Apollo Tyres Limited vs M/S. Surindra Tyres
2001 Latest Caselaw 453 Del

ORDER

K.S.Gupta. J.

1. This order will govern the disposal of I.As. 1366/98, 1367/98, 1368/98 and 1369/98.

2. Suit under Order xxxvII CPC was filed by Apollo Tyres Ltd alleging that it is a company incorporated under the Companies Act, 1956 and Kapil Kumar, Assistant Manager (Legal) is authorised to sign and verify the plaint and institute suit on its behalf under a General Power of Attorney executed on 26th February 1991 pursuant to resolution of Board of Directors of company dated 19th February 1991. The plaintiff is engaged in the manufacture and sale of automotive tyres, tubes and flaps. Defendant No. 1 is a partnership firm and is engaged in the sale and purchase of automotive tyres, tubes and flaps. Defendants 2 and 3 always represented themselves to be the partners of defendant No. 1 firm. It is further alleged that for the supplies made by plaintiff to defendants from April 18, 1994 to 12th August 1994 the plaintiff raised invoices against which the defendant No. 1 firm issued cheques for a total sum of Rs.14,74,574/-. The details of invoices raised Along with dates and amounts thereof of the total amount of Rs.14,74,574/- have been set out in Para No. 6 of the plaint. Particulars of the cheque issued by defendant No. 1 together with dates and amounts thereof have also been disclosed in that Para. It is alleged that the cheques issued by defendant No. 1 on presentation were dishonoured by its bankers. The plaintiff credited various credit notes of the total amount of Rs.74,797/- in the account of defendant No. 1. After giving credit for that amount a sum of Rs.13,99,777/- was due to the plaintiff company from defendants. Defendants are liable to pay interest on this amount @ 18% p.a. which comes to Rs. 4,59,127/- till the date of filing of suit. It was prayed that a decree for Rs.18,58,904/- which interest pendente lite and future be passed in favor of the plaintiff company and against the defendants jointly and severally.

3. Aforesaid I.A. 1366/98 was filed by defendants 1 & 2 under Order xxxvII Rule 4 read with Section 151 CPC on 11th February 1998 alleging that defendant No. 2 entered appearance on his behalf and for defendant No. 1 by filing application dated 12th December 1996. Thereafter neither any summons for judgment on the address given in plaint was tendered or refused by defendants 1 & 2. On 5th February 1998 the defendant No. 2 came to know from defendant No. 3 in regard to decree having been passed against the defendants. Defendant No. 3 learnt about the passing of decree from the Manager, Oriental Bank of Commerce, Vishal Enclave, New Delhi who told him that Kapil Kumar, Assistant Manager (Legal) of plaintiff company had written a letter that decree had been passed on 12th January 1998 and his bank account seized. Immediately, thereafter defendant No. 2 engaged a counsel and on inspection of court file on 7th February 1998 by him, it had been revealed that on summons for judgment for 12th January 1998 report of refusal was given by the process server. It is claimed that this report was obtained by Kapil Kumar, Assistant Manager (Legal) in connivance with the process server. It is further stated that defendant No. 3 was discharged from him liabilities towards defendant No. 1 after its dissolution on 6th April 1994. It is pleaded that defendants 1 & 2 have to take a sum of approximately Rs. 18 lakhs from the plaintiff company which amount wad deposited by defendant No. 1 firm with it from time to time and on which the plaintiff company was paying interest. It is further alleged that cost of rejected tyres which were to be taken back by plaintiff company, is more than Rs. 3 lakhs and accounts between the parties have not been settled till date. It was prayed that judgment and decree dated 12th January 1998 may be set aside and defendants 1 & 2 allowed to contest the suit on merits.

4. In aforesaid I.A. 1368/98 filed by defendant No. 3 on 11th February 1998 seeking similar relief it is additionally pleaded that no summons of any kind was tendered or refused by him. He came to know about the passing of judgment and decree dated 12th January 1998 on 5th February 1998 from the Manager, Oriental Bank of Commerce, Vishal Enclave, New Delhi, where he has maintaining account.

5. Aforementioned I.A.1367/98 by defendants 1 & 2, and I.A.1369/98 by defendant No.3 under Section 151 CPC were filed seeking stay of operation of the judgment and decree dated 12th January 1998.

6. In reply to said I.A.1366/98 filed by plaintiff company it is alleged that defendant No.2 refused to receive summons for judgment and also abused the process server as is recorded in the order dated 12th January 1998. It is emphatically denied that defendant No. 2 came to know of the judgment and decree on 5th February 1998 from defendant No.3 who in turn learnt about it from Manager, Oriental Bank of Commerce, Vishal Enclave, as alleged. It is alleged that suit was decreed against defendant No.3 on 22nd September 1997 in view of his having filed to file memo of appearance despite service of summons on him. After the passing of decree, the plaintiff filed execution application being no. 248/97 against defendant No.3 and by the order dated 6th December 1997 warrants of attachment for recovery of decretal amount was issued and account of defendant No.3 with the bank was attached. It is denied that report of refusal on the summons was obtained by Assistant Manager (Legal) in connivance with the process server as alleged. It is stated that in reply to plaintiff's letter dated 19th July 1996 the Oriental Bank of Commerce has sent letter dated July 24, 1996 to the plaintiff informing that defendant No.1 is a partnership firm consisting of defendants 2 and 3 as its partners. It is denied that defendants 1 & 2 are to receive about Rs. 18 lakhs from plaintiff which amount was allegedly deposited by them from time to time with plaintiff company. It is further denied that cost of rejected tyres to the returned by defendants 1 & 2 is more than Rs. 3 lakhs and accounts between the parties are yet to be settled as alleged. It is stated that defendant No. 1 firm as alleged. Along with the reply the photostat copy of letter dated 24th July 1996 sent by Roshnara Road branch of Oriental Bank of Commerce to plaintiff company with reference to its letter dated 19th July 1996, has been filed. This letter notices that as per the bank record, defendant No. 1 is a partnership concern consisting of Surinder Singh and Gajender Pal Singh (defendants 2 & 3) as partners.

7. Grounds identical to those taken in the reply to I.A.1366/98 have been pleaded in the reply to I.A.1386/98.

8. Defendant No.2 who filed aforesaid I.A.1366/98 on his behalf and on behalf of defendant No.1 firm expired on 14th October 1998 and I.A.1127/99 under Order 22 Rule 3 read with Section 151 CPC filed by his widow, 4 daughters and son who also happens to be defendant No.3 for bringing them on record in place of deceased, was dismissed by the order dated 5th February 1999. Relying on the decision in Jagarnath Singh vs. Srimati Singhashan Kuer and others, (Full Bench), 1984 PLJR 217 the submission advanced by Sh. V.K.Jain for defendants was that where no of the legal representatives of deceased party is before the court when matter is heard but in another capacity, then despite the legal representatives having been declined to be imp leaded in place of deceased, the case will not abate. Having considered the ratio of the said decision, I am inclined to hold that on the death of defendant No.2 I.A. 1366/98 would not abate and defendant No.3 can prosecute it.

9. Coming to merits of said I.As 1366 and 1368/98 submission advanced by Sh. B.L.Wali on behalf on plaintiff was that in I.A.1368/98, the relief claimed by defendant No.3 is for setting aside the judgment and decree dated 12th January 1998. In fact, suit was decreed against defendant No.3 on 22nd September 1997 on his failure to enter appearance after service of summons in Form IV in Appendix B of order xxxvII CPC and said application, thus, deserves to be dismissed being misconceived. On the other hand, it was pointed out by Sh. V.K.Jain for defendants that the order dated 22nd September 1997 as it stands, does not specify the amount for which suit was decreed against defendant No.3 and it is only in terms of the order dated 12th January 1998 that suit was decreed against all the defendants for Rs.18,58,904/- with costs and interest pendente lite and future @ 18% p.a. jointly and severally. It was further pointed out that in both the applications which are supported by the affidavits of defendants 2 & 3, it has been categorically denied that any summons was tendered or refused by them. Without touching the controversy if suit was decreed against defendant No.3 either in terms of the order dated 22nd September 1997 or 12th January 1998 and whether summons were tendered and refused by these defendants I proceed to dispose of said applications on the assumption that these disclose sufficient ground for setting aside the judgment(s) and decree(s) in question. Since in the two applications the defendants have also sought leave to defend the suit, let me examine if the leave prayed for is to be granted or not. It is pertinent to mention that in I.A.1366/98 the defendants 1 & 2 have not specifically denied that from 18th April 1994 to 12th August 1994 the plaintiff company supplied to defendant No.1 firm tyres etc of the total value of Rs.14,74,575/- against invoices as detailed in Para No.6 of the plaint and towards payment of said amount the defendant No. 1 issued 63 cheques as also detailed in said para No.6 of the total amount of Rs.14,74,575/- in favor of plaintiff company, in presentation the cheques were dishonoured and after allowing adjustments of credit notes for Rs.74,797/-, an amount of Rs.13,99,777/- was still due towards balance amount of supplies made during the said period from the defendants. Particularly Para No.11 of the application discloses the main defense on which leave to defend suit is claimed. It is alleged in this para that defendants 1 & 2 have to take a sum of approximately Rs.18 lakhs from the plaintiff company which amount was deposited by defendant No.1 firm with the company from time to time and plaintiff had been paying interest on this amount. It is further stated that cost of rejected tyres which were to be taken back by plaintiff company as per their policy, is more than Rs.3 lakhs. In corresponding para of the reply, the plaintiff has denied that defendants 1 & 2 have to take back approximately Rs.18 lakhs which they allegedly deposited with it from time to time or that the value of rejected tyres are to be returned to plaintiff company, is more than Rs.3 lakhs as alleged. It may be noticed that in said Para 11 or in any other para of the application the defendants 1 & 2 have not disclosed whether said amount of Rs. 18 lakhs was deposited by issuing cheques or in cash not date(s), month(s) and year(s) of deposits have been indicated. Furthermore, rejected tyres to be returned to plaintiff company also have not been quantified. Principles on which leave to defend suit is to be granted or refused by courts stand settled by Supreme Court in the decisions in Santosh Kumar vs. Bhai Mool Singh, AIR 1958 SC 1211 and M/s. Mechalec Engineers & Manufacturers, . In the absence of details to the said effect, obviously, the defense set up in said Para 11 about defendants having deposited approximately Rs.18 lakhs with plaintiff company from time to time and entitlement of more than Rs.3 lakhs towards value of rejected tyres is practically moonshine. Defendants 1 & 2 having admitted supplies of tyres etc of the total value of Rs.14,74,574/- during the period from 18th April 1974 to 20th August 1994 from plaintiff company and issuance of 63 cheques covering that amount which on presentation were dishonoured, applying the ratio of said two decisions the leave prayed for can only be granted to them subject to deposit of Rs.13,99,777/- which was payable by them after allowing adjustment for credit notes for Rs.74,797/-.

10. Coming to I.A.1368/98, the defense additionally taken by defendant No.3 is that on dissolution of defendant No.1 firm on 6th April 1994, he was discharged from this liabilities towards the firm which became sole proprietorship concern to defendant No.2. Looking at the volume of business transacted by defendant No.1 firm, in all probabilities it ought to have been assessed by Income-tax authorities. However, the copies of orders of assessment for the period beyond 6th April 1994 have not been filed by defendant No.3. Needless to repeat that by the letter dated 24th July 1996 filed Along with reply, Roshanara branch of Oriental Bank of Commerce where defendant No.1 firm was having account, had informed the plaintiff company that as per Bank's record the defendant No.3 was one of the partners of defendant No.1 firm. Thus a heavy burden lies on defendant No.3 to prove the said defense. Reasons given for conditional grant of leave in I.A.1366/98 equally apply to defendant No.3.

11. For the foregoing discussion, judgment(s) and decree(s) dated 22nd September 1997/12th January 1998 are set aside and defendants 1 & 3 are granted leave to contest suit on depositing Rs.13,99,777/- through a bank draft in the name of Registrar of this court within 4 weeks from today failing which decree for Rs.18,58,904/- with costs and interest pendente lite and future @ 12% p.a., transaction being commercial in nature, on account of Rs.13,99,777/- will be deemed to have been passed against them.

12. Applications stand disposed of.