Puneet Kumar Agarwal vs M/S Imaginations Agri Exports & ...
2013 Latest Caselaw 829 Del

          *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                     Date of decision: 19th February, 2013

+             IA No.1804/2012 (of the defendants u/O 37 R-3(5) CPC
                  for leave to defend) in CS(OS) NO.922/2010

       PUNEET KUMAR AGARWAL                 ..... Plaintiff
                  Through: Mr. Neeraj Gupta & Mr. Arvind
                           Vashistha, Advs.

                                   Versus

    M/S IMAGINATIONS AGRI EXPORTS & ORS...... Respondents

Through: Mr. Rahul Shukla & Mr. B.B. Shukla, Advs.

CORAM :-

HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J

1. The plaintiff has instituted this suit under Order 37 of the Code of

Civil Procedure (CPC) on the basis of a dishonoured cheque of the

defendant No.1, a partnership firm of which the defendants No.2 to 4 are

partners, for a sum of Rs.21,21,550/- together with interest at the rate of

15% in the sum of Rs.4,50,850/- for the period prior to the institution of

the suit i.e. for recovery of a total sum of Rs.25,72,400/-. Summons for

appearance and thereafter summons for judgment were issued. On

27.02.2012, finding that the defendants No.1&2 had not entered

appearance within the prescribed time, the suit, insofar as against the

defendants No.1&2, was decreed. RFA(OS) No.33/2012 was preferred

by the defendants No.1&2 thereagainst and which was allowed vide

judgment dated 09.04.2012 (corrected on 30th May, 2012) and the matter

remanded. Arguments on the application of the defendants for leave to

defend have been heard.

2. It is the case of the plaintiff, (i) that he and the defendant No.2 Mr.

Tarun Gautam had in or about the year 2000-03 worked together in a

company; (ii) that the defendant No.2 even after leaving the employment

remained in touch with the plaintiff and informed the plaintiff that he along

with the defendants No.3 and 4 viz. Mrs. Ratnesh Gautam and Mr. Sumit

Gautam, had commenced business in partnership in the name and style of

defendant No.1 Firm; (iii) that the defendants No.2 to 4 in the year 2006-07

persuaded the plaintiff to join the defendant No.1 Firm as a „working

partner‟, on the understanding that the amounts given by the plaintiff to the

defendant No.1 Firm and / or incurred by the plaintiff in the business of the

defendant No.1 Firm would be returned to the plaintiff together with

interests at the rate of 2% per mensem; (iv) however though the terms and

conditions orally agreed to, were to be reduced into writing but were not so

reduced but the plaintiff continued to work on the assurance of the

defendants No.2 to 4; (v) that the plaintiff has given / incurred a total sum of

Rs.21,21,550/- to the defendant No.1 Firm and / or on behalf of the

defendant No.1 Firm and out of which Rs.10,00,000/- were given by way of

cheques in the name of the defendant No.1 Firm; (vi) the plaintiff in para

No.11 of the plaint has given the break up of the said amount of

Rs.21,21,550/- under as many as 23 heads; (vii) that the plaintiff so

remained associated with the defendants up to March/April, 2008 and upon

the failure of the defendants to return his monies filed a complaint on

22.06.2008 with the Police against the defendants; that even before the

Police Officials, the defendants assured to return the amount due to the

plaintiff; (viii) that on 15.10.2008 the plaintiff received a registered letter

dated 12.10.2008 under the initials of defendant No.2 enclosing the cheque

aforesaid for Rs.21,21,550/- in favour of the plaintiff; however the said

cheque on presentment was dishonoured for the reason of „insufficiency of

funds‟ in the account of the defendant No.1 Firm; (ix) that prior to the

institution of the present suit, a complaint of offence under Section 138 of

the Negotiable Instruments Act, 1881 (NI Act) was also lodged by the

plaintiff against the defendants and which is pending consideration.

3. The defendants seek leave to defend the suit on the following pleas:

(i) that this Court has no territorial jurisdiction to entertain this

suit. The amount of Rs.10,00,000/- given by the plaintiff to the

defendant No.1 Firm was vide two cheques of Rs.5,00,000/-

each drawn at Chennai where the plaintiff was then working

and deposited by the defendant No.1 Firm in its account with

the Bank at Dehradun and that the plaintiff has falsely stated

that the aforesaid cheques were drawn at Delhi. The defendants

are also residing at Dehradun;

(ii) that no letter dated 12.10.2008 was written by the defendants to

the plaintiff and the said letter has been forged by the plaintiff;

(iii) that the defendant No.1 Firm is only liable to pay a sum of

Rs.12,20,000/- to the plaintiff which the plaintiff had loaned to

the defendant No.1 Firm and no other amount;

(iv) that the dishonoured cheque was stolen in the year 2007 as is

evident from the Statement of Accounts, as the cheques of the

preceding two serial numbers had been encashed from the

defendants account on 05.05.2007 and the cheque of the

succeeding serial number had been encashed from the

defendants account on 07.05.2007. It is further pleaded "that

cheque in question i.e. cheque No.998688 must have been

signed at around the same time by the defendant No.2 which

was subsequently stolen from his possession."

4. The defendants, besides applying for leave to defend have also filed

IA No.3168/2012 under Order 7 Rule 10 of the CPC for return of the plaint

owing to this Court not having territorial jurisdiction to entertain the suit.

5. The counsel for the defendants has argued that the dishonoured

cheque in the present case cannot be an admission of liability on the part of

the defendants since from the date of the encashment of the cheques of the

serial numbers immediately before and after the said cheque, it is apparent

that the said cheque is of May, 2007 and on which date as per the averments

in the plaint also, the question of the defendants admitting liability in any

amount by giving a cheque therefor to the plaintiff did not arise. Attention is

invited to Section 87 of the NI Act providing that any material alteration of a

negotiable instrument renders the same void. The counsel for the defendants

on the aspect of territorial jurisdiction has invited attention to Mountain

Mist Agro India (Pvt.) Ltd. Vs. S. Subramaniyam 149 (2008) DLT 40 (DB)

and on Arinits Sales Pvt. Ltd. Vs. Rockwell Plastic Pvt. Ltd. 149 (2008)

DLT 123 (DB) laying down that it is the situs of the bank on which the

cheque is drawn and not the situs of the bank where the cheque is presented,

which vests jurisdiction. Reliance is further placed on BPDL Investments

(Pvt.) Ltd. Vs. Maple Leaf Trading International (Pvt.) Ltd. 129 (2006)

DLT 94 laying down that the suit under Order 37 of the CPC cannot be

maintained on the basis of stale cheques and granting unconditional leave to

defend in the facts of that case.

6. During the course of hearing, even though there is no plea to the said

effect, but by way of abundant caution, it was enquired from the counsel for

the defendants whether the defendants had lodged any report / complaint

with the police or with their Bankers in the year 2007 of the loss or theft of

the cheque on the basis whereof this suit has been filed.

7. The answer is in the negative.

8. Per contra, the counsel for the plaintiff has with reference to the

documents argued that the cheques for Rs.5,00,000/- each by which the

plaintiff had given the sum of Rs.10,00,000/- to the defendant No.1 Firm

were drawn on account of the plaintiff with the Soami Nagar, New Delhi

branch of the United Bank of India and deposited in the account of the

defendant No.1 Firm with the Union Bank of India, Anna Nagar, Chennai

and cleared through centralized clearing. He has thus contended that this

Court as per the judgment cited by the counsel for the defendants themselves

has territorial jurisdiction. Attention is also invited to the photocopy of a

document titled "Outstanding Amount Statement as on 29/02/2008" (and

original of which is stated to be filed in the proceedings under Section 138

of the NI Act) where the defendant No.1 Firm under the signature of

defendant No.2 as Managing Partner has confirmed the total outstanding

towards the plaintiff at Rs.21,21,550/-. Attention is yet further invited to the

balance sheet of the defendant No.1 Firm as on 31.03.2007 where unsecured

loan of the plaintiff to the defendant No.1 Firm of Rs.10,00,000/- is shown.

Qua the challenge by the defendants to the letter dated 12.10.2008 under

cover of which the cheque for Rs.21,21,550/- is stated to have been sent by

the defendants to the plaintiff, it is stated that the said letter was received by

the plaintiff at Delhi by registered post AD in an envelope bearing the stamp

of posting of the Post Office at Dehradun. It is contended that the denial by

the defendants with respect to the said letter is vague and without any

particulars. Attention is also invited to the second proviso to Order 37 Rule

3 (5) of the CPC to contend that in the face of the admission by the

defendants of the liability in the sum of Rs.12,20,000/-, the defendants

before being heard on the application for leave to defend are liable to be

directed to deposit the said amount. Reliance is placed on Amit Garg Vs.

Raminder Singh 190 (2012) DLT 335 where on the basis of comparison of

the signatures on the application for leave to defend and the disputed

signatures, the leave to defend was refused. Relying on Section 20 of the NI

Act, it is contended that delivery of a blank cheque is prima facie authority

to the holder thereof to fill up the same. Reliance in this regard is placed on

V.K. Enterprises Vs. Shiva Steels (2010) 9 SCC 256 and Rajni Kumar Vs.

Suresh Kumar Malhotra (2003) 5 SCC 315 and General Rubber Works Vs.

Continental Carbon India Ltd. MANU/DE/2197/2008, National Small

Industries Corp. Ltd. Vs. Novavision Electronics (P) Ltd. 132 (2006) DLT

140, Brakewel Automotive Components (India) Pvt. Ltd. Vs. Karpagga

Brakewel MANU/DE/0138/2011 & M/s Margra Industries Ltd. Vs. M/s

Mediterranean Shipping Company, S.A., (FAO(OS) 198/2006 decided on

21.03.2012).

9. The counsel for the defendants in rejoinder has contended that the

original letter dated 12.10.2008 has not been filed by the plaintiff in Section

138 NI Act proceedings also.

10. The counsel for the plaintiff has responded by stating that in view of

the multifarious litigation, the original has not been filed but can be

produced.

11. The defendants, in their leave to defend application, have not disputed

/ controverted the receipt of the legal notice. It was enquired from the

counsel for the defendants whether any reply thereto was given. The answer

is in the negative.

12. I may further add that the certified copies of the dishonoured cheque,

its return memo, the letter dated 12.10.2008, its envelope, legal notice dated

13th December, 2008 originals of which have been filed in the Section 138

NI Act proceedings, are on record in the present case.

13. I have considered the rival submissions. The defendants, either by

express admission or by non traverse in the application for leave to defend,

have admitted the factum of, (a) the plaintiff having been known to the

defendant No.2; (b) the plaintiff having joined the business carried on by the

defendants No.2 to 4 in the name and style of defendant No.1 Firm and

having worked therefor and of the plaintiff having in the course of his said

association loaned a sum of Rs.12,20,000/- to the defendant No.1 Firm.

14. The dispute thus is really of the balance sum of Rs.9,01,550/- out of

the total principal claim amount of Rs.21,21,550/-. The claim for the said

amount is on account of various expenses which the plaintiff claims to have

incurred on the oral assurance of, and in accordance with the verbal

understanding with, the defendants. The claim for the said amount would

not fall within the ambit of Order 37 of the CPC save on the basis of the

amount thereof being included in the dishonoured cheque for the total sum

of Rs.21,21,550/-, out of which as aforesaid Rs.12,20,000/- is admitted as

due.

15. In the circumstances, in my opinion, the whole controversy revolves

around the credence to be given to the defence of the defendants vis-à-vis

the said cheque.

16. As far as the reliance by the plaintiff on the letter dated 12.10.2008

under cover of which the plaintiff claims the said cheque was sent by the

defendants to the plaintiff is concerned, in my view, at this stage, the said

letter cannot be accepted. I do not give any wheitage to the envelope

containing the letter dated 12.10.2008 bearing the stamp of postage at

Dehradun. If indeed the letter dated 12.10.2008 has been forged and

fabricated by the plaintiff as alleged by the defendants, it was not at all

difficult for the plaintiff to have the same posted from Dehradun.

17. Though the counsel for the plaintiff has argued that signatures of the

defendant No.2 thereon are similar to the signatures of the defendant No.2

on the leave to defend application and though at least one Single Judge of

this Court in Amit Garg supra has at the stage of leave to defend undertaken

ocular comparison of the disputed signature with the admitted signature, but

I refrain from venturing into the said arena.

18. What is significant is that the defendants do not deny that the

dishonoured cheque is drawn on account maintained by the defendant No.1

Firm with its bankers and that the same bears the signatures of the defendant

No.2 as the Managing Partner of the defendant No.1 Firm. The defendants

seek to discredit the said cheque only by demonstrating from their Statement

of Accounts that the cheques bearing serial numbers immediately preceding

and following the serial number which the dishonored cheque bears, were

encashed in May, 2007. However the counsel for the plaintiff during the

course of hearing has from the same Statement of Account of the defendants

shown that it is not as if that the cheques issued by the defendants are always

debited to their account chronologically as per their serial number in the

cheque book. It is demonstrated from the said Statement of Account that

several other cheques bearing subsequent serial numbers are also debited on

earlier dates. It is thus argued that the defendants are in the habit of issuing

cheques from their cheque book haphazardly and not seriatim.

19. The plea of the defendants of the cheque having been stolen in the

year 2007 is bereft of any particulars whatsoever. The defendants, except for

stating that „the dishonoured cheque must have been signed and that the

same was subsequently stolen‟ have not explained, why it was signed, to

whom it was intended to be issued, from whose custody it was stolen, why

no complaint of theft was not lodged and why its payment was not stopped

and as to how the same landed in the custody / possession of the plaintiff.

The use of the words „stolen by the defendants‟ also shows that if it had been

so, in the ordinary course of business a Police complaint or at least a report

to the Bank for stopping the payment of the cheque would have been made.

The defendants are carrying on business and have been preparing and filing

balance sheets. Upon a signed cheque going missing, at least at the end of

the year while preparing the balance sheets and for which audit would

essentially have been conducted, the missing cheque would have been

detected and at least then report would have been made.

20. What also intrigues me is that the defendants, inspite of receipt of the

legal notice did not reply thereto. Ordinarily a person / party faced with the

allegation of commission of an offence under Section 138 of the NI Act

would immediately respond, specially if the cheque was stolen. The conduct

of the defendants shows that the defendants were sitting over the fence and

the pleas taken in the leave to defend are nothing but an afterthought.

21. Even if one is to believe, though not pleaded, that the dishonoured

cheque was given to the plaintiff in blank as security for the investments /

contribution of the plaintiff or amounts incurred by the plaintiff, made

in/to/on behalf of the defendant No.1 Firm, the defendants having done so,

impliedly authorized the plaintiff to fill up the amount thereon and realize

thereunder the monies due to him. It is significant that though the defendants

admit parting of ways with the plaintiff in the year 2008 but even then did

not care to stop payment of the said cheque which would have been done if

the defendants even then felt that the plaintiff may misuse the said cheque.

It is settled law that it is open to a person to sign and deliver a blank or

incomplete instrument, and it is equally open for the holder to fill up blanks

and specify the amount therein. In Scholfield Vs. Lord

Londesborough (1895) All E R 282 it was held that whoever signs a cheque

or accepts a bill in blank and then puts it into circulation must necessarily

intend that either the person to whom he gives it, or some future holder, shall

fill up the blank which he has left. This common law doctrine was also

affirmed by Justice Macnaghten in Griffiths Vs. Dalton (1940) 2 KB

264 where it was held that the drawer of an undated cheque gives a prima

facie authority to fill in the date. The Supreme Court in T. Nagappa Vs. Y.R.

Murlidhar (2008) 5 SCC 633 discussing the scope of Section 20 of the

Negotiable Instruments Act held that by virtue of the said provision a right is

created in the holder of the cheque, which prima facie authorises the holder

to complete the incomplete negotiable instrument, subject to conditions

contained therein. In Vijender Singh Vs. Eicher Motors Limited

MANU/DE/2021/2011 it was held a blank cheque signed and handed over

meant that the person signing it had given implied authority to the holder to

fill up the blank which he had left and the person issuing a blank cheque is

to understand the consequences of doing so and cannot escape his liability

only on the ground that blank cheque had been issued. The same view has

also been affirmed in MOJJ Engineering Systems Ltd. Vs. A.B. Sugars Ltd.

154 (2008) DLT 579 and Purushottam Maniklal Gandhi Vs. Manohar K.

Deshmukh MANU/MH/1188/2006

22. The entire conduct of the defendants is in consonance with their

admission of liability and which makes me also believe the Statement of

Account on which the counsel for the defendants even during the hearing did

not dispute the signatures or sought to give an explanation therefor.

23. As far as the plea of the defendants of territorial jurisdiction is

concerned, the defendants have not disputed that the plaintiff is now a

resident of Delhi. The defendants admit their liability at least in the sum of

Rs.12,20,000/- to the plaintiff. I have during the hearing asked the counsel

for the defendants whether the Courts at Delhi would not have territorial

jurisdiction to entertain the suit on the principle of debtor must seek the

creditor (See L.N. Gupta Vs. Tara Mani 24 (1983) DLT 184 State of

Punjab Vs. A.K. Raha (Engineers) Ltd. AIR1 964 Cal 418 and Mrs.

Shradha Wassan Vs. Mr. Anil Goel MANU/DE/0490/2009). The

defendants as debtors, even if situated out of the territorial jurisdiction of

this Court, are required to discharge their admitted liability to the plaintiff at

Delhi and this Court on the basis of the said principle alone, will have

territorial jurisdiction. No answer is forthcoming from the counsel for the

defendants.

24. I also find merit in the plea of the plaintiff of the cheques for

Rs.5,00,000/- each having been drawn up on account of the plaintiff with the

branch of the Bank at New Delhi. It is the branch of the Bank with which

the account is held which is of relevance for determining territorial

jurisdiction. In today‟s day and time of electronic banking, it is possible to

operate an account from any branch whatsoever.

25. I am therefore convinced that the pleas of the defendants in the

application for leave to defend do not disclose any substantial defence and

are frivolous, vexatious and moonshine.

26. The application of the defendants for leave to defend is accordingly

dismissed.

27. Axiomatically, the plaintiff becomes entitled to a decree for the

principal sum of Rs.21,21,550/-. However, as far as the claim of the

plaintiff for interest is concerned, no rate of interest having been agreed

upon between the parties, the plaintiff cannot be awarded interest at any rate

in excess of the rate which the fixed deposit receipts of nationalized banks

on an average fetch. The plaintiff is thus awarded interest from the date of

dishonour of the cheque and till the date of institution of the suit, pendente

lite and future till the date of payment, at the rate of 10% per annum. The

plaintiff shall also be entitled to costs of this suit as per schedule.

Decree sheet be drawn up.

RAJIV SAHAI ENDLAW, J FEBRUARY 19, 2013 „gsr‟..