Delhi District Court
M/S Magic Bowl Hospitality Pvt. Ltd vs Based On A True Story on 19 November, 2025
IN THE COURT OF SH. NARESH KUMAR MALHOTRA :
DISTRICT JUDGE (COMMERCIAL)-06
TIS HAZARI COURTS, WEST: DELHI
CS (COMM) No. 430/2022
CNR No.DLWT010051762022
19.11.2025
Magic Bowl Hospitality Pvt. Ltd.
Having its registered address at:
J-2/17-A G/F Rajouri Garden,
New Delhi-110027.
.....Plaintiff
Vs.
1. M/s. Based On A True Story
(Through its Partners)
Having its registered office at:
11/14, III floor, East Patel Nagar,
New Delhi-110008
2. Ravinder Singh Kalra,
Salcon- The Verandas,
Basil Tower Flat No. 10001
Sector-54, DLF Golf Course Road,
Gurgaon, Haryana-122001
3. Gurmeet Kalra,
Salcon-The Verandas
Basil Tower Flat No. 10001
Sector-54, DLF Golf Course Road,
Gurgaon, Haryana-122001 ....Defendants.
Date of filing : 01.06.2022
Date of arguments : 19.11.2025
Date of judgment : 19.11.2025
COMMERCIAL SUIT FOR RECOVERY OF Rs. 8,83,009/-
ALONGWITH INTEREST.
JUDGMENT:
CS (Comm.) No. 430/2022 -1-
1. Vide this judgment, I am deciding the suit for recovery of Rs. 8,83,009/- along with interest filed by the plaintiff against the defendants.
2. In the plaint, it is mentioned that the plaintiff is a company duly incorporated under the provisions of the Companies Act, 2013 having its registered office at J-2/17-A G/F Rajouri Garden, New Delhi-110027. The plaintiff company is one of the leading suppliers of goods and raw materials to restaurants, bars and canteens, including supply of paper napkins, silver foils, vegetables, non-vegetarian products, milk products and utensils etc. The plaintiff company offers a wide range of international quality raw materials and ingredients to restaurants and has built a stellar reputation over the years in the industry. The plaintiff company has also implemented year-round sustainability initiatives in its production system to ensure less wastage, sustainability and high standards of business ethics. The present suit is filed by Mr. Manmeet Singh Sethi, who is Director of the plaintiff company. Mr. Deepak Khanna is the other Director of the plaintiff company. It is mentioned that the defendant no. 1 is a partnership concern and defendants no. 2 & 3 are its partners, who were in charge and responsible for the conduct of the affairs of defendant no. 1. The defendant no. 1 entered into a franchise and Restaurant Operating Agreement dated 01.12.2017 with M/s. Bright Hospitality Pvt. Limited (BHPL), one of whose directors is Mr. Manmeet Singh Sethi, who is also the director of the plaintiff company. According to this franchise and Restaurant Operating Agreement, defendant no. 1 was operating a cafe/restaurant situated at Ambience Mall, Gurugram, Haryana CS (Comm.) No. 430/2022 -2- on a franchise basis and was utilizing the established branch/trade name belong to BHPL being 'AM PM'. It is mentioned that since the plaintiff was already engaged in the business of supplying raw materials and daily goods required in the running of restaurants including that of M/s. Bright Hospitality Pvt. Ltd., the defendants approached the plaintiff to avail its products and services for supplying goods and raw materials for the operational needs of 'AM PM' franchise restaurant. In March 2018, the plaintiff and the defendant no. 1, through the defendant no. 2, entered into an oral agreement for supply of goods and raw materials required for the day to day operational needs of 'AM PM' franchise restaurant. Pursuant to such oral agreement, the plaintiff has been providing to the defendant no. 1 products on regular basis, based on orders which were received from the defendant no. 1 from time to time. Such orders were received on the customized system software created by BHPL where the defendant no. 1 would raise a purchase order electronically which would be visible to the concerned vendor (s) of raw material(s) directly. Such vendor(s) would supply raw material(s) to the defendant no. 1 and raise a bill via email with the plaintiff. The plaintiff company provided goods and raw materials to the defendant no. 1 and raise a bill via email with the plaintiff. The plaintiff company provided goods and raw material to the defendants as per their instructions and such supply was to the complete satisfaction of defendants. No complaints whatsoever were raised by any of the defendants against the materials/products/ services provided by the plaintiff. The plaintiff did not execute a formal written agreement in relation to such set of transactions with the defendants, since it was acting CS (Comm.) No. 430/2022 -3- on the mutual trust, assurances and representations of the defendants and the directors of the plaintiff company had a prior existing relationship with the defendants no. 2 & 3. The plaintiff also did not insist upon the defendants to enter into a written agreement since the oral agreement was being acted upon and performed by both the parties as demand of raw materials was raised by the defendants and payments towards such supply was made to the plaintiff. Pre-existing relationship between the principles of the plaintiff, through BHPL, and the defendants was already established for the running of 'AM PM' franchise at Ambience Mall. It is mentioned that the plaintiff supplied market standard products as per the requirements of the defendants, and the defendants did not make any contemporaneous complaints, save and except some minor supply related aspects, which would be addressed immediately with the satisfaction of the defendants by the plaintiff. As per the plaintiff, there were no outstanding issues at the end of the defendants in respect of supply of products. The understanding and continuing commercial relationship between plaintiff and the defendant no. 1 is demonstrated by contents of communications and emails exchanged between the officers of plaintiff and defendants no. 2 & 3, including in a WhatsApp group established on 09.05.2018 for all purchase related issues involving 'AM PM' franchise restaurant at Ambience Mall. The plaintiff company also maintained the ledgers as well as record of payments maintained in relation to the same. The plaintiff had been maintaining a running mutual, open and current account with defendant no. 1 in respect of which statement of account/ ledger is regularly maintained with the plaintiff company. The plaintiff company CS (Comm.) No. 430/2022 -4- during the normal course of business sold goods and raw materials for operational needs of the 'AM PM' franchise from time to time and raised various invoices upon defendant no. 1 between the period March 2018 to June 2019 which were accepted by the defendants. The ledger for the plaintiff company records the details of the goods supplied and corresponding payment received from April 2018 till 27.06.2019. As per the ledger, the first payment by the defendant no. 1 was made on 03.05.2018 in two trances of Rs. 1,48,238/- and Rs. 9,77,862/- towards amounts due on pending invoices. This payment was made to the previous account of the plaintiff company being ICICI Bank Account No. 400905500015. The plaintiff was lastly paid on 27.06.2019 in plaintiff's HDFC bank account bearing A/c No. 50200031819454 towards payment of pending invoices up to February, 2019. The plaintiff further averred that WhatsApp messages exchanged between Mr. Manmeet Singh Sethi and defendants no. 2 & 3 also show that the oral agreement for supply of goods was being acted upon. On 15.11.2018, defendant no. 2 informed Mr. Sethi that he would make payments to the plaintiff company and as per the ledger an amount of Rs. 1,49,709.65 paise was received from defendant no. 1 on 16.11.2018. On 10.04.2019, defendant no. 3 sent a message to Mr. Sethi that an amount of Rs. 4,50,484.22 paise was paid to the plaintiff towards pending bills in relations to 'AM PM' and another payment of Rs. 10,659 was made on 17.04.2019. On 25.04.2019, defendant no. 3 had written that it will take 2-3 days for them to arrange the money to pay plaintiff's pending dues and as per the ledger on 30.04.2019 an amount of Rs. 1,25,364.60 paise was made to the plaintiff. As per plaintiff while payments CS (Comm.) No. 430/2022 -5- were always due in the ledger, the plaintiff kept receiving payments towards pending invoices from time to time. The defendants made payments till July 2018. However, after July 2018 the payments were delayed and none of the invoices were cleared in timely manner. By March 2019, the defendants were postponing payments on pending invoices on some pretext or other, including claims that they did not have sufficient funds. It is mentioned that from time to time the directors of the plaintiff had requested the defendants no. 2 & 3 to clear invoices. In the WhatsApp messages the defendant no. 2 has admitted that payments were delayed and directors of the plaintiff has requested the defendants to make the payment. It is also mentioned that since BHPL owned the 'AM PM'restaurant brand, it would appear that BHPL were interested in ensuring that all the franchises using the 'AM PM' brand name be run in a profitable manner. Thus, it would appear that when defendant no. 2 was unable to make the 'AM PM' Ambience Mall franchise profitable, Mr. Manmeet Sethi, in his role as a Director of the plaintiff company, offered some financial and management support from time to time as a friend and as a business partner. The record also reveals that there was no contractual obligation to offer such support and it was clear that any such offer was purely bona fide. It is also clear that Mr. Sethi wanted to prevent further losses and paid some money to the defendants on the condition that he would be repaid when 'AM PM' was generating profits. It is mentioned that such monies were offered by Mr. Sethi so that the plaintiff company could recover its dues from the defendant no. 1 and pay off the vendors from whom the goods were purchased since payments to such vendors could not CS (Comm.) No. 430/2022 -6- be delayed. Despite such aid, the defendants have neither been able to continue running 'AM PM' franchise restaurant at Ambience Mall profitably, which was ultimately unilaterally shut down at the onset of the Covid-19 pandemic in March 2020, nor defendants have cleared the dues of the plaintiff company. The plaintiff has raised a total bill of Rs. 1,32,30,890/- out of which the plaintiff has received an amount of Rs. 1,23,47,881/-. It is mentioned that defendants have deliberately failed to make the complete payments and as on date a sum of Rs. 8,83,009/- qua the invoices relating to the 'AM PM' franchise is still due and payable by defendants relating to the goods supplied from the period 03.03.2019 to 13.06.2019. As per the plaintiff, it is entitled for an amount of Rs. 8,83,009/- on account of unpaid invoices for the period from 03.03.2019 to 13.06.2019. It is mentioned that on 20.08.2019 an official of defendant no. 1 sent an email to Mr. Deepak Khanna, Director of the plaintiff company, attaching a Debit Note. This Debit Note was deliberately dated 31.03.2019, almost five months before it was sent. In this Debit Note No. Misc/DN/8, the defendant no. 1 claimed that a sum of Rs. 29,21,588.84 paise ought to be reduced from the balance due from defendant no. 1, alleging that there was overbilling from market retail price as printed on the items/ agreed rates against the items supplied in the year 2018-2019. As per the plaintiff, this debit note was issued in respect of goods supplied by the plaintiff for two restaurants operated by defendant no. 1, 'AM PM' and 'The GT Road'. It is mentioned that prior to issuance of this Debit Note, defendant no. 1 had not raised any complaint disputing the invoices raised. As per the plaintiff these delayed Debit Notes were issued wrongfully by the CS (Comm.) No. 430/2022 -7- defendants to deny the payment. It is mentioned that after delivery of items by the plaintiff on 13.06.2019, it stopped supplying goods to the defendants. The invoices raised in the months of March, April, May and June, 2019 remain unpaid till date. It is mentioned that on 09.07.2019, an email was sent by an official from the plaintiff to the official of defendant no. 1, seeking statement of account and balance confirmation as on 31.03.2019. On 18.07.2019, an official of defendant no. 1 confirmed that an amount of Rs. 23,86,639.19 paise was due from the defendant no. 1 to the plaintiff as on 30.06.2019 in relation to both 'AM PM' and GTR restaurants. Since this amount did not match the plaintiff's ledger, another email was addressed by an official from the plaintiff company on 18.07.2019 for balance reconciliation, which clearly records that as on 30.06.2019, an amount of Rs. 8,81,033/- was due from Defendant No. 1 qua 'AM PM' restaurant invoices (total amount of Rs. 25,10,270/- in relation to both 'AM PM' and GTR restaurants). On 29.07.2019, the accounts officer of defendant no. 1 addressed other email reiterating the balance confirmation as on 31.03.2019. It is mentioned that the defendants have deliberately failed to pay the outstanding dues of the plaintiff. All the goods and material supplied by the plaintiff were received and utilized by the defendants to their satisfaction. On 22.02.2022, the plaintiff has filed pre-institution mediation as per Section 12A of the Commercial Courts Act. The matter was listed for appearance of defendant company on 21.03.2022 and 13.04.2022, however the defendants failed to appear despite issuance of notice as a result of which, non-starter report was issued by the DLSA, West District, Tis Hazari Courts on CS (Comm.) No. 430/2022 -8- 13.04.2022. As per the plaintiff, it is entitled for a sum of Rs. 8,83,009/- from the defendants. Plaintiff has also claimed interest @ 18% per annum till 28.05.2022 which comes to Rs. 5,06,894/-. It is prayed by the plaintiff to pass a decree of Rs. 13,89,904/- in its favour and against the defendants. The plaintiff has also claimed pendente-lite and future interest @ 18% per annum.
3. The defendants have filed written statement taking preliminary objections that suit filed by the plaintiff is not maintainable. The same has been filed by the plaintiff with oblique motives to harass the defendants and to extract money. In preliminary submissions, it is admitted that defendant no. 1 is a duly registered partnership firm, wherein, the defendant no. 2 & 3 are husband and wife and its partners. The plaintiff has misrepresented, misled and deceived the defendants. The plaintiff is also guilty of having caused huge direct financial losses to the defendants. In true facts, it is mentioned by the defendants that defendant no. 2 was known to Sh. Manmeet Singh Sethi @ Sh. Rajan Sethi through certain common friends since many years. Sometime in 2017, the defendant no. 2 was approached by Sh. Rajan Sethi, representing himself to be owner/ director of M/s. Bright Hospitality Pvt. Ltd. ("the BHPL"). He represented to the defendant no. 2 that he owns franchises of various restaurants and has huge experience in the food and restaurant business. He further represented to the defendant no. 2 that he would help in making huge profits by association in the food and restaurant business. Sh. Rajan Sethi had ascertained that the defendants have funds to invest and he successfully lured the defendants in getting franchise arrangement of his food chain. It is mentioned CS (Comm.) No. 430/2022 -9- that believing the assurances Sh. Rajan Sethi on the possibility of huge growth and profits vide association with him, the defendant no. 2 agreed to open franchise unit(s) of two of their restaurants i.e. "AMPM, Cafe and Bar" and "The G.T. Road". Sh. Rajan Sethi assured the defendant no. 2 that these restaurants are well known brands in the market and he is also having huge experience in the business. He has also stated that he on behalf of the defendant will decide the location of these restaurants after ascertaining the market condition and he shall also be looking after the hiring and arrangement of staff of these restaurants. He has also stated that he will decide upon the third-party vendors to supply the raw materials, equipment etc. as he is adept in ensuring most efficient, cheapest and best quality sourcing. It was categorically assured by Sh. Rajan Sethi that he will manage the location, staff, sourcing of supplied and sale prices for the restaurants and defendant no. 2 had to invest money in the business. He also assured the defendant no. 2 that he will be a Managing Board Member of the defendant no. 1 and shall also be involved with him. It is mentioned that on the basis of the assurances of Sh. Rajan Sethi, the defendant no. 2 agreed to invest his hard-earned money and opened franchise units of two of the so called "popular' AM PM, Cafe and Bar and The G.T. Road. Sh. Rajan Sethi asked the defendant no. 2 to open the restaurants in the Ambience Mall, Gurugram but the defendant no. 2 was reluctant to open in the Ambience Mall due to high rents and maintenance cost. Sh. Rajan Sethi assured the defendant no. 2 that he will get the rent negotiated with the management of the mall and he will provide space at much lower price than the market. Sh. Rajan Sethi also assured the defendant CS (Comm.) No. 430/2022 -10- no. 2 that all these costs will be covered by huge profits that the defendant no. 2 will earn from the business. Based on these assurances, the defendant no. 2 agreed to the decision being made by Sh. Rajan Sethi. The franchise agreement was signed between the defendant no. 1 and BHPL (the company of Mr. Rajan Sethi) for the AMPM, Cafe and Bar on 22.02.2018 wherein as per terms of the defendant no. 1 was to pay 6% of the monthly revenue to the BHPL, out of which 3% was towards the franchise fee and 3% towards the management fee. It is mentioned that Sh. Rajan Sethi had already negotiated the leasing of the space for the restaurant(s) AMPM, Cafe and Bar and The G.T. road and he instructed the defendant no. 1 to simply sign the lease deed stating that he has negotiated the best deal. The space for the 'AM PM, Care and Bar' restaurant was taken in December 2017 and the process of fit-outs and arrangements started. Accordingly, a lease deed was signed with the Ambience Mall, Gurugram for an area of approx. 328.37 sq. mtr on the Third floor of the Ambience Mall for a period of 9 years i.e. from 24.12.2017 to 23.12.2026 at a monthly lease of Rs. 3,53,461. It is mentioned that the defendant no. 1 was induced to sign the formal franchise agreement towards AMPM for the G.T. road Restaurant, no franchise agreement was signed. For the AMPM restaurant, the said Rajan Sethi always assured that while a franchise agreement is signed for the records purpose, the actual fee he would charge will depend on the profits made and he assured that defendants will make profits. It is mentioned that all the equipment for the restaurant was sourced by Vendors of Sh. Rajan Sethi at prices which were negotiated by him thereafter instructed upon the defendants to place the orders and get the CS (Comm.) No. 430/2022 -11- equipment installed and the operations of 'AM PM, Cafe and Bar' commenced on 06.03.2018. It is also mentioned that regarding the sourcing of goods, Sh. Rajan Sethi represented to the defendant no. 2 that one of his associate companies i.e. M/s. Magic bowl Hospitality Pvt. Limited shall supply all the raw material to the defendant no. 1. Sh. Rajan Sethi assured the defendant no. 2 that material shall be provided to the defendant no. 2 at the lowest price in the market. It is stated that the supplier i.e. the present plaintiff being his associate company, does not wish to make any profits in the plaintiff company. It is mentioned that Sh. Rajan Sethi never disclosed that Magic bowl Hospitality Pvt. Limited is fully owned and controlled by him. In reality the defendant no. 1 has overcharged, overbilled, under- supplied, given invoices for material never received and supplied without even placing orders. The plaintiff has played fraud upon the defendants. It is mentioned that the supply made by the plaintiff to the defendant were all a part of the vicious and malafide scheme of Sh. Rajan Sethi to enrich himself from both hands i.e. as the franchise owner and also as the supplier of goods and supplies for the day-to-day operations of the restaurants. Sh. Rajan Sethi made huge profits from the defendants while causing them severe losses. The defendant no. 1 met the officials of the plaintiff along with Sh. Rajan Sethi and he was again assured by the representative Sh. Rajan Tarafdar, Sh. Ravi, Mr. Preetanjali, Sh. Ashwani and others, who told him that the goods supplied to the defendant no. 1 shall be at cost price to them and substantially lower than the Maximum retail price. The defendant no. 1 has not only been fleeced but clearly cheated by the plaintiff. It is mentioned that though a written CS (Comm.) No. 430/2022 -12- Franchise Agreement was signed between the defendant no. 1 and the BHPL for the franchise of the 'AM PM, Cafe and Bar' restaurant but no written agreement was executed between the defendant no. 1 and the plaintiff for providing the materials to the restaurant but the defendant no. 1 started incurring expenses of running G.T. Road restaurant which is as under: -
Particulars Amount Towards the franchise fee for the 3% of the total monthly revenue AMPM, Cafe and Bar to the BHPL. (varied each month) Towards the management fee for the 3% of the total monthly revenue AMPM, Cafe and Bar to the BHPL (varied each month). Towards the materials purchased As per the invoices raised by the from the plaintiff plaintiff (varied each month) Towards the lease/rent to the Rs. 5,24,290/- (approx.) Ambience Mall Towards the electricity, water, PNG Rs. 2,33,993/- and other monthly charges.
Towards Common Area Rs. 1,76,218/- Maintenance (CAM) charges paid to the Ambience Mall.
Staff Salaries etc. the staff hired by Paid by the Defendants as instructed Sh. Rajan Sethi. by Sh. Sethi.
Various other expenses towards maintenance, repair, other good purchases, liquor, staff welfare etc. It is mentioned that the expenses were on the very high end however the defendants were always assured by Sh. Rajan Sethi for and on behalf of the BHPL that due to his experience the revenues and profits shall far outstrip the costs. On 06.03.2018, the operations of the 'AM PM' Cafe and Bar commenced and the first sale bill was issued. The fixed cost for running the 'AM PM, Cafe & Bar turned out to be more than Rs. 11 lacs per month. Moreover, from the very commencement of the restaurant, there were serious discrepancies/shortcomings in the management and CS (Comm.) No. 430/2022 -13- the raw material that was provided by the plaintiff. Such issues were from time to time intimated to the plaintiff. Some of these issues/ shortcomings are as follows: -
(i) The Defendants found that the plaintiff was overcharging on the materials and also, delivering short on items which were yet "shown" as delivered.
(ii) The defendants found that the plaintiff was even supplying expired materials, which was brought to its notice from time to time in the monthly review meetings of the defendants and BHPL.
(iii) The defendants found that the equipment sold to it by the plaintiff were not brand new as assured to it by the plaintiff as well as BHPL and were second hand/used. Further, these were sold to the defendants at highly inflated prices.
(iv) The defendants had noticed incidents of pilferage by the staff provided by the plaintiff at various occasions.
(v) The plaintiff and Sh. Rajan Sethi would often entertain their guests without even paying their bills including bills of liquor.
(vi) The defendants were further misled by the plaintiff and BHPL as the management personnel and staff provided by the plaintiff did not have adequate experience and knowledge to run the business. In fact, a majority of them had no prior experience to run a restaurant.
4. It is also mentioned that vide email dated 02.05.2018 from the authorized official of the defendant no. 1 to Sh. Rajan Sethi as well as others, it was intimated that high cost on certain food items in the food purchase list need to be discussed specifically. This email was replied by the defendant no. 2 clarifying that they CS (Comm.) No. 430/2022 -14- all need to discuss the high food cost (more than 57%). Vide email dated 01.06.2018, the authorized person of the defendant no. 1 wrote to Sh. Rajan Sethi and the BHPL, requesting for a meeting in the first week of June 2018 to discuss issues especially high food costs. This email was replied by Sh. Rajan Sethi vide this email dated 02.06.2018. The copy of agenda of meeting which is to be held on 06.06.2018 was circulated by the defendant no. 2 to the plaintiff. The above sequence clearly evidences that Sh. Rajan Sethi was controlling both the entities i.e. BHPL and also the present plaintiff and also personally responsible for ensuring viable sourcing. It is mentioned that a proper rate contract was never signed between the plaintiff and the defendant no. 1. As per the norms of the industry, a fixed rate card/contract was to be supplied by the supplier to the purchaser, which is valid for 6 months or 12 months, as decided and agreed by the parties. The plaintiff charged the defendant no. 1, even more than the printed prices of the materials/Maximum retail price. It is mentioned that as per the industry norms, the food cost should be between 20% to 22% of the selling price but the food items that were sold by the defendants had the food price of about 34% due to overpricing by the plaintiff for the materials and short supply of various items, which were billed by the plaintiff but never received by the defendants. The lapses and malpractices of the plaintiff severely impacted the business of the defendants and rather than making profits as assured by Sh. Rajan Sethi, it ran into huge losses. It is mentioned that vide email dated 18.07.2018, the defendant no. 2 shared his concerns with Sh. Rajan Sethi, the plaintiff as well as others. In this email, the defendant no. 2 categorically raised his concerns inter alia CS (Comm.) No. 430/2022 -15- huge losses, high prices of the materials, operating loss since the opening, poor implementation and follow-up by the plaintiff, bad quality of the staff amongst others. It is also mentioned that the storekeeper of the materials of the defendant no. 2, who was in charge of keeping a tab of the raw materials of the restaurant was also provided by the BHPL to the defendant no. 1. It is mentioned that the store keeper in connivance with plaintiff used to place orders for the materials without approval of the defendant no. 2 and was placing orders not as per requirements of the defendant no. 1 but in order to provide maximum benefit to the plaintiff by over-ordering. The defendant no. 2 vide email dated 08.08.2018 requested them to seek his pre-approval before making any such expense in the future. It is mentioned that the plaintiff used to hire and lay-off the employees of the restaurant as per its own whims and fancies, without seeking approval/consent from the defendants. However, the defendant no. 2 had requested the plaintiff to at least keep intimated about the hiring of the employees as the salaries of each of the employee were paid by the defendant no. 1. This was also intimated by the defendant no. 2 to the plaintiff and BHPL on numerous occasions inter alia email dated 14.11.2018, which was replied by Sh. Rajan Sethi. The defendants got no support from the plaintiff and BHPL, despite raising the concerns with them from time to time. It is mentioned that the defendant no. 2 had also observed that the management of the plaintiff distributed freebies to the customers at the restaurant, including beer, without the permission of the defendant, thereby causing huge losses. This was also intimated by the authorized official of the defendant no. 1 to Sh. Rajan Sethi vide email dated 01.02.2019, CS (Comm.) No. 430/2022 -16- who then accepted the mistake vide his response dated 01.02.2019. It is mentioned that owing to the constant losses of the defendant no. 1 and casual as well as negligent approach of the plaintiff and BHPL towards the grievances and concerns of the defendants, vide email dated 24.05.2019, the defendant no. 2 informed them that w.e.f. 01.05.2019, the defendant no. 1 shall not be paying the Management fee of 3% to the BHPL and accordingly advised it not to raise the bill for the Management fee henceforth. As regards the franchise fee, the defendant no. 2 agreed to continue to pay the same for both the restaurants i.e. @ 3% plus GST out of relation which could later be refunded depending on the turn-out of the business. This was responded by Sh. Rajan Sethi vide his email dated 30.05.2019, wherein, he proposed to reduce the management fee, however, the same was refused by the defendant no. 2 vide email dated 30.05.2019, wherein, he categorically mentioned that due to the huge losses that the defendant no. 1 is incurring, no Management fee is payable by it to the BHPL. The defendant no. 2 in his email has mentioned that losses have been incurred by the defendant no. 1 due to the mismanagement, lack of proper controls and BHPL directives on purchasing. It was further mentioned in the email that the financial misappropriation and mismanagement by the BHPL have started at the project stage even before the outlet was opened and the defendant no. 1 called for a meeting to amicably resolve this aspect. It is mentioned that vide email dated 09.07.2019, the plaintiff requested the defendant no. 1 to share the statement of accounts and balance confirmation as on 31.03.2019 and 30.06.2019. The same was replied by the defendant no. 1 vide email dated 18.07.2019, mentioning the CS (Comm.) No. 430/2022 -17- balance confirmation as on 31.03.2019 as Rs. 39,28,105.04 paise and as on 30.06.2019 as Rs. 23,86,639/-. As per the defendants, these confirmation accounts were approximate figures in the usual course of business and transactions between the plaintiff and the defendant no. 1. On some occasions, the defendant no. 1 used to raise debit notes against invoices due to various reasons such as overbilling, non-delivery, damaged products etc. These debit notes were accepted by the plaintiff and payments used to be made accordingly. It is mentioned that it was the agreed position between the defendant no. 1, the plaintiff and the BHPL that the losses incurred towards the overbilling/pilferage/missing supplies shall be reimbursed by the plaintiff. The defendant again reiterated that the plaintiff was supplying the stock, materials to the defendants at highly inflated and exorbitant price as compared to the market. Hence, the defendants decided to stop buying the materials from the plaintiff due to overpricing. It was revealed that the defendants were being grossly overcharged in certain items (30% to 40%). This position was conveyed to the plaintiff and after discussions, a discount of 10% was mutually agreed and given by the plaintiff on the total purchase for the year 2018-19 and the accounts were settled mutually. The total purchases made by the defendant no. 1 from the plaintiff for both the restaurants for the year 2018-19 was Rs. 2,92,15,888.38 paise. It was mutually agreed that the plaintiff shall provide a discount of 10% of the total purchase of Rs. 2,92,15,888.38 paise i.e. for a sum of Rs. 29,21,588.84 paise for the purchases/invoices raised for both, the G.T. Road restaurant as well as AMPM, Cafe and Bar. Out of this amount of Rs. 29,21,588.84 paise, an amount of Rs. 17,54,997.94 paise was for CS (Comm.) No. 430/2022 -18- the G.T. Road and Rs. 11,66,590.90 paise was for AMPM. It was agreed that a debit note shall be issued by the defendant no. 1 in the course of business, which was also duly accepted by the plaintiff. The ledger of the defendant no. 1 for year 2018-2019 was prepared, including this amount and thereafter, the ITR of the defendant no. 1 for the assessment year 2019-20 was filed. This proves the fact that the discount of Rs. 29,21,588.84 paise was mutually decided in March 2019 itself. It is mentioned that the defendants kept on requesting the BHPL/Sh. Rajan Sethi that the franchise agreement for the G.T. road restaurant be signed and executed on an urgent basis. It was expected that the Management fee shall be waived off in the entirety and only the management fee shall be paid as a function of the profits however, no heed was ever paid by BHPL due to malafide attempt to extract money. It is mentioned that as the discount of 10% was mutually agreed and given by the plaintiff on the total purchase for the year 2018-19 to the defendant no. 1 and the accounts were settled mutually, vide email dated 20.08.2019, the authorized official of the defendant no. 1 sent 3 debit notes to the plaintiff i.e. a debit note dated 31.03.2019 bearing no. Misc/DN/9 for Rs. 29,21,588.84 paise (concerning both, the G.T. Road as well as AMPM restaurants) as 10% of the total purchase of Rs. 2,92,15,888.38 paise along with 2 more debit notes, including one dated 31.03.2019 bearing no. Misc./DN/7 for Rs. 1,02,665.29 paise (concerning only the G.T. road) for non-receipt of material and one debit note dated 19.08.2019 bearing no. 103 for Rs. 50,400/- (concerning only the G.T. Road restaurant). These debit notes were issued after mutual agreement between the plaintiff and the defendants and same were duly accepted by CS (Comm.) No. 430/2022 -19- the plaintiff without raising any demure. It is mentioned that the defendants were in constant touch with the plaintiff as well as BHPL and were constantly updating about the losses. It is mentioned that vide email dated 04.03.2020, the defendant no. 1 informed Sh. Rajan Sethi, plaintiff and others that he is closing the restaurant owing to low sales and recurring losses. Defendants were exiting the business as the world was hit by the Covid-19 pandemic and the Government of India announced Nationwide lockdowns from March, 2020 itself. Therefore, the entire stock, equipment, material etc. remained in the premises. The last sale that was made by the defendant no. 1 for the 'AM PM, Cafe and Bar' from the Ambience Mall was on 18.03.2020. Vide email dated 05.06.2020, the defendant no. 2 intimated Sh. Rajan Sethi about the total operating losses from the date of opening till the date of closing of both the restaurants. The details are as under: -
Total operating losses for the G.T. Rs. 1,62,86,552/- Road restaurant.
Total operating losses for the Rs. 67,57,751/-
AMPM, Cafe & Bar Total Rs. 2,30,44,303/-
Share of both the parties (@ 50% Rs. 1,15,22,151/- each)
5. It is also mentioned in the written statement that around July, 2020 the defendant no. 2 and Sh. Rajan Sethi had a discussion wherein Sh. Rajan Sethi offered the defendant No. 2 to take over both the outlets at 50% of the security amount paid by the defendants to the Ambience Mall, Gurugram plus the current liabilities. It was decided that Sh. Rajan Sethi shall pay Rs. 45,00,000/- to the defendants and against this amount, he CS (Comm.) No. 430/2022 -20- shall get both the restaurants complete with all the fittings, furniture assets, in addition to the security deposit of Rs.
84,97,800/- plus the liabilities of both the outlets, including the pending bills and rents. It is mentioned that despite assurances by the plaintiff and BHPL, nothing got materialized and the defendants were left to suffer losses. The defendant no. 2 requested Sh. Rajan Sethi to revert on the offer as well his assurance to bear half of all the losses incurred by them. However, he started ignoring the defendants on some pretext or the other. The defendants were left with no option but to clear the dues of the mall on their own. The defendants offered the Ambience Mall one-time settlement of all the dues. In this regard, a Deed of Settlement dated 28.10.2020 was signed and executed between M/s. Ambience Developers & Infrastructure Pvt. Limited and the defendant no. 1. It is mentioned that due to the false assurances of Sh. Rajan Sethi and the overcharging, undersupply and overbilling by the plaintiff, the defendants had to suffer huge financial losses. Due to this false scheme of the plaintiff the defendants suffered losses. It is also mentioned that as per the books of accounts of the defendant no. 1, for the financial year 2018-2019, the total outstanding of the defendant no. 1 towards the plaintiff for the unpaid invoices, even after deducting the amount of the debit note dated 31.03.2019 for the sum of Rs. 29,21,588.84 paise, was of Rs. 10,06,516.20 paise, out of which Rs. 2,82,513.19 paise (Credit) was for AMPM and Rs. 7,24,002.41 paise (Credit) was for G.T. Road. In the subsequent financial year i.e. 201-2020, the outstanding invoices were paid and therefore, this amount became Rs. 5,84,245.17 paise (Debit) i.e. receivable by the defendant no. 1 from the CS (Comm.) No. 430/2022 -21- plaintiff, out of which Rs. 3,12,470.20 (Debit) was for AMPM and Rs. 2,71,775.57 paise (Debit) was for G.T. Road. The defendant no. 1 had stopped buying the materials from the plaintiff in 2019 itself. There were no transactions with the plaintiff in the financial year 2020-2021. However, the amount of Rs. 5,84,245.17 paise (Debit) remained as receivable by the defendant no. 1, out of which Rs. 3,12470.20 (Debit) was for AMPM and Rs. 2,71,775.57 paise (Debit) remains unpaid by the plaintiff to the defendant no. 1. As per the defendants, in view of the past relations between the parties and the various assurances by Sh. Rajan Sethi on behalf of plaintiff and also BHPL, the defendant no. 1 chose not to take any legal action to recover the amount from the plaintiff. It is mentioned that total unpaid invoices are mentioned as Rs. 8,83,009.49 paise but as per the ledger filed by the plaintiff at page 377 of the plaint, this amount is Rs. 8,72,335.18 paise. The plaintiff has not taken into account an unpaid bill of Rs. 84,702.59 paise. The plaintiff at page no. 26-29 of the plaint have mentioned certain invoices which were not even received by the defendant no. 1. These bills are dated 01.06.2019, 13.06.2019, 13.06.2019 and 13.06.2019 of Rs. 10,066.97 paise, Rs. 3,111.40 paise, Rs. 5,236.37 paise and Rs. 1,265.60 paise respectively, total amounting to Rs. 19,680.34 paise. The ledger filed by the plaintiff on page no. 371-375 itself shows that it had issued credit notes to the defendant no. 1 of Rs. 13,938.87 paise and this amount has not been deducted from the amount recoverable by the plaintiff. The plaintiff has deliberately not taken into account the amounts of the debit notes issued by the defendant no. 1. The debit note dated 31.03.2019 of Rs. 29,21,588.84 paise has not been included by the plaintiff. Out of CS (Comm.) No. 430/2022 -22- this amount of Rs. 29,21,588.84 paise, an amount of Rs. 17,54,997.94 paise was for G.T. Road and R.s 11,66,590.90 paise was for AMPM. The defendants have already made the payment of some invoices for which amount has not been deducted by the plaintiff. As per the defendants, the plaintiff owes a sum of Rs. 3,12,470.20 paise to the defendant no. 1 for the 'AM PM, Cafe and Bar'. In reply on merits, similar averments are made and all the averments of the plaint are denied. Dismissal of suit is prayed by the defendants.
6. The plaintiff has filed replication to the written statement filed by the defendants and controverted the allegations made in the written statement and further reaffirmed the averments made in the plaint. In the replication, it is mentioned that the defendants have received goods and failed to raise any complaint and belatedly alleged that there were issues of over-billing, over- supply. In the replication, it is also mentioned that in relation to the defendant's version of disputes between BHPL and the defendant no. 1, the legal proceedings have already been initiated by BHPL and those proceedings have no relation with the present case.
7. On the basis of pleadings of the parties, following issues were framed by me on 17.11.2023, which are as under: -
(i) Whether the plaintiff is entitled for recovery of Rs. 8,83,009/- from the defendants, as prayed? (OPP)
(ii) Whether the plaintiff is entitled to the interest on the amount of Rs. 8,83,009/-, if yes, then at what rate and for what period? (OPP) CS (Comm.) No. 430/2022 -23-
(iii) Relief.
8. In evidence plaintiff has examined Sh. Manmeet Singh Sethi S/o Late Sh. Bhupinder Singh Sethi as PW-1. This witness has filed affidavit on the lines of plaint. This witness has proved True copies of invoices issued by the plaintiff company in relation to supply of goods to defendant No.1 for 'AM PM' for the period March 2019 to June 2019 as Ex. PW1/1 (colly), True copies of invoices issued by the plaintiff company in relation to supply of goods to defendant No.1 for 'AM PM' for the period 01.04.2018 to 31.01.2020 as Ex. PW1/2 (colly), True copies of the bank statements of the plaintiff's bank account in HDFC bank from 1.4.2018 to 31.3.2021 as Ex. PW1/3, True copies of e-mails exchanged between the officials of the plaintiff and defendants regarding nonpayment of dues by defendant No. 1 dated 9.7.2019, 18.7.2019, 28.7.2019, 29.7.2019, 2.8.2019 and 19.8.2019 as Ex. PW1/4 (colly), WhatsApp conversations between the deponent and defendant No. 2 & 3 as Ex. PW1/5, True copy of email dated 20.8.2019 along with debit notes dated 31.3.2019, addressed by officials of defendant No.1 to Deepak Khanna, director of plaintiff company as Ex. PW1/6, True copy of table demonstrating the calculation of interest on pending invoices as Ex. PW1/7, Original nonstarter report dated 13.4.2022 issued by DLSA West as Ex. PW1/8, Nonstarter report bearing Ref No. 3202 issued on 14.07.2022 as Ex. PW1/9, Copy of order dated 10.10.2022 passed by Hon'ble High Court in Arbitration Petition No. 1151/1BT1 titled Bright Hospitality P. Ltd Vs Based on a True Story as Ex. PW1/10, True copy of the master data of M/s Bright Hospitality P. Ltd and M/s Magic CS (Comm.) No. 430/2022 -24- Bowls Hospitality P. Limited as obtained from the website of the Ministry of Corporate Affairs as Ex. PW1/11 (colly), True copy of email addressed by the d/o defendant no.2 and 3, Ms. Jasmine Kalra as Ex. PW1/12.
9. This witness is duly cross examined by Ld. Counsel for defendants. In cross examination, this witness has stated that he had made last dealing with the defendant in June/July 2019. This witness has stated that he had sent communication to the defendant through WhatsApp and email demanding the amount between the period June,2019 to May, 2022. He has admitted that Mr. Ranjan Tarafdar is also involved in the business affairs of the plaintiff. This witness has stated that he cannot admit or deny if he had chaired a meeting with the defendant on 3.5.2018. This witness has admitted document Ex. PW1/DX1. This witness has admitted email received from the defendant as Ex. PW1/DX2. This witness has stated that the plaintiff used to supply to the defendant food materials such as fruits, Vegetables, restaurant supplies, housekeeping material, butchery (non veg food). He has stated that the plaintiff company used to buy these products which used to be supplied to the defendant. This witness has stated that he can show the invoices to prove that the goods were purchased by the plaintiff which were supplied to the defendant. He has admitted invoices from page no. 148 to 173 Ex. PW1/DX1(colly). This witness has stated that he can't tell without seeing the record if the plaintiff used to purchase goods from these companies/firms namely Mahabir Coal Company, K Can Foods, Mahabir Beverages, Agro Green Vegetables, Sona Trader, TFS Delhi Product, Babu Meat Shop and Satguru Sai CS (Comm.) No. 430/2022 -25- Trader. He has voluntarily stated that the defendant used to try negotiating prices on regular basis as their business practice, hence they would have raised differential price issue. He has admitted that an issue regarding short supplies and supply of expired goods having been made by the plaintiff company to the defendant. He has voluntarily stated that the defendant raised this issue once but did not support it with any material evidence or proof. He has admitted that Mr. Naveen Hada was working with the plaintiff. This witness has admitted email Ex. PW1/DX-2 which were sent to his team members. This witness has admitted his statement recorded in CS (COMM) 442/2022. This witness has admitted his signatures at point A, A1, A2, A3, A4, A5, A6, A7, A8 and A9, A10, A11 and A-12 and the copy of statement was given exhibit mark as Ex. PW1/DX-3. He has admitted that the certified copy of the plaint with documents in suit no. 442/2022 as Ex. PW1/DX4, the replication as Ex. PW1/DX-5 and affidavit in evidence as Ex. PW1/DX-6 filed by him in above mentioned suit number. This witness has admitted that he was purchasing goods from Mahabir Coal Company, K Can Foods, Mahabir Beverages, Agro Green Vegetables, Sona Trader, TFS Delhi Product, Babu Meat Shop and Satguru Sai Trader. This witness has stated that he had not given the reply to the email dated 20.08.2019 sent by the defendant. He has admitted that a meeting between him and defendant was held on 05.04.2018 at his Gurugram office. This witness has admitted that he had received the email dated 02.05.2018 from the defendant which is Ex. PW1/DX-7. He has stated that a meeting dated 06.06.2018 was held between him and defendant at his Bright Hospitality office at Gurugram. He has denied that in this meeting the agenda CS (Comm.) No. 430/2022 -26- included both the management of the business of the defendant company being run under the franchise of Bright Hospitality P. Ltd and also supplies and food costs of purchases being made from the present plaintiff. He has stated that the meeting was held only to discuss the management of the outlet by Bright Hospitality and purchases of the raw materials could have been one of the points of discussion. This witness has stated that he has received the email dated 18.07.2018 in the capacity of Director of his other company Bright Hospitality P. Ltd which is Ex. PW1/DX-8.
10. On the other hand, defendant has examined Sh. Ravinder Singh Kalra, its partner as DW-1. This witness has filed affidavit on the lines of written statement. This witness has proved copy of the authorization of the defendant no. 1 dated 15.10.2022 as Ex. DW-1/1, copy of the Franchise Agreement dated 22.02.2018 between BHPL & BOATS for AMPM as Ex. DW-1/2, Copy of the Lease Deed dated 20.06.2018 signed between deponent and the Ambience Mall for the G.T.R. restaurant as Mark- A, copies of the Company Master Data of the plaintiff as well as BHPL as Ex. DW-1/3, copies of the email dated 11.04.2018 circulating the minutes of meeting dated 05.04.2018 as Ex. DW-1/4, copies of the emails dated 02.05.2018 which is already exhibited as Ex. PW-1/DX-7, Copy of the emails dated 01.06.2018, 02.06.2018 and 05.06.2018, circulating the agenda for the meeting of 06.06.2018 already exhibited as Ex. PW-1/DX1, Copy of the email dated 18.07.2018 sent by the defendant no. 2 as already exhibited as Ex. PW-1/DX-8, Copy of the email dated 08.08.2018 from the defendant No. 2 as Ex. DW-1/7, Copy of CS (Comm.) No. 430/2022 -27- email dated 08.08.2018 from defendant no. 2 as Ex. DW-1/5, copies of the email dated 14.11.2018 of the authorized official of the defendant no. 2, along with reply dated 14.11.2018 from Sh. Rajan Sethi as Ex. DW-1/6, copy of the email dated 01.02.2019 of the authorized official of the defendant no. 1 along with reply dated 01.02.2019 from Sh. Rajan Sethi as Ex. DW-1/7, Copies of the emails dated 24.05.2019, 30.05.2019 & 30.05.2019 as Ex. DW-1/8, copies of emails dated 09.07.2019, 18.07.2019, 18.07.2019 along with the working of the accounts as Ex. DW-1/9, copies of the some of the invoices raised by the plaintiff and other external vendors for comparison along with a comparison table as Ex. PW-1/DX1A, originals of invoices from external vendors as Ex. DW-1/10, copy of the relevant pages of the ledger of the defendant no. 1 for the year 2018-19 (showing the transactions of both AMPM and G.T. road), along with the ITR of the defendant no. 1 for the AY 2019-20 as Ex. DW-1/11, copy of email dated 17.07.2019 from the authorized official of the defendant no. 1 as Ex. DW-1/12, copy of the email dated 20.08.2019 sent by the authorized official of the defendant no. 1 to the plaintiff along with the 3 debit notes issued by the BOATS already exhibited as Ex. PW-1/DX-2, copy of the email dated 04.03.2020 from the defendant no. 2 as Ex. DW-1/13, copy of the email dated 05.06.2020 from the defendant no. 2 already exhibited as Ex. PW-1/DX-2, copy of the email dated 31.07.2020 from the defendant no. 2 as Ex. DW-1/14, copy of the Deed of settlement dated 28.10.2020 signed between the Ambience Mall and the BOATS as Mark-B, a calculation sheet showing all the expenses made by the defendants from the beginning till the closing of both AMPM and G.T. Road as Ex. DW-1/15, copy of CS (Comm.) No. 430/2022 -28- the outstanding statements of the defendant no. 1 for the FY 2018-2019, 2019-2020 and the ledger of the defendant no. 1 for the FY 2020-2021 as Ex. DW-1/16 and the calculation sheet of the defendant no. 1 along with table showing status of each invoice and the relevant pages of the bank statements and Ledger of the plaintiff as Ex. DW-1/17.
This witness is duly cross examined by Ld. Counsel for plaintiff. During cross examination, this witness has admitted that he has placed different invoices for different kinds of goods from different suppliers along with written statement. This witness has admitted that operation of the restaurant 'AM PM' was commenced in March 2018. This witness has admitted that in the Agenda for Meeting dated 03.05.2018, it is mentioned that Rhizome will present reports that they have started mailing on daily basis. He has admitted that all the payments were made by the defendant to Rhizome. This witness has admitted that he has not stated anywhere that there was any attempt from the side of Mr. Rajan Sethi to hide his association with Magic Bowl. This witness has admitted that all the issues in relation to Magic Bowl supply were only raised by him with PW-1. He has admitted that certain documents in the form of Excel sheets have been attached with email Ex. PW-1/DX-8. This witness has stated that he cannot comment if Rhizome has not sent any documents directly to BHPL. This witness has stated that he cannot produce any attachment as mentioned in the email Ex. PW-1/DX8. This witness has admitted that the document titled 'Agenda' at page 127 to 129 of documents filed with the written statement which is part of D-7 of the WS and Ex. PW-1/DX1 is the attachment to the said email dated 05.06.2018. This witness has admitted that CS (Comm.) No. 430/2022 -29- the document titled 'Agenda' was prepared solely by him and his team (BOATS). This witness has stated that in the email Ex. PW-1/4 Mr. Vishal Bhatia has represented this email as he was Manager Audit of BOATS. He has admitted that whenever an invoice of Magic Bowl was disputed the same was intimated in writing. This witness has admitted that the email Ex. PW-1/DX8 was deleted by him from the mailbox. This witness has stated that he must have deleted the email after filing written statement. He has admitted that before April 2019 purchases were made solely from Magic Bowl. He has admitted that the revenue from running the restaurant enter the accounts of BOATS and no other entity. He has admitted that from the date when the restaurant was operational till April 2019 in the very least, food was made, plated and served to customers as having been prepared from raw materials sourced from Magic Bowl. He has admitted that after April 2019 when purchases started being made from third party vendors and contract was also executed. This witness has admitted that he has not placed on record any such contract with third party vendors. This witness has admitted that he has cleared the dues of all third-party vendors. This witness has admitted that purchases made from third party vendors were also at time higher than the purchases made by corresponding items from Magic Bowl. This witness has admitted that there must have some small dues of Magic Bowl even in November 2019and he had indicated to Mr. Rajan Sethi that all dues will be paid in due course. This witness has stated that if materials in respect of invoice or challan were not received, he cannot show any simultaneous communication with the plaintiff in May 2018 to which debit notes relates.
CS (Comm.) No. 430/2022 -30-11. I have heard Ld. Counsels for both the parties at length and perused the record carefully.
12. My issue-wise findings are as under: -
13. Issue No. 1 -Whether the plaintiff is entitled for recovery of Rs. 8,83,009/- from the defendants, as prayed? (OPP)
14. At the very Outset, I may observe that the provisions of Section 2 (1) (c)(xviii) of Commercial Courts Act, 2015 are very clear which reads as under: -
(c) "commercial dispute" means a dispute arising out of-
(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines, aircraft equipments and helicopters, including sales, leasing and financing of the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or commerce.
(viii) franchising agreements;
(ix) distribution and licensing agreements;
(x) management and consultancy agreements;
(xi) joint venture agreement;
(xii) shareholders agreements;
(xiii) subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage;
(xv)partnership agreements;CS (Comm.) No. 430/2022 -31-
(xvi) technology development agreements; (xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;
(xviii) agreement for sale of goods or provision of services;
(xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum; (xx) insurance and re-insurance;
(xxi) contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.
15. The provisions of Section 2 (1) (c) (xviii) of Commercial Courts Act as above are very much clear. Sale of goods are governed by Sale of Goods Act, they pertain to movable properties, any dispute of sale or agreement to sale of goods of specified value do come within the jurisdiction of Commercial Courts Act. The clause also includes the services and guarantee given for the goods sold. The service or guarantee may be oral or written. Therefore, the facts which alleged in the plaint comes under the Commercial disputes.
16. Secondly, now the question arises whether this Court has the pecuniary jurisdiction to adjudicate the matter which is dispute. In this regard, the provisions of Section 3 of Commercial Courts Act, 2015 provides that:
Section 3: Constitution of Commercial Courts:
(1) The State Government, may after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under this Act:CS (Comm.) No. 430/2022 -32-
[Provided that with respect to the High Courts having ordinary original civil jurisdiction, the State Government may, after consultation with the concerned High Court, by notification, constitute Commercial Courts at the District Judge level:
Provided further that with respect to a territory over which the High Courts have ordinary original civil jurisdiction, the State Government may, by notification, specify such pecuniary value which shall not be less than three lakh rupees and not more than the pecuniary jurisdiction exercisable by the District Courts, as it may consider necessary. ] 3[1A) Notwithstanding anything contained in this Act, the State Government may, after consultation with the concerned High Court, by notification, specify such pecuniary value which shall not be less than three lakh rupees or such higher value, for whole or part of the State, as it may consider necessary.]
17. Admittedly, the Commercial Court Act was amended on 03.05.2018 and by virtue of the amendment and by virtue of the notification, the pecuniary value of the Commercial Courts Act shall not be less than Rs. 3,00,000/-.
18. In the present case, the claim amount which is shown in the plaint is of Rs. 8,83,009/-. So, commercial court has jurisdiction to try and entertain the present suit.
19. Now I am dealing with contention raised by the Ld. Counsels of the parties one by one.
20. The burden to prove this issue is on the plaintiff. To prove this issue Ld. Counsel for the plaintiff has argued that it has CS (Comm.) No. 430/2022 -33- supplied various goods to the defendant no. 1 and invoices for the same were duly issued. However, the defendant no.1 failed to clear pending invoices of Rs. 8,83,009/- despite repeated reminders. On the other hand, Ld. Counsel for the defendants have raised various contentions that Sh. Rajan Sethi (one of the director of the plaintiff company) induced defendants to enter the restaurant business, the plaintiff company hid the fact that Sh. Rajan Sethi was also one of the directors of the plaintiff company which supplied the goods as well as BHPL, Plaintiff entrapped defendants by controlling its management and operations, plaintiff deliberately overbilled and supplied expired / defective products to the defendants and plaintiff dully received and never refuted to the debit notes issued by the defendant.
21. Ld. Counsel for the defendants have firstly argued that plaintiff induced him to get into restaurant business and hid the fact that one of the directors of BHPL Sh. Rajan Sethi was also one of the directors of the plaintiff company that supplied the goods. Subsequently, Sh. Rajan Sethi induced him to take franchise of his restaurant 'AMPM' and then also supplied goods that were required to run the restaurant through his sister company. In contrast Ld. Counsel for the plaintiff has argued that defendant already knew that Sh. Rajan Sethi was one of the directors of plaintiff company and has agreed to purchase raw materials to maintain uniformity in the taste of the food prepared at the restaurant as that of other flagship stores. It is pertinent to note that defendants in paragraph no. 12 of the written have stated as under:-
CS (Comm.) No. 430/2022 -34-"12. As regarding the sourcing of goods, Sh. Rajan Sethi represented to the Defendant No. 2 that one of his associate companies i.e. M/s Magic bowl Hospitality Pvt. Ltd. i.e. the Present Plaintiff, shall supply all the raw materials to the Restaurant/Defendant No. 1. Sh. Rajan Sethi assured the Defendant No. 2 the materials shall be provided to Defendant No. I at the lowest prices in the market and with the supplier retaining little or no profits. It was stated that the supplier i.e. the present Plaintiff being his associate Company, he does not wish to make any profits in the Plaintiff Company which is set up specially for the purpose of sourcing goods and supplies at the lowest possible rates and thereafter supply these goods and supplies to the franchisee at the best market profits keeping only nominal/no profits."
(emphasis supplied)
22. Plain reading of the aforementioned paragraph would show that it is not the case that defendants were completely unaware of the fact that Sh. Rajan Sethi was associated with the plaintiff company which was responsible for supplying raw material. Furthermore, Franchise agreement dated 01.12.2017 (EX- DW1/2), in clause 5.9 states that appointment of vendors, contractors, along with their rates shall be mutually decided. Clause 5.9 of Franchise agreement is reiterated below: -
"5.9 Appointment of all the vendors, contractors along with their rates shall be decided on mutual agreements of the OPERATOR and the FRANCHISEE. Further, all salaries shall be as per the mutually decided slabs. The FRANCHISEE shall also have its rights to access the employee master mechanism/software anytime without any notice."
(emphasis supplied)
23. WhatsApp Communication dated 09.05.2018 (EX. PW1/5) shows that defendants were in clear communication with Sh.
CS (Comm.) No. 430/2022 -35-Rajan Sethi to discuss business affairs pertaining to the plaintiff entity and BHPL. In Cross-examination dated 02.04.2025, DW-1 was asked at Q.2 whether it is correct that information about Mr. Rajan Sethi's association with Magic Bowl was always available in public domain? To which he answered in negative but he voluntarily added that he never checked the public domain as relationships were cordial. He was further asked whether it is correct that you have not stated anywhere that there was any attempt from the side of Mr. Rajan Sethi to hide his association with Magic Bowl? To which he replied in affirmative. It is pertinent to note that the defendants had already taken franchisee of another restaurant 'The G.T. Road' prior to franchisee of 'AMPM' from the plaintiff. Furthermore, email dated 04.06.2022 (Ex. DW1/14) clearly states 'AMPM' to be a profitable venture. Relevant portion of this email is reiterated below:-
From: Ravi Kalra <[email protected]> Sent: Friday, July 31, 2020 1:20 PM To:[email protected] <[email protected]>; [email protected] <[email protected]> Cc: Gurmeet Kalra < gurmeet [email protected]»; Jasmine Kalra' <[email protected]>; Jitander Prasher [email protected] Subject: Outlets at Ambience Mall Dear Rajan, This is further to our conversation about GT Road and AMPM at Ambience Mall and your subsequent offer of taking over the outlets at 50% of the security amount paid to the Mall management plus current liabilities, the details of which has already been shared with you.CS (Comm.) No. 430/2022 -36-
We hereby accept your offer of Rs 4500000/-. In return you get both the outlets complete with all the fittings, furniture and assets plus the transfer of the security deposit of Rs 8497800.00 plus the liabilities of both the outlets as on date (pending rents etc - details till 31.3.2020 already shared) You are already aware that though GT road was not breaking even AMPM on the other hand was a profitable venture for us. We now need to concentrate on our core business and wish to exit from the restaurant business altogether, therefore the depressed exit As suggested by you, we will sign a clause of returning the monies paid by you in case the mall gets demolished by December 2020 due to some pending legal disputes the mall management is currently contesting.
The offer stands till end of the day of July 31st, 2020 that is today Best regards (emphasis supplied) Therefore, from the above it is clear that plaintiff has not induced the defendant no. 2 and 3 to take the franchisee of its restaurant 'AMPM' and the fact that Sh. Rajan Sethi was one of the directors of the plaintiff company which supplied the goods was also not concealed from the defendants. Thus, this contention of the Ld. Counsels for the defendants carries no force.
24. The second contention raised by the Ld. Counsel for the defendants is that plaintiff entrapped the defendants by taking control of entire management and operations. Further, plaintiff failed to supply contracted rates of the goods to the defendants. On the other hand, Ld. Counsel for the plaintiff has converted this allegation and argued that defendants were dully involved in CS (Comm.) No. 430/2022 -37- day-to-day business activity. It is also argued that as such there were no contractual rate contract between the plaintiff and the defendants. Ld. Counsel for the defendants have drawn my attention towards Paragraph no. 6 of the plaint wherein it is stated that order placed by the defendant were received to the plaintiff on a customized software created by BHPL. Paragraph 6 of the plaint is reiterated as below: -
"6. That since the Plaintiff was already engaged in the business of supplying raw materials and daily goods required in the running of restaurants, bars, and canteens, including that of M/s Bright Hospitality Pvt. Ltd., the Defendants approached the Plaintiff, to avail their products and services for supplying goods and raw materials for the operational needs of 'AM PM' restaurant franchise. The Plaintiff believes that the Defendants approached the Plaintiff for the purpose of supply of raw materials and daily goods since they may have wanted to maintain the same quality of food and services as in the flagship restaurant "AM PM". In March 2018, the Plaintiff and the Defendant No.1, through the Defendant No.2, entered into an oral agreement for supply of goods and raw materials required for the day-to-day operational needs of 'AM PM' franchise, including paper napkins, silver foils, Kot Printer roll with carbon, raw vegetables, non-vegetarian products, milk products, utensils, etc. Pursuant to such oral agreement, the Plaintiff has been providing to the Defendant No.1, products on a regular basis, based on orders which were received from the Defendant No.1 from time to time. Such orders were received on the customized system software created by BHPL where Defendant No.1 would raise a purchase order electronically which would be visible to the concerned vendors of raw materials directly. Such vendors would supply raw material) to the Defendant No.1 and raise a bill via email with the Plaintiff. It is imperative to state herein that the Plaintiff Company provided goods and raw material to the Defendants as per their instructions, and such supply was to the complete satisfaction of the Defendants. No complaints whatsoever were raised contemporaneously by any of the Defendants CS (Comm.) No. 430/2022 -38- against the materials / products and/or services provided by the Plaintiff.
(emphasis supplied)
25. Ld. Counsel for the defendants have also drawn my attention towards cross-examination dated 20.02.2024 of PW-1 wherein contrary statement has been given by PW-1. During cross PW-1 was asked whether defendant no. 1 used to place orders on the plaintiff through software of M/s Bright Hospitality, sister concern of the plaintiff? To which PW-1 replied in negative and voluntarily stated Bright Hospitality does not own or operate any software for material order placement. A software by the name of kissflow was used to place the orders with the plaintiff. I have carefully perused the paragraph no. 6 of the plaint and deposition of PW-1. However, there is nothing material in favor of the defendants to suggest that any tampering was done by the plaintiff with the software used by the defendants to place orders. Who, when, which and where the software was created is immaterial to prove tampering. Ld. Counsel for the defendants has relied upon judgment titled Lakshmi and Ors. Vs Muthusamy (2011 SCC OnLine Mad 1500) passed by the Hon'ble High Court of Madras. I have perused this judgement with utmost regard however it is not helpful to the defendants. Thus, this contention of the defendants carries no force.
26. It is also argued by Ld. Counsel for the defendants that they had no involvement in procurement of raw material and the whole process was solely controlled by the plaintiff. WhatsApp Chat (Ex.PW-1/5) shows that defendant no. 2 and 3 were duly CS (Comm.) No. 430/2022 -39- involved in decision making of defendant no. 1 and even agents of defendant no. 1 created a WhatsApp group on 09.05.2018 'PURCHASE@BOATS' to discuss purchase related issues with the plaintiff. Defendant No. 2 has clearly stated on this group on 09.05.2018 at 1:12:56 PM that this group has been created to discuss and update on purchase related issues. Defendant no. 2 and its agents have routinely informed about the plaintiff's agent about any issues pertaining to supply of goods. Perusal of this WhatsApp communication clearly shows active involvement of defendant no. 2 and its agents. Emails exchanged between the plaintiff and its agent and defendants and its agents (Ex. DW-1/4, Ex. PW-1/DX-7, Ex-D2, Ex. PW1/DX-8, Ex. DW1/5 - Ex. DW1/9, Ex. DX1/12, Ex. PW1/DX-2, Ex. DW1/13, Ex. PW1/DX2A, Ex. DW1/14) clearly show that defendants were involved in business affairs from purchase, hiring, supply, marketing, cost cutting, administration, management and negotiation. Email dated 11.04.2018 (EX. DW-1/4) is sent by defendant no. 2 to plaintiff informing about minutes of meeting held at BHPL office on 5th April 2018. Email dated 02.05.2018 EX. PW-1/DX-7) is sent by defendant no. 2 to plaintiff inviting attention for discussion regarding high food cost. Email dated 02.06.2018 (Ex-D2) sent plaintiff to defendant acknowledges the email dated 01.06.2018 sent by the defendants informing that meeting is fixed for 6th June. Email dated 18.07.2018 (Ex. PW1/DX-8) sent by defendant no. 2 to plaintiff draws attention of the plaintiff to discuss agenda for monthly corporate meeting and concerns. This email contains several pointers relating to defendant no. 1. Email dated 08.08.2018 (Ex. DW1/5) sent by defendant no. 2 to the plaintiff states to seek pre-approval for CS (Comm.) No. 430/2022 -40- expenses and recommends the need to set in place a system. Email dated 07.08.2018 sent by the defendant no. 1 to the plaintiff raises a concern of a bill wherein no approval was sought for printing letter heads. This email concludes by saying that since no pre-approval was sought defendant no. 2 has refused to pay this bill. Email dated 14.11.2018 (Ex. DW1/6) sent by the defendants to the plaintiff raises a concern of hiring of employee the same was answered by plaintiff vide email on the same day telling one Ms. Swati to look into the matter and streamline the matter. Email dated 01.02.2019 (Ex. DW1/7) sent by the one jasmine (daughter of defendant no. 2 and 3) informs that the defendants must be kept in loop with the marketing team. Plaintiff has apologized and replied in affirmative. Email dated 24.05.2019 (Ex. DW1/8) sent by defendant no. 1 to the plaintiff talks about discontinuation of payment of management fee of 3% to BHPL with effect from 01.05.2019. Plaintiff replied to this email vide email dated 30.05.2019 showing its disapproval. Vide a separate email dated 30.05.2019 plaintiff stated that the base management fee shall be reduced to 1.5% and balance of 1.5% is payable if the outlet is in profit. Email dated 18.07.2019 (Ex. DW1/9) sent by agent of the defendant no. 2 and 3 to agent of plaintiff seeks to confirm balance as on 31.03.2019 and 30.06.2019. Email dated 17.07.2019 (Ex. DX1/12) is sent by defendant no. 1 to plaintiff informing that no franchise agreement has been signed between the parties for BHPL GTR and the same needs to be done urgently. Email dated 20.08.2019 (Ex. PW1/DX-2) is sent by defendant no. 1 to one Naveen Hada whereby 5 pointers are listed and in view of the same 3 debit notes were attached. Email dated 04.03.2020 (Ex. DW1/13) is CS (Comm.) No. 430/2022 -41- sent by defendant no. 2 to plaintiff and agents of Ambeince mall where the restaurant 'AMPM' was leased. This email notifies its recipient of closure of 'GT. Road' Ambeince Mall. Email dated 05.06.2020 (Ex. PW1/DX2A) sent by defendant no. 2 to plaintiff informs the plaintiff about statement of profit and loss at Ambience mall. Email dated 31.07.2020 (Ex. DW1/14) sent by defendant no. 2 to plaintiff offers an exit plan to the plaintiff.
Thus, it cannot be said that defendants were entirely precluded from business management and had no control over the business. This contention of the Ld. Counsel for the defendant carries no force.
27. Further, it is argued that no rate of contract was sent to the defendants. However, perusal of the records show that no pre- determined rate of contract was ever entered between the parties. In cross-examination DW-1 was questioned (Q.48) that after April 2019, when purchases started being made from third party vendors, did DW-1 enter into contract with such third-party vendors? To which DW-1 answered in affirmative. He was further questioned (Q.49) whether he has not placed any such contract with third party vendors as part of your record? To which DW-1 replied in negative and voluntarily stated that he has filed some bills. Therefore, it is clear that no contract was entered between parties containing pre-determined rate list of goods. Thus, this contention of the defendants carries no force.
28. Third contention raised by the Ld. Counsel for the defendants is that plaintiff deliberately overbilled and supplied expired / defective products to defendant no. 1. To prove this CS (Comm.) No. 430/2022 -42- contention Ld. Counsel for the defendants has drawn my attention towards email communication (Ex. DW-1/4, Ex. PW-1/DX-7, Ex-D2, Ex. PW1/DX-8, Ex. DW1/5 - Ex. DW1/9, Ex. DX1/12, Ex. PW1/DX-2, Ex. DW1/13, Ex. PW1/DX2A, Ex. DW1/14). I have perused all of these emails in detail. However nothing detrimental can be concluded against the plaintiff. These emails appear to be part and parcel of discussion of any business. Plaintiff has nowhere admitted to have supplied expired goods or goods that are overpriced. I have also examined Ex.PW-1/DX1 (Colly) and (Ex. DW1/10) which are invoices issued by the plaintiff to the defendant no. 1. However, perusal of these bills do not show that goods were supplied at inflated rate. PW-1 in cross-examination was questioned whether he is aware of issue of short supplies and supply of expired goods having been made to the plaintiff company? To which he replied in affirmative and voluntarily stated that defendant raised this issue once but did not support it with any material evidence or proof. This witness was further shown Point-A of PW1/5 and was asked whether there is any contradiction to his answer to which PW-1 kept the same viewpoint as before and stated that only issue was raised without any evidence and there was no acceptance of from his end. On the other hand, DW-1 in cross-examination has admitted that plaintiff has not supplied any item over MRP. DW-1 was also uncertain when he was questioned whether purchases made by him from third party vendors were at times higher than purchases made for corresponding items from the plaintiff. He voluntarily added that he had to pay as per the contract whether it was lower or higher. It is pertinent to note that email dated 18/07/2018 sent by the defendant no. 2 to the plaintiff contains an attachment CS (Comm.) No. 430/2022 -43- named "AM PM Cost Report Jun'18.xls; GTR Cost Report Jun'18;xls Purchase Rate Comparative Rhizom.xls". During cross-examination dated 24.04.2015, Ld. Counsel for the plaintiff produced a document titled as Purchase Rate Comparative AMPM Gurgaon for the period 01st May 2018 to 31st May 2018 and drew the attention of the DW-1 and suggested that this document is the same document as referred in email marked as DW1/6. DW-1 replied in affirmative and this document was accordingly exhibited as Ex. DW1/PW-8. I have perused DW1/PW-8 carefully. This document shows comparison of cost of raw material purchased by defendants from the plaintiff to that of other restaurants namely PNB, Warehouse and Chilies. Chicken thai purchased by defendant from plaintiff costed Rs.243.80/- however purchase made by PNB costed Rs. 250.00/-. Similarly, there are many variables which shows that plaintiff supplied goods as cheaper rate than other restaurants whereas at time certain products were sold at higher price than the other restaurants put in comparison. This list contains comparison of many other products and there is no huge price gap that would conclude that plaintiff was maliciously overcharging the defendants. Thus, it cannot be said that plaintiff supplied damaged goods or overcharged the defendants. Even otherwise, if the goods were defective or over billed, the defendants were at liberty to file counter claim or set-off to recover such loss. No counter claim or set-off has been preferred by the defendants in the present suit. Thus, there is no merit in this contention of the defendants.
CS (Comm.) No. 430/2022 -44-29. Lastly, Ld. Counsel for the defendants has contended that plaintiff has failed to refute the Debit notes issued by the defendants. Ld. Counsel for the defendants has drawn my attention towards an email sent by agent of the defendant to the plaintiff exhibited as Ex. PW1/DX-2. This email lists 5 points in reference of which debit notes are issued. This email contained attachment of 3 debit notes. Debit note no. Misc./DN/7 dated 09.05.2018 is for non-recipient of challans bills material sent by the plaintiff at outlet against bill no. 003 dt 03.05.18 Rs. 560.20, 006 dt. 07.05.18 Rs. 47,159.20, 26189.79 and 009 dt. 09.05.18 Rs. 19340.28 for a total amount Rs. 1,02,665.29/-. Debit note no. Misc./DN/8 dated 31.03.2019 is against amount debited by plaintiff for overbilling from market retail price as printed on the items / agreed rates against items supplied by the plaintiff in the year 2018 -19 (net purchase 29215888.38 @ 10%) for a total amount of Rs. 29,21,588.84/- and Debit note no. 103 dated 19.08.2019 is against amount debited by the plaintiff for flyer of GTR supplied by the plaintiff without order by the defendants against bill no. 019 and 020 dated 26.04.2019 for a total amount of Rs. 50,400.00/-. Statement of account of the defendants is attached as Ex. DW1/16 and Ex. DW1/17 as per which Ld. Counsel for the defendants has argued that there is nothing payable by the defendants to the plaintiff. I have carefully perused these debit notes which are all back dated and issued for the bill raised by the plaintiff way prior to the issuance of the debit notes by the defendant. It is pertinent to note that these debit notes were issued to the plaintiff only vide email dated 20.08.2019. These debit notes are nowhere mentioned in email communication prior to the month of August, 2019 even though CS (Comm.) No. 430/2022 -45- the debit notes are issued against bills 07.05.18, 09.05.18, 31.03.2019 and goods supplied in 2018-2019. Email dated 09.07.2019 ((Ex. DW1/9) sent by accounts department of defendant no. 1 to the plaintiff requesting for reconciliation of ledger balance of 'AMPM' and 'GTR' has no whisper of the 3 debit notes issued vide email dated 20.08.2019. Furthermore, there is no admission made by the plaintiff towards these debit notes. In WhatsApp communication (Ex.PW1/5) between the plaintiff and defendant no. 2 on 26.11.2019 at 12:13:04, plaintiff has clearly asked the defendant to clear the dues. Relevant chat between the plaintiff and the defendant are reiterated here: -
[26/11/19, 12:13:04 PM] Ravi Kalra: You will need to chip in money - the deficit is growing every month [26/11/19, 12:13:10 PM] Rajan Sethi: Don't blame brand, of management, or anything / anyone else. [26/11/19, 12:13:22 PM] Ravi Kalra: Even AMPM is not churning profits 26/11/19, 12:13:39 PM] Rajan Sethi: Bhaiya. I won't till my Magic bowl money is first given and management and pending brand monies are remitted [26/11/19, 12:13:46 PM] Rajan Sethi: I don't want to waste yours and mine time [26/11/19, 12:13:54 PM] Rajan Sethi: I am in this with you [26/11/19, 12:13:57 PM] Rajan Sethi: 100% [26/11/19, 12:14:01 PM] Rajan Sethi: With my all heart and soul [26/11/19, 12:14:09 PM] Rajan Sethi: But I also run a family and a company [26/11/19, 12:14:12 PM] Ravi Kalra: Agree but will have to take a realistic stand if the mall footfalls don't improve [26/11/19, 12:14:16 PM] Rajan Sethi: I can't run dry and give fruits [26/11/19, 12:14:28 PM] Rajan Sethi: I'll fill the outlet in deserted mall [26/11/19, 12:14:30 PM] Rajan Sethi: ### the mall [26/11/19, 12:14:41 PM] Rajan Sethi: I know what needs to be done [26/11/19, 12:14:46 PM] Rajan Sethi: Leave the past behind [26/11/19, 12:14:52 PM] Rajan Sethi: I can only say that CS (Comm.) No. 430/2022 -46- [26/11/19, 12:14:57 PM] Rajan Sethi: Rest it's your decision sir [26/11/19, 12:15:09 PM] Rajan Sethi: I'll stand by you as a partner, friend and a brother [26/11/19, 12:15:23 PM| Rajan Sethi: Neither these outlets start the journey for me, nor would they end it. [26/11/19, 12:15:38 PM] Ravi Kalra: Monies can only be paid once we have money: you put in your share and I will put in mine and clear all dues:
30. Perusal of these chats show that defendant no. 2 is asking Sh. Rajan Sethi to invest money in the business by forgoing plaintiff's shares. Defendant no. 2 has not asked to recover any pending dues. Sh. Rajan Sethi has requested to remit pending dues pertaining to the plaintiff. Further, in cross-examination PW-1 has clearly denied to have received the Debit notes from the defendants. In respect of debit note no. Misc/DN/8 dated 31.03.2019 defendants have argued that plaintiff had agreed to give 10%. The defendants have not annexed any document such as email, letter or Minutes of Meeting to show that plaintiff had ever agreed to give 10% discount. DW-1 in cross examination has admitted that he has not placed on record any agreement to show that plaintiff has ever agreed to give discount. From the above it is clear that plaintiff never agreed to give 10% to the defendants for which debit note of Rs. 29,21,588.84/- has been issued by the defendants. Plaintiff has also not accepted debit note issued by the defendants vide email dated 20.08.2019 and have duly asked to remit pending dues. Ld. Counsel for plaintiff has heavily placed reliance on judgment titled as "Unique Engineers Pvt. Ltd. Vs. Nitya Electrocontrols Pvt. Ltd." passed by the Hon'ble High Court of Delhi, wherein, it is held that "Sections 41 and 42 of the Sale of Goods Act, 1930 give a right to the buyer to inspect the goods before accepting them and if he CS (Comm.) No. 430/2022 -47- or she does not have any objection qua its quality or short supply within a reasonable time, the buyer is deemed to have accepted the goods without demur. Reasonable time is a question of fact, as per Section 63 of the Act, and cannot be as along as claimed by the appellant, and as rightly held by the learned Single Judge.
In view of the aforesaid discussion and the fact that the appellant has raised the plea of debit notes after about 2½ years clearly proves that the debit notes raised are false and sham. Aforesaid defense regarding debit notes has been raised by the appellant in the Court to deny its liability regarding the balance due to the respondent." Ld. Counsel for the plaintiff has also placed reliance on judgment titled M/s PVT Ltd. Vs. Kedar Nath Gupta (2008:
DHC:3168-DB) passed by Hon'ble High Court of Delhi. This judgment observed that a buyer is deemed to have accept the goods if within a reasonable time he does not intimate the rejection of the goods. relevant paragraph of this judgment is as follows: -
"9. Learned Trial Judge has noted that the goods were supplied on various dates between 29.07.2000 till 21.10.2000 and bills raised and that for the first time an issue pertaining to the price was raised when the appellant wrote a letter on 15.02.2001 and that too after the respondent had pestered the appellant for release of payment. Learned Trial Judge has held that the contemporaneous conducted evidenced appropriation of the goods without demur requiring an inference to be drawn that the appellant had no grievance qua the price at which the bills were raised since the issue of the price was raised after nearly 6 months of the receipt of the first lot of goods.
10. The result is that the suit has been decreed.
11. Conceding that there is no written contract evidencing the price which was agreed between the parties, only submission urged by learned counsel for the appellant is that the newspaper cutting being extracts from the Economic Times listing price of refined coconut oil was good evidence to determine the price thereof.
CS (Comm.) No. 430/2022 -48-12. .......
13. We take guidance from Section 42 of the Sale of Goods Act, 1930 which stipulates that a buyer is deemed to have accept the goods if within a reasonable time he does not intimate the rejection of the goods.
In view of the forgoing discussion, I am of the view that defendants have issued ante-dated Debit Notes as an afterthought and no money is payable by the plaintiff to the defendants.
31. The plaintiff has placed on record invoices along with plaint and proved the same as Ex. PW-1/1 (colly). The defendants have admitted the invoices from page no. 42 to 344 of the plaint. Thus, the defendants have admitted all the invoices of the plaintiff. The first invoice is dated 03.03.2019 and last invoice is dated 20.05.2019. DW-1 has admitted that before April 2019 all the purchases were made from the plaintiff in answer to question no. 45 recorded on 24.04.2025. This witness has also admitted that revenue for running the restaurant was also entered in the accounts of the defendant no. 1. This witness had admitted that from the date when the restaurant was operational till April 2019 food was made, plated and served to customers as have been prepared from raw materials sourced from Magic Bowl. Thus, DW-1 (defendant no. 2) has admitted to receive goods from the plaintiff for running the restaurant 'AMPM'. Plaintiff has also attached its ledger account (Ex. PW1/2) which shows due of Rs. 8,72,335.18/-. This ledger is further corroborated with statement of account (Ex. PW-1) and invoices (Ex.PW-1/1). As all the invoices are admitted by the defendants the plaintiff is able to prove due of Rs. 8,72,335.18/- against the defendants.
CS (Comm.) No. 430/2022 -49-32. In view of the above discussions, I am of the view that plaintiff is able to prove that it is entitled to recover a sum of Rs. 8,72,335.18 paise from the defendants. Accordingly, issue no. 1 is decided in favor of the plaintiff and against the defendants.
33. Issue No. 2- Whether the plaintiff is entitled to the interest on the amount of Rs. 8,83,009/-, if yes, then at what rate and for what period? (OPP) The plaintiff has claimed interest @ 18% per annum from the defendant. Admittedly, no agreement regarding rate of interest was executed between the parties. Reliance can be placed in this regard on the judgment of Central Bank of India Vs Ravindra & Ors MANU/SC/0663/2001 passed by Hon'ble Supreme Court of India. In this judgment it is held that according to stroud's Judicial dictionary of Words and Phrases interest means, inter alia, compensation paid by the borrower to the lender for deprivation of the use of his money. In Secretary, Irrigation Department, Government of Orissa & Ors Vs G. C. Roy Manu/ SC/0297/1992 (1992) 2 SCC 508, it is held that the constitution bench opined that a person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This is the principles of Section 34 CPC.
In this judgment, Judgment of Dr. Shamal Narula Vs CIT Punjab MANU/ SC/0109/1964 (53) was also relied upon wherein it is held that interest is paid for the deprivation of the use of the money. In this judgment it is also held that in whatever category "interest in a particular case may be put, it is a consideration paid CS (Comm.) No. 430/2022 -50- either for the use of money or for forbearance in demanding it, after it has fallen due, and thus, it is charge for the use of forbearance of money. In this sense, it is a compensation allowed by law or fixed by parties, or permitted by customs or usage, for use of money, belonging to another, or of the delay in paying money after it has become payable.
Reliance can also be placed on the judgment of Aditya Mass Communication (P) Ltd Vs APSRTC MANU/SC/0759/2003 wherein Hon'ble Supreme Court granted interest @ 12% p.a. Reliance can also be placed on the judgment of "M/s IHT Network Limited Vs. Sachin Bhardwaj" in RFA No. 835/2016 & CM Appl.14617/2020 wherein the Hon'ble High Court of Delhi has granted interest @12% per annum. I am of the view that interest claimed by the plaintiff is every excessive and plaintiff is entitled to interest @ 12% p.a. which is reasonable and usually prevailing market rate of interest on the amount of Rs. 8,72,335.18 paise from 27.06.2019 since when the amount was due.
34. RELIEF:
In view of my above discussions, the suit of the plaintiff is decreed and a decree of Rs. 8,72,335.18 paise, is passed in favour of the plaintiff and against the defendants. The plaintiff is also entitled to interest @ 12% per annum on the amount of Rs. Rs. 8,72,335.18 paise from 27.06.2019 since when the amount was due till realization. Plaintiff is also entitled to the cost of the suit. All the defendants are jointly and severally liable to make payment of decretal amount. Decree sheet be prepared CS (Comm.) No. 430/2022 -51- accordingly. File be consigned to record room, after necessary compliance.
Announced in the (NARESH KUMAR MALHOTRA)
open court on 19.11.2025 District Judge, Comm. Court-06
West, Tis Hazari Courts
Extension Block, Delhi/19.11.2025
Digitally
signed by
NARESH
NARESH KUMAR
KUMAR MALHOTRA
MALHOTRA Date:
2025.11.19
16:15:49
+0530
CS (Comm.) No. 430/2022 -52-