Delhi District Court
Iffco Tokio General Insurance Co Ltd vs I 2 Distribution And Anr on 10 November, 2025
IN THE COURT OF SH. PULASTYA PRAMACHALA,
DISTRICT JUDGE (COMMERCIAL COURT)-01,
PATIALA HOUSE COURTS, NEW DELHI
Sl. INDEX
No. HEADINGS Page Nos.
1. Memo of Parties 2
2. Description of case 2
3. Brief Facts of the Case 3-5
4. Plea of defendants 5-7
5. Issues Framed 7
6. Plaintiff's Evidence 7-8
7. Evidence of Defendants 8
Decision on Issues
8. Issues No.1 9-10
9. Issue No.2 10-12
10. Issue No.3 12-16
11. Issue No.4 16-19
12. Issue No.5 19
13. Relief 19-20
Digitally
signed by
PULASTYA
PULASTYA PRAMACHALA
PRAMACHALA Date:
2025.11.10
17:00:01
+0530
CS No. 956/2018 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.1 of 20 Patiala House Court, New Delhi
CS(COMM.) 956/2018
In the matter of:
IFFCO TOKIO GENERAL INSURANCE
COMPANY LIMITED (ITGI)
Iffco Tower, Plot no. 3,
Sector-29, Gurgaon, Haryana-122001
Also at:
IFFCO Sadan
C-1, District Centre, Saket,
New Delhi-110017.
...Plaintiff
Versus
1. M/s I2 Distribution
No.22/32, Journalist Colony,
Srinivasapuram, Thiruvanmiyur,
Chennai-600041.
Also at:
15, Karpagam Garden, 2nd Main Road,
Adyar, Chennai-600020. ... Defendant no. 1
2. MICROMAX Informatics Limited
Registered office at 21/14, A, Phase-II,
Naraina Industrial Area,
New Delhi-110028. ... Defendant no. 2
Date of Institution : 05.10.2018
Conclusion of arguments : 15.10.2025
Date of Judgment : 10.11.2025
Decision : Suit is decreed in favour of Plaintiff and against
Defendant No.1
JUDGMENT
DESCRIPTION OF CASE
1. Present suit has been instituted by plaintiff under the provisions of the Commercial Courts Act, 2015, for recovery of a sum of Rs.42,91,084/- (Rupees Forty Two Lakhs Ninety One Thousand and Eight Four) along with interest.
CS No. 956/2018 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.2 of 20 Patiala House Court, New Delhi
BRIEF FACTS OF THE CASE
2. Plaintiff is a company duly incorporated under the Companies Act, engaged in the business of general insurance, and provides various insurance products, including credit risk insurance policies. Defendant No. 1 is a private limited company engaged in the business of distribution and redistribution of electronic goods, including mobile handsets. Defendant No. 2 is also a private limited company engaged in the business of trading and distribution of mobiles, data cards, tablets, and other electronic devices.
3. It is the case of plaintiff that defendant no. 2, in the ordinary course of its business, used to appoint distributors across India for the sale and resupply of its products. In this regard, defendant no. 2 entered into a Distributor Agreement with defendant no. 1, under which defendant no. 1 was granted a non-exclusive right to market and distribute the products of defendant no. 2. Pursuant to the said agreement, defendant no. 2 supplied goods to defendant no. 1 against various purchase orders, and raised invoices from time to time. The details of such invoices raised for the period between 04.09.2015 to 18.10.2015 are set out in paragraph 10 of the plaint. As per the said statement, a principal amount of Rs. 79,88,785.43/- became due and payable by defendant no. 1 to defendant no. 2.
4. Defendant no. 2 had obtained a Credit Insurance Policy bearing No. 61006704, valid for the period from 06.05.2015 to 05.05.2016, from plaintiff. Under the terms of the said policy, plaintiff agreed to indemnify defendant no. 2 for losses up to CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.3 of 20 Patiala House Court, New Delhi 80% of the amount of loss assessed in accordance with the policy conditions. Defendant No. 2 submitted a notification of overdue account to plaintiff on 11.12.2015, informing that certain sums were outstanding from defendant no. 1. Upon assessment, as per the statement of account of defendant no. 2 for the period 01.11.2015 to 17.01.2017, the net assessed debt was determined to be Rs. 53,63,855/-, and accordingly, plaintiff paid a sum of Rs. 42,91,084/- to defendant no. 2 under the terms of the policy.
5. It is further averred that, in accordance with the principle of subrogation recognized under insurance law, once the insurer has indemnified the insured for a covered loss, the insurer becomes entitled to exercise all rights and remedies available to the insured against third parties responsible for such loss. Clause 6.7.4 of the policy also incorporates this principle.
6. Defendant no. 2 executed a Letter of Subrogation-cum-Special Power of Attorney dated 31.03.2017, whereby, in consideration of the payment of Rs. 42,91,084/-, it subrogated and assigned to plaintiff all its rights and remedies against defendant no. 1 for recovery of the said amount. Consequently, under the law of subrogation, Plaintiff became entitled to recover from defendant no. 1 the amount paid to defendant no. 2. However, defendant no. 1 has failed to make such payment. Hence, the present suit has been filed for recovery of Rs.42,91,084/- along with pendente lite and future interest at 18% per annum.
7. Plaintiff has further pleaded that this Court has the territorial jurisdiction to entertain and adjudicate the present suit, as defendant no. 2 carried on business within the jurisdiction of this CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.4 of 20 Patiala House Court, New Delhi Court. Moreover, in terms of the Distributor Agreement between defendants no. 1 and 2, all disputes arising out of the agreement are subject to the jurisdiction of the Courts at New Delhi. Accordingly, the present suit is maintainable within the territorial jurisdiction of this Court.
PLEA OF DEFENDANTS
8. Upon service of summons, both defendants entered into appearance and filed their respective written statements. Defendant no. 1, in its written statement, has denied all the averments made in the plaint, contending that the present suit is a gross abuse of the process of law. It is alleged that Plaintiff, in collusion with defendant no. 2, has dishonestly concealed material facts relevant to the suit claim. Defendant no. 1 has further averred that it is a partnership firm, whereas paragraph 6 of the plaint erroneously describes it as a private limited company. It is stated that although there exists a company named i2 Distribution Private Limited, no transaction was ever undertaken between the said entity and plaintiff. Defendant no. 1 has also challenged the maintainability of the suit on the ground that the same has been instituted without a valid Board Resolution. It is contended that the Power of Attorney executed in favour of Sh. M. L. Dass is not supported by any valid resolution of the Board of Directors of plaintiff company, and therefore, the suit has not been filed by a duly authorized person.
9. It is further the plea of defendant no. 1 that Plaintiff, having instituted the present suit as a subrogee of defendant no. 2, is not entitled to file and prosecute the suit in its own name. It is CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.5 of 20 Patiala House Court, New Delhi contended that an insurer, as a subrogee, can maintain an action to recover the amount paid to the insured only by impleading the insured as a co-plaintiff. Plaintiff, it is claimed, has neither filed the present suit as an agent of defendant no. 2 nor joined defendant no. 2 as a co-plaintiff.
10. Defendant no. 1 has further alleged that plaintiff negligently indemnified defendant no. 2 without independently verifying the alleged loss through any qualified surveyor or conducting a proper investigation into the pre-existing disputes between defendants. It is stated that plaintiff relied upon an inconclusive report prepared by M/s Unified Credit Solutions, which had been engaged by defendant no. 2, and treated mere representations of defendant no. 2 as true without due diligence. Accordingly, defendant no. 1 has prayed for dismissal of the suit with costs.
11. In its written statement, defendant no. 2 has averred that it has been impleaded merely as a pro forma defendant and that the suit is not maintainable against it, as there exists no dispute whatsoever between plaintiff and defendant no. 2. It is stated that, as per the duly maintained running accounts of defendant no. 2, an outstanding amount of Rs.53,63,855/- remained unpaid by defendant no. 1 towards goods supplied. Consequently, defendant no. 2 raised a claim under the insurance policy, which was duly verified by plaintiff, and plaintiff thereafter reimbursed defendant no. 2 to the tune of Rs.42,91,084/-. Defendant no. 2 has, therefore, contended that no cause of action has arisen in favour of plaintiff against it and that it is neither a necessary nor a proper party to the present proceedings.
CS No. 956/2018 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.6 of 20 Patiala House Court, New Delhi
12. Plaintiff filed replications to the written statements of both defendants, specifically denying the averments on merits and controverting the preliminary objections of defendant no.1, as false and baseless.
ISSUES FRAMED
13. Vide order dated 07.10.2021 following issues were framed: -
i. Whether suit has been filed wrongly against defendant no. 1, in view of the preliminary objection 3-A of the written statement of defendant no. 1 ? OPP ii. Whether the suit has been filed by a duly authorized person on the basis of valid authorization/power of attorney? OPP iii. Whether suit has been filed as a subrogee of defendant no.
2, if so, its effect? OPP iv. Whether Plaintiff is entitled for the suit claim, if so, against which defendant and for what amount? OPP v. Whether Plaintiff is entitled for interest, if so, at what rate on which amount and for which period? OPP.
vi. Relief, if any?
14. After framing of issues, case management hearing was conducted and dates were fixed for plaintiff's evidence, defendant's evidence and final arguments.
PLAINTIFF'S EVIDENCE
15. In support of its case, plaintiff examined one witness i.e. AR Sh.
Sanjeev, Senior Manager of plaintiff, who tendered his affidavit in evidence as Ex.PW-1/A, and referred to and proved following documents: -
SL Documents Exhibit/Mark
No. Number
1. Power of Attorney Ex.PW 1/1
CS No. 956/2018 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.7 of 20 Patiala House Court, New Delhi
SL Documents Exhibit/Mark
No. Number
2. Copy of Distributor Agreement Ex.PW 1/2 (OSR)
3. The insurance policy being police no. Ex.PW 1/3 (OSR) 66192770
4. The invoice raised for default period Ex.PW 1/4 (colly) for 04.09.2015 to 18.10.2015 (OSR)
5. Notification of over-due amount Ex.PW 1/5 (OSR)
6. The discharge voucher Ex.PW 1/7 (OSR)
7. Letter of subrogation of Plaintiff Ex.PW 1/8 (OSR)
16. The testimony of PW-1 remained unrebutted, as he was not subjected to cross-examination by the learned counsel for defendants. Thereafter, vide order dated 27.02.2023, plaintiff closed its evidence.
EVIDENCE OF DEFENDANTS
17. A perusal of the record reveals that vide order dated 09.02.2021, the learned counsel for defendant no.1 withdrew his vakalatnama and was discharged from the proceedings. Thereafter, none appeared on behalf of defendant no. 1, and the said defendant was proceeded ex parte vide order dated 07.10.2021. Consequently, defendant no. 1 did not lead any evidence in its defence. Similarly, defendant no. 2 also did not adduce any evidence in its defence.
18. I heard ld. counsel of plaintiff and have perused the record carefully. My issue-wise findings in the present matter are as under: -
CS No. 956/2018 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.8 of 20 Patiala House Court, New Delhi
ISSUE NO. 1
Whether suit has been filed wrongly against defendant no. 1, in view of the preliminary objection 3-A of the written statement of defendant no. 1? OPP
19. Though onus to prove this issue was cast upon plaintiff, but since this was a plea taken by defendant no.1, it was for this defendant to prove this plea. Plaintiff examined its Authorized Representative, PW-1 Sh. Sanjeev, Senior Manager, who tendered his affidavit in evidence and relied upon the documents already detailed above.
20. In its written statement, defendant no. 1 claimed that it is a partnership firm and that the suit has been wrongly filed against it as a private limited company. It was further pleaded that although there exists an entity by the name of I2 Distribution Pvt. Ltd., no transaction was ever conducted by the said company with Plaintiff.
21. Upon perusal of the record, it is evident that in the memo of parties, plaintiff has described defendant no. 1 as "M/s I2 Distribution, No. 22/32, Journalist Colony, Srinivasapuram, Thiruvanmiyur, Chennai-600041." The summons were duly served upon the said defendant, and the written statement filed on its behalf also bears the same address. Moreover, the written statement contains admissions regarding the business transactions between defendant no. 1 and defendant no. 2.
22. Plaintiff, on the other hand, has placed on record the Distributor Agreement (Ex. PW-1/2), which clearly records defendant no. 1 as the distributor appointed by defendant no. 2, and also the CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.9 of 20 Patiala House Court, New Delhi invoices (Ex. PW-1/4 Colly), which were raised by defendant no. 2 upon defendant no. 1. These documents substantiate the existence of a commercial relationship between defendant no. 1 and defendant no. 2. It is not the case of plaintiff that defendant no. 1 had any transaction with plaintiff.
23. No evidence has been adduced on behalf of defendant no. 1 to establish that it is a partnership firm or that it has been wrongly described in the plaint. Moreover, defendant no. 1, having failed to contest the proceedings after being proceeded ex parte, has not discharged its burden of proof.
24. In view of the above, it is apparent that defendant no. 1 has been correctly impleaded in the present suit. The plea that defendant is a partnership firm and not a private limited company is not very significant, because a company or a partnership firm, both are juristic persons. Plaintiff, on the basis of the information available, has described defendant no. 1 in the memo of parties. Such a discrepancy, even if any, does not invalidate the proceedings or affect the maintainability of the suit.
Accordingly, Issue No. 1 is decided in favour of Plaintiff and against Defendant no. 1.
ISSUE NO. 2Whether the suit has been filed by a duly authorized person on the basis of valid authorization/power of attorney? OPP
25. The onus to prove this issue was upon plaintiff. On perusal of the record, it is evident that the present suit has been filed by Mr. Mridul Ranjan S/o Sh. M.L. Das claiming that he had been authorized by way of a Power of Attorney dated 08.12.2016 CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.10 of 20 Patiala House Court, New Delhi (Ex.PW-1/1), which is duly stamped by plaintiff company, notarized, and signed by its Managing Director. The said document authorized him to institute, prosecute, and defend legal proceedings on behalf of plaintiff.
26. The objection raised by defendant no. 1 that the Power of Attorney is not supported by a valid Board Resolution has remained unsubstantiated. No evidence has been led by defendants to rebut the authenticity of the Power of Attorney or to demonstrate that it was not validly executed.
27. In United Bank of India v. Naresh Kumar, (1996) 6 SCC 660, Supreme Court while dealing with the aspect of a suit filed on behalf of a company, made following observations: -
"10. It cannot be disputed that a company like the appellant can sue and be sued in its own name. Under Order 6 Rule 14 of the Code of Civil Procedure a pleading is required to be signed by the party and its pleader, if any. As a company is a juristic entity it is obvious that some person has to sign the pleadings on behalf of the company. Order 29 Rule 1 of the Code of Civil Procedure, therefore, provides that in a suit by or against a corporation the Secretary or any Director or other Principal Officer of the corporation who is able to depose to the facts of the case might sign and verify on behalf of the company. Reading Order 6 Rule 14 together with Order 29 Rule 1 of the Code of Civil Procedure it would appear that even in the absence of any formal letter of authority or power of attorney having been executed a person referred to in Rule 1 of Order 29 can, by virtue of the office which he holds, sign and verify the pleadings on behalf of the corporation. In addition thereto and dehors Order 29 Rule 1 of the Code of Civil Procedure, as a company is a juristic entity, it can duly authorise any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Order 6 Rule 14 of the Code of Civil CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.11 of 20 Patiala House Court, New Delhi Procedure. A person may be expressly authorised to sign the pleadings on behalf of the company, for example by the Board of Directors passing a resolution to that effect or by a power of attorney being executed in favour of any individual. In absence thereof and in cases where pleadings have been signed by one of its officers a corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied. The court can, on the basis of the evidence on record, and after taking all the circumstances of the case, specially with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleading by its officer."
28. Thus, in any case, any infirmity in authorization of PW1, was rectifiable, had there been any challenge to his affirmation that he was AR of plaintiff. In view of the duly exhibited Power of Attorney on record, and absence of cross examination of PW1, I find that the present suit has been instituted by a duly authorized person. The objection taken by defendant no. 1, therefore, cannot be sustained.
Accordingly, Issue No. 2 is decided in favour of Plaintiff and against Defendant No.1.
ISSUE NO. 3Whether suit has been filed as a subrogee of defendant no. 2, if so, its effect? OPP
29. Plaintiff has instituted the present suit as an insurer seeking recovery of the amount paid under an insurance policy issued to defendant no. 2, towards the loss suffered due to non-payment by defendant no. 1. Plaintiff's case is that upon settlement of the insurance claim, it became subrogated to the rights of defendant no. 2 against defendant no. 1 to the extent of the claim amount CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.12 of 20 Patiala House Court, New Delhi reimbursed.
30. Plaintiff has placed on record the Letter of Subrogation-cum-
Special Power of Attorney (Ex. PW-1/8) and the Discharge Voucher (Ex. PW-1/7), both executed by defendant no. 2 in its favour, acknowledging receipt of the claim amount of Rs.42,91,084/- and assigning in its favour all rights of recovery against defendant no. 1. These documents have been duly proved on record and have not been challenged or rebutted by either of defendants. Rather defendant no. 2 has supported the facts pleaded by Plaintiff in this respect.
31. Further, Clause 6.7.4 of the Insurance Policy (Ex. PW-1/3) expressly provides for subrogation in favour of the insurer. The clause reads as under: -
"6.7.4 Subrogation:
6.7.4.1 Upon settlement of any claim, the insured shall duly subrogate in favour of the company, all their rights of recovery against the approved buyer in respect of the insured debt and shall execute and hand over documents required by the company in this regard including original documents relating to the insured debt, correspondences, demands and such other proofs as deemed necessary by the company."
This clause clearly demonstrates that upon payment of the claim, Plaintiff became entitled to pursue all recovery rights vested in the insured against the defaulting buyer.
32. In the present case, plaintiff has proved its right of subrogation through the documents on record. Defendant No. 2, in its written statement, has categorically admitted that it received payment from plaintiff under the policy and that there exists no dispute between them. This admission further corroborates plaintiff's CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.13 of 20 Patiala House Court, New Delhi status as a rightful subrogee.
33. Hon'ble High Court in the case of M/S Transway Cargo Lifters Pvt. Ltd vs National Insurance Co. Ltd. [2016 SCC OnLine Del 2311] held that: -
"13. This Court, in National Insurance Co. Ltd. Vs. Mukesh Tempo Service (Carrier) MANU/DE/3196/2010 held (i) that there is no particular form of notice prescribed in the Carriers Act, 1865 and it is sufficient if carrier is informed about the loss of the goods; (ii) that Section 3 of the Act where the liability of carrier is limited, applies only to carriage of goods specified in Schedule to the Act (it is not the plea of the appellant / defendant here that the goods were scheduled goods); (iii) that as per law laid down in Patel Roadways Limited Vs. Birla Yomana Ltd. AIR 2000 SC 1461 the liability of a carrier is absolute and referring to Section 9 of the Act it was held that it is not necessary for Plaintiff to establish negligence; (iv) reliance was placed on South Eastern Carriers (P) Ltd. Vs. Oriental F&G Insurance Co. Ltd. MANU/KE/0653/2003 where it was held that a carrier is answerable for the loss even when not caused by negligence or for want of care on its part; (v) that the Insurance Co. is competent to sue in the name of insured also; (vi) that notwithstanding the impersonal nature of testimony of witnesses of Insurance Co. and discrepancy in documents, their genuineness is established from the consignor of the carrier having not preferred any claim against the carrier for recovery of compensation for the loss of the goods. To the same effect is the another recent judgment of this Court in Road Transport Corporation Pvt. Ltd. Vs. National Insurance Co. Ltd. MANU/DE/6854/2011 where qua objection of authority to sue having not been proved, relying on United Bank of India Vs. Naresh Kumar supra it was held that once a company such as a banking company or even an insurance company has pursued a suit to the hilt, the suit cannot be thrown out on technicalities.
14. Reference in this regard may also be made to (a) New India Assurance Co. Ltd. Vs. Okay Transport Corporation CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.14 of 20 Patiala House Court, New Delhi MANU/KE/0268/1990 where a Division Bench of Kerala High Court held that when all the parties including the party entitled to recover damages are before the Court, the Court would be reluctant to take a hypertechnical view and dismiss the suit only because insured is made a defendant instead of being made a co-Plaintiff along with insurer; and,
(b) United India Insurance Company Ltd. Vs. Muthulakshmi, Radhakrishnan and Star Match Factory MANU/TN/0031/2003 (& SLP(C) No.20140/2003 where against was dismissed on 6th December, 2004) where a Division Bench of Madras High Court held that the Court has power to mould and grant necessary reliefs to the parties, when all parties who are interested in the suit are before the Court"
34. Similarly, Hon'ble High Court in the case of M/S. RAHUL CARGO PVT. LTD. vs M/S. NATIONAL INSURANCE COM- PANY LTD. & ANR. [2014 SCC OnLine Del 2229] has reiter- ated that: -
"7. Once therefore the respondent no.2/Plaintiff no.2 transferred his rights under the transportation of contract to the respondent no.1/Plaintiff no.1 by virtue of letter of subrogation, the respondent no.1/Plaintiff no.1 steps into the shoes of the respondent no.2/ Plaintiff no.2 and respondent no.1/Plaintiff no.1 therefore will only exercise those rights and obligations between the consignor/Plaintiff no.2 and the carrier/petitioner/defendant. Since therefore it cannot be disputed that the respondent no.1/Plaintiff no.1 as an insurance company is only suing as a subrogee of the rights of the respondent no.2/ Plaintiff no.2, i.e the original rights for claiming loss for the goods lost under the contract of transportation was of the respondent no.2/ Plaintiff no.2, if the contract of Plaintiff no.2/respondent no.2 with the petitioner/defendant had an arbitration clause, then, this arbitration clause will bind and operate between the respondent no.1/Plaintiff no.1 and the petitioner/defendant also. Once the respondent no.2/Plaintiff no.2 had a contract of arbitration with the petitioner/defendant, and that is not CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.15 of 20 Patiala House Court, New Delhi disputed that there is an arbitration clause in the contract of transportation between the respondent no.2/Plaintiff no.2 and the petitioner/defendant, then, surely the respondent no.1/ Plaintiff no.1 who steps into the shoes of the respondent no.2/Plaintiff no.2 as its subrogee, will consequentially therefore be bound by the arbitration clause binding the respondent no.2/ Plaintiff no.2 and the petitioner/defendant."
35. From the above judicial pronouncement, it is evident that once the insurer indemnifies the insured, it becomes subrogated to all rights and remedies of the insured against the wrongdoer responsible for the loss. Such subrogation need not always result in a joint action by the insured and the insurer, so long as the insurer establishes its right through a valid subrogation agreement.
36. Applying the above principles to the facts of the present case, it is evident that Plaintiff, having indemnified defendant no. 2 under the insurance policy, has acquired all rights of recovery against defendant no. 1 by virtue of valid subrogation. The suit instituted by Plaintiff in its own name, therefore, is both maintainable and legally sustainable.
Accordingly, Issue No. 3 is decided in favour of Plaintiff and against Defendant No.1.
ISSUE NO. 4Whether Plaintiff is entitled for the suit claim, if so, against which defendant and for what amount? OPP
37. At the outset, it is evident that the Credit Risk Insurance Policy, bearing No. 66192770, was executed between plaintiff and defendant no. 2. The said policy has been duly proved on record CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.16 of 20 Patiala House Court, New Delhi as Ex. PW-1/3. Under the policy, defendant no. 2 had furnished a list of its approved customers, which included the name of defendant no. 1. Plaintiff has also proved on record the Distributor Agreement executed between defendant no. 1 and defendant no. 2, exhibited as Ex. PW-1/2, which established the business relationship between them for distribution of defendant no. 2's products.
38. It stands proved from the record that a dispute arose between defendant nos. 1 and 2 in respect of outstanding payments for goods supplied by defendant no. 2 to defendant no. 1 during the period 04.09.2015 to 18.10.2015, amounting to Rs.79,88,785.43. Plaintiff has placed on record copies of the invoices raised by defendant no. 2 against defendant no. 1 for the said period, exhibited as Ex. PW-1/4, which corroborate the transaction and the liability of defendant no. 1.
39. Upon default by defendant no. 1 in making payment, defendant no. 2 duly notified plaintiff of the overdue account in terms of the insurance policy. Plaintiff has proved on record the said Notification of Overdue Account dated 11.12.2015, exhibited as Ex. PW-1/5, which clearly reflects the net outstanding dues of Rs.79,88,785.43 payable by defendant no. 1 to defendant no. 2.
40. The Statement of Account filed by plaintiff shows that, as on 08.04.2016, the balance outstanding against defendant no. 1 was Rs.53,75,208.32. Thereafter, defendant no. 2 raised a claim with plaintiff on 29.03.2017, and upon due assessment, the net insured debt was determined at Rs.53,63,855/-. In accordance with the policy terms, plaintiff settled 80% of the assessed debt, CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.17 of 20 Patiala House Court, New Delhi amounting to Rs.42,91,084/-, in favour of defendant no. 2.
41. The payment of the aforesaid amount is duly proved by the Discharge Voucher dated exhibited as Ex. PW-1/7, wherein defendant no. 2 acknowledged receipt of Rs.42,91,084/- as full and final settlement of its claim under the policy. The said voucher specifically mentions the debtor's name as M/s i2 Distribution, i.e. defendant no. 1.
42. Consequent to such settlement, defendant no. 2 executed in favour of plaintiff a Letter of Subrogation-cum-Special Power of Attorney (Ex. PW-1/8), thereby transferring all its rights of recovery against defendant no. 1 to plaintiff. This subrogation stands further supported by Clause 6.7.4 of the insurance policy itself, which mandated that, upon settlement of any claim, the insured would subrogate all recovery rights in favour of the insurer.
43. Thus, by virtue of the payment made to defendant no. 2 and the execution of the letter of subrogation, plaintiff stepped into the shoes of defendant no. 2 and became legally entitled to recover from defendant no. 1 the sum of Rs.42,91,084/-, being the amount paid under the policy. Defendant no. 1, despite due notice and opportunity, has failed to discharge its liability or controvert the documentary evidence produced by Plaintiff. Defendant no. 1 has neither led any evidence to dispute the transactions nor challenged the authenticity of the documents produced. Its failure to contest the claim further strengthens Plaintiff's case. Defendant no. 2 has also confirmed the correctness of plaintiff's claim and supported plaintiff's right of CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.18 of 20 Patiala House Court, New Delhi recovery.
44. In view of the above discussion, and in the light of the findings on Issue No. 3, I am of considered view that plaintiff has successfully proved its entitlement to recover Rs.42,91,084/- from defendant no. 1 as subrogee of defendant no. 2 under the insurance policy.
45. Accordingly, I hold that plaintiff is entitled to recover a sum of Rs.42,91,084/- from defendant no. 1. No relief, however, is made out against defendant no. 2, which is merely a pro-forma party.
Issue No. 4 is, therefore, decided in favour of Plaintiff and against Defendant No. 1.
ISSUE NO. 5Whether Plaintiff is entitled for interest, if so, at what rate on which amount and for which period? OPP.
46. Plaintiff has prayed for interest @ 18% p.a. Keeping in view the provisions of Section 34 CPC and the prevailing rate of interest in commercial transactions, the rate of interest @ 18% appears to be excessive. Considering the facts, circumstances of the case and nature of transaction between the parties, I find it just and proper to allow pendente-lite and future interest @ 8% per annum from the date of filing of the suit till realization of the decreetal amount.
Issue no. 5 is accordingly decided in favour of Plaintiff and against Defendant No. 1.
RELIEF
47. In view of the foregoing observations, discussions and findings, CS No. 956/2018 (Pulastya Pramachala) District Judge (Commercial Court)-01, Page No.19 of 20 Patiala House Court, New Delhi the suit is decreed in favour of plaintiff and against defendant no.1 for recovery of Rs.42,91,084/- (Rupees Forty Two Lakhs Ninety One Thousand and Eight Four), payable along with pendente lite and future interest @ 8% per annum from the date of filing of the suit till realization of the decretal amount. Cost of suit is also awarded in favour of plaintiff and against defendant no. 1 as per rules. Advocate's Fee certificate be filed by plaintiff within 10 days. Decree sheet be prepared accordingly.
File be consigned to record room after due compliance.
Digitally signed by PULASTYA PULASTYA PRAMACHALA PRAMACHALA Date: 2025.11.10 17:00:10 +0530 Pronounced in the (PULASTYA PRAMACHALA) Open Court on this District Judge (Commercial Court)-01, th
10 Day of November, 2025 Patiala House Court, New Delhi.
CS No. 956/2018 (Pulastya Pramachala)
District Judge (Commercial Court)-01,
Page No.20 of 20 Patiala House Court, New Delhi