M/S. Bharat Aluminium Company ... vs M/S. Maharashtra Aluminium ...
2009 Latest Caselaw 1777 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                          CS(OS) No.2977/1988

%                          Date of Decision: May 01, 2009

# M/s Bharat Aluminium Co. Ltd.
                                                           ..... Plaintiff
!                   Through: Mr.Davinder Singh, Sr. Advocate
                            with Mr.Jasmeet Singh and Mr.Saurabh
                            Tiwari, Advs.

                                    Versus

$ M/s Maharashtra Aluminium Corporation
                                                       .....Defendant
^                   Through: Mr.K.R.Gupta, Adv. with Mr.Nitin Gupta
                             and Ms.Kiran Dharam, Advs.

CORAM:

HON'BLE MR. JUSTICE S.N. AGGARWAL

1.

Whether reporters of Local paper 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

S.N.AGGARWAL, J This is a suit filed by the plaintiff against the defendant

for recovery of Rs.20,19,699/- with pendente lite and future interest

@ 24% p.a.

2. Briefly stated, the facts of the case are that the plaintiff

is a Government company and the suit has been filed through its

Executive Director, Shri P.S.Gupta. The plaintiff appointed the

defendant as its consignment agent vide letter dated 27.5.1985 for

a period of 11 months starting from 2.5.1985 to 31.3.1986. The

defendant, as per the terms of the Consignment Agency

Agreement, was required to deposit a sum of Rs.3 lacs as security

with the plaintiff which was to carry interest @ 12% p.a. and the

interest so accrued was to be adjusted annually against the

supplies made. In further terms of the Consignment Agency

Agreement, the defendant was required to raise and make invoices

on customers in defendant's own name on behalf of the plaintiff in

respect of the goods sold by the defendant and was made

responsible to pay the plaintiff full value of such invoices on due

date notwithstanding the realization of the price from its customers.

3. The defendant, during the continuance of Consignment

Agency Agreement, was allowed to make payment for the materials

supplied to the defendant within 55 days in case of dispatches

made through road and 65 days in case of dispatches made

through rail, from the date of dispatch of the material from Korba

and/or Bidhan Bagh Unit and the cheques were to be deposited by

the defendant in such a manner so as to get credit of the same in

the account on due dates.

4. According to the statement of account filed along with

the suit, an amount of Rs.11,67,853/-, after adjusting the security

amount of Rs.3 lacs, was outstanding against the defendant. It is

alleged that the defendant was also liable to pay interest @ 24%

p.a. and an amount of Rs.6,43,015/- has been claimed on account

of interest upto 30.6.1988. An amount of Rs.2,08,831/- has also

been claimed on account of interest for delay in payment made

after the scheduled date. As such, a total sum of Rs.20,19,699/-

has been claimed by the plaintiff against the defendant, which

includes interest upto the date of filing of the suit.

5. In response to the summons of the suit, the defendant

has filed its written statement. The defendant has disputed the

territorial jurisdiction of the Court to entertain the present suit. It is

stated that neither any cause of action arose in favour of the

plaintiff in the jurisdiction of this Court nor the defendant either

resides or works for gain within the territorial limits of this Court.

As per the defendant, the contract of agency was concluded at

Bombay and the offer of appointment of agency was also made by

the plaintiff to the defendant from its office at Bombay. It is,

therefore, alleged that this Court lacks territorial jurisdiction to try

the present suit.

6. The defendant has also disputed that the suit has been

signed, verified or filed by a competent person on behalf of the

plaintiff. It is denied that Shri P.S.Gupta, through whom this suit

has been filed, is the Executive Director (Commercial) and a senior

officer of the plaintiff company. The authority of Mr.P.S.Gupta to

sign, verify and institute the suit has been questioned by the

defendant.

7. The defendant has denied its liability to pay any interest.

It is stated that there was no agreement between the parties that

the defendant would be required to pay interest on the delayed

payment. The statement of account filed by the plaintiff along with

the suit has also been disputed by the defendant. The defendant

has denied the entitlement of the plaintiff to claim the alleged

principal amount or the interest claimed in the suit. The defendant

has filed its statement of account maintained by it in the regular

course of business along with its written statement and relying on

its statement of account, the defendant has stated that it is the

plaintiff who is liable to pay a sum of Rs.29,092/- to the defendant

after settling of the accounts. The defendant has denied the entries

contained in the statement of account filed by the plaintiff along

with the suit. It is stated that the plaintiff has shown an amount of

Rs.2,11,080/- in the debit side as outstanding although the same

was paid by the defendant vide cheque No.973566 drawn on State

Bank of Bikaner and Jaipur, Sikandarabad Branch. The plaintiff is

stated to have not given credit for this payment. It is further

alleged that the defendant had given two drafts in the sum of

Rs.40,000/- each drawn in favour of the plaintiff on the State Bank

of Bikaner and Jaipur and these payments also did not find place on

the credit side in the statement of account furnished by the

plaintiff. It is further stated that the plaintiff has also not given any

credit for the interest accrued on the security amount of Rs.3 lacs

furnished by the defendant. As per the defendant, the goods sent

by the plaintiff through Jamshedpur Transport Company were not

delivered to the defendant and on enquiry, the said Transport

Company informed the defendant that the same were returned to

the plaintiff but still the plaintiff has shown debit entries of

approximately Rs. one lakh in its statement of account. The

commission payable to the defendant under the Consignment

Agency Agreement dated 27.5.1985 is also not shown correctly in

the statement of account filed along with the suit. On these

grounds the defendant has denied its liability to pay any amount to

the plaintiff and has prayed for the dismissal of the suit.

8. The plaintiff has filed its replication to the written

statement of the defendant in which it has denied all the allegations

which are inconsistent and contrary to its averments contained in

the plaint and has reiterated the facts stated in the plaint to be

correct. The plaintiff has re-asserted its prayer for grant of decree

for the suit amount against the defendant.

9. Following issues were framed in the suit on 20.7.1998:-

"1. Whether the suit has been signed, verified and filed by a competent person? OPP.

2. Whether this Court has no territorial jurisdiction to try the suit? OPD

3. To what amount, if any, is the plaintiff entitled on account of principal from the defendant? OPP

4. Whether the plaintiff is entitled to interest? If so, at what rate and in what amount? OPP

5. Whether the plaintiff is estopped to claim interest on the closed transactions on account of its conduct? OPD

6. Relief."

10. In evidence, the plaintiff has examined only one witness,

namely, its Regional Manager, Mr.R.P.Junagade as PW-1. The

evidence of the plaintiff was closed by the Court vide its order

passed on 23.01.2009. The defendant has not examined any

witness in the matter.

11. I have heard the arguments of learned counsel for both

the parties and have also perused the entire case file. My findings

on the above issues are as follows:-

ISSUE NO.1

12. At the time the suit was filed, the plaintiff was a

Government Company incorporated under the Companies Act,

1956. However, during the pendency of the suit, the plaintiff

company was privatized. The suit was signed, verified and

instituted through Shri P.S.Gupta, then Executive Director of the

plaintiff company. Mr.Gupta, through whom this suit has been filed,

has not been examined in the case. The resolution by which

Mr.Gupta might have been authorized to sign, verify and institute

the suit has neither been pleaded in the plaint nor it is tendered in

the evidence. The onus of proof to prove that the suit has been

signed, verified and instituted by a duly authorized person was

upon the plaintiff. However, Mr.Davinder Singh, learned senior

counsel appearing on behalf of the plaintiff has relied upon a

judgment of the Hon'ble Supreme Court in United Bank of India Vs.

Naresh Kumar & Ors. (1996) 6 SCC 660 and on the strength of

this judgment, he had argued that the suit on behalf of a company

can be filed by any principal officer of the company and according

to him the Court cannot dismiss the suit for want of proof of the

authority in favour of the person through whom the suit was

instituted. In this case, it was held by the Hon'ble Supreme Court

as under:-

"A company like the appellant can sue and be sued in its own name. Reading Order 6 Rule 14 together with Order 29 Rule 1 of the Code of Civil Procedure it would appear that even in the absence of any formal letter of authority or power of attorney having been executed a person referred to in Rule 1 of Order 29 can, by virtue of the office which he holds, sign and verify the pleadings on behalf of the corporation. In addition thereto and dehors Order 29 Rule 1 CPC, as a company is a juristic entity, it can duly authorise any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Order 6 Rule 14 CPC. A person may be expressly authorised to sign the pleadings on behalf of the company, for example by the Board of Directors passing a resolution to that effect or by a power of attorney being executed in favour of any individual. In absence thereof and in cases where pleadings have been signed by one of its officers a corporation can ratify the said action of its officer in signing the pleadings. Such ratification may be express or implied. The court can, on the basis of the evidence on record, and after taking all the circumstances of the case, specially with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleading by its officer."

It was further held in the above-mentioned judgment as

under:-

"In cases like the present where suits are instituted or defended on behalf of a public corporation, public interest should not be permitted to be defeated on a mere technicality. Procedural defects which do not go to the root of the matter should not be permitted to defeat a just cause. There is sufficient power in the courts, under the Code of Civil Procedure, to ensure that injustice is not done to any party who has a just case. As far as possible a substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable."

13. In view of the ratio of law laid down by the Hon'ble

Supreme Court in the above-mentioned case, I disregard the

objection regarding the authority of Mr.P.S.Gupta taken by the

defendant in its written statement and hold that the present suit

has been filed, signed and instituted by a duly authorized person. I

take this view in the matter because of the fact that the defendant

has not produced any evidence to prove its contention that

Mr.P.S.Gupta, through whom this suit was instituted, was not

competent to sign, verify and file the present suit. This issue is

accordingly decided in favour of the plaintiff and against the

defendant.

ISSUE NO.2

14. The suit is based on a Consignment Agency Agreement

dated 27.5.1985 (Ex.P-4 at page 62 in Part-III file). By this

Agreement the defendant was appointed as a consignment agent

by the plaintiff for sale of its aluminium products at Nagpur and

Bombay. The objection of the defendant to the territorial

jurisdiction of this Court is based on the plea that neither any part

of cause of action has arisen in the jurisdiction of this Court nor the

defendant resides or works for gain in the territorial limits of this

Court. It was contended that all the formalities relating to

appointment of the defendant as consignment agent for the plaintiff

had taken place at Bombay and the contract of Consignment

Agency was also concluded at Bombay by acceptance of terms and

conditions of the Agency Agreement by the defendant at Bombay

on 27.5.1985. Admittedly, the goods pursuant to Consignment-

Agency Agreement in question were not supplied by the plaintiff to

the defendant from Delhi. The plaintiff admits that neither goods

were supplied in the jurisdiction of this Court nor any payment was

made in the jurisdiction of this Court.

15. Mr.Davinder Singh, learned senior counsel appearing on

behalf of the plaintiff had based his argument for conferring

jurisdiction to this Court only on document Ex.P-4 and relying on the

said document, he had argued that since the letter dated 27.5.1985

appointing the defendant as consignment agent was sent by the

plaintiff's Head Office at Delhi, a part of cause of action had arisen

in the jurisdiction of this Court and, therefore, according to him this

Court is competent to try and entertain the present suit. The

learned senior counsel appearing on behalf of the plaintiff has relied

upon a judgment of the Hon'ble Supreme Court in Progressive

Constructions Ltd. Vs. Bhart Hydro Power Corporation Ltd. 59

(2995) DLT 290 to contend that the contract of appointment of

the defendant as consignment agent vide letter dated 27.5.1985

was complete when the said letter was posted by the plaintiff's

Head Office from Delhi. According to the learned senior counsel for

the plaintiff, the delivery of the said letter to the defendant and its

acceptance by him at Bombay is wholly inconsequential for

deciding the objection of territorial jurisdiction.

16. On the other hand, Mr. K.R. Gupta, learned counsel

appearing on behalf of the defendant, had taken me through the

correspondence that exchanged between the parties prior to

issuance of formal letter of appointment of the defendant as

consignment agent vide letter dated 27.5.1985 and with the help of

the said correspondence, the learned counsel has contended that

the defendant had no dealing at all with the plaintiff's Head Office

at Delhi and, therefore, according to him, the defendant is not

concerned with any correspondence, if any, that might have taken

place between the plaintiff's Branch Office at Bombay and Head

Office at Delhi. It was argued that the defendant had completed all

formalities relating to its appointment as consignment agent of the

plaintiff at Bombay only. It was contended that the defendant

neither wrote any letter to the plaintiff at its Head Office in Delhi

nor received any communication from the Head Office of the

plaintiff. Admittedly, the seat of business of the defendant is at

Bombay. A perusal of documents Ex.P-1, Ex.P-2 and Ex.P-3 would

clearly show that the entire correspondence that took place

between the parties prior to issuance of formal letter of

appointment to the defendant appointing it as consignment agent

had taken place at Bombay. The decision to appoint the defendant

as consignment agent was taken by Mr.A.P.Chopra, the Branch

Manager of the plaintiff company at Bombay. Reliance is placed

upon the noting at the foot and back of document Ex.P-1 at page 60

of Part-III file. The letter Ex.P-4 seems to have been signed by the

Deputy Marketing Manager of the plaintiff company at its Delhi

Head Office. The question is whether the signing of the said letter

Ex.P-4 by the plaintiff's Deputy Marketing Manager at Delhi gives

rise to a cause of action or part thereof to confer jurisdiction of this

Court to try the present suit.

17. I am of the view that mere signing of appointment

letter at Delhi would not confer jurisdiction on this Court to try the

present suit. The jurisdiction can be conferred only on a Court

where the contract is concluded. The plaintiff has not produced any

evidence on record to prove how letter Ex.P-4 was sent to the

defendant for its acceptance. The defendant has taken a specific

stand that he had accepted the terms and conditions of his

appointment as consignment agent of the plaintiff contained in

letter Ex.P-4 dated 27.5.1985 in the plaintiff's Branch Office at

Bombay. The plaintiff's witness PW-1 Mr.R.P.Junagade has testified

in his evidence-in-chief that after the decision to appoint a

consignment agent is taken at the Head Office of the plaintiff

company at Delhi, the defendant was required to sign an

agreement with the plaintiff company. He has deposed that two

copies of the agreement, after they were signed by the plaintiff

company, were sent to the consignment agent who is appointed by

the company. The consignment agent returned one copy of the

agreement duly signed by him to the company and retained the

other copy with him. He stated that he has no personal knowledge

of the dealings between the parties and the knowledge derived by

him was from the records of the company. He stated that he does

not know how document Ex.P-4 was sent to the defendant because

he was not at Bombay at the relevant time. He further stated that

he does not have any record to show that the agreement Ex.P-4

was sent by Delhi Office to the defendant. From this testimony of

the plaintiff's witness on record, it cannot be said that document

Ex.P-4 was sent by the plaintiff from Delhi to Bombay. One thing

which is admitted even by the plaintiff is that the agreement Ex.P-4

was sent by the defendant to the plaintiff's office in Bombay in

token of its accepting the terms of appointment contained in the

said letter.

18. In my view, the contract of appointment of the defendant

as consignment agent of the plaintiff was concluded at Bombay

when the defendant had accepted the terms and conditions of the

Agency Agreement which admittedly were accepted by him at

Bombay. I had put it to the learned senior counsel during

arguments whether the plaintiff would have supplied goods to the

defendant on the basis of document Ex.P-4, had the terms

contained therein were not accepted by the defendant, the learned

senior counsel responded to the said query by saying that in the

event of defendant not accepting the terms and conditions of

appointment contained in the letter Ex.P-4 dated 27.5.1985, the

plaintiff would not have supplied goods to the defendant under the

Consignment Agency Agreement. This response by the learned

senior counsel supports my conclusion that the contract of

Consignment Agency Agreement between the parties was

concluded at Bombay when it was accepted by the defendant at

Bombay. In this view of the matter, the judgment of the Hon'ble

Supreme Court in Progressive Constructions Ltd. Case (Supra) is not

applicable to the facts of this case.

19. Having regard to the above, I have no hesitation in

holding that this Court has no territorial jurisdiction to try and

entertain the present suit. This issue is decided accordingly in

favour of the defendant and against the plaintiff.

ISSUE NO.3

20. The plaintiff has filed this suit on the basis of statement

of account maintained by it in the regular course of business. The

entries contained in the statement of account filed along with the

suit have been disputed by the defendant. The plaintiff has not

proved its statement of account in its evidence. Section 34 of the

Indian Evidence Act, 1872 is relevant and is extracted below:-

"34. [Entries in books of account including those maintained in an electronic form] when relevant.- [Entries in the books of accounts including those maintained in an electronic form], regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability."

21. Since the plaintiff has failed to prove its statement of

account by leading any evidence much less cogent evidence in

regard to the same, it cannot be said that the plaintiff has proved

its claim against the defendant. However, the learned senior

counsel appearing on behalf of the plaintiff has relied upon the

admission of the defendant contained in letters Ex.P-6 dated

15.4.1986 and Ex.P-7 dated 18.3.1986. The alleged admission by

the defendant in these letters Ex.P-6 and Ex.P-7 is of no legal

consequence because the present suit was filed by the plaintiff on

28.11.1988 after more than 2 ½ years of the alleged admission and

it is not the case of the plaintiff that no dealings at all had taken

place between the parties after these alleged admissions. In fact,

the plaintiff was required to prove its statement of account before

the defendant could be burdened with the liability for payment in

this suit.

22. I am of the view that the pleadings contained in the

plaint is no evidence, far less, proof. In terms of Section 102 of the

Evidence Act, 1872 the initial onus to prove its claim was always on

the plaintiff and if he discharges that onus and makes out a case

which entitles him to a relief, the onus shifts to the defendant to

prove those circumstances, if any, which would dis-entitle the

plaintiff to the same.

23. In the present case, the plaintiff has not led any

evidence much less cogent evidence to substantiate its claim

against the defendant. I, therefore, hold that the plaintiff is not

entitled to any recovery from the defendant in the present suit.

This issue is also decided against the plaintiff.

24. Findings on these issues are not called for because of the

failure of the plaintiff to prove its claim even on account of the

principal outstanding amount against the defendant.

RELIEF

25. In view of my findings on the above issues, the present

suit is hereby dismissed, but in the peculiar facts of this case, with

no order as to costs. Decree sheet be drawn accordingly.

May 01 , 2009                                 S.N.AGGARWAL
vg                                                 [JUDGE]