Sanjeev Sharma vs Avinash Rastogi
2017 Latest Caselaw 3303 Del

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*       IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                             Reserved on: 07th July, 2017
                                              Pronounced on: 17th July, 2017

+       CS(COMM) 1205/2016

        SANJEEV SHARMA                                         ..... Plaintiff
                     Through :                Mr.Deepak Sahni & Mr.Manish
                                              Dua, Advocates.

                               versus

        AVINASH RASTOGI                                          ..... Defendant
                     Through :                Mr.Prashant Mehta, Ms.Mrinmoi
                                              Chatterjee, and Mr.Varun Dev
                                              Mishra, Advocates.

CORAM:
HON'BLE MR. JUSTICE YOGESH KHANNA

YOGESH KHANNA, J.

IA No.25386/2015

1. This suit has been filed by the plaintiff under Order 37 of the Code of Civil Procedure, 1908 (hereafter referred to as the 'CPC') against the defendant, based on an agreement/letter dated 06.07.2013 and four cheques dishonoured on its presentation.

2. The plaintiff says a company namely M/s Baxter India Private Limited (BIPL) approached him through its officers namely Rajat Sharma and Joseph Jaggraj to offer the distributorship for sale of haemo- dialysis machines and haemo-dialysis consumables in Northern India.

The BIPL represented the plaintiff that he would have no difficulty in selling its products through the defendant herein as he has contacts with good buyers in the market. The plaintiff invested his money and started supplying to the defendant the aforesaid products of BIPL for different specifications. The defendant placed various purchase orders as stated in para No.4 of the plaint and the total value of products sold to the defendant was `5,74,37,168/- in the year 2012-13. After adjusting the payments received, the defendant was liable to pay an amount of `3,30,00,000/-, including interest. The defendant acknowledged his liability by a written agreement/letter dated 06.07.2013 in the presence of the authorized representative of BIPL and pursuant to settlement dated 06.07.2013, the defendant issued four post dated cheques of `82,50,000/- each and assured its encashment on presentation. As a security, the defendant kept original title documents of his property bearing No.119A, Ground Floor, Cycle Market, Jhandewalan, New Delhi 110055 in a locker in Bank of Maharashtra under joint operations of the plaintiff and the defendant. However, the cheques were dishonoured on presentation and the defendant failed to pay a single penny, even after a notice dated 29.10.2013 was sent to him.

3. The defendant has also been convicted in a criminal complaint case

- CC No.8870/2013 titled Sanjeev Sharma vs. Avinash Rastogi under Section 138 of the Negotiable Instruments Act, 1881 by learned Metropolitan Magistrate, Central District, Tis Hazari Courts, Delhi, hence, this suit under Order 37 CPC for recovery of `3,30,00,000/-

towards principal amount and `99,00,000/- towards interest thereon and for future interest.

4. The defendant filed his application under Order 37 Rule 3 (5) of the CPC seeking leave to defend. The following paragraphs of his application are relevant for disposal:-

"o. Believing their such promises as true, the Deponent agreed and settled the accounts with said the Plaintiff on July 06, 2013 vide agreement dated 06.07.2013, which was executed and signed at office of Deponent at 147,FF, Cycle Market, Jhandewalan Extension, New Delhi-110055.

p. That in the said agreement, it was agreed by the Plaintiff that he would issue Deponent Credit Notes worth Rs.1,87,00,000/- (Rs.One Crore Eighty Seven Lacs Only), the amount of loss which the Deponent had incurred during business transactions with the Plaintiff.

q. That the Deponent was even supposed to have Credit Notes worth Rs.1,87,00,000/- (Rs.One Crore Eighty Seven Lacs Only) out of Rs.3.30 Crores, still the Deponent issued four cheques of Rs.82,50,00,000/- (Rs. Eighty Two Lacs &Fifty Thousand only) for the entire amount. It was agreed that the said four cheques would not be presented till the clearance of his said amount i.e. the loss, commission and interest and on this the Plaintiff told the Deponent that this is a separate dealing and the dealings and outstanding amount of the Deponent towards him is on account of separate transactions, however the Deponent should not worry and that the Plaintiff would definitely clear the outstanding amounts of the Deponent before presentation of the cheques. It is further submitted

that the agreement dated 06.07.2013 was a tripartite agreement, and as such Baxter India Pvt. Ltd, is also a necessary and proper party in the present suit. The Officials of Baxter India Pvt. Ltd. are also signatory to the said agreement dated 06.07.2013.

r. Hence, the Deponent agreed and entered into that agreement and issued the four cheques, as mentioned in para 6 of the Plaint. Thereafter neither the Plaintiff issued any credit note nor Baxter India Pvt. Ltd. cleared the outstanding amounts. It is however submitted that merely because, the Deponent issued four cheques of the entire amount, would not fasten liability upon the Deponent for the said amount, which otherwise is not consistent with the own records of the Plaintiff."

5. A bare perusal of the contents above would reveal the applicant/ defendant had admitted the agreement dated 06.07.2013 as also the issuance of four cheques of `82,50,000/- each - subsequently dishonoured. The defendant says that though in the agreement dated 06.07.2013 he has agreed and accepted the supply of material as per orders placed and an amount of `3,30,00,000/- with interest is due to the plaintiff, but he rather says that in lieu of the outstanding he has only agreed to transfer / handover his PPT business of `2,50,00,000/-, except the business going on with Madaan Hospital, Panipat and further since he had borne a loss of `1,87,00,000/- in dealings with the plaintiff, the plaintiff had agreed to issue him the credit notes for said amount. The contents of agreement/ letter dated 06.07.2013 are thus relevant:-

"I Avinash Rastogi, Prop M/s Proxima Medicare, do hereby agrees and accept that M/s R S Company has supplied us the material as per Orders placed and Rs 3.30 crores is due towards us including interest.

I Avinash Rastogi, Prop M/s Proxima Medicare, do hereby agrees and accept that I will transfer/ handover my PPT Buisness of Rs.2.50 Crores except the business going on with M/s Madaan Hospital, Panipat. That in the business going on with M/s R S Company I have borne a loss of Rs1.87 Crores which I request Mr Sanjeev Sharma to issue us a Credit note for the same amount.

I further agree to issue post dated cheques and will make sure that all cheques gets cleared on respective dates and no stop payments will be imposed on them and I will not change my bank account till the payment cleared by me. Cheque details are as under:

1. Cheque No. 004309 dated 16.08.2013 drawn on Bank of Maharashtra, Karol Bagh for Rs.82,50,000.00 only.

2. Cheque No. 004310 dated 01.09.2013 drawn on Bank of Maharashtra, Karol Bagh for Rs.82,50,000.00 only.

3. Cheque No. 004311 dated 15.09.2013 drawn on Bank of Maharashtra, Karol Bagh for Rs.82,50,000.00 only.

4. Cheque No. 004312 dated 30.09.2013 drawn on Bank of Maharashtra, Karol Bagh for Rs.82,50,000.00 only.

I confirm that if I failed to get the above mentioned cheques cleared on time, legal action shall be initiated on me and I shall be liable for Interest charge on amount due @3% per month.

I further agree and to make their payment secured, I will keep my Original Property Papers of 119A, Ground Floor, Cycle Market, Jhandewalan Extension, Delhi-110055, in a Bank Locker of Bank of Maharashtra, under the joint operations of Mr. Sanjeev Sharma and Myself (Avinash Rastogi).

I request Mr Sanjeev Sharma Prop of M/s R S Company to issue four (04) Credit notes of Rs.46,75,000.00 only each in favour of M/s Proxima Medicare. First credit note of Rs.46,75,000.00 only will be issued by Mr. Sanjeev Sharma Prop M/s R S Company out of Rs.1,87,00,000.00 only once first two cheques of Rs.82,50,000.00 only each gets cleared."

6. Relying upon the above agreement, the defendant seeks unconditional leave on the following grounds:- (a) BIPL being privy to the agreement dated 06.07.2013 is not made a party to this suit hence the suit is bad for non-joinder; (b) the report dated 02.06.2014 of the Investigating Officer speaks about a possible fraud committed upon the defendant; (c) defendant had transferred to the plaintiff his PPT business worth `2.50 crore in respect of various hospitals, including Shri Bala Ji Hospital (Kangra), Dayanand Medical College (Ludhiana) through Crust Medicos (Chandigarh), Jindal Hospital (Bharatpur) and value of the same needs to be set off against the dues; and (d) the plaintiff has failed to issue credit notes for `1,87,00,000/-.

7. Now, in the agreement/letter dated 06.07.2013, the defendant had accepted of having received goods from the plaintiff and an amount of `3,30,00,000/- being payable to the plaintiff but his plea is, he was being cheated by the employees of BIPL and he has also to recover an amount

of `5,50,00,000/- from BIPL. However, the agreement dated 06.07.2013 do not give any hint of such a plea of the defendant or if BIPL had ever admitted such liability. The presence of Rajat Sharma, a representative of BIPL only show the dispute between the parties herein was settled in his presence, as BIPL being the manufacturer/ supplier, would be all the more interested to settle dispute among its distributors. Hence there was no reason for the plaintiff to implead BIPL in this suit. In fact, Mr.Rajat Sharma or as a matter of fact any other person present there, except the parties to this suit, had signed the agreement only as a witness and would never be a proper or necessary party to be impleaded herein. Hence, in this case the defendant cannot take a plea of alleged losses suffered by him through BIPL.

8. Rather while recording his plea of defence in CC No.8870/2013 under Section 138 NI Act the defendant himself had admitted that all the cheques in question were given to the plaintiff by him as a consideration for the goods received by him from the plaintiff who is a distributor of BIPL. The cheques in question also bear his signatures and other columns were filled by him and he accepted the dishonor of the cheques and receipt of legal demand notice to which he never replied. He further reiterated that he had some disputes with BIPL and he had already filed case against it. Even the defence raised by the defendant that he was made to sell the goods at a lesser rate is not at all supported by any document or communication. The defendant rather stood convicted in the criminal case ignoring any status report of Investigating Officer.

9. Secondly, his plea that he had transferred his PPT business worth `2,50,00,000/- to the defendant in respect of various hospitals viz. Shri Bala Ji Hospital (Kangra), Dayanand Medical College (Ludhiana) through Crust Medicos (Chandigarh), Jindal Hospital (Bharatpur) etc is also not supported by any single document and has no merit.

10. However, the defendant certainly has raised a triable-issue qua the losses suffered by him in the business with the plaintiff to the tune of `1,87,00,000/- for which the plaintiff too had agreed to issue credit notes to him but alleges that the issuance of credit notes were rather contingent upon the encashment of the first two post dated cheques. No doubt the plaintiff's submission find support in the document dated 06.07.2013 but one cannot ignore the fact that such dishonour of cheques relates only to the financial capability of the defendant to pay for which a conviction already stands against him and that the dishonour of cheques would not wipe of the contention of defendant that he had suffered losses for which he is entitle to credit notes. Hence, at this stage, suffice is to say that his plea that he had suffered losses in dealing with the plaintiff for which plaintiff had agreed to issue credit notes, cannot be ignored for the purpose of grant for leave to defend.

11. The law relating to the leave to defend has been settled by the Apex Court in Mechelec Engineers and Manufacturers vs. M/s Basic Equipment Corporation 1976 SCC (4) 687 and it notes:-

" (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."

12. In view of law discussed above and taking into consideration the triable issue raised by defendant as above, the leave to defend is granted

to the defendant on his depositing an amount of `1,43,00,000/-(Rupees One Crore Forty Three Lacs) with the Registrar General of this Court within four weeks from today. The amount so deposited shall be converted into a fixed deposit with a nationalised bank for a term of three months initially, extendable, per order of the Court.

13. The application stands disposed of in above terms.

CS(COMM) 1205/2016

14. Upon complying with above directions, written statement be filed by the defendant within four weeks thereafter. Replication thereto, if any, be also filed by the plaintiff within two weeks of filing the written statement.

15. List for compliance and completion of pleadings before the Joint Registrar (Judicial) on 20th September, 2017.

16. Be listed in Court upon completion of pleadings.

YOGESH KHANNA, J JULY 17, 2017 M