M/S Ring Road Car Clinic vs Shri H.L.Advani & Ors.
2009 Latest Caselaw 1462 Del

*       HIGH COURT OF DELHI : NEW DELHI

                      RFA No. 446 of 1996

%             Judgment reserved on:25th March, 2009

              Judgment delivered on: 18th April, 2009


M/s Ring Road Car Clinic
Burmah Shell Petrol Pump,
Ring Raod, South Extension
Part No.1, New Delhi.                        .... Appellant

                     Through: Mr.Vikram Jetly, Adv.

                              Versus

 1.Shri H.L.Advani,
Sole Proprietor
M/s Machine Tool Engineering Co.
2616/2 Nehru Motor Market Extension,
Kashmere Gate, Delhi.

2. M/s Ring Road Service Station,
Burman Sheel Petrol Pump
Ring Road, South Ext. Part -I,
New Delhi.

3.M/s Chaudhary Service Station,
Burmah Sheel Petrol Pump,
Ring Road, South Extension Part-I
New Delhi.

4.Shri Y.K.Barmah,
N-83 Panchsheel,
New Delhi.                                 ...Respondents.

                     Through: Ms.Sunita Harish, Adv. for R-1



RFA No.446 of 1996                                Page 1 of 20
 Coram:
HON'BLE MR. JUSTICE V.B. GUPTA

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

2. To be referred to Reporter or not?                        Yes

3. Whether the judgment should be reported
   in the Digest?                                            Yes

V.B.Gupta, J.

Appellant has filed this appeal challenging the

judgment dated 5th August, 1996 passed by Addl.

District Judge, Delhi, vide which suit filed by

respondent No.1 herein, was decreed for a sum of

Rs.31,784.37 together with interest @ 18% per annum,

from the date of filing of the suit till realization.

Proportionate costs was also awarded in favour of the

respondent no.1.

2. The brief facts of this case are that respondent

No.1 filed suit for recovery against appellant and

respondents 2 to 4. Respondent No.1 is sole proprietor

of his firm. Appellant, on credit basis had been

purchasing motor parts from respondent no.1 from 8th

December, 1974 to 20th May, 1977. Last payment was

received by respondent no.1, on 27th April, 1997 for Rs.

3,000/- by cheque and this payment was made by

respondent no.3. Goods were also purchased after this

date. Appellant and respondent No.3, are sister

concern of respondent No.2. Respondent No.3 had

been placing orders on behalf of appellant.

Respondent No.4 was the workshop manager of

appellant and respondents 2 & 3.

3. It had been further alleged that the goods were

supplied along with bill and the same were received by

the appellant or respondent No.2 and 3 by themselves

or by their employees and the bills were signed on

account of receipts of the goods. Parties were

maintaining running account.

4. On 29th May, 1997, the accounts were checked by

Sh.Satnam Singh, respondent No.4 and Sh.Rajinder

Singh, partner of appellant and respondent No.2. It

was found that sum of Rs.21,684.17p. was due and

payable by appellant and respondents 2 & 3. A credit

note of Rs.694/- was also issued by respondent No.1 in

favour of appellant and respondents 2 and 3 and after

giving credit of this amount, balance due to the

respondent No.1 stood as Rs.21,684.17p. Interest on

the aforesaid amount had been calculated @ 18% per

annum till 21st April, 1980 and only a sum of

Rs.10,000/- is claimed on this account. Appellant and

respondent Nos.2 & 3, in spite of repeated letters,

dated 14th September, 1977, 14th February, 1978 and

13th March, 1978 failed to liquidate their dues. Legal

notice dated 5th January, 1978 was also served, but of

no consequence.

5. Appellant as well as respondent Nos.2 to 4 were

duly served. However, none appeared on behalf of

respondent No.4, as such he was proceeded ex parte,

by the trial court on 23rd May, 1980.

6. Appellant in its written statement took the

defence that respondent No.1, filed the present suit in

collusion with respondent No.4, who was employee of

the appellant. He had played fraud on the appellant, in

collusion with respondent No.1, therefore, respondent

No.4 was dismissed from service.

7. It is further stated that there had been no

purchase of goods whatsoever on and from the end of

March, 1977. However, appellant admits the last

payment of Rs.3,000/-, but the said payment was not

made since no goods were ever purchased thereafter.

It was denied that respondent No.3 was sending orders

for the appellant.

8. It is alleged that many fictitious bills are expected

to have been created without supply of the

corresponding goods. Respondent No.4 was never

authorized to create liabilities qua appellant and no

amount is due to respondent No.1.

9. Respondents 2 & 3 in their written statement took

the plea that they had no dealing with respondent No.1

and there was no privity of contract, as such no cause

of action has arisen to respondent No.1. Since in

account books of respondent No.1, name of appellant

has been mentioned, these respondents have

admittedly no liability whatsoever towards respondent

No.1.

10. Trial court framed the following issues;

"1.Whether there was no privity of contract between the plaintiff and the defendants 1 and 2? OPD

2.Whether the suit is bad for mis-joinder of parties? OPD

3.Whether the suit does not disclose any cause of action against the defendants 1 and 2? OPD

4.Whether the suit has been filed in collusion with defendant No.4? OPD

5. To what amount and rate of interest is the plaintiff entitled and from which of the defendants? OPP

6.Relief."

11. Issue Nos.1 to 3 being interconnected were

decided in favour of appellant and against respondent

No.1, holding that respondent No.1 has failed to

disclose any cause of action against respondents 2 & 3

and qua these respondents, the suit was dismissed.

12. Issue Nos.4 and 5 were decided in favour of

respondent No.1 and against the appellant.

13. It is contended by learned counsel for the

appellant that, the fact that respondent No.4 who had

been in collusion with respondent No.1 appeared as a

witness as PW-2, to support respondent No.1, although

respondent No.4 did not file any written statement.

This fact alone goes on to show that there was

collusion between respondent No.1 and respondent

No.4.

14. It is further contended that the bills relied upon

by respondent No.1, are fictitious and respondent No.4

had no authority, either to place any order on behalf

of appellant or to receive any goods on his behalf.

15. Another contention is that the documents which

had been proved on record are only true copies of the

bills but neither the originals nor copies bearing

signatures of DW-1 had been placed on record, to

prove these documents. These documents have been

got exhibited in the statement of PW-2 which should

not be taken the admission of the fact on the part of

the appellant. The conduct of respondent No.1 is mala

fide from the fact that vide mentioning that the

challans had been submitted along with the bills to the

appellant, in fact, no goods were supplied. As such

there was no existence of challan and accordingly, the

supply of the goods had not been proved. Therefore,

there was no reason for raising the bills or receiving

the bills by the appellant.

16. It is also contended that interest on interest

cannot be granted. On this point, learned counsel has

cited the following judgments;

1) Sanyukt Nirmta v. Delhi Development Authority, 2002 (65) DRJ 409

2) Mohan Construction Co. (M/s.) v. DDA, 2005 VII AD (DELHI) 44

3) M.G.Kapoor (Lt.Col.) v. Union of India & Ors. 1999 III AD (DELHI) 623.

17. On the other hand, it has been contended by

learned counsel for respondent No.1, that respondent

No.4 was the workshop manager of appellant during

the period in dispute and he had been dealing with

respondent No.1-firm on behalf of appellant. The

goods were supplied on the orders of the appellant and

the orders forms were returned along with the bill to

the appellant. Employees of the appellant, used to sign

the bill in token of having received the goods.

18. It is further contended that the appellant had

been paying amount on account and on 29th May, 1997

the accounts were checked by respondent No.4 and

Sh.Rajinder Singh on behalf of the appellant, it was

found that a sum of Rs.21,684.17 was due against the

appellant. Respondent No.1 also issued one credit

note of Rs.694/- in favour of the appellant and after

giving credit of this amount, the balance of

Rs.21,684.17p was due. Respondent No.1 had proved

all the bills and appellant also admitted that there was

running account between the parties. As such there is

no ambiguity in the judgment of the trial court and the

present appeal is liable to be dismissed.

19. Before filing the suit, respondent No.1 gave legal

notice (Ex.P-74) to the appellant stating therein that a

sum of Rs.21,684.17p. is due from the appellant, on

account of costs of motor parts supplied by respondent

No.1 to his workshop. In this notice, interest @ 24%

per annum as agreed, was also claimed.

20. Since no reply to the notice was sent by appellant

to respondent No.1, hence averments made in the

notice shall be deemed to be admitted as correct.

21. Now coming to the defence of the appellant, the

case of the appellant is that there had been no

purchase of the goods whatsoever on and from the end

of the March, 1977. It means that prior to this period,

appellant had been purchasing goods from respondent

No.1. Appellant in its written statement admitted the

last payment of Rs.3,000/- but thereafter no goods

were ever purchased by him.

22. Another defence of the appellant is that,

respondent No.1 had filed the present suit in collusion

with respondent No.4, who was employee of the

appellant and respondent No.4 had played fraud on the

appellant in collusion with respondent No.1.

23. There is nothing on record to show that the

appellant ever took any legal action against respondent

No.4, being its employee, when appellant had come to

know that respondent No.4 had played fraud in

collusion with respondent No.1, except for the bald

statement of appellant that respondent No.1 was

thrown out of employment, because he colluded with

respondent No.1 and is not in their employment since

1977.

24. When respondent No.4, who appeared in a

witness box as PW-2, no suggestion was given to him

on behalf of the appellant that he was thrown out of

the employment by the appellant since he had played

fraud on appellant and colluded with respondent No.1.

So, this defence of the appellant that respondent No.4

had played fraud upon him, in collusion with

respondent No.1, has no legs to stand.

25. Appellant in his cross-examination admitted that

all the bills on which reliance had been placed upon by

respondent No.1, that is, Ex. P-1 to P-68 had been

received by appellant and respondents 2 & 3 and the

amount of the bills is correct, as there is no correction

in the same. Appellant also admitted that respondent

No.4 Sh.Y.K.Burman was his Workshop Manager.

26. Respondent No.4 when appeared in witness box

as PW-2, categorically stated that Satnam Singh

another employee, was also receiving goods on behalf

of the appellant and orders were also placed by them,

on behalf of the appellant. He also identified the

signatures of the Satnam Singh on most of the bills.

27. Respondent No.1 had also proved on record the

letter (Ex.P-71) and this document has been received

on behalf of the appellant by Sh.Satnam Singh and

respondent No.4 had proved the signatures of Satnam

Singh on this document and had identified the same.

28. Appellant in his statement stated that they had

been maintaining stock register but the stock register

had not been placed or proved. There is also

contradiction in the case of the appellant, as in its

written statement it had taken the stand that no goods

were supplied to them after March, 1997 whereas, in

his deposition on oath in the Court as RW1, he

admitted the receipt of the bills Ex.P-1 to P-68.

29. Appellant also stated in his examination-in-chief

that the delivery challans and the bills were submitted

along with the goods and if some goods were returned

back to respondent No.1, necessary correction in the

bills were made, but no such correction was made in

Ex.P-1 to P-68.

30. This shows that no goods were returned to

respondent No.1 on the aforestated bills and the goods

sent along with these bills were dully received by the

appellant, for which payment had to be made.

Appellant also admitted in its written statement the

last payment of Rs.3,000/-. The case of the appellant

is that the bills Ex.P-53 to P-67 which are for the

period from 13th April, 1977 to 13th May, 1977 are

fictitious and no goods had been received with regard

to these bills.

31. However, in cross-examination appellant admitted

that all the bills which are Ex.P-1 to P-68, are correct

and for that reason they contain no correction. He also

admitted that corrections were made only on those

bills where certain goods were returned back to

respondent No.1.

32. So, from the statement of appellant, it is clear

that the dispute now raised by him with regard to bills

Ex.P-53 to P-67, is contrary to his own statement,

wherein he admitted the receipt of bills Ex.P-1 to P-68.

Respondent No.4 had identified the signatures of

Satnam Singh on these bills who has received the

goods on behalf of the appellant.

33. Respondent No.1 had also proved his statement of

account which is Ex.P-69 and credit note Ex.P. 70 vide

which credit of Rs.694/- had been given by respondents

No.1, to the appellant.

34. Under these circumstances, I do not find any

ambiguity in the judgment of the trial court and the

findings of the trial court on issue No.4 are confirmed.

35. Now coming to the interest, it has been

contended by learned counsel for the appellant that

trial court has granted interest over interest.

36. Respondent No.1 in its legal notice (Ex.P-74)

claimed interest @ 24% per annum as agreed.

Respondent No.1 when appeared in witness box stated

that he had charged interest @ 18% per annum,

though there is an agreement of interest @ 24% per

annum printed on the bills. This 18% interest rate is

also prevalent in the market.

37. No cross-examination on this aspect had been

conducted on behalf of the appellant and appellant in

its written statement simply stated, that respondent

No.1 is not entitled to any interest.

38. Since there had been no cross-examination of

respondent No.1 with regard to the interest and

respondent No.1 claimed interest @ 18% only, though

in the bills he claimed interest @ 24% only, the trial

court rightly awarded interest @ 18% p.a.

39. Now coming to the contention of the appellant

that the trial court has granted interest over interest,

the same is not permissible under law.

40. Grant of interest over interest is prohibited under

Section 3(3)(c) of the Interest Act, 1978 and the

relevant Section read as under;

"Section 3(3) Nothing in this section,

(c) shall empower the court to award interest upon interest."

41. In view of the specific provision, no interest over

interest can be granted. Respondent No.1 filed the

present suit before the trial court on 28th April, 1980

for the total claim of Rs.31,784.37, as per details given

below.

" i) Amount due                   :     Rs.21784.37
ii) Interest @ 18% till
21.4.80 though interest
Amounts to Rs.11609.36
Only Rs.10,000/- is claimed       :     Rs.10000.00
              Total               :     Rs.31784.37"

42. The suit of respondent No.1 was decreed on 5th

August, 1996 for a sum of Rs.31,784.37p. together

with interest @ 18% p.a. from the date of filing of the

suit (that is, 28th April, 1980) till realization.

43. Since the decretal amount of Rs.31,784.37p.

include the sum of Rs.10,000/- as interest, there was

no occasion for the trial court to grant further interest

@ 18% p.a. on the interest amount of Rs.10,000/-.

44. Under these circumstances, appellant is directed

to pay or deposit the decretal amount of

Rs.31,784.37p. within one month from today. Appellant

is further directed to pay interest @ 18% p.a. on the

sum of Rs.21,784.37p. from the date of filing of the suit

(that is w.e.f. 28th April, 1980) till realisation.

45. On 12th December, 1996 when this appeal was

filed, the appellant was directed to deposit the decretal

amount of Rs.21,784/- along with interest @ 10% p.a.

from the date of the suit till date and thereafter vide

order dated 4th August, 2000 respondent No.1 was

given opportunity to withdraw the same on furnishing

necessary security. The appellant shall get adjustment

for the deposit made by him in terms of the order

dated 12th December, 1996 passed by this Court.

46. It is well-settled that when litigation has been

needlessly protracted by an unsuccessful litigant, he

should be burdened with heavy costs. The general rule

is that the successful party is entitled to costs, unless

he is guilty of misconduct, negligence or omission.

47. In the present case, respondent No.1 supplied

goods to the appellant in April, 1977 for which

appellant did not make any payment, even though

respondent No.1 served him with the legal notice also.

The appellant had been fighting this litigation since

1977 having no legal rights at all and had dragged

respondent No.1, up to this Court. It had taken nearly

thirty two years to conclude this matter.

48. Under the circumstances, appellant is directed to

pay Rs.25,000/- as costs to respondent No.1. Costs

shall be paid to respondent No.1 or deposited in the

trial court/executing court within one month from

today. In case, appellant fails to comply with the above

directions, the executing court shall execute the

decree by coercive process after expiry of one month

from today.

49. Subject to above directions, the appeal is

dismissed.

50. Trial court record be sent back forthwith.

April 18, 2009                            V.B.GUPTA, J.
Bisht