Delhi District Court
M/S Capital Plastic House vs M/S Hindstone Industries on 5 April, 2025
BEFORE THE COURT OF SH. SURINDER S. RATHI, DISTRICT JUDGE
(COMM.)-11 CENTRAL, THC, DELHI
CS Comm. No.871/2024
Mohinder Kumar Gandhi
Prop. of M/s Capital Plastic House
Through its AR
having its office at:
3084/1,Chuna Mandi,
Paharganj, New Delhi-110035 .........Plaintiff
Vs.
Rishabh Bansal
Proprietor of M/s Hindstone Industries
2971/3, 1st Floor, Chuna Mandi,
Paharganj, New Delhi-110055
Also At:
1261, Bagichi Ram Chander,
Sangatarashan, Near Sai Baba Mandir,
Paharganj, New Delhi ........Defendant
Date of Institution : 09.08.2024
Date of Final Arguments : 05.04.2025
Date of Judgment : 05.04.2025
Decision : Dismissed
Judgment
1. This suit is filed by plaintiff for recovery of Rs.4.96 lakhs alongwith
interest @12% per annum as balance amount out of advance payment
made qua which no supplies were made.
Case of the Plaintiff
2. Case of the plaintiff as per plaint and the documents filed is that plaintiff
is proprietor of M/s Capital Plastic House at Paharganj, New Delhi and is
in the business of trading of polycarbonate sheets, PVC sheets, sun boards
CS Comm No.871/2024 page 1
Mohinder Kumar Gandhi Vs. Rishabh Bansal
etc. Defendant who is proprietor of M/s Hindstone Industries also at
Paharganj, Delhi approached him for business by offering to sell
polycarbonate sheets to the plaintiff. Considering this offer plaintiff
placed an oral order for supply of polycarbonate sheets and tendered an
advance amount of Rs.4 lakhs by way of bank transfer on 12.05.2021.
However, no goods were supplied by the defendant to the plaintiff up to
05.08.2021. Plaintiff was constrained to issue a letter requesting
cancellation of the order and return of the advance but the letter was
returned back with a remark "addressee left". However, defendant
promised to return the amount on telephonic conversation.
3. When the payments were not returned even thereafter, plaintiff was
constrained to issue legal notice dated 13.03.2023 which was also sent to
the respondent by whatsapp apart from speed post. Although plaint is
silent but it is apprised that the defendant responded through a whatsapp
message contending therein that goods have already been supplied to the
plaintiff against due receipt. It was also contended that Rs. 4 lakhs was
not an advance payment but was received post delivery of the goods as
value of the goods. As such plaintiff was constrained to approach Central
DLSA for Pre-Institution Mediation under Section 12A of Commercial
Courts Act, 2015 where defendant did not participate and Non-Starter
Report dated 02.07.2024 was issued. Although plaint is silent but it is
apprised that the plaint is neither signed nor filed by the plaintiff but is
signed by purported SPA Ranjit Kumar Chaudhary, Senior Marketing
Manager of the plaintiff. In this backdrop, plaintiff has filed this suit for
recovery of Rs.4.96 lakhs which include Rs.96,000/- pre-suit interest for
following reliefs:
CS Comm No.871/2024 page 2
Mohinder Kumar Gandhi Vs. Rishabh Bansal
Prayer:
i. Issue a decree for Rs. 4,96,000/- (Rs. Four Lakh Ninty Six Thousand only) i.e.
(Rs.4,00,000/- as principal amount PLUS Rs.96,000/- as interest @ 12% p.a.) till the
issuance of date of Legal Demand Notice.
ii. Pass a decree of Pendente Lite and future interest @12% per annum.
iii. Award cost of the suit and Counsel Fee;
iv. Pass such other and further orders as this Hon’ble Court may deem fit and proper in
the facts and circumstances of this case.
4. Summons of the suit was served upon the defendant and was served by
way of whatsapp vide order of Ld. Predecessor dated 18.10.2023, on
30.08.2024. Since no WS was filed by the defendant, his right was closed
and he was proceeded ex-parte.
5. However, subsequently defendant was allowed to participate through
application under Order 9 Rule 7 CPC and detailed WS was e-filed and
no hard copy was received in terms of E-Filing Rules of High Court of
Delhi, 2022.
Defendant’s Case
6. Case of the defendant as per WS is that suit of the plaintiff deserves to be
dismissed as it is based on false and bogus averments. It is pleaded that
material facts have been suppressed and the suit is aimed at extorting
money from defendant even though there is no cause of action in favour
of plaintiff. It is contended that defendant had already supplied goods to
the plaintiff in the month of April 2021 vide duly issued GST paid four
invoices. Objection is taken that the plaint is not signed by duly
authorised person.
7. In his reply on merits, it is not denied that plaintiff is carrying on business
of trading of polycarbonate, PVC and sunboard sheets. It is, however,
denied that it was the defendant who approached the plaintiff for sale of
polycarbonate sheets. It is defendant’s case that he used to run the
CS Comm No.871/2024 page 3
Mohinder Kumar Gandhi Vs. Rishabh Bansal
defendant firm M/s Hindstone Industries but had closed the same on
01.12.2021. It is case of the defendant that plaintiff was desirous of
buying goods from the defendant and they had business relations since
2017 whereunder defendant used to make regular sales/supplies to the
plaintiff.
8. It is, however, admitted that plaintiff did give oral order for supply of
polycarbonate sheets to the defendant and a sum of Rs. 4 lakhs was
transferred to the defendant’s bank account on 12.05.2021 but it is added
that it was not an advance payment but was a payment made qua goods
already sold and supplied in April 2021. Qua this defendant had raised
four invoices to the plaintiff which were all GST paid. Defendant has
denied the plea of the plaintiff that no supply was made. It is also denied
that plaintiff issued a letter for refund of the claimed advance. It is denied
that defendant promised to return the money to the plaintiff in a
telephonic conversation.
9. Receipt of legal demand notice is accepted by whatsapp. Although it was
responded to by the defendant but this fact is not mentioned in the WS.
With these pleas dismissal of the suit is prayed.
10. In his affidavit of admission denial, defendant has denied plaintiff’s SPA
and the purported letter of cancellation of order and legal notice, however,
GST registration and the plaintiff’s copy of bank statement showing
transfer of Rs. 4 lakhs to the defendant are admitted.
Replication
11.Separate replication was filed by plaintiff wherein the SPA of the plaintiff
reiterated the pleaded case. It is denied that plaintiff suppressed any
material facts or did not approach the Court with clean hands. It is denied
that the defendant had supplied goods to the plaintiff in the month of April
CS Comm No.871/2024 page 4
Mohinder Kumar Gandhi Vs. Rishabh Bansal
2021 through 4 GST paid invoices. It is claimed that the bills filed by the
defendant are forged and fabricated. The plaintiff has neither admitted nor
denied the defendant’s contention that the parties have business relations
since 2017 and has been regularly carrying out sale and purchase. The
affidavit of admission denial to defendant’s documents is not as per
Order 11 Rule 4 (3) CPC as no reasons have been cited for denying the
GSTR-1 and GSTR-3B of the defendant.
12.Upon completion of pleadings following issues were identified by this
Court on 06.12.2024:
Issues:
i. Whether the plaintiff is entitled to recovery of Rs.4,96,000/- alongwith
interest @12% per annum?OPP
ii. ReliefEvidence
13.Evidence in this case was ordered to be recorded before Ld. LC Sh.
Chitragupt Dagar, Advocate for recording of evidence as per protocol
created by this Court under Order 18 Rule 4 CPC read with Order 15A
Rule 6(l) and (o) CPC as applicable to Commercial suits for the sake of
timely disposal of this case.
14.At the onset it is observed that the plaintiff Mohinder Kumar Gandhi did
not step into the witness box and rather evidence was recorded by the SPA
Baljeet Kumar Chaudhary. Vide Ex.PW1/A he deposed on the lines of
plaint and exhibited following documents:
i. SPA dated 02.08.2024 and SPA dated 16.12.2024 is Ex.PW1/1 (colly.);
ii. Original copy of GST is Ex.PW1/2;
iii. Bank Statement is Ex.PW1/3;
iv. Copy of letter dated 05.08.2021 along with envelope is Ex.PW1/4 (colly.);
v. Copy of legal notice dated 13.03.2023 alongwith returned envelope, whatsapp
messages and certificate under Section 65 of Indian Evidence Act is Ex.PW1/5;
15.No affidavit under Order 11 Rule 6 CPC was exhibited by the plaintiff.
CS Comm No.871/2024 page 5
Mohinder Kumar Gandhi Vs. Rishabh Bansal
16. Plaintiff has exhibited his SPA as Ex.PW1/1. Perusal of the copy of the
SPA available on record shows that it has been created on a rupees 20
stamp paper. However, as per Article 48 of Schedule 1A attached to
Indian Stamp Act, 1899, as applicable to Delhi a power of attorney in
such like matters has to be created on at least Rs.50 stamp paper. For
ready reference the same is reproduced hereunder:
48. POWER-OF-ATTORNEY [as defined by
section 2(21)], not being a PROXY (No. 52),–
(a) when executed for the sole purpose of
procuring the registration of one or more
Twenty rupees
documents in relation to a single transaction
or for admitting execution of one or more
such documents;
(b) when required in suits or proceedings Twenty rupees
under the Presidency Small Cause Courts Act,
1882;
(c) when authorizing one person or more Fifty rupees
to act in a single transaction other than the
case mentioned in clause (a);
(d) when authorizing not more than five Fifty rupees
persons to act jointly and severally in more
than one transaction or generally;
(e) when authorizing more than five but Fifty rupees
not more than ten persons to act jointly and
severally in more than one transaction or
generally;
(f) when given for consideration and The same duty* as a Conveyance (No.
authorizing the attorney to sell any immovable 23) as levied by this Act for the amount of
property; the consideration.
(g) In any other case. Fifty rupees for each person authorised.
N.B.- The term "registration" includes
every operation incidental to registration
under the Indian Registration Act, 1908
* Reduced from 8% to 3% by the Indian Stamp (Delhi Amendment) Act, 2007 (Delhi Act 10 of 2007) (w.e.f.
20-11-2007)
CS Comm No.871/2024 page 6
Mohinder Kumar Gandhi Vs. Rishabh Bansal
17. Section 35 of Indian Stamp Act, 1899 provides that any instrument
which is not duly stamped is inadmissible in evidence. For ready
reference the same is reproduced hereunder:
Section 35: Instruments not duly stamped inadmissible in evidence,
etc. —
No instrument chargeable with duty shall be admitted in evidence for any purpose by any
person having by law or consent of parties authority to receive evidence, or shall be acted
upon, registered or authenticated by any such person or by any public officer, unless such
instrument is duly stamped
Provided that–
(a) any such instrument [shall] be admitted in evidence on payment of the duty with
which the same is chargeable, or, in the case of any instrument insufficiently stamped,
of the amount required to make up such duty, together with a penalty of five rupees, or,
when ten times the amount of the proper duty or deficient portion thereof exceeds five
rupees, of a sum equal to ten times such duty or portion;
(b) where any person from whom a stamped receipt could have been demanded, has given
an unstamped receipt and such receipt, if stamped, would be admissible in evidence
against him, then such receipt shall be admitted in evidence against him on payment of
a penalty of one rupee by the person tendering it;
(c) Where a contract or agreement of any kind is effected by correspondence consisting of
two or more letters and any one of the letters bears the proper stamp, the contract or
agreement shall be deemed to be duly stamped;
(d) nothing herein contained shall prevent the admission of any instrument in evidence in
proceeding in a Criminal Court, other than a proceeding under Chapter XII or
Chapter XXXVI of the Code of Criminal Procedure 1898 (V of 1898);
(e) nothing herein contained shall prevent the admission of any instrument in any Court
when such instrument has been executed by or on behalf of the Government, or where
it bears the certificate of the Collector as provided by section 32 or any other
provision of this Act.
18. Admittedly, Ld. Counsel for defendant did not object to exhibition and
admission of this SPA during the course of evidence for it being
understamped and Section 36 can come into play. However, this Court is
desirous of invoking Section 61 of Indian Evidence Act. For ready
reference the same is reproduced hereunder:
Section 36. Admission of instrument where not to be questioned. —
Where an instrument has been admitted in evidence, such admission shall not, except as
provided in section 61, be called in question at any stage of the same suit or proceeding on
the ground that the instrument has not been duly stamped.
Section 61. Revision of certain decisions of Courts regarding the
sufficiency of stamps. —
CS Comm No.871/2024 page 7
Mohinder Kumar Gandhi Vs. Rishabh Bansal
(1) When any Court in the exercise of its civil or revenue jurisdiction or any Criminal
Court in any proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal
Procedure, 1898 (V of 1898), makes any order admitting any instrument in evidence as
duly stamped or as not requiring a stamp, or upon payment of duty and a penalty under
section 35, the Court to which appeals lie form, or references are made by, such first-
mentioned Court may, of its own motion or on the application of the Collector, take such
order into consideration.
(2) If such Court, after such consideration, is of opinion that such instrument should
not have been admitted in evidence without the payment of duty and penalty under
section 35, or without the payment of a higher duty and penalty than those paid, it
may record a declaration to that effect, and determine the amount of duty with which
such instrument is chargeable, and may require any person in whose possession or
power such instrument then is, to produce the same, and may impound the same when
produced.
(3) When any declaration has been recorded under sub-section (2), the Court recording
the same shall send a copy thereof to the Collector, and, where the instrument to
which it relates has been impounded or is otherwise in the possession of such Court,
shall also send him such instrument.
(4) The Collector may thereupon, notwithstanding anything contained in the order
admitting such instrument in evidence, or in any certificate granted under section 42,
or in section 43, prosecute any person for any offence against the Stamp-law which
the Collector considers him to have committed in respect of such instrument:
Provided that. —
a. no such prosecution shall be instituted where the amount (including duty and
penalty) which, according to the determination of such Court, was payable in
respect of the instrument under section 35, is paid to the Collector, unless he
thinks that the offence was committed with an intention of evading payment of
the proper duty;
b. except for the purposes of such prosecution, no declaration made under this
section shall affect the validity of any order admitting any instrument in
evidence, or of any certificate granted under section 42.
(Emphasis Supplied)
19. This Court is desirous of invoking Section 61 of the Stamp Act for the
purpose of impounding the document filed by invocation of power under
Section 38 r/w Section 40 of Indian Stamp Act. As such in the suit in
hand there is a deficiency of Rs.300/- in stamp duty.
20.As per this witness M/s Capital Plastic and another firm M/s Perfect
Plastic are owned by father and son duo. Plaintiff claims that he met
defendant Rishabh Bansal for the first time in 2021. He denied if any
business happened between the parties to this suit prior to 2021 and
CS Comm No.871/2024 page 8
Mohinder Kumar Gandhi Vs. Rishabh Bansal
reiterated that the transaction of Rs.4 lakh in question was the first one
between the parties. He denied the suggestion that they have business
relations since 2017. He added that the work order was placed
telephonically on 7th and 8th May of 2021 by plaintiff’s proprietor but this
date is not mentioned in the plaint. He was confroned with document
Ex.PW1/D1 and Ex.PW1/D2 i.e. supporting affidavit and affidavit of
statement of truth filed by the witness in another suit titled Perfect Plastic
Vs. Pioneer Polyplast. Upon perusing this document witness accepted that
he is AR of M/s Perfect Plastic as well. He denied that he made a false
statement earlier in the cross-examination by claiming that he got
confused in this regard.
21.The witness was also confronted with defendant’s bank statement
Ex.PW1/D3 so as to show that there have been several transactions
between platniff’s firm M/s Capital Plastic and defendant’s firm M/s
Hindstone Industries. Witness answered that he has no knowledge
because he joined the company in 2021. In the light of this evasive reply
by the SPA, the duty of the plaintiff to step into the witness box became
more pertinent and important but he refrained from doing so.
22.Defendant had confronted PW1 with another document Ex.PW1/D4 i.e.
defendant’s ledger for the period 05.03.2018 to 12.05.2021 to which the
witness answered that he has no knowledge. It is observed that the
plaitniff has not placed any ledger on record either with the plaint or the
replication or even thereafter to explain or refute the existence of financial
transactions between the plaintiff and defendant between July 2020
onwards till May 2021.
23.Upon being asked to explain a plea in the plaint that defendant had
assured to return the claimed advance payment of Rs. 4 lakhs at the
earlier, PW1 simply replied that this conversation happened between the
CS Comm No.871/2024 page 9
Mohinder Kumar Gandhi Vs. Rishabh Bansal
defendant and plaintiff’s proprietor and he is not aware of the same. He
stated that the plaintiff maintains books of account qua transactions with
the defendant and has filed the ledger alongwith the plaint, however, this
is a false statement since admittedly no ledger was filed with the plaint.
He accepted as correct that he is not aware of any fact qua the business
relations of plaintiff and defendant except the claimed transaction of Rs. 4
lakhs.
24.Defendant has examined himself as DW1 Rishabh Bansal. Vide affidavit
Ex.DW1/A he deposed on the lines of WS and exhibited following
documents:
i. Copy of GSTIN/UIN status of Defendant Firm, is Ex.DW1/1.
ii. Copy of invoices, recipient records, GSTR-1 form and GSTR-3B form, is Ex.DW1/2
(colly.).
25.In his crossexamination carried out by Ld. Counsel for plaintiff Sh. K K
Singh he stated that he was in the business of sale of acrylic and
polycarbonate sheets as his father was also in the same trade and his
father was running a manufacturing unit in Sonipat, Haryana. He accepted
the suggestion that the four invoices filed by him as Ex.DW1/2 does not
have any endorsement of receipt and on two invoices mode of sending of
the goods is also not mentioned. The witness added that the goods werre
supplied on trust basis and no endorsement or receipt was asked. They
were not maintaining stock or sale register over and above the ledger.
26. I have heard arguments of Sh. K K Singh and Sh. Sanjay Kumar, Ld
counsels for plaintiff and Sh. Abhishek Gupta, Ld. Counsel for
defendant. I have perused the case file carefully.
27.Now I shall dispose of individual issues framed in this case.
Issue No.1:
i. Whether the plaintiff is entitled to recovery of Rs.4,96,000/- alongwith
interest @12% per annum?OPPCS Comm No.871/2024 page 10
Mohinder Kumar Gandhi Vs. Rishabh Bansal
28.At the onset it would be appropriate to cull out admitted facts. It is
admitted case of the parties that Mohinder Kumar Gandhi is proprietor of
M/s Capital Plastic and defendant Rishabh Bansal was running a
proprietorship firm as M/s Hindstone Industries at Paharganj. Admittedly,
a sum of Rs. 4 lakhs was transferred via bank by plaintiff to the defendant
on 12.05.2021.
29.While plaintiff’s case is that the above payment was made as advance for
purchase of polycarbonate sheets but no supply was made whereas
according to defendant this payment was made in discharge of already
supplied goods in April 2021 vide 4 invoices. Defendant has maintained
that plaintiff has not approached this Court with clean hands.
30. During the course of arguments Ld. Counsel for plaintiff accepted that the
plaintiff did have business relations with defendant since 2017 but nothing
has been put forth to justify as to why this fact has been denied in the
replication. The defendant’s bank statement Ex.PW1/D4 cateogrically
shows several payments made by the plaintiff to the defendant qua goods
supplied earlier. Evidently, the plaint is marred by concealment of
material facts and failure of plaintiff to step into the witness box which is
mandated by Hon’ble Supreme Court in case titled Janki Vashdeo
Bhojwani and Anr. Vs. Indusind Bank Ltd. and ors., 2004 Latest
Caselaw 697 SC the power to depose in a particular case qua particular
facts cannot be delegated by Attorner to the Attorney. The relevant paras
are reproduced as under:
“This Court in the case of Vidhyadhar vs. Manikrao and Another, (1999) 3
SCC 573 observed at page 583 SCC that “where a party to the suit does not
appear in the witness-box and states his own case on oath and does not offer
himself to be cross-examined by the other side, a presumption would arise that
the case set up by him is not correct”.
On the question of power of attorney, the High Courts have of Rajasthan, 1986
2WLL 713 it was held that a general power of attorney holder can appear, plead
and act on behalf of the party but he cannot become a witness on behalf of the
party. He can only appear in his own capacity. No one can delegate the power
to appear in witness box on behalf of himself. To appear in a witness box is
CS Comm No.871/2024 page 11
Mohinder Kumar Gandhi Vs. Rishabh Bansal
altogether a different act. A general power of attorney holder cannot be allowed
to appear as a witness on behalf of the plaintiff in the capacity of the plaintiff.
The aforesaid judgment was quoted with the approval in the was held that the
word “acts” used in Rule 2 of Order III of the CPC does not include the act of
power of attorney holder to appear as a witness on behalf of a party. Power of
attorney holder of a party can appear only as a witness in his personal capacity
and whatever knowledge he has about the case he can state on oath but be
cannot appear as a witness on behalf of the party in the capacity of that party. If
the plaintiff is unable to appear in the court, a commission for recording his
evidence may be issued under the relevant provisions of the CPC.
Dias reported in 2000 Vol.102 (1) Bom.L.R.908, the Goa Bench of the Bombay
High Court held that a power of attorney can file a complaint under Section 138
but cannot depose on behalf of the complainant. He can only appear as a
witness.
Armando Luis & Anr. reported in 2002 (2) Bom.C.R.754 on which the reliance
has been placed by the Tribunal in the present case, the High Court took a
dissenting view and held that the provisions contained in order III Rule 2 of CPC
cannot be construed to disentitle the power of attorney holder to depose on
behalf of his principal.
The High Court further held that the word “act” appearing in order III Rule 2 of
CPC takes within its sweep “depose”. We are unable to agree with this view
taken by the Bombay High Court in Floriano Armando (supra).
We hold that the view taken by the Rajasthan High Court in the case of Shambhu
Dutt Shastri (supra) followed and reiterated in the case of Ram Prasad (supra) is
the correct view. The view taken in the case of Floriano Armando Luis (supra)
cannot be said to have laid down a correct law and is accordingly overruled.”
31.Although plaintiff claims that he was Senior Marketing Manager of the
plaintiff but the fact that he joined the services of the plaintiff since 2021
and had absolutely have no clue about any fact prior to 2021 goes on to
show that it was duty of the plaintiff to personally step into the witness
box. PW1 SPA also could not explain as to how Rs.4 lakhs was paid as
advance for a particular order or that defendant had assured to return the
same as per his cross-examination the said telephonic conversation
happened between defendant and Sh. Mohinder Kumar Gandhi.
32.Affidavit of statement of truth in para 5 mandates that neither of the sides
are supposed to conceal material facts and documents from the Court. For
ready reference the same is reproduced hereunder:
5. I say that all documents in my power, possession, control or custody,
pertaining to the facts and circumstances of the proceedings initiated by me
have been disclosed and copies thereof annexed with the plaint, and that I do
not have any other documents in my power, possession, control and custody.
(Emphasis Supplied)
CS Comm No.871/2024 page 12
Mohinder Kumar Gandhi Vs. Rishabh Bansal
33. As discussed supra not only the plaintiff approached the Court with
unclean hands by concealing previous transactions of sales by defendant
to the plaintiff but also concealed the ledger from the court. In this regard
presumption is liable to be drawn under Section 119 of Bhartiya
Sakshya Adhiniyam, 2023 (Section 114 (g) of Indian Evidence Act).
For ready reference the same is reproduced hereunder:
Section 119 of Bhartiya Sakshya Adhiniyam, 2023: Court may
presume existence of certain factsIllustration
The Court may presume-
(g) That evidence which could be and is not produced would, if produced, be unfavourable to
the person who withholds it;
34. The law is well settled with regard to concealment of material facts and
clever drafting. In case titled Krishan Dayal Vs. Chandu Ram, 1969
SCC Latest Caselaw 133 Del while discussing the effect of withholding
of material documents like account book it was observed that:
“Question then arises as to what is the effect of the withholding of material account
books. In this respect I find that according to illustration (g) under Section 114 of the
Evidence Act, the evidence which could be and is not produced would, if produced, be
unfavorable to the person who withholds it. The principle underlying the above
illustration has been applied by their Lordships of the Supreme Court in cases
wherein a party in possession of material document does not produce the same. It has
accordingly been held that the non-production of a material document by a party to
a case would make the Court draw an inference against that party.
A Division Bench of the Calcutta High Court (Mookerjee and Panton, JJ.) in the
case of Debendra Narayan Singh v. Narendra Narayan Singh and others held:- “In
a suit for accounts, the non-production of account books by the party who has
custody of them justifies the presumption under Section 114(g). Evidence Act, that
they have been withheld, because if produced, they would have been unfavorable to
his case. If he is the plaintiff and is claiming accounts though withholding papers, his
suit is liable to be dismissed.
(Emphasis Supplied)
35. In case titled Union of India Vs. Mahadeolal Prabhudayal, 1965 Latest
Caselaw 43 SC Hon’ble Supreme Court while discussing judgments
passed by Privy Counsel ruled that:
CS Comm No.871/2024 page 13
Mohinder Kumar Gandhi Vs. Rishabh Bansal
“If it is found that a party to a suit breaches its application to give full disclosure of
relevant facts and materials, the Court shall invoke the presumption attached to
Section 114(g) of the Evidence Act.”
36. It is a settled legal proposition that any person who seeks equity must do
equity first. Hon’ble Supreme Court has ruled that Court should be at
guard against litigants engaged in clever drafting and creating illusions of
cause of action by suppressing the material facts and camouflaging the
pleadings. In case titled ITC Ltd. Vs. Debt Recovery Appellate
Tribunal, 1997 Latest Caselaw 869 SC Hon’ble Apex Court held,
“Law cannot permit clever drafting which creates illusions of a cause of action.
What is required is that a clear right must be made out in the plaint. If however, by
clever drafting of the plaint, it has created the illusion of a cause of action, it should
be nipped in the bud, so that bogus litigation will end at the earliest state. The Court
must be vigilant against any camouflage or suppression, and determine whether the
litigation is utterly vexatious, and an abuse of the process of the Court.”
(Emphasis Supplied)
37. In case titled C.B. Aggarwal Vs. P. Krishna Kapoor, 1994 Latest
Caselaw 764 Del Hon’ble Delhi High Court observed:
“It is true that in a civilised society, legal process is the machinery for keeping
order and doing justice. It can be used properly or it can be abused. It is used
properly when it is invoked for vindication for men’s right and enforcement of just
claims. It is abused when it is diverted from its true course so as to serve extortion
or oppression; or to exert pressure so as to achieve an improper end.”
In case titled Curtis-Raleighquoted in Jennison v. Baker (1972) 1 All ER 997 at p.
1006. it is said “The law should not be seen to sit by limply, while those who defy
it go free, and those who seek its protection lose hope”.
38. In Kishore Samrite Vs. The State of UP, 2012 Latest Caselaw 606 SC,
Hon’ble Supreme Court expounded that:
“As and when the Courts found that a litigating party is abusing the Court process
and had approached the Court with unclean hands without disclosing complete
facts, they shall be burdened with exemplary and deterrent cost. In the cited case
while observing that the petitioner have misused the judicial process, a cost of Rs.5
lacs was imposed.”
39. In case titled S.P. Chengalvaraya Naidu (Dead) by LRs Vs. Jaganath
(Dead) LRs and ors. 1993, Latest Caselaw 451 SC, Hon’ble Supreme
Court observed :
“The Courts of Law are meant for imparting justice between the parties. One who
comes to the court , must come with clean hands. We are constrained to say thatCS Comm No.871/2024 page 14
Mohinder Kumar Gandhi Vs. Rishabh Bansal
more often then not, process of the court is being abused. Property – grabbers tax-
evaders, bank-loan-dodgers and other unscrupulous persons from all walks of life
find the court process a convenient level to retain the illegal gains indefinitely. We
have no hesitation that a person whose case is based on falsehood has no right to
approach the court. He can be summarily thrown out at any stage of litigation.”
40. In case titled Goyal MG Gases Pvt. Ltd. Vs. AIR Liquide Deutschland
th Gmbh & Ors., 2006 Latest Caselaw 1866 Del Hon’ble Delhi High
Court held that:
“Vexatious and frivolous litigation poses a number of threats to the efficient
operation of any civil justice system. Those threats stem from the manner in which
the vexatious and frivolous litigant conducts litigation before the courts. Such
proceedings, apart, from the oppression and the harassment inflicted on the
adversary, are extremely damaging to public interest. Judicial resources are
valuable and scarce. The resources of the court are not infinite, especially in
terms of judicial time. Therefore, administration of justice and interests of equity
and fair play mandate that a party which succeeds is compensated by award of
costs in respect of false or vexatious claims or defences. A faulting party may be
required to pay to the other party such costs as would, in the opinion of the
court, be reasonably sufficient to reimburse the other party in respect of the
expenses incurred by him in attending the court on that date and payment of such
costs on the next date following the date of such order if unreasonable
adjournments are taken by the parties.
However, many unscrupulous parties take advantage of the fact that either costs
are not awarded or nominal costs alone are awarded against the unsuccessful
party.
The legislature has recognised the need for imposition of costs and consequently,
so far as the civil proceedings are concerned, has enacted Section 35 of the Code
of Civil Procedure which provides for imposition of costs. The Apex Court was
concerned with the manner in which the costs are imposed resulting in undue
advantage being taken by parties of the fact that notional costs are awarded
which do not deter or discourage persons from filing vexatious or frivolous
claims or defences. ……………. The courts have recognised the inherent power of
the court to award costs in the interest of justice. ……………………………… In this
background, there is yet another more imperative reason which necessitates
imposition of costs. The resources of the court which includes precious judicial
time are scarce and already badly stretched. Valuable court time which is required
to be engaged in adjudication of serious judicial action, is expended on frivolous
and vexatious litigation which is misconceived and is an abuse of the process of
law. A judicial system has barely sufficient resources to afford justice without
unreasonable delay to those having genuine grievances. Therefore, increasingly,
the courts have held that such totally unjustified use of judicial time has to be
curbed and the party so wasting precious judicial resources, must be required to
compensate.”
41. In Jagmal Singh Vs. Delhi Transport Corporation, 1995 Latest
Caselaw 572 Del, Delhi High Court observed thus:-
“We are firmly of the view that petitioner has resorted to the dilatory tactics
CS Comm No.871/2024 page 15
Mohinder Kumar Gandhi Vs. Rishabh Bansal
hereby crippling the progress of the departmental enquiry pending against him
for the last about eight long years. It is not only unfortunate but matter of
concern to all of us being the members of the society, that the petitioner by
indulging in this type of frivolous litigation has not only wasted his time and
money but has also wasted the time of the court and other public functionaries
thereby causing unnecessary drain on the resources of public exchequer whose
coffers are filled in by poor people’s money. In such a case with a view to
discourage frivolous litigation, it becomes our duty not only to see that the
petitioner is saddled with exemplary costs but also to ensure that he gets no
benefit on account of the delay caused by him in the departmental enquiry
pending against him.”
42. In Vinod Seth Vs. Devinder Bajaj, 2010 Latest Caselaw 435 SC it was
ruled that the provision for costs is intended to achieve the following
goals:
“It should act as a deterrent to vexatious, frivolous and speculative litigations
or defenses. The specter of being made liable to pay actual costs should be such,
as to make every litigant think twice before putting forth a vexatious, frivolous or
speculative claim or defense.
Costs should ensure that the provisions of the Code, Evidence Act and
other laws governing procedure are scrupulously and strictly complied with and
that parties do not adopt delaying tactics or mislead the Court.
Costs should provide adequate indemnity to the successful litigant to
adopt alternative dispute resolution processes and arrive at a settlement before
the trial commences in most of the cases. In many other jurisdictions, in view of
the existence of appropriate and adequate provisions for costs, the litigants are
persuaded to settle nearly 90% of the civil suits before they come up to trial.
The provisions relating to costs should not, however, obstruct access to
courts and justice. Under no circumstances, the costs should be a deterrent, to a
citizen with a genuine or bonafide claim, or to any person belonging to the
weaker sections whose rights have been affected, from approaching the courts.
At present these goals are sought to be achieved mainly by Section 35, 35A and
35B read with the relevant civil rules of practice relating to taxing of costs.
That Section 35B CPC providing for costs for causing delay is seldom
invoked and that it should be regularly employed to reduce delay.
43. A classic case where Hon’ble Supreme Court, in an extremely well-
articulated Judgment dwelled on the need for curbing unscrupulous
litigation is Ramrameshwari Devi & Ors. Vs. Nirmala Devi & Ors.,
2011 Latest Caselaw 444 SC where it was inter-alia observed as under:
34. “According to Dr. Mohan, in our legal system, uncalled for litigation
gets encouragement because our courts do not impose realistic costs.
The parties raise unwarranted claims and defences and also adopt
obstructionist and delaying tactics because the courts do not impose
actual or realistic costs. Ordinarily, the successful party usually remains
uncompensated in our courts and that operates as the main motivating
factor for unscrupulous litigants. Unless the courts, by appropriate orders
or directions remove the cause for motivation or the incentives, uncalled
CS Comm No.871/2024 page 16
Mohinder Kumar Gandhi Vs. Rishabh Bansal
for litigation will continue to accrue, and there will be expansion and
obstruction of the litigation. Court time and resources will be consumed
and justice will be both delayed and denied……..
45.We are clearly of the view that unless we ensure that wrong- doers are
denied profit or undue benefit from the frivolous litigation, it would be
difficult to control frivolous and uncalled for litigations. In order to curb
uncalled for and frivolous litigation, the Courts have to ensure that there
is no incentive or motive for uncalled for litigation. It is a matter of
common experience that Courts otherwise scarce and valuable time is
consumed or more appropriately wasted in a large number of uncalled
for cases.
54. While imposing costs we have to take into consideration pragmatic
realities and be realistic what the defendants or the respondents had to
actually incur in contesting the litigation before different courts. We have
to also broadly take into consideration the prevalent fee structure of the
lawyers and other miscellaneous expenses which have to be incurred
towards drafting and filing of the counter affidavit, miscellaneous charges
towards typing, photocopying, court fee etc.
55. The other factor which should not be forgotten while imposing costs is
for how long the defendants or respondents were compelled to contest and
defend the litigation in various courts. The appellants in the instant case
have harassed the respondents to the hilt for four decades in a totally
frivolous and dishonest litigation in various courts. The appellants have
also wasted judicial time of the various courts for the last 40 years.
56. These appeals are consequently dismissed with costs, which we
quantify as Rs.2,00,000/-. We are imposing the costs not out of anguish
but by following the fundamental principle that wrongdoers should not
get benefit out of frivolous litigation.
Though the Court has expressed that it is imposing cost not out of
anguish, yet the observations as highlighted above clearly portray the
miserable state of affairs and courts distress on the situation of
mounting frivolous litigations.
44.I do not find any strength in the plea of Ld. Counsel for plaintiff that
defendant has failed to show delivery of goods to the plaintiff qua claimed
four invoices in the month of April 2021. Once the plaintiff is found to
approach the Court with unclean hands, he is not entitled to any relief.
Plaintiff has failed to discharge primary onus under Section 104 of
Bhartiya Sakshya Adhiniyam, 2023 (Section 101 of Indian Evidence
Act, 1872). This issue is accordingly answered against the plaintiff
and in favour of defendant.
CS Comm No.871/2024 page 17
Mohinder Kumar Gandhi Vs. Rishabh Bansal
Relief
45.In view of the above discussion, this Court has no hesitation in concluding
that plaintiff company has miserably failed to discharge the onus of
proving this case and suit of the plaintiff is accordingly dismissed with
cost. Defendant’s lawyer’ fees is assessed as Rs.50,000/-.
46.Decree Sheet be prepared accordingly. File be consigned to Record Room
after due compliance.
Digitally
signed by
SURINDER
SURINDER S RATHI
S RATHI Date:
2025.04.09
15:22:57
+0530(SURINDER S. RATHI)
District Judge,
Commercial Court -11
Central District, THC
Delhi/05.04.2025CS Comm No.871/2024 page 18
Mohinder Kumar Gandhi Vs. Rishabh Bansal
[ad_1]
Source link