Delhi District Court
M.S Hi Tech Pipes Ltd vs M/S Kmc Constructions Ltd on 28 April, 2026
IN THE COURT OF SH. DEVENDER KUMAR JANGALA,
DISTRICT JUDGE (COMMERCIAL COURT)-01,
NORTH WEST, ROHINI, NEW DELHI
CS (COMM) No.369/19
CNR NO.DLNW010097152019
M/s Hi Tech Pipes Ltd.
Through its Authorized representative
Mr. Gurmeet Singh
Having its registered office at:
505 Pearl Omaxe Tower,
Netaji Subhash Place,
Delhi-110034
...Plaintiff
Versus
M/s KMC Construction Ltd.
Through its Managing Director,
Having its registered office at:
Plot no.85, Road no.72,
Prashasan Nagar, Jubilee Hills
Hyderabad, Andhra Pradesh-50003
Also At
3rd Floor, 44, Community Center
Basant Lok, Vasant Vihar,
New Delhi-110057.
........Defendant
SUIT FOR RECOVERY OF RS.20,95,850/-(RUPEES TWENTY
LACS NINETY FIVE THOUSAND EIGHT HUNDRED FIFTY
ONLY) ALONGWITH FUTURE AND PENDENTELITE
INTEREST.
Date of institution of Suit : 15.10.2019
Date of final arguments : 16.04.2026
Date of Judgment : 28.04.2026.
JUDGMENT
1. The plaintiff filed the present suit seeking recovery of CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 1/47 Rs.20,95,850/- alongwith pendente-lite and future interest against the defendant.
2.1 Brief facts: The facts of the case in brief as per plaint are that the plaintiff is a private limited company incorporated under the provisions of Companies Act and it is engaged in the business of manufacturing steel tubes and pipes including 'GI Section and Black Steel Tubes' among other steel products and is having good reputation and demand in the market.
2.2 It is stated that the defendant is a private limited company duly incorporated under the Companies Act, 1956, and has been purchasing 'GI SECTION AND BLACK STEEL TUBES" from the Plaintiff on credit basis from time to time, for their project sites at Assam, Jaipur and Nellore.
2.3 It is stated that against each purchase/sale, the plaintiff has been raising Invoice to the Defendant and in acknowledgment of which, the Defendant has been making on account payment, in part, to the Plaintiff from time to time. That a running statement of account / ledger account is maintained by the plaintiff in the name of the Defendant company in its ordinary and regular course of business; in which entries of all the sales / purchases made, as well as, all the entries of payments made by the defendant in part, have been duly reflected and maintained.
2.4 It is stated that as per the statement of account /ledger account, a sum of Rs. 12,18,522/- (Rupees Twelve lakhs Eighteen Thousand Five Hundred Twenty Two Only) is due, outstanding and CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 2/47 payable to the plaintiff by the defendant as on 22.09.2016.
2.5 It is stated that the plaintiff repeatedly demanded the said money from the defendant but the defendant has been procrastinating and avoiding the matter on one pretext or other and has not made any payment to the plaintiff.
2.6 It is stated that the defendant has withheld the aforesaid amount of Rs 12,18,522/- without any rhyme and reason, and therefore it is liable to make payment along with interest @ 24% per annum (which is the prevailing rate of interest as per usage, market, trade and custom, and is also duly printed on the Bills / Invoices raised by the Plaintiff and received/acknowledged by the Defendant from time to time.
2.7 It is stated that due to non payment by the defendant, the plaintiff was constrained to get issued a Legal Notice, however, despite due service of said Legal Notice, the Defendant did not make payment of due amount along with interest @ 24% per annum w.e.f. 22/09/2016. That since the transaction of sale purchase of goods existing between the Plaintiff and the Defendant is commercial transaction and therefore the Plaintiff initiated pre-Institution Mediation proceedings as per the provisions of the Commercial Courts Act, 2015. However, the defendant failed to appear and non- starter report dated 22/08/2019 was issued by North West Delhi District Legal Services Authority.
2.8 The plaintiff has described the outstanding amount as under:-
CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 3/47 S. No. Particulars Amount (Rs.) 1 Principal Amount 12,18,522/-
Interest @ 24% per annum on the above 2 8,77,328/-
principal amount w.e.f. 22/09/2016 till date Total Suit Amount 20,95,850/-
(Rupees Twenty Lakhs Ninety Five Thousand Eight Hundred Fifty Only) 2.9 It is stated that the cause of action to file the present suit in favour of the Plaintiff and against the Defendant arose when on 22/09/2016, a sum of Rs. 12,18,522/- became due, outstanding and payable by the defendant. That it further arose on each and every occasion as and when the plaintiff made pursuance with the defendant thereby raising demand of such amount. That the cause of action further arose on 08.06.2019 when the legal notice was served upon the defendant and the defendant did not made the said payment. That the cause of action further arose when pre institution mediation was instituted by the plaintiff and due to non appearance of the defendant, non starter report dated 22.08.2019 was issued. That the cause of action still subsists as till date no payment has been made.
2.10 It is stated that the suit amount has become due against the Defendant out of a contract of sale of goods / materials, which amount is payable by the defendant to the plaintiff at Delhi, because the all the payments, i.e., cost of supplied goods / materials have become payable in the bank account of the plaintiff maintained with HDFC Bank Ltd., Netaji Subhash Place, Delhi, and the defendant has been making all the payments against supply of goods / materials to the Plaintiff, from time to time in such bank account maintained by the Plaintiff at Delhi. That all the Invoices have been raised and generated from Delhi which duly contains the Clause of jurisdiction of Delhi courts, and also the Ledger Account has been maintained in CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 4/47 Delhi. That part cause of action has arisen in favour of the Plaintiff and against the Defendant to file and institute the present suit at Delhi; hence, this Court is having jurisdiction to try and entertain the present suit.
2.11 With the aforesaid submissions, the plaintiff has filed the present suit seeking recovery of Rs.20,95,850/- alongwith pendentelite and future interest @ 24% per annum from the date of filing of suit till the actual realization.
3. Vide order dated 15.10.2019 the summons for settlement of issues were issued to the defendant. The defendant on being served put the appearance and filed its written statement in terms of directions of the court.
WRITTEN STATEMENT 4.1 In its written statement the defendant has raised various issues regarding maintainability of the suit. It is stated that the present suit of the plaintiff is bad in law because the plaintiff has been mixing three different projects at three different places as mentioned in the notice dated 08.06.2019 wherein the counsel of the plaintiff has mentioned in para no.2 of the notice that the projects sites at Assam, Jaipur and Nellore has been clubbed for payment of alleged balance of amount stated to be paid by the defendant to the plaintiff. That the way of clubbing three projects for the payment of alleged amount is not legally maintainable because the payments with different projects are exclusive as per privity of the contract by way of placing purchase orders.
4.2. It is stated that the present plaint of the plaintiff is bad in law CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 5/47 on account of territorial jurisdiction because the purchaser order dated 15.09.2015, 11.10.2015, 03.06.2015 and 30.11.2015 and the first purchase order dated 04.11.2011 have been placed by the defendant to the plaintiff wherein the company address has been mentioned as Admin. Office at 4th Floor, Raheja Square, Sector-2, IMT Manesar, Gurgaon-122050 (Harayan). That the billing address has been mentioned as KMC Constructions Ltd., RJ Plot No.630, Sector-9, Chitrakoot Yojna, Vaishali Nagar, Jaipur, Rajasthan, Pin-302021. That as per the provision of the law of the land, the territorial jurisdiction to file a suit lies where the defendant resides or the address of the defendant situates or the cause of action has arisen. That the purchase order is itself a piece of agreement/cause of action hence the present suit is not maintainable on the sole ground as mentioned above.
4.3. It is stated that the present suit of the plaintiff is time barred because as per the plaintiff, the last payment has been made by the defendant on 22.09.2016. That the alleged payment of Rs. 11,00,000/- by the defendant is mentioned from Simhapuri Expressway, NEFT wherein there is no any purchase order issued by the defendant. That on the other hand, the present suit is time barred in the provision of law of limitation.
4.4. That the defendant had placed purchaser orders for the project of construction of six lane on National Highway No.8 Manesar started from Gurgaon to Jaipur for a stretch of 225 Kilometer. That the contents of business of manufacturing of steel pipes and tubes including 'GI Section' and 'Black Steel Tubes' has been mentioned in the legal notice of the plaintiff. That it is further alleged in the legal notice that the defendant approached the plaintiff for purchasing 'GI Section' and Black Steel Tubes' which is not maintainable and never CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 6/47 included in the purchase order for the said project of the construction of road on NH-8. That the allegations of the plaintiff against the defendant with respect to the said project are baseless and not maintainable in the name of the alleged payment of balance amount.
4.6. It is stated that as per the last pay order, the defendant paid Rs.1,12,723/- against the purchase order of defendant of Rs.9,39,226/-. after going through the observation and physical dimension as well as quality check of the supplied items, it was found that the supply of articles were sub-standard and not as per terms and conditions agreed according to the purchase order given to the plaintiff by defendant company. That the supplied materials were found to be deficient in quality when checked and assessed as per Indian standard IS 1852 as it is the requirement set in purchase order. That principal work for construction of National Highway and from Gurguram to Jaipur was given by NHAI to Pink City Expressway Pvt. Ltd. That in fact, the plaintiff has been unnecessary changing the defendant with PCEPL as both are different and distinct in law. That it is important to mention here that quality and supplied MBCB material is not as per the standard fixed by the Ministry of Road Transport and Highway (MORT & H) and IRC Guidelines applicable in National Highway Authority of India project. The purchase orders were given to the plaintiff for specification set by NHAI. That the defendant has suffered with loss, arises due to inferior quality as well as sub-standard quality of material. That in this regard, the reply to legal notice dated 17.06.2019 has been sent to the plaintiff's office. That the intimation dated 09.10.2017, 26.02.2018 and 23.03.2018 has been communicated to plaintiff company wherein it has been mentioned that the quality of the MBCB are some sub-standard and CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 7/47 under the required quality. That the defendant company has calculated the loss due to the supply of the sub-standard and under- standard material by the plaintiff which comes to the tune of Rs.84,62,761/- as on 09.10.2017. That the defendant company has recovered the loss of Rs.84,62,761/-from the plaintiff company. That the calculation of loss are liable to be recovered, is based on standard fixation of quality of the product to be used by the defendant company at the time of the construction. That the present suit is not maintainable in the aforesaid facts and circumstances rather the defendant files the counter claim of Rs.84,62,761/- from the plaintiff company.
4.5. It is stated that the plaintiff is guilty of suppresso-vari and suggestio-falsi and the relief as claimed in the suit cannot be granted. That the present suit is liable to be dismissed as per the provisions of under Order 7 Rule 11 of CPC because no cause of action as stated by the plaintiff, has never arose in favour of the plaintiff and against the defendant. The averments made on merits are denied. It is prayed that the suit may kindly be dismissed.
REPLICATION 5.1 The plaintiff filed detailed replication to the written statement of the defendant. The plaintiff in the replication has reaffirmed its claim made in the suit and denied the averments of the defendant. It is stated that the Plaintiff has done business with the Defendant. That the remaining submissions related to a particular project of a particular region is only concerned with the other partners/sub-contractor/petty-contractor of such project, who are having particular/independent contractual terms including separate CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 8/47 tenure of each project.
5.2. It is stated that there exists a single oral contract between the plaintiff and the defendant in pursuance of which the plaintiff has been supplying and delivering various steel products/materials/goods to various projects sites of the defendant based upon various purchase order placed by the defendant from time to time. That para 2 of the legal notice dated 08-06-2019 mentions only about approaching of the defendant to the plaintiff for making purchase of GI Section and "Black Steel tubes" for its project sites at Assam, Jaipur, & Nellore.
That para no. 3 of the said legal notice dated 08.06.2019 as well as para no 3 of the Plaint duly mention that the Plaintiff has been maintaining a running statement of account/Ledger account in the name of the Defendant in which all the entries of sale/purchase and part payments made in respect of all the three sites have been duly reflected and maintained. That the above facts clearly establish that there has been a single contract between the plaintiff and the defendant in respect of various project sites of the defendant at Assam, Jaipur & Nellore etc., as per which the Plaintiff was required to supply and deliver goods/materials to the various projects sites as per various purchase orders placed by the defendant from time to time, under a single oral contract. That the plaintiff supplied and delivered goods to the defendant to its various projects under various purchase orders in pursuant to a single oral contract and there is no separate/independent contract in respect of different CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 9/47 projects/purchase order.
5.3. That the purchase order placed by the defendant mentions its address as Fourth floor, Raheja Square, Sector 2, IMT Manesar, Gurgaon-122050, Haryana; and also because the billing address has been mentioned that KMC Constructions ltd, RJ Plot no 630, Sector-9 Chitrakoot Yojana, Vaishali Nagar, Jaipur Rajasthan-
302021 as alleged. That the oral contract for sell-purchase of goods / materials has been entered into at the registered office of the Plaintiff where key terms of the business transactions have been negotiated and settled. That the suit amount has arisen /became due against the Defendant out of a contract of sale of goods/materials, which amount is payable / has become impliedly payable by the Defendant to the Plaintiff at Delhi for the reason that the plaintiff is maintaining its bank account at Delhi under normal and ordinary course of its business being carried out at Delhi. That the Plaintiff furnished details of such bank account maintained with HDFC Bank Ltd., Netaji Subhash Place, Delhi, to the Defendant for making deposits of payment of costs of goods/materials in such bank account and the Defendant has been making all the payments against supply of goods / materials to the Plaintiff, from time to time in such bank account maintained by the Plaintiff at Delhi under ordinary and normal course of business. That all the Invoices have been raised and generated from Delhi which duly contain the Clause of Jurisdiction of Delhi courts only, which has been duly accepted and acknowledged by the Defendant from time to time by making part CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 10/47 payments. That the Ledger account has been maintained at the registered office of the Plaintiff at Delhi. That the part cause of action has arisen in favour of the Plaintiff and against the Defendant to file and institute the present suit before courts of Delhi within whose territorial limits the registered office as well as, the Banker of the Plaintiff, both are situated. That this Court is competent to try and entertain the present suit, within whose territorial limits the registered office of the Plaintiff as well as the banker of the Plaintiff is situated.
5.4. It is also stated that the Defendant made payment of Rs.
11,00,000/- on 22/09/2016 to the Bank Account of the Plaintiff State Bank of India, Commercial Branch, Karol Bagh, New Delhi, vide UTR No SBIN0013039SBIN916266190039; which has been duly reflected and maintained by the Plaintiff in the Ledger Account maintained in the name of the Defendant under ordinary and regular course of business. That the Pre-Institution Mediation Application in the present matter had been filed by the Plaintiff on 15/07/2019; and even the cause of action to file the present suit is calculated from the date of last sale to the Defendant by the Plaintiff which was on 08/08/2016 vide Invoice No 2741 for Rs. 11,56,335/- then also the last date for filing the present commercial suit (filing and instituting pre-institution mediation) was 08/08/2019. That therefore, the Pre-
Institution Mediation proceedings instituted by the Plaintiff on 15/07/2019 which duly commenced the commercial suit proceedings, CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 11/47 was well within the limitation period of 3 years. That the Defendant has nowhere disputed the Invoices filed and relied upon by the Plaintiff in the Written Statement. That in Reply on Merits Para 3 the Defendant has admitted all the Invoices raised by the Plaintiff to the Defendant).
5.5. That the Defendant has admitted all the Invoices raised by the Plaintiff which have been duly mentioned and reflected and being relied upon by the Plaintiff; meaning thereby the contents of the Invoices containing particulars of goods supplied are also admitted by the Defendant which includes "Gf Section" and "Black Steel Tubes among other Steel Parts & Products so purchased by the Defendant from the Plaintiff from time to time. That in Para 2 of the Plaint it has been specifically pleaded that the purchases had been made for the project sites of the Defendant at Assam. Jaipur and Nellore, and not Six Lane National Highway No 8 project only, as alleged. That the Plaintiff and Defendant have duly entered into an oral contract for supply and delivery of various steel products including "Gl Section" and "Black Steel Tubes" at various sites of the Defendant at Assam, Nellore and Jaipur in pursuant to placing of various Purchase Orders for which the Plaintiff maintained a common/single Ledger Account in the name of the Defendant, it being the single purchaser for all such project sites under single contract.
5.6. It is stated that the story of supply of sub standard and deficient quality material has been concocted later on by the Defendant with CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 12/47 the view to escape the genuine liability of making payment to the Plaintiff for the purchases made by it from time to time for its various project sites. That in reply to the averments regarding principal work for construction of National Highway from Gurugram to Jaipur given by NHAI to Link City Expressway Pvt. Ltd. (PCEPL), it is submitted that the Plaintiff has nothing to do with such fact if any, because the Plaintiff has contractual relationship with the Defendant of the suit only, who earlier approached the Plaintiff for making purchase of various steel products like "GI Section", "Black Steel Tubes" etc. for it's various projects at Assam, Nellore and Jaipur against various Purchase orders.
5.7. It is stated in regard to intimation dated 09/10/2017, 26/02/2018 and 23/03/2018 sent by the Defendant to the Plaintiff that the same have been intentionally and deliberately procured and projected almost after more than one year since the date of last purchase made by the Defendant on 08/08/2016 after lapse of period more than one year since the date of last purchase. That the allegations regarding sub standard and defective quality of materials / goods raised by the Defendant after a long period of one year since the last date of purchase, is nothing but an afterthought and ill design devised by the Defendant solely with the dishonest intention to get rid of the genuine liability of the principal amount of the present suit. That it is stated by the defendant in its WS that it has suffered loss to the tune of Rs. 84,62,761/- as on 09/10/2017 due to supply of sub standard material by the Plaintiff. That till date no suit / counter claim has been filed or instituted by the Defendant against the Plaintiff to recover such huge amount. That, had the Defendant actually suffered CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 13/47 such huge loss due to any fault or deficiency on part of the Plaintiff as alleged in the Written Statement, it ought to have raised such issue for the first time immediately after the date of purchase; i.e., after date of last purchase in August, 2016 and not after expiry of more than one year period after date of supply.
5.8. It is stated that without admitting existence of any single cause of action to file suit / counter claim by the Defendant, the Defendant ought to have filed a suit for recovery/counter claim against the Plaintiff as the suit for recovery of such huge amount was not filed within the period of limitation which already expired on 09/10/2020.
5.9. It is stated that the defendant did not point out a single fact/incident of alleged suppression or concealment made by the Plaintiff and there is no statement in regard to how there is no cause of action arisen in favour of the Plaintiff to file the present suit against the Defendant. That there is no application under Order 7 Rule 11 CPC filed by the Defendant thereby seeking rejection of the plaint which itself shows that the contents of this Paragraph have been averred for name sake of legal objections and not on the basis of any viability under the law.
6. The pleadings of the parties have been completed vide order dated 17.03.2023.
7. After completion of pleadings of parties, following issues were framed vide order dated 17.03.2023:-
1. Whether plaintiff is entitled to recover Rs.12,18,522/- towards principal from defendant? O.P.P.
2. Whether plaintiff is entitled to interest @ 24% per annum on the principal amount from 22-9-2016 till filing of CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 14/47 the suit amounting to Rs.8,77,328/- from defendant? O.P.P.
3. Whether plaintiff is entitled to pendente lite and future interest @24% per annum from the defendant? O.P.P.
4. Whether this Court lacks territorial jurisdiction ? O.P.D.
5. Whether suit is time barred? O.P.D.
6. Relief
8. After framing of issues, the matter was fixed for evidence of the parties.
PLAINTIFF EVIDENCE
9. In support of case of the plaintiff, Shri Amit Rai, Senior Manager (Marketing) of the Plaintiff Company examined himself as PW-1. He tendered his evidence by way of affidavit Ex. PW1/A. In his affidavit Ex. PW1/A, the PW-1 has reiterated the averments made in the plaint and relied upon the following documents:-
1 Certificate of incorporation Ex PW1/1, 2 Board's Resolution dated 06th September, 2019 Ex PW1/2 3 Board's Resolution dated 15 November, 2022 Ex PW1/3 4 Invoices Ex PW1/4 to Ex PW1/35 5 ledger Mark A (running into 5 pages) 6 Legal Notice dated 8th June, 2019 Ex PW1/36 7 Copy of courier receipts Mark B and Mark C 8 Non-Starter Report PW1/37 9 Affidavit under Sec 65B of the Evidence Act Ex PW1/38.
CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 15/47
10. PW-1 was cross-examined at length by Ld. Counsel for defendant. The detailed cross-examination of PW-1 is reproduced as under:-
"All documents, referred above, were signed by the concerned person in my presence. It is incorrect that the same were not signed in my presence. I joined plaintiff company in the year 2008. It is correct that the plaintiff company has been authorised me, after one other person. Reply to the Legal Notices Ex PW1/D1 and Ex PW1/D2, sent to counsel of the plaintiff, are not within my knowledge.
I am well aware in respect of all documents and developments, took place in this case. It is correct that the Plaintiff has clubbed the reliefs in the plaint in respect of three projects, located at Assam, Jaipur and Nellore. It is incorrect that these three projects were executed at different times Vol. delivery of the goods at the aforesaid projects were made at different and distinct times. We were given purchase order and many a times instructions were given on telephone to deliver the goods at a particular site. It is incorrect that in respect of the aforesaid projects, various purchase orders were issued by Pink City Express Pvt. Ltd. It is correct that copy of purchase orders have not been filed along with the plaint. It is correct that the documents annexed with the plaint are computer generated, which have been proved in the case. It is correct that the documents, referred above, do not bear counter signatures of any persons or authority of the Defendant. I do not recollect as to whether last purchase order is of 30 November 2015. It is incorrect that the Defendant told us that substandard material has been delivered. The above projects were relating to work of National Highway Authority of India, awarded to the Defendant. It is correct that the Defendant used to specify the quality of the goods, which was to be delivered at site. Vol. after manufacturing of the material, the Plaintiff used to call the Defendant to come and inspect the quality of the goods, so that the delivery may be made. The Defendant used to instruct us on phone to make delivery of the goods without any physical inspection. I do not recollect whether the aforesaid fact is detailed in the plaint or not. After going through the plaint, I say that the said fact has been not recorded therein. Report Ex PW 1/D1 is not disputed. It is not within my knowledge that one Sh. B.B. Jaggi was authorized to inspect the quality of the goods, constructed by the Defendant. Report submitted by Sh. Jaggi never came to my knowledge through any source. I am not conversant with handwriting/signature of Sh. B.B. Jaggi or Sh.
CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 16/47 Rajesh. The Plaintiff has not received the report of Sh. B.B. Jaggi through Pink City Express Pvt. Ltd. I do not recollect as to whether Pink City Express Pvt. Ltd. has any nexus or connection with the Plaintiff. Plaintiff might have supplied goods to Pink City Express Pvt. Ltd. I am not aware as to whether Pink City Express Pvt. Ltd. is the sister concern of the Defendant.
I do not recollect as to when last purchase order was received. It is not written in the plaint that the Defendant has to make payment in respect of supplies made on 22 September 2016 only. It is correct that as on 22 September 2016, a sum of Rs. 12,18,522/- was due from the Defendant.
Que. Will you please tell as to which purchase order(s) would reflect the above amount, claim to have been due from the Defendant?
Ans. Since purchase orders are neither filed on record nor in my possession now, hence I cannot point out as to which purchase order(s) would reflect the above amount, as due from the Defendant.
It is incorrect that there is no purchase order(s) issued by the Defendant, which may reflect a sum of Rs. 12,18,522/- as due from the Defendant. It is not within my knowledge that on 17.06.2019 a legal notice was got issued to the Defendant. Reply to the legal notice, as issued on 17.06.2019, which is Ex PW1/D1 was not received by the Plaintiff. I have no idea whether any demand notice was sent to Defendant on 8 July 2019. It is not within my knowledge that Shri Manish Gupta Advocate, ever represented the Plaintiff, or ever tendered legal advice to it. It is incorrect that I have no complete knowledge of the facts of this case. It is incorrect that Ex PW1/D2 was received by the Plaintiff. It is incorrect that Ex PW1/D2 is lying in the file of the Plaintiff. It is correct that last payment for an amount of Rs. 11,00,000/- was made by the Defendant on 22.09.2016. It is correct that this amount was sent by the Defendant from Simhapuri Expressway, Nellore, through NEFT. I do not recollect that a purchase order was sent from Manesar, Haryana, by Pink-City Express Pvt. Ltd. It is correct that the Defendant had placed a purchase order of goods worth Rs. 9,39,226/- and only made a payment of Rs. 1,12,723/- against that purchase order. It is incorrect that the balance amount was with held by the Defendant, since goods supplied were substandard. Since the Defendant never used to make payment against a particular purchase order, satisfying the liability of the said purchase order, there was no question of issuing a notice specifically for the sum of CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 17/47 Rs. 8,26,503/-, withheld by the Defendant against the purchase order of Rs. 9,39,226/-. The Defendant was working for NHAI and purchase orders placed by it, were relating to the work performed for NHAI. It is incorrect that the Defendant suffered a loss of Rs. 84,62,761/-, since substandard material was allegedly supplied by the Plaintiff. Letter dated 9th October 2017, which is mark A was not received by the Plaintiff. The Defendant never informed the Plaintiff alleging that substandard material was supplied. It is incorrect that on 17 March 2016 I was personally intimated by the Defendant that substandard material was been supplied. It is incorrect that on 13th May 2016, team constituted by NHAI, found the material substandard, on examination of the work performed by the Defendant, using material supplied by the Plaintiff. It is incorrect that letter dated 17.05.2016 and report dated 13.05.2016 are part and parcel of Ex PW1/D1. is incorrect that intentionally I have suppressed material facts. It is incorrect that the claim of the Plaintiff is barred by time.
Invoices, sent by the Plaintiff to the Defendant, stipulated that an interest at the rate of 24 per cent per annum shall be charged on delayed payments, which fact emerged out of the contents written in bottom of Ex PW1/20. It is correct that Ex PW1/20 does not bear signatures of any person/ authority of the Defendant. It is incorrect that the interest rate of 24 per cent per annum is penal and cannot be enforced by the Plaintiff unilaterally, without adjudication by the court. It is incorrect that the Defendant never placed order for supply of black steel tubes. It is incorrect that the Defendant intimated on 09.10.2017,26.02.2018 and on 23.03.2018 that quality of MBCB is substandard. It is incorrect that some invoices were intentionally withheld by the Plaintiff, since in those invoices there were facts favouring the Defendant. It is incorrect that claim of the Plaintiff is illegal as well as malicious. It is correct that contract between the Plaintiff and the Defendant was oral and never articulated into a document. It is incorrect that the Plaintiff is in breach of the contract and not the Defendant. It is incorrect that I have deposed false facts."
11. No other witness was examined on behalf of plaintiff and PE was closed vide statement/order dated 25.08.2023.
DEFENDANT EVIDENCE:
CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 18/47
12. In support of case of the defendant, Sh. Ratan Kumar Srivastava, Manager of the Defendant Company examined himself as DW-1. He tendered tendered his evidence by way of affidavit Ex. DW1/A. In his affidavit Ex. DW1/A, the DW-1 has reiterated the averments made in the plaint and relied upon the following documents:-
1. Original Board Resolution dated 11.09.2019, copy of which was marked as Mark A, is Ex.PW1/D1 (OSR)
2. Copy of bill details (running into 5 pages) is Mark A.
3. Copy of reply dated 17.06.2019, which is Mark B,
2. Reply Ex. PW1/D2 (running into 5 pages)
13. DW-1 was cross-examined at length by Ld. Counsel for Plaintiff. The detailed cross-examination of DW-1 is reproduced as under:-
"Affidavit ExDWI/A was prepared on my instructions and its contents are correct. It is correct that Board Resolution dated 11.09.2019 nowhere authorise me to take steps in the present case. It is incorrect that the defendant has not authorised me to file written statement, take steps in defending the case and to testify facts in the present controversy. I am serving with defendant in financial accounts department from last 18 years. I have technical knowledge in respect of the goods/items supplied and installed by the defendant. I am B. Com and LL.B. I have no degree/ diploma in any engineering discipline. It is incorrect that I have no technical knowledge in respect of the modisiems supplied and installed By the defendant.
The contract between the plaintiff and defendant was initiated in the year 2013. The plaintiff used to supply goods/items when so ordered by the defendant, in its various projects. No written contract was executed between the plaintiff and defendant. Vol. the defendant used to issue work orders and the plaintiff used to supply goods. It is correct that the plaintiff supplied goods for Assam, Nellore and Jaipur projects. All goods ordered by the defendant for the above 3 projects were supplied and delivered by the plaintiff. Vol. there were articles worth Rs. 10 to 12 lakhs which were defective.
Que. For the first time when you came to know about the defective items CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 19/47 supplied by the plaintiff?
Ans. After going through the judicial record, I say that I came to know on 13.05.2016 about the defective items for the first time, after inspection of Hi-Tech Pipes at factory visit.
I was not the member of expert team, who inspected Hi-Tech Pipes during factory visit. It is correct that neither in the written statement nor in affidavit ExDWI/A, the defects allegedly noted by the expert team, have been mentioned. In May or June 2016, the plaintiff was apprised about the defects in the goods supplied. Vol. it was mentioned for the first time in the legal notice sent to the plaintiff. It is incorrect that in May or June 2016, the plaintiff was not apprised about the defects in the goods supplied. Calculation Sheet Mark A has been filed by the defendant to show that it suffered a loss of Rs. 84,62,761 as on 09.10.2017. a demand notice was sent to the plaintiff in that regard by email, date of which I do not recollect. No suit/counter claim has been filed against the plaintiff to recover the loss amount of Rs. 84,62,761.
Except the intimation given to the plaintiff, no steps were taken for return of sub-standard material. No debit note was issued in that regard to the plaintiff. It is incorrect that the goods supplied by the plaintiff were not of sub-standard and it were of high quality. ExPWI/D1 does not contain any acknowledgement from beside of the plaintiff. No postal receipt is filed, showing that ExPWI/D1 was delivered to the plaintiff. Vol. the soft copy of ExPW1/D1 was attached with mail sent to the plaintiff immediately after writing the said letter. It is incorrect that ExPW1/D1 is a fabricated document. It is incorrect that the plaintiff was never informed about the defective/sub-standard items supplied. It is incorrect that the goods supplied by the plaintiff were completely consumed by the defendant. Vol. last supplied was not consumed. I do not recollect the date, month and year of the last supply made by the plaintiff. It was approximately of the amount worth Rs. 10-11 lakhs. It is incorrect that the defendant has illegally withhold the amount claimed by the plaintiff in the suit. It is incorrect that I have deposed false facts."
14. The defendant filed an application for permission to record the evidence of Shri Munawwer Jamal, Team Leader, PMC of Maple Highways, Eastern Peripheral Project, TMC Office, Dasna, Ghaziabad, Uttar Pradesh, which was allowed vide order dated 06.11.2024 by Ld. Predecessor of this Court.
15. Sh. Munawwer Jamal tendered his evidence by way of affidavit Ex. DW2/A. In his affidavit Ex. DW2/A, the DW-2 has relied upon the following documents:-
1. photocopy of 1-card, prepared by mechanical process CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 20/47 Ex. DW2/1.
2. letter written by Sh. B.B. Jaggi Ex. DW2/2 3, Test report of examination of the base material Ex.
PW1/D-1
16. DW-2, was cross-examined at length by Ld. Counsel for Plaintiff. The detailed cross-examination of DW-2 is reproduced as under:-
"From year 2009 to year 2020, I was working as Assistant Quality-Cum-Material Engineer, in Aarvee Associates, Ravula Residency, Srinagar Colony, Main Road, Hyderabad. In the year 2016 I was instructed to visit a factory, located somewhere in Uttar Pradesh. Now I recollect that I had gone to Sikanderabad in Uttar Pradesh to inspect the base material. I had gone to a Hi Tech Company and collected samples from there, which were tested in the lab of said company.
The said visit report is not filed on the judicial record. Our Team Leader forwards that report to the concessionaire as well as to NHAI. The material, which does not satisfy the parameters for elongation, cannot be used in the project.
XXXXXX by Sh. Rahul Sharma, Advocate, for the plaintiff.
"We had gone for inspection on 13-05-2016. We had inspected metal beam crush barrier manufacturing unit there. Ex. PWI/D-1 does not contain any fact to the effect that metal beam crush barrier manufacturing unit was inspected by our team. However, it contains that W Beam (which represent the shape) was inspected. Though Ex. PW1/D-1 bears my signature, but it has not been prepared by me. Ex. PWI/D-1 contains signature of Sh. R.K. Srivastava, representative of concessioner. It also contains signature of lab incharge, where the material was tested, at point B. It is incorrect that my signature does not appear at point A on Ex. PW1/D-1. It is incorrect that my signature at point A and B on Ex. PW2/A are different than signature at point A on Ex. PW1/D-1. It is incorrect that I was not a party to the inspection team. It is incorrect that I have deposed false facts."
CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 21/47
17. I have already heard the arguments at length advanced by Sh. Mayank Sharma, and Ms. Nishita Gupta, Ld. counsel for plaintiff and Sh. AK Dubey, Ld. Counsel for defendant. Written submissions on behalf of defendant already filed.
18. It is argued on behalf of the Plaintiff that the claim of the plaintiff is duly supported by cogent and reliable documentary evidence in the form of 32 invoices (Ex.PW1/4 to Ex.PW1/35) and that nothing contrary has come on record during the examination of PW-1 so as to dislodge the plaintiff's case. It is argued that the defendant has admitted through its own witness DW-1 that all goods ordered for all three project sites at Assam, Nellore and Jaipur were supplied and delivered by the plaintiff. It is also argued that the defence of the defendant of sub-standard material is a belated afterthought which is unsupported by any independent document and the same deserves outright rejection. It is therefore prayed that the present suit is liable to be decreed in favour of the plaintiff and against the defendant.
19.1 It is argued on behalf of the defendant through written arguments that PW-1 himself admitted in his evidence that "since the defendant never used to make payment against a particular purchase order satisfying the liability of the said purchase order", and further admitted that "it is correct that the last payment of Rs.11,00,000/- was made by the defendant on 22.09.2016 and it is correct that this amount was sent by the defendant Simhapuri Expressway from Nellore through NEFT", thereby demonstrating that the payment was CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 22/47 project-specific and not referable to any consolidated running account of the defendant. It is argued that the non-inclusion of PCEPL as a party defendant means that the real controversial issue and the real question in dispute cannot be decided properly. That PCEPL is therefore a proper and necessary party for the proper adjudication of the subject matter of the present suit. It is argued that the witness PW-1 admitted his signatures over the document Ex.PW1/D-1, a part of the report submitted by the Independent Engineer after inspection of the factory site of the plaintiff company which clearly establishes that the material supplied was sub-standard as per the fixation of standard of material by NHAI. That DW-2 Sh. Munawwer Jamal stated in his evidence that "in that test report, it was noted that the base material was not satisfying one of the parameters needed for elongation. The said test report is Ex.PW1/D-1 which bears his signature at Point A. Ex.PW1/D-1 was having visit report along with it." That the testimony of DW-1 and DW-2 is corroborative in nature and needs to be appreciated for just and proper adjudication of the present case.
19.2 It is argued that in the present case, there was a visit of an Independent Engineer team functioning as Aarvee Associates Architects Engineers and Consultants Pvt. Ltd., Independent Engineer for six-laning of the Gurugram to Kotputli-Jaipur section of NH-8. That the plaintiff company supplied Metal Beam Crash Barrier for the said project. Vide letter dated 12.05.2016, the Acting Team Leader Sh. B.B. Jaggi informed PCEPL that Sh. Munawwer Jamal (Assistant Quality and Material Engineer) had been appointed for the various tests, inspections and quality checks pertaining to the supply of Metal Beam Crash Barrier proposed to be procured by the Concessionaire for incorporation at various locations in the project.
CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 23/47 19.3 It is argued that the acceptance of and signatures upon the document Ex.PW1/D-1 by the witness of the plaintiff, PW-1, is sufficient to corroborate the fact that the material supplied by the plaintiff company to the defendant was of sub-standard quality and was not used by the defendant company in the project. That the defendant company suffered a loss of approximately Rs.84,62,761/- as calculated at the relevant point in time. That in the circumstances, the defendant company duly communicated to the plaintiff company that no payment is required against the rejected sub-standard material.
19.4 That the plaintiff company examined its witness PW-1 who could not answer the specific question put to him by the learned counsel for the defendant, namely: "Will you please tell as to which purchase order(s) would reflect the above amount claimed to have been due from the defendant?", to which PW-1 answered: "Since purchase orders are neither filed on record nor in my possession now, hence I cannot point out as to which purchase order(s) would reflect the above amount as due from the defendant." That the non- production of purchase orders is fatal to the plaintiff's case, as without establishing the nexus between specific purchase orders and the claimed outstanding amount, the plaintiff cannot maintain a suit for recovery of a specific sum. It is argued that the reply to the legal notice dated 17.06.2019 is Ex.PW1/D1, which was duly sent by the defendant to the plaintiff, but PW-1 claimed that it was not received by the plaintiff is unbelievable and an afterthought.
ANALYSIS OF EVIDENCE AND ARGUMENTS:
20. It may be relevant now to consider the law pertaining to discharge of burden of proof of the issues as relevant and applicable CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 24/47 to the Civil Jurisdiction. In the binding authority of the Hon'ble Supreme Court of India, in M/s. Gian Chand & Brothers and Another v. Rattan Lal @ Rattan Singh: [2013] 3 S.C.R. 601; it has been laid down:-
1.3. It is well settled principle of law that a person who asserts a particular fact is required to affirmatively establish it. The burden of proving the facts rests on the party who substantially asserts the affirmative issues and not the party who denies it but the said principle may not be universal in its application and there may be an exception thereto.
21. The various aspects of proving the facts of a case and exceptions, if any, have been duly considered by Hon'ble Supreme Court of India in Anil Rishi vs Gurbaksh Singh in Appeal (civil) 2413 of 2006 on 2 May, 2006, wherein the binding legal position has been reinforced as under :-
"Pleading is not evidence, far less proof. Issues are raised on the basis of the pleadings. Indisputably, the relationship between the parties itself would be an issue. The suit will fail if both the parties do not adduce any evidence, in view of Section 102 of the Evidence Act. Thus, ordinarily, the burden of proof would be on the party who asserts the affirmative of the issue and it rests, after evidence is gone into, upon the party against whom, at the time the question arises, judgment would be given, if no further evidence were to be adduced by either side."
It has been further laid down (supra) :-
"A distinction exists between a burden of proof and onus of proof. The right to begin follows onus probandi. It assumes importance in the early stage of a case. The question of onus of proof has greater force, where the question is which party is to begin. Burden of proof is used in three ways : (i) to indicate the duty of bringing forward evidence in support of a proposition at the beginning or later; (ii) to make that of establishing a proposition as against all counter evidence; and (iii) an indiscriminate use in which it CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 25/47 may mean either or both of the others. The elementary rule is Section 101 is inflexible. In terms of Section 102 the initial onus is always on the plaintiff and if he discharges that onus and makes out a case which entitles him to a relief, the onus shifts to the defendant to prove those circumstances, if any, which would disentitle the plaintiff to the same.".
22. As per law of the land, the onus to prove is upon the plaintiff and if the plaintiff discharges that onus and makes out a case to entitle him to the relief asserted, in these circumstances the onus shifts upon the defendant to prove such circumstances which may disentitle the plaintiff to the relief claimed.
23. After careful perusal of the record and considering the relevant laws, my issue wise findings are as under:
ISSUE NO.4
4. Whether this Court lacks territorial jurisdiction ? O.P.D.
24. The Court shall take up the issue of jurisdiction first. The onus to prove this issue is upon the defendant. The defendant has contended that the territorial jurisdiction lies at the place where the defendant resides or where the cause of action arises, and since the purchase orders were placed from Haryana and the billing address was in Jaipur, Rajasthan, this Court lacks territorial jurisdiction.
25. The plaintiff in its plaint and replication has submitted that the oral contract was entered into at the registered office of the plaintiff in Delhi and that all the invoices were generated from Delhi with a jurisdiction clause specifying Delhi Courts. It was submitted that the suit amount became payable in the bank account of the plaintiff maintained with HDFC Bank Ltd., Netaji Subhash Place, Delhi and CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 26/47 that the ledger account is maintained in Delhi. It has been further submitted by the plaintiff that the defendant has been making all payments against supply of goods in the bank account maintained by the plaintiff at Delhi, as evidenced by the NEFT transfer of Rs.11,00,000/- by the defendant on 22.09.2016 to the plaintiff's SBI account at Karol Bagh, New Delhi.
26. The reliance of the defendant upon the address mentioned in the purchase orders as the sole basis to contend that the present court does not have jurisdiction, is misconceived. The cause of action in a sale transaction is not confined to the place of issue of a purchase order alone. It equally arises at the place where payment was to be made and was actually made, and where the seller's accounts are maintained. It is a settled principle of law that under Section 20 (c) of the Code of Civil Procedure, 1908, a suit can be filed where the cause of action wholly or in part arises. In the instant case, the oral contract was negotiated and entered into at the plaintiff's office in Delhi, invoices were raised from Delhi, payments were to be made and have in fact been made in the plaintiff's bank account in Delhi, and the ledger account is maintained in Delhi. All these constitute a part of the cause of action having arisen within the territorial limits of this Court. The invoices, though not counter-signed by the defendant, contain a clause conferring jurisdiction upon Delhi Courts, and the defendant's repeated payments into the Delhi bank account of the plaintiff, including the last NEFT payment of Rs.11,00,000/- on 22.09.2016, constitute implied acceptance of such terms.
27. In view of the foregoing, the defendant has failed to discharge the onus of proving that this Court lacks territorial jurisdiction. This Court is competent and has jurisdiction to try and entertain the CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 27/47 present suit.
Issue No.4 is accordingly decided in favour of the plaintiff and against the defendant.
ISSUE NO.5
5. Whether suit is time barred? O.P.D.
28. Now the Court will take up the issue of limitation. The law of limitation is not a mere technicality but a substantive principle of law designed to ensure legal certainty. As the Hon'ble Supreme Court of India held in Popat and Kotecha Property v. State Bank of India Staff Association, decided on 29.08.2005,, reported as (2005) 7 SCC 510:
"Bar of limitation does not obstruct the execution. It bars the remedy. (See V. Subba Rao and Ors. v. Secretary to Govt. Panchayat Raj and Rural Development, Govt. of A.P. and Ors. (1996 (7) SCC 626.) Rules of limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. The law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and wasted time would never revisit. During the efflux of time, newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So, a life-span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. The law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae ut sit finis litium (it is for the general welfare that a period be put to litigation). The idea is that every legal remedy must be kept alive for legislatively fixed period of time. (See N. Balakrishanan v. M. Krishna Murthy (1998 (7) SCC 123)."
(Emphasis supplied in bold)
29. Thus, the law of limitation does not extinguish the underlying right, it merely restricts the enforceability of the remedy CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 28/47 through courts after the prescribed period. Its purpose is not to defeat legitimate claims, but to ensure that parties act with reasonable diligence and do not indulge in unnecessary delay. The legal system provides remedies to redress injuries, but such remedies cannot be kept open indefinitely. Thus, limitation law is grounded in considerations of public policy, encapsulated in the maxim interest republicae ut sit finis litium, meaning that it is in the interest of the State that litigation must come to an end. The legislative intent is to ensure that every legal remedy is pursued within a fixed and reasonable time.
30. The onus to prove this issue is upon the defendant. The defendant has contended that as per the case of the plaintiff, the last payment was made on 22.09.2016, and the suit instituted on 15.10.2019, is therefore beyond three years from the date the cause of action, and is thus barred by limitation under Article 1 of the Schedule to the Limitation Act, 1963.
31. The plaintiff has averred that the present suit falls within the prescribed period of limitation of three years as the time during the pre-institution mediation mandatory under Section 12A of the Commercial Courts Act, 2015 (hereinafter referred to as "the CC Act") is liable to be excluded. Now it becomes necessary to examine section 12A of the CC Act. For the sake of reference, the said section is reproduced below:
"12A. Pre-Institution Mediation and Settlement--
1. A suit, which does not contemplate any urgent interim relief under this Act, shall not be instituted unless the plaintiff exhausts the remedy of preinstitution mediation in accordance with such manner and procedure as may be prescribed by rules made by the Central Government.
2. The Central Government may, by notification, authorise the Authorities constituted under the Legal Services Authorities Act, CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 29/47 1987 (39 of 1987), for the purposes of pre-institution mediation.
3. Notwithstanding anything contained in the Legal Services Authorities Act, 1987, the Authority authorised by the Central Government under sub-section (2) shall complete the process of mediation within a period of three months from the date of application made by the plaintiff under sub-section (1):
Provided that the period of mediation may be extended for a further period of two months with the consent of the parties:
Provided further that, the period during which the parties remained occupied with the pre-institution mediation, such period shall not be computed for the purpose of limitation under the Limitation Act, 1963 (36 of 1963).
4. If the parties to the commercial dispute arrive at a settlement, the same shall be reduced into writing and shall be signed by the parties to the dispute and the mediator.
5. The settlement arrived at under this section shall have the same status and effect as if it is an arbitral award on agreed terms under sub-
section (4) of section 30 of the Arbitration and Conciliation Act, 1996 (26 of 1996).]"
(Emphasis supplied in bold)
32. Under Proviso to Section 12A(3) of the Commercial Courts Act, 2015 time consumed in pre-institution mediation is to be excluded while calculating the limitation period so that engaging in mediation does not cause the plaintiff lose his right to sue due to delay. The Hon'ble High Court of Delhi in Exclusive Capital Ltd. v. Clover Media (P) Ltd., decided on 04.08.2025, reported as 2025 SCC OnLine Del 5221 observed as under:
"17. The said provision further empowers the Central Government to authorize the authorities under the Legal Services Authorities Act, 1987 to conduct these pre-institution mediations. Typically, District Legal Services Authorities (DLSAs) or other notified bodies facilitate the mediation process. It is further envisaged that the mediation process should be completed within three months from the date the application for mediation is made by the plaintiff (extendable by two months with consent of the parties). Importantly, the time spent in pre-institution mediation is excluded for the purpose of calculating the limitation period for the commercial suit. It ensures that engaging in mediation does not make the plaintiff lose the right to sue due to delay. If mediation is successful and the parties arrive at a settlement, it must be reduced to writing and signed by the parties and the mediator."
CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 30/47 (Emphasis supplied)
33. Thus the Hon'ble High Court in Exclusive Capital Ltd. (supra) while observing on proviso to section 12A (3) of the CC Act noted that the said provision ensures that the plaintiff does not lose the right to sue due to delay.
34. Coming back to the facts of the present case, the pre-institution mediation application was filed by the plaintiff on 15.07.2019, which is well within three years from the date of last payment dated 22.09.2016 as well as from the date of the last invoice dated 08.08.2016. Even acknowledging limitation from 22.09.2016, the three-year period would expire on 22.09.2019. The pre-institution mediation was initiated on 15.07.2019 and the non-starter report was issued on 22.08.2019 after a period of 38 days. Under the proviso to Section 12A(3) of the Commercial Courts Act, 2015, the period spent in pre-institution mediation is liable to be excluded for the purpose of computation of limitation. Accordingly, after excluding the said 38 days, the extended last date for filing the suit stands shifted from 22.09.2019 to 30.10.2019. The present suit was instituted on 15.10.2019, therefore is well within the extended limitation period of 30.10.2019.
Issue No.5 is therefore decided in favour of the Plaintiff and against the Defendant.
ISSUE NO.1
1. Whether plaintiff is entitled to recover Rs.12,18,522/- towards principal from defendant? O.P.P.
35. The onus to prove this issue lies upon the plaintiff. In Order to CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 31/47 succeed in a suit for recovery of money arising out of a contract of sale of goods, the plaintiff must establish the existence of a contract, whether express or implied, supply and delivery of goods with respect to the contract and the outstanding amount payable by the defendant. The first ingredient, i.e., the existence of a contract between the parties stands conclusively established as can be gathered from the record. Both PW-1 and DW-1 have categorically admitted that an oral contract existed between the plaintiff and the defendant. PW-1 admitted in his cross-examination: "It is correct that contract between the Plaintiff and the Defendant was oral and never articulated into a document." Similarly, DW-1 admitted:
"No written contract was executed between the plaintiff and defendant. The defendant used to issue work orders and the plaintiff used to supply goods." The existence of an oral contract for the supply of steel goods including GI Section and Black Steel Tubes to the defendant for its various project sites at Assam, Jaipur and Nellore is therefore not in dispute and stands proved by the admissions of both parties. It is a settled principle of law under Section 58 of the Indian Evidence Act, 1872 (now Section 58 of the Bharatiya Saakshya Adhiniyam, 2023) that the facts admitted need not be proved.
36. The second ingredient, supply and delivery of goods stands equally proved both through documentary evidence and through the admissions of the witnesses of the defendant. The plaintiff has placed on record 32 invoices Ex.PW1/4 to Ex.PW1/35 covering supplies made to the defendant's project sites at Assam, Jaipur and Nellore, The DW-1 has made the following categorical admission in his cross- examination that "It is correct that the plaintiff supplied goods for Assam, Nellore and Jaipur projects. All goods ordered by the CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 32/47 defendant for the above 3 projects were supplied and delivered by the plaintiff." Once the defendant's own witness has admitted that all goods ordered for all three projects were supplied and delivered by the plaintiff, the defendant cannot be permitted to back off from this admission and contend otherwise.
37. The principal defence of the defendant is that the goods supplied by the plaintiff were sub-standard and not as per IS 1852 and the standards fixed by NHAI/IRC on account of which the defendant suffered a loss of Rs.84,62,761/- and is therefore not liable to make the payment. This defence and the alleged counter-claim for Rs.84,62,761/- must now be tested against the evidence. The defendant relies primarily upon Ex.PW1/D-1, which is stated to be a test report prepared after a factory visit to the plaintiff's premises on 13.05.2016; letters dated 09.10.2017, 26.02.2018 and 23.03.2018 allegedly sent by the defendant to the plaintiff; and the testimony of DW-2 Sh. Munawwer Jamal, who was a member of the inspection team.
38. On the contention of the defendant that the goods supplied were sub-standard and that it has suffered a loss of Rs.84,62,761/- which it seeks to recover as a counter-claim, it becomes relevant to discuss the relevant provisions of the Sale of Goofs Act, 1930 (hereinafter referred to as 'SOGA').
39. The Hon'ble High Court of Delhi in Lohmann Rausher Gmbh v. Medisphere Marketing (P) Ltd., decided on 13.01.2005, reported as 2005 SCC OnLine Del 39 while explaining Section 41 and 42 of the Sale of Goods Act, 1930 (hereinafter referred to as "SOGA") observed that the defendant has a right to inspect the goods and report defect if the goods are of inferior quality or if the CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 33/47 defendant wants to return the goods. As per Section 42 SOGA, If reporting of defect by the defendant is not done within a reasonable period of time, the defendant is deemed to have accepted the goods. The relevant portion is reproduced below:
"20. Section 41 and Section 42 of the Sale of Goods Act, 1930 reads as under:--
"41. Buyer's right of examining the goods.--
(1) Where goods are delivered to the buyer which he has not previously examined, he is not deemed to have accepted them unless and until he has had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract.
(2) Unless otherwise agreed, when the seller tenders delivery of goods to the buyer, he is bound, on request, to afford the buyer a reasonable opportunity of examining the goods for the purpose of ascertaining whether they are in conformity with the contract.
42. Acceptance.--The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them."
21. As per the mandate of Section 41 of the Sale of Goods Act, the defendant not having inspected the goods in question prior to delivery, had a right to inspect the case on delivery and report defects within a reasonable time of delivery. If not rejected within reasonable time, mandate of Section 42 stipulates that the defendant would be deemed to have accepted the goods."
(Emphasis supplied in bold) CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 34/47
40. Thus the Hon'ble High Court of Delhi in Lohmann Rausher Gmbh (supra) explained that a buyer who has not inspected goods prior to delivery has a right to inspect them upon delivery and report defects within a reasonable time. As per the mandate of Section 41, of the Sale of Goods Act, 1930 the defendant not having inspected the goods prior to delivery had a right to inspect the same on delivery and report defects within a reasonable time of delivery. If not rejected within reasonable time the mandate of Section 42 stipulates that the defendant would be deemed to have accepted the goods. If reporting of defect by the defendant is not done within a reasonable period of time the defendant is deemed to have accepted the goods and becomes liable to pay the price thereof.
41. The Hon'ble High Court of Bombay in Godrej & Boyce Manufacturing Co. Ltd. v. Remi Sales & Engineering Ltd., decided on 24.12.2025, reported as 2025 SCC OnLine Bom 5334 while discussing Section 42 SOGA explained the concept of deemed acceptance in case the buyer does not send any intimation to seller of rejection. The relevant portion is provided as follows:
"34. Ordinarily, once the goods are accepted by the buyer, he becomes liable to pay for the goods sold. Therefore, the act of acceptance of goods is an important step which needs to be proved for claiming the price of the goods sold. The concept of acceptance is dealt with in Section 42 of the Sale of Goods Act, which provides thus :--
"42. Acceptance The buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them."
CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 35/47
35. Thus, Section 42 creates a deeming fiction where the goods are deemed to have been accepted when the buyer intimates to the seller that he has accepted them or when the goods have been delivered to the buyer, who acts in relation to them which is inconsistent with the ownership of the seller, or when the buyer retains the goods without issuing intimation of rejection after lapse of reasonable time. In the present case, since the Petitioner has used the tubes in the heat exchangers, such act is construed as an act which is inconsistent with the ownership of the seller. Thus, the Petitioner's act of using the tubes in heat exchangers is treated as an acceptance of the tubes."
(Emphasis supplied in bold)
42. The Hon'ble High Court of Bombay in Godrej & Boyce (supra) while discussing Section 42 of the Sale of Goods Act, 1930 explained the concept of deemed acceptance and held that the deeming fiction of acceptance is attracted in three circumstances namely first when the buyer expressly intimates to the seller that he has accepted the goods, second when the goods have been delivered to the buyer and he does any act in relation to them which is inconsistent with the ownership of the seller and third when after the lapse of a reasonable time the buyer retains the goods without intimating to the seller that he has rejected them. The court further held that the act of using the delivered goods in the buyer's own works or manufacturing process constitutes an act inconsistent with the ownership of the seller and therefore amounts to deemed acceptance binding the buyer to pay the price of the goods so used.
43. The Hon'ble Madras High Court in S.M.S. Traders v. Official Liquidator of the High Court, Madras, 2011 SCC OnLine Mad 2214, relied upon Section 43 SOGA while observing that when the buyer refuses to accept the goods, it is sufficient to intimate to seller CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 36/47 about his refusal to accept the goods. The relevant para is as follows:
"14. As per Section 43 of Sale of Goods Act, 1930, it is not the duty of the purchaser who refuses to take delivery to return the goods to the seller from the place of delivery at his cost. Section 43 reads as under:
"43. Buyer not bound to return rejected goods.--Unless otherwise agreed, where goods are delivered to the buyer and he refuses to accept them, having the right so to do, he is not bound to return them to the seller, but it is sufficient if he intimates to the seller that he refuses to accept them."
When the buyer refuses to accept the goods, it is sufficient if he intimates to the seller about his refusal to accept the goods. By a reading of Section 43 of Sale of Goods Act read with Clause 16 of the Purchase Order, it cannot be said that the Company in liquidation is bound to pay the amount for the rejected pulpwood."
(Emphasis supplied)
44. Thus the Hon'ble High Court of Madras in S.M.S. Traders (supra) relying upon Section 43 observed that when a buyer refuses to accept the goods it is sufficient if he intimates the seller about his refusal to accept and he is not bound to physically return the goods to the seller from the place of delivery at his own cost. The court clarified that the obligation of the buyer upon rejection is limited to timely intimation of rejection to the seller and that the absence of such timely intimation disentitles the buyer from taking the defence of rejection of goods so as to avoid payment of the price.
45. Applying the above legal position to the facts of the present case, the defence of sub-standard material is found to be wholly unreliable and an afterthought, for the following reasons:
(i) Inordinate and Unexplained Delay in Raising Complaint: DW-1 admitted in cross-examination that the defendant came to know of the defective items on 13.05.2016, after inspection of Hi-Tech Pipes during a factory visit.
However, the defendant continued to make purchases from the plaintiff till 08.08.2016, a full three months after the alleged CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 37/47 discovery of defects. The last payment of Rs.11,00,000/- was made as late as 22.09.2016, more than four months after the alleged discovery. The defendant raised the first formal complaint vide letter dated 09.10.2017, which is more than 17 months after the discovery and more than 14 months after the last payment. This conduct is wholly inconsistent with the conduct of a party which has genuinely suffered loss due to sub-standard material.
(ii) No Steps Taken for Return of Goods or Issuance of Debit Note: DW-1 categorically admitted: "Except the intimation given to the plaintiff, no steps were taken for return of sub-standard material. No debit note was issued in that regard to the plaintiff." In commercial practice, when a buyer rejects goods as sub-standard, the ordinary course of conduct would be to immediately notify the seller in writing, issue a debit note for the rejected goods, and then arrange for return or rejection of the goods. The complete absence of any such steps over a period of years confirms that the defence of sub- standard material is an afterthought and not a genuine commercial grievance.
(iii) No Suit/Counter-Claim Filed Within Limitation: DW-1 admitted that no suit or counter-claim has been filed against the plaintiff to recover the alleged loss of Rs.84,62,761/-. The defendant's own case is that it calculated its loss as on 09.10.2017. The limitation period for filing a suit/counter- claim for such loss would expire on 09.10.2020. No suit or counter-claim has been filed even till the date of arguments in April 2026 more than five years after limitation expired. A CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 38/47 party which has genuinely suffered a loss of Rs.84,62,761/- due to a contractor's breach would not remain silent for years for such a big amount. This conduct further establishes that the claim of sub-standard material is an afterthought.
(iv) Infirmities in Ex.PW1/D-1: DW-2 Sh. Munawwer Jamal, who is stated to have been a member of the inspection team, made significant admissions in cross-examination. He admitted that Ex.PW1/D-1 does not contain any fact to the effect that a metal beam crash barrier manufacturing unit was inspected; rather, it refers to the inspection of 'W Beam'. He further admitted that Ex.PW1/D-1 was not prepared by him, even though it bears his signature. The document therefore suffers from fundamental ambiguity as to the precise subject matter of inspection. The visit report which DW-2 stated was prepared and forwarded to the concessionaire has not been filed on the judicial record, depriving this Court of what would have been the primary document evidencing the alleged sub-standard quality. The non-production of the visit report, which was within the exclusive possession and knowledge of the defendant and its associated entities, invites an adverse inference under Section 114(g) of the Indian Evidence Act that the said report, if produced, would be unfavourable to the defendant. (See Koninklijke Philips N.V. v. MAJ (RETD) Sukesh Behl, decided on 20.02.2025, reported as 2025 SCC OnLine Del 1121).
(v) No Independent Laboratory Test from Government- Approved Lab: The defendant has not produced any test certificate from a government-approved or NABL-accredited CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 39/47 laboratory independently testing the goods actually supplied to and used at the project sites. The only document is Ex.PW1/D-1, which was a test conducted in the lab of the defendant company itself, and which DW-2 admitted was not prepared by him. There is no independent corroboration of the alleged quality deficiency through credible third-party forensic or laboratory evidence.
(vi) Goods Admitted to Have Been Consumed: DW-1 admitted in cross-examination: "It is incorrect that the goods supplied by the plaintiff were completely consumed by the defendant. Vol. last supplied was not consumed." The voluntary statement made by DW-1 that the last supply was not consumed is significant. However, he concedes that goods were in fact consumed. Once goods have been consumed in construction works, the defendant cannot simultaneously claim that they were sub-standard and also that it suffered a loss due to their use, without producing independent evidence of the specific defect and the resulting quantifiable damage. No such evidence has been led.
(vii) Absence of Specific Pleading of Defects: DW-1 admitted in cross-examination: "It is correct that neither in the written statement nor in affidavit Ex.DW1/A, the defects allegedly noted by the expert team, have been mentioned." A party relying on the defence of sub-standard goods in a civil suit is required to specifically plead the nature of the defects, the standard against which the goods were found deficient, and the manner in which loss was calculated. A bald plea of 'sub-standard material' without particularising the CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 40/47 specific defects is insufficient as a legal defence.
46. Turning to the plaintiff's single oral contract theory, the defendant has contended that there are separate privity of contracts for each of the three project sites and that the claims cannot be clubbed. This contention is unsustainable. DW-1 himself admitted that the contract between the plaintiff and defendant was initiated in the year 2013 and that the plaintiff used to supply goods/items when ordered by the defendant for its various projects. A single ledger account was maintained in the name of the defendant covering all three project sites. PW-1 clarified that instructions were given on telephone to deliver goods to particular sites against various purchase orders, all under one oral contract. The plaintiff's maintenance of a single consolidated running account and the defendant's making of consolidated payments without reference to any specific purchase order further confirm that there was a single oral contract between the parties, within which individual purchase orders were placed from time to time. The defendant's contention of separate privity for each project site therefore fails.
47. In view of the foregoing discussion and the findings recorded hereinabove, this Court is of the considered opinion that the plaintiff has successfully discharged the burden of proof cast upon it and has established its claim for recovery of the principal amount of Rs.12,18,522/- through cogent, reliable and unrebutted documentary evidence in the form of invoices Ex.PW1/4 to Ex.PW1/35, duly supported by the admissions of both PW-1 and DW-1 as to the existence of the single oral contract and the supply and delivery of all goods ordered for all three project sites. The defence of sub-standard material raised by the defendant has been found to be a belated CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 41/47 afterthought which is wholly unsupported by legally admissible evidence.
Accordingly, Issue No.1 is decided in favour of the plaintiff and against the defendant. The plaintiff is held entitled to recover a sum of Rs.12,18,522/- (Rupees Twelve Lakhs Eighteen Thousand Five Hundred Twenty Two Only) as a principal amount from the defendant.
ISSUE NO.2
2. Whether plaintiff is entitled to interest @ 24% per annum on the principal amount from 22-9-2016 till filing of the suit amounting to Rs.8,77,328/- from defendant? O.P.P.
48. The onus to prove the present issue is upon the plaintiff. The plaintiff seeks pre-suit interest @ 24% per annum on the principal amount from 22.09.2016 till the date of filing of the suit, amounting to Rs.8,77,328/-. The basis for this claim is that the invoices raised by the Plaintiff explicitly mentions the rate of interest @24% per annum shall be charged on delayed payments.
49. PW-1 in cross-examination confirmed that the invoices sent by the plaintiff to the defendant stipulated interest @ 24% per annum on delayed payments, as is evident from the contents written at the bottom of Ex.PW1/20. He further denied the suggestion that this rate is penal and cannot be enforced by the plaintiff unilaterally without adjudication by a court. However, it is also admitted by PW-1 that Ex.PW1/20 does not bear the counter-signature of any person or authority of the defendant.
50. Under Section 34 CPC, pendente lite and future interest can be CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 42/47 awarded only on the principal sum adjudged. Post-suit interest cannot be awarded on the interest component of a decretal amount. The ancient Rule of Damdupat prevalent in Hindu common law, recognised by the Hon'ble Supreme Court provides that the interest recoverable at any one time cannot exceed the principal amount. This rule acts as a check on the accumulation of interest beyond equitable limits. It is a fundamental principle that the right to claim compound interest must be founded on a contract expressly stipulating compound interest or on a usage/custom of trade. The Hon'ble Supreme Court in M/s D. Khosla and Company vs. Union of India, decided on 07.08.2024, reported as 2024 INSC 587 while observing on the term interest on interest or compound interest under Section 3(3) of the Interest Act, 1978 held that the courts are not empowered to grant compound interest unless specifically provided in a contract or a statute. The Court observed that:
"17. Section 34 of the CPC provides that where the decree is for payment of money, the court may order interest at such rate as the court deems reasonable to be paid on the principal sum adjudged. Again, the reading of the aforesaid Sub-Section (1) of Section 34 CPC would reveal that the interest is payable on the principal sum adjudged and not on interest part of the award.
18. The Interest Act, 1978 vide Sub-Section (3) of Section 3 specifically lays down that nothing in Section 3 which permits the court to award interest shall empower the court to award interest upon interest. It means that ordinarily the courts are not entitled to award interest upon interest unless specifically provided either under any statute or under the terms and conditions of the contract
19. In Oil and Natural Gas Commission vs. M.C. Clelland Engineers S.A., (1999) 4 SCC 327, which was also a case under the Act, this Court observed that there cannot be any doubt that the Arbitrators have power to grant interest akin to Section 34 CPC and it is clear that interest is not permissible CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 43/47 upon interest awarded but only upon the claim made. In the aforesaid case, the claim made was in two parts, and in the second part, interest on delayed payment was also claimed. In that situation, the court held that the interest awarded would form part of the damages or compensation for delayed payment and would become part of the principal amount and thus, in that circumstances, Arbitrator has the power to grant interest on interest which partakes the compensation awarded.
20. In State of Haryana and Others vs. S.L. Arora and Company, (2010) 3 SCC 690, it was observed that interest, unless otherwise specified, refers to simple interest and that interest is payable only on principal amount and not on any accrued interest. It was further held that the compound interest can be awarded if there is a specific provision under the statute or in the contract for compounding of interest but no general discretion lies with the courts or tribunals to award compound interest or interest upon interest.
21. In Hyder Consulting (UK) Limited vs. Governor, State of Orissa, (2015) 2 SCC 189, this Court was dealing with Section 31(7) of the Arbitration and Conciliation Act, 1996, wherein for the purposes of payment of post-award interest, the phrase 'sum directed to be paid by award' was used and it was held that it includes the pre-award interest and, therefore, post- award interest is payable on the sum awarded which includes pre-award interest. However, a distinction was made between Section 31(7) which simply uses the word 'sum' and Section 34 CPC wherein the phrase 'on principal sum adjudged' has been used. The departure in the use of the language in the two provisions was held to be of great significance which clearly showed that the term 'sum' under Section 31(7) refers to aggregate amount of the award and the pre-award interest whereas 'principal sum adjudged' under Section 34 CPC refers only to the amount awarded.
22. The case of UHL Power Company Limited vs. State of Himachal Pradesh, (2022) 4 SCC 116, is again in relation to interpretation of Section 31(7) of the Arbitration and Conciliation Act, 1996, wherein the principal laid down in Hyder Consulting (UK) Limited (supra) has been accepted.
23. In the light of the above legal provisions and the case law on the subject, it is evident that ordinarily courts are not supposed to grant interest on interest except where it has CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 44/47 been specifically provided under the statute or where there is specific stipulation to that effect under the terms and conditions of the contract. There is no dispute as to the power of the courts to award interest on interest or compound interest in a given case subject to the power conferred under the statutes or under the terms and conditions of the contract but where no such power is conferred ordinarily, the courts do not award interest on interest."
51. Thus, The Hon'ble Supreme Court in D. Khosla (supra) while referring to Oil and Natural Gas Commission v. M.C. Clelland Engineers S.A., (1999) 4 SCC 327, State of Haryana v. S.L. Arora and Company, (2010) 3 SCC 690, and Hyder Consulting (UK) Limited v. Governor, State of Orissa, (2015) 2 SCC 189, observed that held that interest is payable only on the principal amount and that compound interest or interest upon interest can be awarded only where there is a specific statutory provision or an express contractual stipulation to that effect. In the absence of any such provision or stipulation in the present case, this Court is not empowered to award interest upon interest, and accordingly, the pendente lite and future interest shall be calculated only on the principal sum adjudged and not on any pre-suit interest component.
52. Coming back to the facts of the present case, where interest is stipulated in the invoices forming part of the commercial transaction between the parties, and the same are relied upon by both parties, such stipulation has evidentiary value. However, where invoices do not bear the counter-signature of the buyer and the contract is admittedly oral, the stipulation of interest on the invoice alone without any acknowledgement by the buyer of the interest terms, cannot be treated as an agreed contractual term so as to entitle the CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 45/47 seller to pre-suit interest at that rate as a matter of right. In commercial transactions, the reasonable rate of interest is generally assessed with reference to the prevailing market rates and the nature of the transaction. In the instant case, the transaction is admittedly commercial in nature. The amount has been withheld by the defendant since 2016, and the plaintiff has been deprived of its legitimate dues for nearly three years before institution of the suit. In these circumstances, it would be equitable to award pre-suit interest at a rate lower than the claimed 24% per annum. This Court deems it appropriate to award pre-suit interest @ 9% per annum on the principal amount of Rs.12,18,522/- from 22.09.2016 till the date of filing of the suit 15.10.2019.
Issue No.2 is accordingly decided partly in favour of the plaintiff and against the defendant.
ISSUE NO.3
3. Whether plaintiff is entitled to pendente lite and future interest @24% per annum from the defendant? O.P.P.
53. The onus to prove this issue is upon the plaintiff. The plaintiff has claimed pendente lite and future interest @ 24% per annum on the principal sum from the date of filing of the suit till realization.
54. It is a settled principle that the grant of pendente lite and future interest lies within the discretion of the Court under Section 34 of the Code of Civil Procedure, 1908. As discussed in D. Khosla (supra) above, the Court is required to award reasonable interest keeping in view the nature of the transaction, the conduct of the parties and the overall facts and circumstances of the case.
55. In the present case, the claim of 24% per annum as pendente lite CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 46/47 and future interest is on the higher side, particularly in the absence of any formally executed written agreement stipulating the said rate. In view of the above considerations, this Court deems it appropriate to award pendente lite and future interest @ 9% per annum on the principal amount of Rs.12,18,522/- from the date of filing of the suit till realization.
Issue No.3 is accordingly decided in favour of the plaintiff and against the defendant.
ISSUE NO.6
6. Relief
56. In view of the findings on Issue Nos. 1 to 5, a decree for recovery of the principal sum of Rs.12,18,522/- (Rupees Twelve Lakhs Eighteen Thousand Five Hundred Twenty Two Only) is passed in favour of the plaintiff, M/s Hi Tech Pipes Ltd., and against the defendant, M/s KMC Construction Ltd. The plaintiff shall also be entitled to pre-suit, pendente lite and future interest @ 9% per annum on the said principal amount of Rs.12,18,522/- from 22.09.2016 till the date of actual realization. The plaintiff is also entitled for the costs of the suit.
Decree sheet be drawn accordingly.
File be consigned to record room, after due compliance.
Announced in the open Court today on this 28th day of April, 2026 (DEVENDER KUMAR JANGALA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
DEVENDER by Digitally signed DEVENDER KUMAR 28.04.2026 KUMAR JANGALA JANGALA Date: 2026.04.30 15:24:31 +0530
CS (Comm.) No369/19 M/s Hi Tech Pipes Ltd. Vs. M/s KMC Constructions Ltd. 47/47