Piccadily Hotels Private Limited vs. Ashish Rathi & Anr.

Facts

The Appellant, Piccadily Hotels Private Limited, engaged in hospitality services, had a business relationship with the Respondent, Ashish Rathi, who supplied electrical items, hardware, sanitary products, and refrigeration goods. The Appellant alleged that the Respondent consistently failed to supply goods on time and that the supplied goods were of substandard quality, leading to financial losses and reputational damage. Consequently, the Appellant terminated the business relationship on June 12, 2018. The Appellant claimed to have paid for all goods received, totaling ₹3,24,533. However, the Respondent filed a suit on April 9, 2021, seeking recovery of ₹12,02,957/- with interest, claiming supply of goods from April 1, 2018, to March 2, 2021. The Trial Court decreed the suit in favor of the Respondent for ₹12,02,957/- with interest and costs. The Appellant appealed this judgment.

Held

The Court held that the Appellant failed to discharge the burden of proof regarding their allegations of forgery and fabrication of invoices. The Appellant's witness could not identify the stamp on the invoices, nor did they produce any genuine invoices or other documents to substantiate their claim that the Respondent's invoices were forged. The Court noted that allegations of forgery require comparative analysis with genuine documents, which was absent. Furthermore, the Appellant did not produce any contemporaneous evidence to support their claim of inferior quality goods. The Court relied on the Supreme Court's judgment in M/s Star Paper Mills Ltd. v. M/s Beharilal Madanlal Jaipuria Ltd., stating that once the plaintiff (Respondent) discharges the initial burden by producing primary documentary evidence, the burden shifts to the defendant (Appellant) to establish its allegations of forgery, fraud, or duress. The Appellant's witness was also unable to point out specific payments made against invoices, identify signatures, or disclose the name of the Project Manager. Therefore, the Court found no grounds to interfere with the Trial Court's judgment, which correctly held that ₹12,02,957/- was due and payable to the Respondent and had not been paid. The appeal was dismissed.

Key Issues

1. Whether the invoices and statement of account relied upon by the Respondent are forged and fabricated, as alleged by the Appellant (turning on the evidentiary value of documents and the burden of proof for forgery)? 2. Whether the goods supplied by the Respondent were of inferior quality, as alleged by the Appellant (turning on the proof of breach of contract and damages)? 3. Whether the Respondent is entitled to a decree for recovery of ₹12,02,957/-, as prayed for? 4. If the Respondent is entitled to recovery, whether they are entitled to interest, and if so, at what rate and for what period? Contentions of the Appellant: The Appellant argued that the Trial Court erroneously held them liable for the entire dues. They contended that crucial evidence was overlooked, and the Trial Court wrongly held that their witness (DW-1) could not identify the Appellant's stamp, despite no invoice bearing such a stamp. The Appellant highlighted admissions by the Respondent's witness (PW-1) that no document containing agreed terms was filed and that communication was verbal. Crucially, PW-1 admitted no transactions occurred between April 1, 2017, and December 30, 2017, and no material was supplied after June 2018, contradicting the Respondent's account statement. The Appellant asserted that the invoices were forged and fabricated, lacking acknowledgment or authentic stamps, and no purchase orders were produced. They also argued that no witness proved actual delivery, and the Project Manager, who allegedly received materials, was not summoned. The Appellant relied on the principle that allegations of forgery require comparative analysis with genuine documents. Contentions of the Respondent: The Respondent argued that the Appellant failed to produce any contemporaneous evidence of inferior quality goods. They contended that the Appellant's witness could not identify the stamp on the invoices, and no genuine invoices were produced to substantiate the forgery claim. The Respondent relied on the Supreme Court's decision in M/s Star Paper Mills Ltd. v. M/s Beharilal Madanlal Jaipuria Ltd., emphasizing that once the plaintiff discharges the initial burden with documentary evidence, the burden shifts to the defendant to prove allegations of forgery or fraud. They also cited J. Yashoda v. K. Shobha Rani regarding the best evidence rule.