[CASE NUMBER] "[ENTITY] vs. [ENTITY]" DOD: 28.03.2018 IN THE COURT OF [ENTITY]: ADDL.DISTRICT JUDGE-10 (CENTRAL): TIS HAZARI COURTS: NEW DELHI Civil Suit No.18300/16 (Old No.192/07) In the matter of: [ENTITY] Office at- Auto Cars Compound Adalat Road, Aurangabad, Maharashtra Branch Office at 12th Floor, Videocon Tower, E-1, Jhandewalan Exten. New Delhi Plaintiff Versus 1. M/s [ENTITY] through it partnership 5/A34,Tilak Nagar, New Delhi. 2. Mr. [ENTITY], Partner of, M/s [ENTITY], WZ-22, Mukhram Park Extn, Tilak Nagar, New Delhi Defendants Date of Institution of Suit : 31.07.2007 Date of reserving judgment : 05.03.2018 Date of pronouncement : 28.03.2018 SUIT FOR RECOVERY 28.03.2018 J U D G M E N T:
1. By this order, I shall decide the present suit for recovery of Rs. 18,79,537.35/- filed by the plaintiff. It is the case of the plaintiff that they [CASE NUMBER] "[ENTITY] vs. [ENTITY]" DOD: 28.03.2018 are the manufacturer and seller of the various consumer goods and defendant no.1 being a partnership concern and defendant no.2 being a partner of the firm had approached plaintiff for being appointed as a dealer for the sale of the goods. Running account was maintained by the plaintiff and after adjusting all the payments made by the plaintiff a sum of Rs. 18,79,537.35/- was due from the defendant. Despite repeated request, personal visit and telephonic conversation, the amount was not returned. However, two cheques bearing no. 685736 dated 28.02.2005 amounting to Rs. 9,39,767 and cheque bearing no 685737 dated 02.03.2005 amounting to Rs. 9,39,770/- were given which on presentation get dishonoured, Legal notice was issued to the defendants. Despite legal notice the amount was not paid, hence the present suit for recovery was filed.
2. The summons were issued to the defendant who did not appear and were accordingly proceeded ex-parte vide order dated 24.09.2008. Thereafter ex-parte evidence was lead and vide order dated 30.07.2007, ex-parte decree was granted. Thereafter defendant no.2 moved an application for setting aside the ex-parte decree. Vide order dated 22.02.2013, ex-parte decree was set aside. Thereafter written statement was filed by the defendant no.2, in which he was stated that defendant no.1 was dissolved on 08.05.2004 and hence, defendant no.2 was not a partner of the firm, he further stated that assets of the firm taken over by [ENTITY]. It was contended that proceedings u/[SECTION] [ACT], which was initiated by the plaintiff against the defendant no.2 was quashed by the Hon'ble High Court of Jammu & Kashmir vide order dated 24.09.2008. It was further stated that the suit of the plaintiff is hopelessly time barred.
3. Replication was filed. The contents of the WS was denied by the plaintiff and were reiterated. Vide order dated 23.05.2013 following [CASE NUMBER] "[ENTITY] vs. [ENTITY]" DOD: 28.03.2018 issues were framed.
1. Whether the suit has been filed within the period of limitation (OPP) ?
2. Whether the suit has been signed, verified and instituted by a competent person (OPP) ?
3. Whether the defendant no. 1 was dissolved on 08.05.2004 with notice to the plaintiff and the assets and liabilities were taken over by the other partner Sh. [ENTITY] ? If so, to what effect (OPD) ?
4. Whether the plaintiff is entitle to recovery the suit amount from the defendant ? (OPD)
5. Whether the plaintiff is entitle to recover interest on the amount, if any awarded under Issue no.
4 ? If so, at what rate and for which period (OPP) ?
6 Relief.
4. In order to prove its case, plaintiff examined Sh. [ENTITY] PW1 who relied upon the statement of account. In order to prove its case defendant no.2 examined himself as DW-1/ [ENTITY].
5. Ld. Counsel for the plaintiff has argued that plaintiff is entitled to the decree as defendant no.2 has not proved the dissolution deed. He further submits that the suit is filed well within the period of limitation.
6. On the other hand, ld. counsel for the defendant argued that the plaintiff were very much aware about the dissolution of the partnership firm as the plaintiff has filed complaint case u/[SECTION] [ACT] before the court at Sri Nagar in which defendant no. 2 was summoned as an accused and subsequently the Hon'ble High Court of Jammu and [CASE NUMBER] "[ENTITY] vs. [ENTITY]" DOD: 28.03.2018 Kashmir had quashed the proceedings against defendant no. 2 while placing reliance on the dissolution deed.
7. I have heard the ld. counsel for the parties and perused the record. My issue was finding is as under :-
Whether the suit has been filed within the period of limitation (OPP) ?
9. The onus to prove this issue is upon the plaintiff. It is the case of the plaintiff that the suit is well within the period of limitation and has placed reliance on [SECTION] of the [ACT] . On the other hand ld counsel for the defendant submits that the last transaction took place admittedly on 22.06.2004 and the present suit having been filed on 31.07.2007 is beyond three years and therefore is barred by the law of limitation. As per [SECTION] of the [ACT] period of limitation is three years from the balance due on a actual, open and current account where there were reciprocal payment between the parties and the period of limitation would began from the close of the year in which last item admitted or proved is entered in the account.
10. The Hon'ble High Court in [PRECEDENT] has held:-
Where 'A' sells goods to 'B' makes payment towards the price from time to time, there is only a 'single' contractual relationship, namely that of buyer and seller, between the parties. 'A' has demands against 'B' for items sold, but 'B' can be have no 'demands' against 'A'. Such case is not one of the reciprocal demands and thus [SECTION] of the Schedule to the [ACT] corresponding to [SECTION] of the Schedule to the [ACT] will not apply to suits on such accounts".
[CASE NUMBER] "[ENTITY] vs. [ENTITY]" DOD: 28.03.2018 Reliance was also placed by the Hon'ble High Court on the judgment of [PRECEDENT].
11. In view of the law laid down, it cannot be said in the facts of the present case, that there was open, mutual and current account.
Moreover, the plaintiff in its plaint has not pleaded this fact, it has only stated that it was a running account. Therefore [SECTION] of the [ACT] would not have application in the facts of the case.
12. The Hon'ble Delhi High Court in [ENTITY] (Supra) had further held in Para 20 that :
In case of a running and non mutual account between the buyer and the seller, when goods are delivered by the seller to the buyer, the value of the goods is debited in the debit column and when amounts are paid by the buyer to the seller, they are entered in the credit column. The difference is continuously struck in the column for balance. In such a case, when the buyer defaults to make balance payment, the seller's action is not for the price of goods sold and delivered but for the balance due at the foot of an account.
13. It was further held that even [SECTION] of the [ACT] would have no application and there being no article in the Schedule to the [ACT] dealing with suits for recovery of money due on running and current but non mutual accounts, in such circumstances, the residual article viz. [SECTION] applies to such suit.
14. The period of limitation for filing a suit is three years and the same beings to run when the right to sue would accrue when claim was denied in response to legal notice. The legal notice was issued on 13.4.07 vide Ex. PW1/B. Hence the suit which was filed on 31.07.07 is well within the period of limitation. Accordingly this issue is decided in favour of the plaintiff and against the defendant.
[CASE NUMBER] "[ENTITY] vs. [ENTITY]" DOD: 28.03.2018
15. ISSUE NO.2 Whether the suit has been signed, verified and instituted by a competent person (OPP) ?
16. The onus to prove this issue is upon the plaintiff. It is the case of the plaintiff that Sh. [ENTITY] was duly authorised to file the present case. However ld. Counsel for the defendant submits that there is no board resolution in the eyes of law which authorises the plaintiff to file the present suit.
17. The power of Attorney in this case was exhibited as PW1/1 and the board resolution was Ex.PW1/2. In cross-examination PW 1 has stated that the Managing Director of plaintiff had been authorised by Board of Directors of the plaintiff vide resolution for executing Power of Attorney. He further stated that Ex,.PW1/2 is the resolution by which the managing director were authorised to execute the power of attorney. Subsequently he produced the minute of which is exhibited as Ex.PW1/P1 .
18. The perusal of minutes shows that Mr. [ENTITY] has been clearly authorised to conduct the said suit. The minutes also record that power of attorney granted to [ENTITY] has not been revealed and is still continuing. This is a clear case of ratification by these Minutes of Meeting. The Hon'ble Supreme Court in [PRECEDENT], has held that:
[SECTION] [ACT] as a Company is a juristic entity, it can duly authorise any person to sign the plaint or the written statement which would be sufficient compliance with the provision of [SECTION] [ACT]. A person may be expressly authorised to sign the pleadings on behalf of the company. For example by the Board of Directors passing a Resolution to that effect or by a power of attorney being executed in favour of any individual. In [CASE NUMBER] "[ENTITY] vs. [ENTITY]" DOD: 28.03.2018 absence thereof and in case where pleadings have been signed by one of its officers a Corporation can ratify the said action of its officers in signing the pleadings. Such ratification can be expressed or implied".
19. In the present case there is an express ratification as shown in the minutes of meeting. Thus it cannot be said that the plaint was not signed, verified and instituted by a competent person. Hence this issue is decided in favour of plaintiff and against the defendant.
Whether the defendant no. 1 was dissolved on 8.05.2004 with notice to the plaintiff and the assets and liabilities were taken over by the other partner Sh. [ENTITY] ? If so, to what effect (OPD) ?
21. The onus to prove this issue was upon the defendant. It is the case of the defendant that the firm i.e. defendant no.1 was dissolved by virtue of the dissolution deed i.e. 08.05.2004. On the other hand counsel for the plaintiff argued that provision of the [ACT] have not been complied with.
22. As per [SECTION] of the [ACT], one who by words spoken or written or by conduct represent himself to be a partner in a firm is liable as a partner in firm. As per [SECTION] of the Act notwithstanding the retirement of a partner of the firm, he and the partner would continue to be liable as a partner to third party for any act done by any of them until public notice is given. [SECTION] prescribe as to how the public notice is to be given. Admittedly no such notice was ever given by the defendant no.2 which fact has been admitted by him in his cross-examination. DW-1 has also admitted that [ENTITY] and [ENTITY] are one and the same person. He also admits that he had not intimated the plaintiff company regarding the dissolution. Therefore to say that he would not be liable [CASE NUMBER] "[ENTITY] vs. [ENTITY]" DOD: 28.03.2018 is incorrect. No account statement has been placed on record which was settled at the time of dissolution of the firm. Defendant no.2 has also not been able to show as to what assets and liabilities were taken over by [ENTITY] on 08.05.04. The deed of dissolution Ex.DW1/1 has also not been proved as none of the witnesses were examined to prove the said dissolution. In so far as the judgment of the Hon'ble High Court of Jammu and Kashmir is concerned, no reliance can be placed as essentially the cheques were signed by Sh. [ENTITY] and under [SECTION] [ACT] it is the only signatory who is liable and in the said case the plaintiff here in had not stated whether defendant no.2 is the signatory of the cheque in question or not. Therefore, the complaint was quashed against the defendant no.2. However, in the present case it was incumbent upon the defendant to prove the dissolution as well as to show that the provision of [ACT] had been complied with which were not done. Hence this issue is decided in favour of the plaintiff and against defendant no.2.
23. ISSUE No 4.
Whether the plaintiff is entitle to recovery the suit amount from the defendant ? (OPP)
24. The onus to prove this issue is upon the plaintiff. Plaintiff is placed on record the invoices which were exhibited as Ex.PW1/4 (Colly). He has also placed reliance on statement of account Ex.PW1/6. The legal notice has also been proved on record. There is nothing in the cross-examination of PW1 which could discredit his testimony. In the cross-examination PW-1 has stated that the outstanding figure of Rs. 18,79,537.35/- has not been mentioned in the plaint. In my opinion nothing much turns upon this fact as in para 5 there is a specific averment regarding the exact amount due. There is only a vague denial that the goods were not supplied. DW-1 admitted in his cross examination that a partnership deed was executed on [CASE NUMBER] "[ENTITY] vs. [ENTITY]" DOD: 28.03.2018 10.02.2003 wherein he and [ENTITY] were partners, the said firm was constituted for sale of electronics goods. He has also admitted Ex. PW1/4 bears his signatures. Ex.PW1/4 is the copy of the dealer profile form. It is not the case of the defendant that goods were not supplied. The statement of account is duly proved. Accordingly this issue is decided in favour of plaintiff and against the defendant.
25. ISSUE NO.5.
Whether the plaintiff is entitle to recover interest on the amount, if any awarded under Issue no. 4 ? If so, at what rate and for which period (OPP) ?
26. The onus to prove this issue is upon the plaintiff. No evidence has been laid by either of the parties regarding the amount of interest. Considering the normal rate of interest and the fact that it is a commercial transaction, plaintiff is entitled to the interest @ 12 % per annum from the date of issuance of legal notice till the date of realization.
27. Relief.
In view of the finding of the issues, the suit of the plaintiff is decreed. No order as to costs. Decree sheet be prepared accordingly.
28. File be consigned to Record Room. Digitally signed ANKUR by [ENTITY] Date:
JAIN 2018.03.28 15:54:58 +0530 ([ENTITY]) Addl. District Judge-10 (Central) Tis Hazari Courts: Delhi Announced in the open court on 28.03.2018