The court upheld the validity of the agreement and relied on the provisions of the Negotiable Instruments Act 1881 and the Indian Contract Act 1872 to enforce the plaintiff's right to recovery.

G.S. Sistani, J. (Oral)

1. Plaintiff has filed the present suit for recovery of Rs.85,97,286/-. On 07.12.2009, the defendants entered appearance and sought time to file the written statement. Pursuant to the order dated 07.07.2010 neither the written statement was filed nor the defendants were represented in the Court. Thereafter, due to non-appearance of the defendants on various dates, the defendants were proceeded ex-parte by an order dated 07.07.2010.

2. The plaintiff has led ex-parte evidence and has examined three witnesses. PW-1 Shri Kamal Sahdev has testified on the lines of the plaint. PW-1 has testified that he is the sole proprietor and is carrying on his business from 60 Okhla Industrial Area, Phase-III, New Delhi. The defendant No.1 is a private limited company engaged in the manufacture and trading of cables including electricity cables. Defendant No.2 is the Managing Director and is responsible for the day to day affairs of the company. Defendant No.1, vide communication No.4231/PVVNL-MT/MM/208(S)-2006 dated 12.05.2006, received an order for manufacture and supply of LT Ariel Bunched Cable (3x120+1x95+IX 16) against tender specification No.PVVNL-Mt/208(S)-2006 and an agreement dated 12.05.2006 was entered into between M/s.Grid India Power Cables Pvt. Ltd. (defendant No.1) and The Pashchimanchal Vidyut Vitran Nigam Ltd., Meerut (hereinafter referred to as “the Nigam”). The plaintiff was informed by defendant No.2 that the value of the order was about Rs.1,99,00,670.25 which included excise duty @16.48% and CST @4% and freight. The basic value of the order was Rs.1,64,50,533/-. The defendant No.2 further projected that the total profit would be of approximately 12% (on the entire supplied value being approximately Rs.19.74 lakhs) on the basic value i.e. Rs.1,62,50,533/-. It was further represented by defendant No.1 that the payments would be made by the Nigam latest by 30.09.2006. The defendant No.2 sought financial assistance from the plaintiff as the order received from the Nigam was to be executed within the time fixed. The financial assistance of Rs.40 lakhs was sought up to 30.09.2006 for execution of the work. A return of 6% was offered as consideration on the total value of the order. The offer of the defendants was accepted and two cheques drawn on HSBC, Nos.107639 and 107640, dated 29.06.2006 and 05.07.2006 respectively, in sum of Rs.15,00,000/- and Rs.25,00,000/- respectively, were handed over to the defendants. The terms of the agreement were reduced in writing in the form of agreement dated 20.07.2006. The agreement has been exhibited as Ex.PW-1/27. PW-1 has also identified the signatures of defendant No.1 on the agreement Ex.PW-1/27. It has further been deposed by PW-1 that the defendant No.1 agreed to give 6% of the Order Value as consideration to his proprietorship concern investing the aforesaid sum of Rs.40,00,000.00 (Rupees Forty Lacs only) in the project/order and with a view to impress upon the plaintiff their sincerity and genuineness of the terms of the agreement, the defendants, issued the following cheques in favour of the proprietorship concern of the plaintiff in order to secure the principal amount of Rs.40.00 lacs paid by the plaintiff, to secure the principal amount of Rs.40 lacs paid by me issued the following cheques in favour of my proprietorship concern:-

Sl.No.

Cheque No.

Drawn on

Amount

Remarks

(i)

977771

Canara Bank

25,00,000.00

Returned for insufficient funds

(ii)

977770

Canara Bank

15,00,000.00

Payment stopped

(iii)

387141

Canara Bank

12,00,000.00

Payment stopped

3. PW-1 has deposed that the cheques at Sl.No.(i) & (ii) above were issued towards the return of principal amount and the cheque at Sl.No.(iii) above was issued towards the share of part profit of the proprietorship concern of the plaintiff as envisaged under the agreement dated 20.07.2006 and it was so written on the said cheque on its reverse side by the defendant No.2. The said cheques were undated. That after 30.09.2006, the d