Case Law Details
Star Paper Mills Limited Vs Beharilal Madanlal Jaipuria Ltd. (Supreme Court)
Conclusion: The claim of assessee stood at Rs. 96,41,765.31 for not making the due payments against the 189 consignment of the respondents was acceptable as the respondent had taken up wholly untenable ground that the large number of documents such as invoices, debit notes and ST-1 Form spread over 3 months was an exercise of duress to defeat the legitimate claim raised by assessee.
Held: Assessee-company manufactured writing and printing papers which were sold to customers through wholesalers. It sold its products against direct payment or payment by means of hundies. Respondent was a wholesaler dealer in Delhi, which purchased paper from its Delhi Sales Office and its mills in Saharanpur, lifted a stock of about Rs. 15-20 lakh per month. The sale made to respondent was through limited credit of 45-60 days as well as hundi. Interest was charged after fifteen days from the date of delivery. The rate of interest was 21% p.a., from the date of delivery till the date of payment along with penal interest of 3%. As a wholesaler, the respondent got a trade discount amounting to Rs. 700-750 per ton. For the stock lifted during the period from November, 1985 to January, 1986, the respondent did not make the due payments against the 189 consignment worth Rs. 72,27,079 received by it. Moreover, the hundies for 9 consignments worth Rs. 2,99,480 were also dishonoured. Therefore, the claim of assessee stood at Rs. 96,41,765.31 (principal amount Rs. 71,82,266+Interest on outstanding bill Rs. 24,59,499.31). Respondent contended that assessee had adduced bills based on fictitious transactions, which were void in law. It was in fact assessee who owed Rs. 45 lakh to the respondents. The respondents also alleged that assessee had coerced them to sign documents and on the basis of the same had indulged in tax evasion. As the sale directly made from Saharanpur would be levied with a sales tax of 4%, assessee-company used to take out the goods from the Mill in the name of the respondents and would sell it from appellant’s Delhi depot in the open market at a higher profit. It was held by Court that each invoice had the sales tax registration number and the same were stamped and signed by the respondents. The debit notes and ST-1 forms were also stamped and signed by the respondents. The Court noted that it was the respondents who had claimed that the transactions were fictitious and fraudulent, therefore the onus was on them to establish the same. Assessee had indeed proved the documents maintained in regular course of business by a witness. Moreover, having accepted the trade discount, which was evident from the stamp and signatures not only on the debit notes but also on the invoice as well as on ST-1 Form, showed that the goods were actually lifted by the respondents for which payment had not been made. The respondents had taken up wholly untenable ground that the documents were signed under duress. Large number of documents such as invoices, debit notes and ST-1 Form spread over 3 months was unbelievable to be an exercise of duress. The stand of the respondents was wholly untenable and unjustifiable in law and was only to defeat the legitimate claim raised by assessee. The High Court in the appeal had gravely erred in setting aside the reasoned order of the learned Single Bench on the grounds which were not even raised by the respondents.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
1. The present appeal is directed against an order passed in an intra-court appeal by the Division Bench of the High Court of Delhi at New Delhi on 28.5.2012 whereby the judgment and decree passed by the learned Single Bench of the High Court was set aside and the suit filed by the appellant-plaintiff was dismissed. The learned Single Bench decreed the suit of the appellant for a sum of Rs.96,41,765.31 along with simple interest @ 15% p.a. from the date of institution of the suit i.e., 5.10.1987, till the date of payment, on the principal amount of Rs.71,82,266/-.
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