Full Order Text
Final Order 2 · 20 Jan 2024 · CNR MHCC010114802019
Order Details: Copy of Judgment Pdf Text: CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 1 of 15 MHCC010114802019 Suit Filed on : 08.11.2019 Arguments Heard : 11.10.2023 & 09.01.2024 Decided on : 20.01.2024 Duration : 04 Y, 02 M, 12 Days City Civil & Sessions Court, Mazgaon, Greater Mumbai Court Room No. 31 – Commercial Court (Additional District Judge : Vijay S. Hingne, LL. M.) Commercial Suit No. 100030 / 2020 Exhibit No. 28 Plaintiff : Ramchand Atmaram Nagpal Karta and Manager of, Atmaram Kherajmal H.U.F. 405-A Neelkanth, 98, Marine Drive, Mumbai 400 002 VERSUS Defendants 1 Reena Tinaaz Pvt. Ltd. A / 601-604, Dynasty Business Park 151, Andheri Kurla Road, Near J. B. Nagar Metro Station, Opp Sangam Cinema, Andheri (East), Mumbai 400 059 2 Mr. Uday Kantilal Desai, Flat No. 2, Neelam Nagar, Building No. 11A Phase 1, A. V. B. Phadke Road, Mulund (E), Mumbai 400 081 3 Mr. Sailesh B Panchal B-301, Sai Aashish CHS Ltd. Village Road, Opp Santoshi Mata Mandir, Bhandup (West), Mumbai 400 078. Appearances Plaintiff : Adv. Ms. Rekha Shukla Adv. Ms. Yojana Gandhi Defendants : Adv. Shri Omkar Kakad Suit for Recovery of ₹. 17,62,603/- ************************************************************************ -- 1 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 2 of 15 J U D G M E N T (Delivered on this 20th Day of January, 2024) Suit is preferred for recovery of . ₹ 17,62,603/- with interest @ 18 % per annum. Case of Plaintiff : 2) Ramchand Atmaram Nagpal, is Karta and Manager of Atmaram Kherajmal HUF (hereinafter, plaintiff). Defendant No. 1 Reena Tinaaz Pvt. Ltd., is Private Limited Company. Defendant No. 2 Uday Kantilal Desai and defendant No. 3 Sailesh B Panchal are its Directors (hereinafter, defendants / D1 / D2 / D3). 3) Defendants requested funds of .24,00,000/- to ₹ plaintiff. Hence, vide Cheque No. 000108 Dt. 15.03.2018, plaintiff paid said amount to D1. On 15.03.2018 itself, D1 drew Demand Bill of Exchange on D2 & D3 for .24,00,000/-. ₹ Defendants also paid its interest till 09.11.2018 through Cheques. 4) As per agreed repayment schedule, defendants issued 8 Cheques of . 3,00,000/- each. From it, only 3 Cheques got ₹ encashed while 5 were dishonoured. Thus, plaintiff received . ₹ 9,00,000/- while . 15,00,000/- is balance. ₹ 5) When plaintiff presented Bill of Exchange of .15,00,000/-, D2 & D3 sought time. Subsequently, D1 issued ₹ Cheque No. 222099, Dt. 19.11.2018 for . 15,00,000/- towards ₹ repayment of balance amount. However, said Cheque was dishonoured with bank endorsement as, Exceeds Arrangement. 6) On 08.02.2019, plaintiff issued Notice seeking repayment and then subjected the dispute for Pre-Institution Mediation where defendants appeared, but did not proceeded. Hence, plaintiff preferred Commercial Suit No. 100030 / 2020, for recovery of .17,62,603/- with interest @ 18 % p. a. ₹ -- 2 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 3 of 15 Case of defendants (Written Statement, Exh.8, Dt. 01.10.2021) : 7) Defendants opposed Suit and prayed for its dismissal with compensatory costs, on following grounds : 1. Defendants have never obtained any loan and had never made any repayment. 2. Suit is not maintainable before Commercial Courts. 3. Suit is bad for misjoinder of D2 & D3. 4. Plaintiff has also preferred Complaint U / Sec. 138 of NI Act. It is pending before Learned MM, Esplanade Court, Mumbai. Plaintiff cannot opt for simultenous two proceedings. Evidence of Plaintiff : 8) Plaintiff adduced oral and documentary evidence as : PW1, Exh.13 : Evidence of Dilipkumar Atmaram Nagpal Exh. 15 : Photocopy of Power of Attorney Dt. 27.03.2018 Exh. 16 : Original Bill of Exchange Dt. 15.03.2018 executed by Reena Tinaaz Pvt. Ltd. in favour of Atmaram Kherajmal HUF for . 24,00,000/-. ₹ Exh. 17 : Original letter Dt. 15.03.2018 issued by defendants showing repayment schedule. Exh. 18 : Bank Statement of plaintiff of debit and credit. Exh. 19 : Certified copies of Dishonoured Cheque No. 222099, Dt. 19.11.2018 for . 15,00,000/- and its ₹ Bank Dishonour Memo. Exh. 20 : Statutory Notice Dt. 08.02.2019 by plaintiff seeking repayment from defendant. (with postal receipt and acknowledgment). Exh. 21 : Evidence closure pursis Dt. 07.02.2023. Perusal shows that, on 17.11.2022, plaintiff filed evidence affidavit of Dilipkumar Nagpal (Exh. 13) and exhibited his documents on 09.01.2023. Roznama Dt. 09.01.2023 shows that, on that day, defendants were absent. Hence, my Learned Predecessor passed Order of no cross-examination. On 07.02.2023, plaintiff closed his evidence (Exh. 21). Accordingly, Suit got adjourned for evidence of defendant. -- 3 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 4 of 15 Evidence of defendants : 9) Defendant adduced oral and documentary evidence as : DW1, Exh.25 : Evidence Affidavit of defendant No. 2 Uday Kantilal Desai. Exhibit A : Notarized Copy of Order Dt. 16.12.2022 from Commercial Suit No. 41 / 2020, Ramchand Nagpal Vs. Reena Tinaaz Perusal shows that, on 14.06.2023, defendants filed evidence affidavit of D2-Uday (Exh. 25). On next dates i.e. on 03.07.2023, 04.08.2023 and 02.09.2023, defendants’ witness did not appeared before the Court for examination and cross-examination. Hence, vide Roznama Order Dt. 02.09.2023, evidence of defendants was closed. Defendants filed Written Argument on 11.10.2023 at Exh. 27 in Commercial Suit No. 100030 / 2020. Points for determination : 10) Heard Adv. Ms. Yojana Gandhi with Adv. Ms. Rekha Shukla for plaintiff and Adv. Shri Omkar Kakad for defendants. Perused Record. Points for determination, findings and reasons are as follows : Issues Findings 1. Whether plaintiff proves that an amount of . 17,62,603/- is ₹ outstanding from defendants?...... Partly in Affirmative 2 Whether plaintiff prove that in view of bill of exchange dated 15.03.2018, the defendant have failed to repay the balance amount to the plaintiff?................ Partly in Affirmative 3 Whether suit is maintainable?...... In the Negative. 4 Whether plaintiff has locus standi to file suit against defendants?..... In the Negative. 5 Whether suit is bad on the ground of misjoinder of parties?............... In the Negative. 6 Whether this Court has jurisdiction to try and entertain -- 4 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 5 of 15 the suit?........................................ In the Negative 7 Whether the plaintiff proves that cause of action arose against the defendant within jurisdiction of this Court?.................................... In the Negative. 8 Whether plaintiff is entitled to recover amount of . 17,62,603/- ₹ from defendants? If yes, at what rate of interest?............................. In the Negative. 9 What Order and Decree?.............. As per final order. R E A S O N S Two Suits : Commercial Suit No. 100030 / 2020 : 11) Perusal shows that, Ramchand Atmaram Nagpal, the Karta and Manager of Atmaram Kherajmal HUF, has preferred Commercial Suit No. 100030 / 2020, for recovery of .17,62,603/- against above defendants. ₹ Commercial Suit No. 100031 / 2020 : 12) Janesha Dilipkumar Nagpal, through Power of Attorney Holder Dilipkumar Nagpal, has preferred Commercial Suit No. 100031 / 2020, for recovery of .5,87,534/- against above ₹ defendants. 13) In both Suits, pleadings and evidence of plaintiff as well as defendant is identical. It is tabled as follows : Suit No. 100030 / 2020 100031 / 2020 Plaintiff Ramchand Atmaram Nagpal Janesha Dilipkumar Nagpal Status of Plaintiff Karta and Manager of Atmaram Kherajmal HUF Through POA Defendants 1. Reena Tinaaz Pvt. Ltd. 2. Uday Kantilal Desai 3. Sailesh B Panchal Status of defendants Defendant No. 2 and No. 3 are Directors of defendants No. 1 Registered Company. Funds demanded . 24,00,000/- ₹ . 8,00,000/- ₹ -- 5 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 6 of 15 Amount paid . ₹ 24,00,000/- . 8,00,000/- ₹ Payment date 15.03.2018 15.03.2018 Payment mode Cheque No : 000108 Dt. : 15.03.2018 Cheque No : 000100 Dt. : 15.03.2018 Name on Cheque Reena Tinaaz Pvt. Ltd. Bill of Exchange 15.03.2018 Defendant paid interest upto 09.11.2018, by Cheques Cheques by defendants 8 8 Each Cheque . ₹ 3,00,000/- . ₹ 1,00,000/- Total cheque vlaue . ₹ 24,00,000/- . ₹ 8,00,000/- Cheques cleared 3 3 Amount received . 9,00,000 ₹ . ₹ 3,00,000/- Amount balance . 15,00,000 ₹ . ₹ 5,00,000/- New Cheque by defendant Dt. : 19.11.2018 No. : 222099 . 15,00,000/- ₹ Dt. : 19.11.2018 No. : 222096 . 5,00,000/- ₹ Dishonoured reason Exceeds Arrangement Legal Notice 08.02.2019 08.02.2019 Suit Filed 08.09.2019 08.09.2019 Claim . ₹ 17,62,603/- + 18 % interest . 5,87,534/- ₹ + 18 % interest PW1 Dilipkumar Atmaram Nagpal DW1 D2 – Uday Kantilal Desai 14) Peculiar facts of both Suits are that, plaintiff filed his evidence-affidavit and was ready for cross-examination. But, defendants did not conducted his cross-examination. Throughout trial, defendants did not gave any explanation for not conducting such cross-examination. Thereby, defendants kept evidence of plaintiff unchallenged. 15) Similarly, in both Suits, defendant filed his evidence- affidavit, but he did not affirmed it and did not subjected himself for cross-examination at the hands of plaintiff. Hence, said evidence-affidavit of defendant looses its importance. -- 6 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 7 of 15 16) It was argued by Learned Counsel for plaintiff that, the evidence of plaintiff being unchallenged, Suit needs to be decreed. Against it, defendants challenged nature of Suit in the category of Commercial Suit. It was argued that, it being solitary loan transaction, it will not come under the nature of commercial transaction. Hence, Suit needs to be dismissed. Reasons as to Issue No. 1 & No. 2 : 1. Whether plaintiff proves that an amount of . ₹ 17,62,603/- is outstanding from defendants? 2. Whether plaintiff prove that in view of bill of exchange dated 15.03.2018, the defendant have failed to repay the balance amount to the plaintiff? 17) Plaintiff has filed certified copy of Bill of Exchange Dt. 15.03.2018. It is at Exh. 16 in respective Suits. 18) In Plaint and evidence-affidavit, plaintiff claimed that, said Bills of Exchange are signed and executed by defendants. Said evidence of plaintiff is unchallenged from defendants. 19) In Commercial Suit No. 100030 / 2020, Ramchand Nagpal Vs Reena Tinaaz, the defendants, in Para No. 16 of their Written Statement, pleaded as follows : 16. This Hon’ble Court has no Jurisdiction to entertain the present claim of the Plaintiff in the plaint with interest or otherwise. It is not correct say that plaintiff had raised funds in the Defendants Company but advanced loan as a money lender for a sum of Rupees 17,62,603/- out of which the Defendants company has already repaid Rupees 15,00,000/-. 20) In Commercial Suit No. 100031 / 2020, Janesha Nagpal Vs Reena Tinaaz, the defendants, in Para No. 15 of their Written -- 7 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 8 of 15 Statement, pleaded as follows : 15. This Hon’ble Court has no Jurisdiction to entertain the present claim of the Plaintiff in the plaint with interest or otherwise. It is not correct say that plaintiff had raised funds in the Defendants Company but advanced loan as a money lender for a sum of Rupees 5,87,534 /- out of which the Defendants company has already repaid Rupees 3,00,000/-. Thereby, defendants admitted receiving money from plaintiff. This admission with unchallenged evidence of plaintiff proves that, plaintiff has advanced said amount to defendants and accordingly, defendants executed said Bill of Exchange, acknowledging the debt. Therefore, it is held that, . ₹ 24,00,000/- was received by defendant in Suit No. 100030 / 2020 and . ₹ 8,00,000/- in Suit No. 100031 / 2020. 21) Though defendants claimed part-repayment, however, there is no evidence from defendants to show that, they have repaid said amount. There is also no case raised by defendants that, for some legal aspects, they are not liable to repay that amount. Therefore, it is held that, liability of said amount continues to exist on defendants. Accordingly, Issues No. 1 & 2 are answered partly in affirmative. Reasons as to Issue No. 3, No.4, No.6 & No. 7 : 3. Whether suit is maintainable? 4. Whether plaintiff has locus standi to file suit against defendants? 6. Whether this Court has jurisdiction to try and entertain the suit? 7. Whether the plaintiff proves that cause of action arose against the defendant within jurisdiction of this Court? 22) Defendants have challenged maintainability of Suits on ground that, single loan transaction do not satisfy essential requisites of Sec. 2 (1) (C) of the Commercial Courts Act. Hence, -- 8 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 9 of 15 present Suit in nature of Commercial Suit is not maintainable. Provision of Sec. 2 (1) (C) of the Commercial Courts Act, 2015 23) For convenience, Sec. 2 (1) (C) of the Commercial Courts Act, 2015, is re-produced as under :- (c) “commercial dispute” means a dispute arising out of-- (i) Ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents; (ii) Export or import of merchandise or services; (iii) Issues relating to admiralty and maritime law; (iv) Transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters….. (v) Carriage of goods; (vi) Construction and infrastructure contracts….. (vii) Agreements relating to immovable property …. (viii) Franchising agreements; (ix) Distribution and licensing agreements; (x) Management and consultancy agreements; (xi) Joint venture agreements; (xii) Shareholders agreements; (xiii) Subscription and investment agreements pertaining to the services industry including outsourcing services and financial services; (xiv) Mercantile agency and mercantile usage; (xv) Partnership agreements; (xvi) Technology development agreements; (xvii) Intellectual property rights relating to registered and unregistered trademarks, copyright, ….. (xviii) Agreements for sale of goods or provision of services; (xix) Exploitation of oil and gas reserves or other natural resources ….. (xx) Insurance and re-insurance; (xxi) Contracts of agency relating to any of the above; and (xxii) Such other commercial disputes as may be notified by the Central Government. -- 9 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 10 of 15 24) Suit can be treated as a commercial summary suit on the mandate that, transaction has occurred between merchants, bankers, financiers and traders and said transaction is of commercial nature. 25) Term ‘ merchant’ would cover a person who buy and trade, in any commodity and therefore, the term as explained correspond to all sort of traders, buyers and sellers. A trader is, necessarily a person who engages himself in trading in goods; buying and selling them at profit, who buy and sell securities or one who buys and sells commodities for others, in anticipation of speculative profit. A ‘ financer’ is an administrator, collector of taxes or one who is skilled in levying and managing public money or as capitalist concerned in financial operations. Thus, ordinary transactions of merchants, business, financiers and traders, relating to mercantile documents, can only fall within the purview of ‘commercial disputes’. 26) In backdrop of aforesaid provision, it is necessary for the Plaintiff to satisfy following aspects : 1. Plaintiff is, merchants, bankers, financiers and traders. 2. The transaction is, Ordinary transaction, relating to mercantile documents, 3. Similar transactions are regularly carried by Plaintiff, with numerous people on numerous occasions. 4. Carrying similar transactions is profession of plaintiff. 5. Said transactions are recognised as, commercial transaction. 6. The loan-amount was utilised by defendants for some commercial activity. It is in this backdrop, it is necessary to evaluate pleading and evidence of the Plaintiff. Profession of plaintiff : 27) As per Sec.2 (1) (C) (1) of the CCA, the transaction can qualify to be called as commercial transaction, provided it is -- 10 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 11 of 15 carried out by, merchants, bankers, financiers and traders. 28) In Commercial Suit No. 100030 / 2020, plaintiff disclosed about itself as : The Plaintiff is an Indian Inhabitant of Bombay, the Karta and Manager of Atmaram Kherajmal H.U.F. having address as mentioned in the title of the plaint. 29) In Commercial Suit No. 100031 / 2020, plaintiff disclosed about itself as : The Plaintiff an Indian inhabitant of Bombay having address as mentioned in the title of the plaint. 30) In respective Suits, plaintiff did not disclosed as to what is its profession / business and what is its income source. In other words, plaintiff did not disclosed his status as to whether he is, merchant, banker, financier and trader. Is plaintiff in business of advancement of loan : 31) Relevant pleading from Plaint Para No. 2 of Commercial Suit No. 100030 / 2020, reads as : 2. The Plaintiff states that the Defendants requested the Plaintiff to raise funds to the total value of Rs. 24,00,000/- (Rupees Twenty Four Lakhs Only) to which the Plaintiff agreed upon on the Defendants signing documents accordingly in their favour. 32) Relevant pleading from Plaint Para No. 2 of Commercial Suit No. 100031 / 2020, reads as : 2. The Plaintiff states that the Defendants requested the Plaintiff to raise funds to the total value of Rs. 8,00,000/- (Rupees Eight Lakhs Only) to which the Plaintiff agreed upon on the Defendants signing documents accordingly in their favour. 33) Aforesaid pleading of plaintiff in both suits as, ….. -- 11 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 12 of 15 Defendants requested the plaintiff to raise funds to the total….. points that, plaintiff came with case that, it was on request of defendant, plaintiff advanced loan of . ₹ 24,00,000/- and . ₹ 8,00,000/- to defendants. 34) It is not case of plaintiff carries transactions of merchants, bankers, financiers and traders, and is regularly providing finance to numerous persons including defendants. 35) In fact, plaintiff maintained absolute silence about its business / profession / commercial activity. So, it is very difficult to conclude that, plaintiff is carrying out transactions which are similar with transactions being carried out by merchants, bankers, financiers and traders. It appears to be sole loan transaction effected by the plaintiff. No mercantile documents : 36) Plaintiff has annexed list of documents at Page No. 11 of the Plaint in both the Suits. These documents are as follows : 1. Copy of Bill of Exchange Dt. 15.03.2018. 2. Copy of Dishonoured Cheque with Bank Memo. 3. Copy of Plaintiff Advocate Letter Dt. 08.02.2019. 4. Copy of Non-Starter Report Dt. 20.07.2019. 5. Other relevant documents with the permission of this Hon’ble Court. Thereby, above documents relied by plaintiff, are related with single loan transaction. From bill of exchange and cheque, it is difficult to ascertain that, plaintiff is merchants, bankers, financiers and traders and the transaction which he has carried out is transactions of merchants, bankers, financiers and traders, So, the single bill of exchange, being not related with commercial transaction, cannot be clothed as mercantile document. For what the defendant obtained the loan : 37) Normal business practice prevalent in the market is that, creditor always ascertains purpose for which borrower seeks loan. -- 12 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 13 of 15 38) This being commercial suit, then the loan-transactions, which is utilised for commercial purpose, can only come under the cover of commercial suits. 39) When Plaintiff is creditor and is advancing huge loan to defendant, then it was expected that, plaintiff must have ascertained purpose / need of the defendant. However, in present case, the plaintiff nowhere disclosed as to for what purpose the defendant sought the loan. So, it is not possible to a certain/conclude that the loan that was advanced, was utilized for commercial activity. Conclusion : 40) In backdrop of provision and pleadings, following facts are ascertained : 1. Throughout pleading, plaintiff came up with case that, this is only transaction between him and defendant. 2. It is not case of plaintiff that, he is in business of providing loans to numerous persons like defendant and that he is having license to that effect. 41) Plaintiff came with case of solitary loan transaction between himself and defendant. There is no repeated trading transaction between plaintiff and defendants. Solitary transaction of advancing loan, on friendly terms, is not ordinary transaction of merchants, bankers, financiers and traders, and cannot be termed as trade or commercial transaction. 42) Said transaction cannot be called as Commercial transaction for simple reason that, it is in the nature of money- lending and it is not seen to have been facilitating flow of trade, movement of commerce, servicing of business. So, Suits for recovery of money, in nature of single loan transaction between two entities, cannot come under Sec. 2 (1) (c) (i) of the Act. -- 13 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 14 of 15 43) Hence, it is held that, alleged loan transaction was not in the nature of commercial transaction but at the most it can be termed as domestic loan transaction. Therefore, objections raised by defendants regarding maintainability of the Suit, jurisdiction of this Court to try the Suit, succeeds. Therefore, Issue No. 3, No. 4, No. 6 and No. 7 are answered in Negative. Reasons as to Issue No. 5 : 5. Whether suit is bad on ground of misjoinder of parties? 44) In Para No. 15 of WS, defendants pleaded that, D2 & D4 are not necessary parties. Plaintiff came with case that, D1- Reena Tinaaz is company with D2-Uday and D3-Sailesh as its Directors. There is no D4 in the Suit. 45) This being Commercial Suit filed under Commercial Courts Act and amended provisions of Code of Civil Procedure, 1908, then it is necessary for plaintiff and also for defendant to substantiate its claim by cogent pleading and evidence. In the present case, after making bare statement that, D2 to D4 are not necessary parties, defendants did not took steps to cross-examine the plaintiff or led his own evidence, to show as to how these defendants are not related with D1-Reena which has accepted loan and executed Bill of Exchange. Therefore, in absence of cogent pleading and evidence, bare statement and defense that, Suit is bad for misjoinder of parties, fails. Therefore, Issue No. 5 is answered in Negative. Reasons as to Issue No. 8 & No. 9 : 8. Whether plaintiff is entitled to recover amount of . 17,62,603/- from defendants? If yes, at what rate ₹ of interest? 9. What order and decree? 46) Plaintiff failed to show that, regarding loan transaction he can file Suit in nature of Commercial Suit under Commercial Courts Act. Hence, it is held that, plaintiff cannot be granted any relief. Therefore, his recovery Suit fails. Accordingly, Issue No. 8 -- 14 of 15 -- CS No.100030 / 2020 Ramchand – Reena Judgment (Exh.28) 15 of 15 is answered in Negative and Suit is disposed off by following Order : ORDER 1. Commercial Suit No. 100030 / 2020, Ramchand Nagpal – Reena Tinaz, is dismissed with costs. 2. Decree be drawn up accordingly. 3. Judgment dictated and pronounced in Open Court. 4. Plaintiff be informed about its right to challenge this judgment and period of limitation for it. 5. After compliance and period of Appeal, Shirestedar and AS to consign Record of the Suit, to Record Room. Mumbai Dated : 20.01.2024 (Vijay S. Hingne) Additional District Judge, Court Room No.31 – Commercial Court City Civil & Sessions Court, Mazgaon, Greater Mumbai Visit ecourts.gov.in for updates or download mobile app “eCourts Services” from Android or iOS -- 15 of 15 --
