THE HON’BLE SRI JUSTICE ABHINAND KUMAR SHAVLI AND THE HON’BLE SRI JUSTICE VAKITI RAMAKRISHNA REDDY CITY CIVIL COURT APPEAL No.143 of 2012 JUDGMENT: (Per Hon’ble Sri Justice Vakiti Ramakrishna Reddy This Appeal is filed by the appellant/plaintiff against the Judgment and Decree dated 11.06.2012 (hereinafter will be referred as ‘impugned judgment’) passed in O.S. No.462 of 2003 on the file of Chief Judge, City Civil Court, Hyderabad (hereinafter will be referred as ‘trial Court’), wherein the suit filed by the appellant/plaintiff for recovery of money was dismissed apart from partly allowing the counter claim filed by the respondent/defendant.

2. For the sake of convenience, the parties herein are referred as per their status before the trial Court.

I. BRIEF FACTS

3. The brief facts of the case as can be seen from the plaint filed by the plaintiff are as under:

a) The plaintiff is a registered company having branches at Madura, Bangalore, Cochin, Hyderabad and New Delhi and it is represented by its authorized signatory and power of attorney holder P.B. Rammoorthy, who is the Deputy General Manager in the Apollo Group of Concerns of which Plaintiff Company is a constituent. The Plaintiff Company deals in manufacturing, marketing and selling of surgical and medical disposable goods. The defendant Nos.1 and 2 are Chief Executive and Sales Executive of the Plaintiff Company respectively at Hyderabad. Defendants No.4 to 6 are businessmen of the Plaintiff Company dealing with the works of distributing and selling medical, surgical and pharmaceutical products in the city of Hyderabad.

b) The defendant Nos.1 and 2 conspired and hatched a plan, wherunder they undersold the goods of the Plaintiff Company to the defendants No.4 to 6 and are guilty of impersonation, fraud and cheating at the behest of defendant Nos.1 and 2. The defendant No.2, who is the under the supervision and management and control of defendant No.1, made supplies of goods from the plaintiff to defendants No.4 to 6. The goods were delivered to the consortium of defendants No.4 to 6 on fictitious names sometimes with delivery challans and sometimes without any acknowledgement of supply. In few instances, the goods were diverted to the consortium of defendants No.4 to 6 after showing delivery of the goods at the customer by stopping the consignment of a short period. In the months of April and May, 2001, the company’s accounts, auditing was done, wherein it was found that the amounts to a tune of several lakhs were due and payable by several hospitals, medical stores and other customers including the defendants No.4 to 6 as per the invoices and delivery challans.

c) On enquiry, it is revealed that defendant No.2 breached the trust reposed in him and cheated the company by indulging in malpractices of various nature and misrepresented several factors to the company regarding the quantum, terms and others details of suppliers to the defendants No.4 to 6 with their connivance and support. Accordingly, the defendant No.1 submitted a statement of the defendant No.2 dated 11.05.2001 owning responsibility for the transactions. In pursuance of the same, a complaint was lodged with Panjagutta Police Station against defendant Nos.2, 4 to 6 vide Crime No.358 of 2001 for the offences under Sections 406 and 420 of the Indian Penal Code. The defendant Nos.1 and 2 organized a meeting between the Managing Director of the Plaintiff Company and defendant No.4 on 03.05.2001, wherein defendant No.3 presenting himself as defendant No.4 promised to clear the outstanding amounts and issued two cheques bearing Nos.95961 and 95962, dated 05.05.2001 and 04.05.2001 respectively for Rs.5,00,000/- each drawn on the A.P. Mahesh Cooperative Urban Bank Limited, Malkajgiri Branch. However, after registering the above referred criminal complaint, the cheques were returned dishonoured. The defendants No.4 and 5 denied the liability in their correspondence.

d) On enquiry with the Manager of the Bank, it was rev