Mohinder Singh vs The Nsic Ltd. & Ors.
2008 Latest Caselaw 1848 Del

*                 IN THE HIGH COURT OF DELHI


                  Judgment reserved on : September 25, 2008

%                 Judgment delivered on : October 20, 2008

+                           RFA No.215/2004



      MOHINDER SINGH                           ....... Appellant

                  Through: Mr. K.C.Dua, Advocate

                            versus

      THE NSIC LTD. & ORS.                     ....... Respondents

                  Through: Mr. Sanat Kumar, Advocate

CORAM:
HON'BLE MR. JUSTICE PRADEEP NANDRAJOG
HON'BLE MR. JUSTICE J.R. MIDHA


1.    Whether reporters of local papers may be allowed
      to see the judgment?

2.    To be referred to the Reporter or not?

3.    Whether judgment should be reported in Digest?


: PRADEEP NANDRAJOG, J.

1. The present appeal under Section 96 of the Code of

Civil Procedure has been preferred against the judgment and

decree dated 27.01.2004 passed by the learned Trial Court

wherein suit filed by the respondent No.1 company for

recovery of money from appellant and respondents Nos.2 and

3 stands decreed.

2. Backdrop leading to filing of the present appeal are

that the respondent No.1 company had filed a suit for recovery

of Rs.3,11,459.11 together with interests and costs against the

appellant and respondents Nos.2 and 3. As per the averments

made in the suit, four hire purchase agreements (three

agreements were dated 31.12.1987 and one agreement was

dated 08.07.1991) were entered into between the respondents

in respect of certain machines. The respondent No.1 company

was the owner and respondents Nos.2 and 3 were the hirer of

the machines. The relevant terms of the agreements were that

the respondents Nos.2 and 3 were required to deposit earnest

money with the respondent No.1 company and thereafter

make necessary payments at regular intervals to the

respondent No.1 company. The payments were required to be

made either at Delhi or Ludhiana. To secure the payment under

the said agreements, a contract of guarantee was entered into

between the appellant who was the father of respondent No.3

and respondent No.1 company wherein the appellant

undertook to make payment in case of default committed by

the respondents Nos. 2 and 3 in making payment under the

said hire purchase agreements. The respondent Nos. 2 and 3

defaulted in making the stipulated payment and the books of

accounts of the respondent No.1 company evidences that

Rs.2,45,584.11 is due and payable against the respondent

nos.2 an 3 and therefore the present suit was filed against the

respondents Nos. 2 and 3 and the appellant who was the

guarantor of the said respondents.

3. Respondents Nos.2 and 3 chose not to contest the

suit and therefore were proceeded ex-parte by the learned Trial

Court.

4. The appellant averred in his written statement that

the dispute which arose between the respondents under the

hire purchase agreements was settled. Pursuant to the

settlement, the respondent No. 3 paid a sum of Rs.95,000/- in

cash and issued three cheques in sum of Rs.35,000/- each in

favour of the respondent No.1 company. With the settlement

arrived at between the respondents, resulting in making of

cash payment and issuance of cheques, obligations under the

original hire purchase agreements stood discharged. In

essence, the plea was that the settlement arrived at between

the parties amounted to a new agreement between the

respondents, the subject-matter of which was the performance

of the settlement. Since the obligations under the original hire

purchase agreements stood discharged, the contract of

guarantee which was entered into between the appellant and

the respondent No.1 company for securing the performance of

obligations of the respondents under the original hire purchase

agreements stood terminated and therefore the appellant is

not liable to pay the amount claimed by the respondent No.1

company.

5. A preliminary objection as regards the jurisdiction of

courts at Delhi was also raised by the appellant on the ground

that the contract of guarantee excluded the jurisdiction of

courts at Delhi in as much it stipulated that the disputes

arising between the parties shall be adjudicated only by the

courts at Ludhiana.

6. On basis of the pleadings of the parties, following

issues were framed by the learned Trial Court:-

"1. Whether this court has jurisdiction to try and entertain the present suit?OPD

2. Whether the suit is barred by limitation?OPD

3. Whether the defendant no.3 stands discharged from the surety due to novation, as so alleged in preliminary objection No.1 of the written statement?

4. Whether the suit has been signed, verified and filed by a duly authorized person? OPP

5. Whether the plaintiff is entitled for recovery of the suit amount?OPP

6. Whether the plaintiff is entitled to interest, if so, then at what rate and to what extent?OPP

7. Whether the plaintiff is entitled for the recovery of the possession of the hired machines or in the alternative for its residual value?OPP

8. Relief."

7. At the trial, the respondent No.1 company examined

one Mr.Rajeev Jain, who was the Development Officer (Law) of

the respondent No.1 company and one Mr.Rajesh Kumar who

was the Deputy Manager (Accounts) of the respondent No.1

company as PW-1 and PW-2 respectively. Both the witnesses

deposed on the lines of the averments made in the plaint.

They denied that any settlement was arrived at between the

respondents. The alleged cash payment of Rs.95,000/- made

by the respondent No.3 was denied. The factum of issuance of

three cheques in sum of Rs.35,000/- by the respondent No.3

was admitted however it was explained that the said cheques

were issued towards payments due and not towards

settlement as alleged by the appellant and that the said

cheques were dishonoured.

8. On behalf of the appellant, appellant himself

stepped into the witness box as DW1/D3. In his testimony, he

reiterated the stand taken by him in his written statement.

9. We need not note the documentary evidence led by

the parties inasmuch as no serious grievance has been raised

by the appellant with regard to appreciation of documentary

evidence by the learned Trial Court.

10. After considering the case set up the parties in its

totality, vide judgment and decree dated 27.01.2004, the

learned Trial Court decreed the suit filed by the respondent

No.1 company and directed the appellant to pay a sum of

Rs.2,54,584.11 to the respondent No.1 company together with

interest @17% per annum from the date of filing of the suit till

the date of realization.

11. The first grievance raised by the appellant is that

the learned Trial Court erred in holding that the courts in Delhi

have the jurisdiction to adjudicate upon the present suit.

12. The hire purchase agreements Ex.PW-1/5 to Ex.PW-

1/7 stipulate that the payment which is required to be made

thereunder could be made either at Delhi or Ludhiana and that

courts at Delhi 'alone' shall have jurisdiction to adjudicate

upon the disputes pertaining to hire purchase agreements.

Whereas contracts of guarantee Ex.PW-1/9 and Ex.PW-1/10

which was executed to secure the performance of obligations

arising under the hire purchase agreements stipulated that

payment could be made at Ludhiana and courts at Ludhiana

'alone' shall have jurisdiction to adjudicate upon the disputes

pertaining to contract of guarantee.

13. The dispute raised by the respondent No.1 company

in the suit related to performance of obligations under the hire

purchase agreements whereas defence taken by the appellant

was the termination of the contract of guarantee due to

discharge of obligations under the hire purchase agreements

due to settlement arrived at between the parties. Therefore, in

essence, the dispute in the suit pertain to

performance/discharge of obligations under the hire purchase

agreements and not to contract of guarantee and thus had to

be adjudicated upon by the courts at Delhi as per stipulation in

the hire purchase agreements. The stipulation in the contract

of guarantee pertaining to exclusive jurisdiction of courts at

Ludhiana would have come into play only when dispute

pertained to contract of guarantee.

14. Even otherwise, the courts at Delhi would have had

jurisdiction irrespective of stipulation of jurisdiction of Delhi

courts in hire purchase agreements as the payment under the

hire purchase agreements could have been made either at

Delhi or Ludhiana. It is settled law that part of cause of action

arises at a place where money is expressly or impliedly

payable under a contract. (See the decision of the Hon'ble

Supreme Court reported as ABC Laminart Pvt Ltd v AP

Agencies, Salem AIR 1989 SC 1239)

15. The second grievance raised by the appellant is that

the learned Trial Court has not correctly appreciated the law

relating to discharge of obligations under the contract due to

an accord.

16. We need not catena of authorities on the issue save

and except the decision of this court reported as Jindal

Aromatic v South Coast Spices Exports Pvt Ltd 106

(2003) DLT 798 wherein the law relating to discharge of a

contract due to an accord was summarized as under:-

"The legal position which emerges from the aforesaid judgment is that an accord discharges the performance of obligations under the contract. A dispute pertaining to satisfaction furnishes a fresh and independent cause of action, until and unless it is provided that the performance of the satisfaction was a condition precedent for discharge under the contract. If promise is received in satisfaction, it is a good satisfaction, but if the performance and not the promise is intended to operate in satisfaction, then there will be no satisfaction without performance. Wherever there is an accord, obligations under the original contract would be discharged until and unless it is specifically provided that the performance of satisfaction would discharge the obligations under the contract." (Emphasis Supplied)

17. In a given case, whether a promise or performance

thereof is intended to operate as satisfaction would depend

upon the pleadings of the parties, evidence led and other facts

and circumstances of the case.

18. In the instant case, the circumstance that no

document recording the alleged satisfaction/settlement was

executed by the parties is strongly suggestive of the fact that

the performance of the alleged satisfaction/settlement was a

condition precedent for discharge of obligations under the hire

purchase agreement.

19. In such circumstances, it cannot be held that

alleged cash payment of Rs.95,000/- and issuance of cheques

by the respondent no.3 has discharged the obligations under

the hire purchase agreement and has resulted in termination

of the contract of guarantee.

20. There is yet another aspect of the matter.

21. In reply to the defence set up by the appellant, the

respondent No.1 company categorically pleaded that the

cheques were issued by the respondent no.3 towards the due

payment and not towards settlement as alleged by the

appellant. The factum of cash payment of Rs.95,000/- by the

respondent No.3 was denied by the witnesses of the

respondent No.1 company in their testimony. The letter dated

01.02.2000 Ex.DW-3/3 issued by the respondent No.1 company

and addressed to respondent No.3 records that the cheques in

question were issued by the respondent No.3 towards

discharge of his liability under the hire purchase agreements.

22. Appellant has led no evidence to establish that the

cash payment of Rs.95,000/- was made by the respondent

No.3 or that the cheques in question were issued by the

respondent No.3 towards settlement arrived at between the

parties and not towards due payment under the hire purchase

agreements. Few letters written by the appellant to the

respondent No.1 company recording that the cash payment of

Rs.95,000/- was made by the respondent No.3 or that cheques

in question were issued by the respondent No.3 towards

settlement arrived at between the parties has been produced

in evidence by the appellant. Nothing much turns on said

letters as they are self-serving documents.

23. It is further relevant to note an interesting feature of

the testimony of the appellant. In his testimony as DW1/D3,

the appellant, had first deposed that the factum of settlement

of dispute between the respondents was told to him by

respondent No.3 and had later on deposed that he is not on

talking terms with the respondent No.3.

24. If the appellant was not on talking terms with the

respondent No.3 then how come the respondent No.3 told him

about the factum of settlement of dispute between the

respondents, remains a mystery?

25. The appellant had set up the plea of settlement of

dispute between the respondents, therefore, the onus of

proving the same was upon him which onus has not been

discharged by him.

26. For the reasons stated above, we find no merits in

the appeal.

27. In the result, the appeal is dismissed with costs.

28. TCR be returned.

PRADEEP NANDRAJOG, J.

J.R.MIDHA, J.

October 20, 2008 mm