Shri B.B. Patel vs Nexim Exports Pvt. Ltd. And Anr.
2000 Latest Caselaw 522 Del

JUDGMENT

R.C. Chopra, J.

1. This suit under Order 37 of the Code of Civil Procedure was instituted by the plaintiff against the defendants for recovery of Rs. 24,20,000/- with costs and interest. Vide orders dated 3.5.1993, the defendant's application for leave to defend was granted subject to certain conditions.

2. The plaintiff's case as set out in the plaint, briefly stated, is that the plaintiff is the sole proprietor of M/s. Nikoleon Brothers. The defendant No. 1 is a private limited company and defendant No. 2 is its Managing Director and a party to the contract. The plaintiff alleged that the plaintiff and defendants were having good business relations and had joined hands in many business deals helping one another. In the month of September, 1988, the defendant No. 2 approached the plaintiff for financial assistance. He asked for a short term temporary loan of Rs. 20 lacs which was to carry interest at the rate of 21% per annum. The defendant No. 2 assured the plaintiff that the loan would be returned on or before 31.12.1988 as his payments from a foreign party were expected before 30.12.1988. The plaintiff agreed to the suggestion and as such, gave two cheques of Rs. 10 lacs each to the defendants which were drawn on Union Bank of India. The cheques were received by defendant No. 2 in terms of the conditions laid in the vouchers. The defendants encashed the said cheques but the amount was not paid back on 31.12.1988 as agreed. The plaintiff raised demands but the defendants kept on giving him false assurances. The plaintiff sent a registered AD letter dated 7.1.1989 calling upon the defendants to pay the amount. A legal notice dated 20.1.1989 was also sent by the plaintiff to the defendants calling upon them to liquidate the loan amount but no payment was made. The plaintiff as such, claimed a sum of Rs. 20 lacs as principal amount and a sum of Rs. 4,20,000/- as interest thereon from September, 1988 to September, 1989. The plaintiff also claimed costs of the suit and pendente lite and future interest at the rate of 21% per annum from the date of filing of the suit till realisation.

3. The defendants filed a written statement raising preliminary objections that the suit filed by the plaintiff was without any cause of action and based on false, fabricated, tempered with and interpolated documents. It was submitted that the plaintiff had tried to push a "general voucher" as a "receipt voucher" before the Court with an intention to mislead the Court. It was stated that at the time when the defendant No. 2 signed the vouchers only the name of the defendant Company, defendant No. 1, was mentioned. Everything else was added on the vouchers later on. It was stated that defendant No. 2 had signed these general vouchers in good faith when these were not having revenue stamps even. On merits, it was pleaded that the plaintiff may be put to strict proof that the was the sole proprietor of M/s Nikoleon Brothers. It was denied that the defendants had ever faced any financial crisis or approached the plaintiff for a temporary loan as alleged. It was stated that a cock and bull story had been set up by the plaintiff to show that the payment of Rs. 20 lacs was a loan. It was pleaded that the plaintiff had approached the defendants for helping him in the execution of an export order and in exchange of defendants' expertise and know-how, had proposed to give them a sum of Rs. 20 lacs as fee. It was submitted that the defendant No. 2 had been doing business in USSR for several years. It was reiterated that the payment of Rs. 20 lacs was made by M/s. Nikoleon Brothers to defendant No. 1 towards consultancy fee for rendering export know-how and as such, the case as set up regard to the loan transaction, was false. The plaintiff filed a replication to the written statement of the defendants controverting the pleas raised by the defendants and re-asserting the averments made in the plaint.

4. On the pleadings of the parties, following issues were settled on 19.9.1997:

1. Wether M/s. Nicolian Bros. is a sole proprietorship of the plaintiff, who is authorised to act on its behalf? OPP

2. Whether the plaint does not disclose any cause of action against the defendants or any of them? OPD

3. Whether the plaintiff gave any loan of Rs. 20,00,000/- to the defendants and if so what are the terms thereof including repayment and interest? OPP

4. Whether the documents bearing dates 3.9.1998 and 24.9.1998 relied upon by the plaintiff have been interpolated and/or materially altered and subsequently stamped after the same were got signed in blank and if so to what effect? OPD

5. Whether the amount of Rs. 20,00,000/- was paid to defendants No. 1 and 2 by way of consultation fee and Advance towards costs in connection with an export order and if so to what effect? OPP

6. What amount, if any, is the plaintiff entitled to recover from the defendant? OPP

7. To what rate of pendente lite and future interest, if any, is the plaintiff entitled and on what amount for what period?

8. Relief.

Vide orders dated 28th January, 1998, the following additional issue was framed:

1A. Whether the loan as allegedly given is money of Mr. B.B. Patel, Proprietor of M/s. Nicolian Bros. in September, 1988 and if so, to what effect? OPP

5. It was also ordered that onus of proving issue No. 5 will be on the defendants.

6. In support of his case, the plaintiff examined PW-1 Shri Mukesh Gupta, an Accounts Officer of the plaintiff, PW-2 Shri Yogesh Jain, Chartered Accountant, PW-3 Shri Suresh Kabadi, a partner of M/s. Nikoleon Brothers and PW-4, the plaintiff himself. The defendant No. 2 examined himself as DW-1.

7. I have heard learned counsel for the plaintiff and defendant No. 2 in person. I have gone through the pleadings of the parties, documents and evidence on record. My findings on the issues are as under:

8. This issue was framed on the basis of the averments made by the plaintiff in para 1 of the plaint to say that he is the sole proprietor of M/s. Nikoleon Brothers and therefore is capable of suing in the name of the said firm. The defendants denied these averments and asserted that the plaintiff be put to strict proof to establish that he is the sole proprietor of M/s Nicolian Brothers. In the course of arguments, the defendants have pressed for the dismissal of the suit filed by the plaintiff on the short ground that on the date of the filing of the suit M/s. Nikoleon Brothers was a partnership concern which was not registered in terms of Section 69 of the Partnership Act and as such the suit is liable to be dismissed.

9. After considering the pleadings of the parties, evidence on record and the submissions made by learned counsel for the parties, it is found that this controversy has arisen merely on account of an unnecessary and uncalled for pleading made by the plaintiff, in para 1 of the plaint, by saying that he is the sole proprietor of M/s. Nikoleon Brothers which fact is admittedly wrong for the reason that on the date of the filing of the suit M/s. Nikoleon Brothers was a partnership firm and the plaintiff was not its sole proprietor as averred. The controversy is unnecessary and irrelevant for the purpose for the disposal of the suit for the reason that the pleadings as well as the evidence on record shows that the suit was filed by the plaintiff in his personal capacity and not for and on behalf of partnership firm M/s. Nikeleon Brothers. Therefore, the question as to whether M/s. Nikoleon Brothers was a sole proprietorship concern or a partnership firm on the date of the filing of the suit is of no consequences. In fact the plaintiff who was filing this suit in his personal capacity merely described his name and address as the proprietor of M/s. Nikolean Brothers. He was not at all required to make any averment that he was the sole proprietor of the said firm. The evidence on record shows that at the time of the giving of the alleged loan M/s. Nikoleon Brothers was the sole proprietor concern of the plaintiff and as such the loan, if any, was a personal loan advanced by the plaintiff himself. The partnership firm which had taken over M/s. Nikoleon Brothers later had not taken over the actionable right in respect of the said loan and as such it continued to be a personal loan advanced by the plaintiff. The capital account of the plaintiff Ex. PW 2/1, the balance sheets of the firm Exhibit PW 2/2 and PW 2/3 satisfactorily establish on record that after the conversion of M/s. Nikoleon Brothers from sole proprietary concern to a partnership firm the loan allegedly advanced by the plaintiff to the defendants was not taken over by the partnership firm. Therefore the argument that the suit filed by the plaintiff is liable to be dismissed as on the date of the filing of the suit the firm M/s. Nikoleon Brothers was not a registered partnership firm cannot be accepted. The suit was filed by the plaintiff who had allegedly advance the loan in question to the defendants and if after the conversion of the firm M/s. Nikoleon Brothers into a partnership firm the loan was not taken over by the said firm, the right to sue the defendants in respect of the said loan continued to subsist in favor of the plaintiff personally. It cannot be said that the suit could not be filed as on the date of filing of suit the proprietorship concern was not in existence. The plaintiff as its erstwhile sole proprietor was entitled to file the suit as loan was advanced by him as sole proprietor of his concern M/s. Nikoleon Brothers. He, therefore, could file the suit in his individual capacity. The averment in para 1 of the plaint which was factually incorrect does not affect the maintainability of suit. In case the plaintiff had stated that he was the proprietor of M/s. Nikoleon Brothers, there would have been no difficulty. Only by the use of word "is", confusion has arisen which stands cleared through evidence on record. The suit is not hit by Section 69 of Partnership Act. The issue, therefore, stands disposed of by holding that on the date of the filing of the suit M/s. Nikoleon Brothers was not a sole proprietorship concern of the plaintiff and the suit was not filed by the proprietorship firm M/s. Mikoleon Brothers. The plaintiff had filed this suit on his own behalf as the alleged loan was advanced by him when he was the sole proprietor of M/s. Nikoleon Brothers.

10. All these issues are being dealt with together as these are interlinked, based on same evidence and the decision of one is likely to affect the decision of other.

11. The case as set up by the plaintiff in the plaint is that in September, 1988 when he was the sole proprietor M/s. Nikoleon Brothers, the defendant No. 2 approached him for financial help. The plaintiff agreed to advance him a loan of Rs. 20 lakhs on interest @ 21 per cent per annum. On 3.9.1988 the defendant No. 2 received a cheque for Rs. 10 lakhs in favor of his company defendant No. 1 and signed the voucher Ex. PW1/1. On 24.9.1988 another cheque of Rs. 10 lakhs was issued by the plaintiff to the defendants for which the defendant No. 2 signed the voucher Ex. PW1/2. According to the plaintiff the defendant No. 2 had requested him for financial assistance by way of a short term loan and had assured that the loan would be returned on or before 31st December, 1988. However, the loan amount was not returned and hence the suit. The defendants plea on the other hand is that the defendant No. 2 had never approached the plaintiff for any financial assistance or short term loan as alleged and infact this payment was made by the plaintiff to the defendants as consultancy fee for rendering export know-how. It is also pleaded that the vouchers Ex. PW1/1 and PW1/2 are false, fabricated, tempered with and interpolated. According to the defendants these were "general vouchers" but have been converted into "receipt vouchers". The defendant No. 2 had signed these vouchers when only the name of the company defendant No. 2 was mentioned. Everything else in these vouchers was added later on. According to the defendants these vouchers were not having any revenue stamp even at the time when defendant No. 2 had signed the same. The revenue stamps were affixed and crossed later on.

12. Coming to the question as to whether plaintiff had given a loan of Rs. 20 lakhs to the defendants, it is found that according to the averments made in the plaint the defendant No. 2 had approached the plaintiff for financial assistance in the sum of Rs. 20 lakhs and by issuing two cheques dated 3.9.1988 and 24.9.1988 in favor of defendant No. 1 the said loan was advanced by the plaintiff to the defendants. According to the plaintiff the defendant No. 2 alone was known to him and upon his asking only he had advanced this temporary loan to the defendants. It is alleged that while receiving the two cheque the defendant No. 2 had signed the vouchers Ex. PW1/1 and Ex. PW1/2 in which not only the amount of loan but the condition relating to the interest @ 21 per cent per annum was also mentioned. Both these cheques were encashed by the defendants and as such there remain no dispute about the payment or advancement of this amount. The averments of the plaintiff in regard to the payment of this loan are supported not only by PW4, the plaintiff, and PW1 Shri Mukesh Gupta, a former Accountant of the plaintiff but by PW 3 Shri Suresh Kabadi also who stated that in his presence defendant No. 2 had admitted that he had taken loan of Rs. 20 lakhs from plaintiff on interest. The books of accounts of the plaintiff also supports the plaintiff's case that it was a loan only and not a consultancy fee. The defendants in their written statement did not dispute the receipt of the two cheques of Rs. 10 lakhs each but raised a plea that his amount was towards consultancy fee paid by the plaintiff to the defendants in lieu of the know how provided by the defendants for execution of an export order which the plaintiff had received from Russia. The plaintiff while appearing as PW4 stated on oath that this was a loan only and denied that this payment was towards any consultancy fee. Nothing could be brought out in his cross examination to show that the plaintiff had obtained any know how from the defendants for the execution of an export order. In the cross examination of PW4 it came out that an export order was received by him from Rushia in November, 1988 only whereas the present loan was advanced in the month of September, 1988. It cannot be believed that much before the receipt of the export order the plaintiff had paid such a heavy amount to defendants merely for obtaining the know how as to how the export order was to be executed.

No agreement has been pleaded or proved by defendants to support their plea that the plaintiff had made this payment for obtaining know how only. This Court is unable to appreciate that a contract involving such a heavy payment was oral only. If the payment was consultancy fee the defendant No. 2 could have mentioned this fact in vouchers Ex. PW1/1 and PW1/2. The mere fact that plaintiff had no expertise in the field of the export of medical equipment does not ipso facto establish that the plaintiff had taken any help from defendants. It has come in evidence that the plaintiff had entered into a partnership with PW3 in connection with the export order and his new partner has helped him in the execution of the export order. Ex. PW4/X2 does not establish any contract between the plaintiff and the defendants in regard to supply of know how and payment of consultancy fee. The defendant No. 1 being a company could not have entered into such an agreement with the plaintiff without a resolution of the Board of Directors. No such resolution has been proved on record by the defendants to establish their plea that this amount was received towards consultancy fee for supply of know how. The defendant No. 2 even while appearing as DW1 did not make any statement in support of this plea and rather raised a totally new plea by saying that this amount was paid by the plaintiff to another company known as M/s. Maxin Exports Pvt. Ltd. This plea was not only beyond pleadings but contrary also to the defense raised by the defendants in their written statement that this amount was paid to them as consideration for supply of know-how. Once the defendants admitted the receipt of the amount of Rs. 20 lakhs from the plaintiff the burden came upon them also to establish their plea that it was a consultancy fee only and not a loan.

Therefore, in view of the evidence on record this Court has no hesitation in holding that the plaintiff has succeeded in establishing that in September, 1988 a loan of Rs. 20 lakhs was advanced to the defendants. The plea raised by the defendants that this amount was consultancy fee towards know-how supplied by them to the plaintiff cannot be accepted as neither there is any evidence on record in support of this plea nor this plea is believable.

13. The next question to be considered by this Court as to who had advanced the loan of Rs. 20 lakhs and to whom. The plaintiff had not filed this suit on behalf of any firm nor had pleaded that the loan amount was advanced by any firm to the defendants. According to him in September, 1988 when the defendant No. 2 had approached him for financial assistance, he was the sole proprietor of M/s. Nikoleon Brothers and as such the loan of Rs. 20 lakhs was advanced by him to the defendants as the sole proprietor of M/s. Nikoleon Brothers. The testimonies of PWs 2, 3 and 4 establish on record that M/s. Nikoleon Brothers was converted into a partnership firm in December, 1988 only. PW3 Shri Suresh Kabari who joined the said firm as a partner deposed on oath that the loan was not advanced by the firm and rightly so for the reason that in September, 1988 when this loan was advanced to the defendants M/s. Nikoleon Brothers was a sole proprietorship concern of PW4 only. He rather went on t add that in his presence the defendant No. 2 had admitted having taken loan of Rs. 20 lakhs from the plaintiff on interest. No suggestion was given to this witness that the loan was advanced by a partnership firm. PW2 Shri Yogesh Gupta a Chartered Accountant of the plaintiff proved on record the certificates Ex. PW1/1, PW2/2 and PW1/3 issued on the basis books of accounts of the plaintiff to show that the amount in question was advanced by the plaintiff when he was the sole proprietor of M/s. Nikoleon Brothers. The defendant No. 2 while appearing as DW1 did not say that the loan was advanced by any firm. The statement of plaintiff appearing as PW4, that he did not know even the defendant No. 1 is not a contradiction to his case but a reassertion of the fact that the loan was advanced by him on the request of defendant No. 2 only though in the name of his company defendant No. 1. In the statement of PW4 details came out to show that the plaintiff knew defendant No. 2 since long and in course of time the defendant No. 2 even married the daughter of a friend of the plaintiff. Therefore, in view of the pleadings of the parties and the evidence on record, it is established on record that the loan of Rs. 20 lakhs was advanced by the plaintiff himself while he was the sole proprietor of M/s. Nikoleon Brothers.

14. Regarding the controversy as to whom this amount was advanced, it is found that in the plaint the plaintiff had clearly and categorically pleaded that the defendant No. 2 had approached him with a request for loan as he was facing a financial crisis and had asked for a short term temporary loan of Rs. 20 lakhs which was to carry interest of 21 per cent per annum. The case set up by the plaintiff is supported by the plaintiff himself as PW4, PW1 his Accountant, PW2 his Chartered Accountant and PW3 Shri Suresh Kabari who became his partner later on when M/s Nikoleon Brothers was converted in to a partnership firm. The plaintiff has stated on oath that he had given by loan to defendant No. 2. He denied the suggestion that the defendant No. 2 had been imp leaded merely in his capacity as the Managing Director of defendant No. 1 and added that he knew defendant No. 2 only and not defendant No. 1 PW1 Mukesh Gupta who had prepared the vouchers PW1/1 and PW1/2 was categorically in his statement that the cheques in question were handed over to defendant No. 2 after he had signed the vouchers. PW3 also corroborated the plaintiff's statement by saying that in his presence, the defendant No. 2 had admitted having taken loan of Rs. 20 lakhs from the plaintiff on interest. Defendant No. 2 appearing as DW 1 did not say that his loan was given to defendant No.1 only and rather raised a totally knew plea by saying that this loan was given to some other company know as M/s. Maxin Export Pvt. Ltd. If the defendant No. 2 obtained this loan and signed the vouchers Ex. PW1/1 and PW1/2 merely on behalf of the company defendant No. 1 he ought to have proved on record some resolution of the company defendant No. 1 resolving to take loan or payment from the plaintiff. This has not been done. To the contrary the plea raised by the defendants in their written statement was that it was not at all a loan but consultancy fee whereas while appearing as DW1, the defendant No. 2 introduced a new plea that his payment was made to some other company and as such there is nothing on record to hold that this loan was not advanced to the defendants as alleged by the plaintiff.

15. The defendant have raised serious objections in regard to the genuineness and authenticity of the vouchers Exts. PW1/1 and PW1/2. It is contended that these vouchers were only general vouchers but are sought to be proved on record as receipt vouchers. This Court, however, is of the considered opinion that in view of the fact that the payment of amount was through cheques and further in view of the fact that the payments stand admitted in the written statement the question as to whether Ext. PW1/1 and PW1/2 were general vouchers or receipt vouchers is of no significance. In fact the relevance of these vouchers got lost as soon the receipt of Rs. 20 lakhs was admitted by the defendants. The plea that at the time of signing PW1/1 and PW1/2 these were blank cannot be believed for the reason that PW1 has deposed on oath that these vouchers were filled up by him and after these had been prepared the defendant No. 2 had signed the same after receiving the cheques.

Nothing could be brought out in his cross examination to falsify him. No evidence in rebuttal has been produced by the defendants. Defendant No. 2 even while appearing as DW1 did not say that when he signed the vouchers Exts. PW1/1 and PW1/2 these were not filled up. The burden of proving this assertion was squarely upon the defendants which they have miserably failed to discharge.

16. The controversy in regard to the affixation of the revenue stamps and crossing is also not very important for the reason that PW1 admitted that at the time of preparation of these vouchers revenue stamps were not available and those were affixed later. The argument of the defendants that the revenue stamps had not been affixed till after the filing of the suit cannot be accepted for the reason that Along with the plaint itself the plaintiff had filed the photo copies of these vouchers as Annexure A-1 and A-2 in which the photo copy of the revenue stamps were clearly visible.

Relying upon Niranjan Singh v. Gurdev Singh reported in 1(1997) BC page 45 the defendants argued that since revenue stamps were affixed on Exts. PW1/1 and PW1/2 subsequently the suit must be dismissed. This Court is of the opinion that in view of the admission of the payments by two cheques of Rs. 10 lakhs each the relevance and importance of Exts. PW1/1 and PW1/2 gets lost. Without relying upon these receipts even the Court has ample evidence on record to hold that loan of Rs. 20 lakhs was given to defendants by the plaintiff.

The controversy raised by the defendants in regard to the manipulation, interpolation, fabrication of Ex. PW1/1 and Ex. PW1/2 is not at all material and deserves to be rejected.

17. In view of the pleadings of the parties and the evidence on record, this Court is of the considered view that a sum of Rs. 20 lakhs was advanced as loan by the plaintiff to the defendants as a short term loan on interest of 21 per cent per annum. There is nothing on record to show that the amount of Rs. 20 lakhs was paid by the plaintiff to the defendants by way of consultancy fee. It is proved on record that this loan was advanced by the plaintiff when he was sole proprietor of M/s.

Nikoleon Brothers and the loan was never transferred to the partnership firm and continued to remain a actionable claim with the plaintiff. In para 1 of the plaint itself the plaintiff had alleged that the defendant No. 2 was party to the contract which clearly conveyed that the defendant No. 2 was not signing the vouchers or receiving the cheques merely on behalf of defendant No. 1. Ex. PW2/1, the capital account of the plaintiff and Ex. PW2/2 and PW2/3, the balance sheets of the partnership firm, clearly establish on record that the loan advanced to the defendants was a loan advanced by the plaintiff himself and it had nothing to do with the partnership firm of the plaintiff which came into existence towards the end of 1988. In view of the advancement of the loan and non payment thereof by the defendants inspite of demands and notices a cause of action had arisen in favor of the plaintiff and against the defendants. Issues stand disposed of accordingly.

18. In view of the decision of the foregoing issues, the plaintiff is entitled to recover a sum of Rs. 20 lakhs as principal amount from the defendants and sum of Rs. 4,20,000/- as interest thereon @ 21 per cent per annum up to September, 1989. The rate of interest was mentioned not only in Exs. PW1/1 and Ex. PW1/2 but is supported by statements of witnesses also and as such the plaintiff is entitled to claim interest on this rate. The issue stands disposed of accordingly.

19. This suit was filed by the plaintiff in the year 1989. It is established on record that the defendants have been contesting this suit on totally false and frivolous grounds. The plaintiff is, therefore, entitled to pendente lite and future interest on the suit amount from the date of the filing of the suit till realisation. Considering the market conditions and Bank rate of interest during the last decades and the facts and circumstances of the case, this Court is of the considered view that the plaintiff should be awarded pendente lite and future interest @ 12 per cent per annum from the date of the filing of the suit till realisation. It is ordered accordingly. Issue stands disposed of.

RELIEF

20. In view of the decision of the foregoing issues as decree in the sum of Rs. 24,20,000/- with costs is passed in favor of the plaintiff and against the defendants.

The plaintiff is entitled to pendentelite and future interest @ 12 per cent per annum from the date of the filing of the suit till realisation. Both the defendants are held liable jointly and severally.

Decree sheet be prepared.