In a significant ruling by the Delhi High Court, the case of Hind Steel Sales vs. M/s. AJAX Projects Pvt. Ltd. has been analyzed, shedding light on commercial disputes. The judgment delves into the intricacies of the settlement agreement and the delivery of goods, aiming to resolve the outstanding amount issue. Stay informed about this legal development involving key parties in the commercial transaction.
Facts
- The defendants, M/s. Hind Steel Sales (HSS), were involved in iron/steel trading with the plaintiff Company through Mr. Devi Dayal Garg.
- An outstanding amount of Rs.1,49,76,639/- against specific Invoices raised against defendant No. 1 was found in October 2009.
- Pressure and threats were extended by Mr. Devi Dayal Garg and his relatives for payment against undated cheques since January 2010.
- A settlement was reached in March 2010 stating that the defendants owed Rs.1,49,76,639/- to the plaintiff Company with no interest chargeable, payable for goods to be supplied by June 2010.
- Mr. Devi Dayal Garg deputed Mr. Chauhan to lift material from M/s. Jindal Steel and Power Ltd. in Ranchi to be delivered to the plaintiff’s godown in Delhi.
- The last business transaction occurred in July 2009 with payments made by the defendants totaling around Rs. 2.5 crores to the plaintiff Company.
- Freight payment was made by Mr. Devi Dayal Garg directly to Jai Bajrang Carrier in Ghaziabad, U.P.
- 6 undated cheques totaling the outstanding amount were handed over by the defendants to Mr. Devi Dayal Garg as security, with an agreement for goods supply or payment by June 2010 as per the settlement.
- Goods purchased from M/s. Jindal Steel and Power Ltd., Ranchi Jharkhand, by the defendants were later transferred to M/s. AJAX Project Pvt. Ltd. (an associate concerned of the defendant).
- The goods were to be supplied to the plaintiff against the outstanding amount on a pick and choose basis.
- The agreed rate to be paid by the defendants was settled at 34.75 per kg, exclusive of taxes and freight.
- Upon completion of the transaction, the 6 undated cheques would be returned to the defendants.
Issue
- Defendants had procured goods from Ranchi Project through M/s AJAX Projects Pvt. Ltd. for onward delivery to the plaintiff.
- The defendants assert that there was a settlement agreement in March 2010, where they agreed to supply goods in discharge of outstanding liabilities.
- The existence and terms of the alleged settlement agreement are in dispute.
- The defendants provided Invoices of April and May 2010 as evidence of goods delivery, which the plaintiff claims are forged and fabricated documents.
- There are significant triable issues regarding the settlement agreement and the authenticity of the delivery documents.
Arguments
- The plaintiff claims that the defendants owe them an outstanding amount of Rs. 1,49,76,639/-, which the defendants partially paid by delivering goods and partially by a payment of Rs. 46 Lakhs.
- The defendant justifies the transactions with their associate Concern M/s. AJAX Projects Pvt. Ltd. as temporary storage of material from JSPL in a godown rented by the plaintiff.
- The defendants handed over 6 cheques to the plaintiff, but the plaintiff denies receiving goods and claims the Invoices are forged.
- There is a dispute regarding the settlement in March 2010 and delivery of goods in lieu of repayment of dues.
- The plaintiff argues that triable issues have been raised in the leave to defend application, while the plaintiff asserts that no plausible defense has been disclosed.
- The court needs to determine the authenticity of the transactions and if the defendants have a valid defense against the outstanding amount.
Analysis
- Defendant No 2/Ramesh Goel’s statement before EOW cannot be considered as an admission without giving them an opportunity to explain.
- Plaintiff paid Rs. 1,00,00,000/- in two tranches for the purchase of steel from defendants, sourced from Ranchi.
- Defendant’s defence is based on a settlement in March 2010 where goods were procured and delivered to plaintiff’s godown.
- Defendants had a valid Agreement for the Ranchi Project with JSPL, subsequently assigned to M/s AJAX Projects Pvt. Ltd.
- Settlement terms included payment of Rs. 1,49,76,639/- without interest for goods supplied by June 2010.
- Delay in payment attributed to business disputes between parties.
- Defendant’s claim of delivery supported by Invoices of April and May 2010.
- Defendant maintains that entire amount was repaid and bills were fabricated after informing the plaintiff.
- Goods were supplied in April-May 2010 as per settlement, received by plaintiff’s godown.
- Allegations against defendant stated as devoid of truth.
- The defendant must show a substantial defense for the court to grant Leave to Defend.
- If the defense is likely to succeed, the plaintiff cannot sign judgment, and the defendant will be granted unconditional leave to defend the suit.
- The court must ensure that the provisions aiding in the quick resolution of commercial cases are not misused or obstructed.
- If the defendant has no substantial defence and/or raises no genuine triable issues, leave to defend the suit shall be refused.
- If the court finds the defence to be frivolous or vexatious, the plaintiff is entitled to judgment forthwith.
- If any part of the amount claimed by the plaintiff is admitted by the defendant, leave to defend the suit shall not be granted unless the admitted amount is deposited in court.
Decision
- Application seeking leave to defend the present suit is allowed
- Triable issues raised by the defendants are acknowledged
- Defendants have the opportunity to defend the suit
Case Title: M/S LEO ISPAT LIMITED Vs. HIND STEEL SALES & ORS (2024:DHC:4138)
Case Number: CS(OS)-2457/2012
