Shudh Garhwal Paneer Nirmata ... vs Piccadily Hotels Private Limited
2019 Latest Caselaw 3807 Del

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*     IN THE HIGH COURT OF DELHI AT NEW DELHI


%                                       Judgment reserved on 26.7.2019
                                        Pronounced on : 19.08.2019

+     CS(COMM) 722/2017


      SHUDH GARHWAL PANEER NIRMATA SANGH..... Plaintiff
                             Through    Mr.Akil Rataeeya and Mr.Lalit
                             Ajmani, Advs.

                    versus


      PICCADILY HOTELS PRIVATE LIMITED..... Defendant
                             Through    Mr.Sacchin Puri, Sr.Adv. with
                             Mr.Vishwadeep Hooda, Mr.Navroop Singh Bakshi,
                             Mr.Varun Jain, Ms.Vanika Gupta, Mr.Kaamil
                             Khan, Mr.Dhan Singh, Advs.


      CORAM:
      HON'BLE MR. JUSTICE JAYANT NATH


JAYANT NATH, J.

IA No.5504/2018

1. This application is filed under Order 37 Rule (3)(5) of the CPC on behalf of the defendant seeking leave to defend.

CS(Comm.)722/2017 Page 1

2. The accompanying suit is filed by the plaintiff seeking a money decree of Rs.1,13,80,309/-. It is the case of the plaintiff that the defendant had ordered dairy products from the plaintiff. The same was duly supplied by the plaintiff. Invoices were raised but the defendant has failed to make the payment within the stipulated period of 15 days despite reminders. In paragraphs 5 to paragraph 252 of the plaint the plaintiff has merely given details of the alleged orders placed by the defendant for supply of various goods including Butter White Cooking, Butter Table Salted, Cheese Amul Tins, Amul Cream Fresh Single Fat. The details of the invoices raised and the value of the invoices has been stated. It is further stated that the defendant has despite delivery of goods failed to make the necessary payment. Based on the said, in paragraph 254 of the plaint the plaintiff states that the defendant is liable to pay to the plaintiff a sum of Rs.1,13,80,309/- i.e. Rs.83,31,515/- as principal and a sum of Rs.30,48,794/- as interest calculated at 18% per annum. It is further stated that the suit is filed under Order 37 of CPC.

3. The defendant has filed the present application under Order 37 Rule (3) (5) CPC seeking leave to defend. In the affidavit filed in support of the application the defendants have raised the following pleas:-

(i) It is stated that the plaintiff has placed reliance upon many forged and fabricated invoices since the defendant company has neither issued the purchase orders nor has acknowledged receipt of any goods against the fabricated invoices. In para 7 of the application details of 68 such invoices are given for which there is no acknowledgement.

CS(Comm.)722/2017 Page 2

(ii) It is further pleaded that the defendant company has never acknowledged and admitted any outstanding liability and hence the present application should be allowed and unconditional leave should be granted to the defendant.

(iii) It is further stated that there is no written contract between the parties. The plaintiff has failed to corroborate existence of such contract to substantiate its claims.

(iv) The defendant further states that the computation of the alleged interest is not uniform and shows that the plaintiff himself is not sure about the amount allegedly payable. Interest, it is stated significantly varies from invoice to invoice.

(v) It is further stated that the defendant had made on account payment of Rs.5 lac on 24.3.2015 drawn on PNB which cheque was cleared. Hence, the defendant company has cleared outstanding in accordance with the actual liability to pay. The plaintiff has now instituted a vexatious suit to extract financial benefit.

(vi) It is further stated that the plaintiff has concealed that on various occasions the defendant placed purchase orders but the plaintiff did not supply the products. Hence, the plaintiff has behaved in an unprofessional manner and caused losses to the defendant.

4. I have heard learned counsel for the parties. Learned senior counsel appearing for the defendant has raised the following submissions:-

(i) He has pointed out that the alleged purchase orders and invoices relied upon by the plaintiff are for the period 21.7.2015 to 11.1.2016.

It is stated that the transaction between the parties have gone on for a long time. Even after 11.1.2016 the defendants have bought goods

CS(Comm.)722/2017 Page 3 from the plaintiff and have duly made payments. It is pleaded that there is no reference to these transactions in the plaint which have been deliberately suppressed.

(ii) Learned counsel has also taken me to some of the invoices filed by the plaintiff. It is pointed out that invoices which are at page 214 to 218 of the list of documents filed show that they have a stamped receipt of the defendants and a signature of the authorized representative of the defendant who has received the same. However, it is pointed out that there are large number of invoices placed on record by the plaintiff where there is no acknowledgement of receipt of the goods by the defendants nor do these invoices contain the stamp of the defendant company to show receipt of the invoices/goods. Based on this, learned senior counsel has pleaded that the large number of invoices are make belief. The documents filed by the plaintiff cannot be relied upon. These documents do not tantamount to any acknowledgement of dues by the defendants. It is further stated that the plaintiff would have to prove these documents in evidence before any liability is thrust on the defendants. Defendants do not accept or acknowledge these invoices.

(iii) Learned senior counsel for the defendant further states that the plaintiff has sued in the name of the proprietorship concern and not in the name of the proprietor. Hence, he states that the present suit is misplaced and misconceived and not maintainable under Order 30 Rule 10 CPC. He relies upon the judgment of this Court in the case of P.C.Advertising vs. MCD, (1998) 73 DLT 259.

CS(Comm.)722/2017 Page 4

5. Learned counsel for the plaintiff has stated that the principal amount claimed by the plaintiff is approximately Rs.1.13 crores. It is stated that at page 11 of IA No.5504/2018 the defendant has given a list of invoices which according to the defendant are not acknowledged. He states that the value of these invoices listed by the defendants and stated to be not acknowledged comes to Rs.1,040,063/-. Hence, he states that at best the disputes raised by the defendant pertains to a sum of Rs.1,040,063/-. It is stated that a decree may be passed in favour of the plaintiff for the balance principal amount and interest.

6. Learned senior counsel for the defendants in rejoinder, however, refutes the contention of the plaintiff. He states that bills worth more than Rs.48.814 lacs which were filed by the plaintiff have not been acknowledged or accepted by the defendants. In contrast the defendants have paid a sum of Rs.56 lacs to the plaintiff meaning thereby that no amount is due and payable to the plaintiff. He has in the course of arguments in court sought to place on record photocopies of documents including photocopies of cheques said to have been paid by the defendants in favour of the plaintiff from 13.2.2015 till 16.12.2015. He has also placed on record large volume of vouchers alongwith invoices said to have been paid by the defendants in favour of the plaintiff from 12.1.2016 to 23.2.2016. I may note that when these documents were filed in court learned counsel for plaintiff did not object to these documents being taken on record.

7. The grounds on which leave to defend can be granted to a defendant have been stated by the Supreme Court in the case of IDBI Trusteeship Services Limited vs. Hubtown Limited, (2017) 1 SCC 568 wherein the Supreme Court held as follows:-

CS(Comm.)722/2017 Page 5

17. Accordingly, the principles stated in para 8 of Mechelec case [Mechelec Engineers & Manufacturersv. Basic Equipment Corpn., (1976) 4 SCC 687] will now stand superseded, given the amendment of Order 37 Rule 3 and the binding decision of four Judges in Milkhiram case [Milkhiram (India) (P) Ltd. v. Chamanlal Bros., AIR 1965 SC 1698 : (1966) 68 Bom LR 36] , as follows:

17.1. If the defendant satisfies the court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit. 17.2. If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign judgment, and the defendant is ordinarilyentitled to unconditional leave to defend. 17.3. Even if the defendant raises triable issues, if a doubt is left with the trial Judge about the defendant's good faith, or the genuineness of the triable issues, the trial Judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security.

17.4. If the defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires.

17.5. If the defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintiff is entitled to judgment forthwith. 17.6. If any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised),

CS(Comm.)722/2017 Page 6 shall not be granted unless the amount so admitted to be due is deposited by the defendant in court."

8. A perusal of the facts of this case shows that essentially the suit is filed based on more than 250 invoices said to have been unpaid by the defendants. There is no acknowledgement of debt by the defendants at any place. Large number of these invoices has receipts of acceptance by the defendants. But equally large number of invoices does not bear receipt of the defendants acknowledging receipt of the goods. The plaint also fails to record the complete transactions that have been gone into between the parties. It has not been denied that for the period other than the period for which the present suit is based i.e. 21.7.2015 to 11.1.2016 transactions have taken place between the parties. The plaintiff has also received some payments from the defendants. All these details are lacking in the plaint.

9. In my opinion, in view of the facts stated above, the plaintiff would have to lead evidence to show that the goods mentioned in the invoices relied upon by the plaintiff were duly received by the defendants and no payments have been rendered by the defendants for goods supplied by the said invoices. The documents as filed do not unequivocally show any default on the part of the defendants.

10. I may now also deal with another submission raised by learned senior counsel for the defendant, namely, that the suit is liable to be rejected as it has not been filed in the name of the sole Arbitrator.

11. In the present case the suit is filed in the name of the proprietorship concern, namely, Shudh Garhwal Paneer Nirmata Sangh. The name of the sole proprietor is only mentioned in paragraph 2 of the plaint where it is

CS(Comm.)722/2017 Page 7 stated that the sole proprietor Shri Ashwani Kumar has authorized Mr.Manik Saha through power of attorney dated 26.5.2017 to represent the plaintiff.

12. A co-ordinate Bench of this court in P.C.Advertising vs. Municipal Corporation of Delhi, (supra) was dealing with a case in which the plaint was filed in the name of P.C. Advertising a sole proprietorship concern. The court observed that there was no prayer for amendment to allow the sole proprietor to sue in his own name. The court in those facts held as follows:-

"21. It appears this plaint does not disclose cause of action for a number of reasons. Firstly, the plaint discloses that Shyam Malik is sole proprietor of PC Advertising, but he has not filed the suit in his own name, the plaintiff's concern is neither a partnership firm nor HUF concern which would be covered by Order 30, Rule 10, CPC. Since there is misdescription of plaintiff in the title of the suit, the plaint does not fulfil the requirement of Order 7, Rule 1 nor of Order 30, Rule 10. ..."

13. In a similar manner reference may be had to the judgment of the Division Bench of this court in the case of Miraj Marketing Corporation vs. Vishaka Engineering, 2004(115) DLT 471. That was also a case in which the suit was instituted in the name of the proprietorship concern. The court held that a proprietorship concern is not a legal entity and a suit cannot be instituted in the name of the proprietor.

14. The observations in the above decision of this court would clearly apply to the facts of this case inasmuch as the plaint is not filed in the name of the sole proprietor.

15. In view of the above, in my opinion, the defendant has a substantial defence. The plaintiff is not entitled to leave to sign judgment.

16. In view of the above, in my opinion, it is a fit case to grant unconditional leave to defend.

CS(Comm.)722/2017                                                              Page 8
 17.   Application is allowed.
CS(COMM) 722/2017

Defendants may file written statement within 30 days from today. Replication, if any, be filed within 30 days thereafter.

List on 6.9.2019 before Joint Registrar.

                                               JAYANT NATH
                                                   (JUDGE)
AUGUST 19. 2019
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CS(Comm.)722/2017                                                Page 9