Avishek Kumar Singh vs Praveen Singh & Ors
2016 Latest Caselaw 4796 Del

         *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                              Date of decision: 25th July, 2016

+     CS(OS) 512/2015 & IA No.3884/2015 (u/O XXXIX R-1&2 CPC)
      AVISHEK KUMAR SINGH                    ..... Plaintiff
                  Through: Mr. Rajiv Tyagi with Mr. Divakar
                           Kumar, Mr. Gyan Inder Sharma &
                           Mr. Rajender Prasad, Advs.
                                      Versus
    PRAVEEN SINGH & ORS.                     ..... Defendants
                  Through: Mr. Satish Tamta, Sr. Adv. with Mr.
                           L.B. Rai & Mr. Puneet Rai, Advs.
CORAM:-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.

The plaintiff instituted the present suit for recovery of

Rs.1,34,09,700/- jointly and severally from Praveen Singh, Sanjay Kumar

Singh and Indian Oil Corporation Ltd. (IOC) impleaded as defendants no.1

to 3 pleading i) that the defendant no.1 Praveen Singh introduced himself as

the owner of the petrol pump under the name and style of Shivan Auto

Centre near Mayur Vihar Phase-II, Delhi, close to the residence of the

plaintiff and asked the plaintiff to join in the said business as the existing

partner of the defendant no.1 was retiring and the defendant no.1 was

finding it difficult to manage the business on his own; ii) the defendant no.1

Praveen Singh informed the plaintiff that the outgoing partner had 49% share in the partnership and the defendant no.1 Praveen Singh had to pay an

amount of Rs.3.75 crores to the outgoing / retiring partner and the plaintiff,

by bringing capital in the said amount could be inducted as a partner in the

said business of Shivan Auto Centre; iii) however the defendant no.1 while

executing the partnership deed dated 23rd December, 2010 described himself

therein as the Manager of the petrol pump, representing that as the land

underneath the petrol pump belonged to defendant no.3 IOC and he was

only the lessee and dealer, the defendant no.3 IOC permitted the defendant

no.1 Praveen Singh to describe himself as Manager only; iv) that the

plaintiff was persuaded to so enter into the partnership as the officials of the

defendant no.3 IOC also during their visits to the petrol pump dealt with the

defendant no.1 Praveen Singh as dealer of the petrol pump; v) that the

defendant no.1 Praveen Singh also introduced the plaintiff to defendant no.2

Sanjay Kumar Singh as his brother; vi) that the plaintiff paid a sum of Rs.52

lacs to the defendant no.1 prior to singing partnership agreement dated 23rd

December, 2010 and the receipt thereof was acknowledged by the defendant

no.1 Praveen Singh in the partnership agreement itself and thereafter paid a

further sum of Rs.31.50 lacs to the defendant no.1 Praveen Singh making a

total payment of Rs.83.50 lacs; vii) that in accordance with the partnership agreement, the plaintiff also started participating in the business of Shivan

Auto Centre; viii) however much later, the plaintiff learnt that it was the

defendant no.2 Sanjay Kumar Singh who was the dealer of the defendant

no.3 IOC and the owner of the petrol pump but the defendant no.2 Sanjay

Kumar Singh had executed a power of attorney in favour of defendant no.1

Praveen Singh to do all acts, deeds and things with respect to the said

business and acting under which authority the defendant no.1 Praveen Singh

only was signing all invoices, cheques, correspondences etc. relating to the

said business; and, ix) however the plaintiff was not paid any share of profits

and for which reasons, the plaintiff stopped making further contributions to

the capital of the partnership.

The plaintiff has thus filed this suit for recovery of Rs.83.50 lacs with

interest at 15% per annum from the date of payment till the date of filing of

the suit i.e. for a total sum of Rs.1,34,09,700/-

2. The suit was entertained. The defendants no.1 and 2 Praveen Singh

and Sanjay Kumar Singh have contested the suit by filing a joint written

statement pleading i) that the monies paid by the plaintiff have stood

forfeited in view of Clause 5 of the partnership agreement owing to the

plaintiff having not contributed the entire agreed capital of Rs.3.75 crores;

ii) that the suit is bad for non-joinder of Sh. Satpal Singh the outgoing /

retiring partner in whose place the plaintiff was taken in as a partner; iii)

admitting that the defendant no.2 Sanjay Kumar Singh had executed power

of attorney in favour of defendant no.1 Praveen Singh vesting all the

responsibility of the business in defendant no.1 Praveen Singh but denying

that the defendant no.1 Praveen Singh had ever represented to the plaintiff

that the defendant no.1 Praveen Singh was the owner of the petrol pump; iv)

that the question of sharing profits of the business with the plaintiff did not

arise as the plaintiff did not contribute the full amount of Rs.3.75 crores as

the plaintiff had agreed; v) denying that any fraud was played by the

defendants no.1 and 2 Praveen Singh and Sanjay Kumar Singh on the

plaintiff.

3. Though the plaintiff filed replication to the written statement of

defendants no.1&2 and the defendant no.3 IOC also filed a written statement

and to which also the plaintiff filed replication but the need to refer thereto

is not felt.

4. The suit came up before this Court on 19th July, 2016 for framing of

issues and for hearing of the application for interim relief when the

following order was passed:

"1. The plaintiff has sued for recovery of Rs.1,34,09,700/- jointly and severally from the defendant No.1 Mr. Praveen Singh, defendant No.2 Mr. Sanjay Kumar Singh and the defendant No.3 Indian Oil Corporation Limited (IOC).

2. It is inter alia the case of the plaintiff that the defendant No.2 Mr. Sanjay Kumar Singh was the dealer of the defendant No.3 IOC of a petrol pump at Mayur Vihar, Delhi; that the plaintiff entered into an agreement with the defendant No.1 who was the attorney of the defendant No.2 with respect to the said petrol pump and whereunder the plaintiff invested Rs.83,50,000/- in the said business; that the plaintiff was however not paid his share of benefits of the said business though the plaintiff was also participating in the business of petrol pump; that the plaintiff in the month of February/March, 2012 came across a file from which he learnt that the defendant No.1 in fact had no right to enter into the agreement with the plaintiff. Accordingly, this suit for recovery of Rs.83,50,000/- along with interest.

3. The claim against the defendant No.3 IOC is on the basis that the officials of the defendant No.3 IOC during the visits to the said petrol pump dealt with the defendant No.1 as the owner / dealer of the petrol pump, leading the petitioner to enter into the partnership agreement with the defendant No.1 and paying monies to the defendant No.1.

4. The counsel for the plaintiff, on enquiry as to how on the pleadings aforesaid, the suit claim against the defendant No.3 IOC is tenable, as to an issue to be framed thereon, states that since the officials of the defendant No.3 IOC, to the public at large were holding out the defendant No.1 to be the dealer of the subject petrol pump by dealing with him and which action of the officials of the defendant No.1 led the plaintiff to enter into the partnership agreement with the defendant No.1, the defendant No.3 IOC is also liable for monies.

5. The plaintiff, in paragraph 2(ii) itself of the plaint has pleaded that the defendant No.1 was the attorney of the defendant No.2 vide General Power of Attorney dated 15th April, 1994. The plea in para 2(xxvii) that the plaintiff sometimes in February / March, 2012 only became aware of the Power of Attorney, thus does not inspire confidence. Moreover, the actions / conduct, ever even if any of the official of the defendant No.3 IOC of dealing with the defendant No.1 as dealer of the petrol pump would not make the defendant No.3 IOC liable for the said illegal acts of its officials. No official of the defendant No.3 IOC has been impleaded as party defendant in person.

6. The counsel for the plaintiff states that he is not pressing the suit against the defendant No.3 provided the counsel for the defendant No.3 IOC furnishes to the plaintiff the names of the officials appearing in the photographs filed by the plaintiff along with the plaint.

7. The plaintiff, who claims relief on the basis of action of holding out of the officials of defendant No.3 IOC, ought to know the names of said persons on whose representations he claims to have advanced a sum of Rs.80,50,000/- to the defendant No.1.

8. Even otherwise, the plaintiff has not disclosed any facts as to what due diligence he did before entering into the agreement with the defendant No.1.

9. A perusal of the agreement entered into by the plaintiff with the defendant No.1 also shows that the defendant No.1 did not describe himself therein as having any agreement with the defendant No.3 IOC and merely described himself as the manager of the subject petrol pump. The same should have put the plaintiff to enquiry and the plaintiff ought to have examined the documents under which the defendant No.3 IOC had granted the dealership.

10. These are commercial suits and issues therein cannot be framed merely on a plea being raised and without finding any substance therein. It cannot be lost sight that putting a plea, which is not substantial, to trial prolongs the trial and delays the disposal of the suit.

11. The plaintiff thus, on the basis of the averments in the plaint is not found to have made out any case for the relief claimed against the defendant No.3 IOC.

12. The suit, insofar as against the defendant No.3 IOC, is dismissed.

13. As far as the claim against the defendants No.1&2 is concerned, the counsel for the defendants No.1&2 though has filed separate written statements for the said two defendants, states that the defendants No.1&2 admit having received the sum of Rs.83,50,000/- from the plaintiff. It is however his contention that the claim in suit is barred by time. He is however unable to state which Article of the Schedule to the Limitation Act, 1963 would apply to claim of the present nature. Merely stating that the suit has been filed after three years from the last payment would not make the suit barred by time.

14. The other contention of the counsel for the defendants No.1&2 is that the plaintiff, as per the agreement, is not entitled to refund of the monies and has forfeited his rights thereto for having not paid the entire amount which he was to pay under the agreement.

15. However, the counsel for the plaintiff correctly points out that it is the case of the defendants No.1&2 themselves that the subject partnership agreement is void. Even otherwise, it appears that the defendant No.1, who had no right to the subject business of petrol pump, could not have entered into a partnership with respect thereto.

16. At this stage, the counsel for the defendants No.1&2 states that the suit be adjourned to enable him to obtain instructions from the defendants No.1&2, whether they are willing to refund the amount admittedly received from the plaintiff, in which case the counsel for the plaintiff states that he will be reasonable qua interest.

17. List on 25th July, 2016, as sought.

18. Both the defendants i.e. defendants No.1&2 to remain personally present in the Court on the next date of hearing."

5. The defendants no.1 and 2 Praveen Singh and Sanjay Kumar Singh

are stated to be present in Court.

6. The senior counsel today appearing for the defendants no.1&2, on

enquiry as to what is the defence of the said defendants which is required to

be put to trial or on which an issue of fact can be said to arise, contends that

since the agreement as pleaded by the plaintiff is void under Section 20 of

the Contract Act, 1872, the plaintiff is not entitled to recover the monies

admittedly received by the two defendants.

7. On enquiry, the senior counsel for the defendants confirms that the

defendant no.1 while entering into the agreement with the plaintiff was

acting as the attorney of the defendant no.2.

8. The senior counsel for the defendants no.1&2 on further enquiry

whether the defendant no.2 Sanjay Kumar Singh, as the dealer of IOC with

respect to the retail outlet at Mayur Vihar, was entitled to enter into a

partnership, directly or acting through his attorney defendant no.1 Praveen

Singh, with the plaintiff, fairly states that the defendant no.2, without prior

permission of IOC, could not enter into the partnership.

9. Admittedly, no such prior permission was taken.

10. The invocation of Section 20 of the Contract Act is not apposite in the

facts of the present case.

11. In the present case, the defendants were not under any mistake of fact

that they were not entitled to enter into an agreement of partnership with the

plaintiff or to receive any money from the plaintiff as a capital towards the

said partnership. Rather, this is a case where the defendant no.2 Sanjay

Kumar Singh as dealer of IOC, inspite of being fully aware that he was not

entitled to enter into any partnership, through his attorney defendant no.1

Praveen Singh, entered into a partnership with the plaintiff to receive monies

from the plaintiff. The defendants having done the same, are liable to refund

the monies so received from the plaintiff.

12. The counsel for the plaintiff in this regard has drawn attention to

Section 65 of the Contract Act providing that where an agreement is

discovered to be void or when a contract becomes void, the person who has

received any advantage under the said agreement or contract is bound to

restore it or to compensate the person from whom he received it.

13. It thus follows that even if the sole argument of the senior counsel for

the defendants no.1&2 is to be accepted, the same does not constitute a

defence in law to the claim of the plaintiff for refund of the monies admittedly received by the defendants.

14. No other argument has been raised.

15. The counsel for the defendants no.1&2 today also on enquiry admits

receipt by defendants no.1&2 of Rs.83.50 lacs from the plaintiff.

16. Though the senior counsel for the defendants no.1 and 2 Praveen

Singh and Sanjay Kumar Singh has not argued but I may notice that the sole

defence taken in the written statement, of plaintiff having forfeited the sum

of Rs.83.50 lacs paid by him for the reason of having not paid the entire

agreed amount of Rs.3.75 crores, also is no defence in law. Supreme Court

in Sri Tarsem Singh Vs Sri Sukhminder Singh (1998) 3 SCC 471 held that

since the stipulation for forfeiture of the earnest money is part of the

contract, it is necessary for the enforcement of that stipulation that the

contract between the parties is valid; if the forfeiture clause is contained in

an agreement which is void on account of the fact that the parties were not

ad-idem and were suffering from mistake of fact in respect of a matter which

was essential to the contract, it cannot be enforced as the agreement itself is

void under Section 20 of the Contract Act. It was further held that a void

agreement cannot be split up and none of the parties to the agreement can be

permitted to seek enforcement of a part only of the contract through a Court of law; if the agreement is void, all its terms are void and none of the terms

can be enforced. Having found the agreement to sell immovable property in

that case to be void, it was held that the forfeiture clause of the agreement

would also for that reason be void and no forfeiture thereunder could be

effected.

17. Here, the sole contention of the senior counsel for the defendants no.1

and 2 Praveen Singh and Sanjay Kumar Singh is of the agreement being

void. Once that is the contention, the defendants no.1 and 2 Praveen Singh

and Sanjay Kumar Singh cannot on the one hand contend the agreement to

be void and on the other hand seek to take advantage of the forfeiture clause

in the contract.

18. In my view, the contract between the plaintiff on the one hand and the

defendant no.1 Praveen Singh acting as the attorney of the defendant no.2 on

the other hand, where under the defendants received 83.50 from the plaintiff

was void under Section 23 of the Contract Act as the contract was opposed

to public policy against allowing commercial transactions in dealerships of

petrol pumps granted by public sector oil companies to discourage

profiteering therefrom. Though it also appears that the contract was as a

result of fraud, misrepresentation and undue influence practiced by the defendants but I refrain from making any observations in this respect as

complaints of offences committed by the defendants are also reported to

have been made and any observation / finding in that respect may affect the

outcome thereof.

19. Thus, as far as the claim of the plaintiff in the suit for recovery of the

principal amount of Rs.83.50 lacs jointly and severally from the defendants

is concerned, no substantial issue of law or fact arises with respect thereto

and the suit for recovery of the said amount is entitled to be decreed.

20. I have satisfied myself that the claim in suit is within time.

21. The suit thus has to be decreed for recovery of the principal amount of

Rs.83.50 lacs.

22. As far as the claim of the plaintiff for interest is concerned, I am of

the view that considering the fact that the plaintiff, without carrying out due

diligence as he was expected to, entered into agreement and paid the monies

to the defendants, the claim of the plaintiff should be restricted to interest

with effect from 1st November, 2012 when the plaintiff claims to have first

demanded the refund followed by complaint dated 2nd November, 2012 and

at the rate of 10% per annum for a period till today and also for the period

till 31st August, 2016. However if the defendants do not comply with the decree by 31st August, 2016, the interest chargeable on the principal amount

with effect from 1st September, 2016 shall be at the rate of 15% per annum.

23. The suit is accordingly decreed.

24. A decree is passed in favour of the plaintiff and against the defendants

no.1&2 jointly and severally for recovery of Rs.83.50 lacs with interest at

10% per annum from 1st November, 2012 till the date of payment and / or

31st August, 2016 whichever is earlier and at the rate of 15% per annum

from 1st September, 2016 till the date of realization.

25. The plaintiff shall also be entitled to costs of the suit.

Decree sheet be drawn up.

Counsels fee assessed at Rs.55,000/-.

RAJIV SAHAI ENDLAW, J JULY 25, 2016 „gsr‟