TMI Blog2017 (5) TMI 1721X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into an exclusive Distributorship Agreement with it. Defendants cannot withheld the money with the object of pressurising the plaintiff to enter into any agreement. Once it has, against invoices, released the advance money (50% of the value) and received the good without any demur or complaint, the defendants are liable to pay the balance due amount raised by plaintiff against commercial invoices. The invoices, as is clear from the document itself, are a valid contract between the parties. It contains offer, acceptance and the consideration of such agreement as defined in Section 2(h) of the Indian Contract Act, 1872. The defendants have also argued that where there is a violation of the legal provisions, a decree in terms of Order 37 CPC cannot be passed and even the suit is liable to be dismissed. It is argued that the plaintiff had failed to comply with provisions of Order 37 Rule 3(4) read with Appendix B Form No. 4A as summons of judgment is not supported by the affidavit of the plaintiff and a defective summons of judgment was served on defendants and defect cannot be cured and so suit be treated as normal suit and no decree can be passed under Order 37 CPC. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed into a business relationship in 2009. The plaintiff had exported dental devices to defendants to market and sell them in India. 3. It was agreed between them that the defendants shall pay 50% of the advance of the required devices/equipments and on the release of that advance, the plaintiff shall execute the order and send the devices to the defendants and then the defendants shall within two months from the date of bill of lading, release the balance 50% amount to the plaintiff. This practice continued between the parties since 2009 and the email dated 05.11.2014 of the defendants confirmed the said fact. In the year 2014 in the month of September, defendant No. 1 placed an order for purchase of dental devices including Intra Oral Sensor and Digital X-Ray System . As per the standard practice between them, the plaintiff raised the performa invoices for that purpose. The details are as follows:- 4. It is also submitted by the plaintiff that the defendants released 50% of advance based on the performa invoices and details are as under:- 5. Bank statements that the amount was transferred against each mentioned Performa Invoices and credited to the plaintif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue at the earliest , which confirms that the amount is still outstanding. It is submitted that these facts clearly show that the defendants despite admitting the outstanding payments and thereby acknowledging its liability did not pay. It is submitted that the defendants were pressurising the plaintiff to sign exclusive dealership agreement on its own terms because they wanted to become an exclusive dealer of the plaintiff, however, it was not acceptable to the plaintiff. When the plaintiff informed the defendants of the appointment of another dealer i.e. M/s. Chesa, in southern India it was vehemently objected by the defendants apparent from their email dated 26th February, 2015. Defendants, thereafter, did not pay the balance money. A reminder dated 10th March 2015 was sent asking the defendants to clear the balance payment but money was not paid. A legal notice dated 6th May, 2015 was also sent to the defendants giving one more opportunity to the defendants to resolve the matter and pay the overdue amount but the defendants did not reply the same. Last and final reminder was sent by the plaintiff on 23rd May, 2015 but despite that, the payment was not released by the defendants. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the products, which was within the warranty period, and returned to the Company. Defendant No. 1, in pursuance of the said Agreement, started marketing the products of the plaintiff company in full earnestness and also appointed extra personnel and created huge demands for the products of the plaintiff and procured orders despite the fact that the plaintiffs equipments were costly and were not in extensive use in India and plaintiff was an unknown entity in India at that time. Defendant No. 1 was able to create huge market for the plaintiffs goods within September 2009 to December 2009 i.e. 4 months and placed order of about ₹ 23,11,100/- and during the last six years, defendant No. 1 has imported about ₹ 35.80 crore worth of products from the plaintiffs. This shows that defendant No. 1 is working hard for creating the demand of the plaintiffs goods and as such increased the market demand of the plaintiffs products. In 2014, the plaintiff wanted to appoint another distributor in complete disregard to the understanding between them and thereby taking away the exclusive rights of defendants to import, market and sell the products of the plaintiffs in India. Defendant No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued that an Advocate cannot act in a dual capacity, of an Attorney and of plaintiff and so the affidavit filed by the counsel for the plaintiff cannot be considered as having being filed by the plaintiff. Reliance is placed on Baker Oil Tools (India) Pvt. Ltd. vs. Baker Hughes Ltd. Anr., 2011 (47) PTC 296 (Del.) and Columbia Pictures Industries, Inc. and Others vs. Siti Cable Network Ltd., 2001 (60) DRJ 11 (DB). It is further submitted that Directors cannot be sued for the liability of Company under Order 37 of CPC. Relying on Simba F.R.P.(P) Ltd. vs. Department of Tourism, Lucknow, Uttar Pradesh, 1995 III AD (Delhi) 473, it is argued that summary suit cannot be filed on the basis of invoices, which is only a correspondence between parties and does not constitute a contract. Since there is no written contract, the case should be treated as normal suit and leave to defend be granted. It is submitted that following triable issues have arisen in favour of defendants; (a) Suit against defendant Nos. 2 to 4 solely on the grounds that they were Director of defendant No. 1 Company is bad for mis-joinder and it cannot be tried summarily, (b) plaintiff need to lead evidence to prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to develop market for the products of the Plaintiff by making entire investment on promise of giving exclusive right om import, marketing and sale of its products within the territory of India for a period of 15 years. Defendant No. 1 thus worked vigorously and made huge investments to develop market for the products of Plaintiff, and in fact in a period of 6 years sale of products of Plaintiff rose from being NIL to about 16.50 crore in the year 2014. Yet in complete breach of the understanding the Plaintiff appointed another dealer disregarding the understanding of exclusivity; (h) On account of the breaches committed by the Plaintiff, it is liable to pay damages to Defendant No. 1, in regard whereto a suit is being filed by Defendant No. 1 against the Plaintiff. (i) the Plaintiff is also guilty to breach the understanding between the parties whereby free of cost and timely spares were to be provided to the customers, which was critical to ensure that the market created by Defendant No. 1 did not suffer credibility. Timely supply of spares was all the more critical as services was being provided by the Defendant No. 1. (j) the Plaintiff cannot be allowed to take advantag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this Distributorship Agreement, defendant No. 1 was not appointed as an exclusive dealer in India. It is submitted that against a written agreement, no oral evidences are admissible and the oral contentions cannot change the terms and conditions of any written agreement. It is submitted that defendant Nos. 2 to 4 are all actively involved in the working of defendant No. 1 and, therefore, they are necessary parties and even otherwise the suit cannot be defeated on ground of mis-joinder of the parties in view of Order 1 Rule 9 CPC. It is submitted that application for leave to defend does not disclose any triable issue and is liable to be dismissed and the plaintiff is entitled for the decree. It is further contended on behalf of the plaintiff that the affidavit which accompanied the summons for judgment was a technical affidavit. It is submitted that the plaintiff had issued vakalatnama in favour of the firm (M/s. Khurana Khurana) of Advocates and any of the partner of the said firm can act as a Power of Attorney of the plaintiff. It is submitted that since the facts of the case are admitted and no substantive issue exists between the parties, there is no bar to passing a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... litigation; (ii) Whether the existing practice followed by firm of Advocates/Solicitors/Attorneys particularly in case of non-resident clients as aforesaid is in conformity with law and the recognised rules of professional ethics; 7. It is well settled law that the constituted attorney of a suitor has no right of audience in Court or to cross-examine witnesses. The Constituted Attorney is merely entitled to 'act' and 'appear' for a party but has no right to 'plead' in a Court. The expressions 'act' and 'appear' do not mean 'right to plead' as such. It has been so held by our High Court in the case of A.S. Patel v. National Rayon Corporation Limited, AIR 1955 Bom 262. It is permissible for an Advocate to act as a 'recognised agent' or a Constituted Attorney by virtue of Power of Attorney executed in his favour by a suitor and sign vakalatnama pleadings and affidavits on behalf of the donor of Power of Attorney to the extent provided in the Code of Civil Procedure as aforesaid. In all such cases the signature of Constituted Attorney on pleadings, affidavits, vakalatnama and other documents is liable to be equated to signat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sked is as to whether the two roles can be combined? The question to be asked is as to whether it is not inherent in the scheme and the provisions of Code of Civil Procedure and implicit in the provisions contained in Order III Rule 4 of the Code of Civil Procedure and other connected provisions that advocate who acts or appears or pleads before the Court in a professional capacity must have a client with separate and distinct identity. The answer to these questions is obvious. For all practical purposes, the recognised agent of a suitor is on par with the suitor or client himself; an Advocate is not, as an Advocate is an independent person with a specific role in administration of justice. In certain situations advocates are permitted to accept power of attorneys from a client for purpose of acting in a suit or matter, sign pleadings, vakalatnama and affidavits on behalf of plaintiff or defendant as case may be. An Advocate may be appointed as a Receiver in a suit or a cause. No one can object to the Advocate accepting these assignments permissible under the law. The question still remains as to whether the advocate who is holding a power of attorney from a client to act and appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the fact that a constituted attorney is entitled to identify himself with the interest of his client and give instruction to the Advocate representing the client before the Court. It would be strange if the lawyer constituted attorney gives necessary instruction in the matter to himself or his copartners. Taking an overall view of all the relevant provisions pointing out to the Court and their objectives as indicated above, I have no hesitation in accepting each of the submissions urged on behalf of Bar Council of Maharashtra and Goa and interpret the relevant provisions so as to infer prohibition of combination of two capacities by necessary implication. 11. It makes no difference that the power of attorney is executed in favour of one or other partner of the firm of the Advocate and the litigation is in fact conducted by another partner of the advocate's firm. If the vakalatnama is executed by a client in favour of firm of advocates it follows that all the partners of the said firm are engaged as Advocates by the client concerned. It makes no difference to the situation that the vakalatnama is accepted in writing only by one of partners of the firm. All the partners n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as under: (a) An Advocate is not entitled to act in a professional capacity as well as constituted attorney of a party in the same matter or cause. An Advocate cannot combine the two roles. If a firm of Advocates is appointed as Advocates by a Suitor, none of partners of the Advocates' firm can act as recognised agent in pursuance of a power of attorney concerning the same cause. (b) The existing practice followed by the firm of advocates/solicitors/attorneys particularly in case of nonresident clients combining the two roles is opposed to law and is required to be discontinued forthwith. (c) The Prothonotary and Senior Master, High Court shall not accept any vakalatnama in favour of a firm of advocates where one or the other partner of the same firm also holds a power of attorney from the Plaintiff or the Defendant or any other suitor before the Court in the same cause . 22. It is argued that compliance of Order 37 Rule 3(4) is mandatory and where summons for judgments is not in terms of Order 37 Rule 4 and Appendix B Form No. 4A, the defect in summons for judgment cannot be cured subsequently by filing affidavit of the plaintiff. 23. It is further submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiff's pleader, or, if the plaintiff sues in person, to the plaintiff himself, either by notice delivered at or sent by a prepaid letter directed to the address of the plaintiff's pleader or of the plaintiff, as the case may be. (4) If the defendant enters an appearance, the plaintiff shall thereafter serve on the defendant a summons for judgment in Form No. 4A in Appendix B or such other Form as may be prescribed from time to time, returnable not less than ten days from the date of service supported by an affidavit verifying the cause of action and the amount claimed and stating that in his belief there is no defence to the suit. (5) The defendant may at any time within ten days from the service of such summons for It's affidavit or otherwise such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the court or judge to be just: Provided that leave to defend shall not be refused unless the court-is-satisfied. that the facts disclosed by the defendant do not indicate that he has a substantial defence to rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the Plaintiff is not entitled to judgment and the Defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security. (d) If the Defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the Plaintiff is entitled to leave to sign judgment and the Defendant is not entitled to leave to defend. (e) If the Defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the Plaintiff is entitled to leave to sign judgment, the Court may protect the Plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the Defendant on such condition, and thereby show mercy to the Defendant by enabling him to try to prove a defence. 26. The plea of defendants is that there is no written contract between the parties and, therefore, the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce money (50% of the value) and received the good without any demur or complaint, the defendants are liable to pay the balance due amount raised by plaintiff against commercial invoices. The invoices, as is clear from the document itself, are a valid contract between the parties. It contains offer, acceptance and the consideration of such agreement as defined in Section 2(h) of the Indian Contract Act, 1872. Reliance of defendants on Simba (supra) is misplaced since facts are entirely different. The court has observed in para 6 as under:- (6) From a perusal of the correspondence it cannot be said that the same constitutes a written contract which could be made the basis of a suit under Order xxxvii Civil Procedure Code. It cannot be said that there was consensus of mind which led to a contract . In the instant case, there was an offer, counter offer in which different terms and conditions were specified and agreement had not been reached on all the terms such as freight, advance, delivery, etc. COUNSEL for the petitioner had relied on Air 1992 Delhi I tilled M/x. Punjab Pen House Vs. Mis. Samrat Bicycle Ltd. in support of the contention that written contract could be on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4A in Appendix B.......... 31. This provision requires that the summons for judgment shall be served in Form No. 4 A of Appendix B. Form No. 4A Appendix B is reproduced as under:- Upon reading the affidavit of the plaintiff the Court makes the following order, namely: Let all parties concerned attend the Court of Judge as the case may be on the .......day of......19......, at........O'clock in the forenoon on the hearing of application of the plaintiff that he be at liberty to obtain judgment in this suit against the defendant (or if against one or some or several, insert names) for Rs.....and for interest and costs. Dated the....day of .....19.... 32. It requires the Court to pass an order only on the basis of the affidavit of the plaintiff. In the present case, the affidavit supporting summons of judgment is of an Advocate. In Baker Oil case (supra), also in Oil and Natural Gas Commission (supra) and Columbia Pictures (supra), the Courts have categorically held that an Advocate cannot act in dual capacity and so cannot file an affidavit on behalf of the plaintiff and where firm has been engaged all the partners of the firm can act only as counsel of plai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent affidavit and treating the same as due compliance for issuing the summons for judgment and passing the decree. The defendant was not obliged to file a leave to defend application against an invalid and defective summons for judgment. Having regard to the entire background of the matter and the defect appearing in the summons for judgment, in all fairness the court ought to have exercised its jurisdiction and discretion in allowing the application rather than dismissing it. 33. In the present case, as is evident, the plaintiff even did not make any effort to substitute the affidavit of its Advocate with that of its own. 34. In view of the above discussions, it is apparent from the totality of facts and circumstances of the case, more particularly the issue that the summons for judgments suffers with legal infirmity, I am satisfied that it is a fit case to grant leave to defend to the defendants. 35. I am satisfied that on the facts of the case, where the document shows that the defendants owes ₹ 2,77,26,742 to the plaintiff, while granting the leave to defend to the defendants, defendants are directed to deposit the said money with the Registrar General w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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