VIPIN GUPTA v. CHITRA ADVERTISING PRIVATE LIMITED — 1994 DIGILAW 547 (DEL)

Usha Mehra ( 1 ) BY this summary suit under Order 37 of the Code of Civil Procedure (in Short CPC) Vipin Gupta has sought recovery of Rs. 386 10,35,000. 00 against M/s Chitra Advertising Pvt. Ltd. and Abbas Hakim. Brief facts of the case are that the plaintiff deals in the business of advertising and marketing of various products. He brings business to Doordarshan for which he is paid commission. Defendant No. 2 Abbas Hakim is a producer of T. V. serials. He has already produced T. V. serial such as kisse Miyan Biwi Ke . The said defendant had a concept of T. V. serials known as sunahre Warq . He had submitted the proposal of 13 episodes and pilot episoode to Doordarshan for approval. The said approval was granted on 2nd August, 1989. The serial was scheduled to be telecaste on the national network from 9th June, 1990 at 9. 00 p. m. Plaintiff procures sponsored programmes for his potential clients in the form of episode for telecasting over national network of Doordarshan. Vide agreement dated 10th February, 1990 he purchased the telecasting rights and all benefits accruing therefrom from defendant No. 2. Defendant No. 2 agreed that the programme entitled sunehre Warq will not be offered at any point of time to any other agencies, sponsors or parties. Plaintiff obtained the exclusive rights. As per agreement, plaintiff was required to pay Rs. 2,80,000. 00 per episode for sponsorship. In accordance with the terms and conditions he paid a sum of Rs. 12,50,000. 00 to defendant No. 2. It is further averred that for some reasons the serial could not be telecasted on the fixed date. Defendant No. 2 arbitrarily and illegally cancelled the agreement vide notice dated 21st June, 1990. After cancelling the contract he did not return the money received from the plaintiff amounting to Rs. 12,50,000. 00. Though the exclusive right on the serial was that of the plaintiff but the defendant No. 2 without returning the payment entered into another agreement with defendant No. I, thereby giving the defendant No. I telecasting right of this serial including the right to enter into an agreement with the responsors. On acquiring this knowledge, plaintiff lodged a protest. 00. Though the exclusive right on the serial was that of the plaintiff but the defendant No. 2 without returning the payment entered into another agreement with defendant No. I, thereby giving the defendant No. I telecasting right of this serial including the right to enter into an agreement with the responsors. On acquiring this knowledge, plaintiff lodged a protest. Thereafter a settlement was arrived at, pursuance to which the tripartite agreement was entered into between the plaintiff on one hand and defendants 1 and2 on the other, dated 16th May, 1991. As per that agreement, defendant No. 1. agreed to pay the amount of the plaintiff for and on behalf of defendant No. 2. The plaintiff agreed to abrogate his right in favour of the said defendant No. 1. As per terms of the agreement, a sum of Rs. 1,50,000. 00 was paid by bank draft and another sum of Rs. 2 lacs was paid by cheque to the plaintiff. It was also agreed that the balance amount of Rs. 9 lakhs would be paid by defendant No. I to plaintiff directly on behalf of defendant No. 2. The plaintiff abrogated his exclusive rights in the said serial on the assurance and undertaking of defendant No. I that the payment of the balance amount would be made, he relinquished his rights. Inspite of the said agreement dated 16th May, 1991, the defendants have not paid the balance amount of Rs. 9 lakhs to the plaintiff. Defendants instead of making the payment as per agreement filed a suit claiming damages from the plaintiff at Bombay High Court. This they did in order to avoid the payment of the balance amount. The amount claimed is based on the written agreement executed between the parties hence the suit under Order 37 CPC. ( 2 ) NOTICE under for Form-IV, Schedule-B of Order 37 was issued to the defendants. They put in appearance in time. Thereafter summons of judgment were issued. In response both the defendants filed affidavits seeking leave to defend. Defendant No. I, filed the affidavit of one Ms. Madhubala Srivastava, 387 Manager Sponsored Programme and Emerging Media. The leave to defend affidavit was filed within time, but the Counsel for the plaintiff objected to the same on the ground that it has not been filed by a competent person of the defendant No. 1. Defendant No. I, filed the affidavit of one Ms. Madhubala Srivastava, 387 Manager Sponsored Programme and Emerging Media. The leave to defend affidavit was filed within time, but the Counsel for the plaintiff objected to the same on the ground that it has not been filed by a competent person of the defendant No. 1. Hence in the eye of law there is no affidavit of defendant No. I, seeking leave to defend as required Rule 3, Sub-Rule (5) of Order 37 CPC. Defendant No. I, M/s Chitra Advertising Pvt. Ltd. vide its Resolution authorised one Sh. Satish Soney to represent the company before this Court. Hence the leave to defend could only be filed by Sh. Satish Soney. In fact the power of attorney/vakalatnama in favour of the Counsel has also been executed and signed by the said Satish Soney on behalf of defendant No. 1. Madhubala Srivastava was never authorised by the Company to file any application or affidavit seeking leave to defend. Rule I of Order 29 Civil Procedure Code envisages that when a company or corporation is to sue or be sued it shall be represented by its Secretary, Director or Principle Officer. Ms. Madhubala Srivastava is neither of the three. Therefore, she had no authority to file this affidavit. Any affidavit or leave to defend which is filed by an unauthorized person is honest in the eye of law. This Court cannot take cognizance of the same, nor can it be said that defendant No. I has sought leave to defend. Even in her affidavit she has nowhere stated that she has the authority being a Principal Officer to file this affidavit, neither she produced nor relied on any resolution of the Board of the Company authorising her to file this affidavit. Authorisation Mark "a" dated 11th May, 1992 is not in her favour. It is in favour of Shri Satish Soney. But the said Satish Soney had not applied for leave to defend. Hence, there being no affidavit of leave to defend in the eye of law filed by defendant No. I decree should be passed against defendant No. I forthwith. To strengthen his arguments Mr. It is in favour of Shri Satish Soney. But the said Satish Soney had not applied for leave to defend. Hence, there being no affidavit of leave to defend in the eye of law filed by defendant No. I decree should be passed against defendant No. I forthwith. To strengthen his arguments Mr. Kapur Counsel for the plaintiff, placed reliance on the decision of High Court in the case of Subhash Malhotra v. M. L. Kapur and Anr" 21 (1982) Delhi Law Times, 97, which was a case under Section 25b of the Delhi Rent Control Act (In short the DRC Act ). Placing reliance on that judgment Mr. Kapur contended that even though the Subhash Malhotra s case was under the DRC, Act, still the provisions of 25b Sub-section (5) are para materia thesameas0rder37 Rule3 (5 ). Therefore, the position which boils down is that the defendant or its authorised representative alone can seek leave to defend. Ms. Madhubala Srivastava nowhere in her affidavit stated that she had the authority on behalf of the company or that she being a Principal Officer was filing the affidavit. Rather in her affidavit she has clearly stated that she was working as Manager Sponsored Programme. ( 3 ) REFUTING this assertion. Counsel for defendant No. I contended that this ground was not taken by the plaintiff in his reply. Therefore, this oral argument cannot be allowed now nor the defendant can be taken by surprise. This Court in Subhash Malhortra s case was dealing with the case or a landlord. He had raised the objection of non filing of the leave to defend affidavit by the tenant at the first available opportunity. Inspite of opportunity having been afforded to the tenant in that case, the tenant did not rectify the defect. It was in this back ground that the Court held that there was no affidavit seeking leave todefend before the Court. But in the present case no such objection was taken. Therefore, the defendant had no opportunity to rectify the mistake. If given opportunity he would have filed proper affidavit seeking leave to defend. 388 ( 4 ) AT the outset I must say, till date no Board Resolution has been placed on record by defendant No. I authorising Ms. Madhubala Srivastava to execute, sign and verify this affidavit seeking leave to defend. Nor it is the case of Ms. If given opportunity he would have filed proper affidavit seeking leave to defend. 388 ( 4 ) AT the outset I must say, till date no Board Resolution has been placed on record by defendant No. I authorising Ms. Madhubala Srivastava to execute, sign and verify this affidavit seeking leave to defend. Nor it is the case of Ms. Srivastava that she was the Principal Officer or fall in any of the category of officials mentioned under Order 29, Rule 1 CPC. Admittedly power of attorney mark "a" dated 11th May, 1992 issued bydefendant No. 1is in favour of Sh. Satish Soney, Manager of Delhi Branch with authority to act, appear and plead on behalf of the company. The said Satish Soney in turn issued the Vakalatnama in favour of Mr. M. S. Yadav, Advocate. How Ms. Madhubala Srivastava got the authority to execute, sign and verify the affidavit has not been explained. No resolution of defendant No. I authorising Ms. Srivastava to file application and affidavit for leave to defend has been placed on record. There is in fact no application nor any affidavit on behalf of defendant No. I before this Court seeking leave to defend. Defendant No. I is a company, therefore, under the provisions of Order 29 Rule I, CPC, it can be represented only by an authorised person. Admittedly Madhubala Srivastava being neither Secretary nor Director, nor Principal Officer of defendant No. I could not have sworn the affidavit seeking leave to defend. She had no authority to file the leave to defend application also. Even after the objection regarding the locus standi of Madhubala Srivastava was raised by the Counsel for the plaintiff at the bar no steps have been taken by defendant No. I to rectify the defect. Therefore, I have no hesitation in holding that in the eyes of law there is no leave to defend application on behalf of defendant No. I company, as required under Rule 3 (5) of Order 37 CPC. The defendant as per the provisions of Sub Rule 5 of Rule 3 of Order 37, within ten days, from the service of summons for judgment, has to file leave to defend affidavit disclosing such facts as may bedeemed sufficient to entitle him to defend. The defendant as per the provisions of Sub Rule 5 of Rule 3 of Order 37, within ten days, from the service of summons for judgment, has to file leave to defend affidavit disclosing such facts as may bedeemed sufficient to entitle him to defend. But when an unauthorised person applies on the summons for judgment, the leave to defend, the same cannot be treated to be an application on behalf of the defendant. Hence the observation of this Court in Subhash Malhotra s case, referred to above, would apply to the facts of this case. Ms. Srivastava had no locus standi to file leave to defend affidavit on behalf of defendant No. I, accordingly, I hold that there being no leave to defend application before this Court filed by defendant No. I, therefore, the allegations in the plaint are deemed to have been admitted by the said defendant No. 1. The decree for the amount claimed in the suit is accordingly passed against defendant No. I with costs and interest @ 12% p. a. from the date of suit till realisation. I. A. stands disposed. I. A. 10739192 ( 5 ) BY this application defendant No. 2 has pleaded such facts which, to my mind, have raised triable issues entitling Defendent No. 2 to defend the suit unconditionally. The case of the plaintiff through out had been that there was a tripartite agreement between them, defendant No. I and defendant No. 2, pursuance to which defendant No. I agreed to pay back the balance amount of Rs. 9 lacs for and on behalf of defendant No. 2. It was the term of the said agreement that neither the plaintiff nor any of his representative or agent would in any way interfere in the due telecast of the serial sunehre Warq in the time slot allotted. Clause 3 of the said agreement specifically provide that the plaintiff would indemnify the defendant against any claim of any other party claiming 389 any amount under or on behalf of the palintiff. It is the case of defendent No. 2 that when the telecast commenced on 27th June, 1991 and the first four episodes were telecasted, one Shri Dhiraj Kumar acting on behalf of the plaintiff sent a legal notice dated 12th July, 1991 to the defendants to the Doordarshan aswell as to the sponsors M/s Procter and Gamble India Pvt. Ud. It is the case of defendent No. 2 that when the telecast commenced on 27th June, 1991 and the first four episodes were telecasted, one Shri Dhiraj Kumar acting on behalf of the plaintiff sent a legal notice dated 12th July, 1991 to the defendants to the Doordarshan aswell as to the sponsors M/s Procter and Gamble India Pvt. Ud. putting them to notice that plaintiff owned him a sum of Rs. 4 lacs. The said Dhiraj Kumar threatened to stop the said serial from being telecasted by approaching the Court and by obtaining the injunction against the telecast of the said serial. Mr. Dhiraj Kumar had in fact filed a suit. The plaintiff did not contest that suit nor took any action. In the said suit Dhiraj Kumar sought injunction against the defendants. Because of the said litigation having been started by the representative of the plaintiff, the defendant No. I, cancelled the contract with defendant No. 2 vide letter dated 1st August, 1991. The suit and the appeal were contested by the defendants. When the said Dhiraj Kumar could not get injunction he withdrew the Doordarshan had given categorical statement in Court that it would not grant further time slots for the telecast of the remaining three episodes. Thus, the defendant on account of the breach committed by the plaintiff could not telecast the remaining three episodes. On accountofthisbreach,defendantno. l cancelled the contract, hence the amount could not be repaid to the plaintiff because of the breach committed by him. It is also alleged that there was connivance between the plaintiff and Dhiraj Kumar, as a result of which litigation started and defendants suffered losses, for which he filed a suit in the Bombay High Court claiming damages against the plaintiff. ( 6 ) CONTESTING this application. Counsel for the plaintiff contended that mere filing of the suit against the plaintiff is no ground for grant of the leave to defend. In this regard he placed reliance on the decision of this Court in the case of Punjab and Sind Bank v. B. S K. Tulshan reported in ILR (Delhi Series) 1991 Volume-1, Parts III and IV, page 293, wherein the Court held that filing of counter claim based on damages is no ground to grant the leave to defend. In this regard he placed reliance on the decision of this Court in the case of Punjab and Sind Bank v. B. S K. Tulshan reported in ILR (Delhi Series) 1991 Volume-1, Parts III and IV, page 293, wherein the Court held that filing of counter claim based on damages is no ground to grant the leave to defend. The provisions of Order 37 on the face of it dd not contemplate entertainment of any counter claim from the defendant. While considering the suit under Order 37 of the Court is not to consider the facts which may entitle the defendants to file any suit for damages against the plaintiff. I am afraid this authority is of no help to the plaintiff, because the leave to defend is not sought only on the ground that defendant No. 2 has filed a suit claiming damages at Bombay. The ground, as already discussed above, is that it is the plaintiff who committed the breach of the terms of the tripartite agreement dated May, 1991. It was the representative of the plaintiff, Mr. Dhiraj Kumar who filed the suit in order to harass the plaintiff. Because of this litigation by Dhiraj Kumar the defendant No. I cancelled the contract of defendants Nos. I and2. Whetherthe plaintiff committed breach or not and whether Dhiraj Kumar was acting as agent for and on behalf of the plaintiff, are the issues, which requires adjudication and therefore, triable which could be disposed of after recording evidence. These questions go to the root of the case. Moreover, in a claim of debt, the Court has to be specified that there is a pecuniar liability upon the person against whom the claim is made. The question is whether in law the person who commits a breach of contract becomes pecuniarily liable to the other party to the contract. In order to determine the pecuniary liability evidence and 390 determination of allegations, counter allegations, have to be gone into. Hence, the leave has to be granted to the defendant No. 2. The question, however, arises whether it should be conditional or unconditional. In order to determine the pecuniary liability evidence and 390 determination of allegations, counter allegations, have to be gone into. Hence, the leave has to be granted to the defendant No. 2. The question, however, arises whether it should be conditional or unconditional. Provisions of Sub Rule 5 of Rule of Order 37 provides that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by defendant did not indicate that he has a substantial defence to raise or that defence raised is frivolous or vexatious. Having held that defendant has raised reliable issues and the defence being neither frivolous nor vexatious, there is no other alternative, but to grant unconditional leave to defend to defendant No. 2. I, accordingly allow this application and permit defendant No. 2 to contest the suit unconditionally. Application stands disposed. S. No. 1363/92 Let the written statement be filed by defendant No. 2 within four weeks with advance copy to Counsel for the plaintiff who may file replication within four weeks thereafter. Documents may also be filed by the parties by the next date. To be listed for admission/denial of documents on. . . . . . . LA. 10865/92 -Disposed of, IA. 10739192 - Allowed.