Beacon Electronics vs M/S. Sylvania & Laxman Ltd.
1998 Latest Caselaw 20 Del

ORDER

K.S. Gupta, J.

1. Plaintiff filed suit under the provision of Order xxxvII CPC, inter alia, alleging that it is a partnership firm duly registered under the Indian Partnership Act and Prashant Mendiratta, who signed and verified the plaint and instituted the suit, is one of the partners thereof. Plaintiff has been carrying business of manufacture and supply of tube light chokes, fittings and fixtures for the last more than 28 years. On Ashok Aggarwal, managing director of the defendant-company, approaching the plaintiff in or around 1993, the plaintiff agreed to supply aforesaid goods to the defendant on credit basis for a specified period of 45 days. In case the payment was delayed, it was expressly agreed that interest @ 24% per annum will be paid by the defendant for the period of default in payment. Plaintiff supplied the foresaid goods which were duly received by the defendant against bills/challis over a period from September 1993 to August 21, 1995. It is alleged that as the volume of business increased defendant started committing defaults in making the payment by the due dates. In para 10 details of the outstanding bills have been given as below:-

      Bill/Invoice No.   Date    Amount
     2988            10.01.94   9,282.00
     3048            18.03.94   2,375.00
     100             16.09.94   3,300.00
     114             30.09.94   48,720.00
     
     115             30.09.94   45,240.00
     116             30.09.94   34,680.00
     125             24.10.94   69,890.00
     130             28.10.94   58,828.00
     133             29.10.94   28,600.00
     150             24.11.94   17,846.00
     151             24.11.94   35,492.00
     162             23.12.94   27,144.00
     163             23.12.94   73,834.00
     164             26.12.94   16,224.00
     165             26.12.94   66.192.00
     166             26.12.94   24,024.00
     175             07.01.95   19,546.00
     187             19.01.95   45,240.00
     192             22.01.95   39,090.00
     193             23.01.95   45,240.00
     196             24.01.95   41,390.00
     197             25.01.95   1,20,819.00
     87              23.08.94   11,172.00
     99              16.09.94   3,696.00
     104             05.09.95   90,480.00  
     134             20.09.95   19,546.00 
     135             20.09.95   45,240.00
     136             20.09.95   27,144.00
     137             20.09.95   18.096.00
     154             05.10.95   92,220.00
     34              13.06.95   95,129.00 
     38              17.06.95   44,990.00
     39              17.06.95   27,144.00
     41              20.06.95   27,144.00
     44              23.06.95   11,497.00
     45              23.06.95   19.546.00
     49              26.06.95    45,240.00
     50              27.06.95   4,599.00
     53              03.07.95   3,619.00
     55              13.07.95   1,29,570.00 
     62              24.07.95   52,119.00
     63              24.07.95   52,119.00
     70              30.07.95   39,090.00
     79              05.08.95   57,486.00
     80              06.08.95   19,546.00
     82              08.08.95   72,384.00
     86              12.08.95   1,03,147.00
     95              21.08.95   1,37,070.00
     Total                      21,22,029.00
 

2. Aforesaid bills amount to a written contract between the parties. It is further alleged that the defendant-company issued three cheques Nos. 629473 dt. 8.11.95 for Rs. 56,412/- 629474 dt. 9.11.95 for Rs. 62,128/- and 314907 dt. 22.11.95 far Rs. 48,720/-. By cheques Nos. 314907 & 629474 defendant purported to make full payments of bills No. 114, 130 & 100. By cheque No. 629473 it purported to make full payment of bill No. 115 and part payment of bill No. 80 for Rs.29,170/-. On presentation all these three cheques were dishonored by the Punjab National Bank, Tropical Building, New Delhi. In addition to the aforementioned amount of Rs. 21,22,029/- , a sum of Rs. 12,70,652/49P has been claimed towards interest @ 24% per annum from the due dates till November 15, 1996. Total amount whereof the recovery is sought by the plaintiff against the defendant is Rs. 33,92,681/49P including the interest.

3. By filing the affidavit dated April 5, 1997 of Ashok Aggarwal, managing director of the company, defendant has sought the leave to defend the suit and condone the delay in seeking the leave to contest. In the affidavit it is averred that the defendant received the summons for judgment on March 19, 1997 and it was handed over to the counsel for taking appropriate action in the matter. Since the wife of the counsel became seriously ill the affidavit could not be filed within the statutory time. It is stated that office block, coat section, store room and basement of the defendant's factory situated at 68/1-3, Najafgarh Road were sealed by the District Collection Officer, Tis Hazari, Delhi, on August 26, 1996, in connection with the recovery of Rs. 65,94,868/50P allegedly due towards wages of the workers who are on illegal strike since April 1996. Against the said illegal recovery the defendant-company filed Civil Writ No. 3375/96 and in C.M. No. 5883/96 a status quo order in respect of the recovery has been passed by this Court on September 3, 1996. Status quo order still continues to be in operation. It is stated that due to non-availability of the records because of sealing of the aforesaid portions of the defendant's factory it is unable to find out the exact position of the claim of the plaintiff. Defendant does not accept a single paisa claim of the plaintiff as well as the bills on which the suit claim is based and the cheques which were dishonoured. It is denied that interest @ 24% per annum was agreed to be paid by the defendant to the plaintiff.

4. Alongwith the affidavit photostat copies of the order dated September 3, 1996, passed in Civil Writ No. 3375/96 and the sealing memo dated August 26, 1996, have been filed.

5. In the reply it is alleged that the defendant has failed to disclose sufficient cause to justify the condensation of delay in filing the affidavit. Although it is not disputed that Ashok Aggarwal is the managing director of the defendant-company but it is denied that he is competent to file the affidavit seeking leave to defend the suit on behalf of the defendant. Defendant-company having duly received the goods and made endorsements in that behalf on the bills cannot now be permitted to out rightly deny the bills without furnishing the particulars thereof. Bald denial of the claim of the plaintiff made by the defendant is not tenable in law. It is further stated that rate of interest is expressly incorporated in the bills and the defendant cannot seek to avoid liability to pay interest at the agreed rate. Reply is supported by the affidavit of Prashant Mendiratta, one of the partners of the plaintiff firm.

6. At the outset it may be noticed that there is delay of about six days in filing the affidavit dated April 5, 1997. Delay in question is alleged to have occurred due to serious illness of the wife of the counsel whom summons for judgment was given for taking appropriate action. Taking a lenient view, delay in question is condoned.

7. Submission advanced by the learned counsel of the defendant was that the present suit does not qualify for being brought under the provisions of Order xxxvII CPC as it is not based on instrument (s) reference whereof is made in rules 2(a) & (b) of the said order. On the contrary, relying on a decision of this Court in M/s. Punjab Pen House Vs. M/s. Samrat Bicycle Ltd. , argument advanced by the learned counsel of the plaintiff was that the suit is based on bills which amount to a written contract between the parties within the meaning of clause (b)(i) of rule 2 of the aforesaid Order. In M/s. Punjab Pen House (supra) at page 3 of the report which is relevant it was held thus:-

"When the goods are supplied through a bill on certain terms and conditions duly agreed to between the parties, there is no escape from the conclusions that it amounts to a written contract between the parties. Therefore, I am of the view that the suit is covered by clause (2) sub-clause (b) of Order xxxvII of the Code according to which the plaintiff seeks to recover a debt or liquidated amount in money payable by the defendant with or without interest arising on a written contract."

8. In para 11 of the plaint it is pleaded that the bills referred to in para 10 of the plaint amount to a written contract between the parties. Plaintiff has placed on file the original bills invoices referred to in said para 10 raised in the name of the defendant-company. These amongst others include the terms that interest @ 24% per annum will be charged if the bill is not paid within one month of the date of presentation that no complaint regarding the bill and no reduction in rate (s) will be entertained if not made in writing within a week of the date of the bill and that the disputes between the parties are subject to Delhi jurisdiction. Thus, it cannot be said that it is a case simpliciter of supply of goods to the defendant without any written terms and conditions between the parties. Ratio in M/s. Punjab Pen House's Case (supra), with which I fully agree applies to this case and the objection taken about the non-maintainability of the suit under the aforesaid Order CPC is repelled being without merit.

9. This brings me to the crucial point whether the facts disclosed in the aforementioned affidavit of Ashok Aggarwal entitle the defendant for leave to contest the suit and if so, on what terms. Case of Santosh Kumar Vs. Bhai Mool Singh, , is the basic decision on the provision contained in said Order xxxvII CPC. In para 10 of the report (at page 324) which is relevant, it was held thus:-

"It is always undesirable, and indeed impossible, to lay down hard and fast rules in matters that affect discretion. But it is necessary to understand the reason for a special procedure of this kind in order that the discretion may be properly exercised. The object is explained in Kesavan Vs. South India Bank Ltd. and is examined in greater detail in Sundaram Chettiar Vs. Valli Ammal AIR 1935 Madras 43 (F), to which we have just referred. Taken by and large, the object is to see that the defendant does not unnecessarily prolong the litigation and prevent the plaintiff from obtaining an early decree by raising untenable and frivolous defenses in a class of cases where speedy decisions are desirable in the interests of trade and commerce. In general, therefore, the test is to see whether the defense raises a real issue and not a sham one, in the sense that, if the facts alleged by the defendant are established, there would be a good, or even a plausible, defense on those facts."

10. Needless to repeat that the plea raised in the affidavit of Ashok Aggarwal on behalf of the defendant-company is that office block, cost section, store room and the basement of the defendant's factory at 68/1-3, Najafgarh Road, were sealed on August 26, 1996 by the District Collection Officer, Tis Hazari, in connection with the recovery of Rs. 65,94,868/50P being the amount of the arrears of wages of the workers and because of non- availability of the records defendant is unable to find out the exact position of the claim of the plaintiff. Simultaneously, defendant has not accepted a single paisa claim of the plaintiff or the bills on which the suit claim is based or the cheques which were dishonoured. Claim of the plaintiff could have been denied only on verification of the records maintained by the defendant-company. If the relevant record itself was not available due to the sealing of the factory premises, latter part of the defense denying the plaintiff's claim based on the bills is a dishonest attempt to evade the liability on the part of the defendant and it cannot be allowed leave to contest on that ground.

11. Turning to the former part of the plea referred to above, aforesaid affidavit does not indicate that after the receipt of the summons any attempt whatsoever was made by the defendant to secure the records from the sealed factory premises. If the facts alleged by the defendant are duly proved they will afford a good or even a plausible answer to the palintiff's claim, is the test laid down for grant of leave to defend by the Supreme Court in Santosh Kumar's case (supra). Plea of inability to find out the exact position in regard to the suit claim due to non-avilability of records clearly signifies that the defendant-company has no defense to make at this stage but appropriate defense will be taken by it as and when the records are made available. Such a plea even if proved by the defendant will no afford a good or even a plausible answer to the plaintiff's claim in the suit. Rate of interest being 24% per annum on delayed payments in noted in the original bills placed on the file. From the aforesaid discussion, it must follow that the defendant is not entitled to the leave prayed for.

12. Consequently, leave to defend the suit is declined. Suit is decreed for recovery of Rs. 33,92,681/94P with costs and interest pendente lite and future on Rs.21,22,029/- @ 12% per annum against the defendant-company.