Delhi High Court
M/S Fedders Lloyd Corporation Ltd vs Kss Petron Pvt Ltd on 17 March, 2017
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
%
Date of decision: 17th March, 2017
+ CS(COMM) 1106/2016
M/S FEDDERS LLOYD CORPORATION LTD ..... Plaintiff
Through: Mr. P.S. Bindra, Adv.
Versus
KSS PETRON PVT LTD ..... Defendant
Through: Mr. K.K. Sharma, Sr. Adv. with Mr.
Vinod Wadhwa, Adv.
CORAM:-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
IA No.15408/2016 (of the defendant under Order VII Rule 11 of the CPC)
1. The defendant, in this suit for recovery of Rs.1,82,20,511/-, seeks
rejection of the plaint on the ground of claim therein being barred by time and
this Court not having territorial jurisdiction to entertain the suit.
2. The plaintiff has instituted this suit pleading i) that the defendant
awarded purchase orders dated 17th January, 2011, 11th January, 2012, 16th
October, 2012, 21st February, 2013 and 20th June, 2013 to the plaintiff for
supply of fabricated structural steel as per specifications contained in the
purchase orders; ii) that as per the purchase orders, the supplies were for
different periods and were to commence and end on different dates, the latest
falling in 2013-14; iii) that the plaintiff made the supplies in accordance with
the purchase orders and the defendant acknowledged the same by way of
certificate dated 1st October, 2013; iv) that for the supplies made, the plaintiff
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raised invoices totaling Rs.92,72,37,881/- and against which the defendant has
paid Rs.91,38,40,448/- leaving the balance amount of Rs.1,33,97,434/-; v) that
the last payment was made by the defendant to the plaintiff on 19 th July, 2013
being in the sum of Rs.10,36,544/-; vi) that the defendant also issued C Forms
for the supplies made; vii) that for the remaining amount totaling
Rs.1,33,97,434/-, the plaintiff on various occasions requested the defendant to
make the payments; however the requests fell on deaf ears as defendant failed
to pay the outstanding amount; viii) that the plaintiff got served a legal notice
dated 19th May, 2015 through its advocate calling upon the defendant to pay to
the plaintiff Rs.1,33,97,434/- with interest; ix) the said notice was served on the
defendant on 25th May, 2015 but the defendant neither gave any reply nor made
any payment; x) that the plaintiff is also entitled to interest at the rate of 12%
per annum with effect from 19th July, 2013 and a sum of Rs.48,23,077/- is due
from the defendant to the plaintiff towards interest till the date of institution of
the suit.
3. Paras no.10 and 11 of the plaint are as under:
"10. That the cause of action for filing the present suit arose from to (sic
for two) time as stated in the foregoing paras. The cause of action
arose when the Defendant made payments leaving the balance
amount outstanding. The cause of action arose on 19.7.2013 when
the last payment was made by the Defendant to the Plaintiff leaving
the suit amount outstanding. Since the Defendant has failed to pay
the outstanding amount, the cause of action is continuing one.
11. This Hon‟ble Court has territorial jurisdiction to try and entertain the
present suit for the reason that the cause of action for filing the suit
arose in Delhi. The Purchase Orders were placed upon the Office of
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the Plaintiff at Delhi and payments were to be made and also made
to the Plaintiff at Delhi through its bank account in SBI, Tolstoy
Marg, Delhi. The balance payment due is also to be made at Delhi.
Therefore, this Hon‟ble Court has jurisdiction to entertain and try
the present suit.
4. Summons of the suit were issued by the Joint Registrar.
5. The defendant, on being served has filed this application contending that
as per paras no.5 and 10 of the plaint, last payment was made by the defendant
to the plaintiff on 19th July, 2013 and the cause of action for the suit also
accrued to the plaintiff against the defendant on 19th July, 2013 when the last
payment was made by the defendant to the plaintiff and the suit instituted on
12th August, 2016 is barred by limitation. Qua territorial jurisdiction, it is
contended that the purchase orders were issued by the defendant from its
Gurgaon (Haryana) office; the material was to be supplied by the plaintiff to the
defendant at Paradeep Refinery Project, Paradeep, Orissa; the supplies were to
be made by the plaintiff from its godowns at Haridwar (U.P.), Sikandrabad and
Jabalpur; the place of business of the defendant is Gurgaon (Haryana), the
invoices were raised by the plaintiff from its registered office at Noida and thus
this Court has no territorial jurisdiction to entertain the suit.
6. Being of the view that an application for rejection of the plaint is to be
considered only on the basis of averments made in the plaint and documents
filed therewith, the need to call for a reply to the application was not felt.
7. The counsels were heard on 14th December, 2016 and 15th December,
2016 and orders reserved.
CS(COMM) No.1106/2016 Page 3 of 11
8. As far as the ground for rejection of the plaint on the ground of this
Court not having territorial jurisdiction to entertain this suit is concerned, as
evident from para no.11 of the plaint reproduced hereinabove, the plaintiff has
invoked the territorial jurisdiction of this Court pleading that the purchase
orders were placed upon the office of the plaintiff at Delhi and payments were
to be made and made to the plaintiff at Delhi through its bank account in State
Bank of India, Tolstoy Marg, Delhi and the balance amount for recovery of
which the suit is filed was also payable at Delhi. The said pleas have not been
controverted by the defendant in the application for rejection of the plaint. It is
also not the case of the defendant that though the plaintiff has pleaded so but
the documents show otherwise. A perusal of a copy of at least one of the
purchase orders placed by the defendant on the plaintiff shows the same to have
been placed upon the plaintiff at Delhi. Though the plaintiff in the list of
documents has referred to other purchase orders also but the plaintiff is found
to have filed documents running into 675 pages without proper indexation and
by clubbing all the purchase orders together and thus it is difficult to check the
other purchase orders. Be that as it may, the said aspect cannot be subject
matter of rejection of the plaint which has to be on the basis of averments made
in the plaint only. As per averments made in the plaint, all the purchase orders
balance amount whereunder is claimed in this suit having been placed upon the
plaintiff at Delhi, this Court would have territorial jurisdiction to entertain the
suit and the plaint cannot be rejected on the ground of this Court not having
territorial jurisdiction.
9. However, as far as the ground of the suit claim being barred by time is
concerned, the suit is found to have been filed first on 14th July, 2016 and re-
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filed on 12th August, 2016 and came up before the Joint Registrar on 17th
August, 2016 when summons thereof were ordered to be issued.
10. The suit being for recovery of the balance amount due towards price of
goods supplied by the plaintiff to the defendant as per purchase orders placed
by the defendant upon the plaintiff, it was enquired from the counsel for the
plaintiff whether not the limitation therefor would be governed by Articles 14
to 16 of the Schedule to the Limitation Act, 1963. Article 14 provides for
limitation of three years commencing from the date of delivery of the goods for
a suit for price of goods sold and delivered where no fixed period of credit is
agreed upon. Article 15 also provides limitation of three years commencing
from the date when the period of credit expires for a suit for price of goods sold
and delivered to be paid for after the expiry of a fixed period of credit. Article
16 provides for a limitation of three years commencing from the date when the
period of the proposed bill expires for a suit for price of goods sold and
delivered to be paid for by a bill of exchange and no such bill having been
given. Mention may also be made of Article 18 which provides limitation of
three years commencing from the date when the work is done for a suit for
price of work done by the plaintiff for the defendant at the request of the
defendant and where no time has been fixed for payment. The plaintiff
however in the plaint has shied away from giving the dates of delivery of goods
under the purchase orders claim to be placed by the defendant on the plaintiff
and has computed the limitation not as per the date of delivery of goods or from
the date of expiry of period of credit or from the date when the work was done
but from the date of the last payment made. It was as such enquired from the
counsel for the plaintiff as to how the date of the last payment made by the
CS(COMM) No.1106/2016 Page 5 of 11
defendant to the plaintiff could be the commencing point for limitation of three
years. Article 1 of the Schedule to the Limitation Act relating to a suit for
accounts provides for limitation of three years commencing from the close of
the year in which the last item admitted or proved is entered in the account but
for a suit for balance due on a mutual, open and current account where there
have been reciprocal demands between the parties. It was enquired from the
counsel for the plaintiff that in the absence of a plea of a mutual, open and
current account where there have been reciprocal demands between the parties,
how could the period of limitation be computed from the date of last payment
made by the defendant to the plaintiff.
11. The counsel for the plaintiff referred to Bharath Skins Corporation Vs.
Taneja Skins Company Pvt. Ltd. 186 (2012) DLT 290. A Division Bench of
this Court therein was concerned with a suit for recovery of balance amount
due towards the price of goods supplied under 56 bills and for which a current,
open and mutual account was maintained by the plaintiff in the name of the
defendant and as and when goods were supplied, a bill was raised for the value
of the goods supplied and correspondingly a debit entry was made in the
account as and when payment was received by making a credit entry in the
account. It was held that Article 14 of the Schedule to the Limitation Act does
not apply to suits for recovery of money due on a running and current but non-
mutual account between the buyer and seller and there being no Article in the
Schedule to the Limitation Act dealing with suits for recovery of money due on
running and current but non-mutual account, the residual Article 113 would
apply and thereunder the period of limitation of three years for filing the suit
would begin to run when the claim was denied in response to the legal notice or
CS(COMM) No.1106/2016 Page 6 of 11
when the last payment was made.
12. Per contra, the senior counsel for the defendant relied on The Hindustan
Forest Company Vs. Lal Chand 1960 (1) SCR 563 holding that where various
quantities of goods are delivered by the seller to the buyer from time to time
and various payments towards price of goods are made, the account containing
the balance amount due would not qualify as a mutual account based on
reciprocal demands within the meaning of Article 115 of the Limitation Act,
1908 equivalent to Article 1 aforesaid of the Limitation Act, 1963.
13. However the plaintiff neither pleads nor argues that the account for the
recovery of the balance amount due whereunder the suit is filed is a mutual,
open and current account where there have been reciprocal demands between
the parties. Thus the reliance on The Hindustan Forest Company supra
misconceived.
14. The question for adjudication thus is whether the case of the plaintiff is
covered by Bharath Skins Corporation supra and in which case it would be
within time as the suit was first instituted within three years of the last payment
or it would be governed by any of the Articles 14 to 16 aforesaid of the
Schedule to the Limitation Act and in which case, the suit claim may be barred
by time.
15. I may notice that the counsel for the plaintiff, after the judgment had
been reserved, has also filed copies of judgments in F.C.C. Projects Pvt. Ltd.
Vs. Ashish Bhardwaj (2007) 145 DLT 457 (DB), Rajesh Kumari Vs. Prem
Chand Jain 1997 (42) DRJ 280, Sanjeev Chopra Vs. All Wear Clothing
CS(COMM) No.1106/2016 Page 7 of 11
(India) Pvt. Ltd. 2012 SCC Online Del 640 & Technofab Engineering Ltd. Vs.
Nuchem Weir India Ltd. 2006 SCC OnLine Del 1575 but reliance whereon is
again found to be misconceived.
16. A perusal of the purchase order dated 17th January, 2011 placed by the
defendant on the plaintiff and a copy whereof is at page 4 of the documents
shows the same for "supply of Fabricated Structural Steel" as per specifications
with the first delivery thereunder to be started after three weeks from date of e-
mail confirmation from the defendant and the total duration for supply being
seven months from the date of purchase order. Clauses 4 and 8 thereof are as
under:
"4 Terms of Payment 1. 10% of the Total Order Amount shall be paid
against unconditional acceptance of this PO
and submission of ABG for an equivalent
Amount in KSSIIPL prescribed format duly
issued by nationalized bank and submission
of signed & accepted sub-orders copy on
prime rollers (Like SAIL, Jindal) as proof of
ordering of steel against this purchase order.
The validity of ABG shall be for a period till
the full recovery is adjusted against supplies.
2. 80% of the total order value with taxes &
duties shall be paid through irrevocable &
revolving letter of credit with 30 days interest
free usance period against submission of
following documents to KSSIIPL banker.
i) Original Lorry Receipt (GR), as applicable.
ii) Original Cenvatable and commercial
invoices in requisite sets.
iii) Original Packing List in requisite set.
iv) Original Inspection Release Note issued by
TPIA.
v) Original Material test certificates duly
endorsed by TPIA.
vi) Original Dispatch instructions issued by
CS(COMM) No.1106/2016 Page 8 of 11
KSSIPL.
vii) Delivery Challan or Goods receipt note
duly signed by KSSIIPL stores as a proof of
receipt of all material.
3. 10% payment shall be released after
successful completion of erection at site for
material supplied by FLCL or 3 months from
the date of last supply, whichever is earlier
and on submission of performance bank
guarantee of 10% of Total Order Value valid
till 12 months from the date of last dispatch
as per KSSIIPL prescribed format.
LC confirmation charges, if required shall be
to the supplier‟s account.
8 Terms and All other Terms and conditions shall be as per
Conditions General terms & Conditions (Indigenous)."
As aforesaid, the plaintiff, while filing the documents has clubbed the
documents in hundreds with no proper indexation and it is impossible to find
the other purchase orders. It can only be presumed that the other purchase
orders are on the same terms and conditions. The index also does not disclose
the plaintiff to have filed any General Terms and Conditions (Indigenous)
referred to in Clause 8 supra of the purchase order. A perusal of the copy of the
invoice at page 88 of the plaintiff‟s documents shows the invoices to be for a
specific amount and not for "rounded up amounts". Again, the remaining
invoices are presumed to be similar.
17. The document at serial no.4 of the list of documents of the plaintiff is
described as „Statement of Account‟ and is filed at pages 655 to 667. A perusal
thereof shows debit entries for specific invoice amounts and credit entries again
for specific amounts and they do not appear to be payments on account but
CS(COMM) No.1106/2016 Page 9 of 11
appear to be payments against specific invoices. Therefrom, it does not appear
that the account maintained by the plaintiff in the name of the defendant was of
the nature with which the Division Bench of this Court in Bharath Skins
Corporation supra was concerned. A Single Judge of this Court in Wings
Pharmaceuticals Ltd. Vs. Praveen Bhasin MANU/DE/3472/2016, observing
that the relationship between the parties in that case was of buyer and seller,
held the account to be not a mutual running account and Bharath Skins
Corporation supra to be not applicable; the plaint was rejected on the ground of
limitation.
18. Reference may also be made to (a) Sumeet Steel Traders Vs. Surendra
Enterprises AIR 2005 AP 345 (DB) holding that merely because several
supplies are made it does not mean that they are one transaction and Article 15
would govern; (b) S.T.K.M. Lakshmanan Chettiar Vs. Nalla Sevugam
Servai AIR 1943 Mad 13 holding that in the absence of anything to show that
the dealings were intended to be continuous, period of limitation cannot begin
to run from the date of last supply; (c) Chittoor Visweswara Rao vs. Akella
Satyanarayna AIR 1957 AP 445 to the same effect; and, (d) Discover Prints
India Pvt. Ltd. Vs. Ashu Chemicals 2012 SCC OnLine Del. 160.
19. Moreover, as per the terms of payment contained in the purchase order,
the payments to be made by the defendant were to be 10% in advance, 80%
through irrevocable revolving letter of credit on submission of documents
including of dispatch of goods and 10% after successful completion of erection
work at site.
20. The plaint is blissfully vague.
CS(COMM) No.1106/2016 Page 10 of 11
21. There is no averment about the receipt of advance if any, the receipt
under the revolving letter of credit if any, or when the work of erection of the
material supplied was completed. In my view the period of limitation in such a
case would be three years from each of the said dates.
22. The plaint is thus not found to be as per the transaction between the
parties and though is liable to be rejected on this ground only without liberty to
the plaintiff to file afresh as suits cannot be permitted to be filed in such casual
manner, not intended to get any relief but merely to remain pending in the
Court and to develop the case as the suit proceeds, but reserving the right to
impose exemplary costs on the plaintiff, it is deemed appropriate to offer an
opportunity to the plaintiff to, if has any seriousness in the matter, render
explanation.
23. List on 26th April, 2017.
RAJIV SAHAI ENDLAW, J.
MARCH 17, 2017 „gsr‟..
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