Nagpal Fabrics PVT. LTD. vs. Sh. Rajeev Gulati & Anr.

Facts

Nagpal Fabrics Pvt. Ltd. (appellant) filed a suit for recovery of ₹20,16,632/- from Sh. Rajeev Gulati (respondent no.1), who operates as M/s Gulati Enterprises (respondent no.2). The appellant claimed to have supplied fabric worth ₹19,45,801/- and sought recovery of this amount along with interest. The appellant alleged that a cheque for ₹10,00,000/- issued by the defendant's father as part payment was dishonored. The Commercial Court dismissed the suit, finding that the appellant failed to establish the delivery of goods. The appellant appealed this decision. The respondent denied any commercial relationship, disputed the authenticity of signatures and seals on invoices, and claimed the invoices were fabricated. He stated he became aware of the invoices through the GST portal.

Held

The Court held that the appellant failed to establish its case that it had delivered the goods against the raised invoices and was therefore entitled to recover the consideration. The Court concurred with the Commercial Court's finding that the appellant had not proven the delivery of goods. The reasoning was based on several factors: (i) the cheque in question was not signed by the proprietor of M/s Gulati Enterprises at the relevant time; (ii) the series of cheques pertaining to the cheque in question were not in use after November 2017; (iii) the delivery of the cheque by the defendant to the plaintiff remained unproved; and (iv) the appellant failed to establish the receipt of the cheque from the defendant at the material time, especially considering the death of the person who signed it. Additionally, the Court noted the suspicious practice of raising multiple invoices below ₹1,00,000/- on the same dates, suggesting an attempt to circumvent the requirement of E-way bills, which would have evidenced the movement of goods. The absence of prior transactions between the parties and the supply on credit also raised doubts. Therefore, the appeal was dismissed.

Key Issues

1. Whether the appellant (plaintiff) has proved the delivery of goods (fabrics) to the respondent (defendant) for the total sum of ₹19,45,801/-, as claimed, and is therefore entitled to recover the said amount along with interest? Appellant's arguments: The appellant contended that it supplied fabric to the defendant, raised invoices, and received a part payment via a cheque which was subsequently dishonored. The defendant's father signed the cheque, and the invoices bore the defendant's company seal and signature, acknowledging the amount due. The appellant relied on the invoices and the dishonored cheque as proof of transaction and debt. Respondent's arguments: The respondent argued that the goods were never supplied, and he had no commercial dealings with the appellant. He claimed the signatures and seal on the invoices were forged and fabricated. He presented evidence suggesting the cheque was not validly issued or delivered by him, including bank records indicating the cheque series was no longer in use and his father's demise prior to the alleged cheque issuance/delivery. The respondent also raised concerns about the plaintiff's practice of issuing multiple invoices below ₹1,00,000/- to avoid mandatory E-way bills.