Delhi High Court
U.S. Sharma vs Aaren Initiative Outdoor ... on 31 March, 2014
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 2014/2009 & IA No.3859/2012 & IA No.4459/2012
% Judgment dated 31.03.2014
U.S. SHARMA ..... Plaintiff
Through: Ms.Suman Bagga, Adv.
versus
AAREN INITIATIVE OUTDOOR
ADVERTISING PVT. LTD. & ORS. ..... Defendants
Through: Ms.Jasmine Damkewala, Adv. for defendants
No.1 and 2.
Mr.Amitesh Mishra and Ms.Upasana
Mukherjee, Advs. for defendant No.3.
CORAM:
HON'BLE MR. JUSTICE G.S.SISTANI
G.S.SISTANI, J (ORAL)
1.
The plaintiff has filed the present suit under Order XXXVII of the Code
of Civil Procedure for recovery of Rs.49,46,648/- along with pendente lite
and future interest @24% per annum.
2. The defendant No.3 has filed IA No.3859/2012 under Order XXXVII
Rule 3(5) seeking leave to defend. IA No.4459/2012 under Order I Rule
10 CPC has been filed by defendant No.3 for deletion of defendant No.3
from the array of parties.
3. The brief facts of the case as set out in the plaint are that the plaintiff is an
advertising agency. On 15.04.2007 the defendant No.1 through defendant
No.2 approached the plaintiff for display of advertisements on bus
shelters and kiosks in Delhi. It is also the case of the plaintiff that from
time to time the defendant No.1 placed with the plaintiff release orders of
the work/advertisements to be released for their client, defendant No.3.
Copies of the release orders dated 26.07.2007, 27.07.2007, 21.08.2007,
06.09.2009 and 17.09.2009 have been placed on record which bear the
signatures of defendant No.1. After the advertisements were released, the
plaintiff raised bills dated 01.08.2007 (invoice No.028/2007-08),
01.08.2007 (invoice No.029/2007-2008), 05.09.2007 (invoice
No.038/2007-08), 21.09.2007 (invoice No.045/2007-08), 21.09.2007
(invoice No.046/2007-08) for a total sum of Rs.49,46,648/-. Copies of
the bills have also been filed along with the plaint. It has also been
averred that after raising the bills, number of reminders were issued and
visits were made to the office of the defendant No.1 for the payment due
towards the bills raised by the plaintiff, but no payments were released.
The plaintiff on several occasions also approached the defendant No.3 but
to no effect. The plaintiff was forced to issue a legal notice on 22.08.2008
calling upon the defendant No.1 to pay their dues in the sum of
Rs.49,46,648/-, but the payments were not made.
4. Defendant No.1 has filed an application seeking unconditional leave to
defend. It is submitted that the plaintiff has suppressed and withheld
material facts. The present suit has been instituted with ulterior motives
and for extracting money for which the plaintiff is not entitled.
5. It is submitted that Delhi Transport Corporation and Municipal
Corporation of Delhi as a part of their policy permit companies/entities to
display advertisement on all DTC bus stands and its other locations. The
allotment of sites is awarded after following due process and allotment is
awarded to an entity on payment of substantial licence fee. The allotment
made by DTC permits the allottee to advertise on designated sites and
charge premium from parties whose advertisements are displayed and
only the exclusive appointed entity who has been allotted sites can claim
monies for putting up advertisement on the sites specifically allotted to
them. Defendant No.1 was desirous of availing such DTC sites for
advertisement on behalf of Tata Telecom Services Ltd. Counsel for
defendant No.1 has submitted that the plaintiff represented to defendant
No.1 that they were valid allottees by the DTC and that the plaintiff had
exclusive right to display advertisement work for Bus Shelter Display and
Pole Kiosks. It is argued that the defendant No.1, solely based on the
representation of the plaintiff that plaintiff was entitled by DTC to
advertise on certain DTC advertising sites, entered into negotiations with
the plaintiff and the defendant No.1 agreed to permit the plaintiff to
advertise on the said sites. It is the case of defendant No.1 that after
placing the release orders and after the advertisements were displayed it
was learnt that in fact one M/s.Adwel Advertising Services (hereinafter
referred to as „M/s.Adwel‟) were solely entitled to put advertising
displays on the said sites during the relevant period. It is also the case of
defendant No.1 that when the plaintiff was confronted, the plaintiff
verbally represented to the defendant No.1 that the plaintiff was
exclusively entitled to put advertising displays on the said sites whereas
M/s.Adwel also provided cogent documentary evidence in support of its
stand. Reliance is placed on communication dated 10.05.2008 by which
M/s.Adwel explained their entire stand to defendant No.1. M/s.Adwel
informed the defendant No.1 that plaintiff had made a false representation
that the plaintiff was authorised by DTC to display defendant Nos.1‟s
advertisement on DTC Bus Queue Shelters. M/s.Adwel emphasized to the
defendant No.1 that M/s.Adwel were the owners of the said sites at the
relevant time and that the plaintiff had represented to M/s.Adwel that
Purchase Orders for advertisement on the sites would be issued by
defendant No.1 in the name of M/s.Adwel. M/s.Adwel indicated to the
defendant no.1 that any payment made to the plaintiff would be based on
totally fraudulent representation of the plaintiff to the defendant No.1.
That M/s.Adwel thus requested the defendants No.1 not to release any
payment to the plaintiff. M/s.Adwel also produced documents before
defendant No.1 indicating that DTC had appointed M/s.International
Avenue as their exclusive allottee for the purpose of displaying
advertisements on the said sites. The said M/s.International Avenue had
given marketing rights for all bus shelters allotted to M/s.Adwel. Copy of
the letter dated 17.05.2009 has been placed on record. Documents
showing arrangement between M/s.International Avenue and M/s.Adwel
Advertising i.e. showing M/s.Adwel as assignee of M/s.International
Avenue have also been placed on record. Faced with this quandary, the
defendant No.1 addressed e-mails to the plaintiff dated 27.08.2007,
30.08.2007, 06.09.2007 and 18.09.2007. The defendant No.1 also
demanded from the plaintiff for a copy of the letter from M/s.Adwel
giving the plaintiff right to sell advertising space. It is further submitted
by counsel for the defendant no.1 that in response to the various letters
and emails no authority letter was provided by the plaintiff to the
defendant No.1. Counsel submits that in the absence of any letter and to
the contrary documentary evidence provided by M/s.Adwel, the defendant
No.1 was left with no option but to make the payment to M/s.Adwel. The
defendant in turn also requested M/s.Adwel for indemnities from any
claims which would be made by the plaintiff against them. For the above
reasons defendant No.1 seeks unconditional leave to contest.
6. Leave to contest has also been sought by defendant No.3 by filing IA
No.3859/2012. It is the contention of learned counsel for defendant No.3
that defendant No.3 is not a proper or necessary party as there is no
privity of contract between the plaintiff and defendant No.3. It is
submitted by counsel for the defendant no.3 that the defendant no.3 has
been impleaded as a party only to arm twist the defendant no.3. Reliance
has also been placed on a No Dues Certificate dated 14.02.2011 issued by
the defendant No.1 in favour of defendant No.3 showing no outstanding
till 31.12.2010 except for a sum of Rs.8,15,915/- and the aforesaid amount
is not a subject matter of the present suit. The No Dues Certificate also
shows that on payment of Rs.8,15,915/-, the plaintiff shall not stake any
claim for the services/material supplied to the defendant No.3 till
31.12.2010. Leave is also sought by defendant No.3 on the ground that
there are no allegations against the defendant No.3. The dispute is
entirely restricted between the plaintiff and defendants No.1 and 2. Even
otherwise, there is no legal obligation whatsoever on the defendant No.3
to make the payment to the plaintiff. Reliance is also placed on the release
orders where there is no mention of the name of defendant No.3. The
reference of the name on the invoices only mentions the name of
defendant No.3 as a client. Besides, no legal notice was issued by the
plaintiff to defendant No.3 and service of legal notice was only upon
defendants No.1 and 2 which show that even as per the understanding of
the plaintiff the dispute was between the plaintiff and defendants No.1 and
2.
7. For the above reasons the defendant No.3, vide IA No.3859/2012, not
only seeks unconditional leave to defend but, vide IA No.4459/2012, also
prays that the defendant No.3 be deleted from the array of parties.
8. In reply to the application for leave to defend, it has been stated that it is
incorrect that only allottees can claim monies for putting up advertisement
on the sites specifically allotted to them. Ms.Bagga submits that as per
the market price if the original allottee(s) cannot get enough business to
put advertisement such allottee(s) further authorizes/gives sub-licences to
other persons to put up advertisements on sites against consideration as in
the present case. It is also disputed that the plaintiff had ever represented
that they were the exclusive or direct allottees or had a right to display
advertisement work for Bus Shelters and Pole Kiosks for DTC. Another
explanation has been rendered that the plaintiff used to charge fee from
his clients for display of their advertisements on Bus Queue
Shelters/Kiosks etc. and in turn pay to the allottee after retaining margin
of profit for services rendered by the plaintiff.
9. I have heard the learned counsel for the parties.
10. The parameters for grant of leave to defend are well-settled. In case the
defendants raise a good defence to the claim on merits or raise a triable
issue indicating that he has a fair or bona fide or reasonable defence, the
defendant is entitled to unconditional leave to defend. According to
learned counsel for the defendants, the plaintiff is not entitled to the
amount so claimed as the plaintiff was not authorized to display
advertisements as neither DTC nor MCD had authorized the plaintiff for
the said purpose. Despite the aforesaid stand taken, the plaintiff except
for a bald statement referring to the market practice as prevalent has failed
to place a single document on record to establish his right for display of
advertisements on the sites in question by DTC. It would be useful to
refer to the discussion of the Supreme Court of India in the case of
M/s.Mechelec Engineers & Manufacturers v. M/s.Basic Equipment
Corporation (1976) 4 SCC 687. Relevant paras are reproduced as under:-
(a) If the defendant satisfies the court that he has a good defence
to the claim on its merits the plaintiff is not entitled to leave
to sign judgment and the defendant is entitled to
unconditional leave to defend.
(b) If the defendant raises a triable issue indicating that he has a
fair or bona fide or reasonable defence although not a
positively good defence the plaintiff is not entitled to sign
judgment and the defendant is entitled to unconditional leave
to defend.
(c) If the defendant discloses such facts as may be deemed
sufficient to entitle him to defend, that is to say, although the
affidavit does not positively and immediately make it clear
that he has a defence, yet, shows such a state of facts as leads
to the inference that at the trial of the action he may be able
to establish a defence to the plaintiff‟s claim the plaintiff is
not entitled to judgment and the defendant is entitled to leave
to defend but in such a case the court may in its discretion
impose conditions as to the time or mode of trial but not as to
payment into court or furnishing security.
(d) If the defendant has no defence or the defence set up is
illusory or sham or practically moonshine then ordinarily the
plaintiff is entitled to leave to sign judgment and the
defendant is not entitled to leave to defend.
(e) If the defendant has no defence or the defence is illusory or
sham or practically moonshine then although ordinarily the
plaintiff is entitled to leave to sign judgment, the court may
protect the plaintiff by only allowing the defence to proceed
if the amount claimed is paid into court or otherwise secured
and give leave to the defendant on such condition, and
thereby show mercy to the defendant by enabling him to try
to prove a defence.
11. Order XXXVII Rule 1 CPC is a very stringent provision which reads as
under:-
"1. Courts and classes of suits to which the Order is to
apply.- (1) This Order shall apply to the following Courts,
namely:-
(a) High Courts, City Civil Courts and Courts of Small
Causes; and
(b) other Courts:
Provided that in respect of the Courts ...........
(2) Subject to the provisions of sub-rule (1), the Order applies to
the following classes of suits, namely:-
(a) suits upon bills of exchange, hundies and promissory
notes;
(b) suits in which the plaintiff seeks only to recover a debt
or liquidated demand in money payable by the
defendant, with or without interest arising,-
(i) on a written contract; or
(ii) on an enactment, where the sum sought to be
recovered is a fixed sum of money or in the nature of a
debt other than a penalty; or
(iii) on a guarantee, where the claim against the
principal is in respect of a debt or liquidated demand
only."
12. A suit under Order XXXVII Rule 1 CPC can be instituted only on the
basis of a written contract, dishonour of cheques, hundies, Bill of
Exchange etc. The onus is really on the defendant to show why a decree
should not be passed. The timeframe fixed in Order XXXVII Rule 3(1)
CPC is only 10 days after service of summons for judgment. Thus in my
view, it is incumbent upon any plaintiff while filing a suit under Order
XXXVII CPC to place on record all the relevant documents and
correspondence exchanged between the parties and also all material facts
should be disclosed in the plaint and all material documents should be
filed.
13. In the present case although the original invoices and release orders have
been placed on record but the plaint is completely silent and no
documents have been filed and material documents including e-mails
addressed by the defendants No.1 and 2 to the plaintiff and the No Due
Certificate issued by the plaintiff to defendant No.3 have been concealed
from the Court. Also, there is no reference to the controversy raised by
the defendants No.1 and 2 with regard to M/s.Adwel having exclusive
rights of advertisement, neither the relevant documents in this regard have
been filed. I may hasten to add that in the absence of these documents a
suit under Order XXXVII CPC would still be maintainable but firstly it
reflects on the conduct of the plaintiff and secondly, given the stringent
provision and the short timeframe fixed for filing leave to defend, a
solemn duty is cast upon any plaintiff and more particularly on a plaintiff
who institutes a suit under Order XXXVII CPC, to place relevant
documents along with the suit. This plaintiff has failed in its duty to do
so. It is the stand of defendants No.1 and 2 that almost the entire payment
has been made by them to M/s.Adwel. In my view the defendants have
been able to raise a good bona fide defence, as the plaintiff has failed to
place a single document on record to show that they were authorized by
DTC to display the advertisement. It cannot be said that the defendants
have neglected to make the payments or the stand of the defendant is
moonshine or sham. Accordingly, defendants No.1 and 2 are granted
unconditional leave to defend.
14. As far as defendant No.3 is concerned release orders placed by the
defendants No.1 and 2 with the plaintiff clearly establish that there is no
privity of contract between the plaintiff and defendant No.3. Even in the
invoices, the name of defendant No.3 has been shown as a client. Even as
per the understanding of the plaintiff, defendant No.3 was not a party to
the dispute which is evident from the fact that no legal notice was issued
to the defendant No.3. The No Dues Certificate issued by the defendant
no.1 to defendant no.3 placed on record shows that no amount is due with
respect to the invoices pertaining to the present suit. Accordingly the
application of defendant No.3 under Order I Rule 10 CPC i.e. IA
No.4459/2012 is allowed. Defendant No.3 is deleted from the array of
parties. No formal orders are passed on IA No.3859/2012, the application
for leave to defend of defendant No.3 as defendant no.3 has been deleted
from the array of parties.
CS(OS) 2014/2009
15. Let written statement be filed within six weeks from today. Replication, if
any, be filed within four weeks thereafter. Parties shall file documents,
which are in their possession and power, within the same period.
16. List the matter before Joint Registrar for admission/denial of documents
on 23.7.2014.
17. List the matter before Court for framing of issues on 28.8.2014, when
parties shall bring suggested issues to Court.
(G.S.SISTANI)
JUDGE
MARCH 31, 2014
//dkb//
