Virender Kumar v. Mool Chand Shripal Jain

1. This Regular First Appeal is filed under Section 96 of the Code of Civil Procedure, CPC by the defendant no. 1 in the suit impugning the judgment of the trial court dated 25.1.2017 by which 2017:DHC:4241 the trial court has decreed the suit for recovery of Rs.7,91,776/- along with interest on account of fuel/diesel purchased by the appellant/defendant no. 1 from the respondent/plaintiff who owns a retail petrol pump outlet of Bharat Petroleum in Delhi.

2. The facts of the case are that the respondent/plaintiff pleaded that the appellant/defendant no. 1 was in transportation business and owned various trucks. It was further pleaded in the plaint that the appellant/defendant no.1 approached the respondent/plaintiff for supply of fuel on credit basis and with respect to which interest at the rate of 1.25% per month compounded quarterly was to be charged. Appellant/defendant no.1 was pleaded to be in default right from the very first bill and outstanding amount kept on inflating on each subsequent bill whereby the appellant/defendant NO. 1 offered to liquidate the outstanding amount in installments by desiring to get a running account with the respondent/plaintiff. It is then pleaded in the plaint that the outstanding amount remained unpaid as in August 2004. It is further pleaded that when credit was obtained and the account to be maintained by the respondent/plaintiff the same was subject to a security deposit, which though was originally waived, but, when appellant/defendant no. 1 sought revival of his account with the respondent/plaintiff then the respondent/plaintiff was given by the appellant/defendant no. 1 cheque as security and which was to be used and encashed in case there were defaults in clearing of the outstanding amount. It is then pleaded in the plaint that the history of defaults in payments continued and last supply was drawn by the appellant/defendant no. 1 in November 2005. It was pleaded that in September 2006 the outstanding amount came to Rs.7,91,776/-. It is then pleaded in the plaint that when the respondent/plaintiff deposited the cheque for recovery of the outstanding amount, the same was dishonored and therefore not only the subject suit was filed but a complaint under Section 138 of the Negotiable Instruments Act, 1881 was also filed and which is pending disposal before the concerned court of Metropolitan Magistrate.

3. Appellant/defendant no. 1 contested the suit and pleaded that the suit is barred by limitation. It was also pleaded that the security cheque which was claimed by the respondent/plaintiff was of a period prior to three years prior to the date of filing of the suit. It was further pleaded that the security cheque was a blank cheque which did not bear any date or amount. Appellant/defendant no. 1, however, did not dispute that he had been taking fuel from the petrol pump of the respondent/plaintiff and that he owned a fleet of ten trucks and was in the business of transportation. It was pleaded in the written statement that the respondent/plaintiff was inflating bills and therefore the credit facility was discontinued since inception itself. It is further pleaded that the appellant/defendant no. 1 in good faith and trust upon the respondent/plaintiff agreed to keep the security cheque with the respondent/plaintiff although no purchases were to be made on credit basis. The suit was accordingly prayed to be dismissed.

4. After pleadings were complete, the trial court framed the following issues:- “1. Whether the plaintiff firm is a registered partnership firm and competent to file the suit? OPP

2. Whether the suit is barred by limitation? OPP

3. Whether the plaintiff has misutilised the security cheque? OPD

4. Whether the plaintiff is entitled for recovery of the amount? OPP

5. Whether the plaintiff is entitled for interest, if so, at what rate? OPP

6. Relief.”

5. Issue no. 2 with respect to limitation has been held in favour of the respondent/plaintiff that the statement of account relied upon by the respondent/plaintiff is not an open, mutual and current account and therefore the suit is not covered under Article 1 of the Limitation Act, 1963. 6.(i) With respect to issue nos. 3 and 4 trial court has held that there is no misutilization of the security cheque and this security cheque was rightly presented by the respondent/plaintiff to clear unpaid invoices Ex.PW1/2 to Ex.PW1/9. Trial court has further held that the respondent/plaintiff has proved that there were purchases by the appellant/defendant no. 1 of the fuel on credit basis and there is no proof for the court to hold that the invoices Ex.PW1/2 to Ex.PW1/9 are for inflated amounts. Trial court also referred to admission of DW-1/Sh. Virender Kumar/appellant that he used to take fuel from the respondent/plaintiff sometimes on credit basis also and that the transactions with the respondent/plaintiff continued in cash or by way of cheque or on credit in the year 2005-06. It was further held by the trial court that the appellant/defendant no.1 admitted that he never gave any notice or any letter to the respondent/plaintiff with respect to alleged discrepancies in the bills because of inflation of the bills on the ground that litres said to be filled in the trucks were less than actually what was filled in. The trial court relied upon the invoices Ex.PW1/2 to Ex.PW1/9 and held that amounts were due to the respondent/plaintiff for the unpaid bills and for which security cheque was deposited. Trial court has held that the security cheque cannot be said to have been misutilized by the respondent/plaintiff because the cheque admittedly is of the bank account of the appellant/defendant no. 1 and also it bears the signatures of the appellant/defendant no. 1. On preponderance of probabilities, trial court has held that the cheque was good for encashment for lawful liability. Trial court also noticed that the respondent/plaintiff served a legal notice Ex.PW1/14 to the appellant/defendant no. 1 and though DW-1 denies giving reply to any such notice but DW-1 conceded in his cross-examination when confronted with the complaint Ex.DW1/P-1 where DW-1 himself has stated that he had sent a reply in response to the legal notice sent by the respondent/plaintiff.

(ii) The aforesaid conclusions have been arrived at by the trial court on the basis of the following paras of the impugned judgment and which paras read as under:- “20. If we consider the evidence of defendants, DW-1 Virender Kumar in his evidence has testified all the above stated facts however, has failed to explain certain necessary details. First of all if according to defendants, cheque was given only for security of outstanding amount, it was necessary for defendant to explain as to when same was issued and under which authority, defendants claim that same could not have been presented for encashment. Law with regard to issuance of any cheque is well settled, upon issuance of a cheque there is a presumption under section 139/118 of NI Act, that it must have been issued towards payment of a legally enforceable debt. No doubt, such presumption is rebuttable. But, defendant was required to give some documentary or specific evidence to establish that the said cheque No. 907997 was not given for encashment or that was given only as security. If cheque was admittedly bearing the signatures of defendant and rest of the details were not filled on the cheque. That by itself does not render the cheque to be not good for encashment of any lawful liability. When it is denied by the plaintiff that cheque was given as security rather positive evidence was given specifically of PW-1, PW-2 and PW- 7, who have testified that said cheque was given for clearing the outstanding amount.

21. The argument on behalf of defendant that such cheque has been misused only to make a time barred claim, appears to be not sustainable when DW-1 in his cross examination has admitted that he has been issuing the cheque for payment of outstanding amount and has also admitted that he continued to have transaction with plaintiff firm in cash or by way of cheque as well as on credit, in year 2005-06 as well. DW-1 further admits that when said cheque returned dishonoured, he had received legal notice from plaintiff which is Ex.PW1/14. However, DW-1 denies giving any reply to such notice of plaintiff but DW-1 was confronted with the complaint Ex.DW1/P[1] of defendant Virender Kumar, in which he himself has stated in that complaint that he had sent the reply in response to the notice sent by plaintiff firm. These facts assume importance and are sufficient to establish that defendant has failed to establish that cheque was not meant for encashment or that it was given only as security. Defendant to my conclusion has failed to rebut the presumption under section 139/118 of NI Act and has failed to establish that cheque was misused by the plaintiff firm. xxxxx xxxxx xxxxx

29. In the present case, if we take into consideration the account statement Ex.PW1/10, wherein all the entries of credit sale of fuel, by plaintiff firm to defendants have been reflected along with different payments received by the plaintiff from time to time, along with the dishonored cheque No. 907997 of Rs.7,91,776/-, one can easily conclude that suit is within limitation because all the transactions regarding different payments made from time to time as well as issuance of different cheques including cheque No. 907997, were carried out within the three years period of accrual of cause of action.

34. Now, if we consider the evidence of plaintiffs, first of all it be noted that there is no dispute to the fact that defendants have been drawing fuel from the outlet of plaintiff firm. It is also not disputed that the arrangement regarding supply of fuel to the trucks of the defendant was not under any written agreement between the parties. Evidently, it was mutual oral arrangement for supply of fuel to the trucks of defendant regarding which the case of defendants simply is that regarding supply of fuel from the plaintiff firm payments have been regularly made and there was no credit running account. If we consider this aspect of the matter, nothing could come out in the cross-examination of PW-1, PW-2 or PW-7 to show that there was never any credit sale of fuel for trucks of defendants. In the entire cross examination of PW-1, it is nowhere suggested to the witness that invoices Ex.PW1/2 to Ex.PW1/9 are not correct or in any way inflated etc. In the absence of any such suggestion coming in the evidence of PW-1, it impliedly means that defendants have disputed raising of such bills by plaintiff firm regarding supply of fuel to the trucks of defendants.

35. In this context, counsel for the defendant has argued that inflated bills were raised by plaintiff firm by charging amount for 400 ltrs, whereas the fuel tanks of the trucks had maximum capacity to store only 350 ltrs. at one time. It is argued that such facts clearly show that claim of the plaintiff was not only exaggerated but patently false. It was also argued that defendants never had any credit accounts in the books of plaintiff as cash amount has been paid on each occasion of drawing fuel from the outlet of the plaintiff firm. Taking such plea on the face of it, first of all it be again noted here that PW-1 is partner of the plaintiff firm who has deposed about the claim of the plaintiff firm but in his cross-examination it is nowhere even suggested to this witness that exaggerated bills have been raised or supply of fuel has been shown to be more than even the maximum capacity of any truck. Such defence on the face of it appears to be convincing but I find that same has not been proved on record, firstly nothing has come in evidence of either of the witnesses of plaintiff. Now, if we consider the evidence of DW-1 Virender Kumar, he though had testified these facts, but in his cross-examination DW-1 had admitted that he used to take fuel from plaintiff sometimes on credit basis also. DW-1 has also admitted that his transactions with plaintiff firm continued in cash or by way of cheque or on credit in year 2005-06. DW-1 further admits that he had never given any notice or letter to plaintiff regarding discrepancies in quantity of liters supplied to the trucks of defendant as mentioned in para 10 of his affidavit. Thus, it is clear that nothing could come out in the evidence of DW-1 or DW-2 Dilbag Singh to establish that plaintiff had inflated their claim by falsely showing larger quantity of liters of fuel supplied than actual supply.