Bpl Limited vs Hindustan Traders Co. & Ors.
2008 Latest Caselaw 2214 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                  CS(OS) 331/2005



%11.12.2008                           Date of decision: 11.12.2008



BPL LIMITED                                                  ....... Plaintiff
                               Through:          Ms. Jhuma Bose, Advocate

                                    Versus

HINDUSTAN TRADERS CO. & ORS.                                 .....Defendants
                               Through:         None


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

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
      in the Digest?                        YES


RAJIV SAHAI ENDLAW, J.

1. The plaintiff has instituted the suit for recovery of

Rs.25,28,847/- from the defendants jointly and severally together

with pendente lite and future interest. The defendants were

proceeded ex-parte vide order dated 25th April, 2007. The plaintiff

has led its ex-parte evidence in the form of affidavit (Ex. PW1/A) by

way of examination in chief of its sole witness Shri R.

Sathyanarayanan. The witness has also tendered documents Exhibit

P1/1, Exhibit P1/1A, Exhibit P1/2 - P1/61 and Exhibit P1/62 - Exhibit

P1/64.

2. It is inter-alia in the case of the plaintiff and in evidence that

the plaintiff is engaged in the business of manufacturing and

marketing of electronic goods; that the defendant No.1 of which the

defendant No.2 is the sole proprietor was the dealer of the plaintiff;

that the plaintiff used to supply electronic goods to the defendant

No.1 and raised invoices on the defendant No.1; that the defendant

No.1 was to pay the amount of the invoice on or before the due date;

that it was however agreed by the defendants that if they fail to

make the payments on time they will pay interest at 24% per annum

on the value of the invoice; that the plaintiff effected the supply of

goods on the defendants and the defendants used to make on

account payments from time to time against the various invoices

raised by the plaintiff; that the said payments were adjusted against

the various invoices by the plaintiff after giving due credit as and

when the payments were received; that the plaintiff filed CS(OS)

No.2742/1999 in this court for recovery of Rs.39,67,465.19 then due

from the defendants; that during the pendency of the aforesaid suit

the matter was settled and the plaintiff agreed, against the then

outstanding amount of Rs.29,17,253/- as on 25th January, 2001, to

pay a sum of Rs.19,17,253/- only in full and final settlement; that the

plaintiff in the circumstances withdrew CS(OS)No.2742/1999 on 3 rd

September, 2001; that the plaintiff thereafter continued transacting

business with the defendants and the defendants issued to the

plaintiff various cheques for a total a sum of Rs.13,51,856/- towards

outstanding for supplies made till the date of institution of this suit;

that out of the total cheques for Rs.13,51,856/-, 28 cheques for a

total of sum of Rs.7,77,795/- were returned dishonoured to the

plaintiff for the reason of insufficiency of funds in the bank account

of the defendants; that the plaintiff, in the circumstances did not

even present the remaining 17 cheques for a total sum of

Rs.5,74,061/-; that besides the cheques for a total sum of

Rs.13,51,856/-, supplies against other invoices for a total sum of

Rs.5,04,671.33 were also made by the plaintiff to the defendants and

for which no cheques were issued. The plaintiff, thus, claimed that a

total principal sum of Rs.18,56,527.33 (Rs.13,51,856/- for which

cheques were issued + Rs.5,04,671.33 for the balance amount for

which cheques were not issued) was due from the defendants to the

plaintiff. The plaintiff besides the said amount claimed interest of

Rs.6,72,320.46 at 12% per annum on the outstandings, till the date

of institution of the suit, making the suit for recovery of

Rs.25,28,847/-. The plaintiff also claimed pendente lite and future

interest.

3. Even though, the evidence aforesaid of the plaintiff remains

unrebutted by the defendants but I find that the entire claim of the

plaintiff in the present suit is not within time. Section 3 of the

Limitation Act, 1963 provides that a suit instituted after the

prescribed period "shall be dismissed, although limitation has not

been set-up as a defence". Even in a matter where defendant is ex-

parte, the claim which is found to be barred by time cannot be

allowed.

4. Before discussing the aspect of limitation, I may also notice

that the plaintiff besides the defendants No.1&2 (supra) has also

impleaded defendant No.3 who is stated to be the authorized

signatory of the defendant No.1. All the cheques aforesaid issued by

the defendant No.1 to the plaintiff are signed not by the defendant

No.2 as the proprietor of the defendant No.1 but by the defendant

No.3 as the authorized signatory of the defendant No.1. Section 28

of the Negotiable Instruments Act, 1881 provides that an agent who

signs his name to a promissory note, bill of exchange or a cheque

without indicating thereon that he signs as agent or that he does not

intend thereby to incur personal responsibility, is liable personally on

the instrument, except to those who induced him to sign upon the

belief that the principal only would be held liable. Section 7 of the

said Act defines the maker of a cheque as the drawer. Section 30 of

the Negotiable Instruments Act makes a drawer of a cheque liable to

compensate the holder. Thus, in the present case, as far as the claim

on the basis of the cheques signed by the defendant No.3 is

concerned, the defendant No.3 having signed as a cheque as

authorized signatory and having not disclosed that he does not

intend to incur personal liability, would be liable for the amount, if

any, found due on the said cheques.

5. Coming back to the issue of limitation, the plaintiff has in the

plaint set out a table of the cheques issued by the defendants and

returned dishonoured to the plaintiff as under:-

 Sr.       Cheque No.                 Date            Amount (Rs.)
 No.
1.      252010                    20.12.2001              25,921
2.      252012                    22.12.2001              37,721
3.      252024                    24.12.2001              40,000
4.      252023                    23.12.2001              36,931
5.      252033                    26.12.2001              14,520
6.      252038                    28.12.2001              42,500
7.      252037                    27.12.2001              26,380
8.      252048                    29.12.2001              52,096
9.      252058                    31.12.2001              21,779
10.     252059                    08.01.2002              14,800
11.     252551                    06.01.2002              11,739
12.     252550                    05.01.2002              28,190
13.     252569                    09.01.2002              30,000
14.     252568                    08.01.2002              24,220
15.     252567                    18.01.2002              14,800
16.     252581                    19.01.2002              22,200
17.     252587                    17.01.2002              32,240
18.     252595                    18.01.2002              23,337
19.     252719                    23.01.2002              56,980
20.     252752                    22.12.2001              26,220
21.     252798                    30.01.2002              45,545
22.     252022                    02.01.2002              25,169
23.     252522                    09.01.2002              17,580
24.     252068                    09.01.2002              15,179
25.     252585                    20.01.2002              15,179
26.     252031                    07.01.2002              17,580
27.     252598                    20.01.2002              43,948
28.     252049                    09.01.2002              15,041

Similarly, the plaintiff has in the plaint set out a table of the

cheques issued by the defendants but not presented by the plaintiff

as under:

 Sr.        Cheque No.                 Date              Amount (Rs.)
 No.
1.      252562                     07.01.2002                26,220
2.      252577                     15.01.2002                17,480
3.      252586                     16.01.2002                40,000
4.      252716                     22.01.2002                24,357
5.      252722                     24.01.2002                28,655
6.      252732                     27.01.2002                35,000
7.      252733                     28.01.2002                42,499
8.      586955                     01.02.2002                59,339
9.      586954                     31.01.2002                59,339
10.     586956                     02.02.2002                40,000
11.     586957                     03.02.2002                46,439
12.     252751                     30.01.2002                45,545
13.     252725                     26.01.2002                35,158
14.     252723                     25.01.2002                17,579
15.     252724                     25.01.2002                26,369
16.     252730                     28.01.2002                15,041
17.     586976                     05.02.2002                15,041

The plaintiff has in the plaint also set out a table of the invoices

for the other supplies made by the plaintiff to the defendants and

against which no cheques even were issued, as under:

 Sr.        Invoice No.                Date              Amount (Rs.)
 No.
1.      204808                     16.11.2001                 20434
2.      204901                     19.11.2001                 97158
3.      205114                     24.11.2001                 34730
4.      205334                     29.11.2001                 29600
5.      205438                     30.11.2001                 26220
6.      205560                     03.12.2001                 26380
7.      205574                     04.12.2001               58794.66
8.      205623                     06.12.2001               14519.34
9.      205634                     07.12.2001                 11739
10.     205648                     07.12.2001                 60519
11.     205682                     08.12.2001                 29979
12.     205736                     11.12.2001                 45010
13.     205753                     12.12.2001               30150.73
14.     205754                     12.12.2001                 17379
15.     255257                     21.11.200,1               2058.60

6. As far as the limitation qua the amount for which cheques were

issued, the limitation prescribed in Article 14 of Schedule 1 of the

Limitation Act for the recovery of price of goods sold and delivered,

as the transaction between the parties herein was, where no fixed

period of credit is agreed upon is prescribed as three years

commencing from the date of the delivery of the goods. Article 15

concerns a suit for the price of goods sold and delivered, to be paid

for after the expiry of a fixed period of credit. The limitation of three

years in such cases commences from the date when the period of

credit expires. Though, the witness of the plaintiff in his affidavit

aforesaid deposed in para 14 that the defendants were liable to pay

the amount of the invoices on or before the due dates, a perusal of

the invoices-cum-challans proved by the plaintiff does not have a

column of due date. It does have a column of payment terms, but

nothing is filled therein. In the absence of any pleading or evidence

to the effect that there was a fixed period of credit and in the

absence of the invoices-cum-challans of the plaintiff showing so,

there is no option but to hold that the case would fall in Article 14

(supra) and the period of three years would commence from the date

of delivery of the goods.

7. Thus, as far as the claim for Rs.5,04,671.33 is concerned and

for which as aforesaid, the defendants No.1&2 only and not

defendant No.3 are liable, it has to be seen as to how many of the

invoices-cum-challans are of a date within three years prior to the

institution of the suit. The documents proved being invoices-cum-

challans, the date thereof has to be taken as the date of delivery.

8. The suit was instituted on 12th January, 2005. A perusal of the

invoices for total sum of Rs. 5,04,671.33/-as reproduced herein above

would show that none of the invoices are within the period of three

years prior to the institution of the suit. Thus, the claim for

Rs.5,04,671.33/- is barred by time.

9. As far as the claim for the price of invoices for which cheques

aforesaid are stated to be issued, even though the date of invoices

against which the cheques were issued may be of more than three

years prior to the institution of the suit, issuance of the cheques for

the same would give a fresh cause of action to the plaintiff. The next

question which arises is as to from which day three years to be

counted with respect to the cheques which have been dishonoured.

It has been held in Ashok K. Khurana vs. M/s Steelman

Industries AIR 2000 Delhi 336 DB and Technofab Engineering

Ltd. vs. Nuchem Weir India Ltd. 136 (2007) DLT 223 that the

limitation commences from the date of the cheque and not from the

date of presentation or dishonor thereof. The relevant Article of

Schedule 1 to the Limitation Act is Article 35. Thus, it has to be seen

as to how many of the cheques, whether presented or not are of a

date within three years prior to the institution of the suit on 12th

January, 2005. I find only the cheques at serials No. 15,16 to 19, 21,

25 and 27 in the table of the cheques dishonoured and cheques at

serials No. 2 to 17 in the table of the cheques not presented to be of

a date within three years prior to the institution of the suit. Thus, the

amount thereof only, total of which comes to Rs 8,02,070/- is within

time. The plaintiff would thus be entitled to a decree in the said

amount only towards principal, the balance principal amount being

barred by time.

10. The next question is of the rate of interest. The plaintiff has in

the plaint pleaded the agreement for payment of interest at 24% per

annum. However, the witness of the plaintiff has not deposed of

interest at such rate at any time in the earlier transactions between

the parties being paid. The plaintiff itself has claimed pre-institution

interest @ 12% per annum only. The invoices-cum-challans of the

plaintiff do not bear any provision for interest. However, transaction

between the parties, even though, of sale of goods, being a

commercial transaction, I find the claim for interest at 12% per

annum to be reasonable. The plaintiff is held entitled to pre-

institution interest at 12% per annum from the date of each of the

cheques, claim where for is found to be within time, till the

institution of the suit. However, post institution of the suit, the

record reveals that the plaintiff has been highly negligent in

prosecuting the suit. The plaintiff failed to take steps for service of

the defendants after the institution of the suit till 12th September,

2006, as noticed in the order of that date. The plaintiff thereafter

also sought adjournments at each and every stage. In the

circumstances, I find the plaintiff entitled to interest pendente lite @

6% per annum only in the principal amount found out as aforesaid.

11. As far as the future interest is concerned, the plaintiff would be

entitled to interest on the principal amount at 6% per annum only

from the date of the decree and for a period of 90 days, in which

time the defendants are expected to pay the decretal amount.

However, for the delay, if any, by the defendants in payment of

decretal amount beyond 90 days, defendants shall be liable for

interest on the principal amount at 18% per annum. The decree

sheet be drawn upon accordingly. The plaintiff shall also be entitled

to proportionate costs of the suit.

RAJIV SAHAI ENDLAW (JUDGE) December 11, 2008 PP