Delhi High Court

Ved Prakash vs Mangrove International Ltd. on 18 December, 2013

Author: Rajiv Sahai Endlaw

         *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                 Date of decision: 18th December, 2013

+                               RFA No.153/2013

      VED PRAKASH                                        ..... Appellant
                         Through:     Mr. Madan Lal Sharma & Mr. Varun
                                      Nishcal, Advs.

                                    Versus

    MANGROVE INTERNATIONAL LTD.                             ..... Respondent
                 Through: None.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

1. The appeal impugns the judgment and decree (dated 23.01.2013 of the

Court of Additional District Judge (ADJ)-03, (South District), Saket Courts,

New Delhi in CS No.548/2010 filed by the respondent / plaintiff for

recovery of Rs.14,07,067/- from the appellant / defendant) of recovery of

Rs.14,00,000/- from the appellant / defendant with costs and interest,

consequent to the dismissal of the application under Order 37 Rule 5(3) of

the CPC filed by the appellant / defendant for leave to defend the suit filed

by the respondent / plaintiff under Order 37 of the CPC.

2. Notice of the appeal was issued and vide ex parte ad-interim order

dated 20.03.2013, subject to the appellant / defendant depositing the decretal

amount in this Court, execution was stayed.

3. The notice of the appeal sent to the respondent / plaintiff remained

unserved with the report that the respondent / plaintiff had shifted from the

address given by the appellant / defendant in the appeal. The appellant /

defendant was accordingly permitted to serve the respondent / plaintiff by

publication, which was effected. None appeared for the respondent /

plaintiff thereafter also. However, finding that the respondent is a company

and further finding that the appellant / defendant claims to be a Promoter

Director of the respondent / plaintiff company, the appellant / defendant was

vide order dated 23.10.2013 directed to find out the present address of the

respondent / plaintiff company and its Directors and to file an affidavit.

Upon being told that Section 138 Negotiable Instruments Act, 1881

proceedings initiated by the respondent / plaintiff company against the

appellant / defendant were listed next on 07.11.2013 in the Court of Sh.

Sunil Kumar, Metropolitan Magistrate, Rohini Courts, New Delhi, the

appellant / defendant was also requested to intimate the representative of the

respondent / plaintiff company appearing in the said proceedings of the next

date of hearing in this appeal and the learned Metropolitan Magistrate was

requested to, in his order, if such intimation is given by the appellant /

defendant, record the said fact.

4. The appellant / defendant filed an affidavit confirming that the

respondent / plaintiff still exists at the address given in the memorandum of

appeal and yet further confirming intimation having been given to the

respondent / plaintiff company and a copy of the order dated 07.11.2013 of

the Court of Sh. Manish Khurana, Metropolitan Magistrate (North), Rohini

Courts, Delhi in this regard was also filed.

5. Notwithstanding the aforesaid, none appeared for the respondent /

plaintiff on 11.12.2013. However in the interest of justice, adverse orders

were deferred and the matter posted for today. Today also none appears for

the respondent / plaintiff inspite of passover. The counsel for the appellant /

defendant has been heard.

6. Though the Trial Court record is not available but the counsel for the

appellant / defendant states that copies of the relevant records have been

filed.

7. The respondent / plaintiff instituted the suit from which this appeal

arises, pleading:

(a) that the appellant / defendant was appointed as the First

Director of the respondent / plaintiff company on 07.12.2006

and continued to be a Director till he resigned on 28.11.2008;

(b) that the appellant / defendant in or about the months of

February-March, 2007 took a personal loan of Rs.13,50,000/-

and advance of Rs.50,000/- from the respondent / plaintiff

company by cheque dated 19.02.2007 for Rs.6,00,000/- and

cheque dated 09.03.2007 for Rs.8,00,000/-;

(c) that the appellant / defendant besides the aforesaid amounts had

taken other advances also from the respondent / plaintiff

company and which were duly reflected in the account of the

appellant / defendant maintained by the respondent / plaintiff

company;

(d) that the appellant / defendant in discharge of his said liability,

issued cheques, both dated 16.03.2009, bearing No.215697 for

Rs.6,00,000/- and cheque bearing No.215698 for Rs.8,00,000/-

in favour of the respondent / plaintiff company but both the said

cheques were dishonoured for the reason of 'Insufficiency of

Funds' in the account of the appellant / defendant; and,

(e) that the appellant / defendant inspite of notice did not pay the

amount and accordingly a complaint of offence under section

138 of the Negotiable Instruments Act, 1881 was filed.

Accordingly, the suit from which this appeal arises, for recovery of

Rs.14,00,000/- on the basis of dishonoured cheques was filed.

8. The suit was entertained under Order 37 of the CPC and summons for

appearance and thereafter summons for judgment issued to the appellant /

defendant.

9. The appellant / defendant sought leave to defend on the grounds:

(i) that the appellant / defendant on 31.03.2009, by intimation to

his banker had stopped payment of the subject cheques but

notwithstanding the same, the cheques had been dishonoured

for the reason of 'Insufficiency of Funds';

(ii) that no amount is due from the appellant / defendant to the

respondent / plaintiff;

(iii) that subject cheques were in the custody of the respondent /

plaintiff for security of loan;

(iv) that subject two cheques and another cheque were lying with

the respondent / plaintiff without date since 08.05.2007; and,

(v) that subject cheques were not handed over by the appellant /

defendant to the respondent / plaintiff for discharge of any debt.

10. The counsel for the appellant / defendant states that along with the

leave to defend application, copy of an e-mail dated 08.05.2007 of another

Director of the respondent / plaintiff to the appellant / defendant

acknowledging receipt of the subject two cheques and the third cheque

bearing No.215696 for Rs.6,00,000/- in the name of eSys Services &

Technologies Pvt. Ltd., was also filed. It is informed that the respondent /

plaintiff company was earlier known as eSys Services & Technologies Pvt.

Ltd.

11. The counsel further states that the appellant / defendant had also filed

before the suit Court, copies of the communication to its banker to stop

payment of the subject cheques.

12. The respondent / plaintiff filed a reply to the leave to defend

application.

13. The counsel for the appellant / defendant has at the outset stated that

the leave to defend application is not very happily worded. He has however

contended that the present is not a case where the appellant / defendant

should be condemned unheard and has stated that the appellant / defendant is

willing to keep the amount of Rs.17,61,000/- deposited in this Court till the

adjudication of the suit. It is thus contended that conditional leave to defend

be granted to the appellant / defendant.

14. I am inclined to accept the aforesaid request for the following reasons:

(A) the subject cheques are drawn in favour of eSys Mangrove

India Pvt. Ltd.;

(B) the suit was filed by M/s Mangrove (India) Household Pvt.

Ltd. and it was the averment in para No.3 of the plaint that in

February and March, 2007, the name of the respondent /

plaintiff company was eSys Mangrove India Pvt. Ltd. Though

the date of change of name is not written anywhere but the

counsel for the appellant / defendant states that the name of the

respondent / plaintiff was changed from eSys Mangrove India

Pvt. Ltd. to M/s Mangrove (India) Household Pvt. Ltd. on

13.03.2008. It is thus evident that the cheques in the name of

eSys Mangrove India Pvt. Ltd. were issued prior to 13.03.2008

and were not issued on 16.03.2009, the date which they bear;

(C) though for the reason of the appellant / defendant having not

mentioned about the e-mail dated 08.05.2007 in the leave to

defend application, no response thereto is contained in the

reply to the leave to defend application but the name in which

the cheques are drawn, supports the said e-mail;

(D) the cheques were returned by the banker of the appellant /

defendant for two reasons. Firstly, of the funds being

insufficient and secondly, of the drawers signatures being

incomplete / different / required;

(E) the counsel for the appellant / defendant points out that the

cheques though of the personal account of the appellant /

defendant are signed besides by the appellant / defendant also

by Ms. Swati Bahl, who was not the account holder along with

the appellant / defendant and there were no instructions to the

banker of the appellant / defendant of the cheques to be signed

by her also;

(F) it has been held in Canara Bank Vs. Canara Sales

Corporation (1987) 2 SCC 666 that if the signature on the

cheque are not of the customer of the Bank, the document

carries no mandate to the Bank to pay and is not a cheque and

is a nullity; a question would thus arise whether a suit under

Order 37 of the CPC is at all maintainable on the basis thereof;

(G) though the appellant / defendant had not taken the said plea in

the leave to defend application but has before this Court also

filed an e-mail dated 16.12.2008 sent by him to the respondent

/ plaintiff company complaining that the agreement which the

respondent / plaintiff company had sent to the appellant /

defendant for signatures was not as had been settled / agreed

between the parties; the appellant / defendant has also filed a

copy of the memorandum of understanding dated 28.11.2008

forwarded by the respondent / plaintiff company to the

appellant / defendant and in which it is inter alia recorded that

all accounts had been settled; and,

(H) the respondent / plaintiff in the plaint has admitted that the

appellant / defendant resigned on 28.11.2008; it thus requires

to be adjudicated whether the loan, even if any taken by the

appellant / defendant, had been settled at the time when the

appellant / defendant parted with from the respondent /

plaintiff company.