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Delhi District Court

Hindustan Plywood Company vs M/S Kvaerner Cementation India Ltd on 20 January, 2009

                                      1

      IN THE COURT OF SH. D.K. MALHOTRA, ADDL DISTRICT
                       JUDGE CENTRAL­14: DELHI


RCA No. 05/08
  
Hindustan Plywood Company,
2/2 D. B. Gupta Road,
Paharganj,
New Delhi.
                                                             ...... Appellant


Versus


M/s Kvaerner Cementation India Ltd.
Room No. 205, and 207,
Suneja Tower­I,
District Centre, Janak Puri,
New Delhi.
                                                         .......Respondent


                                   Plaint presented on :   10.11.2008
                                Arguments heard on:   20.01.2009
                                Judgment on                 20.01.2009



J U D G M E N T

1. The judgment will decide the appeal filed vide dismissal of the suit by the Ld. Trial Court. The case of the applicant / appellant is Contd...

that the Ld. Trial Court erred in law in dismissing the suit on the ground of limitation under Section 3 of Limitation Act, 1963 when there was payment by issue of cheque dated 29.02.2000 by the defendants to the plaintiff before the expiry of limitation. Ld. Trial Court erred in law in overlooking the fact that the defendant has paid a sum of Rs.3581.75 paise by issuing cheque dated 29.02.2000 to the plaintiff which has been admitted by the defendant in its written statement though falsely alleged by the defendant. The plaintiff had induced the defendant to make the payment of Rs.3581/­ in respect of revised bill dated 19.04.97 for Rs.68,495.75 paise. This amount of Rs.3581/­ was issued by the defendant to the plaintiff which is acknowledgment under section 19 of the Limitation Act as has been held by Delhi High Court in re­ Rajesh Kumari Vs Prem Chand vide judgment dated 22.04.97, 1997 Rajdhani Law Reporter, 471. Ld. trial Court erred in law in dismissing the suit on the ground of limitation on the bare plea that Contd...

the said cheque dated 29.02.2000 was encashed on 27.05.2000 as per statement of account Ex. PW 1/8 which was encashed after one week of bill dated 19.04.97 by the Ld. Trial Judge ignored the pleadings of the parties to the effect that the cheque dated 29.02.2000 was issued by the defendant to the plaintiff and the said cheque dated 29.02.2000 was issued within three years from 26.04.2000 as per bill dated 19.04.1997 and it has been held that :

"A payment by cheque satisfy the requirement of Section 19 in as much as the acknowledgment of payment appears in the writing of or in a writing signed by person making the payment in the form of cheque."

2. Ld. Trial Judge erred in law to the effect that the account maintained by the plaintiff is not mutual and current account with the defendant. The statement of account clearly satisfy that at one point of time at least each party should have a credit as against the Contd...

other. As per statement of account Ex. PW 1/6 for the year 1996­ 97 the defendant has a credit balance of Rs.72,540/­ as on 12.11.1996 against the plaintiff. The defendant made payment of Rs.1,00,000/­ vide cheque no. 761505 dated 01.03.1997 as per statement of account Ex. PW 1/6 to the plaintiff and after adjusting account, the defendant still had a credit balance of Rs.15,647/­ against the plainitff as per statement of account Ex. PW 1/7 in the year 1997­98. The defendant made purchase of goods vide bill dated 19.04.1997 for Rs.64914/­ thereby, the plaintiff has credit balance of Rs.49267/­ against the defendant as on 19.04.1977 in the year 1997­98 after adjustment of account. The defendant was further debited an amount of Rs.3581/­ on 29.02.2000 and a sum of Rs.52,848.75 paise has become due and payable to the plaintiff from the defendant in the year 1999­2000. The defendant issued cheque dated 29.02.2000 to the plaintiff within three years from the last cheque dated 01.03.1997 and within last bill dated 19.04.1997, Contd...

which is an acknowledgment within the meaning of Section 19 of the Limitation Act, 1963 and as per statement of account Ex. PW 1/6 for the year 1996­97 and as per Ex. PW 1/7 for the year 1997­ 98, so the suit was not barred by limitation as was wrongly held by the Ld. Trial Judge. The issue no.3 has been wrongly decided holding that the suit is barred by time. Hence this appeal.

3. Plaintiff's facts of the case are as under:

The plaintiff is a partnership firm duly registered with the Registrar of Firms and Sh. K. K. Sapra is one of the partners. The defendant is a duly incorporated company. The defendant was earlier known as M/s Trafalgar House Construction India Ltd.. The defendant was purchasing wood products from the plaintiff from 1996 and mutual and current accounts were maintained by plaintiff with the defendant; a sum of Rs.72,540/­ was credited on 12.11.1996. In the financial year 1996­97, the defendant Contd...

purchased goods vide three bills bearing nos. 6153, AC6254 and AC6296 amounting to Rs.1,56,893. The defendant paid a sum of Rs.1,00,000/­ vide cheque on 01.03.1997. During the financial year 1997­98 on 19.04.97 the defendant purchased goods from the plaintiff vide bill no. AC­6428 for Rs.64,914. An amount of Rs.49,267/­ was due upon the defendant as on 31.03.1998. The defendant failed to issue C­Form in respect of the Central Sales Tax (CST) in respect of the last mentioned bill dated 19.04.1997 amounting to Rs.3,581.75 paise. This amount of Rs. 3,581.75 paise was subsequently paid by the defendant vide cheque dated 29.02.2000 towards part payment in respect of the above mentioned bill which was for Rs. 68,495.75 paise inclusive of sales tax. A legal notice dated 30.06.99 was also served upon the defendant but he failed to pay the amount. Upon this fact the suit has been filed for a sum of Rs.49,267/­ towards outstanding balance and Rs.60,733/­ being interest at the rate of 24% per Contd...

annum.

4. The defendant put his appearance and filed written statement in which he took plea that plaintiff has supplied defective material to the defendant against tender specifications. The plaintiff failed to replace the defective material despite request and reminders. The defendant was forced to get the defective material replaced from M/s Janta Furniture House, Ghaziabad, which cost the defendant Rs.34,771/­. Prior to the above mentioned replacement the defendant had also served upon the plaintiff a notice dated 18.07.1997 for replacement and when it was not so done the defendant was constrained to make alternative arrangements at the cost of the plaintiff. The bills filed by the plaintiff does not bear the correct figure which were corrected at the site on the objection of the Stores Department of the defendant at the time of delivery of the goods. The plaintiff has never supplied the goods vide bill no. AC­6428 dated 19.04.97 and hence the plaintiff is not entitled for Contd...

recovery of this amount. The defendant is entitled to recover an amount of Rs.66,203/­ from the plaintiff. The suit is barred by limitation. On merits it is stated that the credit amount of Rs.72,540/­ is admitted. It is however, alleged that when the goods in respect of bill no. 6153, AC­6254 and AC­6269 were delivered, the necessary corrections were made at the time of delivery with red pen on the bills and it was duly within the knowledge of the plaintiff. The corrections were made by the plaintiff in his own handwriting. Hence the total amount in respect of these three bills is Rs.144,689/­ instead of Rs.1,56,893/­. It is also alleged that the amount of Rs.64,914/­ in respect of bill no. 6428/­ never became Rs.68,495.75 paise on account of non supply of necessary C­Forms as the goods in respect of this bill was never supplied to the defendant.

5. On the pleadings of the parties the following issues were framed:

Contd...

(i) Whether the plaintiff is entitled for a decree of Rs.1,00,000/­ alongwith interest @ 24 % per annum, as prayed for? OPP

(ii) Whether the suit filed by the plaintiff is without any cause of action? OPD

(iii) Whether the suit is barred by law of limitation? OPD

(iv) Relief.

6. First two issues were decided in favour of the plaintiff. However the issue no.3 of limitation was decided against the plaintiff and suit was consequently dismissed being barred by time on the plea that the payment of Rs.3581/­ was not towards the part payment of any bill, moreover no cheque has been proved on record certifying the payment made by the defendant to the plaintiff being coupled with part payment towards debt.

7. As far as findings on issue no.1 and 2 is concerned it is not assailed either by the appellant or respondent. The only point which is assailed by the counsel for the appellant is that the finding Contd...

on issue no.3 whether the suit of the plaintiff is within limitation is against the facts under the facts and circumstances. Ld. counsel for the appellant has argued that the payment of Rs.3581/­ was made pertaining to C­Form of Sales Tax and as the payment is admitted by the defendant, it amounts to acknowledgment of debt in writing and period of limitation stand extended regarding the same , in view of Section 19 of the Limitation Act. My attention is drawn towards the order passed by the Ld. Civil Judge towards the bill Ex. PW 1/10 wherein a note is mentioned " a supplementary bill for the Sales Tax alongwith interest, if any charged by concerned authorities will be raised and debited to your account, if proper Sales Tax Declaration is not received before we are assessed." The plaintiff kept silent for about three years and a debit note of Rs.3581/­, though the payment is admitted by cheque. Plaintiff was required to prove in terms of Section 19 of Limitation Act by producing the original cheque signed by the Contd...

defendant for explaining the limitation. Section 19 provides as follows:

"Effect of payment on account of debt or of interest on legacy­ where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorized in this behalf, a fresh period of limitation shall be computed from the time when the payment was made ...."

8. Two conditions must be satisfied by the plaintiff before the period of limitation can be extended that the payment of Rs.3581/­ was a part payment towards the whole outstanding liability for payment the dues and that the above payment was made within the subsisting period of limitation. The plaintiff was required to raise a supplementary bill once the defendant failed to supply C­Form, which is not so in the present case. Plaintiff kept silent for about Contd...

three years and on 29.02.2000, a debit note was raised for this amount for Rs.3,581/­ only. No explanation has been given as to why this amount was not claimed earlier. It is clear that plaintiff alongwith covering letter demanding Rs.3581.75 paise only and demand was met by the defendant by paying this amount. By making the payment, it is hard to infer that the defendant made the payment with intention to admit jural relationship qua the disputed bill. There might be a situation that the defendant had already made the payment of bill amount but had not issued the C­ Form. In that situation, if the defendant subsequently makes the payment in lieu of C­Form, can it be said that the defendant admitted the jural relationship in respect of the bill amount? The answer would be in negative only. The payment of Rs.3,581/­ was thus independent from the previous bill / transaction, although it might have some nexus with the bills. Hence there is no escape from the conclusion that the payment of Rs.3581.75 paise was not Contd...

a part payment of the liability within the parameters of Section­19 of Limitation Act, 1963. Moreover the plaintiff has not placed on record any copy of cheque through which the payment was made. The payment is not coupled with any writing contemplated under Section 19 of the Limitation Act. On this score alone, the requirement of Section 19 of Limitation Act, 1963 could not be met and the suit fails being barred by limitation being filed in October, 2000. Hence the judgment of the Delhi High Court cited is to the same effect 1997 Rajdhani Law Reporter, 471. Plaintiff was required to prove the cheque through which payment was made which he has failed to prove by stating that defendant has admitted the issuance of cheque towards part payment of the liability as per the discussions made above. This is not the case where the payment has not to be proved to be part payment towards liability in terms of Section 19 of Limitation Act. The account cannot be said to be mutual and current account as no payment was made Contd...

by the plaintiff to the defendant. Appeal is devoid of merits. The same is dismissed.

9. Decree sheet be prepared accordingly. File be consigned to Record Room.

(D.K.Malhotra) Announced in the open court Addl. District Judge:

dated 20.01.09                             Central­ 14 Delhi




                                                                  Contd...