Universal Music India Limited vs Subodh Garg
2004 Latest Caselaw 332 Del

JUDGMENT

Mukundakam Sharma, J.

1.By this judgment and order, I propose to dispose of the application, which is filed by the defendant praying for leave to defend the suit filed by the plaintiff, which is registered as IA No.9245/2001.

2.The suit is filed by the plaintiff praying for a decree against the defendant for recovery of an amount of Rs.37,92,927.47p along with pendente lite and future interest and cost. The plaintiff is engaged in the business of manufacture and supply and marketing of audio cassettes and CDs. The defendant, who is the proprietor of M/s Shiva Electronics, is engaged in the business of trading and selling the said products and other products.

3.In 1994, the plaintiff appointed the defendant as a dealer of the products manufactured and marketed by the plaintiff. It is stated in the plaint that subsequent to the said appointment, products of the plaintiff were duly supplied by the plaintiff to the defendant against invoices raised at mutually agreed price and rates. It is alleged that the defendant, however, failed to adhere to the agreed terms of payment and began making only part account payments whereupon a running account came to be established. It is also alleged that on 31.3.2000, a sum of Rs.23,59,908.19 was due and payable by the defendant to the plaintiff as against which on 30.4.2000, the defendant made an on account payment of Rs.8,00,000/- vide cheque No.658505 drawn on Canara Bank, followed by a further on account payment of Rs.4,00,000/- vide cheque No.658517 drawn on Canara Bank. However, both the aforesaid cheques were returned unpaid by the bank upon presentation. It is further alleged that during the financial year 1999-2000, the plaintiff supplied to the defendant a number of consignments of the products which were duly received and accepted by the defendant and that after receipt of the said consignments and after settling accounts and adjusting credit under credit notes for the products returned by the defendant and also adjusting the payments made by the defendant, the defendant owed to the plaintiff a sum of Rs.37,92,927.47p. It is also alleged that in discharge of the said liability, the defendant issued in favor of the plaintiff various cheques numbering seven towards payment of the amount owed to the plaintiff being Rs.37,92,927.47p. However, the aforesaid cheques when sent for collection by the plaintiff, six cheques for the value of Rs.2,00,000/- each were returned back unpaid to the plaintiff with the remarks "insufficient funds" on 2.8.2000 and the last cheque drawn on Vaish Co-op. New Bank Ltd. for Rs.25,92,927.47 was returned back by the defendant's bankers on 9.8.2000 with the remarks "account closed". Consequently, the present suit was filed under the provisions of Order xxxvII of the Code of Civil Procedure seeking for the aforesaid reliefs.

4.The defendant entered appearance upon which summons for judgment were taken out. On service of of the aforesaid summons for judgment, the defendant filed the aforesaid application under Order xxxvII Rule 5 CPC praying for grant of leave to defend the present suit. The pleadings having been completed in respect of the said application, the same was listed for arguments before me and accordingly, I heard the counsel appearing for the parties. I have also perused the records to which reference was made by the counsel appearing for the parties during the course of their submissions. In the light of the said submissions of the counsel for the parties and the documents on which reliance was placed by the counsel, I proceed to give my reasoned decision on the pleas raised in the aforesaid application.

5.It is submitted by the counsel appearing for the defendant that the cheque dated 8.8.2000 shown to have been issued in favor of the plaintiff for an amount of Rs.25,92,927.47p was actually given and handed over to the plaintiff company sometime around December 1997 totally blank i.e. without mentioning any amount or filling up any date therein in the said cheque except mentioning the name of Polygram India Ltd. and putting signatures of the defendant. It is submitted that the aforesaid cheque has been misutilised by the plaintiff company by filling the amount in the cheque both in figures and words, and also filling up the date as 8.8.2000 on the said cheque, which, according to the learned counsel, itself raises a strong friable issue against the plaintiff company. It was also submitted that the aforesaid cheque in dispute would not be covered under the definition of bill of exchange as defined in the Negotiable Instruments Act, for a cheque which is blank without any amount mentioned therein is neither a bill of exchange under Section 5 of the Negotiable Instruments Act nor is a cheque under Section 6 of Negotiable Instruments Act and cannot be said to be an instrument which is payable on demand under Section 19 of Negotiable Instruments Act. The counsel also submitted that the other friable issue which is raised in the affidavit filed by the defendant relates to the disputes regrading the statement of accounts. It was submitted that the statement of account filed along with the suit is wholly incorrect and wrong. It was submitted that the plaintiff has till date not settled the claim of the defendant towards incentive called "free of cost" as against which the defendant is entitled to receive the benefit of an amount of Rs.17,54,252.56p in that regard. A statement of account giving the details of the said claim is mentioned in the affidavit filed. It was also contended by the counsel appearing for the defendant that the defendant has a further claim of Rs.10 lacs as against the plaintiff company towards goods returned back to the plaintiff company and also goods lying unsold and returned from the dealers to the defendant. It was submitted that the said goods are required to be taken back by the plaintiff company and adjustment of the amount in that regard is required to be given in the accounts of the defendant. Further submission of the counsel for the defendant was in respect of two bills / invoices dated 13.12.1999 and 14.12.1999 for a total amount of 5.63 lacs. It was submitted in respect of the aforesaid two bills / invoices that the defendant never received any goods or materials against the said bills / invoices and, therefore, the said amount is not payable by the defendant.

6.In the background of the aforesaid submissions, the counsel submitted that the defense which is raised by the defendant is honest and bona fide, which could be decided only by leading evidence and since strong friable issues have been raised by the defendant in his application seeking for leave to defend, therefore, such leave should be granted to the defendant and the suit is required to be tried as an ordinary suit.

7.Counsel appearing for the plaintiff, however, submitted that the aforesaid cheque which is dated 8.8.2000 was given in the custody of the plaintiff by the defendant himself for payment of the unpaid amount duly signed in favor of the plaintiff with a clear stipulation that the balance amount which is payable by the defendant to the plaintiff could be realised by encashing the same from the bank. It was also submitted that since the said cheque was issued by the defendant in favor of the plaintiff towards payment of the unpaid amount and the said cheque having been dishonoured by the bank on presentation along with six other cheques for a value of Rs.2.00 lacs each, the defense sought to be raised is not only vexatious but also moonshine and, therefore, the plaintiff is entitled to a decree forthwith. It was also submitted that as and when any good is returned back to the plaintiff company by the defendant, credit note is always issued by the plaintiff. In support of the said contention, counsel appearing for the plaintiff drew my attention to the various credit notes which are placed on record by the defendant in the application filed seeking for leave to defend. Relying on the said credit notes, it was submitted by the counsel that whatever goods have been returned by the defendant to the plaintiff, for the same credit notes have been issued by the plaintiff to the defendant and adjustment of the said amount is given to the defendant. In support of the aforesaid submission, the counsel referred to the detailed statement of accounts, which is placed on record. It was also submitted that the accounts between the parties have been finalised and on failure on the part of the defendant to clear the outstanding, the present suit for recovery of liquidated amount has been filed. It was also submitted that goods in respect of the two bills dated 13.12.1999 and 14.12.1999 have been duly received by the defendant and the duly signed invoices No.001714 and 001726 have been filed with the reply of the plaintiff. In the light of the aforesaid documents, it was submitted that the defendant is trying to create false defense in his favor.

8.I have considered the aforesaid submissions of the counsel appearing for the parties. In the present suit, reference is made to seven cheques, six of which are for an amount of Rs.2.00 lacs each total amounting to Rs.12 lacs and the seventh cheque which is dated 8.8.2000 is for an amount of Rs.25,92,927.47. All the six cheques for an amount of Rs.2.00 lacs each total amounting to Rs.12 lacs were also presented to the bank and the same were dishonoured by the bank on presentation. No dispute could or is raised as against the aforesaid six cheques. It is no doubt true that proceeding initiated by the plaintiff under Section 138 of the Negotiable Instruments Act were stayed by the High Court in a revision petition filed before it for quashing the said proceedings. However, the matter is still subjudice in this Court, so far criminal liability is only concerned. However, the fact remains that said cheques which were issued for an amount of Rs.12 lacs, were dishonoured by the bank when presented for encashment. No friable issue is sought to be raised or arises in respect of the aforesaid amount of Rs.12 lacs.

9.Therefore, the aforesaid facts and circumstances clearly disclose that the aforesaid amount of Rs.12 lacs is due and payable by the defendant to the plaintiff.

10.So far the other cheque dated 8.8.2000 for an amount of Rs.25,92,927.47 is concerned, it is an admitted position that a cheque duly signed by the defendant in favor of the plaintiff with the name of the plaintiff clearly scribbled on it was handed over to the plaintiff. The idea was that if any amount is due and payable by the defendant to the plaintiff, the same could be realised through the aforesaid cheque. Therefore, it cannot be said that the said cheque was not issued to the plaintiff by the defendant. The defendant has placed on record the entire statement of accounts from the year 1995 till August 2000. The liquidated outstanding for which the aforesaid suit is filed is clearly shown in the said statement of accounts. Therefore, the claim of the plaintiff as raised in this suit could be the subject matter of a summary suit. Cheques were issued in favor of the plaintiff by the defendant and, therefore, they were bills of exchange under the Negotiable Instruments Act. It is also stated by the plaintiff in the reply that all the seven cheques were presented to the bank as per the directions of the bank. It is also submitted that the plaintiff company fully cooperated with the investigating agency in case FIR No.570/2000 registered at the Police Station Daryaganj filed by the defendant alleging fraud in the aforesaid cheque dated 8.8.2000. It was also stated that the said matter was investigated by the police and that no truth has been found in the allegations levelled by the defendant and a cancellation report is submitted in respect of the aforesaid FIR. It is also denied by the plaintiff that there was any agreement regarding free of cost as is alleged by the defendant. It is the specific case of the plaintiff that the plaintiff at no stage had agreed or was under any obligation to supply any number of CDs/Cassettes free of cost and that there was absolutely no contractual liability of the plaintiff company in that regard and that the defendant by way of right cannot claim set off or adjustment in respect of the said amount.

11.I have considered the aforesaid pleas raised by the plaintiff and the defendant in respect of the aforesaid claim for cassettes and CDs to be supplied"free of cost". The agreement between the parties is absolutely silent that any such benefit is to be given to the defendant by the plaintiff. No other document is also placed on record by the defendant to prove that he is entitled by way of right to any such benefit. Therefore, I am of the considered opinion that the defendant cannot claim as of right any such benefit from the plaintiff. This is corroborated by the fact that there is no reflection in respect of the aforesaid claim shown in the statement of accounts as given to the defendant for the period of 1995 to August 2000. The records placed before me also make it crystal clear that all the credit notes which have been issued and given in favor of the defendant are accurately reflected in the statement of accounts. Nothing could be shown by the defendant that any of the aforesaid entries made in the statement of accounts filed is false and not genuine.

12.In that view of the matter, I am of the considered opinion that no friable issue arises in the present case. The defense that is raised by the defendant is vexatious and moonshine and the same is raised only in order to delay payment of the amount which is due and payable to the plaintiff. Since it is held that no friable issue arises for consideration, the plaintiff is entitled to a decree. Accordingly, a decree is passed in favor of the plaintiff and against the defendant for recovery of an amount of Rs.37,92,927.47p with cost. In addition, the plaintiff shall also be entitled to interest @ 12 % per annum from the date of the amount falling due till the date of payment.

Mukundakam Sharma, J