*1* 20-sj-344-09 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION srj SUMMONS FOR JUDGMENT NO.344 OF 2009 IN SUMMARY SUIT NO.1568 OF 2009 Shetu P. Doshi .. Plaintiff V/s. A.P.Aksh Broadband Ltd. & Another .. Defendants Ms. Divya Trivedi, for Plaintiff. Mr. Kirit Munshi with Ms. Saira i/b. Mr. A.T. Kulkarni, for Defendants. CORAM : S.C.DHARMADHIKARI, J. DATE : 7th December, 2010. P.C. 1 Plaintiff has filed this summary suit on the basis of the written contract as evidenced by the invoices under which the goods referred in para 3 of the plaint have been supplied, sold and delivered to the Defendants. It is stated that the consignment was duly received by the Defendants and there is no dispute with regard to the quality or quantity thereof. Thus, against the total transaction of Rs.33,80,914/- from April, 2006 to May, 2006, the Defendants have made part payment, leaving balance sum of Rs.13,80,914/- which is due and payable. *2* 20-sj-344-09 2 It is this sum which is claimed and it is stated that prior to April, 2006, there were transactions between Defendants and that transactions were in sum of Rs.7,65,000/-, which came to be honoured and Defendants paid the amount due and payable, by cheque of Rs.7,65,000/-. It is further stated that payments made are duly reflected in the statement of Account which is the subject matter of this suit and the Plaintiff has issued repeated reminders to the Defendants to make payments. The Defendants did not respond, ultimately the legal notice dated 6th April, 2009 was sent, which was duly dispatched to the registered office of Defendant Nos.1 and 2, but the same was returned with remark “Unclaimed/Refused returned to sender”. 3 That goods have been delivered, sold and supplied, the respective invoices raised and that the claim of the Plaintiff being within limitation, the instant suit be decreed is the request. 4 An Affidavit in reply is filed to this Summons for Judgment, which is affirmed by Dr. Kailash Choudhari, Defendant No.2, who is also a Managing Director of Defendant No.1. Firstly, it is stated that the claim of the Plaintiff is barred by limitation. However, it is immediately clarified by Mr. Munshi, Advocate appearing on behalf of the Defendants that the Defendants do not press this objection raised in para 4 of the affidavit in reply. *3* 20-sj-344-09 5 On merit, it is stated that one Mr. R.V.R.Chowdary, was a Managing Director and share holder of Defendant No.1 and was also in charge of the day to day affairs of Defendant No.1. Shri R.V.R.Chowdary indulged in several fraudulent activities and the fraud committed by him, has been set out in paras 6 and 7 of the affidavit in reply. However, it is stated that Mr. R.V.R.Chowdary was director of Defendant No.1 right from its incorporation on 3rd February, 2005 and was also in charge of the day to day affairs till July, 2006. After which, Defendant No.2 was appointed as Managing Director of Defendant No.1 and was also entrusted with the charge of the day to day affairs of Defendant No.1 and continued as a director of Defendant No.1. It is stated that the study of the records, books and accounts of Defendant No.1 reveals large number of fraudulent activities and irregularities of Mr. R.V.R.Chowdary, who is also Managing Director of another company called Incablenet (Andhra) Limited. At the same time, it is stated in the affidavit that funds of Defendant No.1 were used to make payment for consideration of the goods. It is stated that the part payments have been made but they have been made on the instructions of Mr. R.V.R.Chowdary. 6 There is Rejoinder Affidavit dated 13th October, 2010, in which it is stated that the alleged fraudulent acts of Mr. R.V.R.Chowdary qua the Defendant No.1 would not affect the claim of the Plaintiff because *4* 20-sj-344-09 it is not demonstrated that the Plaintiff is a party to these acts or had knowledge of the same. The independent legal status of Defendant No.1 is relevant and material. The internal matters therein are of consequences as far as the suit claim. 7 On this material, I have heard Ms. Trivedi, Advocate appearing on behalf of the Plaintiff and Mr. Munshi, Advocate appearing on behalf of Defendants. As far as Defendant No.2 is concerned, he is Managing Director of Defendant No.1. There is no question of any privity between Managing Director and the Plaintiff, because the goods were sold, supplied and delivered to Defendant No.1. Therefore, it being a public limited company and Defendant No.2 employed as a Managing Director who is stated to have assumed charge on 10th July, 2006 whereas the transaction between the Plaintiff and Defendant No.1 is of April-May, 2006, Defendant No.2 cannot be held to be liable for the claim of the Plaintiff. As far as Defendant No.1 is concerned, from reading of the entire affidavit, it is not possible to agree with Mr. Munshi that there was collusion between Plaintiff and Defendant No.1 or its Director Shri R.V.R.Chowdary. Once the Plaintiff supplied the goods, and there is no record of the goods being not delivered or received, so also the position emerging from the company records that payments were made by the 1st Defendant company to the Plaintiff, then, merely because *5* 20-sj-344-09 Mr. R.V.R.Chowdary, is appointed as Managing Director of the Defendant No.1, and the acts are of his tenure, it cannot be straight way assumed that the company has made payment without the goods or invoices being received. Needless to state that it is not even prima facie demonstrated that all the documents in relation to the company making payment were a result of the fraud committed by Mr. R.V.R.Chowdary. That the Plaintiff is not a party to any of his acts including creation of the record and documents is clear from a reading of the Affidavit in reply. Hence, it will not be possible to accept the submission of Mr. Munshi that the averments set out in para 7(c) of the affidavit in reply would show that the suit transaction is nothing but a result of the fraud. 8 It is common ground that Defendant No.1 is a public limited company, functioning through the board of directors. The board held a meeting on 10th July, 2006 and Defendant No.2 has taken charge as Managing Director with effect from that day. It can be safely assured that if the 2nd Defendant directed inspection of the records, books and accounts of Defendant No.1, between 10th July, 2006 and 9th March, 2007, a communication would have been sent to the Plaintiff disowning the transaction and further stopping payment. Based on the documents annexed to the reply, it is clear that nothing of this nature has been done. Upon a query from the Court, as to whether the cheques which are stated *6* 20-sj-344-09 to have been forwarded in part payment by Defendant No.1 have been honoured or not, it is stated that they are duly honoured. It is also clear that no complaint with the police has been lodged. There is no reply to the legal notice, although it is stated that several e-mails have been sent. In such circumstances, the plea raised in the affidavit in reply cannot be accepted but in the interest of justice and to enable the Defendant No.1, to substantiate its version, there will be a conditional leave to defend the claim in the suit. The order of conditional leave would serve the ends of justice. 9 The balance amount due under the Invoice Bill no.6 is Rs.7,20,114/- and Rs.6,60,800/- is due under the Invoice Bill no.15. It is stated to be in all Rs.13,80,914/-. Interest of justice would be served, if the 1st Defendant is directed to deposit in this Court a sum of Rs.12,00,000/- within a period of eight weeks from today. On such deposit being made, 1st Defendant would be entitled to defend the suit and the suit will stand transferred to the list of Commercial Causes. In default, all further consequences in law shall follow against 1st Defendant. 2nd Defendant is granted unconditional leave to defend the suit. 10 Summons for Judgment is disposed of accordingly. No costs. (S.C. Dharmadhikari, J)