STATE OF M.P. AND OTHERS Vs. NARENDRA KUMAR UPPAL

JUDGEMENT

(1.) THIS appeal has been preferred by the defendants State of M.P. and others aggrieved by the judgment and decree dated 29 -10 2003 passed by Second Additional District Judge, Shahdol in Civil Suit No. 8 -B/02 decreeing the suit filed by the respondents for a sum of Rs. 24,13,046/ -inclusive of interest Rs. 10,10,112/ -@ 24% per annum. The pendente lite interest has been ordered to be paid @ 9% per annum from the date of filing of the suit. Shri N.K. Uppal had filed the instant suit for recovery of sum of Rs. 14,02,934/ - with respect to the supply made to the defendants as per bill Nos. B -51/161 to B -51/167 dated 5 -10 -1998. The plaintiff averred that defendants purchased the goods and took the delivery. Goods were checked by their officials, they were found to be in order, goods were duly entered in the measurement books. Plaintiff did not receive any complaint of any sort with respect to the quality of goods. The defendants failed to pay the price of goods as such they were liable to pay the interest @ 24% per annum which was in conformity with rate of interest of M.P. Laghu Udyog Nigam (hereinafter to be referred to as LUN). The goods were supplied as per challans dated 17 -9 -1998, 18 -9 -1998, 8 -10 -1998 and 19 -9 -1998. After a demand notice was sent, defendant No. 4 made part payment and issued a cheque No. 035432 dated 31 -12 -1998 for Rs. Two Lakhs. Cheque was deposited by the plaintiff in Dena Bank, Jabalpur, later on by letter dated 13 -1 -1999 Dena Bank, Jabalpur informed the plaintiff that payment of amount of check could not be received due to its stoppage. Thereafter a notice dated 31 -7 -2001 was served by the plaintiff under section 80, Civil Procedure Code claiming principal amount of Rs. 14,02,934/ - and interest of Rs. 10,10,112/ - from 5 -10 -1998 till the date of filing of the suit. The defendants No. 1 to 4 in their joint written statement contended that there was no direct contract entered into by the defendants with the plaintiff for supply of goods. Defendant did not issue supply order to the plaintiff. No cause of action accrued as against them. Purchase orders were required to be issued by LUN, Bhopal. It was only after confirmation of LUN, payment could have been made by the defendants. On receipt of supply, a communication was sent by the defendants to LUN to send the items list in order to make the payment. The LUN, Bhopal informed to the defendant No. 4 that no supply order was ever issued in favour of the plaintiff by the LUN. The supply orders were fabricated. Payment was ordered to be stopped. Various correspondence in that regard took place inter alia in the month of November and December, 1998 and January, 1999 referred to in the written statement. LUN had issued a notice to the plaintiff for playing fraud and for submitting forged supply orders using its seal unauthorizedly even thereafter without impleading the LUN, the plaintiff has filed the suit. The suit was not maintainable, as it was based on fraudulent act of supply made on the basis of forged supply orders, plaintiff was to be criminally prosecuted in which goods were liable to be confiscated.

(2.) THE trial Court framed eight issues and after recording the evidence, decreed the suit, consequently this First Appeal has been preferred by the defendants. Shri Sudesh Verma, learned Govt. Advocate appearing on behalf of State of M.P. has submitted that judgment and decree is perverse and grossly illegal. The plaintiff was never appointed as supplier by the LUN, his tender was not accepted. The supply orders were not issued by the LUN to the plaintiff. The plaintiff has admitted that he participated in the tender proceedings, however, two other firms namely Rajat Sales Corporation, Indore and Shubham Corporation, Indore were appointed as suppliers for the purpose of supply of survey equipments and an agreement was entered into with those firms by the LUN. The plaintiff has stated that in fact his tender was not accepted. Counsel further submitted that plaintiff has not deposited 3% commission payable to LUN before issuance of supply orders. Shri R.D. Saxena, GM, LUN, Bhopal has stated that before issuance of supply order 3% commission was required to be paid to LUN, no such amount was deposited with the LUN by the plaintiff. Shri G.N. Sahu, Manager of LUN has stated that no final agreement was entered into with the plaintiff, as such no supply order was issued to the plaintiff. Supply orders were not signed by the concerned officer by whom they were purported to have been signed. Shri R.D. Saxena, GM has denied the signatures on seven supply orders D -6 to D -8 and D -37 to D -40, thus these supply orders were clearly an outcome of forgery. Plaintiff purposefully did not implead the LUN and made the supply on the basis of forged document on receiving the intimation from LUN, the payment of cheque of Rs. Two Lakhs that was issued was stopped due to commission of fraud by the plaintiff, suit could not have been decreed. He has also submitted that decreeing the interest @ 24% per annum was totally uncalled for and without impleadment of LUN, suit was not maintainable. Shri M.L. Jaiswal, learned Sr. Counsel assisted by Shri K.K. Gautam, Advocate appearing on behalf of respondent has submitted that supply orders were issued by the LUN. Defendants have failed to prove that the fraud was committed. The supply orders have not been proved to be forged in view of the evidence adduced on behalf of defendants. Entry was made in the measurement book, cheque of Rs. Two Lakhs was issued, for part payment of principal amount, estoppel was created against the defendants having accepted the supply, they were required to make the payment, even if contract was ultimately found to be void for any reason. He has placed reliance on section 70 of the Contract Act and the decisions in Pilloo Dhunji Shaw Sidhwa vs. Municipal Corporation of the City of Poona, : AIR 1970 SC 1201; Pannalal vs. Dy. Commissioner, Bhandara and another, : AIR 1973 SC 1174; Union of India vs. J.K. Gas Plant, : AIR 1980 SC 1330 and Cantonment Board, Mhow vs. M/s Chhajumal and sons, Mhow, : 1968 MPLJ 425. Firstly we are required to examine the nature of transaction between the parties. It is not in dispute that no supply order was to be issued by the defendants. It appears that LUN was required to appoint the suppliers. By floating all India wise tenders, the offers were invited : The offer of plaintiff was not accepted by LUN and two other firms were appointed as suppliers. To the selected suppliers the supply orders were required to be issued by the LUN on the basis of requisition made by the department as per their requirements. Plaintiff Narendra Kumar Uppal (PW -1) has stated that he has participated and submitted his tender for appointment as supplier, all India -wise tenders were invited by the LUN. In Para -11 of his deposition plaintiff has further stated that when he wanted to deposit the performance guarantee of Rs. 50,000/ -, he came to know that two other firms namely Rajat Sales Corporation, Indore and Shubham Corporation, Indore were given the contract for making supply of survey equipments. Plaintiff has not stated that an agreement was entered into with him by the LUN pursuant to the said NIT. On the contrary he has stated that his performance guarantee was not accepted on the ground that M.D. had yet to sanction his tender, only thereafter amount could have been deposited. Plaintiff has not filed any document whatsoever showing that his tender was accepted by the LUN nor plaintiff has deposited the performance guarantee at any point of time. Coupled with the aforesaid statement of plaintiff himself when we consider the deposition of two responsible officials of LUN, Shri G.N. Sahu, Manager of LUN, Bhopal has stated that there was no final agreement entered into with the plaintiff, consequently no supply orders were issued to the plaintiff, the supply orders were forged, they were not issued by the LUN. Shri R.D. Saxena, GM, LUN, Bhopal has also stated that as per procedure in the LUN supply/purchase order could have been issued by the Department or supplier unit could have submitted the supply orders. In LUN on receiving the purchase order, entry used to be made in the inward register. Whenever supply order used to be issued, dispatch number used to be mentioned and before issuance of supply order, it was necessary to make payment of 3% commission of the amount of which supply order was to be issued, only thereafter, the supply order used to be issued. Statement of aforesaid witnesses indicate that no agreement was entered into appointing plaintiff as a supplier by the LUN, thus we have no hesitation in holding that no agreement was entered into by the plaintiff with the LUN for effecting the supply, his tender was not accepted. The plaintiff did not deposit the performance guarantee and has admitted that two other firms were appointed as suppliers, the fact is also supported by communication (Ex.D -10A) dated 20 -11 -1998 that only M/s Raj at Sales Corporation, Indore and M/s Shubham Corporation, Indore had been appointed as suppliers, no other supplier was appointed by the LUN. No orders were issued for supply of survey equipments to any other firm, thus plaintiff has failed to prove that he was appointed as supplier, he has not produced any document neither that he had deposited amount of 3% commission nor deposited performance guarantee.

(3.) WHEN we consider whether fraud has been played or not, the finding on the aforesaid aspect that plaintiff was not appointed as supplier assumes significance coupled with the other evidence, we have no iota of doubt that serious kind of fraud was played by the plaintiff in this case. He has used forged supply orders to make supply, which were never issued by the LUN. In Para -6 of cross -examination, he was unable to state the date on which he received the supply orders from LUN, the plaintiff was responsible for submitting the forged documents to effect the supply whereas he was not even appointed as supplier by the LUN. In the absence of acceptance of his tender by the LUN, it was not open to the plaintiff to effect the supply. He has stated in Para 7 of his deposition that whatever agreements/documents were entered into, they have been given back to LUN, he was not having any document in his possession. This incorrect statement indicate that there was no agreement entered into. "Man may lie but circumstances do not" is the cardinal principal of evaluation of evidence. In the absence of having even a single document indicating that the plaintiff was appointed as a supplier, we have no hesitation in rejecting the bald oral statement of plaintiff that an agreement was entered into and he was appointed as supplier. There was no reason, in case he was appointed as supplier by the LUN, to give back all the documents which were required to be entered into between them. He has further admitted that the defendants did not issue any supply order to him. PWD had placed an order with the LUN and the LUN issued supply orders to him, he had oral discussion with the officers of PWD to effect supply, however, he admitted that he knew very well that on oral communication no supply could have been made to the defendants. He has also stated that he received the work orders from the LUN by way of post in closed envelops, he has returned the envelop. This is again an unreliable and flimsy stand taken by the plaintiff, there was no reason to give back envelops as stated in Para -9. He has thus tried to cover up the origin of fabricated supply orders. He has not stated that any particular person of LUN handed over supply orders to him, he has failed to prove that how and in what manner he has received the disputed supply orders. In view of the aforesaid statement, it can be culled out that supply orders were forged and it can be inferred that he was responsible for it. When we consider the statement of Shri G.N. Sahu, Manager, LUN, he has stated that as soon as they received seven supply orders for the purpose of approval of payment, they informed the Executive Engineer, PWD to stop the payment, a communication (P -13) was sent. Supply orders were not issued by the LUN, the seal was never affixed while issuing the supply orders. Printed supply orders used to be signed by the concerned officer. There was no dispatch number of the LUN on the supply orders (D -6 to D -8). Other communication has also been proved by him in which it was mentioned that for committing forgery, a police case was required to be lodged against the plaintiff. Several letters were written by the LUN to the PWD for taking criminal action against the plaintiff. He has further stated that he was posted as Manager, LUN, Bhopal from 1998. The LUN did not enter into an agreement with the plaintiff. Letter (D -24) was sent by Shri Surendra Agrawal. Dy. GM, a letter dated 3 -1 -2001 was also written by GM in the matter of the fraud committed by the plaintiff. He has further stated that Government was also informed by the LUN that disputed supply orders were not printed by the LUN. Shri R.D. Saxena, GM (PW -4) has stated that he was well acquainted with the signatures of Shri S.P. Johri. He himself and Shri S.P. Johri used to sign the supply orders, his signatures were not there on (Ex.D -6 to D -8 and D -37 to D -40). They never affixed the seal on the supply orders which used to be issued. Printing used to be done by the Administrative Department. There is no reason to disbelieve the statement of Shri R.D. Saxena that supply orders did not bear his signatures. There was no dispatch number mentioned on the supply orders thus production of dispatch register was of no utility. Shri D.C. Tiwari (DW -I) Executive Engineer, PWD, an officer in -charge of the case has proved the correspondence on record made by PWD, indicating that PWD has also informed to take appropriate criminal action against the plaintiff. The payment of cheque of Rs. 2,00,000/ - was stopped on coming to know of the fact that no supply orders were issued by the LUN and they were forged. There is no iota of doubt from the correspondence on record and from the statement of witnesses that no agreement was entered into with the plaintiff, supply orders were forged, no dispatch number was mentioned in the supply orders, they were not signed by the officers of LUN, thus supply made by the plaintiff was clearly an act of fraud committed. In the facts and circumstances, we are surprised that when the supply order used to be issued at the instance of LUN, Bhopal it was necessary to deposit amount of 3% commission with the LUN before issuance of supply orders, it was also not deposited. Coupled with the evidence of defendants witness and shaky statements of plaintiff, there is no room for doubt that plaintiff was responsible for creating and using forged supply orders. Coming to the submission raised by Shri M.L. Jaiswal, learned Sr. Counsel appearing for respondent/plaintiff with respect to section 70 of the Contract Act. Section 70 of the Contract Act lays down that where a person 'lawfully' does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered. First requirement is that person must have acted 'lawfully' not fraudulently. Secondly that person should not have done the act 'gratuitously' and thirdly that other person must have 'enjoyed the benefit'. The word 'lawful' in the section 70 of the Contract Act applied to transaction in conformity with the principle or spirit of law whether moral or judicial. Section is not intendant to help voluntary fraudulent act, the words lawfully does something' is merely bona fide act not a fraudulent act if act is not lawful section 70 cannot be invoked. In the instant case it cannot be said that benefit was bona fide conferred by plaintiff on the defendants. The second requirement of section 70 is that benefit done to other is not intended to be done gratuitously. It does not mean that benefit should be thrust upon him without his having option of refusing it. No person can have a right to force a benefit fraudulently upon another person.