Delhi High Court
Kailash Chand Gupta (Huf) vs M/S Telu Ram Amar Chand & Co on 8 December, 2021
Digitally Signed By:DEVANSHU
JOSHI
Signing Date:10.12.2021 12:42:34
$~13 to16
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 8th December, 2021
+ C.R.P. 252/2019 & CM APPL. 48346/2019
KAILASH CHAND GUPTA (HUF) ..... Petitioner
Through: Mr. Abhishek Gupta, Advocate.
(M:9871032872)
versus
M/S TELU RAM AMAR CHAND & CO ..... Respondent
Through: None.
14 WITH
+ C.R.P. 255/2019 & CM APPL. 49094/2019
SURESH KUMAR ..... Petitioner
Through: Mr. Abhishek Gupta, Advocate.
versus
M/S TELU RAM AMAR CHAND & CO ..... Respondent
Through: None.
15 WITH
+ C.R.P. 258/2019 & CM APPL. 49209/2019
ASHA SINGHAL (DECEASED) THR LRS ..... Petitioners
Through: Mr. Abhishek Gupta, Advocate.
versus
M/S TELU RAM AMAR CHAND & CO ..... Respondent
Through: None.
16 AND
+ C.R.P. 259/2019 & CM APPL. 49244/2019
AMREESH SINGHAL (HUF) ..... Petitioner
Through: Mr. Abhishek Gupta, Advocate.
versus
M/S TELU RAM AMAR CHAND & CO ..... Respondent
Through: None.
C.R.P. 252/2019 & connected matters Page 1 of 7
Digitally Signed By:DEVANSHU
JOSHI
Signing Date:10.12.2021 12:42:34
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)
1. This hearing has been done in physical Court. Hybrid mode is
permitted in cases where permission is being sought from the Court.
2. None has appeared for the Respondent in these matters for the last
few hearings, despite being served and also being repeatedly intimated by
the Registry. Vide order dated 24th February, 2021, it was recorded that
notice has been accepted by Mr. Kadian, ld. Counsel appearing on behalf of
the Respondent, and three weeks' time was sought for filing the reply.
However, none appears for the Respondent today as well. Accordingly, this
Court proceeds in the matter.
3. These petitions have been filed challenging the order dated 14th
October, 2019 passed by the Ld. District & Sessions Judge (HQs), Central
District, Tis Hazari Courts, Delhi (hereinafter referred as "Trial Court") by
which the applications under Order XII Rule 6 CPC filed by the
Petitioners/Plaintiffs (hereinafter referred as "Plaintiffs") have been
dismissed by the Trial Court. The Plaintiffs had instituted the suits being CS
Nos.1661/2018, 1663/2018, 1662/2018 and 1664/2018 for recovery of sums
of Rs. 7,56,250/-, Rs.12,60,416/-, Rs.10,08,333 and Rs.12,60,416/-
respectively, in each of these petitions.
4. The case of the Plaintiffs was that the Respondent/Defendant
(hereinafter referred as "Defendant") had borrowed Rs.6 lakhs, Rs.10
lakhs, Rs.8 lakhs and Rs.10 lakhs respectively, from each of the Plaintiffs.
The said amounts were advanced at the rate of 12.5% interest per annum for
a period of three years. These transactions were in the nature of a loan. In
Digitally Signed By:DEVANSHU
JOSHI
Signing Date:10.12.2021 12:42:34
fact, account payee cheques in respect of the interest amount payable for the
first two years, after deducting necessary TDS were also issued by the
Defendant. However, since the loan amounts were not repaid, the Plaintiffs
filed the suits seeking decree of the amount along with pendente lite and
future interest.
5. In the written statement, the Defendant did not deny the factum of the
amount having been advanced by the Plaintiffs. However, the case of the
Defendant was that the same was advanced in the form of investments for a
share in profits. Thus, the transactions were not in the nature of loan. Since
the same were in the form of investments, the Defendant suffered huge
losses. Thus, the Defendant's case was that the Plaintiffs were also liable to
suffer the same losses, and the amounts advanced were not repayable loan
amounts.
6. Before the Trial Court, an application under Order VII Rule 11 CPC
was filed by the Defendant, which was dismissed, vide Trial Court's order
dated 15th April, 2019. The Trial Court directed the personal appearance of
the proprietor of Sh. Amar Chand Gupta, the Defendant firm as also that of
the Chartered Accountant of the Defendant firm. Statements of the
proprietor of the Defendant firm as also its Chartered Accountant were
recorded. The latter produced TDS returns and TDS Certificates, and stated
that the nature of payment on which TDS was deducted to be the payment of
interest on the amount advanced.
7. The said statements of the proprietor of the Defendant firm, as also
that of the Chartered Accountant are relied upon by the Plaintiffs to the
effect that the Chartered Accountant admitted that the payment of interest on
the amounts advanced. The same indicated that the TDS was deducted under
Digitally Signed By:DEVANSHU
JOSHI
Signing Date:10.12.2021 12:42:34
Section 194A of the Income Tax Act, 1961. This, according to the Plaintiffs,
constitutes a clear admission by the Defendant. Thus, on the strength of
these statements, the Plaintiffs filed an application under Order XII Rule 6
CPC seeking a judgment on admissions, and consequently, decree of the
suits.
8. After considering the facts and circumstances of the case, the Trial
Court, dismissed the Plaintiffs' application under Order XII Rule 6 CPC.
Reliance was placed upon the judgment of the Supreme Court in M/s. Kapil
Corepacks Pvt. Ltd. v. Shri Harbans Lal, [Civil Appeal arising out of SLP
(C) 19894/2009, decided n 3rd August, 2020] to the effect that the
statements recorded under Order X Rule 1 and 2 CPC can only be used to
elucidate the matter in controversy in the suit, and cannot be considered to
record evidence or to secure admissions.
9. Hence, the short question in these petitions is as to the effect of the
statements made under Order X Rule 1 and 2 CPC as also the effect of the
TDS Certificates produced by the Defendant before the Trial Court.
10. Mr. Gupta, ld. Counsel for the Plaintiff has relied upon the judgment
in Uma Shankar Sharma & Ors. v. Rajesh Sharma & Ors. [CS (OS)
1442/2011 decided on 27th May, 2015] to argue that statements under Order
X CPC have to be recorded on oath. He further submits that the judgment in
M/s. Kapil Corepacks Pvt. Ltd. (supra) has been misinterpreted by the Trial
Court.
11. This Court is of the opinion that a statement under Order X CPC
when recorded, has to be read in the context of Order X Rule 1 CPC and
Order X Rule 2 CPC. If there are any allegations of facts, which are either
admitted or denied, there has to be an oral examination of the parties or any
Digitally Signed By:DEVANSHU
JOSHI
Signing Date:10.12.2021 12:42:34
person, to elucidate the matter in controversy in the suit.
12. In the present case, the Chartered Accountant of the Defendant firm
has stated in his statement that Section 194A of the Income Tax Act, 1961
relates to the payment of interest. This, in any event, is a provision of law,
which can be clearly deciphered from a perusal of the said provision itself.
The effect of a TDS Certificate being issued, and whether the same can be
construed as an admission or not is a question that would arise in this case.
The Statement of the Chartered Accountant of the Defendant firm, who
stated that TDS was deducted, and deposited for the payment of interest also
has to be considered. The relevant extract of the said Statement of the
Chartered Accountant reads as under:
"Statement of Sh Deepak Bansal S/o Late Sh
S.K.Bansal, Chartered Accountant, 201/8, Sushma
Tower, Central Market, D Block, Prashant Vihar, New
Delhi- 110 0850
On S.A.
I have received the summons of this court for today.
I was the TDS consultant for the defendant firm for the
years 2014-15 and 2015-16. I had filed the TDS
returns as a TDS consultant on the basis of data
provided to me by M/s Telu Ram Amar Chand & Co.
for the financial year 2014-15
and 2015-16. I have brought the photocopies of TDS
returns and TDS certificate which are mark X & Y as
per my records based on what I have filed. I have
verified the mark A & B from the above documents
brought by me. The nature of the payment, from which
the TDS was deducted and deposited vide TDS
certificate mark X & Y was payment of interest.
XXXXX by Sh N.K. Kadiyan, Ld. Counsel for the
Digitally Signed By:DEVANSHU
JOSHI
Signing Date:10.12.2021 12:42:34
defendant
M/s Telu Ram Amar Chand & Co. was a sole
Proprietorship of Mr. Amar Chand Gupta. Section 194
A Income Tax Act is applicable on interest, except
interest on securities. It is wrong to suggest that
provisions of Section 194 A of Income Tax Act are
applicable only to the companies or organizations
registered with Reserve Bank of India. Vol. The
provisions of Section 194 A of Income Tax Act are
applicable to all the assesses who had been assessed to
Income Tax in the previous financial year and their
accounts were audited in the previous year and were
paid the interest in the current year. It is wrong to
suggest that I had deposited the TDS under the wrong
provisions. Vol. I had deposited the TDS on the basis
of information supplied by the client regarding the
nature of payment. It is wrong to suggest that
documents placed on record by me are not the true
documents."
13. In response to a query by the Court as to the stage of the suit as on
date, the Ld. Counsel for the Plaintiffs, fairly and candidly admits that the
suit is at the stage of final arguments, and the recording of evidence is
complete in the matter.
14. Considering that the evidence has already been recorded and the
pleadings of the parties have been completed before the Trial Court, one of
the issues that the Trial Court would now have to examine is the effect of the
TDS Certificates in the context of the Statement of the Chartered Account of
the Defendant firm. Further, the Trial Court has to consider the short issue as
to whether the amount advanced by the Plaintiffs was in the nature of
investments or loan.
15. At the stage of final adjudication, the Trial Court shall bear in mind
Digitally Signed By:DEVANSHU
JOSHI
Signing Date:10.12.2021 12:42:34
the statements made under Order X CPC read along with the pleadings of
the parties. If the case of the Defendant, that the amount was advanced as a
means of investment and not as a loan, is not made out, the Trial Court
would proceed further, in accordance with law, on the basis of the evidence
adduced by the Plaintiffs and the statements recorded under Order X CPC.
16. With these observations, these petitions, along with all pending
applications, are disposed of.
PRATHIBA M. SINGH
JUDGE
DECEMBER 8, 2021/dk/Ad
