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2025 DIGILAW 1023 (TS)

Healthcare (India) Limited v. Gautham Naha

2025-09-12

ABHINAND KUMAR SHAVLI, VAKITI RAMAKRISHNA REDDY

body2025
JUDGMENT : VAKITI RAMAKRISHNA REDDY, J. 1. 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. 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 revealed that defendant No.3 impersonated himself as defendant No.4 as per the plan of defendant No.2 with the active connivance and advice of defendant No.1.The defendants No.4 to 6 approached the plaintiff company and expressed to settle the matter by paying such sums as may be mutually agreed. Accordingly, a settlement was arrived at on 30.07.2001 between the Plaintiff Company and defendants No.4 to 6, who paid Rs.11,00,000/- to the Plaintiff Company towards full and final settlement. Accordingly, a settlement was arrived at on 30.07.2001 between the Plaintiff Company and defendants No.4 to 6, who paid Rs.11,00,000/- to the Plaintiff Company towards full and final settlement. Thus, the Plaintiff Company is not making any claim against defendants No.4 to 6 but they are made as parties to the suit since they are proper and necessary parties. An amount of Rs.30,07,093/- is the balance amount receivable by the Plaintiff Company towards consideration for the goods from the defendant Nos.1 to 3. Hence, the plaintiff filed the present suit for recovery of Rs. 36,37,345/- with interest from the defendants. 4. In reply to the plaint averments, the defendant No.1 filed written statement cum counter claim. Defendant No.2 reported to have died. The right of defendant No.3 to file written statement was forfeited as he failed to file the written statement within the time prescribed by the court. Defendants No.4 to 6 remained exparte. 5. The sum and substance of the written statement filed by the defendant No.1 is as under: a) At no point of time the defendant No.1 worked against the interest of the Plaintiff Company and in fact, he formed a work team, which worked sincerely under his leadership. Defendant No.2 being the Marketing Executive toiled hard for marketing of the products. b) The fact that defendant No.2 was under the supervision and control of defendant No.1 did not manifest that defendant No.1 was also responsible for any fraud committed by the defendant No.2. The defendant No.1 is not responsible for any of the fraud, diversion of goods. The defendant No.1 did not own the responsibility for the transaction at no point of time and in fact, he lodged a complaint with Inspector of Police, Panjagutta, Hyderabad against defendant Nos.2, 4, 5 and 6 for cheating the Plaintiff Company and a criminal case was registered in Crime No.358/2001 dated 13.05.2001 for committing offences punishable under Section 406 read with Section 420 of the Indian Penal Code. Defendant No.2 brought letters acknowledging the liability purportedly issued by defendant Nos.4 and 5. Admittedly, defendant No.1 organized a meeting between the Managing Director of the company and the defendant No.4 on 03.05.2001 concerning the payments to be made by defendant Nos.3 to 5. Defendant No.2 brought letters acknowledging the liability purportedly issued by defendant Nos.4 and 5. Admittedly, defendant No.1 organized a meeting between the Managing Director of the company and the defendant No.4 on 03.05.2001 concerning the payments to be made by defendant Nos.3 to 5. The Managing Director of the company was in constant touch with the defendant No.2 and under played in all the matters to tarnish the image of the defendant No.1 and he had the feeling of insecurity that defendant No.1 may take his position on account of his excellent performance. The defendant No.1 was also made a co-accused at the instance of the Plaintiff Company particularly Managing Director, who wanted to make the defendant No.1 a scapegoat having complete knowledge of all the transactions. At no point of time, the defendant No.1 supported or colluded with the defendant No.2 in undertaking the fraudulent transactions. The defendant No.1 while discharging the responsibilities bestowed on him by the Plaintiff Company, had supervised the activities of the Plaintiff Company and kept cautioning all the concerned officers through his official letters. c) The Managing Director though was over active in matter of creating hindrance for the positive steps being taken by defendant No.1 for the growth of the Plaintiff Company did not take cognizance of the caution given by the defendant No.1 deliberately and willfully for the reasons best known to him. The defendant No.1 received a letter of appreciation and promotion from the President of the Plaintiff Company on 25.06.2001. The plaintiff deliberately and willfully tried to make the defendant No.1 a scapegoat for the recovery of the loss suffered through the defendant Nos.2 to 6. If there was any collusion between defendant No.1 and defendant Nos.2 to 6, it is not understood why the defendants No.4 to 6 approached the plaintiff and expressed desire to settle the accounts. As per the plaint averments, a settlement was arrived on 30.07.2001 between the plaintiff and defendants No.4 to 6 and as per the settlement they had agreed to pay a further sum of Rs.11,00,000/- to the plaintiff company in full and final settlement of the claim of the Plaintiff Company as against defendants No.4 to 6. As per the plaint averments, a settlement was arrived on 30.07.2001 between the plaintiff and defendants No.4 to 6 and as per the settlement they had agreed to pay a further sum of Rs.11,00,000/- to the plaintiff company in full and final settlement of the claim of the Plaintiff Company as against defendants No.4 to 6. It is not understood how the defendants No.4 to 6 were given total discharge on receiving the sum of Rs.11,00,000/- when the statement of facts presented in the plaint clearly manifest that it is the defendants No.4 to 6, who are responsible for committing the act of fraud in collusion with the defendant No.2 along with other Sales Executive, Go-down Keeper, Senior Sales Executive, Van Driver – cum – Sales man and Delivery Boy and it is the defendant Nos.2 to 6 who were liable for the entire suit claim of the plaintiff. Since the defendant No.1 is in no way responsible for commission of the act of fraud by the defendant No.2 or by the defendants No.4 to 6, the question of Plaintiff Company making the suit claim against the defendant No.1, does not arise. d) The balance amount if any is recoverable from defendant Nos.2 and 3, as they connived with defendants No.4 to 6 and put the plaintiff to wrongful loss. It is not understood how the service of defendant No.1 was terminated without providing the right of hearing or without giving the show cause notice in terms of contract or employment, which is nothing but violation of principles of natural justice. Though the plaintiff is aware that the defendant No.2 had expired, he was intentionally arrayed in the suit. The suit is liable to be dismissed as the plaintiff failed to bring on record the legal heirs of the defendant No.2. As on the date of filing the suit, the defendant No.2 died, as such the suit is filed against a dead person and thereby the suit is liable to be dismissed. e) The defendant No.1 was appointed as the General Manager vide letter dated 01.04.1994 offering a share in the profit after working out the targets and the profitability figures as per the condition No.4 of the letter of appointment. Later the Defendant No.1 was appointed as Chief Executive Officer on the same terms and conditions. e) The defendant No.1 was appointed as the General Manager vide letter dated 01.04.1994 offering a share in the profit after working out the targets and the profitability figures as per the condition No.4 of the letter of appointment. Later the Defendant No.1 was appointed as Chief Executive Officer on the same terms and conditions. The defendant No.1 was not paid the salary for the months of May and June, 2001 and moreover he was terminated on 10.07.2001 without prior notice. Even if the letter of termination is deemed as valid, the salary of the defendant No.1 before his termination was Rs.38,500/-, as such, a sum of Rs.77,000/- was due and payable by the plaintiff to the defendant No.1. The defendant No.1 was not paid the salary for the ten days i.e., Rs.12,667/- as he was terminated on 11.07.2001. The defendant No.1 is entitled to claim a sum of Rs.12,58,080/- towards salary from 11.07.2001 to 31.03.2004 at Rs.38,500/- per month. The defendant No.1 served the Plaintiff Company for a period of 11 years i.e., from 1991 to 2001, as such, he is entitled to claim a sum of Rs.2,09,000/- towards gratuity, calculated @ 15 days salary for every year of completed service as per the last salary drawn. The defendant No.1 is entitled to claim the said amount with interest at the rate of 18% per annum as the same is unauthorized enrichment of the plaintiff to the extent of the above amount. The defendant No.1 is also entitled to earned leave encashment of 45 days as on April, 2001, hence, an amount of Rs.57,750/- and Rs.19,250/- towards earned leave up to the date of settlement as on April, 2002 for fifteen days, Rs.1,69,400/- towards encashment of sick leave for 132 days, Rs.6,950/- towards petrol reimbursement voucher for the months of May and June, 2001 along with interest at the rate of 18% per annum. The defendant No.1 is also entitled to 3.75% of the profit on the overall turnover after adjustment. The net profit as per the auditor’s report during the period 1994-1995 to 2000-2001 was Rs.35.30 crores. The share of defendant No.1 in the total turnover after deduction is Rs.26,47,500/-. The staff advance was wrongly debited and recovered as per the ledger is Rs.18,408/- which is liable to be reimbursed. The net profit as per the auditor’s report during the period 1994-1995 to 2000-2001 was Rs.35.30 crores. The share of defendant No.1 in the total turnover after deduction is Rs.26,47,500/-. The staff advance was wrongly debited and recovered as per the ledger is Rs.18,408/- which is liable to be reimbursed. The employee share of provident fund, which was not deposited by the plaintiff for 39 months amounting to Rs.58,500/-, is also entitled by the defendant No.1 along with interest at the rate of 18% per annum. The total receivables is therefore, Rs.53,82,280-90 paise only. Thus, the defendant No.1 is preferring counter claim to claim back the sum of Rs.53,82,280-90 paise along with further interest at the rate of 18% per annum from the date of filing of the counter claim till the date of full and final settlement. f) The theory of underselling was floated by defendants No.4 to 6, who took delivery of material goods. The responsibility of supply of material to defendants No.4 to 6 or to fictitious parties created by defendant No.2 was a joint handiwork of two other sales executives of the company, Van Driver – cum – Salesman Ramulu Yadav, Ravinder Rao and Ashok Reddy along with defendant No.2, who have jointly submitted outstanding recovery reports repeatedly to the Managing Director, which clearly manifests the involvement of the three sales Executives, Delivery Staff, Senior Sales Coordinator, Godown in-charge and accountant and also the Managing Director. The defendant No.2 could not collect money from the hospitals and from the distributors but had promised that the bills outstanding will be cleared by 30.04.2001 and that he would personally monitor and collect the same. The inter office memo showing the list of the parties from whom payment are to be received by the Plaintiff Company was signed by defendant No.2, Ravinder Rao and Ashok Reddy. The documents go to show that the defendant No.2 along with Ashok Reddy and Ravinder Rao had confessed to the defendant No.1 about the misappropriations being carried by them in respect of outstanding amounts due to the Plaintiff Company and that the Managing director was having knowledge of all the transactions. g) There is no explanation as to why Ashok Reddy, P.B. Rajender, Godown Incharge, Srinivas Reddy, Accountant, Ramulu Yadav, A. Ramakrishna, M. Ravinder Rao and Meenakshi Sundaram are not made parties to the suit. g) There is no explanation as to why Ashok Reddy, P.B. Rajender, Godown Incharge, Srinivas Reddy, Accountant, Ramulu Yadav, A. Ramakrishna, M. Ravinder Rao and Meenakshi Sundaram are not made parties to the suit. The Managing Director controlled the entire operational aspect and directly interacted with each functional Managers and Sales Team bye-passing defendant No.1. The accountant separately reported to the Managing director/company president and other directors on the day to day operations and all the transactions of the company. The defendant No.1 was compelled to act only as an intermediate person though he was designated as Chief Executive Officer by the Managing Director. The responsibility assigned to each operational managers will clearly manifest their involvement in the case at every step, which clearly ruled out any involvement of defendant No.1. Each person reported directly to the Managing Director, who was aware of the work of each and every person in the office and each and every transaction undertaken by the employees. The godown in-charge, P. B. Rajender, Driver/Salesman of delivery van Ramulu Yadav and Delivery Boy Siddaiah delivered the entire goods and never reported any dispute on pricing by defendants No.4 to 6 for over ten months of supplies made from September, 2000. h) The Accountant Srinivas Reddy, outstanding recovery Manager Narasinga Rao, Senior Sales Coordinator, A. Rama Krishna, who authorized supplies and invoicing, never reported any dispute or contradiction of rates quoted on invoice by defendants No.4 to 6 when they received supplies for over ten months and have been praying for it too. Accountant Srinivasa Reddy, who held multiple post-dated cheques issued by defendants No.4 to 6 at Hyderabad office, is equally responsible since he had worked in close association with defendant No.2 and in the matters of collection of amounts from defendants No.4 to 6. The accountant held post-dated cheques, blank cheques, covering of the supplies made and never reported any discrepancies to defendant No.1. The Managing Director, on the directions of the company President, had fixed the sales price for all goods, with which understanding alone did the sales team effect sales to each and every party, leaving no room for anybody to undersell or oversell company goods and if they did it was the sales man’s sole responsibility. The Managing Director, on the directions of the company President, had fixed the sales price for all goods, with which understanding alone did the sales team effect sales to each and every party, leaving no room for anybody to undersell or oversell company goods and if they did it was the sales man’s sole responsibility. M/s. Suryachandra Reddy, Auditors at Hyderabad monitored all transactions on a monthly basis and M/s. Mouli and Reddy, Auditors based at Chennai handled consolidated audit of all branches. In any of the audit reports, no deviation was reported. A third Audit Company M/s. Karra and Company carried out an extensive audit during December, 2000 and February, 2001 and the report did not indicate any deviation. i) If theory of underselling the goods is taken into consideration, the act of defendant No.2 corroborated to the theory since defendant No.2 though under employment of the Plaintiff Company sought employment in a Chennai based company viz., M/s. Trans Health Care during February, 2001 itself, wherein again the defendant No.2 tried to defraud them and the same was within the knowledge of the Managing Director of the Plaintiff Company. After being terminated by the Plaintiff Company, the defendant No.2 sought appointment in M/s. Browndove Health Care Private Limited and again he defrauded the company to a large sum of amount due to which the company lodged FIR with Panjagutta Police Station during August, 2002 and he was arrested. On investigation it was reported that the defendants No.4 to 6 sold the goods of the Plaintiff Company from the premises of Maithry Hospitals, Lalapet with connivance and with the active involvement of the defendant No.2 and in the presence of company sales executive, Ravinder Rao. j) The defendant No.2 in his written confession dated 11.05.2001 offered to recover the amount from the defendants No.4 to 6 or pay from his end but the Managing Director deliberately ignored this offer to resolve the situation during May, 2001 itself with the fear that his involvement in the episode may come to the light of the Board of Directors. The defendant No.2 addressed letter to the defendant No.1 accepting his guilt and also agreed to repay the amounts due from the respective parties. The defendant No.2 addressed letter to the defendant No.1 accepting his guilt and also agreed to repay the amounts due from the respective parties. The Managing Director, due to vested interest, jealousy, grudge etc., against the defendant No.1, had implicated the defendant No.1 and put the company to irreparable loss by letting off the defendants No.4 to 6. The intention of the Plaintiff Company is to harass the defendant No.1 mentally. Wherever defendant No.1 sought employment, anonymous letters were sent mentioning his imprisonment, as such, he was left jobless. Hence, the defendant No.1 prayed to dismiss the suit and decree may be passed in his favour for the amount claimed in the counter claim and grant mandatory injunction to reinstate him in the Plaintiff Company with effect from 10.07.2001 with full back wages and all the consequential benefits and declare the letter of termination dated 10.07.2001 as arbitrary, illegal and violative of principles of natural justice. 6. In reply to the written statement filed by the defendant No.1, the Plaintiff Company filed rejoinder, the brief averments of which are as under: a) Casual correspondence and inter office memos exchanged by the defendant No.1 with his subordinates are self-serving and cannot wash off the loss suffered by the Plaintiff Company due to the activities of the defendants. The managing director of the company is stationed at Chennai and monitoring the affairs of the company. The suit subject matter losses were suffered due to a fraud in marketing and sales department and all the concerned people are working under the defendant No.1. In fact, the defendant No.1 never informed about the true state of affairs to anyone till it became unmanageable and apparent. None of the letters alleged to have been sent to the President, ever reached the management. b) The defendant No.1 pitted his subordinates against one another in order to have total and absolute control over the affairs, which ultimately got exposed. The Plaintiff Company settled the claims with defendants No.4 to 6 because it is apparently clear that the entire fraud was a job done by insiders who betrayed the trust reposed on them and as wiser business sense would suggest the company has to salvage every rupee of its, in the circumstance. The settlement of claim with defendants No.4 to 6 does not exonerate the other guilty individual, who facilitated the opportunity to defendants No.4 to 6. The settlement of claim with defendants No.4 to 6 does not exonerate the other guilty individual, who facilitated the opportunity to defendants No.4 to 6. The Plaintiff Company had rightfully laid its claim and defendant Nos.1 and 3 are jointly and severally liable to make good the loss. The defendant No.1 was terminated as he acted prejudicial to the interests of the company. The Plaintiff Company is of the opinion that the defendant betrayed the trust reposed in them and are responsible for the damages suffered by it. The plaintiff was not aware of the death of the defendant No.2 as the Plaintiff Company was not attending the proceedings before the XX Metropolitan Magistrate Court as the case was being prosecuted by the State. c) There is no record to show or information to show that the defendant No.2 involved in such games of deception even before he joined the Plaintiff Company and before working under the supervision of the defendant No.1. Since the defendant No.1 failed to act in furtherance of interest of the Plaintiff Company and since his activities with the assistance of defendant Nos.2 to 6 resulted in serious loss to the company, the services of the defendant No.1 were terminated, which is valid and lawful. The defendant No.1 is not entitled to any sums as claimed by him and all the figures and calculations in the counter claim are self serving and are creation of imaginative creativity of the defendant No.1. The true state of affairs never cross defendant No.1 and were never intimated to the top management. The defendant No.1 did not discharge his responsibility as claimed by him. It is surprising that except the defendant No.1, no other person made any statement about the Managing director and his role in the fraud that resulted in loss to the company. d) The defendant No.1 did not contribute enough to secure the interest of the company. In fact, defendant No.1 parleyed with the other defendants and had been responsible for the fraud which ultimately resulted in suicide by defendant No.2. However, the facts reveal that defendant No.2 was initialized into the game of deception, beginning with the Plaintiff Company, while he was working under defendant No.1. The defendant No.2 suffered due to his irreversible fall due to his gullible nature and lack of ability to continue such game of deception. However, the facts reveal that defendant No.2 was initialized into the game of deception, beginning with the Plaintiff Company, while he was working under defendant No.1. The defendant No.2 suffered due to his irreversible fall due to his gullible nature and lack of ability to continue such game of deception. The company never addressed any anonymous letters to anyone. The counter claim is barred by limitation as the same is not presented properly within limitation and lis liable to be rejected as not tendered with proper court fee within the limitation period. The relief of mandatory injunction cannot be granted for a contract that is already terminated and as there are no existing rights and obligations. The counter claim may be dismissed. 7. After considering rival pleadings, the trial court framed the following issues: i. Whether the defendant No.1 committed fraud on the plaintiff and appropriated Rs.36,37,345/- as detailed in the plaint? ii. Whether the defendant Nos.2 to 6 are alone liable to pay the entire suit amount? iii. Whether giving discharge to defendant Nos.2 to 6 are alone liable to pay the entire suit amount? iv. Whether the defendant No.1 is entitled to counter claim of Rs.53,82,280-90 paise? v. Whether the defendant is entitled to be reinstated with effect from 10.07.2001 with full back wages and all consequential benefits? vi. To what relief? 8. On 31.08.2007 the following additional issues were framed for trial: i) Whether the termination of services of the 1 st defendant is illegal and is liable to be set aside? ii) Whether the plaintiff is liable to pay the salary of the 1 st defendant as prayed for? iii) Whether the plaintiff is liable to compensate the 1 st defendant towards leave encashment and sick leave encashment? iv) Whether the plaintiff is liable to the defendant amount as claimed by the 1 st defendant towards profit sharing? v) Whether the plaintiff is liable to amounts allegedly wrongly deducted from the 1 st defendant as staff advance? vi) Whether the 1 st defendant is entitled to the decree as prayed for through the counter claim? vii) To what relief? 9. During the course of trial, the PW1 was examined and got marked Exs.A1 to 11 on behalf of Plaintiff Company. On behalf of the defendants, defendant No.1 examined himself as DW1 and got marked Exs.B1 to B7. 10. vii) To what relief? 9. During the course of trial, the PW1 was examined and got marked Exs.A1 to 11 on behalf of Plaintiff Company. On behalf of the defendants, defendant No.1 examined himself as DW1 and got marked Exs.B1 to B7. 10. The trial Court after considering the oral and the documentary evidence adduced on behalf of both sides, dismissed the suit of the plaintiff with costs and whereas the counter claim of the defendant No.1 was partly allowed granting decree with a direction to the plaintiff to pay Rs.1,72,162/- with simple interest @ 12% per annum from the date of counter claim i.e., from 16.04.2004 till the date of realisation of payment. 11. Aggrieved by the aforesaid Judgment and Decree of the trial Court, the appellant/plaintiff had filed the present Appeal to set aside the impugned judgment and decree. 12. Heard Sri A. Narasimha Reddy, learned counsel for the appellant/plaintiff and perused the record. The learned counsel for the appellant was permitted to take out personal notice to respondent Nos.1 and 3 to 6. The learned counsel for the appellant/plaintiff submitted memo along with proof of service. A perusal of memo discloses that notice addressed to respondent Nos.1, 4 to 6 returned with an endorsement that no such person in the said address. The track report in respect of notice to respondent No.3 shows that the item got dispatched. However, none appeared for the respondents/defendants. II. POINT FOR DETERMINATION 13. Now the point for determination is: Whether there are any tenable grounds to set aside the impugned Judgment and Decree dated 11.06.2012 passed in O.S. No.462 of 2003 on the file of Chief Judge, City Civil Court, Hyderabad? III. ANALYSIS 14. Before going into the merits of the case, it is appropriate to place on record some of the undisputed facts. There is no dispute that defendant Nos.1 and 2 are the employees of Plaintiff Company and defendants No.4 to 6 are the businessmen dealing in procuring and obtaining suppliers of surgical and medical disposables manufactured and sold by the Plaintiff Company and whereas defendant No.3 alleged to have impersonated defendant No.4. There is no dispute that defendant Nos.1 and 2 are the employees of Plaintiff Company and defendants No.4 to 6 are the businessmen dealing in procuring and obtaining suppliers of surgical and medical disposables manufactured and sold by the Plaintiff Company and whereas defendant No.3 alleged to have impersonated defendant No.4. There is also no dispute that defendant No.2 died prior to filing of the suit as can be seen from Ex.B17 and despite coming to know about the death of defendant No.2, the Plaintiff Company had not initiated any steps to bring the legal representatives of defendant No.2 on record. Even in the present appeal the Plaintiff Company has shown the defendant No.2 in the cause title as if he is alive and in fact, the Plaintiff Company is supposed to bring the legal representatives of the deceased defendant No.2 on record, by filing appropriate application, even before the trial Court. 15. It is pertinent to note that the Plaintiff Company settled the matter with defendants No.4 to 6, as such, the grievance of the plaintiff is only against defendant Nos.1 and 3. Except engaging a counsel, the defendant No.3 did not take any steps to defend himself including filing a written statement in the suit. Furthermore, though the counter claim of the defendant No.1 was partly allowed, the defendant No.1 did not prefer any appeal against the dismissal of part of his counter claim. Thus, the core issue that needs to be adjudicated in the present appeal is whether the trial Court was justified in dismissing the claim of the Plaintiff Company. 16. The main contention of the learned counsel for the plaintiff is that the trial Court erred in dismissing the suit without considering the aspect of fraud committed jointly by defendant Nos.1 to 3 inspite of cogent documentary and oral evidence adduced by the plaintiff. 16. The main contention of the learned counsel for the plaintiff is that the trial Court erred in dismissing the suit without considering the aspect of fraud committed jointly by defendant Nos.1 to 3 inspite of cogent documentary and oral evidence adduced by the plaintiff. It is further contended that the trial Court totally lost sight of the onus, duties and responsibilities which are saddled with an individual who is holding a post of Chief Executive Officer of the company and while discharging the said duties, he alone is responsible for the acts of commission and omission made by him and his colleagues working under him, as such, without properly considering the said aspect and the factum of fraud perpetuated by defendant Nos.1 to 3, the trial Court allowed the claim in respect of the salaries of defendant No.1 whose removal from service itself was as a result of fraud committed by him. Exs.B1 to B3, B16 are the letter of appreciation and promotion issued by the Plaintiff Company in favour of the defendant No.1. If at all, the defendant No.1 is not diligent enough while discharging his duties, Plaintiff Company could not to have issued Exs.B1 to B3 and B16 certifying the good performance of defendant No.1. 17. In order to establish the allegations leveled against defendant Nos.1 and 3, the Plaintiff Company examined its Assistant Manager as PW1, who has reiterated the averments of the plaint in his chief examination. During the course of cross examination, PW1 admitted that the criminal complaint lodged by Meenakshi Sundaram, who is the Managing Director of the Plaintiff Company, against defendant No.1 vide C.C.No.56 of 2004, was dismissed and thereby defendant No.1 was acquitted on merits. Ex.B15 is the certified copy of judgment dated 12.06.2007 passed in C.C.No.56 of 2004 on the file of learned XII Additional Chief Metropolitan Magistrate. 18. PW1 deposed that defendant No.1 had first filed complaint against the defendant Nos.2 and 3. It is to be seen that the defendant No.1 being the Chief Executive Officer of the Plaintiff Company lodged complaint against defendant Nos.2 and 3, who alleged to have involved in the activities, which are detrimental to the interest of the Plaintiff Company. PW1 feigned ignorance as to at whose instance the defendant No.1 was made a party to the complaint. 19. PW1 feigned ignorance as to at whose instance the defendant No.1 was made a party to the complaint. 19. Even as per the version of the Plaintiff Company, it was the defendant No.2, who was alleged to have involved in commission of fraud against the Plaintiff Company by working under the supervision of defendant No.1. There is absolutely no doubt that the defendant No.1 being the Chief Executive Officer is expected to monitor the activities of the employees of the Plaintiff Company. PW1 deposed that the Managing Director and CEO are the policy makers and he never informed in writing to the CEO about any anomalies, misappropriation and fraud. When the errors of omission or commission are not placed before the CEO, the defendant No.1 cannot be held liable for such latches. 20. PW1 admitted that he is not the competent person to depose and comment about the averment in the written statement and document filed in support of the written statement filed by defendant No.1. As rightly observed by the trial Court in the impugned judgment, after the alleged fraud was detected during the audit, according to the plaintiff, the President of the company and Managing Director took control of the matter and the non-examination of the President to whom the defendant No.1 was required to report on monthly activities and equally the non-examination of the Managing Director viz., Meenakshi Sundaram, who had handled the whole issue and who had also deposed in the criminal case, which ended in acquittal, is fatal to the case of the Plaintiff Company. PW1, who is alleged to be the then Assistant Manager during the relevant point of time and as admitted by him, is not competent person to depose about the fraud alleged to have been committed by the defendant No.1, more particularly, when the plaint averments were silent with regard to awareness of PW1/Assistant Manager about the commissions and omissions committed by defendant No.1 while working as Chief Executive officer of the Plaintiff Company. 21. It is the specific averment of the Plaintiff Company in the plaint averments that the defendant Nos.1 and 2 conspired and hatched a plan, whereunder 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. 21. It is the specific averment of the Plaintiff Company in the plaint averments that the defendant Nos.1 and 2 conspired and hatched a plan, whereunder 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. As per the plaint averments, defendant No.1 alleged to have identified defendant No.3 as defendant No.4 in the meeting held by the Managing Director. The trial Court observed in the impugned judgment that the alleged impersonation and identification of the defendant No.3 as that of defendant No.4 by defendant No.1 was done in the presence of the Managing Director viz., Meenakshi Sundaram, who was not examined by the Plaintiff Company. In the absence of any evidence to substantiate that defendant No.1 identified the defendant No.3 as that of defendant No.4, the trial court had no other option except to disbelieve the above said contention of the Plaintiff Company. 22. As stated supra, the Plaintiff Company settled the matter with defendants No.4 to 6 and gave them total discharge. Even though defendants No.4 to 6 were acquitted, no appeal was preferred. In order to establish that defendant No.3 impersonated the defendant No.4 and in view of defendant No.1 had no role to play in that, the Plaintiff Company ought to have examined either of defendant No.4 or defendant Nos.5 and 6 as witnesses. But there is no such instance in the instant case. 23. PW1 admitted that there is no direct allegation made against the defendant No.1 in Ex.A6 i.e., the statement of defendant No.2. The only basis for the Plaintiff Company to lay allegations of fraud against defendants is the audit report under Ex.A4. But neither the auditor nor any person, who had signed the audit report, were examined on behalf of the Plaintiff Company to establish that fraud was detected during the audit. However, PW1 deposed that since the year 2000, he was involved in audit and during audit process, he did not come across any fraud concerning the suit transaction. Furthermore, the trial Court observed in the impugned judgment that none of the material documents are sufficient to fasten liability on any of the defendants No.1 and 3. However, PW1 deposed that since the year 2000, he was involved in audit and during audit process, he did not come across any fraud concerning the suit transaction. Furthermore, the trial Court observed in the impugned judgment that none of the material documents are sufficient to fasten liability on any of the defendants No.1 and 3. In the absence of any material, the defendant Nos.1 and 3 cannot be held liable to pay the suit claim as claimed by the Plaintiff Company. 24. It is the specific case of the Plaintiff Company that in the months of April and May, 2001 the Plaintiff 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. But there is no plausible explanation on the part of Plaintiff Company as to why it discharged defendants No.4 to 6 entirely on mere receipt of Rs.11,00,000/- despite claiming recovery of Rs. 36,37,345/-. The Plaintiff Company did not aver anywhere in the plaint as to what was the amount to which defendant Nos.1 and 3 are exactly liable. There is also no explanation on the part of Plaintiff Company as to why defendant Nos.1 to 3 were not consulted and made parties to the settlement. In these circumstances, Plaintiff Company has to establish as to under what circumstances the defendant No.1 can be saddled with financial responsibilities. 25. Admittedly, Sri P.B. Rammoorthy, who is the authorized signatory and power of attorney holder for the Plaintiff Company, filed the suit on behalf of the Plaintiff Company. Thus, he is the best person to speak about the facts of the case as he signed the plaint on behalf of the Plaintiff Company. But surprisingly he was also not examined by the Plaintiff Company. Though the plaintiff company could examine its Assistant Manager as PW1, he is not the competent person and he is not even aware of the material aspects as far as the liability between Plaintiff Company and defendants. Thus, non- examination of material witnesses like Authorized Signatory and Managing Director of the Plaintiff Company is fatal to the case of the Plaintiff Company. 26. Thus, non- examination of material witnesses like Authorized Signatory and Managing Director of the Plaintiff Company is fatal to the case of the Plaintiff Company. 26. It is the specific contention of the defendant No.1 that as per Ex.A14 he was terminated from the services without serving any notice. In this regard, PW1 deposed that defendant No.1 was sacked from the service but he does not know whether any show cause notice was served on the defendant No.1. It is to be seen that before terminating any employee, an opportunity has to be given to such employee to put forth his contentions. No ample evidence is adduced on behalf of the plaintiff company to establish that a prior notice was issued to the defendant No.1 before terminating his services. Thus, it is clear that without adhering to the principles of natural justice, the defendant No.1 was terminated from the Plaintiff Company. However, it is to be seen that the defendant No.1 did not take any steps in writing to protest the decision of Plaintiff Company in terminating his services and in fact, he had received the cheque in lieu of one month’s notice. The trial Court rightly observed in the impugned judgment that defendant No.1 is stopped by his conduct from claiming the relief of reinstatement with back wages or the alternative relief of damages. Thus, the trial Court answered the additional issue Nos.1 and 2 against the defendant No.1. 27. Though the defendant No.1 has claimed an amount of Rs. 53,82,280-90 paise along with further interest at the rate of 18% per annum from the date of filing of the counter claim till the date of full and final settlement, the trial Court awarded only Rs.1,72,162/- under different heads i.e., unpaid salary for the months of May and June, 2001, unpaid salary for ten days in July, 2001, Earned Leave enchashment for 45 days as on April, 2001 @ Rs.38,500/-, petrol reimbursement, loss on account of non-issuance of TDS Certificate and Form-16. The Plaintiff Company entirely denied the claim of the defendant No.1 on the ground that since the defendant No.1 was terminated, he is not entitled to claim any amount. However, PW1 admitted that defendant No.1 is entitled to receive gratuity, earned leaves and petrol reimbursement as the employees who have completed five years of service will be provided gratuity and petrol allowance. However, PW1 admitted that defendant No.1 is entitled to receive gratuity, earned leaves and petrol reimbursement as the employees who have completed five years of service will be provided gratuity and petrol allowance. The trial Court did not consider the claim of defendant No.1 with regard to advance amount wrongly debited from the account of defendant No.1 on the ground that it is related to period between 1997 and 1999, as such the claim appears to be barred by Law of Limitation. With regard to the claim of defendant No.1 in connection with profit sharing from 1994, the trial Court observed in the impugned judgment that even according to the evidence of DW1 there is no documentary proof showing that defendant No.1 is entitled for profit sharing, more particularly, when the said claim is not sought within prescribed period of limitation. The trial Court did not consider the other claims of the defendant No.1 on the ground that the defendant No.1 failed to place any reliable documentary evidence to corroborate the evidence of DW1. IV. CONCLUSION 28. On a careful perusal of the memorandum of grounds of appeal, it becomes manifest that the appellant has merely reiterated the very same grounds which had already been urged before the learned trial Court. The trial Court upon due consideration of all the relevant aspects, has rightly rendered the impugned judgment and decree by assigning cogent and convincing reasons. 29. In the considered view of this Court, the appellant has failed to prove and establish any tenable grounds so as to demonstrate that the trial Court committed an error in dismissing the suit. We are, therefore of the firm opinion that no case is made out warranting interference by this appellate court. Consequently, the Appeal is devoid of merit and is liable to be dismissed. V. RESULT 30. In the result, the Appeal fails and is hereby dismissed. In the circumstances of the case, there shall be no order as to costs. As a sequel, miscellaneous applications pending if any in the appeal, shall stand closed.