac Fitness Systems Private Limited.

6. The impugned order refers to the contention raised and records that this could be a matter of evidence to be adduced and led. Appellant has to establish the assertions and allegations. Prima facie, the learned Single Judge has observed, the appellant has not been able to discharge onus and establish that the agreement dated 21.4.2016 was vitiated and void. The impugned order also refers to Section 138 of the Negotiable Instruments Act, 1881 („NI Act‟) and rebuttable presumption that the cheques were for discharge of debt or liability. First defendant has initiated proceedings under Section 138 of the NI Act on account of dishonour of cheques. Reference is made to a SMS sent by the appellant to the said defendant, which reads as under:- “Dear Sir We request you not to present the cheques due to the current bank situation. The business has gone down considerably. We will get everything sorted out once the situation becomes normal. Hope you understand. Best Regards.” “29/11/2016 Good morning Sir. Kindly call me back. Need to talk to you. Please.”

7. We find that the aforesaid reasoning given by the learned Single Judge is cogent and befitting. The e-mails referred to by learned counsel for the appellant, it is noticeable, are between the appellant and M/s. Precor Inc. Even if it is assumed that certain dues were payable by the first defendant to M/s. Gympac Fitness Systems Private Limited, there is no privity of contract between the appellant and the first defendant in respect of equipments supplied earlier and prior in point of time. It is not the case of the appellant that any amount is due and payable to them by the first defendant. There appears to be some disconnect in the argument raised, for if the first defendant was in debt and liable, the appellant would not have issued postdated cheques for Rs.2,51,23,590/-, a substantial sum of money, to the first defendant.

8. Contention of the appellant that the defendants had agreed or promised to purchase new equipment for 15 gymnasiums, which were to be set-up and established in the next three years, is not specifically recorded and stated in the agreement dated 21.4.2016. No written contract is pleaded. Learned Single Judge has, therefore, rightly observed that the appellant had not been able to make out a prima facie case and dislodge presumption under Section 139 of the NI Act on the basis of the evidence and material on record. Ocular evidence has to be led by the appellant to establish their case. Once the appellant accepts the agreement was signed, cheques were issued and honoured for six months, we do not think that this is a fit case for grant of interim injunction.

9. We, however, clarify that the observations made by the learned Single Judge in the impugned order and by us in this order are for disposal of the application for interim injunction and this appeal. These would not be treated as binding and final findings on merits.

10. The appeal is dismissed. All the pending applications and caveat are also disposed of. No costs.