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Delhi High CourtIndian Cases

Greaves Limited vs Sandeep Dawar on 25 August 2005

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Delhi High Court
Greaves Limited vs Sandeep Dawar on 25 August, 2005
Equivalent citations: (2006)142PLR22
Author: Swatanter Kumar
Bench: Swatanter Kumar


Swatanter Kumar, J.

1. The plaintiff filed a suit for recovery of Rs. 1,08,646.59 (Rupees one crore eight lakh ninety-eight thousand six hundred forty-six and fifty-nine paise) under the provisions of Order 37 of the Code of Civil Procedure. This suit was instituted on the averments that the plaintiff is a limited company duly incorporated under the Companies Act, 1956, having its registered office at 1, Dr. V.B. Gandhi Marg, Mumbai. It also has its registered office at New Delhi. The plaintiff-company deals in various machinery items, materials, etc. and enjoys a high reputation and enriched status in the business circles. Mr. Mahinder Kumar Jain, the Deputy Manager in the company, who is stated to be conversant with the facts and circumstances of the case had been authorised by the Board of Directors vide resolution dated 29th January, 1999 to sign and verify the pleadings and file the present suit in this Court. He also holds the General Power of Attorney dated 3rd February, 1999 in this regard on behalf of the company. The defendant is the proprietor of M/s. Dawar Polymers, which is carrying on its business at 72, D.S.I.D.C., Okhla Industrial Complex, New Delhi. The plaintiff-company supplied materials and machinery from time-to-time to the defendant, and the defendant failed to make payment of Rs. 77,42,824/-. The plaintiff-company asked the defendant repeatedly to make these payments. The defendant agreed to make the payment of the aforesaid amount as per various cheques details of which have been given in paragraph 6 of the plaint. The same are as under:

“Cheque No. 455927 to 455936 dated 25.10.1997, Cheque No. 455937 to 455946 dated 27.10.1997, Cheque No. 455947 to 455956 dated 28.10.1997, Cheque No. 455957 to 455966 dated 29.10.1997, Cheque No. 455967 to 455976 dated 31.10.1997, Cheque No. 455977 to 455986 dated 1.11.1997, Cheque No. 455987 to 455995 dated 3.11.1997 (69 cheques) each for Rs. 1,00,000/- and the last cheque bearing No. 455996 dated 3.11.1997 for Rs. 1,77,043.24 i.e. 70 cheques for total value of Rs. 70,77,043.24.”

2. The plaintiff-company after receiving the afore-stated 70 cheques presented the same to the Bank which were dishonoured on presentation and after receiving intimation in writing from the Bank, the plaintiff-company served a legal notice dated 22nd November, 1997 and 27th November, 1997 for payment of the said amount of Rs. 70,77,034.24. The cheques were issued as the defendant had already received the goods and as such the plaintiff filed complaint under Section 138 of the Negotiable Instruments Act, 1881 read with Section 420 of the Indian Penal Code. The defendant was summoned in those cases. The proceedings in the complaint case were stayed. The matter relating to and arising from the complaint filed by the plaintiff against the defendant are stated to be pending before the Supreme Court of India. According to the plaintiff, the amount of the cheques have not been paid to the plaintiff, despite the legal notice dated 29th June, 1999, as such the present suit for recovery of money against the defendant for a sum of Rs. 1,08,98,646.59, which includes the principal amount as afore-stated and Rs. 38,21,603.35 on account of interest.

3. From the above noticed facts as they emerge from the pleadings of the parties, it is clear that the parties were carrying on the business for a considerable time and admittedly the defendant had issued cheques in favor of the plaintiff. According to the plaintiff the cheques were issued by the defendant in discharge of their obligation to pay the consideration for the goods which had already been received by them. On the contrary, according the defendant the cheques were given in good faith and were not dated, even though issued in January ’97 and have been used by the plaintiff for filing the present suit in a mala fide manner. The plea taken in the application for leave to defend is also that the claim of the plaintiff is barred by item as well as the plaintiff is not entitled to any interest as none was contemplated even under the alleged agreement dated 29th January, 1999 executed between the parties. The proceedings taken by the plaintiff against the defendant under Section 138 of the Negotiable Instruments Act read with Section 420 of the Indian Penal Code are stated to be pending in appeal before the Supreme Court. The plaintiff has entirely based his claim on the cheques which are stated to have been issued by the defendant and claiming interest thereupon for all the period.

4. In reply to the notice issued by the plaintiff to the defendant, the defendant had stated that they had no mala fide intentions towards the plaintiff and they had already asked the plaintiff to present the cheques as the accounts had already been closed. The other allegations made in the notice were denied. Reply to this notice dated 13th December, 1999 was further amended by another reply dated 18th August, 1999 wherein the defendant completely denied that any amount was due to the plaintiff. It has raised various issues in regard to double billing, lack of bona fides on the part of the plaintiff, and claimed a sum of Rs. 1,69,410.62 in the said notice and also to return the 70 cheques which were alleged to have been issued by the defendant in favor of the plaintiff.

5. At this stage, all that the Court has to determine is whether the averments made in the application for leave to defend gave rise to friable issues or not? Of course, such friable issue must arise out of a bona fide stand taken by the defendant. In the present case, the application for leave to defend, filed by the defendant, does not dispute issuance of cheques, but it is stated that they were not dated and were issued in good faith in January, 1997. They are also attributing definite breach on the part of the plaintiff, in relation to supply of goods. It is averred that the goods were being dumped at stores and shop of the defendant, and the plaintiff had started recovering the dues directly from the customers, thus, damaging the reputation, business and authority to collect sales proceeds from the customers. No correct accounts were rendered to plaintiff they raised a serious dispute in relation to the amount claimed by the defendant. The cheques, which have been placed on record, are written in hand on the date on all the cheques are stamped. The cheques have been issued for different dates. The amounts indicated therein and the handwriting in the different cheques, particularly cheque dated 3rd November, 1997 appears to be of a different person. It is again not in dispute before the Court that parties were doing business for quite some time. The cheques, according to the defendant were issued in the month of January, 1997. In support of this the defendant has filed the counter file of the cheque books which shows that the cheques of the series in question, were issued in the month of February to April. If this stand of the applicant/defendant is accepted, may be the question of limitation would have to be examined by the Court on its merits. As already noticed, in paragraph 6 of the plaint, the plaintiff has referred to the cheque, which is dated 25th October, 1997. The suit of the plaintiff was filed on 23rd/31st October, 2000. If the suit was properly and validly filed on 31st October, 2000, then again some of the claim of the plaintiff may be hit by the plea of limitation.

6. The entire claim of the plaintiff in the suit is not covered under the provisions of Order 37 of the Code of Civil Procedure. There is no contract between the parties to pay interest on the due amount, there are no invoices placed on record vide which the material was received by the defendant from the plaintiff, and that such invoices or bills contained any clause in relation to payment of interest. In absence of a written contract, the Court cannot grant this relief to the plaintiff under the provisions of Order 37 of the Code of Civil Procedure. Suffice it to say that friable issues arise in the present case but in view of the admission of the defendant that they had issued cheques in the present case, but in view of the admission of the defendant that they had issued cheques, the burden to prove that such cheques were not properly and validly issued for consideration is upon the defendant. Thus, in the interest of justice and keeping in view the facts and circumstances of the case and the principle laid down by the Supreme Court in Harprasad v. Allahabad Bank, and in the case of Kiranmoyee Dassi v. J. Chatterjee AIR 1949 Cal. 479. I would grant conditional leave to the applicant/defendant to defend the suit. The defendant would furnish security to the satisfaction of this Court in relation to the claim of the plaintiff for a sum of Rs. 70,77,043.24 only for the principal amount for which the plaintiff had issued cheques.

7. The application for leave to defend is accordingly disposed of, while leaving the parties to bear their own costs.

8. IA No. 6680/2001 also stands disposed of.