CS(OS)No. 1443/1999 Page 1 of 29 THE HIGH COURT OF DELHI AT NEW DELHI % Judgment Reserved on: 19.01.2011 Judgment Pronounced on: 31.1.2011 + CS(OS) No. 1443/1999 M/s J.C. Enterprises (Regd.) ..…Plaintiff - versus - Ranganatha Enterprises .....Defendant Advocates who appeared in this case: For the Plaintiff: Mr. S.C. Singhal and Mr. Sanjay For the Defendant: Mr. R.N. Sharma CORAM:- HON’BLE MR JUSTICE V.K. JAIN 1. Whether Reporters of local papers may be allowed to see the judgment? Yes 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported Yes in Digest? V.K. JAIN, J 1. This is a suit for recovery of Rs.43,82,473/-. It is alleged in the plaint that M/s J78.C. Enterprises, which was a partnership firm, was dissolved vide Dissolution Deed dated 1.4.1997 and thereafter, the plaintiff Rakesh Sharma CS(OS)No. 1443/1999 Page 2 of 29 has been running this firm as his proprietorship concern. The defendant Suresh is running business under the name and style of M/s Ranganatha Enterprises. It is alleged in the plaint that under an oral agreement between the parties, the defendant was appointed as a stockiest of State lotteries including Daily Lotteries etc., on wholesale rate basis. As per the terms and conditions of the agreement, the plaintiff was required to dispatch lottery tickets to the defendant from Delhi as per the requirement of the defendant. The defendant was required to make payment to the plaintiff within a week from the date of the draw. In default of payment, the plaintiff was entitled to interest at the rate of 18% per annum for the period beyond 15 days from the date of draw. It is alleged that the defendant is liable to pay a sum of Rs.20,97,566/- to the plaintiff towards price of the lottery tickets, after adjustment of part payment of Rs.1 lakh made by him on 6th June, 1996. The plaintiff has also claimed interest on that amount at the rate of 18% per annum, which comes to Rs.22,84,907/-, thereby making a total sum of Rs.43,82,473/-. 2. The defendant has contested the suit. He has taken preliminary objections that this Court has no CS(OS)No. 1443/1999 Page 3 of 29 territorial jurisdiction to try the suit and the suit is barred by limitation. It is further alleged that since the agreement was executed between the defendant and M/s J.C. Enterprises, the plaintiff has no cause of action and no right to sue the defendant. 3. On merits, it is alleged that the defendant was in the business of sale of lottery tickets till the year 1993 and had purchased some consignments of lotteries from M/s J.C. Enterprises, payments of which were promptly settled and nothing is due from him. The defendant has also denied the alleged oral agreement between him and M/s J.C. Enterprises, as also the agreement to pay interest. As regards the payment of Rs.1 lakh, it is alleged that this amount was paid to the plaintiff on 6th June, 1996 as a loan. 4. The following issues were framed on the pleadings of the parties:- (i) Whether there is no cause of action for the suit and whether the plaintiff does not have the right to sue? OPD (ii) Whether the suit is barred by law of limitation? OPD (iii) Whether this Court has no territorial jurisdiction to try and decide the CS(OS)No. 1443/1999 Page 4 of 29 present suit? OPD (iv) Whether there is any oral agreement entered into between the plaintiff and the defendant in the month of December, 1991 and if so, what were the terms and conditions of the same? OPP (v) Whether the defendant was required to submit his accounts and make payments at New Delhi for the tickets alleged to have been received by him? OPP (vi) Whether the plaintiff is entitled for recovery of an amount of Rs.43,82,473/- from the defendant as claimed in the suit? OPP (vii) If the aforesaid issue is answered in favour of the plaintiff whether the plaintiff is also entitled for payment of any interest and if so, at what rate and for which period? OPP (viii) Relief. Issue No.1 5. On this issue, the plaintiff Mr. Rakesh Sharma, in his affidavit by way of evidence, stated that M/s J.C. Enterprises, which was a partnership firm till 1st April, 1997, was dissolved, vide Dissolution Deed dated 1st April, 1997 and now he is its proprietor. During his cross- examination, he stated that after dissolution of the partnership firm, he took over all its assets and liabilities CS(OS)No. 1443/1999 Page 5 of 29 being its proprietor. Though the original Dissolution Deed was not produced by the plaintiff and consequently its copy filed by him could not be exhibited and was marked as mark X-1 during his examination before the learned Joint Registrar, even if the document Mark X-1 is excluded from consideration, the unrebutted deposition of plaintiff is sufficient to prove that M/s J.C. Enterprises was dissolved with effect from 1st April, 1997 and all its assets and liabilities were taken over by the plaintiff as its proprietor. Another important factor to be noted in this behalf is that no other partner of M/s J.C. Enterprises has sued the defendant for recovery of the dues of the firm, which, in turn, supports the oral deposition of the plaintiff that he had taken over the assets and liabilities of the erstwhile partnership firm with effect from 1st April, 1997. The issue is decided against the defendant and in favour of the plaintiff. Issue No.2 6. It is an admitted case that the defendant made payment of Rs.1 lakh to the plaintiff, by way of demand draft, on 6th June, 1996. Though, the case of the plaintiff is that, in fact, the payment was received by him on 10th June, CS(OS)No. 1443/1999 Page 6 of 29 1996, that would make no difference since the High Court was closed in June, 1999 and the suit was filed during vacation on 23rd June, 1999. 7. Section 19 of the Limitation Act, to the extent it is relevant, provides that where payment on account of a debt or of interest is made before the expiration of the prescribed period by the person liable to pay the debt, a fresh period of limitation shall be computed from the date when the payment was made. In case, part payment by way of a demand draft was made by the defendant to the plaintiff on 6th June, 1996, this being a payment in writing, a fresh period of limitation commenced from that date and since the High Court was closed in the month of June, 1999, the suit having been filed during the same vacation on 23rd June, 1999 would be within the prescribed period of limitation. The dispute between the parties, however, is as to whether the amount of Rs.1 lakh was paid as part payment towards the dues outstanding against the defendant on the date of payment as claimed by the plaintiff or it was paid as a friendly loan by the defendant to the plaintiff, as alleged by the defendant. 8. In his affidavit by way of evidence, the plaintiff CS(OS)No. 1443/1999 Page 7 of 29 Rakesh Sharma has stated that part payment on account was made by the defendant on 6th June, 1996 vide letter Exhibit P/2 and receipt issued by the plaintiff in this regard on 10th June, 1996 is Exhibit P/3. PW-2 Shri Manjit Singh, who is working with the plaintiff, has corroborated the deposition of the plaintiff in this regard and has stated that last payment was received from the defendant vide Memo No.181 dated 6th June, 1996 for Rs.1 lakh vide demand draft, which was duly realized by the plaintiff. The original Memo dated 6th June, 1996 is Exhibit PW-2/1. I see no reason to disbelieve the oral testimony of plaintiff and his employee Shri Manjit Singh as regards the nature of the payment made by the defendant on 6th June, 1996. During his cross-examination of PW-2 Shri Manjit Singh also no suggestion was given to him that the document Exhibit PW- 1/1 was not issued by the defendant. When a witness deposes a particular fact and no suggestion to the contrary is given during his cross-examination, the party against whom the deposition is made is made is deemed to have admitted that part of the deposition, which thereby remains unchallenged. Therefore, by not suggesting to PW-2 Shri Manjit Singh that the document Exhibit PW-1/1 was not CS(OS)No. 1443/1999 Page 8 of 29 issued by him, the defendant is deemed to have admitted the issue of this document by him. Even otherwise, Exhibit PW-1/1 on which the name as well as address and telephone number of Ranganatha Enterprises, of which the defendant admittedly is the proprietor, is correctly printed does not appear to be a forged document. The memo Ex.PW-2/1 shows that the payment of Rs.1 Lac was made in account, which implies part payment. The receipt Exhibit P-3, which is a computer generated receipt, as stated by PW-2 Shri Manjit Singh, also shows that the payment of Rs.1 lakh vide demand draft No.777626 dated 25th May, 1996 was received in the account of the defendant maintained with M/s J.C. Enterprises. The letter Exhibit P- 2, which is written on the letterhead of the defendant, is the forwarding letter whereby the aforesaid demand draft for Rs.1 lakh was sent to M/s J.C. Enterprises. Though the case of the defendant is that Exhibit P/2 is a forged document, the fact and circumstance of the case indicate that this is a genuine document whereby demand draft for Rs.1 lakh was sent by the defendant to the plaintiff on 6th June, 1996. Another material circumstance in this regard is that though the defendant claims that the amount of Rs.1 CS(OS)No. 1443/1999 Page 9 of 29 lakh was given as a friendly loan to the plaintiff, no notice was ever issued by him demanding the aforesaid amount from the plaintiff. No suit admittedly has been filed by the defendant for recovery of this amount from the plaintiff. Had the amount of Rs.1 lakh being given as a friendly loan, the defendant would at least have demanded this amount from the plaintiff and would also have filed a suit for recovering it from the plaintiff. Therefore, I am satisfied that the payment of Rs.1 lakh vide demand draft No.777626 dated 29th May, 1996 was made towards payment of the amount, which was due from the defendant at that time. In view of the provisions contained in Section 19 of the Limitation Act, the suit, to the extent it pertains to the amount, which had not become time barred on 6th June, 1996, when the part payment was made, will not be barred by limitation. 9. During the course of arguments, it was submitted by learned counsel for the plaintiff that since, the parties were maintaining a mutual open and current account in which last entry was made on receipt of payment from the defendant on 6th June, 1996, the suit having been filed on 23rd June, 1999, during summer vacation of the High Court CS(OS)No. 1443/1999 Page 10 of 29 is well within limitation. Article 1 of the Limitation Act, 1963, to the extent it is relevant, provides that in a suit for the balance due on a mutual, open and current account, where there have been reciprocal demands between the parties, the period of limitation is three years from the close of the year in which the last item admitted or proved is entered in the account. In order to an account to be mutual, there must be transactions on each side creating independent obligations on the other and not merely transactions which create obligations on the one side, those on the other being merely complete or partial discharge of such obligation. This proposition of law was upheld by the Supreme Court in Hindustan Forest Co. v. Lalchand, AIR 1959 SC 1349. In the case before the Supreme Court, the parties entered into an agreement for the supply of 5000 maunds of maize, 500 maunds of wheat and 1000 maunds of dal at the rates and time, specified. A sum of Rs.13,000/- has been paid as advance. The goods were delivered and the buyer was also making payments. The last delivery of the goods was made on 23rd June, 1947, and the suit was brought on 10th October, 1950, for the balance of the price due. The CS(OS)No. 1443/1999 Page 11 of 29 Supreme Court pointed out that what had happened was that the sellers had undertaken to make delivery of the goods and the buyer had agreed to pay for them and had in part made payments in advance and held that there could be no question in such a case that the payments had been made towards the price due and there were no independent obligations on the sellers in favour of the buyer. This proposition of law was again applied by the Supreme Court in Keshari Chand v. Shilong Banking Corporation Ltd., AIR 1965 SC 1711. The real question to be seen by the Court in such a case is to ascertain whether the transactions between the parties gave rise to independent obligations or they were merely a mode of liquidation of the obligation already undertaken by one party. Even in a case for price of goods sold and delivered, there may be obligation on the part of the seller towards the buyer in case some advance has been paid and has not been returned or the payment made by the purchaser is more than the price of the goods which he had to pay to the seller of the goods. However, I find that there is no allegation in the plaint that the parties were having a mutual, open and current account in which there have been reciprocal CS(OS)No. 1443/1999 Page 12 of 29 demands between the parties. There is no allegation in the plaint that the plaintiff owed any amount to the defendant at any point of time whether on account of excess payment or otherwise. The case as set up in the plaint is based only on the part payment of Rs.1 lakh sent by the defendant on 6th June, 1996. In para 10 of the plaint it has been specifically alleged that the suit has been filed within the period of limitation since on account part payment last made by the defendant to the plaintiff at New Delhi on 6th June, 1996 was received on 10th June, 1996. No plea of the parties maintaining a mutual, open and current account with reciprocal obligations on the part of both the parties was set up even in the replication to the written statement. Hence, the period of limitation in this case cannot be calculated under Article I of Limitation Act. The issue is decided accordingly. Issue No.4 10. In his affidavit by way of evidence, the plaintiff has stated that there was an oral agreement between the parties in December, 1991 and the terms and conditions of that agreement were accepted at New Delhi. He further stated that as per the terms and conditions of the agreement, the CS(OS)No. 1443/1999 Page 13 of 29 plaintiff was required to dispatch lottery tickets to the defendant from Delhi and the plaintiff had accordingly been dispatching lottery tickets to the defendant from time to time, the last consignment having been dispatched on 22nd July, 1993. He further stated that the defendant was required to make payment to the plaintiff at Delhi for the lottery tickets received by him. PW-2 Shri Manjit Singh also has stated that tickets to the defendant used to be dispatched at Delhi and the payment used to be received at Delhi. In his affidavit by way of evidence, the defendant has stated that in the year, 1990 Mr. J.C. Sharma one of the partners of M/s J.C. Enterprises had approached him in his office at Bangalore and had started supplying the lottery tickets to him. He further stated that he never came to Delhi in or around December, 1991 and did not enter into any oral or written agreement with the plaintiff. He further stated that most of the consignments were handed over to him in person either by the partner or the representatives of the plaintiff firm. The plaintiff has filed a large number of bills issued by M/s R. South Courier, Ram Nagar, New Delhi in respect CS(OS)No. 1443/1999 Page 14 of 29 of the lottery tickets dispatched to the defendant from M/s J.C. Enterprises. Some of these bills are Bill Nos.087019 dated 17th December, 1992, 093076 dated 8th February, 1993, 093082 dated 12th February, 1993, 006705 dated 10th May, 1993, 019705 dated 8th June, 1993, 018986 dated 10th July, 1993 and 015610 dated 12th July, 1993. This documentary evidence clearly shows that the tickets used to be dispatched by the plaintiff to the defendant from Delhi and used to be delivered through M/s R. South Courier, which used to receive the lottery tickets from the plaintiff at Delhi and deliver the same to the defendant at Bangalore. 11. In A.B.C. Laminart Pvt. Ltd. and Another v. A.P. Agencies, Salem, (1989) 2 SCC 163, the Supreme Court while dealing with the issue of territorial jurisdiction of the Court observed that the jurisdiction of the Court in the matter of a contract will depend on the situs of the contract and the cause of action arising through connecting factors. It was further observed that a cause of action is a bundle of facts, which, taken with the law applicable to them, gives the plaintiff a right to relief against the defendant and comprise every fact necessary for the plaintiff to prove to enable him to obtain a decree, through it has no relation CS(OS)No. 1443/1999 Page 15 of 29 whatever to the defence which may be set up by the defendant. It was also held that the performance of a contract being part of cause of action, a suit in respect of its breach can always be filed at the place where the contract should have been performed or its performance completed. It was further held that part of cause of action arises where money is expressly or impliedly payable under the contract. 12. In a suit for price of the goods sold and delivered which in effect is also the suit for breach of contract on the part of the defendant by not paying the price of the goods in terms of the agreement between the parties, the cause of action, within the meaning of Section 20(c) of the Code of Civil Procedure arises at the following places:- (i) The place where the contract was made. (ii) The place where the contract was to be performed which in such a contract would mean the place where the goods were delivered to the purchaser and (iii) The place where money in performance of the contract was payable, expressly or impliedly. The plaintiff, may in his choice, sue the defendant at any of these three places unless the parties by agreement CS(OS)No. 1443/1999 Page 16 of 29 have restricted the jurisdiction to a particular place, by agreeing that in the event of a dispute arise between them, the Court at a particular place alone would have jurisdiction to resolve the same. As per illustration (a) to Section 20 of the Code of Civil Procedure, if A, a tradesman in Calcutta sells goods to B who is carrying on business in Delhi and on the request of B, A delivers the goods to Railway in Calcutta, A may sue B for price of goods either in Calcutta, where the cause of action has arisen or in Delhi, where B carries on business. This illustration clearly shows that cause of action does arise at the place where the goods are delivered by the seller to the purchaser. 13. If the goods are handed over to the carrier for delivery directly to the consignee, the property in the goods passes to the consignee, the moment they are delivered to the carrier/courier for the purpose of delivering them to the consignee, since the consignee thereafter has no control in those goods and the carrier/courier is bound to deliver them only to the consignee. Section 23(1) of the Sale of Goods Act, 1930 provides that where there is a contract for the sale of unascertained or future goods by description and CS(OS)No. 1443/1999 Page 17 of 29 goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer or by the buyer with the asset of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made. Sub-Section 2 of this Section, to the extent it is relevant, provides that where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier for the purpose of transmission to the buyer and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract. Since the goods handed over to the courier at Delhi were deliverable to the defendant and not to the order of the plaintiff or his agent, the plaintiff did not reserve any right of disposal of those goods, while handing them over to the courier. Therefore, the property in the lottery tickets handed over by the plaintiff to the courier at New Delhi passed to the defendant, the moment the goods were handed over to the courier for delivery to him and, therefore, the tickets shall be deemed to have been delivered to the defendant at New Delhi. Section 39(1) of the Sale of Goods CS(OS)No. 1443/1999 Page 18 of 29 Act, to the extent it is relevant, provides that where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer. Since the lottery tickets for price of which the present suit has been filed were delivered to the defendant at Delhi through R. South Couriers, the part of cause of action arose in the jurisdiction of this Court and, therefore, in view of the provisions contained in Section 20(c) of the Code of Civil Procedure, Delhi Court has jurisdiction to try the suit. 14. Exhibit PW-2/1 to which I have earlier adverted indicates that the payment of Rs.1 lakh to the plaintiff was sent from Bangalore to Delhi. The letter Exhibit P/2 clearly shows that the draft of Rs.1 lakh was sent from Bangalore to Delhi. The computer generated receipt Exhibit P/3 is the most important document in this regard and this document, which could not have been issued at Bangalore, leaves no reasonable doubt that the payment of Rs.1 lakh was received by the plaintiff at Delhi vide demand draft No. CS(OS)No. 1443/1999 Page 19 of 29 777626 dated 25th May, 1996. Therefore, besides oral evidence in the form of deposition of plaintiff and PW-2 Shri Manjit Singh, there is ample documentary evidence produced by the plaintiff to prove that the payment of lottery tickets used to be received by M/s J.C. Enterprises at Delhi. In fact, a large number of documents have been filed by the plaintiff which show that payment of lottery tickets used to be sent by the defendant to M/s J.C. Enterprises from Bangalore. These documents have been collectively exhibited as Exhibit PW-2/2. These documents include a large number of letters whereby payment was sent by the defendant to M/s J.C.