Full Judgment Text
2023/DHC/000745
$~19
* IN THE HIGH COURT OF DELHI AT NEW DELHI
st
% Date of decision 31 January, 2023
+ CS(COMM) 690/2021
TKW MANAGEMENT SOLUTIONS PVT. LTD. ..... Plaintiff
Through: Mr.Abhinav Jaganathan and Mr.Avinash
Amarnath, Advocates
versus
SHERIF CARGO & ANR. ..... Defendants
Through: Mr.Sajal Jain, Adv.
CORAM:
HON'BLE MR. JUSTICE AMIT BANSAL
AMIT BANSAL, J. (Oral)
I.A. 12748/2022 (of the defendants u/O-XXXVII R-3(5) of the CPC) and
I.A. 10658/2022 (of the defendants u/O-VII R-11 of the CPC)
1. The present suit has been filed under Order XXXVII of the Code of
Civil Procedure, 1908 (CPC) for recovery of Rs.2,53,02,720/- along with
pendente lite and future interest.
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2. Summons in the suit were issued on 22 December, 2021. The
defendants entered appearance and filed an application, being
I.A.12748/2022, seeking leave to defend. The defendants also filed
I.A.10658/2022 under Order VII Rule 11(a) and (d) of the CPC for rejection
of the plaint. Pleadings in both the aforesaid applications have been
completed.
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3. Submissions on behalf of the counsels were heard on 24 November,
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2022 and 12 December, 2022. On 12 December, 2022, the parties were
referred for mediation, however, the mediation proceedings were not
successful.
F ACTUAL M ATRIX
4. Briefly stated, the facts pleaded in the plaint are as under:
4.1 Plaintiff company is a third-party logistics company, which, inter alia ,
provides freight forwarding and transportation services.
4.2 Defendant no.1 is engaged in the business of logistics and
warehousing in India and defendant no.2 is the proprietor of the defendant
no.1.
4.3 In February/March, 2019, the defendants approached the plaintiff, on
behalf of their clients, to provide freight forwarding services for shipment of
various goods from Hong Kong.
4.4 As per the arrangement between the parties, once the goods were
brought to the customs ports in India by the plaintiff, a delivery order would
be issued to the defendants to enable to the defendants to collect the goods
from such ports. Once the delivery order was issued, the plaintiff would
raise an invoice on the defendants.
4.5 The plaintiff stopped receiving payments from the defendants against
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its invoices dating back to 12 March, 2019 raised on the defendants. This
is despite the fact that the defendants have never complained about the
quality of service, nor have the defendants raised any dispute regarding the
invoices.
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4.6 On 22 August, 2019, the plaintiff received the last payment of
Rs.10,00,000/- made by the defendants.
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4.7 Various assurances were given by the defendants to the plaintiff via e-
mail and WhatsApp messages that the payment would be released.
However, despite repeated reminders by the plaintiff to the defendants, the
defendants did not release the outstanding amounts.
4.8 As on date, 436 invoices amounting to Rs.2,53,02,720/- are
outstanding, on which the defendants have also deducted tax.
5. Accordingly, the present suit was filed under Order XXXVII of the
CPC seeking recovery of Rs.2,53,02,720/-.
UBMISSIONS ON BEHALF OF THE EFENDANTS
S D
6. In the leave to defend application filed on behalf of the defendants as
well the application filed under Order VII Rule 11 of the CPC, the main
ground taken on behalf of the defendants is with regards to territorial
jurisdiction of this Court to entertain the present suit.
7. It has been submitted on behalf of the defendants that the defendants
are situated in Chennai, Tamil Nadu and hence, no cause of action, wholly
or in part, has arisen at New Delhi. The counsel appearing on behalf of the
defendants has placed reliance on the Explanation to Section 20 of the CPC
to submit that a ‘corporation’, which also includes partnership firms like the
defendant no.1, can only be sued where such corporation has its principal or
subordinate office in India. Reliance in this regard has been placed on the
judgments in Indian Performing Rights Society v. Sanjay Dalia and
Another , (2015) 10 SCC 161 and Dashrath Rupsingh Rathod v. State of
Maharashtra and Another , (2014) 9 SCC 129.
8. It is further submitted by the counsel for the defendants that in the
present case, out of total 436 invoices, at least 400 invoices were in respect
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of goods to be delivered in Chennai and therefore, substantial cause of
action would arise in Chennai.
S UBMISSIONS ON BEHALF OF THE P LAINTIFF
9. Per contra , the counsel for the plaintiff has drawn attention to the
terms of the invoices raised by the plaintiff on the defendants, wherein it is
provided that the payments were to be made in New Delhi. He further
submits that 29 out of the 436 invoices were in respect of goods to be
delivered at New Delhi. Further, the registered office of the plaintiff is in
New Delhi. Therefore, it cannot be contended that this Court does not have
the territorial jurisdiction to entertain the present suit.
10. On merits, the counsel for the plaintiff places reliance on the various
e-mails and WhatsApp messages exchanged between the parties, wherein
the defendants have not denied the dues owed to the plaintiff. Reliance is
also placed on the TDS deducted on behalf of the defendants on the invoices
raised by the plaintiff to submit that the defendants have acknowledged the
amounts in the invoices and never disputed the same.
A NALYSIS AND F INDINGS
11. I have examined the record of the case and heard the counsels for the
parties.
12. The plaintiff has placed on record copies of the unpaid invoices raised
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by the plaintiff on the defendants from 12 March, 2019 till 29 August,
2019. In this regard, the plaintiff has also filed a statement of account for the
relevant period. The amounts due as per the aforesaid statement of account
total Rs.2,53,02,720/-. The plaintiff has also placed on record the various
Form 26AS showing that TDS has been deducted by the defendants in
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respect of all except for four of the aforesaid invoices. Even though vague
submissions have been made in the leave to defend application that the
invoices have not been served on the defendants or that the said invoices are
forged and fabricated or that the goods transported by the plaintiff were
damaged and/or delayed, the defendants have failed to place on record any
communication wherein they have raised any grievance with regard to
services provided by the plaintiff or disputed the amounts claimed under the
aforesaid invoices. In fact, deduction of TDS by the defendants is a clear
acknowledgment of the amounts payable by them to the plaintiff under the
aforesaid invoices.
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13. In the e-mail dated 24 September, 2019 sent by the plaintiff to the
defendants, the plaintiff has called upon the defendants to pay the total
outstanding amount of Rs.2,53,02,720/-. No response thereto was sent by the
defendants. From the various e-mails/WhatsApp communications received
from the defendants, it is clear that defendants were only seeking time to pay
the outstanding amounts and did not raise any dispute with regard to the
amounts due.
14. In view of the discussion above, it is evident that the defendants do
not have any defence insofar as the amounts claimed in the present suit are
concerned.
15. Next, I shall deal with the issue of territorial jurisdiction of this Court
to entertain the present suit. A reference may be made to the relevant clause
in the invoices, which provides that the payments from the defendants to the
plaintiff were to be made only in New Delhi. The same is set out below:
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“Notes:
…
3. Delivery Order will be issued only against payment of above
charges in Cash or Bank Demand Draft in Favour of TKW
MANAGEMENT SOLUTIONS PVT. LTD. Payable at NEW
DELHI only. ”
16. A perusal of the note above would show that the amounts under the
unpaid invoices were payable in New Delhi and therefore, cause of action in
the present suit has arisen in New Delhi. In any event, in respect of the 29
invoices, the goods were delivered in Delhi and therefore, it cannot be
denied that at least a part of the cause of action has arisen in Delhi. In terms
of Section 20(c) of the CPC, this court would have territorial jurisdiction to
entertain the present suit.
17. I do not agree with the submission of the counsel for the defendants
that since the defendants are situated in Chennai, the plaintiff could not have
instituted the present suit before this Court. The Explanation to Section 20 of
the CPC is only in relation to Section 20(a) and (b), on the aspect of where a
corporation can be said to be carrying on business and does not preclude
jurisdiction of courts where cause of action arises, wholly or in part, as
provided in Clause (c) of Section 20. Conversely, the plaintiff cannot be
compelled to go to the place of residence or business of the corporation and
can file a suit at a place where the cause of action, wholly or in part, arises.
Therefore, the reliance placed by the counsel for the defendants on the
Explanation to Section 20 of the CPC is misplaced.
18. In the present case, the plaintiff has correctly invoked the doctrine of
‘the debtor must seek creditor’. The defendant has not denied the fact that
the registered office of the plaintiff is in New Delhi and the various e-mails
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and WhatsApp communications have also been sent on behalf of the
plaintiff from New Delhi to the defendants, calling upon the defendants to
pay the outstanding amount. Nor is there any dispute over the fact that
payment under the invoices was to be made by the defendants in New Delhi.
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19. In the judgment dated 14 May, 2012 passed in RFA(OS) 64/2007
titled Union Bank of India v. Milkfood Ltd. , a Division Bench of this Court
held that in the absence of any covenant in the agreement settling a place of
payment, the debtor must seek the creditor to pay at the place where the
creditor is located.
20. The aforesaid doctrine has also been invoked in the context of suits
filed under Order XXXVII of the CPC in IUP Jindal Metals & Alloys Ltd.
v. M/s. Conee Chains Pvt. Ltd. , 2013 SCC OnLine Del 1454 and Shradha
Wassan & Ors. v. Anil Goel & Ors. , 2009 SCC OnLine Del 1285 and it has
been observed that where the plaintiff has called upon the defendants to pay
the outstanding amounts from a particular place, it would be the Courts
having jurisdiction over such a place that would be the appropriate forum to
adjudicate the dispute on the basis of the doctrine ‘debtor must seek
creditor’.
21. In Shradha Wassan (supra), a Coordinate Bench of this Court has
observed that while considering an application seeking leave to defend,
where leave is sought solely on the ground of challenge to the territorial
jurisdiction, unless a clear case of ouster of jurisdiction is made out, leave
ought not to be granted on such a plea. Observations of the Court in
paragraph 17 of the judgment are set out below:
“17. Reference in this regard be also made to L.N.Gupta v. Smt.
Tara Mani MANU/DE/0159/1983 : AIR1984Delhi49 where also
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after a review of the entire case law including the judgments of
the other courts it was held that the principle of “Debtor must
seek creditor’ is applicable to India. However, an exception was
carved out with respect to the promissory notes. Another thing
which is relevant is that the plea of territorial jurisdiction in this
case is raised in an application for leave to defend. The criteria
for determining the said plea in an application for leave to
defend would be different from the criteria when such a plea is
raised otherwise. While the ground by challenging the
territorial jurisdiction of the court, unless a clear case of ouster
of jurisdiction is made out, leave ought not to be granted on
such a plea. In the present case on the applicability of the
general doctrine aforesaid, no case for granting leave to defend
is made out. ”
22. The judgment in Shradha Wassan (supra) has been followed by me
in Transasia Private Capital Limited and Another v. Parmanand Agarwal
and Others , 2022 SCC OnLine Del 1185, wherein the application seeking
leave to defend as well as the application seeking rejection of the plaint filed
on behalf of the defendant no.1 therein, solely premised on the ground of
lack of territorial jurisdiction, were dismissed.
23. In the present case, on both counts, one, that the payments were to be
received in New Delhi and second, on the principle of ‘the debtor must seek
the creditor,’ the territorial jurisdiction of this Court is made out.
24. The counsel for the defendants has relied on the case of Dashrath
Rupsingh Rathod (supra) to submit that a corporation can only be sued
where its principal or subordinate office is located. In the present case, the
defendants do not have any office in Delhi. However, the said case was in
the context of Section 142 of the Negotiable Instruments Act, 1881, which
deals with the issue of territorial jurisdiction in the case of dishonour of
cheques. Therefore, the observations made in the said judgment are not
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applicable in the present case.
25. Similarly, in Indian Performing Arts Society (supra), the Supreme
Court was seized of a matter concerning Section 62 of the Copyright Act,
1957 and Section 134 of the Trade Marks Act, 1999, both of which are
distinct statutory provisions dealing with territorial jurisdiction of courts in
the context of copyright and trademark disputes. Therefore, the aforesaid
judgment does not advance the case of the defendants.
26. As regards the application made on behalf of the defendants under
Order VII Rule 11(a) and (d) of the CPC, it is a settled position of law that
while deciding an application under Order VII Rule 11 of the CPC,
reference has to be made only to the plaint and the documents filed along
with the plaint.
27. In view of the clear and categorical averments made in the plaint that
the payments for 436 invoices drawn on the defendants were to be made in
New Delhi and in respect of 29 invoices, the goods were delivered in Delhi,
no case is made out for rejection of the plaint on the ground of territorial
jurisdiction.
28. In IDBI Trusteeship Services Limited v. Hubtown Limited , (2017) 1
SCC 568, the Supreme Court has elucidated the principles on which the
leave to defend has to be granted in summary suits filed under Order
XXXVII of the CPC. Paragraph 17 of the said judgment is reproduced
below:
“17. Accordingly, the principles stated in para 8 of Mechelec
case [Mechelec Engineers & Manufacturers v. 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)
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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 ordinarily entitled 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
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suit, (even if triable issues or a substantial defence is raised),
shall not be granted unless the amount so admitted to be due is
deposited by the defendant in court.”
29. In my considered view, the present case is squarely covered by
paragraph 17.5 of the judgment of the Supreme Court in IDBI Trusteeship
Services Limited (supra). The defendants have failed to raise any triable
defence and also failed to make out a case for the ouster of the jurisdiction
of this Court. The TDS Forms placed on record amount to a clear
acknowledgement on part of the defendants of the amounts owed to the
plaintiff. Therefore, no case for grant of leave to defend is made out and the
suit is liable to be decreed in favour of the plaintiff and against the
defendants.
30. Accordingly, in view of the discussion above, I.A. 12748/2022, being
the application seeking leave to defend under Order XXXVII Rule 3(5) of
the CPC, and I.A. 10658/2022, being the application seeking rejection of the
plaint under Order VII Rule 11 of the CPC, are dismissed.
CS(COMM) 690/2021
31. In light of the applications filed on behalf of the defendants seeking
leave to defend and rejection of the plaint having been dismissed, the
plaintiff has become entitled to a decree forthwith.
32. Consequently, taking into consideration the facts and circumstances
of the present case, the suit is decreed for a sum of Rs.2,53,02,720/-. The
plaintiff shall be entitled to pendente lite and future interest @ 9% per
annum till the date the payment is made. The plaintiff is also awarded costs
of the suit.
33. Decree sheet be drawn up.
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34. Pending applications, if any, stand disposed of.
AMIT BANSAL, J.
JANUARY 31, 2023
mamta
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