Shri Dharampal Arora vs M/S Share Tips & Ors.
2010 Latest Caselaw 1578 Del

*       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                      Judgment Reserved on: 11.3.2010
                      Judgment Delivered on: 22.3.2010

                           + CS(OS) No.986/1995

SHRI DHARAMPAL ARORA                               .........Plaintiff
                 Through:               Mr.Amarjit Singh, Advocate.

                  Versus

1. M/S SHARE TIPS
2. SHRI ASHOK MEHTA
3. SHRIMATI ASHOK MEHTA                                  ..........Defendants

                             Through:   Mr.Sangram Patnaik,
                                        Ms.Shanta Pandey
                                        and Mr. Ashwini Kumar,
                                        Advocates

CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR

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

     2. To be referred to the Reporter or not?                     Yes

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

INDERMEET KAUR, J.

1. Plaintiff Dharampal Arora has filed the present suit for

recovery of Rs.50,00,000/. Defendant no.2 Ashok Mehta and

defendant no.3 wife of Ashok Mehta are both partners of

defendant no.1 M/s Share Tips, a partnership firm comprising of

defendants no.2 and 3.

2. Defendants were dealing in sale purchase of shares from

1989 till 1992. Deliveries were being made through the

plaintiff after settling the money transactions with him.

Defendants were also dealing in forward trading. Business with

the plaintiff was either through oral communication on

telephone and sometimes by meetings in the office of the

plaintiff.

3. Plaintiff is a member of the Delhi Stock Exchange since

1964. He was helping the defendants in their share business.

Parties had opened mutual current account in view of the

reciprocal dealings and transactions between them. They had

good business relations. On 23.8.1991 accounts between the

parties finally stood settled and a cheque for Rs.1,03,188/- was

given by the plaintiff to the defendant which was duly encashed

by the defendant.

4. As per the accounts of the plaintiff, in the course of their

business a sum of Rs.33,59,809.70 is still due and payable from

the defendant i.e. from the period commencing 23.8.1991 to

27.11.1991. In spite of demand the said amount has not been

paid to the plaintiff. Defendants are also liable to pay interest

@ 18% per annum on this outstanding as per the custom in the

market. Interest amount is calculated to Rs.16,40,190.30; total

amount outstanding against defendant is Rs.50,00,000/-.

Pendentelite and future interest has also been claimed.

5. Common written statement has been filed by the

defendants. A preliminary objection has been taken that the

suit has not been properly valued for the purpose of court fee

and jurisdiction; it has not been filed by an authorized person; it

is barred by time.

6. On merits, it is reiterated that no amount is due from the

defendants. Plaintiff was acting as an agent/broker of the

defendants for the sale and purchase of shares. It is denied that

the plaintiff was 'helping' the defendants in any way; the 'huge

amount' claimed by the plaintiff has not been specified. It is not

in dispute that the cheque dated 23.8.1991 was paid by the

plaintiff to the defendant. Thereafter six other cheques were

transacted between the parties, details of which have been

mentioned in para no.5 of the written statement. They are

transactions dated 16.1.1992 for Rs.45,739/-, dated 3.2.1992 for

Rs.1,50,724/-, dated 4.2.1992 for Rs.37,282.50, dated 12.2.1992

for Rs.3,00,375/-, dated 13.2.1992 for Rs.1,03,666/- and lastly

transaction was dated 31.3.1992 for Rs.2,00,000/-. It is stated

that 13 contract notes relied upon by the plaintiff to

substantiate his claim show that it is in fact the plaintiff who

owes a sum of Rs.25,320/- to the defendants ; no bills, credit

memos of the alleged transaction has been proved by the

plaintiff. No amount is due from the defendants either in the

principal account or by way of interest.

7. Replication has been filed reiterating the averments

contained in the plaint while denying the defence as set up by

the defendants.

8. On 11.5.2001, on the pleadings of the parties, the

following issues were framed :-

1. Whether the suit is properly valued for the purposes of

Court fees and jurisdiction?

2. Whether the suit is liable to be rejected for want of

material particulars?

3. Whether the suit is barred by limitation.

4. Whether the plaintiff is entitled to recover from the

defendant a sum of Rs.33,59,809.70 for the transactions

effected from 23rd August 1991 to 27th November?

5. Whether the plaintiff is entitled to interest @ 18% on

the above amount?

6. Relief.

9. Plaintiff in support of his case has examined one witness

i.e. Manish Arora. The defendant in support of his case has also

examined one witness i.e. defendant no.2, Ashok Mehta.

10. Arguments have been heard. Record has been perused.

Issue wise findings are as follows:-

11. ISSUE NO.1

On 24.4.1995 plaintiff had been permitted to file requisite

court fee. On the deposit of the same plaint had been registered

as a suit. There is no dispute on this fact.

12. Issue no.1 no longer survives as the proper court fee has

admittedly since been paid.

13. ISSUE NO.2

Defendant has asserted that the plaint is liable to be

dismissed as no details or material particulars about the

transactions or the basis on which the amount are claimed by

the plaintiff have been given in his plaint. Averments made in

the plaint have been perused. Plaintiff has drawn attention of

this Court to para no. 5 to 8 of the plaint wherein the details of

the amounts claimed and the basis of the same have been

averred. The supporting documents have to be read along with

the plaint. There is no force in this objection of the learned

counsel for the defendant.

14. Issue no.2 is decided in favour of the plaintiff and against

the defendant.

15. ISSUE NO.4:

Plaintiff in support of his claim has filed his statement of

account Ex.PW-1/2; this document is running into six pages

commencing from period 19.8.1991 to 27.11.1992. As per

Ex.PW-1/2 a sum of Rs.33, 59,809/- is the balance outstanding

against the defendant. The defendant has produced his

statement of account Ex.DW-1/P-1 which is for the period

19.8.1991 to 16.4.1992.

16. Case of the plaintiff is that the plaintiff was in the sale and

purchase of shares on behalf of the defendants. He was also

doing forward contracts/badla on their behalf. Plaintiff was a

member of the stock exchange. Defendant was not member. In

his cross-examination PW-1 had admitted that a contract note

has to be executed within 24 hours of every transaction which is

made on the floor house i.e. on the floor of the stock exchange.

PW-1 has filed seven contract notes in this case which are Ex.

PW-1/59 to Ex. PW-1/66 for transactions dating 5.3.92 to

30.3.1992. A perusal of one such document shows that it is a

confirmation slip on the letterhead of the plaintiff addressed to

the defendant firm i.e. M/s Share Tips. The left hand column

makes a reference to the securities bought from the defendant

and the right hand column makes a reference to the securities

sold to the defendant. Counsel for the defendant has pointed

out that even assuming these documents to be correct if these

credit and debit entries are calculated a sum of Rs.25,320/- is in

fact due from the plaintiff. No amount is outstanding against

the defendant.

17. Admittedly these contract notes are only up to 30.3.1992.

PW-1 in his cross-examination has admitted that he has no other

contract note after the period 30.3.1992. No such document

has also been placed on record.

18. Defendant has admitted the receipt of a payment of

Rs.1,03,188/- on 23.8.1991 vide cheque by the plaintiff. His

case is that all accounts between the parties stood settled on

31.3.1992 when the entire margin money which was in the

nature of a security amount retained by the plaintiff from the

defendant in lieu of transactions which the plaintiff was

conducting on behalf of the defendant had also been returned

back to the defendant. This is reflected in Ex.PW-1/2. Entry

dated 31.3.1992 states that a sum of Rs.2,00,000/- i.e. the

margin money has been credited to the account of the

defendants. PW-1 has also admitted in his cross-examination

that the entire margin money of the defendant stood paid to him

on 31.3.1992. It has also come on record that after 31.3.1992

there are no contract notes in favour of the plaintiff evidencing

any further transactions made between the parties except the

statement of account Ex.PW-1/2 as also certain bills raised by

the plaintiff upon the defendant.

19. Defence of the defendant is that after 31.3.1992 there

were no transactions between the parties. This defence of the

defendant is negatived by his own admission. In his cross-

examination DW-1 has admitted that on 16.4.1992 he had made

two cheque payments of Rs.6,00,000/- and Rs.5,90,000/- i.e.

totaling Rs.11,90,000/- to the plaintiff. His argument that these

payments were in lieu of transactions transacted prior to

31.3.1992 is neither borne out from his pleadings nor from any

document or from his testimony. In fact, in his cross-

examination, he has categorically admitted that these two

payments of Rs.6,00,000/- and Rs.5,90,000/- had been made to

the plaintiff and are reflected in Ex.PW-1/2. This version is not

qualified by any further explanation. This is in contradiction to

the earlier stand taken by the defendant that he had no dealing

with the plaintiff after 31.3.1992. Clearly the defendant is

taking shifting stands and is not coming out with the true

picture.

20. Further case of the defendant as set up in his arguments

is that on 31.3.1992 there was a credit of Rs.16,71,518.30 in his

account as is reflected in Ex.PW-1/2. This entry of

Rs.16,71,518.30 is admitted by him. In addition he had made

the aforenoted payments i.e. Rs.11,70,000/-. Thus a total sum

of Rs.27,61,518,/- was outstanding in favour of the defendant.

DW-1 in his cross-examination has further admitted that

whatever shares the plaintiff had delivered to the defendant

after 16.4.1992 they were entered in the document Ex.PW-1/2.

21. These admissions of the defendant clearly establish that

there were business transactions and dealing between the

parties after 31.3.1992. Defendant has also nowhere disputed

any specific entry in Ex.PW-1/2. PW-1 has proved this

document. No suggestion has been given to PW-1 by the

learned defence counsel that this document is false, fabricated,

manipulated or not a true statement of account. This document,

in fact, stood admitted by the defendant and he has relied upon

the aforenoted entries himself.

22. The statement of account filed by the defendant

Ex.DW-1/P-1 is only for the period 19.8.1991 to 16.4.1992.

There is no explanation as to why after 16.4.1992 the statement

of account maintained (if any) by the defendant was not placed

on record. The plaintiff has filed his statement of account which

is up to 27.11.1992 and in these circumstances if the defendant

wanted to counter the statement of account of the plaintiff it

was incumbent upon him to place his own statement of account

for the corresponding period. He has deliberately withheld his

statement of account for this seven month intervening period

i.e. from 17.4.1992 to 27.11.1992 for which an adverse

inference against him has to be drawn under Section 114 (g) of

the Indian Evidence Act for withholding the best evidence. The

corollary presumption which arises is that if this evidence would

have been produced it would have gone against the interest of

the defendant.

23. DW-1 in his cross-examination has admitted that on

23.8.1991 the plaintiff had given him a cheque of Rs.1,03,188/-

and this cheque was honoured; he has further admitted that he

does not have the account of transactions which took place

between 23.8.1991 up to 31.3.1992; he used to enter the

transactions with the plaintiff in Ex.DW-1/P-1; in Ex.DW-1/P-1

the entry of the cheque of Rs.1,03,188/- is not reflected. This is

otherwise an admitted payment but is not mentioned in his

statement of account. These admissions of DW-1 falsify his own

document i.e. Ex.DW-1/P-1; Ex.DW-1/P-1 is not a true reflection

of the accounts maintained between the parties; it is false and

fabricated.

24. Per contra the statement of account Ex.PW-1/2 produced

by the plaintiff has been proved. DW-1 in his cross-examination

has admitted that the delivery of shares of different companies

from 10.4.1992 to 23.4.1992 are reflected in Ex.PW-1/2 though

not shown in his own statement of account Ex.DW-1/P-1.

25. From this evidence gathered it is clear that the parties

were transacting with each other after 31.3.1992. On page 31

of Ex.PW-1/2 the entries from 10.4.1992 to 23.4.1992 stand

admitted by the defendant. DW-1 in his cross-examination has

also admitted the delivery of 1000 TISCO shares on 24.4.1992 in

the sum of Rs.6,81,750/-. The 200 shares of Shipping Credit

Corporation on 3.9.1992 reflects a credit entry of the 30,000

and correspondingly shown as debited in the entry dated

7.4.1992 in the sum of Rs.12,280/-. DW-1 had denied that these

shares were received by him on 7.4.1992 at a value of

Rs.12,280/- and then sold by him to the plaintiff on 3.9.1992 for

a value of Rs.30,000/-. In view of this denial, it was all the more

incumbent upon the defendant to have filed his statement of

account for 3.9.1992 to give the true picture but he has

deliberately chosen not to do so for reasons best known to him.

26. DW-1 in his further cross-examination has given evasive

reply to the specific queries on the entry dated 18.9.1992. This

was a bad delivery of 25 shares which had been debited in his

account for Rs.3072.50/-. He has qualified this statement by

stating that he has not been maintaining any account regarding

these transactions. This is in contradiction to his earlier version

wherein he has stated that he has been maintaining a statement

of account of all transactions between himself and the

defendant and which were reflected in Ex.DW-1/P-1.

27. In the course of the arguments defendant has again taken

shifting stands. He has admitted that on 1.4.1992 he had a

credit of Rs.16,71,518.30 as also another sum of Rs.11,90,000/-

i.e. a total amount of Rs.28,61,518/- was lying in favour of the

defendant up to 16.4.1992. He has also submitted that the

transactions from 10.4.1992 up to 24.4.1992 are correct.

Perusal of Ex.PW-1/2 shows that these are debit entries of

Rs.3,06,500/- for purchase of 2000 Essar Shipping shares,

Rs.58,900/- for 1000 Khaitan Hosiery shares, Rs.14,05,450/- for

500 Hero Honda shares, Rs.90,900/- for 500 GNFC shares,

Rs.4,14,000/- for 1000 Reliance shares, Rs.53,000/- for Indo Gulf

shares, Rs.89,55,000/- for 45000 JCT shares and Rs.5,81,750/-

for 1000 TISCI shares. If a total figure of these amounts is

calculated it works out to Rs.26,46,000/- A hand written chart

has been placed on record. It is submitted that even assuming

that the statement of account filed by the plaintiff Ex.PW-1/2 is

correct; if this debit amount of Rs.26,46,000/- is deducted from

his credit of Rs.28,61,518/-; a balance of Rs.2,15,518/- is still

due and payable to the defendant.

28. These submissions of the defendant again reflect his

shifting and contrary stands. Whereas in the first instance i.e.

in his written statement he has submitted that a sum of

Rs.25,320/- is due from the plaintiff; in the course of the

arguments, this figure has been enhanced to Rs.2,15,518/-.

Whereas the initial stand of the defendant was that there was no

transaction between the parties after 1.4.1992; he has

controverted it and has made various admissions as aforenoted

and admitted all transactions as reflected in Ex.PW-1/2 up to

24.4.1992. His case being that these transactions were delivery

of the shares by the plaintiff to the defendant and adjusted

against the amount of Rs.28,61,518/- which the plaintiff owed to

the defendant. This is a piecemeal admission of a document.

Part of Ex. PW-1/2 is admitted; rest of it i.e. the entries after

24.4.1992 have been denied by the defendant. Submission of

defendant is that all these subsequent transactions relate to

forward trading and forward trading was not permissible under

the bye-laws of Delhi Stock Exchange after 1.4.1992; further

that the plaintiff has not given any particulars or details of these

transactions.

29. Attention has been drawn to the order dated 21.4.1998

passed in I.A. No.135/95 in the present suit. Vide this order the

Court had directed the plaintiff to place on record certain

documents which inter alia include (i) Trading Hall Diary also

known as 'chopri' (ii) Register of Transaction, (iii) Contract

Notes in respect of transactions with the defendants, (iv) Details

of 'Badla' transactions and Margin deposits and (v) Bills other

than those already filed by the plaintiff along with his plaint.

30. Affidavit of compliance had been filed by the plaintiff.

Defendant has, however, pointed out that in his cross-

examination PW-1 has admitted that this was not a compliance

in true letter and spirit. Attention has been drawn to his cross-

examination, wherein PW-1 had admitted that two accounts

were maintained by the plaintiff of the defendant i.e. his client

account and his margin account. The original margin account

has been misplaced. PW-1 has further admitted that he has not

placed on record the entire contract notes/transaction slips

except Ex.PW-1/59 to Ex.PW-1/66; he had not filed any other

contract notes. PW-1 has further admitted that the chopri

which has been filed by him is not in conformity with the

prescribed rules of the Delhi Stock Exchange.

31. Counsel for the defendant has contended that these are

serious lacunae which the plaintiff had himself admitted and he

not having followed the mandate of Section 9(3)(b) of the

Securities Contracts (Regulation) Act 1956 (hereinafter referred

to as the Act of 1956) and the subsequent rules and regulation

notified thereunder as also the bye-laws which have a statutory

character, it has been established that the accounts which were

maintained by the plaintiff are bogus and manipulated upon

which no reliance can be placed. Learned counsel for the

defendant has placed reliance upon AIR 2004 SC 55 Bombay

Stock Exchange vs. Jaya I. Shah to substantiate his submission

that the bye-laws and the regulations of the Stock Exchange

have a statutory and binding force. Attention has been drawn to

bye-laws no.62, 69, 219, 221 and 228. Attention has also been

drawn to regulation no.15,17 and 18 of the said Act of 1956. It

is submitted that in terms of the circular no.11/92 dated

10.3.1992 and circular no.1/92 dated 18.9.1992 forward trading

has been banned by the Delhi Stock Exchange and all entries

after of 1.4.1992 as recorded in Ex.PW-1/2 are illegal and void

transactions.

32. Counsel for the defendant has also placed reliance upon a

host of judgments to substantiate his submission that under

Section 101 of the Indian Evidence Act the burden of proof is

always on the plaintiff; it is for him to establish his case; this

burden cannot shift; defendant is under no obligation to produce

any document to substantiate the case set up by the plaintiff

who has to stand on his own legs. Reliance has been placed

upon:-

1. Narcinva v. Kumat & Anr. vs. Alfredo Antonio Doe Martins & Ors., AIR 1985 SC 1281;

2. R.K.Madhuryyajit Singh & Anr. vs. Takhellamb Am Abung Singh & Ors., AIR 2001 Gauhati 181,

3. Usha Beltron Ltd. vs. Nand Kishore Parashamka & Anr., AIR 2001 Calcutta 137,

4. Bilcare Limited vs. The Supreme Industries Ltd., 2007 IV AD (Delhi) 105

5. Indian Performing Right Society Ltd. vs. Debashis Patnaik & Ors., 2007 (2) R.A.J. 293 ( Delhi)

6. Anil Rishi vs. Gurgakshi Singh, 2006(5) Scale

7. Ramchandra Sakharam Mahajan vs. Damodar Trimbak Tanksale(dead) & Ors., (2007) 6 SCC 737

8. Yamuna Nagar Improvement Trust vs. Khariat Lal with Yamuna Nagar Improvement Trust vs. Darshan Lal, (2005)10 SCC 30

33. The aforestated enunciations clearly state that it is for the

plaintiff to affirmatively and substantially assert and prove the

case which he has set up. There is no dispute to this

proposition. That the plaintiff must prove his own case and

merely because the defendant is not able to prove his defence

does not make out a case where the suit of the plaintiff must

automatically be decreed.

34. In the instant case, Ex.PW-1/2 has been proved by PW-1.

This is the statement of account maintained by the plaintiff of

the various transactions which he had with defendant and

ranging from 19.8.1991 to 27.11.1992. There is also no dispute

between the parties for the transactions inter se between them

up to 23.4.1992. Thereafter as per the case of the defendant all

the other transactions related to a forward trading which is a

banned and illegal transaction after 1.4.1992. There is no such

document filed by the defendant. The circulars relied upon by

him do not substantiate this. Further Ex.PW-1/2 has been

admitted in piecemeal; although initially the defendant had

denied it in toto. The transaction of 200 Shipping Credit

Corporation shares as reflected as debited on 7.4.1992 are for

Rs.12,280/- and the corresponding credit entry of the same

shares on 3.9.1992 of Rs.30,000/- has not been specifically

denied by the defendant. In his cross-examination DW-1 has

stated that he is not sure as to how there has been such a

variance and how the same shares have been reflected at two

points in Ex.PW-1/2. DW-1 has also not denied the bad delivery

of 25 shares debited to his account on 18.9.1992. PW-1 has not

been given any suggestion by the learned defence counsel at any

point of time on the various dates when his cross-examination

has been effected that this document is manipulated or

fabricated. In fact, more than a partial reliance of the same has

been placed upon it by the defendant. The statement of account

filed by the defendant Ex.DW-1/P-1 as already noted is only up

to 16.4.1992; if the defendant was also maintaining his accounts

there was no reason as to why he was withholding it and shying

from its production after 17.4.1992 to 27.11.1992 which are the

corresponding entries in Ex.PW-1/2. Ex.DW-1/P-1 is even

otherwise suspect. DW-1 has admitted in his cross-examination

that the transaction on 23.8.1991 of Rs.1,03,188/- (which was an

admitted payment) has not been reflected in his statement of

account. This admission completely throws out the veracity of

Ex.DW-1/P-1.

35. The bills in this transaction had been proved by PW-1 as

Ex.PW-1/114 to Ex.PW-1/147. No suggestion has been given

to PW-1 on any occasion that these bills are not a true reflection

of the transactions between the parties or that they are forged

documents. On oath PW-1 has categorically deposed that these

bills /credit memos were usually signed by defendant no.2, by

his son or sometime by his employees. Perusal of these

document show that most of them are counter signed on the

date on which they had been issued. There is no cross-

examination of PW-1 to the effect that that these bills were not

countersigned in the manner in which PW-1 had deposed about

them.

36. Further contention of the learned defence counsel is that

admittedly a contract note had to be executed for every

transaction between the parties within 24 hours. After

23.4.1992 there is no written document with the plaintiff

whereby the defendant had authorized the plaintiff to transact

on his behalf; in the absence of which it is clear that all the

transactions after 23.4.1992 as reflected in Ex.PW-1/2 are sham.

On this count also this argument of the defendant must fail.

Admittedly, defendant was not a member of the Stock Exchange;

he could trade in the stock exchange only through PW-1. PW-1

in his cross-examination stated that the defendant being not

member of the Stock Exchange and not competent to enter the

trading hall, he used to place orders upon him by personal visits

or by phone and that is how a transaction used to take place. s

DW-1 has also admitted that the transactions used to take place

between the parties on such matters on telephone. This

argument of the defendant is negatived by his own witness.

37. Statement of account Ex.PW-1/2 stand proved. Defendant

has not come to the court with clean hands. He is taking

contrary and shifting stands since inception. Till the filing of the

written statement his defence was that the parties had settled

all accounts and a sum of Rs.25,530/- was in fact due from the

plaintiff. In his evidence he has asserted that all accounts

between the parties stood settled on 31.3.1992 and there were

no transactions thereafter. In the course of the arguments, the

defendant has changed his stand; he has admitted all

transactions in Ex. PW-1/2 up to 23.4.1992 and has given a

written chart whereby according to him an amount of

Rs.2,15,518/- became due and payable to him. Initially the

defendant had completely denied Ex.PW-1/2; gradually he

agreed to accept it in bits and pieces. Upto 23.4.1992 he

admitted all the entries. These oral submissions are again

contrary to the evidence which had been adduced. DW-1 in

cross-examination has not made any specific denial of the 200

shares of Shipping Credit Corporation which has two entries i.e.

a debit entry recorded on 7.4.1992 and debit entry of 3.9.1992

similarly. He has also not denied the bad delivery effected on

him on 18.9.1992. The said transactions thus stand admitted. It

has not been suggested that Ex.PW-1/2 is forged or fabricated.

Bills Ex.PW-1/114 to Ex.PW-1/147 duly countersigned by the

defendant and his son have been proved in the testimony of

PW-1 for which again there is no cross-examination that the said

bills are forged or false. The statement of account filed by the

defendant is falsified by his own admission; the admitted

payment of Rs.1,03,188/- on 23.8.1991 has not been reflected in

this statement of account Ex.DW-1/P-1. Non compliance with

the regulations or bye-laws of the Stock Exchange even

assuming to be correct would not oust the claim of the plaintiff

for the recovery of his amount as claimed by him.

38. Legal notice dated 2.2.1995 Ex. PW-1/148 was served

upon the defendants at two addresses i.e. at Nehru place as also

the address of the defendant at the World Trade Centre. The

UPC receipts are Ex. PW-1/149 to Ex. PW-1/150, postal receipts

are Ex.PW-1/151 and Ex.PW-1/152. Undelivered envelops with

the AD Cards are Ex.PW-1/153 and Ex.PW-1/154. Presumption

under Section 27 of the General Clauses Act 1897 read with

Section 114(e) of the Evidence Act is drawn in favour of the

plaintiff; that the said notices having been properly addressed

on a pre-paid envelope and sent by a registered post had been

served upon the opposite party.

39. In Kalu Ram vs. Sita Ram, 1980 RLR (Note) 44, it has

been held that where the plaintiff before filing a suit makes

serious assertions in a notice to the defendant, the defendant

must not remain silent by ignoring reply; if he does so an

adverse inference for the same may be drawn against him.

Plaintiff is entitled to recover the aforenoted amount as claimed

by him in Ex.PW-1/2.

40. Further case of the defendant is that the claim of the

plaintiff is at best only against defendant no.1 and 2 as the

plaintiff even at the time of filing of the suit was not sure if the

defendant was a partnership or a proprietorship firm.

Defendant no.3 has to be excluded from all liability.

41. In his cross-examination PW-1 has admitted that DW-1 is a

proprietorship concern of defendant no.2. It is thus clear that

no liability can be fastened upon defendant no.3. No specific

issue has been framed in this connection. Learned counsel for

the plaintiff has however pointed out that on 22.2.2005 on a

application filed by defendant no.3 under Order 1 Rule 10 CPC

seeking deletion of her name, although her application has been

dismissed, this question has been left open and it has

specifically been reflected in the order that in case it if is found

that defendant no.3 has no connection with defendant no.1 no

decree will be passed against her. On 3.4.2007 the Division

Bench had dismissed the appeal preferred by defendant no.3 but

this question nevertheless remained open. This submission of

learned defence counsel is borne out from the record. In view of

the categorical admission of PW-1 that defendant no.1 was the

sole proprietorship firm of defendant no.2, it is clear that

defendant no.3 cannot be fastened with any liability as these

transactions were between the plaintiff and the proprietorship

firm of defendant no.2 alone. Defendants no.1 and 2 are liable

to the plaintiff.

42. Issue no.4 is decided in favour of the plaintiff and against

the defendant.

43. ISSUE NO.5

Plaintiff has claimed interest @ 18% per annum. Although

there is no contractual rate of interest between the parties yet

DW-1 in his cross-examination has admitted that in such like

commercial transactions the defaulting party is liable to pay

interest. It is admittedly a commercial transaction relating to

sale/purchase of shares. Interest claimed @ 18% per annum on

the principal amount up to the date of the filing of the suit is the

plaintiff's entitlement.

44. Issue no.5 is decided in favour of the plaintiff and against

the defendant.

45. ISSUE NO.3:

Defendant has contended that the suit is barred by

limitation. Parties have settled their accounts on 23.8.1991 and

this is clear from the averments made in the plaint. The margin

money had been paid on 31.3.1992. The suit filed on 21.4.1995

is clearly barred by limitation. This defence of the defendant

has no force. Parties were admittedly maintaining a running

account of the various inter se transactions between them.

Defendant in the course of his arguments has admitted the

transactions of 23.4.1992; he himself stated that in Ex. PW-1/2

he had lastly transacted with the plaintiff on 24.4.1992 and he

had received a delivery of 1000 TISCO shares of an amount of

Rs.6,71,750/- on the said date. Even as per his case the suit

filed on 21.4.1995 is within limitation.

46. Issue no.3 is decided in favour of the plaintiff and against

the defendant.

47. ISSUE NO.6: RELIEF:

Suit of the plaintiff is decreed against defendants no.1 and

2 in the sum of Rs.50,00,000/- with pendentelite and future

interest @ 12% per annum from the date of filing of the suit till

realization. Cost also be awarded in favour of the plaintiff.

Decree sheet be drawn. File be consigned to record room.

(INDERMEET KAUR) JUDGE MARCH 22, 2010 nandan