Hotel Diplomat vs Folio Holdings (India) Pvt. Ltd. ...
2012 Latest Caselaw 5013 Del

       *       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                       Judgment reserved on: 22.08.2012
                                        Judgment delivered on: 27.08.2012


+      CS(OS) No. 1012/2005

       HOTEL DIPLOMAT                                ..... Plaintiff
                    Through: Mr Sandeep Sharma and Mr Vikas Sharma,
                    Advs.

                    versus

    FOLIO HOLDINGS (INDIA) PVT. LTD. AND ANR.                     ..... Defendants
                  Through: None.
CORAM:
HON'BLE MR. JUSTICE V.K.JAIN

                             JUDGMENT

V.K.JAIN, J.

1. This is a suit for recovery of Rs 49,56,195/-. The case of the plaintiff is that

defendant No. 2 represented that defendant No. 1 was a company incorporated

under Companies Act and she was its Chief Executive officer in-charge and

responsible for day-to-day conduct of its business. In January, 2000, defendant No.

2 contacted the plaintiffs to seek some rooms for running her office. She also

represented that US $200 million were being transferred as per the order of Folic

holding Inc to Citibank, New York for credit to Citibank, N.A., New Delhi and the

payment will be made on disbursements of this amount after receipt of payment by

Citibank, New Delhi. Accordingly, rooms bearing No. 203, 101, 103, 104, 107,

108, 114, 3 and 5 in Hotel Diplomat were occupied by defendant No. 2 for staying

there as also for running her office. The bills amounting to Rs 54,83,521/- were

raised by the plaintiff for occupation of the above-referred rooms. The defendant

made payment of Rs 11,85,500/-, leaving a balance of Rs 42,98,521/-. Believing

the representation made by the defendants that US$ 2 million were being

transferred to Citibank, N.A., the plaintiff allowed them to vacate the premises

without clearing the outstanding dues. Three undated cheques were then issued by

defendant No. 2 to the plaintiff and she instructed the plaintiff to present the

cheques only after receiving instructions from her. Since no instructions were

forthcoming from the defendants, the plaintiff sent a letter to them asking them to

make payment of the outstanding amount of Rs 42,98,521/- along with interest on

that amount. Defendant No. 2 requested the plaintiff to calculate interest only up to

06.09.2001. This amount worked out to Rs 6,57,674/-. Out of this amount, Rs

2,01,479/- had been included in the cheque of Rs 45 lakh and, therefore, the

balance interest amount of Rs 4,56,195/- was included in the remaining two

cheques, one of Rs 1,48,851/- and the other of Rs 3,07,344/- The plaintiff

presented three cheques, one of Rs 45,00,000/-, the other of Rs 1,48,851/ and the

last one of Rs 3,073,44/- to Central Bank of India, Parliament Street, new Delhi on

17.09.2002. The cheques, were, however, dishonoured with the remarks "account

closed". The plaintiff is, therefore, now claiming a sum of Rs 49,56,195/- from the

defendants being the amount of those three cheques.

2. The defendants filed written statement, contesting the suit. It was admitted

in the reply that the defendants has acquired, on rent, accommodation in Hotel

Diplomat for their business activities. It is alleged that nine rooms in the plaint

were occupied by the defendants with effect from 09.02.2000 till November, 2000.

It is alleged that the plaintiffs had assured the defendants that they would be giving

special tariff, including huge discount and concessions. The payments mentioned

in para 8 of the plaint have been admitted in the written statement. It has, however,

been denied that the total outstanding for occupation of rooms in Hotel Diplomat

was Rs 54,83,521/-. It is further alleged that three blank cheques were forwarded

to the plaintiff vide letter dated 30.04.2001 and those cheques were made for

different purposes as is evident from the letter dated 30.04.2001. It is admitted that

defendant No. 2 had instructed the bank to withhold payment of aforesaid three

cheques.

3. The defendants have also taken certain preliminary objection. They have

alleged that the suit is liable to be dismissed in view of Section 69(2) of Partnership

Act as the suit in the name of the firm is not maintainable. The defendants have

also denied the authority of Shri V. M. Mathew to file the present suit.

4. The following issues were framed on the pleadings of the parties on

19.01.2010:-

"a. Whether the suit is liable to be rejected under Order 7 Rule 11 CPC? OPD

b. Whether the suit is barred in view of Section 69 of the Indian Partnership Act, 1932? OPD

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

               OPD
               d.    Whether the plaintiff is entitled to the recovery of
               Rs 49,56,195/- is prayed for? OPP

               e.     Whether the plaintiff is entitled to any interest, in
               case the issued No. 3 is decided in favour for of the
               plaintiff and the rate and on the period thereof? OPP

               f.    Relief."

5. The defendants were proceeded ex parte vide order dated 21.05.2010. The

plaintiffs have filed the affidavit of one Mr. Anil Mathur by way of evidence. In

his affidavit, Mr. Mathur, who claims to be Financial Controller and Constituted

Attorney of the plaintiff has stated that in the month of January, 2009, the

defendant No. 2 contacted the partner of the firm as she wanted some rooms in the

hotel for running her office. She represented that she engaged in the business of

providing loan from foreign banks and the rooms were required for her residence as

well as for the office purposes. She also represented that US $ 2 million were

being transferred as per the order of Folic Holding Inc to Citibank for credit to

Citibank, N.A. and the payment would be made on the disbursements of the said

amount after receipt of that payment by Citibank, N.A. He further stated that

rooms No. 203, 101, 103, 104, 107, 108, 114, 3 and 5 were booked by defendant

No. 1 who was staying there and also was running office from there. According to

him, the total amount for the rooms occupied by the defendants was Rs 54,83,521/-

This amount comprised of room tariff, food, beverages, laundry and applicable

taxes. The defendants made payment of Rs 11,85,500/-, leaving a balance of Rs

42,98,521/-. He further stated that the cheques Ex.PW-1/4 to PW-1/6 were issued

to them by defendant No. 2 and were forwarded to them by defendant No. 2 vide

letter dated 30.04.2001 which is Ex.PW-1/7. She had instructed them to present

the cheques only after receiving instructions from her. He has further stated that

pursuant to the letter sent by them to the defendants, defendant No. 2 requested

them to calculate the interest, which worked out to Rs 6,57,674/-. She issued two

more undated cheques one for Rs 1,48,851/- and the other of Rs 3,07,344/-.

6. Issue No. (a)

The written statement does not indicate why the plaint is liable to be rejected

under Order 7 Rule 11 CPC. The plaint does disclose a cause of action to file the

suit since the case of the plaintiff is that the defendants who were occupying certain

rooms in their hotels had not paid the balance outstanding of Rs 42,98,521/-

Therefore, the issue is decided against the defendants and in favour of the plaintiff.

7. Issue No. (b)

Ex.PW-1/2 is the copy of form A and B filed by the plaintiff on 07.05.2010.

This document shows that M/s Hotel Diplomat is a partnership firm and Shri

Sanjeev Lamba and Kailash Lamba are its registered partner. Since the plaintiff is

a registered partnership firm since 16.10.1991, the suit for recovery of money on

behalf of the plaintiff firm is maintainable. The issue is, therefore, decided against

the defendants and in favour of the plaintiff.

8. Issue No. (c), (d), (e) and (f)

These issues are inter-connected and can be conveniently decided together.

Ex.PW-1/3 (colly) are various bills raised by the plaintiff in respect of the rooms

which the defendants had occupied in Hotel Diplomat. The amount of these

invoices is stated to be Rs 54,83,521/-. Ex.PW-1/4 is the is the cheque bearing

No.126509 of Rs 45,00,000/- dated 10.08.2002, issued by defendant No. 1 in

favour of the plaintiff. Ex.PW-1/5 is the cheque bearing No. 1265010 dated

10.08.2002 of Rs 1,48,851/- in favour of the plaintiff, whereas Ex.PW-1/6 is the

cheque No. 1265011 dated 10.08.2002 for Rs 3,07,344/-. These cheques were sent

vide letter dated 30.04.2001. Ex.PW-1/8 is the letter dated 06.09.2001, written by

defendant No. 2 as the CEO of defendant No. 1 to Manager, Citibank, Jeevan

Bharti Building, New Delhi, conforming issue of cheque No. 1265009 for Rs

45,00,000/- to the plaintiff.

9. The deposition of Mr Anil Mathur, coupled with the bills Ex.PW-1/3 shows

that an amount of Rs54,83,521/- was payable by defendant No. 1-company to the

plaintiff towards room rent and other charges in respect of the rooms which the

company had taken in Hotel Diplomat through defendant No. 2 who is its Chief

Executive Officer. Defendant No. 1 made payment of Rs 11,85,500/- to the

plaintiff, thereby leaving an unpaid balance of Rs 42,98,521/- In fact, the liability

to the extent of Rs 45 lakh has been admitted in the letter dated 06.09.2001

(Ex.PW-1/8) written by defendant No. 2 as CEO of defendant No. 1 to Citi Bank,

New Delhi. This letter clearly indicates that at least Rs 45 lakh were payable by

defendant No. 1 to the plaintiff, on the date this letter was written.

10. As regards interest, Mr Anil Mathur, in his affidavit by way of evidence, has

stated that on receipt of letter dated 06.06.2002 (Ex.PW-1/9) from them, defendant

No. 2 contacted the plaintiff and promise to clear the outstanding amount along

with interest by 10.08.2002. She also requested them to calculate interest up to

06.09.2001, which worked out to Rs 6,57,674/-.

11. I see no reason to disbelieve the unrebutted deposition of Mr Anil Mathur in

this regard, particularly when defendant No. 2 herself requested the banker of

defendant No. 1 vide letter dated 06.09.2001 to pay Rs 45 lakh to the plaintiff. Had

the defendants not agreed to pay interest, the bank would not have been asked to

pay Rs 45 lakh and would have been asked to pay only the balance principal

amount of Rs 42,98,521/-. I, therefore, hold that the plaintiff is entitled to recover

interest amounting to Rs 65,7674/- in addition to the balance principal sum of Rs

42,98,521/-.

12. One issue which came up for consideration, during the course of arguments,

was of limitation. The deposition of Mr Anil Mathur shows that three undated

cheques Ex.PW-1/4 to PW-1/6 were given to them by defendants. The amount of

Rs 45 lakh was already filled in the cheque Ex.PW-1/4 at the time it was delivered

to the plaintiff. This would be evident from the letter dated 06.09.2001 written by

defendant No. 2 to the bank of the defendants. The remaining two cheques were

blank in the sense that neither the date nor the amount was filled on them at the

time they were delivered to the plaintiff. This becomes clear from the fact that

interest up to 06.09.2001 was calculated by the plaintiff, on the instructions of

defendant No. 2, after it had already received all the three cheques and after giving

adjustment for Rs 2,01,479/- which was covered in the cheque of Rs 45 lakh, the

balance amount of Rs 4,56,195/- was covered by the plaintiff by filling up cheques

Ex.PW-1/5 and PW-1/6, one for Rs 1,48,851/- and the other of Rs 3,07,344/-.

13. Section 18(1) of Limitation Act, 1963, to the extent it is relevant for our

purpose, provides that where, before the expiration of the prescribed period for a

suit or application in respect of any property or right, an acknowledgment of

liability in respect of such property or right has been made in writing signed by the

party against whom such property or right is claimed, or by any person through

whom he derives his title or liability, a fresh period of limitation shall be computed

from the time when the acknowledgment was so signed.

14. It is by now settled proposition of law that a dishonoured cheque constitutes

acknowledgement within the meaning of Section 18 of Limitation Act. Reference

in this regard can be made to the decision of this Court in Rajesh Kumari v. Prem

Chand Jain AIR 1980 Delhi 80, where it was held that a cheque constitutes

acknowledgement and whether it was dishonoured or encashed would be

immaterial. It was further held by this Court that where a cheque was dishonoured

a fresh period of limitation would start from the date of the cheque. Similar view

was also taken in S.C. Gupta v. Allied Beverages Co. Pvt. Ltd. 163(2009) DLT 495

& also by Full Bench of High Court of Gujarat in Hindustan Apparel industries v.

Fair Deal Corporation AIR 2000 Gujarat 261.

15. The next question which arises in this context is as to what would be the date

of acknowledgement in a case where the cheque is delivered is undated and the

date is later on put by the payee, with the consent/on the instruction of the drawer

of the cheque.

In Ashok Yeshwant Badave vs. Surendra Madhavrao Nighojakar and Anr.

AIR 2001 Supreme Court 1315, the Apex Court, on considering the provisions of

Section 5 and 6 of Negotiable Instruments Act, held that a cheque is a Bill of

Exchange drawn on a bank by the holder of an account payable on demand. It was

further held that Bill of Exchange even though drawn on a banker if it is not

payable on demand is not a cheque. The Apex Court concluded that a post dated

cheque is not payable till the date which is shown thereon arrives and will become

cheque on the said date and prior to that date the same remains a Bill of Exchange.

Therefore, the cheques Ex.PW-1/4 to PW-1/6 continued to be Bills of Exchange till

a date was put on them by the plaintiff in accordance with the instructions of the

defendants who had asked the plaintiff to present the cheques for encashment only

after 10.8.2002.

In MOJJ Engineering Systems Ltd. and Ors v. A.B. Sugars Ltd. 154(2008)

DLT 579, this Court was of the view that since an undated cheque cannot be

encashed, the person who hands over an undated cheque for a certain amount to the

respondent in terms of the contract between the parties also authorizes the payee to

enter an appropriate date on it. In the case before this Court, the defendants had

expressly authorized the plaintiff to fill up a date which could not be earlier than

10.08.2002 when these cheques were to be presented to the bank. Since the cheque

Ex.PW-1/4 for Rs 45 lakh was otherwise duly filled except that no date had been

put on it when it was delivered to the plaintiff, the cheque could have been

completed by the plaintiff by putting an appropriate date on it in accordance with

its agreement with the defendants.

In the context of a post dated cheque, this Court held in D.C.M. Financial

Services Ltd. v. Sunil Kala & Co. 2002 (97) DLT700 that when the creditor is

prevented by the debtor from presenting the cheque before a particular date, it is

the date on which the cheque can be presented which shall be deemed to be the

date of the cheque. In that case a cheque dated 14.11.1995 was delivered by the

defendant to the plaintiff. He, however, requested the plaintiff not to present the

cheque since they did not have arrangement for its encashment. The cheque was

eventually encashed on 12.12.1995. It was held by this Court that 12.12.1995 and

not 14.11.1995 would be considered as the date of payment by the defendants to

the plaintiff. The Court rejected the contention of the defendant that since the

cheque could have been presented to the bank for the first time on 14.11.1995, that

would be the date of payment.

In the case before this Court, though the cheque of Rs 45 lakh as also the

other two cheques were undated when delivered to the plaintiff, it was the

defendant who prevented the plaintiff from presenting the same to the bank by

requesting that they would be presented only after 10.08.2002 by which they were

expecting the payment to be received in their City Bank account. Therefore,

10.08.2002 would be the date of the cheque for the purpose of computing the

period of limitation. Since a fresh period of limitation starts from the date of the

acknowledgement and the cheque of Rs 45 lakh was dated 10.08.2002, the suit

having been filed on 08.07.2005 is well within limitation. The issues are,

therefore, decided against the defendants and in favour of the plaintiff.

Conclusion

In my finding on the issues, a decree for recovery of Rs 49,56,195/- with

costs and pendente lite & future interest at the rate of 12% per annum is passed in

favour of the plaintiff and only against defendant No. 1. Defendant No.2, who is

stated to be the Chief Executive Officer of defendant No. 1 is not personally liable

since she, while taking the rooms, was acting on behalf of defendant No. 1-

company and did not furnish a personal guarantee to the plaintiff. The suit against

defendant No. 2 is hereby dismissed, without any order as costs.

Decree sheet be drawn accordingly.

V.K.JAIN, J AUGUST 27, 2012 bg