VATECH GLOBAL CO. LTD vs. UNICORN DENMART LTD & ORS

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Decided on: 30.05.2017

+ CS(OS) 1849/2015

VATECH GLOBAL CO. LTD ..... Plaintiff
Through: Mr. Vinod Khurana, Mr. Mohinder
Vig and Mr. Nitin Sen, Advocates.

versus
UNICORN DENMART LTD & ORS ..... Defendants
Through: Mr. Suhail Dutt, Sr. Advocate along
with Ms. Gunjan Kumar and Mr.
Azhar Alam, Advocates.
CORAM:
HON'BLE MS. JUSTICE DEEPA SHARMA

JUDGMENT

I.A. 25396/2015 (by defendants u/O 37 R 3 (5) r/w S. 151 CPC for leave
to defend) I.A No. 25397/2015 (under Section 5 of Limitation Act
seeking condonation of delay in filing the application under Order 37
Rule 3(5) CPC)

1. The present suit has been filed by the plaintiff under Order 37 CPC.
It is submitted that plaintiff is an international company incorporated under
the laws of Republic of Korea and having its registered office at 13,
Samsung 1-ro 2-gil, Hwaseong-si, gyeonggi-do, 445-170, Korea. Mr.
Sookeun Park is the Representative Director of Plaintiff and is authorised to
sign and verify the pleadings and to institute the present suit on its behalf. A
CS(OS) No.1849/2015 Page 1



Copy of Board Resolution dated April 24, 2015 authorising Mr. Sookeun
Park, has been placed on record.
2. The plaintiff is dealing with manufacturing of high tech dental 2D and
3D digital imaging Equipments and software headquartered in S. Korea.
Plaintiff is engaged in designing, manufacturing and marketing state-of-the-
art digital imaging products for dental CBCT etc. The plaintiff‟s business
has an international existence. Defendant no. 1 is Unicorn Denmart, a
Company incorporated under the Company‟s Act, 1956, and is engaged in
the business of providing goods and services in range of dental equipments
and is based at New Delhi having its registered office in Delhi. Defendant
no. 2, Mr. Shammi Gumbhir, is the Managing Director of defendant no. 1
and Defendant no. 3, Mrs. Achla Gumbhir, is Whole time Director of
defendant no. 1. Defendant no. 2 is involved jointly with other defendants
in the management of defendant no. 1 and they all are jointly and severally
responsible for the conduct of defendant no. 1. They had entered into a
business relationship in 2009. The plaintiff had exported dental devices to
defendants to market and sell them in India.
3. It was agreed between them that the defendants shall pay 50% of the
advance of the required devices/equipments and on the release of that
CS(OS) No.1849/2015 Page 2



advance, the plaintiff shall execute the order and send the devices to the
defendants and then the defendants shall within two months from the date of
bill of lading, release the balance 50% amount to the plaintiff. This practice
continued between the parties since 2009 and the email dated 05.11.2014 of
the defendants confirmed the said fact. In the year 2014 in the month of
September, defendant no. 1 placed an order for purchase of dental devices
including “Intra Oral Sensor” and “Digital X- Ray System”. As per the
standard practice between them, the plaintiff raised the performa invoices
for that purpose.
The details are as follows:-

4. It is also submitted by the plaintiff that the defendants released 50%
of advance based on the performa invoices and details are as under:-

CS(OS) No.1849/2015 Page 3

5. Bank statements that the amount was transferred against each
mentioned Performa Invoices and credited to the plaintiff‟s bank account
were also enclosed by the plaintiff along with the suit.
6. It was contended that thereafter the plaintiff executed the order and
raised the Commercial Invoices as per the details below:-

CS(OS) No.1849/2015 Page 4

7. Certified copies of these commercial invoices is also been placed on
record by the plaintiff. It is contended that the performa invoices and the
commercial invoices are exclusive agreements wherein the payment terms
are clearly depicted. It is submitted that as per the findings in the case Iron
And Steel Company Ltd. v Nada Brothers 113 (2004) DLT37, these
invoices are written contracts within the meaning of sub-clause (2) of Rule 2
of Order 37.
8. It is further contended that the items as invoiced in the performa and
commercial invoices for which an advance of 50% had been received, were
sent to the defendants and dispatched as per the details indicated through
Carrier Agent. The copies of packaging list for each outstanding
Commercial Invoice are also enclosed by the plaintiff along with the plaint.
It is submitted that all these items were delivered to the defendants as per
schedule and in perfect manner and the bills of ladings are also enclosed
with the plaint. Despite repeated reminders, the defendants did not pay the
balance payment of 50% value as mentioned in the invoices and the
CS(OS) No.1849/2015 Page 5



outstanding payments were not cleared and they remain outstanding and the
details of outstanding are as follows:-

th th nd
9. The reminders were sent on 4 Nov2014, 27 Nov 2014, 2 Dec
rd th th th th
2014, 3 Dec 2014,12 Dec 2014, 15 Dec 2014, 16 Dec 2014, 17 Dec
nd th th th th
2014, 22 Dec 2014, 29 Jan 2015, 9 Feb 2015, 26 Feb 2015,10 Mar
th
2015 and the last email was sent on 20 March, 2015. It is further submitted
th
that the defendants vide their email dated 13 December, 2014 have
acknowledged their liability to pay but sought time for making payment.
The plaintiff has relied on the averments of the email which reads as under:-
“ This has reference to your call yesterday. We are
running short of cash flow because of yearend billing, so
we are transferring your old payment shortly but as far
as 50% of the new Order is concerned, it will be towards
the end of the year only."
CS(OS) No.1849/2015 Page 6



10. It is submitted that the defendant no. 2 had again vide email
th
dated 9 February, 2015 communicated to the plaintiff that “We also
want to settle this payment issue at the earliest” , which confirms that
the amount is still outstanding. It is submitted that these facts clearly
show that the defendants despite admitting the outstanding payments
and thereby acknowledging its liability did not pay. It is submitted that
the defendants were pressurising the plaintiff to sign exclusive
dealership agreement on its own terms because they wanted to become
an exclusive dealer of the plaintiff, however, it was not acceptable to
the plaintiff. When the plaintiff informed the defendants of the
appointment of another dealer i.e. M/s Chesa, in southern India it was
vehemently objected by the defendants apparent from their email
th
dated 26 February, 2015. Defendants, thereafter, did not pay the
th
balance money. A reminder dated 10 March 2015 was sent asking
the defendants to clear the balance payment but money was not paid.
th
A legal notice dated 6 May, 2015 was also sent to the defendants
giving one more opportunity to the defendants to resolve the matter
and pay the overdue amount but the defendants did not reply the same.
CS(OS) No.1849/2015 Page 7



rd
Last and final reminder was sent by the plaintiff on 23 May, 2015
but despite that, the payment was not released by the defendants.
11. It is submitted that the case of the plaintiff falls under Order 37 of
CPC. On these facts, it is prayed that a money decree be passed in favour of
the plaintiff and defendants be directed to clear the outstanding payment of
USD $88,125.00, USD $158,650.00, JPY14, 160,300.00 and JPY
9,262,616.75 totalling to equivalent amount of Rs. 2,77,26,742- along with
interest of Rs. 14,68,444 worked out at 14% from the due date (which is 60
st
day from the Bill of Lading date till 31 May 2015, the suit filling date) and
st
also pendente lite and future interest @ 14% from 1 June 2015 till the date
of actual payment of the decreetal amount.
12. The defendants were duly served of the said suit. They put in their
appearances and summons for judgment was sent to them. Defendants filed
applications under Order 37 Rule 3(5) along with the application for
condonation of delay of 25 days in filing the said application along with
reply affidavit for leave to defend the case. All the defendants have also
adopted the reply affidavit filed by defendant no. 2 in their affidavits. The
reply affidavit is filed by Mr. Mukesh Aneja, AGM-Accounts & Finance
with Defendant No. 1 Company with the submission that he has been
CS(OS) No.1849/2015 Page 8



authorised by Board Resolution to file it and claims to be conversant with
the facts of the present case. The defendants have not denied their
relationship with the plaintiff and have also not denied that as per practice,
whenever they used to place an order with the plaintiff, on the basis of the
supply invoices, they used to release 50% of advance and the balance
amount was to be released on the supply of the goods within 60 days from
the date of the bill of lading.
13. It is however submitted that parties have decided to enter into a
Distributorship Agreement and it was entered on 04.09.2009. However, it
was entered into with one of the subsidiary/sister concern of the plaintiff,
registered at Singapore viz. Vatech Asia HQ Pte. Ltd, on the request of
plaintiff. Under the said Distributorship Agreement, as per Section 3.3(i),
the defendants were required to make all efforts to promote and develop
demands for the sale of the products. Under the Distributorship Agreement,
the defendants were also required to maintain its sales and field engineering
personnel. The Company also extended a warranty for replacing, repairing,
or giving credit for any of the products, which was within the warranty
period, and returned to the Company. Defendant no. 1, in pursuance of the
said Agreement, started marketing the products of the plaintiff company in
CS(OS) No.1849/2015 Page 9



full earnestness and also appointed extra personnel and created huge
demands for the products of the plaintiff and procured orders despite the fact
that the plaintiffs equipments were costly and were not in extensive use in
India and plaintiff was an unknown entity in India at that time. Defendant
no. 1 was able to create huge market for the plaintiff‟s goods within
September 2009 to December 2009 i.e. 4 months and placed order of about
Rs. 23,11,100/- and during the last six years, defendant no. 1 has imported
about Rs. 35.80 crore worth of products from the plaintiffs. This shows that
defendant no. 1 is working hard for creating the demand of the plaintiff‟s
goods and as such increased the market demand of the plaintiff‟s products.
In 2014, the plaintiff wanted to appoint another distributor in complete
disregard to the understanding between them and thereby taking away the
exclusive rights of defendants to import, market and sell the products of the
plaintiff‟s in India. Defendant No.1 asked the plaintiff to enter into
Distributor Agreement directly with them instead of through its sister
concern. It is also submitted that plaintiff has breached the agreed terms of
the understanding by appointing another dealer for the sale of their products
in India and they are thus liable to pay damages to defendant no. 1.
CS(OS) No.1849/2015 Page 10



14. For replacement of defective parts during warranty period, the
plaintiff was to supply the spare parts. The plaintiff started delaying the
supply of spare parts which needed replacement during the warranty period.
On account of the failure of the plaintiff to supply the spare parts, defendant
no. 1 had to replace it from the stocks of the new products and this has
caused huge loss to defendant no. 1 as the replacement was done free of cost
during the warranty period. This has caused immense discomfort to its
customers and exposed defendant no. 1 to unwarranted litigations. The
plaintiff had also failed to sign the service agreement to protect the interest
of its customers. The plaintiff is also guilty of causing loss by inducing the
defendant no. 1 to develop market for their products with promise to give
exclusive dealership rights to import to defendant no.1. On this
inducement/promise and understanding, defendant no. 1 had worked
vigorously and had invested a lot of money and so plaintiff is liable to pay
damages and cannot be allowed to take advantage of its own wrong.
15. It is submitted that the suit on the basis of invoices is not maintainable
under the provisions of Order 37 of CPC. Except the mails on which the
plaintiff has relied, every other e-mail exchanged between the parties also
CS(OS) No.1849/2015 Page 11



need to be proved especially those e-mails which were exchanged between
the period August 2014 till filing of the present suit.
16. It is further contended that the summons of judgment was not
accompanied by the affidavit of the plaintiff, but was accompanied by the
affidavit of the lawyer of the plaintiff. It is submitted that in terms of Order
37 Rule 3 (4) CPC read with Appendix B Form No. 4A, the requirement of
summons of judgment being accompanied by the affidavit of the plaintiff, is
mandatory and no decree under Order 37 can be passed where summons of
judgment is not supported by affidavit of plaintiff. Reliance is placed on the
findings in the case Satish Kumar vs. Prism Cement Ltd., 107 (2003) DLT
36. It is further argued that an Advocate cannot act in a dual capacity, of an
Attorney and of plaintiff and so the affidavit filed by the counsel for the
plaintiff cannot be considered as having being filed by the plaintiff.
Reliance is placed on Baker Oil Tools (India) Pvt. Ltd. vs Baker Hughes
Ltd. & Anr, 2011 (47) PTC 296 (Del.) and Columbia Pictures Industries,
Inc. and Others vs. Siti Cable Network Ltd., 2001 (60) DRJ 11 (DB) . It is
further submitted that Directors cannot be sued for the liability of Company
under Order 37 of CPC. Relying on Simba F.R.P.(P) Ltd. vs. Department
of Tourism, Lucknow, Uttar Pradesh, 1995 III AD (Delhi) 473, it is argued
CS(OS) No.1849/2015 Page 12



that summary suit cannot be filed on the basis of invoices, which is only a
correspondence between parties and does not constitute a contract. Since
there is no written contract, the case should be treated as normal suit and
leave to defend be granted. It is submitted that following triable issues have
arisen in favour of defendants;
(a) Suit against defendant nos. 2 to 4 solely on the grounds that they were
Director of defendant no. 1 Company is bad for mis-joinder and it cannot be
tried summarily,
(b) plaintiff need to lead evidence to prove that subsequent to the Distributor
Agreement entered into with its subsidiary, the terms of said agreement were
subsequently extended to all future marketing and distribution and sale of
products by defendant no. 1 exclusively.
(c) The plaintiff has not filed any document except the invoices to
demonstrate that any payment is due and payable by the Defendant No. 1 to
it. In any case the claims filed by the Plaintiff do not fall under the
provisions of Order 37 of Code of Civil Procedure, 1908. Claim on the basis
of said invoices cannot be considered to be in the nature of debt, unless an
adjudication is made with regard to the fact that supplies, etc. were made in
accordance with the agreed terms.
CS(OS) No.1849/2015 Page 13



(d) Plaintiff is selectively making reference of the mails exchanged between
the parties. For a proper appreciation of the disputes between the parties
reference has to be made to other mails also which were exchanged between
the parties more particularly the mails that were exchanged between the
period August 2014 till filing of the present Suit.
(e) Plaintiff has resiled and breached the agreed terms of the understanding
between the parties under which Defendant No.1 imported, marketed and
sold the products of the Plaintiff for almost 6 years, during which period the
Defendant No.1 purchased goods of about Rs. 35.80 crore from the Plaintiff;
(f) Disputes arose between the parties on account of the breaches of the
agreed terms committed by the Plaintiff, whereby:
i. The Plaintiff in complete disregard of the agreed terms
appointed dealers for sale of its products within India. On
account of said breach the Plaintiff is liable to pay damages to
Defendant No. 1;
ii. Plaintiff further breached the agreed terms of the
understanding between the parties and delayed or failed to supply
spare parts, causing immense discomfort to the customers and
also exposed Defendant No.1 to unwarranted litigation;
CS(OS) No.1849/2015 Page 14



iii. the Plaintiff failed to sign a Service Agreement, which was
required to protect the interests of the customers who have
purchased products of the Plaintiff through Defendant No.1. The
said proposed Service Agreement was refused to be signed by the
Plaintiff on an allegation of the same being far from international
standards
(g) Plaintiff is also guilty of inducement and causing losses to Defendant
No. 1. Plaintiff induced Defendant No.1 to develop market for the products
of the Plaintiff by making entire investment on promise of giving exclusive
right of import, marketing and sale of its products within the territory of
India for a period of 15 years. Defendant No. 1 thus worked vigorously and
made huge investments to develop market for the products of Plaintiff, and
in fact in a period of 6 years sale of products of Plaintiff rose from being
NIL to about 16.50 crore in the year 2014. Yet in complete breach of the
understanding the Plaintiff appointed another dealer disregarding the
understanding of exclusivity;
(h) On account of the breaches committed by the Plaintiff, it is liable to pay
damages to Defendant No.1, in regard whereto a suit is being filed by
Defendant No.1 against the Plaintiff.
CS(OS) No.1849/2015 Page 15



(i) the Plaintiff is also guilty to breach the understanding between the parties
whereby free of cost and timely spares were to be provided to the customers,
which was critical to ensure that the market created by Defendant No. 1 did
not suffer credibility. Timely supply of spares was all the more critical as
services was being provided by the Defendant No. 1.
(j) the Plaintiff cannot be allowed to take advantage of its own wrong
whereby the Plaintiff, having induced the Defendants to enter into an
understanding with it, subsequently resile from the said agreed terms. The
defendants have prayed that leave to defend be granted to them.
17. The defendants have also filed an application under Section 5 of
Limitation Act for condonation of delay of 25 days in filing the leave to
defend. It is submitted that they had handed over the whole of their record
to their counsel. Since the record was bulky as there were number of emails
which were exchanged between the parties and since the Courts were also
closed in between for the Deepawali, the delay in filing the application has
occurred. It is prayed that the delay be also condoned.
18. It is submitted on behalf of the plaintiff that defendants have not
disclosed any reasonable ground for condonation of delay and their
applications are liable to be dismissed on this ground alone. It is further
CS(OS) No.1849/2015 Page 16



submitted that defendants have not disputed any of the fact necessary for
decreeing the suit in favour of the plaintiff. That the defendants have not
denied the fact that the amount Rs. 2,77,26,742/- is due towards them. It is
further submitted that suit under Order 37 can be filed on the basis of
invoices as the invoices are independent contracts between the parties. It is
further submitted that there was no exclusive distribution contract between
the plaintiff and the defendants. It is submitted that the defendants are
withholding their money with the sole intention to force the plaintiff to sign
the exclusive Distributorship Agreement with them to which the plaintiff is
not agreeing.
The Distributorship Agreement dated 04.09.2009 referred to by the
defendants was even otherwise valid only for 2 years and not for 15 years.
It is submitted that Appendix „A‟ of the agreement (filed by the defendants)
clearly states "Duration: 24 calendar months from the date of endorsement"
and Article 2.03 of the said agreement also envisages that it was not an
exclusive dealership agreement. It is submitted that the said clause states,
"Selling Rights Reserved: Notwithstanding anything to the contrary stated
herein In this agreement the company reserves the right to sell; either
directly or through any of its branch, agent, or distributors any of Its
CS(OS) No.1849/2015 Page 17



product, within any territory, throughout the world." which clearly shows
that under this Distributorship Agreement, defendant no. 1 was not
appointed as an exclusive dealer in India. It is submitted that against a
written agreement, no oral evidences are admissible and the oral contentions
cannot change the terms and conditions of any written agreement. It is
submitted that defendant nos. 2 to 4 are all actively involved in the working
of defendant no. 1 and, therefore, they are necessary parties and even
otherwise the suit cannot be defeated on ground of mis-joinder of the parties
in view of Order 1 Rule 9 CPC. It is submitted that application for leave to
defend does not disclose any triable issue and is liable to be dismissed and
the plaintiff is entitled for the decree. It is further contended on behalf of the
plaintiff that the affidavit which accompanied the summons for judgment
was a technical affidavit. It is submitted that the plaintiff had issued
vakalatnama in favour of the firm (M/s Khurana & Khurana) of Advocates
and any of the partner of the said firm can act as a Power of Attorney of the
plaintiff. It is submitted that since the facts of the case are admitted and no
substantive issue exists between the parties, there is no bar to passing a
decree in terms of Order 37 CPC and the issue raised by defendant is just a
trivial issue and cannot defeat the claim of the plaintiff. It is further
CS(OS) No.1849/2015 Page 18



submitted that the Court has the power to ask the defendants to deposit the
admitted due amount even while granting leave to defend to the defendants.
Reliance is placed on the findings in the case of Southern Sales & Services
& Ors. vs. Sauermilch Design & Handels GMBH, (2008) 14 SCC 457.
19. I have heard the parties and given due consideration to the rival
contentions.
20. For the reasons disclosed in the application for condonation of delay,
the delay in filing the present application is condoned.
21. First and foremost, argument of the defendants is that the suit is liable
to be treated as ordinary suit because no decree can be issued by this Court
under Order 37 CPC where there is a non-compliance of Order 37 Rule 3 (4)
CPC read with Appendix B Form No. 4 A. It is argued that in the present
case, the summons for judgment was not supported by the affidavit of the
plaintiff but the Advocate of the plaintiff has filed its affidavit. It is
submitted that in the Baker Oil Tools (India) Pvt. Ltd (supra) case before
this Court, the issue which came up was whether an Advocate can act in
dual capacity. It is submitted that in that case, as is clear from the facts,
respondent nos. 1 and 2 had engaged the services of solicitor company
known as M/s Remfry & Sagar and two Power of Attorneys were executed
CS(OS) No.1849/2015 Page 19



by the respondent nos. 1 and 2 nominating Advocates with their specific
names who were working for the said solicitor company. M/s Remfry &
Sagar had acted in a dual capacity of a client when he also gave the evidence
on behalf of the respondent company on the factual matrix of the case. This
Court relied on the Bombay High Court judgment in Oil and Natural Gas
Commission vs. Offshore Enterprises Inc., AIR 1993 Bombay 213 wherein
the issue of dual capacity was dealt. The defendants have relied on following
extract of Oil & Natural Gas Commission (supra) reproduced as under:-
“.....In this background, I formulated the following questions for
consideration of this Court in this respect.
(i) Whether an Advocate is entitled to act as
Constituted Attorney of a party with authorisation to sing
the pleadings and affidavits on behalf of the suitor as
well as to act and plead for the party concerned in the
same litigation;
(ii) Whether the existing practice followed by firm of
Advocates/Solicitors/Attorneys particularly in case of
non-resident clients as aforesaid is in conformity with
law and the recognised rules of professional ethics;
7. It is well settled law that the constituted attorney of a
suitor has no right of audience in Court or to cross-
examine witnesses. The Constituted Attorney is merely
entitled to 'act' and 'appear' for a party but has no right to
'plead' in a Court. The expressions 'act' and 'appear' do
not mean 'right to plead' as such. It has been so held by
our High Court in the case of A.S. Patel v. National Rayon
Corporation Limited, MANU/MH/0123/1955:
AIR1955Bom262 . It is permissible for an Advocate to act
as a 'recognised agent' or a Constituted Attorney by virtue
of Power of Attorney executed in his favour by a suitor and
CS(OS) No.1849/2015 Page 20



sign vakalatnama pleadings and affidavits on behalf of the
donor of Power of Attorney to the extent provided in the
Code of Civil Procedure as aforesaid. In all such cases the
signature of Constituted Attorney on pleadings, affidavits,
vakalatnama and other documents is liable to be equated
to signature of a party itself for all practical purposes. It
follows that in all such cases the plaintiff or the defendant
is deemed to have signed the pleading by the hand of his
Constituted Attorney. The pleadings are required to be
verified and declared by the signatory thereof with
reference to personal knowledge of the averments made
therein or on basis of information and belief. The question
to be asked is as to whether an advocate who acts as
Constituted Attorney of a suitor in pursuance of power of
attorney from his client is entitled to combine his role of a
constituted attorney with that of an advocate in the same
cause simultaneously. Members of the Bar are governed by
the provisions contained in the Advocates Act 1961, well
known principles and doctrines recognised for generations
and are rightly described as partner in Administration of
justice. Advocates in their professional capacity are
enjoined to act with complete impartiality and detachment
and not entitled to identify themselves with the clients or
the cause personally. The paramount duty of an Advocate
is to assist the Court in its task of administering justice. In,
the event of there being any conflict between interest and
duty, the Advocate must yield in favour of his duty to assist
the cause of fair and impartial justice. An Advocate is
expected to be fair and reasonable towards his opponent.
All these principles bind the Advocates in discharge of
their professional duties. Advocates belong to noble
profession of law. On the other hand, a constituted
attorney is entitled to identify himself with the donor of
Power of Attorney and act in the same manner as the
suitor-litigant is entitled to act. An Advocate is governed
not merely by written provisions of the Advocates Act 1961
but also by traditions of the Bar built up for generation
during the course of administration of justice for centuries.
CS(OS) No.1849/2015 Page 21



It is provided by Order III Rule 4 of the Code of Civil
Procedure that a vakalatnama should be signed by the
party or by his recognised agent in favour of the pleader.
The question to be asked illustratively is as to whether the
pleader acting in his capacity as constituted attorney of a
litigant can sign such vakalatnama as a client in his own
favour as an Advocate or in favour of the firm in which
such constituted attorney himself is one of the partners.
The answer is in negative. The question to be asked is as to
whether the two roles can be combined? The question to be
asked is as to whether it is not inherent in the scheme and
the provisions of Code of Civil Procedure and implicit in
the provisions contained in Order III Rule 4 of the Code of
Civil Procedure and other connected provisions that
advocate who acts or appears or pleads before the Court
in a professional capacity must have a client with separate
and distinct identity. The answer to these questions is
obvious. For all practical purposes, the recognised agent
of a suitor is on par with the suitor or client himself; an
Advocate is not, as an Advocate is an independent person
with a specific role in administration of justice. In certain
situations advocates are permitted to accept power of
attorneys from a client for purpose of acting in a suit or
matter, sign pleadings, vakalatnama and affidavits on
behalf of plaintiff or defendant as case may be. An
Advocate may be appointed as a Receiver in a suit or a
cause. No one can object to the Advocate accepting these
assignments permissible under the law. The question still
remains as to whether the advocate who is holding a
power of attorney from a client to act and appear in a suit
or matter can also act in the professional capacity in the
same proceedings at the same time. The answer to this
question is of too obvious and has to be in negative.
Detachment and impartiality expected of an Advocate is
likely to be jeopardised when an Advocate acts in both the
capacities. The risk in allowing combination of two roles is
far too serious. I must therefore, construe the Code of Civil
Procedures harmoniously and in a manner so as to prevent
CS(OS) No.1849/2015 Page 22



confusion, anomaly and misunderstanding. In my opinion,
law does not permit the combination of two capacities in
the same cause. Law prohibits such combination and
rightly so.

8. It is unfortunate that a totally wrong practice has
grown up in our Court where one or the other partner
of a solicitors' firm signs pleadings and affidavits on
behalf of a foreign client in pursuance of authorisation
contained in the power of attorney and the same firm of
Advocate/Solicitors acts, appears and pleads in a
professional capacity. The said practice is not
sanctioned by law. To my mind such a practice is
opposed to law.

On principle, the Advocate cannot act in dual capacity
and cannot be a mixture of two characters. No express
provision is required to be enacted in this behalf. With
great respect, the implication from the scheme of the
Code interpreted in light of well recognised rights and
obligation of the Bar is too obvious. It is unfortunate that
the wrong illegal practice referred to in opening part of
this order and the questions formulated by the Court has
continued so far.
10. It is not sufficient that an Advocate acts impartially. It
is also necessary that the Advocate must always appear
to act impartially. The basic principle of acting
impartially and mere representation of a client consistent
with duty to opponent and Court keeping reasonable
distance from arena of conflict would be jeopardised if
the Advocate acts in professional and non-professional
capacity both in the same matter and at the same time.
Practices and procedures of the Court must serve the
administration of justice and rule of law in keeping with
its noble ideals, traditions and objectives. The Court are
required to interpret various provisions of various Acts
and rules in manner so as to avoid anomalies as far as
possible. Shri Ajit P. Shah, the learned counsel for the
CS(OS) No.1849/2015 Page 23



Bar Council has invited attention of the Court to the fact
that a constituted attorney is entitled to identify himself
with the interest of his client and give instruction to the
Advocate representing the client before the Court. It
would be strange if the lawyer constituted attorney gives
necessary instruction in the matter to himself or his co-
partners. Taking an overall view of all the relevant
provisions pointing out to the Court and their objectives
as indicated above, I have no hesitation in accepting
each of the submissions urged on behalf of Bar Council
of Maharashtra and Goa and interpret the relevant
provisions so as to infer prohibition of combination of
two capacities by necessary implication.

11. It makes no difference that the power of attorney is
executed in favour of one or other partner of the firm of
the Advocate and the litigation is in fact conducted by
another partner of the advocate's firm. If the
vakalatnama is executed by a client in favour of firm of
advocates it follows that all the partners of the said firm
are engaged as Advocates by the client concerned. It
makes no difference to the situation that the vakalatnama
is accepted in writing only by one of partners of the firm.
All the partners need not place their signatures on the
vakalatnama. Each and every partner of Advocates' firm
is enjoined to act in such cases in professional capacity
or no other capacity. No conflicting role can be assumed
by one or other partners of the same firm in respect of the
same cause or the matter.
12. There is an additional facet. On close scrutiny of
Order III Rule 4 of the Code and other connected
provisions, I hold that an Advocate acting in professional
capacity must be independent of the suitor or his
constituted Attorney. Rule of professional ethics framed
by the Bar Council clearly provide in terms that no one
can accept a brief or appear as an advocate if he is likely
to be a witness in the case. Affidavits may be filed under
Order XIX Rule 2 of the Code of Civil Procedure. On
several occasions Affidavits are filed, by the constituted
CS(OS) No.1849/2015 Page 24



attorney of the suitor. Pleadings can be signed and
verified by a Constituted Attorney. Once the constituted
attorney of a suitor files an affidavit, he can be
summoned by the Court at the instance of other side or
suo motu for cross-examination. The very possibility of
the advocate holding power of Attorney being summoned
as a witness in such cases is sufficient to infer implied
prohibition on combination of two capacities. Rule 13 of
the rules of Bar Council cannot be treated as exhaustive.
The said rule is illustrative and does not take care of all
situations. Even if an Advocate is not likely to be called
as a witness, he cannot combine the two roles as
discussed above. I find considerable force in each of the
submissions made by Shri Ajit P. Shah on behalf of the
Bar Council of Maharashtra and Goa. I accept each of
the submissions made on behalf of Bar Council. Practice
prevailing in our Court in case of foreign or non-resident
clients whereby the Advocates' firm acts in a professional
capacity and one or two partners of the same firm obtain
power of Attorney with authorisation to sign pleadings
and affidavits etc. is opposed to law as aforesaid. It is not
possible to put judicial imprimatur on such a practice.
Even if no personal affidavits are filed by the Advocate
concerned in pursuance of the power of Attorney, the
Advocate cannot combine the two capacities and the two
roles.
15. In view of above I therefore, answer the questions
formulated by the Court at the commencement of hearing
of this proceedings as under:

(a) An Advocate is not entitled to act in a professional
capacity as well as constituted attorney of a party in the
same matter or cause. An Advocate cannot combine the
two roles. If a firm of Advocates is appointed as
Advocates by a Suitor, none of partners of the Advocates'
firm can act as recognised agent in pursuance of a power
of attorney concerning the same cause.

CS(OS) No.1849/2015 Page 25



(b) The existing practice followed by the firm of
advocates/solicitors/attorneys particularly in case of non-
resident clients combining the two roles is opposed to law
and is required to be discontinued forthwith.

(c) The Prothonotary and Senior Master, High Court
shall not accept any vakalatnama in favour of a firm of
advocates where one or the other partner of the same
firm also holds a power of attorney from the Plaintiff or
the Defendant or any other suitor before the Court in the
same cause”.

22. It is argued that compliance of Order 37 Rule 3 (4) is mandatory and
where summons for judgments is not in terms of Order 37 Rule 4 and
Appendix B Form No. 4 A, the defect in summons for judgment cannot be
cured subsequently by filing affidavit of the plaintiff.
23. It is further submitted that in the case of Columbia Pictures
Industries (supra) also, the Court has held that an Advocate cannot act in
dual capacity of an Advocate as well as a client on the basis of the Power of
Attorney and since the summons of judgment were defective, suit be treated
as normal suit.
24. It is however argued on behalf of the plaintiff that the Distributorship
Agreement dated 04.09.2009 was between Vatech Asia, Singapore and there
was no Distributorship Agreement between plaintiff and the defendants, it is
also argued that even otherwise the said Contract was for 24 months and has
CS(OS) No.1849/2015 Page 26



already expired and the document also does not state anywhere that the
defendants were given exclusive distributorship of the products. It is further
argued that the defendants have not denied their liability anywhere. There is
no denial that the invoices were not raised, 50% advance money was not
released and that the goods were not supplied and thus any defence which
the defendants are not trying to raise are moonshine. It is further argued by
learned counsel that affidavit accompanying the summons for judgment is a
technical affidavit, and because the vakalatnama is in the name of firm of
the Advocates, any of the partner of the said firm can act as Power of
Attorney and that it‟s a technical issue and not fatal to the suit. It is argued
that findings in Columbia Pictures Industries (supra) and Baker Oil Tools
(supra) are distinguishable. Simba F.R.P (supra) case is also
distinguishable on the facts of the present case.
25. The Court deals with grant of leave to defend under Order 37 Rule 3
CPC. It reads as under:-
“3. Procedure for the appearance of defendant.- (1) In a suit to
which this Order applies, the plaintiff shall, together with the
summons under rule 2, serve on the defendant a copy of the
plaint and annexure thereto and the defendant may, at any time
within ten days of such service, enter an appearance either in
person or by pleader and, in either case, he shall file in court
an address for service of notice on him.
CS(OS) No.1849/2015 Page 27



(2) Unless otherwise ordered, all summonses, notices and other
judicial processes, required to be served on the defendant, shall
be deemed to have been duly served on him if they are left at the
address given by him for such service.
(3) On the day of entering the appearance, notice of such
appearance shall be given by the defendant to the plaintiff’s
pleader, or, if the plaintiff sues in person, to the plaintiff
himself, either by notice delivered at or sent by a prepaid letter
directed to the address of the plaintiff’s pleader or of the
plaintiff, as the case may be.
(4) If the defendant enters an appearance, the plaintiff shall
thereafter serve on the defendant a summons for judgment in
Form No. 4A in Appendix B or such other Form as may be
prescribed from time to time, returnable not less than ten days
from the date of service supported by an affidavit verifying the
cause of action and the amount claimed and stating that in his
belief there is no defence to the suit.
(5) The defendant may at any time within ten days from the
service of such summons for It's affidavit or otherwise d such
facts as may be deemed sufficient to entitle him to defend ,
apply on such summons for leave to defend such suit, and leave
to defend may be granted to him unconditionally or upon such
terms as may appear to the court or judge to be just:

Provided that leave to defend shall not be refused unless the
court-is-satisfied.hat the facts disclosed by the defendant do *
not indicate that he has a substantial defence to raise or that the
defence intended to be put up by the defendant is frivolous or
vexatious:
Provided further that, where a part of the amount claimed by
the plaintiff is admitted by the defendant to be due from him,
leave to defend the suit shall not be granted unless the amount
so admitted to be due is deposited by the defendant in court.
(6) At the hearing of such summons for judgment,—
CS(OS) No.1849/2015 Page 28



(a) if the defendant has not applied for leave to defend, or if
such application has been made and is refused, the plaintiff
shall be entitled to judgment forthwith; or
(b) if the defendant is permitted to defend as to the whole or any
part of the claim, the court or judge may direct him to give such
security and within such time as may be fixed by the court of
judge and that, on failure to give such security within the time
specified by the court or judge or to carry out such other
directions as may have been given by the court or judge, the
plaintiff shall be entitled to judgment forthwith.
(7) The court or judge may, for sufficient cause shown by the
defendant, excuse the delay the defendant in entering an
appearance or in applying for leave to defend the suit.
(emphasis supplied)
The principles governing the grant of leave has been discussed
elaborately by the Apex Court in the case Mechelec Engineers &
Manufacturers vs. Basic Equipment Corporation, AIR 1977 SC 577. In
para 8, the Court has summarised it as under:-
“8 In Smt. Kiranmoyee Dassi and Anr. v. Dr. J. Chatterjee 49
C.W.N. 246 , Das. J., after a comprehensive review of
authorities on the subject, stated the principles applicable to
cases covered by order 17 C.P.C. in the form of the following
propositions (at p. 253) :
(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
CS(OS) No.1849/2015 Page 29



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.

26. The plea of defendants is that there is no written contract between the
parties and, therefore, the case is not covered under Order 37 of CPC.
Summary suit is a remedy available to the plaintiff where the suit is based
on the bills of exchange, hundies and promissory notes or the ones in which
a Plaintiff seeks only to recover a debt or liquidated demand in money
payable on a written contract, an enactment, where the sum to be recovered
is a fixed sum of money or in nature of any debt except penalty, a guarantee
CS(OS) No.1849/2015 Page 30



- in respect of a debt or liquidated demand. There is no dispute to the fact, in
the present case, that the defendants had placed an order upon the plaintiff
and as per the practice, followed by both for a long period, the defendants
paid advance money equivalent to 50% of the total value of the goods for
which invoices were raised. There is also no dispute that the goods were
supplied under these invoices to the defendant and thereafter commercial
invoices were raised by the plaintiff.
27. The defendants have raised the defence that the plaintiff had entered
into an exclusive Distributorship Agreement through its sister concern with
the defendants but it, in violation of the said agreement, appointed M/s
Chesa as its distributor in southern India.
The plaintiff, however, has argued that there never was any agreement
of exclusive distributorship with the defendants. The agreement of
distributorship, which was executed by its sister concern in favour of the
defendants was only an agreement for distributorship and not an exclusive
distributorship and this agreement was operative for two years and that
period has already expired. It is further argued that even otherwise, the
defendants cannot withheld the money to pressurise the plaintiff to enter into
an exclusive Distributorship Agreement with the defendants. On
CS(OS) No.1849/2015 Page 31



examination of the relevant document, it is clear that the contentions and
arguments of plaintiff find support from these documents. The alleged
Distributorship Agreement (Article 2.03 & Appendix A) clearly envisages
that it was not an exclusive Distributorship Agreement and was valid for 2
years only. The defendants have failed to place on record any other
documents to show that the plaintiff or its sister concern had entered into an
exclusive Distributorship Agreement with it. Defendants cannot withheld
the money with the object of pressurising the plaintiff to enter into any
agreement. Once it has, against invoices, released the advance money (50%
of the value) and received the good without any demur or complaint, the
defendants are liable to pay the balance due amount raised by plaintiff
against commercial invoices. The invoices, as is clear from the document
itself, are a valid contract between the parties. It contains offer, acceptance
and the consideration of such agreement as defined in Section 2 (h) of the
Indian Contract Act, 1872. Reliance of defendants on Simba (supra) is
misplaced since facts are entirely different. The court has observed in para 6
as under:-

CS(OS) No.1849/2015 Page 32

(emphasis supplied)

From perusal of the invoices in this case, it is apparent that the
documents contains all the terms and conditions of the Contract. This case,
in fact, find support from Punjab Pen House (supra) distinguished on facts
by Court in Simba (supra) . Therefore, I hold that invoices formed a valid
Contract between the parties. Also this Court, in Iron and steel (supra) after
considering catena of judgments held that invoices which contains
description of goods, quantity of goods supplied, its value and payment
terms, are written contracts within the meaning of sub-clause (2) of Rule 2 of
Order 37 CPC.
CS(OS) No.1849/2015 Page 33



28. The other contention of the defendants is that it had suffered losses for
the act of the plaintiff. Defendant has already filed a suit of Rs. 5 crores for
such losses and damages, which is pending trial and thus this matter is
already subjudice.
29. The defendants have also argued that where there is a violation of the
legal provisions, a decree in terms of Order 37 CPC cannot be passed and
even the suit is liable to be dismissed. It is argued that the plaintiff had
failed to comply with provisions of Order 37 Rule 3 (4) read with Appendix
B Form No. 4 A as summons of judgment is not supported by the affidavit
of the plaintiff and a defective summons of judgment was served on
defendants and defect cannot be cured and so suit be treated as normal suit
and no decree can be passed under Order 37 CPC.
30. There is no dispute to the factual position in this case. The summons
for judgment was not accompanied by the affidavit of the plaintiff. The
procedure prescribed under Order 37 has to be followed.
Order 37 Rule 3(4) CPC requires:-
“....................., the plaintiff shall thereafter serve on the
defendant a summons for judgment in Form No. 4A in Appendix
B ..........”

CS(OS) No.1849/2015 Page 34



31. This provision requires that the summons for judgment shall be served
in Form No. 4 A of Appendix B. Form no. 4A Appendix B is reproduced
as under:-
“Form No. 4A
“In the….Court, at ……Suit
No………of 19….XYZ…….Plaintiff
Versus
ABC……Defendant

Upon reading the affidavit of the plaintiff the Court makes the following
order, namely:
Let all parties concerned attend the Court of Judge as the case may be on the
……day of….19…., at…..O‟clock in the forenoon on the hearing of
application of the plaintiff that he be at liberty to obtain judgment in this suit
against the defendant (or if against one or some or several, insert names) for
Rs….and for interest and costs.
Dated the…day of …19…”
32. It requires the Court to pass an order only on the basis of the affidavit
of the plaintiff. In the present case, the affidavit supporting summons of
judgment is of an Advocate. In Baker Oil case (supra), also in Oil and
Natural Gas Commission (supra) and Columbia Pictures (supra), the
Courts have categorically held that an Advocate cannot act in dual capacity
and so cannot file an affidavit on behalf of the plaintiff and where firm has
been engaged all the partners of the firm can act only as counsel of plaintiff
CS(OS) No.1849/2015 Page 35



and are incapable of filing affidavit in lieu of plaintiff. By necessary
implications, it can be said that summons of judgment has to be
accompanied by the affidavit of the plaintiff or his duly authorized Attorney,
and the counsel‟s affidavit is not a sufficient compliance of Order 37 Rule
3(4) CPC read with Appendix B Form No. 4 A. In the present case, there is
no affidavit of the plaintiff company and the summons of judgment carries
the affidavit of his Advocate. There is thus apparent violation of the
provisions of Order 37 Rule 3(4) read with Appendix B Form No. 4 A. This
court in the case Satish Kumar (supra) has clearly held that such a defect is
incurable. The Court has held as under:-
Para 8. “Now the next question is as to whether the said defect
appearing in the summons for judgment can be cured
subsequently simply by filing an affidavit subsequently by the
plaintiff, copy of which, of course was furnished to the defendant.
In the opinion of this Court and for the same reason that the
summons for judgment issued in this case were defective and in
valid for want of affidavit, the most appropriate and legal course
for the trial court was to have issued a fresh summons for
judgment Along with a copy of the affidavit rather than to all
upon the plaintiff to file an affidavit and reply upon the same for
the purpose of passing a decree. The very fact that the learned
trial court had not decreed the suit at once after supply of the
copy of the affidavit to the defendant and had posted the case for
arguments and disposal of the application moved by the
defendant on several dates itself shows that the court was
entertaining a serious doubt about the validity of the summons
for judgment issued by it else if the trial court treated the
subsequent filing of the affidavit a compliance of the provisions
CS(OS) No.1849/2015 Page 36



of Sub-rule 4 of Rule 3 of Order xxxvii of the Code, it would have
then and there notified the defendant that the defendant will be
deemed to have been served with the summons for judgment on
that date and then he could be called upon to file a leave to
defend application, if any, within ten days from the said date.
However, nothing of the sort was done and the court kept on
adjourning the matter for hearing and disposal of the application
moved by the defendant. In the opinion of this Court learned trial
court has erred in relying and acting upon the subsequent
affidavit and treating the same as due compliance for issuing the
summons for judgment and passing the decree. The defendant
was not obliged to file a leave to defend application against an
invalid and defective summons for judgment. Having regard to
the entire background of the matter and the defect appearing in
the summons for judgment, in all fairness the court ought to have
exercised its jurisdiction and discretion in allowing the
application rather than dismissing it.”

33. In the present case, as is evident, the plaintiff even did not make any
effort to substitute the affidavit of its Advocate with that of its own.
34. In view of the above discussions, it is apparent from the totality of
facts and circumstances of the case, more particularly the issue that the
summons for judgments suffers with legal infirmity, I am satisfied that it is a
fit case to grant leave to defend to the defendants.
35. I am satisfied that on the facts of the case, where the document shows
that the defendants owes Rs. 2,77,26,742 to the plaintiff, while granting the
leave to defend to the defendants, defendants are directed to deposit the said
money with the Registrar General within six weeks from the date of the
CS(OS) No.1849/2015 Page 37



order and it is a pre-condition to the grant of leave to defend. In case, the
money is not deposited by the defendants within the stipulated period,
application for leave to defend shall be considered to have been dismissed
and the plaintiff shall be liable for the decree. The money be kept in fixed
deposit, till further orders.
Both the applications stand disposed of.
CS(OS) 1849/2015
Matter be put up before the Roster Bench, subject to orders of Judge
in-Charge (Original Side) for 12.07.2017.

DEEPA SHARMA
(JUDGE)

MAY 30, 2017
ss
CS(OS) No.1849/2015 Page 38