IN THE HIGH COURT OF JAMMU AND KASHMIR AND LADAKH AT JAMMU
Puneet Gupta, J.
Union of India through Secretary Ministry of Home Affairs, New Delhi and ors. – Petitioners
Versus
M/s Kashmir Distillers Pvt. Ltd. and ors. – Respondents
CFA No. 10 of 2014 IA No. 9 of 2014 IA No. 1 of 2017
Decided On : 04-10-2023
COMPANY - SUIT FILED BY COMPETENT PERSON - Companies Act, 1956 - [Issue No.1: Whether the suit has not been filed by a competent person and is so liable to be dismissed? OPD] - The court held that the burden of proof of this issue was wrongly placed on the defendants. It was for the plaintiffs to prove that the suit was filed by the competent person. The plaintiffs failed to establish that the suit was filed by a competent person, leading to the dismissal of the suit.
Fact of the Case:
The plaintiffs, a private Limited Company incorporated under Companies Act, 1956, filed a suit against the defendants for non-payment of Rs.3,21,488/- for 814 cases of RUM supplied to them. The defendants contested the case, claiming that the payment was made to the plaintiff-Company's authorized Manager Sales. The suit was decreed in favor of the plaintiffs, leading to the appeal by the defendants.
Finding of the Court:
The court found that the burden of proof of the issue of whether the suit was filed by a competent person was wrongly placed on the defendants. The plaintiffs failed to establish that the suit was filed by a competent person, leading to the dismissal of the suit.
Issues: The issues framed in the case were whether the suit was filed by a competent person, whether it was bad for non-joinder of necessary parties, whether the manager sales of plaintiffs concern was competent to receive the payment on behalf of the plaintiffs concern, and whether the defendants liquidated the entire outstanding amount on account of receipt of various consignments of monty Rum XXX from plaintiffs concern from time to time through the manager sales.
Ratio Decidendi: The burden of proof of the issue of whether the suit was filed by a competent person was wrongly placed on the defendants. The plaintiffs failed to establish that the suit was filed by a competent person, leading to the dismissal of the suit.
Final Decision: The appeal filed by the appellants-defendants was allowed, and the judgment and decree passed by the trial court were set aside. The suit was dismissed.
JUDGMENT :
1. The suit was filed by the respondents-plaintiffs with the averments that the plaintiffs-Company is private Limited Company incorporated under Companies Act, 1956. The suit is filed through Mr. Ravish Trehan, Managing Director of the Company. The case of the plaintiffs is that the Company supplied 852 cases of MONTY XXX RUM to the appellants-defendants in the month of March, 2004. The defendants received the supply of the same but only DIGP (CRPF), Doda made payment of Rs.15007/-through a cheque whereas the defendant Nos. 2 to 6 did not make due payment of Rs.3,21,488/-for 814 cases of RUM though even legal notice was issued for liquidating the amount.
2. The defendants appeared through counsel and contested the case of the plaintiffs. The stand taken by the defendants was that the plaintiffs had infact supplied the article to the defendants as pleaded and that the payment was also made to the plaintiff-Company through its authorised Manager Sales, Sh. O.P. Katoch through different receipts. No payment is due to the plaintiffs from the defendants is the stand taken in the written statement. The suit has not been filed by the authorised person is also the objection taken in the written statement.
3. The suit was initially assigned to the court of learned Second Additional District Judge, Jammu. The case was later on transferred to the court of Principal District Judge, Samba vide order dated 23.10.2008 by the said Court in view of the notification issued by the High Court.
4. The original record of the trial court is before the court. The suit stands decreed in favour of the plaintiff. Hence, the appeal by the defendants.
5. The Court vide order dated 23.01.2008 framed Issues in the suit which read as under:-
2. Whether the suit is bad for non-joinder of necessary parties? OPD
3. Whether Sh. O.P.Katoch was manager sales of plaintiffs concern and was competent to receive the payment on behalf of the plaintiffs concern? OPD
4. If Issue No.3 is proved in affirmative, whether the defendants liquidated the entire outstanding amount on account of receipt of various consignments of monty Rum XXX from plaintiffs concern from time to time through Sh. O.P.Katoch? OPD
5. Relief.”
6. The learned counsel appearing for the appellants has argued that the learned trial court did not decide the issues as per the evidence that came on record. The defendants paid the requisite amount for the article purchased by them and evidence on record amply shows the same. The suit was not filed by the proper person and the plaintiffs never appeared in the witness box to prove the case which should have resulted into dismissal of the suit.
7. Mr. L.K.Sharma, learned Senior counsel appearing for the plaintiffs-respondents has argued that the alleged payment has been made by the defendants to the person who was not authorised to receive the same. Even the receipts on which the defendants rely upon are not proved by the defendants. The suit has been filed by the authorised person and the attorney holder has appeared as witness in the case which itself shows that the plaintiffs have authorised the competent person to appear on behalf of the plaintiffs and depose in the matter of which he had personal knowledge.
8. It may be mentioned herein that the burden of proof framed by the Court on all the issues was placed upon the defendants.
9. The supply of 482 cases of MONTY XXX RUM by the plaintiff-Company to the defendants is not in dispute. The plaintiffs are entitled to the amount as mentioned in the plaint is the issue which indeed requires consideration by the Court.
10. The court in the first instance takes up Issue No.3 framed in the case for consideration. The case set up by the plaintiffs is that the defendants have not paid the amount due to the plaintiff-Company as projected in the plaint. The defendants averred that the payment has been made to Mr. O.P.Katoc
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State Bank of Travancore vs. M/s Kingston Computers(I) P. Ltd.
The burden of proof of whether the suit was filed by a competent person lies with the plaintiffs, and failure to establish this can lead to the dismissal of the suit.
Authorization for filing complaints under the N.I. Act is a curable defect; a company acts through its Board of Directors, and post-initiation ratification is permissible.
The respondent must prove the existence of a special business practice, and mis-description in the plaint does not necessarily result in non-suit.
A company complaint filed without proper authorization is deemed invalid, emphasizing the requirement for competence in legal representation.
(1) Dishonour of cheque – When, complainant/payee is a company, an authorized employee can represent company.(2) Dishonour of cheque – Dismissal of a complaint at threshold by Magistrate on question ....
In a suit based on invoices, the invoices must be treated as a written contract. If the Defendant raises no genuine triable issues or the defense is frivolous, the Plaintiff shall be entitled to judg....
A power of attorney holder can file a complaint under Section 138 of the NI Act if they have personal knowledge of the transaction, and this must be explicitly stated in the complaint.
The presumption under Section 139 of the N.I. Act in favor of the complainant regarding legally enforceable debt remains unless the accused proves otherwise.
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