Delhi District Court
Ankit Jain vs Hitesh Kumar on 6 September, 2024
BEFORE THE COURT OF SH. SURINDER S. RATHI, DISTRICT JUDGE
(COMM.)-03 SHAHDARA, KARKARDOOMA, DELHI.
CS (COMM) No. 488/2022
Ankit Jain
S/o Shri Sukhmal Jain
Proprietor of M/s Vardhman Paper,
A-7/28, Krishna Nagar, Delhi-110051 ......Plaintiff
Vs.
1. Hitesh Kumar (Son/LR of deceased Daljit Singh)
2. Sunil Kumar (Son/LR of deceased Daljit Singh)
3. Sanjeev Kumar (Son/LR of deceased Daljit Singh)
All LRs are R/o: C-5, Sector-27, Noida
Gautam Buddha Nagar, UP-201301 ........Defendants
Date of Institution : 18.08.2022
Date of final argument : 06.09.2024
Date of judgment : 06.09.2024
Decision : Decreed
Judgment
1. This suit is filed by plaintiff for recovery of Rs.1,36,92,255/- alongwith
interest @18% per annum against three defendants as legal heirs of late Sh.
Daljit Singh as dues of goods sold to their predecessor in interest.
Plaintiff's case :
2. Case of the plaintiff as per plaint and the documents filed is that he is
proprietor of M/s Vardhman Paper and is engaged in the business of trading
of paper. Late Sh. Daljit Singh was engaged in the business of packaging in
the name and style of M/s Monarch Package of India. Three defendants
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Ankit Jain Vs. Hitesh Kumar SURINDER S
SURINDER RATHI
S RATHI Date:
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namely Defendant no. 1 Hitesh Kumar, Defendant no. 2 Sunil Kumar and
Defendant no. 3 Sanjeev Kumar are deceased Daljit Singh's sons and the suit
has been filed against them as the surviving heirs. Late Sh. Daljit Singh
reportedly expired on 06.10.2020 during Covid.
3. It is case of the plaintiff that late Sh. Daljit Singh, also with the aid of his
Defendant no. 1 son Hitesh Kumar, had been purchasing paper in the name of
his firm M/s Monarch Package of India from plaintiff since 2013. Initially,
upon receipt of orders from M/s Monarch, plaintiff used to order for direct
delivery from the mill/supplier to M/s Monarch for which, the mill/supplier
used to issue direct bills in the name of M/s Monarch. For the goods supplied
to M/s Monarch payments used to be made by plaintiff to the mill/supplier's
bank accounts. Thereafter upon being informed Defendant's M/s Monarch
used to make payment to the plaintiff. Plaintiff was maintaining a running
statement of account of payments made to mills and suppliers and payments
received from M/s Monarch of Late Sh. Daljit Singh.
4. In due course the debit balance of M/s Monarch, payable to plaintiff grew, as
late Sh. Daljit Singh was lethargic in making payments. However from April
2014 onwards the above business model was changed and plaintiff started
issuing invoices directly to M/s Monarch. Accounts were
settled/confirmed/acknowledged from time to time. As per account
confirmation dated 01.02.2016 covering transactions up to 31.01.2016 shows
debit balance of Rs.1,51,08,528/- due and payable by M/s Monarch to
plaintiff. Even though plaintiff demanded ITRs from Late Daljit Singh but
they were not supplied. However, plaintiff was handed over two cheques of
Rs.75 lakhs each by Late Daljit Singh. Both these cheques on presentation
were dishonoured on 29.04.2016 and 05.05.2016 as informed by the
plaintiff's HDFC Bank East Jyoti Nagar Branch. Plaintiff issued Section 138
NI Act notice followed by filing of two NI Act complaints. Late Sh. Daljit
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S RATHI Date:
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Singh entered appearance in those two complaints, however, a settlement was
arrived at between the plaintiff herein and late Sh. Daljit Singh during his
lifetime on 09.09.2019 whereunder late Sh. Daljit Singh agreed to pay full
and final settlement amount of Rs.96,44,880/- as against dishonoured cheques
amount of Rs.1.50 crores. The notorised settlement deed was placed on
record before Ld. MM. In terms of settlement late Sh. Daljit Singh handed
over bank draft of Rs.30 lakhs dated 02.09.2019 which was encashed.
Plaintiff was handed over 24 post dated cheques of Rs.2,76,870/- each. Even
several of these cheques on presentation were dishonoured. Late Sh. Daljit
Singh transferred Rs.7,30,610/- by way of RTGS up to 13.02.2020 in four
cache.
5. The plaint also discloses that during the settlement talks in 2017 late Sh.
Daljit Singh shared his balance sheet filed alongwith ITR for the year 2016-
17 showing outstanding debit balance of Rs.1,51,08,428/- payable to
plaintiff's firm M/s Vardhman Paper. Upon dishonour of settlement cheques
the compromise deed dated 09.09.2019 stood breached with debit balance of
Rs.1,22,56,330/- as on 13.02.2020.
6. It was followed by issuance of legal notice to three defendant sons as his LRs
dated 31.12.2021 for Rs.1,21,12,098/- as late Sh. Daljit Singh expired on
06.10.2020. The notice was neither replied nor complied. As per plaint the
actual balance as on that date was Rs.1,22,56,330/- alongwith interest. The
plaintiff approached Shahdara DLSA for Pre-Institution Mediation under
Section 12A of Commercial Courts Act, 2015 wherein defendants did not
participate and Non-Starter Report was issued on 05.03.2022. Having no
other option left plaintiff filed the suit in hand for following reliefs:-
Prayer:
1. Pass a decree for Rs.1,36,92,255/- in favour of plaintiff and against the defendant
along with pendente lite and future interest @18%.
2. Award the costs of the suit in favour of plaintiff and against the defendants.
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3. To grant any other relief which this Hon'ble Court may deem fit and proper in favour
of plaintiff and against the defendant.
7. Before issuance of summons of the suit in so far as plaintiff has not placed on
record any death certificate of Late Sh. Daljit Singh or a proof that he is
survived by his three sons only, he placed on record copy of the death
certificate as per which the Sh. Daljit Singh died on 06.10.2020.
8. Summons of the suit was served upon the defendants. They entered
appearance in person on 13.12.2022. No WS was filed within thirty days and
as such their right to file WS was closed on 02.01.2023. However WS was
accepted after condonation of delay was allowed under orders of Hon'ble
High Court vide order dated 18.01.2023 in CM Main 75 of 2023 in favour of
Defendant no. 1 and Defendant no. 2 subject to payment of cost of
Rs.25,000/- to plaintiff. Defendant no. 3 was also allowed to file WS on
21.02.2023 subject to cost of Rs.12,000/- to be paid to plaintiff.
Case of Defendant no. 1 and 2
9. Defendant no. 1 and Defendant no. 2 brothers have filed a common WS as
per which they have prayed for dismissal of the suit for non-joinder of
necessary parties i.e. the third parties/mill owners who allegedly supplied
goods to Late Sh. Daljit Singh. Dismissal of the suit is also prayed on a plea
that plaintiff has no cause of action against the answering defendants. The suit
is claimed to be barred by limitation. Objection of territorial jurisdiction is
also taken on the ground that defendants are residents of Noida, UP.
10. In their reply to the plaint it is not denied that plaintiff Ankit Jain is proprietor
of M/s Vardhman Paper having offices at Noida and Krishna Nagar, Shahdara
but it is stated that his principal place of business is Sector 11, Noida. It is not
denied that they are sons of Late Sh. Daljit singh who was proprietor of M/s
Monarch Package of India.
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11. It is not denied by Defendant no. 1 and Defendant no. 2 that Late Daljit Singh
was having business relations with plaintiff since 2013 whereunder plaintiff
was supplying goods through the mill suppliers and that plaintiff used to
make payment to these suppliers followed by recovery of same from Late
Daljit Singh. It is however pleaded that no proof of said payments claimed to
have been made on behalf of Late Sh. Daljit Singh has been filed. It is denied
that Daljit Singh was not diligent in making payments and it is claimed that
no money was payable by him to the plaintiff. As far as the settlement
accounts showing debit balance of Rs.1,51,08,528/- annexed with the plaint
are concerned, the defendants have denied them for want of knowledge.
12.Factum of pendency of two NI Act complaints for two cheques of Rs.75 lakhs
each is not denied. Defendants have not specifically denied execution of
settlement deed dated 09.09.2019 for want of knowledge whereunder the two
NI Act cases for Rs.1.50 crores were settled for Rs.96,44,880/-. It is not
denied that late Daljit Singh paid Rs. 30 lakhs by way of draft apart from
issuing 24 cheques of Rs.2,76,870/- each. Likewise it is not specifically
denied receipt of Rs.7,30,110/- out of the 24 cheques. It is pleaded that the
out of court settlement dated 09.09.2019 cannot be treated as
acknowledgement of any financial liability. It is claimed that it was executed
after expiry of period of limitation. It is denied that late Sh. Daljit Singh
carried out two purchases worth Rs.4,45,234/- and Rs.3,97,474/- on
10.11.2019 and 10.01.2020 respectively. It is denied that plaintiff is entitled to
18% interest. It is specifically denied that answering defendants inherited any
property from Late Sh. Daljit Singh and that they are enjoying or managing
the same after his death or that they are liable to pay amount of
Rs.1,22,56,330/-. Defendants have denied receipt of legal notice dated
31.12.2021. With these pleas dismissal of the suit was prayed.
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CS (Comm.) No. 488/2022 SURINDER S
Ankit Jain Vs. Hitesh Kumar SURINDER RATHI
S RATHI Date:
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13. In their affidavit of admission and denial of plaintiff's documents they have
denied the running statement of account filed by the plaintiff qua Late Sh.
Daljit Singh. Out of the 51 no. of invoices placed on record by plaintiff as
Annexure P3 Defendant no. 1 and Defendant no. 2 have admitted ten invoices
and have denied the remaining. They have also denied the accounts
confirmation document Annexure P4 as also the out of Court settlement
placed before Ld. MM in NI Act case. Likewise, the two cheques of Rs.75
lakhs each, 24 settlement cheques and NI Act case court orders for want of
knowledge.
Case of defendant no. 3
14.Defendant no. 3 has filed a separate WS wherein he has pleaded on the lines
of his two brothers Defendant no. 1 and Defendant no. 2. Defendant no. 3 has
stated that he has not inherited the proprietorship business of his father. As
per him his elder brother Defendant no. 1 and younger brother Defendant no.
2 inherited the business of his late father under M/s Monarch Package of
India. He maintained that he has not received any profit from the said
business even as per family settlement deed dated 07.01.2018, executed
between the family members during the lifetime of Late Sh. Daljit Singh, as
per which Defendant no. 3 is not supposed to interfere in the business affairs
of M/s Monarch Package of India. As per him his late father alongwith his
two brothers Defendant no. 1 and Defendant no. 2 were supposed to pay him
Rs.1 crore but no such amount was paid to him.
15.It is pleaded that after the father's death the entire business was taken over by
Defendant no. 1 and Defendant no. 2 and Defendant no. 3 never received any
monetary benefit out of the said business.
16.The affidavit of admission and denial filed by Defendant no. 3 qua plaintiffs
document is found to be defective as it is not in consonance with Order 11
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Rule 4 (3) CPC which provides that the defendant shall specify the reasons
for denying the documents of the plaintiff.
Replication
17.Separate replications were filed by plaintiff against the two set of written
statements. In the replications plaintiff has reiterated the pleaded case and has
added that Late Sh. Daljit Singh had left an estate which was jointly inherited
by the three defendants which include land at Village Khatta Prahladpur,
District Baghpat, UP which is around 1.25 hectares(3.08 acres). It is also
pleaded that defendant also inherited a flat at C-5, Sector 27, Noida, UP
where all the defendants are residing.
18.It is further pleaded in the replication that a portion of the Baghpat land i.e.
0.55 hectare out of 1.2 hectares were sold by all the three defendants to one
Ms. Shilpi Goyal and Mr. Raghav Goyal as per revenue records dated
15.07.2021 and this sale was carried out after the death of late Sh. Daljit
Singh. It is further pleaded that as per information available with the plaintiff
Defendant no. 3 Sanjeev Kumar received the title of remaining land on the
basis of relinquishment deed executed by his Defendant no. 1 and Defendant
no. 2 brothers Hitesh Kumar and Sunil Kumar respectively. As such it is
contended that the three defendants jointly inherited two immovable
properties from the estate of Late Sh. Daljit Singh and are as such liable to
own up the financial liabilities of their late father.
19.Separate replication is filed by plaintiff to the WS of Defendant no. 3 on the
same lines apart from adding that as per sale deed executed by the defendants
qua Baghpat property it was sold for Rs.73,80,240/-.
20. Out of the pleadings following issues were identified by this Court on
30.01.2023:
Issues:
1. Whether suit is bad for non-joinder of necessary parties? OPD1-2
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Ankit Jain Vs. Hitesh Kumar signed by
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SURINDER RATHI
S RATHI Date:
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2. Whether the suit is barred by limitation? OPD1-2
3. Whether this Court has territorial jurisdiction to try this suit? OPD1-2
4. Whether plaintiff is entitled to recovery of Rs.1,36,92,255/- alongwith interest @18%
per annum? OPP
5. Relief
21. Issue no. 3 qua territorial jurisdiction was treated as preliminary issue and
was decided in favour of plaintiff on 22.03.2023. This order was not
challenged by the defendants.
22. Evidence in this case was ordered to be recorded before Ld. LC Ms. Eshu
Chaudhary, Advocate as per protocol created by this Court under Order 18
Rule 4 CPC read with Order 15A Rule 6(l) and (o) CPC as applicable to
Commercial suits.
Plaintiff's Evidence :-
23. To prove his case plaintiff examined himself as PW1 Ankit Kumar. Vide his
affidavit Ex.PW1/A he deposed on the lines of the plaint and exhibited
following documents:-
1. Copy of GST certificate is Ex.PW1/1;
2. Copy of running ledger account maintained by plaintiff with Daljit Singh's firm
M/s Monarch Package of India is Ex.PW1/2;
3. Certificate under Section 65B of Evidence Act is Ex.PW1/2A;
4. Additional affidavit under Order 11 Rule 6 (3) of Commercial Courts is
Ex.PW1/3;
5. Copies of bills/invoices in respect of transactions between plaintiff and M/s
Monarch Package of India since April 2014 are Ex.PW1/4 to Ex.PW1/64;
The documents earlier exhibited as Ex.PW1/65 to Ex.PW1/72 was later de-
exhibited and marked as under:
6. Invoice no 4973, 4974, 4975 dated 13.11.2014 raised by Magnum Ventures Ltd.
are marked as Mark X-1, Mark X-2 and Mark X-3 respectively.
7. Invoice no. 5535 dated 19.03.2015 raised by Dev Priya Industries Ltd. is Mark X-
4.
8. Invoice no. 37 dated 01.04.2015 raised by Dev Priya Industries Pvt. Ltd. is Mark
X-5.
9. Invoice no. 2956 dated 10.09.2015 raised by Dev Priya Industries Pvt. Ltd. is
Mark X-6.
10. Invoice no. 3156 dated 20.09.2015 raised by Dev Priya Industries Pvt. Ltd. is
Mark X-7.
11. Invoice no. 2398 dated 10.11.2019 raised by Dev Priya Product Pvt. Ltd. is Mark
X-8.
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12. Invoice No. 3126 Dated 10.01.2020 raised by Dev priya Products Pvt. Ltd is Mark
X-9.
13. Photocopy of Letter Dated 30.11.2014 issued by Magnum Ventures Ltd. is Mark-
X-10.
14. Photocopy of Letter Dated 10/09/2015 issued by Dev Priya Industries Pvt. Ltd. is
Mark-X-11.
15. Photocopy of Letter Dated 20/09/2015 issued by Dev Priya Industries Pvt. Ltd. is
Mark-X-12.
16. Copy of Bank statement of M/ s Vardhman Paper, maintained with Central Bank
of India from 01/04/2013 to 15/03/2016 (running into 24 Pages) is Ex.PW-1/76.
17. Certificate U/s 65B (4) of Evidence Act, 1872 is Ex.PW-1/76A.
18. Copies of Bank statements of M/s Vardhman Paper, maintained with HDFC Bank
(Account No. 50200002615787) for the period 01/04/2014 to 31/03/2015;
01/04/2015 to 19/03/2016 and 01/04/2016 to 31/03/2017 are collectively
exhibited as Ex.PW1/77.
19. Copies of Bank statements of M/ s Vardhman Paper, maintained with HDFC Bank
(Account No. 50200006183354) the period 01/04/2014 to 31/03/2015; 01/04/2015
to 19/03/2016; 01/04/2016 to 30/04/2016; 01/05/2016 to 01/05/2016; 01/06/2016
to 06/07/2016; 01/07/2016 to 31/07/2016; 01/08/2016 to 31/08/2016; 01/09/2016
to 30/09/2016 and 01/10/2016 to 31/10/2016 are collectively exhibited as
Ex.PW1/78 (colly. 37 Pages);
20. Certificate of Registration and Allotment of TIN Dated 25.01.2016 is Ex.PW-
1/79.
21. Rent Agreement Dated 15.12.2015, registered vide Reg. No.5223 is Ex.PW-1/80.
22. Original account confirmation dated 01.02.2016 is Ex.PW1/81;
23. Copy of ITR alongwith balance sheet is de-exhibited from Ex.PW1/82 to Mark X-
13;
24. Computer generated copy of email communications dated 19.12.2017 is
Ex.PW1/83 (colly.)
25. Certified copy of cheque bearing no.062157 dated 29.04.2016 for Rs.75 lakhs is
Ex.PW1/84;
26. Certified copy of cheque bearing no.062254 dated 05.05.2016 for Rs.75 lakhs is
Ex.PW1/85;
27. Certified copy of returning memo dated 21.05.2016 is Ex.PW1/86;
28. Certified copy of returning memo dated 24.05.2016 is Ex.PW1/87;
29. Certified Copy of Criminal Complaint bearing CC No. 5558 of 2016 under
Section 138 NI Act alongwith documents are exhibited as Ex.-PW-1/88 (Colly.)
30. Certified Copy of Criminal Complaint bearing CC No. 5398 of 2016 under
Section 138 NI Act alongwith documents are exhibited as Ex.-PW-1/89 (Colly.)
31. Certified copy of order sheet dated 09.09.2019 in CR No.2227/16 is Ex.PW1/90;
32. Certified copy of compromise/settlement deed dated 09.09.2019 is Ex.PW1/91;
33. Certified copy of order sheet dated 12.12.2019 in CR No.2227/16 is Ex.PW1/92;
34. Attested copy of bank statement of account bearing no.50200002615787 issued
by HDFC Bank is Ex.PW1/93;
35. Original cheques bearing different numbers and dates alongwith their respective
returning memos are Ex.PW1/94 (colly.)
36. Original legal demand notice dated 31.12.2021 is Ex.PW1/95;
37. Certified copy of Death Certificate dated 12.10.2020 of Sh. Daljit Singh is
Ex.PW1/96;
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38. Original Postal Receipts are exhibited as Ex.PW-1/97 (colly.)
39. Computer generated tracking reports are Ex.PW1/98 (colly.).
40. Computer generated copy of mutation record/Bhulekh UP Land Records in
respect of Khata No.00440 is Ex.PW1/99;
41. Photocopy of sale deed dated 02.03.2021 vide reg. no. 1500 executed by D1, D2
and D3 in favour of Smt. Shilpi Goyal is Mark-A;
42. Photocopy of sale deed dated 02.03.2021 vide reg. no. 1502 executed by D1, D2
and D3 in favour of Sh. Raghav Goyal is Mark-B;
43. Computer generated copy of ledger account maintained by plaintiff in respect of
transactions/payments with Dev Priya Products Pvt. Ltd. for the period from
01.04.2013 to 31.03.2015 is Ex.PW1/100;
44. Computer generated copy of ledger account maintained by plaintiff in respect of
transactions/payments with Devpriya Industries for the period from 01.04.2013 to
31.03.2016 is Ex.PW1/101;
45. Computer generated copy of ledger account maintained by plaintiff in respect of
transactions/payments with Ashoka Pulp and Paper Pvt. Ltd. for the period from
01.04.2013 to 31.03.2016 is Ex.PW1/102;
46. Computer generated copy of ledger account maintained by plaintiff in respect of
transactions/payments with Magnum Ventures Ltd. for the period from 01.04.2014
to 31.03.2015 is Ex.PW1/103;
47. Copy of ITR alongwith balance sheet is converted from Mark X-13 to
Ex.PW1/104.
24. He was cross-examined at length by Ld. Counsel for defendant no. 1 and 2
Sh. Arvind Singh. As per statement given by Ld. Counsel for Defendant no. 3
Ms. Neha Sharma she has adopted the cross-examination done as Ld. Counsel
for Defendant no. 3 as well. In his cross-examination PW1 stated that the
GST certificate in the name of his firm M/s Vardhman Papers was obtained
by him on 28.07.2018 and another registration was obtained on 24.07.2020.
Although the deposition is silent but Court is apprised that they belong to
Noida, UP and Delhi respectively. He accepted the suggestion that his firm
has no GST registration for the period 17.05.2014 to 11.05.2016, i.e. the
portion of the period in which plaintiff claims to have supplied the goods.
25. As per witness his firm was registered for Value Added Tax for the year 2013-
14 but he has not filed any document in support of the same with the suit but
it was placed on record subsequently. As per him he started supplying goods
to M/s Monarch in the year 2013 but the supply was made directly from the
paper mill and invoices were issued by the mills themselves. The paper was
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supplied by M/s Devpriya Products Ltd., M/s Ashoka Pulp and Paper Private
Ltd. and M/s Devpriya Industries under their invoices. As per PW1 he used to
make payments to these mills directly before seeking payment qua them from
Late Sh. Daljit Singh.
26. As per him there were 80 such transactions of around Rs.2.60 crore in the
year 2013 as per ledger Ex.PW1/2. He conceded that he did not place any
such invoice issued by these paper mills on record. As per him he did not find
it necessary since a settlement was arrived at with Late Sh. Daljit Singh on
09.09.2019. He accepted that in case there is any wrong entry found in the
ledger it used to get corrected within 10-15 days. He denied that the ledger
filed on record i.e. Ex.PW1/2 is a forged document. He accepted that no
document has been filed by him to show that he had office at Krishna Nagar
Delhi during 2013-14. He denied that he was maintaining an office at West
Jyoti Nagar during this period. As per him it is his residential address and he
used to work from home during those days.
27.He accepted that M/s Monarch had office at Noida and as per invoices
Ex.PW1/4 to Ex.PW1/62 plaintiff firm's Head Office was at Sector 5, Noida,
UP. However, he added that on invoices Ex.PW1/63 to Ex.PW1/64 the
address is of Sector 11, Noida. He accepted that he did not file lease
agreement dated 18.12.2015 executed by his father Sh. Sukhmal Jain in his
favour with the suit and filed it subsequently. He denied the suggestion that as
per invoices filed by him during the period 2013-14 he supplied goods from
his Noida office. He added that he was working from his residence in
Shahdara. He denied the suggestion that he has no authority to recover money
qua third party invoices Mark X1 to Mark X9. He cited that he has authority
letter issued by the mills as Mark X10 to Mark X12. He stated that he has
issued 61 invoices to M/s Monarch between 17.05.2014 to 11.05.2016 for
Rs.1,58,42,029/-. He did not deny that he has already received
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Rs.2,03,38,421/-. He denied that he received surplus payment. He accepted
that goods were supplied on credit basis and payments were supposed to be
made within thirty days but he did not stop the supply even when there is a
delay in payments.
28.Accounts used to be reconciled every 6 to 8 months. Payments were
demanded by him orally from Late Sh. Daljit singh. He denied that no
reconciliation were carried out. He denied the suggestion that no settlement
was arrived at between him and Sh. Daljit singh. He also denied that payment
of Rs. 30 lakhs made by Daljit Singh was not qua settlement but qua advance
for future supply of goods. He did not receive any money between
07.07.2016 to 06.07.2019. He denied that Late Sh. Daljit Singh never
acknowledged his liability. As per him although sales were made to M/s
Monarch but on several bills defendants have appended signatures as proof of
receiving goods.
29.Purchase orders were placed by Late Daljit Singh to the mills and not directly
to him. PW1 stated that the account confirmation of M/s Monarch
Ex.PW1/81 was signed by Vivek Pathak Accountant of Late Sh. Daljit Singh.
He also denied the suggestion that two cheques issued by late Sh. Daljit singh
were security cheques. The settlement deed Ex.PW1/91 was signed by him
and late Sh. Daljit Singh and submitted with the Court of Ld. MM. Late Daljit
Singh filed a criminal case against him claiming misuse of cheques but the
same was dismissed. He denied the suggestion that no demand notice
Ex.PW1/95 was sent to defendants.
30. Second witness examined by plaintiff is PW2 Arun Sharma, Sale Executive
of M/s Devpriya Products Private Ltd. He proved on record copies of 19
invoices Ex.PW2/2 to Ex.PW2/20 apart from two Goods Receipts dated
07.04.2019 and 08.09.2019 as Ex.PW2/21 and Ex.PW2/22 respectively. M/s
Devpriya was maintaining a separate ledger account of M/s Monarch for the
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period 2013-14 as Ex.PW2/23 and for 2019-20 as Ex.PW2/24. He also
exhibited on record ledger of plaintiff's firm for 2013-14 as Ex.PW2/25 and
2014-15 as Ex.PW2/26.
31.In his cross-examination he stated that he is serving with M/s Devpriya for
the last around 20 years. He appeared as a witness under directions of its
Director Manish Gupta and not on the basis of a board resolution. As per him
there is no dispute between M/s Devpriya and M/s Monarch. He also placed
on record invoices. As per him the printout of ledger Ex.PW2/23 to
Ex.PW2/25 was taken from M/s Devpriya's Computer. During further cross-
examination the two GR receipts Ex.PW2/21 and Ex.PW2/22 were de-
exhibited and were given Mark X-2/21 and Mark X-2/22. He accepted that
the ledger account filed by him is not certified by any chartered accountant.
Plaintiff is a dealer for the last more than 15 years. He added that there was
no need of Form 31 as goods were supplied from UP to UP.
32. PW3 is Sh. Gurmeet Singh from M/s Magnum Ventures Ltd. He exhibited his
authority letter as Accountant of M/s Magnum. He placed on record ledger
for 2014-15 as Ex.PW3/B. In his cross-examination he stated that he is
working for M/s Magnum for the last one year and appeared on the asking of
his director. He stated that he has no personal knowledge about this case and
had come to hand over the documents.
33. PW4 is Manish Kumar Mishra, Sales Officer of M/s Devpriya Industries
Private Ltd. He placed on record ledger of M/s Monarch for the period 2013-
16 and that of m/s Vardhman for this period as Ex.PW4/C. In his cross-
examination he stated that he appeared on the asking of director and has no
personal knowledge of this case.
34. PW5 is Sagar Regmi, Chartered Accountant of defendant M/s Monarch. He
stated that he was Chartered Accountant for late Sh. Daljit singh with M/s
Monarch. He has prepared the balance sheet of M/s Monarch for the year
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2015-16 which is of 13 pages. This document was named as Mark X13. In his
cross-examination he stated that he does not know Daljit Singh personally as
his services were not engaged by Late Sh. Daljit Singh directly. He was added
to the income tax login of M/s Monarch.
35.No evidence was led by either of the three defendants.
36. I have heard arguments of Sh. Dushyant Sisodiya, Ld. Counsel for plaintiff,
Sh. Arvind Singh, Ld. Counsel for Defendant no. 1 and 2 and Sh. Rishi
Sehgal, Ld. Counsel for defendant no. 3 and have perused the case file
carefully.
37.Now I shall dispose of individual issues framed in this case.
Issue No. 1:
1. Whether suit is bad for non-joinder of necessary parties? OPD1-2
38. Before appreciating the rival contentions pleaded by both the sides it would
be appropriate to identify and reproduce facts admitted by both the parties in
pleadings and course of trial. It is admitted case of both the parties that
plaintiff Ankit Kumar as proprietor of M/s Vardhman had been supplying
paper and related products to M/s Monarch, proprietorship firm of Late Sh.
Daljit Singh. It is also admitted that late Sh. Daljit Singh is survived by his
three sons namely Defendant no. 1, Defendant no. 2 and Defendant no. 3.
Late Sh. Daljit Singh had business relations with plaintiff since 2013 and
plaintiff used to supply paper to him. Likewise, factum of plaintiff filing two
NI Act complaints against Late Sh. Daljit Singh is not denied. However, they
have pleaded ignorance about the same as also about the settlement arrived at
between plaintiff and Late Sh. Daljit Singh. It is denied that two cheques
Ex.PW1/84 and Ex.PW1/85 were issued by Late Sh. Daljit Singh to plaintiff
but it is claimed that they were both security cheques.
39.As regards the objection of Defendant no. 1 and Defendant no. 2 that the suit
is bad for non-joinder of necessary parties. It is submitted by Ld. Counsel for
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Defendant no. 1 and Defendant no. 2 that in the fitness of things plaintiff
should have impleaded 4 mills namely M/s Devpriya Products Private Ltd,
M/s Magnum Ventures Ltd, M/s Devpriya Industries Private Ltd and M/s
Monarch since according to the plaintiff he had supplied paper after
procuring the same from these mills.
40. It is highlighted by Ld. Counsel for defendant no. 1 and 2 that it is admitted
case of the plaintiff that during the year 2013-14 and partially in 2014-15 the
sales were made by these four mills directly to the defendant's firm M/s
Monarch. It is argued that since out of the suit claim of Rs.1,36,92,255/- that
bills worth Rs.15,79,167/- are issued by a third party. It is argued that under
settled legal proposition a cause of action of a third party cannot be
transferred to a person who is not a seller and as such the plaintiff has no right
to sue the defendants for recovery of invoices issued by the third party mills
directly to M/s Monarch.
41. It is submitted that in alternative they should have become a party. It is
further argued by Ld. Counsel for defendants that plaintiff has miserably
failed on record to show existence of any Tripartite Agreement between the
paper mill owners on the one hand as sellers and M/s Monarch of Late Sh.
Daljit Singh as buyer with plaintiff Ankit Jain of M/s Vardhman as a party
who shall pay directly to the plaintiff and seek recovery of money from the
defendant M/s Monarch.
42.This plea is opposed by Ld. Counsel for plaintiff with a submission that
although it is correct that no Tripartite Contract was entered between the
parties but it was an oral understanding which was acted upon for around
more than two financial years i.e. 2013-14 and 2014-15. It is also submitted
that the defendants are estopped from raising an objection to the same in so
far as the account reconciliation statement Ex.PW1/81 already contains entry
for this period and has been duly acknowledged by the defendant.
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43.Ld. Counsel for plaintiff has drawn attention of this Court to ledgers filed by
PW2 M/s Devpriya Products as Ex.PW2/24 and Ex.PW2/26 and likewise
Ex.PW4/B and Ex.PW4/C by PW4 of M/s Devpriya Industries which show
that the paper mill owners were maintaining two separate ledgers one for M/s
Monarch and one for M/s Vardhman and there are common entries qua the
same. It is further argued that in case the defendant's plea is to be believed,
despite admitting receipt of goods from the paper mills they have never made
any payment directly to these mills qua the goods supplied through invoices
Mark X1 to Mark X7.
44.Upon being asked Ld. Counsel for defendants concedes that defendants have
not placed anything on record to show that they ever made any direct
payment to the above four mills qua invoices Mark X1 to Mark X7. A bald
plea that their witnesses have deposed in the Court that they have no dispute
with M/s Monarch does not necessarily mean that Daljit Singh has made
payment to them. Rather the fact that these mills were maintaining ledgers in
the name of M/s Vardhman there were no direct sales to M/s Vardhman
indicate that M/s Vardhman had been making payments to the mills on behalf
of the defendant.
45. Ld. counsel for plaintiff has relied on case titled Bayyana Bhimayya and Anr.
Vs. Government of Andhra Pradesh, 1960 Latest Caselaw 295 SC. With the
aid of this of this judgment Ld. Counsel for plaintiff has tried to bring home a
point that in so far as in the case in hand the mills supplied the paper to M/s
Monarch of defendants and payments qua the same were made by plaintiff to
the mills they should be treated as two transactions and that plaintiff has a
right to sue the defendant for the money paid. Perusal of the ratio of this
judgment at the closing of para 6 wherein Hon'ble Supreme Court observed
that
"In our opinion, there being two separate transactions of sale, tax was payable at
both the points, as has been correctly pointed out by the tax authorities and the
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High Court".
46.Unlike the case in hand in the cited case not only the tax authorities but the
High Court and Hon'ble Supreme Court opined that goods supplied by the
Jute mills of Bayyana Bhimayya and deliveries made by mills on the asking
of Bayyana Bhimayya to the third parties were treated as separate
transactions as separate sale tax was justifiably levied being independent
transactions. In the case in hand it is neither pleaded case nor any evidence is
placed on record by the plaintiff to show that he ever paid any Sales Tax or
Value Added Tax to the tax authorities. No documentary or oral agreement or
invoice or voucher has been filed to show that the mills were selling the
merchandise to the plaintiff and that is a first transaction of sale and that
plaintiff was selling the same to the defendant as a second transaction of sale.
Rather this modus operandi was initially adopted as the plaintiff had never
issued any individual invoices to the defendant till 2014-15. Two separate
transactions have been shown as Mark X8 and Mark X9 where mills have
carried out sales to the plaintiff and plaintiff have carried out sales to the
defendant under two separate sets of invoices.
47. As such, I am of the considered view that the endeavour of the plaintiff to
seek recovery of Rs.15,79,167/- on the basis of third party invoices is not
based on a cause of action which can be said to have been accrued in his
favour. The objection of non-joinder of the mills by the defendant is directly
aiming at lack of cause of action with the plaintiff to sue the defendant for the
recovery of this amount. As far as the above partial amount of Rs.15,79,167/-
is concerned this issue is answered against the plaintiff and in favour of
defendants. However finding of this issue shall have no adverse bearing on
the merits of the remaining portion of the suit which is based on individual
bills issued by the plaintiff to Late Sh. Daljit Singh on plaintiff's claim to
seek recovery of this Rs.15,79,167/- on the basis of acknowledgement by
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Late Daljit Singh.
Issue No. 2:
2. Whether the suit is barred by limitation? OPD1-2
48.This issue was primarily casted on the objection raised by the defendants in
para 5 and 6 of the preliminary objection in the WS. It is pleaded that the suit
is barred by limitation and that Late Sh. Daljit Singh never acknowledged the
debt as provided under Section 18 of Limitation Act, 1963.
49.In his reply to the above objection, in the replication it is pleaded by the
plaintiff that predecessor of the defendants have not making payments on bill
to bill basis but a running account was maintained in respect of the
transactions. It is pleaded that by virtue of Sections 18 and 19 of the
Limitation Act the limitation shall start from the last payment made by M/s
Monarch. It is pleaded that Late Sh. Daljit Singh acknowledged the liability
on 10.10.2016. In so far as he filed a balance sheet under his signatures on
10.10.2016 with Income Tax Department alongwith his ITR showing that
plaintiff's firm M/s Vardhman Paper is his sundry creditor for
Rs.1,51,08,428/-.
50.It is further pleaded that copy of this ITR and the balance sheet were supplied
by him to the plaintiff on 19.12.2017 which is Mark X13 as marked by PW1.
It is further stated in the replication that yet again the liability was
acknowledged when Late Sh. Daljit Singh entered into a settlement
Ex.PW1/91 dated 09.09.2019 which was filed before the Court of Ld. MM-
02, Shahdara and he made a payment of Rs.30,000/- The last payment as per
contention of the plaintiff was Rs.1,76,870/- made on 13.02.2020.
51.As far as limitation is concerned, perusal of the plaint shows that no separate
para is dedicated for the same. Attention of this Court is drawn to para 18
which pertains to cause of action where in the closing lines it is written "the
cause of action arose on each and every date when purchases were made by
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the defendants' father Sh. Daljit Singh. The cause of action is continuing one
because the outstanding amount remains unpaid as Late Sh. Daljit Singh
made no payment after 13.02.2020, the last RTGS payment on the running
ledger account maintained by the plaintiff in the normal course of business."
52. In order to better appreciate the limitation aspect it has to be seen as to the
range of invoices filed and relied by the plaintiff. Plaintiff has filed this suit
for recovery of Rs.1,36,92,255/- alongwith interest on the basis of 51 invoices
w.e.f. 17.09.2014 to 10.01.2020. In so far as oldest invoice Ex.PW1/22
available at running page 67, in case the three years period of limitation is
considered from 17.09.2014, the same expired on 17.09.2017. However Ld.
Counsel for plaintiff has relied on acknowledgement of debit balance of
Rs.1,51,08,528/- as on 01.02.2016 vide account confirmation document
Ex.PW1/81 which is said to be bearing rubber stamp of M/s Monarch
Package of India alongwith purported signatures of defendants' father's firm
namely Sh. Vivek Pathak. Perusal of the pleadings shows that execution of
this document has not been denied by either of the three defendants at all.
Even in the affidavits of admission and denial all that is stated is that
defendants are not connected with this document.
53.While addressing the Court oral submission is made on behalf of the
defendants that this is a forged document as neither the rubber stamp belongs
to their father's company nor Vivek Pathak was their employee. This plea is
outrightly beyond pleadings and is nothing but an improvisation. No party
can argue or plead beyond pleadings.
54. It is a settled legal proposition that no party can travel beyond their pleaded
case. The law in this regard is well-settled. No evidence can be led on a plea
not raised in the pleadings and no amount of evidence can cure defect in the
pleadings. No amount of evidence or arguments can be looked into or
considered in absence of pleadings and issues. Relevant judgments are listed
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as under:
i. M. Siddiq (Ram Janmabhumi Temple) Vs. Suresh Das, 2019 Latest
Caselaw 1091 SC
ii. Ravinder Singh vs. Janmeja Singh, 2000 Latest Caselaw 479 SC
iii. Union of India vs. R. Bhusal, (2006) 6 SCC 360
iv. Anathula Sudhakar Vs. P. Buchi Reddy, 2008 (2) AWC 1768(SC)
55. In case titled Kashi Nath vs. Jag Nath, (2003) 8 SCC 740, Hon'ble Supreme
Court ruled that:
"Such evidence which is at variance with the pleadings of the party, cannot be relied
upon and moreover, an adverse inference is to be drawn when the pleadings and
evidence are self-contradictory."
56. In case titled M.M.B. Catholicos vs. T. Paulo Avira, AIR 1959 SC 31 (Five-
Judge Bench) Hon'ble Supreme Court ruled that-
"Plaintiff cannot be allowed to set up a new case in his evidence. He cannot be
allowed to go outside his pleadings and lead evidence on a fact not pleaded."
57. In order to buttress the plea that Vivek Pathak was serving as Late Sh. Daljit
Singh's accountant attention of this Court is drawn to email dated 19.12.2017
which is sent from Email ID [email protected] and is
authored by Vivek Pathak for Monarch Package of India. Even this email
Ex.PW1/83 has not been specifically denied by the defendants and its
authenticity has not been questioned. Ld. Counsel for defendants submitted
that this email document cannot be believed because such emails can be
created by any person. On this account attention of this Court is drawn to
Section 138 NI Act complaints Ex.PW1/88 and Ex.PW1/89 where at the
running page no. 178 which is a purchase order placed by M/s Monarch, the
same email ID i.e. [email protected] is mentioned. As such
the acknowledgement dated 01.02.2016 Ex.PW1/81 is found to be
satisfactory and the oldest unpaid invoice dated 17.09.2014 is found to be
acknowledged which extends the limitation from 01.02.2016 to 01.02.2019.
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58. Summing up the issue of limitation, acknwoledgement of ledger balance
Ex.PW1/81 dated 01.02.2016 which bears rubber stamp of M/s Monarch and
signatures of its accountant and two cheques of Rs.75 lakhs each drawn by
Late Daljit Singh in favour of plaintiff which covers almost the entire debit
balance were dated 29.04.2016 and 05.05.2016. Subsequently, the last sale
carried out by the plaintiff to Late Daljit Singh was on 11.05.2016. The
cheques were dishonoured on 24.05.2016. Plaintiff has relied on copy of late
Daljit Singh's balance sheet Mark X13 filed by him under signatures of PW5
Sagar Regmi, Chartered Accountant. Exhibition of this document was
objected to by Ld. Counsel for defendants during the course of evidence on
the ground that it is a photocopy. Perusal of statement of PW5 that this copy
was prepared by him as as associate of Girish Gupta CA's office and it bears
signatures of Late Daljit Singh coupled with the fact that it was uploaded on
the income tax authorities portal through his membership no.522559 which is
issued by Institute of Chartered Accountants in India, is sufficient a proof of
its authenticity. Mere non-production of original is inconsequential because as
per this witness only scans are uploaded on the IT portal and originals are
retained by the parties which in this case is deceased Daljit Singh. The
authenticity of submission of ITR with balance sheet by PW5 can also be
cross-checked through the certified copy of ITR sent by the Income Tax
Office on record in pursuance of summons. The certified copy received from
Income Tax department is admissible in evidence under Section 78 of
Bhartiya Sakshya Adhiniyam, 2023 (Section 79 of Indian Evidence Act).
59. First page of the certified copy received with covering letter dated 04.03.2024
shows that the balance sheet was filed by PW5 Sagar Regmi with the Income
Tax Returns and the same is also signed by Late Daljit Singh on 10.10.2016.
In the second page of the certified copy the amount M/s Monarch owes to its
sundry creditors is shown as Rs.6,00,53,709/- although no separate list has
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been received in the certified copy from the Income Tax office. The same is
comparable with the list of sundry creditors available at internal page 133 of
now converted document Mark X13 where the last entry in the list of sundry
creditors is that of plaintiff's firm Vardhman Paper showing debit balance of
Rs.1,51,08,428.50P apart from total amount of Rs.6,00,53,709.22P. This
document dated 10.10.2016 of late Daljit Singh categorically constitutes
acknowledgement of debt. It is a settled legal proposition that
acknowledgement of debt by a borrrower in the balance sheet constitutes
legal acknowledgement as per Section 18 of Limitation Act and once the copy
thereof is shared with the creditor the authenticity of the same is further
enhanced.
60. In case titled Asset Reconstruction Company (India) Limited Vs. Bishal
Jaiswal and Anr., 2021 Latest Caselaw 204 SC decided on 15.04.2021 by a
Full Bench of Hon'ble Supreme Court wherein Hon'ble Supreme Court has
held as under:
"An entry made in the books of accounts, including the balance sheet, can amount
to an acknowledgement of liability within the meaning of Section 18 of Limitation
Act, 1963."
61. In case titled Bhajan Singh Samra Vs. M/s Wimpy International Ltd., 2011
Latest Caselaw 5592 Del dated 21.11.2011, Hon'ble Delhi High Court held
that:
"Admission of debt either in a balance sheet or in the form of a letter duly signed by the
respondent would amount to an acknowledgement, extending the period of limitation".
62. Ld. Counsel for plaintiff has relied on case titled Commissioner of Income Tax-III Vs. Shri Vardhaman Overseas, 2011 Latest Caselaw 6333 Del dated 23.12.2011 wherein in para 17 it is held:-
In case titled Daya Chand Uttam Prakash Jain Vs. Santosh Devi Sharma, 67 (1997) DLT 13, HMJ S.N. Kapoor applied the principle in a case where the primary question was whether a suit under Order 37 CPC could be filed on the basis of an acknowledgement. In Larsen & Turbo Ltd. V. Commercial Electric Works and Ors., 67 (1997) DLT 387 a Single Judge of this Court observed that it is well settled that a balance sheet of a company, where the defendants had shown a particular amount as due to the plaintiff, would constitute an acknowledgement within the meaning of Section 18 of the Limitation Act.
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In Rishi Pal Gupta V. S.J. Knitting & Finishing Mills Pvt. Ltd., 73 (1998) DLT 593 the same view was taken. The last two decisions were cited by HMJ Geeta Mittal in S.C. Gupta V. Allied Beverages Company Pvt. Ltd. and it was held that the acknowledgement made by a company in its balance sheet has the effect of extending the period of limitation for the purposes of Section 18 of Limitation Act.
In Ambika Mills Ltd. Ahmedabad V. CIT Gujarat, (1964) 54 ITR 167 it was further held that a debt shown in a balance sheet of a company amounts to an acknowledgement for the purpose of Section 19 of the Limitation Act and in order to be so, the balance sheet in which such acknowledgement is made need not be addressed to the creditors. In the light of these authorities, it must be held that in the present case, the disclosure by the assessee company in its balance sheet as on 31 st March 2002 of the accounts of the sundry creditors amounts to an acknowledgement of the debts in their favour for the purposes of Section 18 of the Limitation Act.
(Emphasis Suppplied)
63. In so far as the suit in hand was filed on 18.08.2022, the limitation can be explained by using the relief granted by Hon'ble Supreme Court in Re:
Cognizance For Extension of Limitation" Suo Motu Writ Petition (C) No.3 of 2020" in cognizance of extension of limitation dated 10.01.2022 from 15.03.2020 to 28.02.2022. Hon'ble Supreme Court held that "5. Taking into consideration the arguments advanced by learned counsel and the impact of the surge of the virus on public health and adversities faced by litigants in the prevailing conditions, we deem it appropriate to dispose of the M.A. No. 21 of 2022 with the following directions:
I. The order dated 23.03.2020 is restored and in continuation of the subsequent orders dated 08.03.2021, 27.04.2021 and 23.09.2021, it is directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi judicial proceedings.
II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022. III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwithstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply.
IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings."
(Emphasis Supplied)
64. In case titled Arif Azim Co. Ltd. Vs. Aptech Ltd., 2024 Latest Caselaw 128 SC Hon'ble Supreme Court ruled that, Page 23 CS (Comm.) No. 488/2022 Digitally signed by Ankit Jain Vs. Hitesh Kumar SURINDER SURINDER S RATHI S RATHI Date:
2024.09.25 16:11:56 +0530 "82. Thus, in ordinary circumstances, the limitation period available to the petitioner for raising a claim would have come to an end after an expiry of three years, that is, on 27.03.2021. However, in March 2020, the entire world was taken under the grip of the deadly Covid-19 pandemic bringing everyday life and commercial activity to a complete halt across the globe. Taking cognisance of this unfortunate turn of events, this Court vide order dated 23.03.2020 passed in Suo Motu Civil Writ Petition No. 03/2020 directed the period commencing from 15.03.2020 to be excluded for the purposes of computation of limitation.
The said extension of limitation was extended from time to time by this Court in view of the continuing pandemic. As a result, the period from 15.03.2020 to 28.02.2022 was finally determined to be excluded for the computation of limitation. It was provided that the balance period of limitation as available on 15.03.2020 would become available from 01.03.2022. Operative part of the order dated 10.01.2022 is extracted hereinbelow:...............
84. The effect of the above-referred order of this Court in the facts of the present case is that the balance limitation left on 15.03.2020 would become available w.e.f. 01.03.2022. The balance period of limitation remaining on 15.03.2020 can be calculated by computing the number of days between 15.03.2020 and 27.03.2021, which is the day when the limitation period would have come to an end under ordinary circumstances. The balance period thus comes to 1 year 13 days. This period of 1 year 13 days becomes available to the petitioner from 01.03.2022, thereby meaning that the limitation period available to the petitioner for invoking arbitration proceedings would have come to an end on 13.03.2023."
65. This judgment has been followed by Hon'ble High Court in a recent judgment passed on 01.05.2024 in case titled Chroma-Ator Energy Systems Pvt. Ltd. Vs. Indraprastha Gas Ltd., 2024 Latest Caselaw 869 Del wherein in an arbitration matter notice under Section 21 of Arbitration Act was issued on 04.11.2022 while petition under Section 11 (6) of the Act was filed on 01.03.2024. While referring to the above judgment of Arif Azim Vs. Aptech Ltd. Hon'ble High Court ruled, "11. Applying the interpretation set out above, since limitation in this case expired on 7th November 2021, firstly, the period of limitation between 15 th March 2020 and 7th November, 2021 would stand excluded. The recommencement of the limitation period would be from Ist March, 2022.
12. Thus, the invocation of arbitration on 4 th November 2022, would not be barred by limitation, rendering the present arbitration petition under Section 11(6) of the Act to be within limitation period under Article 137 of the Limitation Act, 1963."
66.Applying the above law on the facts of this case as on 15.03.2020 when the Supreme Court closed the limitations plaintiff has utilised only 1 year 1 Page 24 CS (Comm.) No. 488/2022 Ankit Jain Vs. Hitesh Kumar Digitally signed by SURINDER S RATHI SURINDER Date:
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month and 15 days leaving a balance of 1 year 10 months and 15 days available with the plaintiff on 01.03.2022. Even otherwise plaintiff has relied on balance sheet signed by Late Sh. Daljit Singh on 10.10.2016 for the year 2016-17 alongwith the Income Tax Return copy of which was handed over to the plaintiff on 19.12.2017 Mark X13 which was also shown to PW5 Sagar Regmi, claimed Chartered Accountant of Late Sh. Daljit Singh who claimed to have authored and signed the same alongwith Late Sh. Daljit Singh. This document was not exhibited on the objection of Ld. Counsel for defendants as the same was a photocopy. This objection of Ld. Counsel for defendants is sustained and allowed in so far as no party can be allowed to put an exhibit on a photocopy/secondary evidence without establishing on record the facts justifying that the primary evidence as per best evidence rule was destroyed or could not have been procured by any legal mode. As discussed supra the limitation of the suit in hand already stands explained by way of acknowledgement of debit balance in the ledger Ex.PW1/81 dated 01.02.2016.
67. The necessity for leading secondary evidence stands duly established as per Section 64 (6) to proviso of the Bhartiya Sakshya Adhiniyam, 2023 (Section 66 (6) of Indian Evidence Act). For ready reference the same is reproduced hereunder:
"(6) When the person in possession of the document is out of reach of, or not subject to, the process of the Court."
68.Even as per judgment of Hon'ble High Court of Delhi Prem Chand Jain Vs. Shri Sri Ram, 2009 Latest Caselaw 4097 Del dated 12.10.2009 the circumstances for permitting leading of secondary evidence have to be portrayed on record and no necessary permission is required. In the light of the same the document Mark X13 is converted to document Ex.PW1/104.
69.Ld. counsel for plaintiff has also relied on settlement Ex.PW1/91 entered Digitally Page 25 signed by CS (Comm.) No. 488/2022 SURINDER Ankit Jain Vs. Hitesh Kumar SURINDER S RATHI S RATHI Date:
2024.09.25 16:12:18 +0530 between plaintiff and late Sh. Daljit Singh in the two NI Act cases for dishonour of two cheques of Rs.75 lakhs each which covered 51 unpaid invoices. In so far as this settlement has not been denied by the defendants either in the pleadings or otherwise. Defendants have not specifically denied the execution of the settlement as per Order 8 Rule 3A CPC.
70.Accordingly once the debit balance is found to be acknowledged on 10.10.2016, the settlement arrived at between the parties before NI Act Court Ex.PW1/91 dated 09.09.2019 falls within the three years period as required under Section 18 of Limitation Act. Once limitation is calculated from 09.09.2019 onwards the suit filed on 28.04.2022 even if the freeze on limitation imposed by Hon'ble Supreme Court from 15.03.2020 to 28.02.2022 is not added, is found to be within limitation. The issue is answered in favour of plaintiff and against the defendants. Issue No. 3:-
3. Whether this Court has territorial jurisdiction to try this suit? OPD1-2
71.Issue no. 3 in this case has already been answered.
Issue No. 4:-
4. Whether the plaintiff is entitled to recovery of Rs.1,36,92,255/- alongwith interest @18%? OPP
72.In order to discharge the onus of proving this issue and seeking recovery of Rs.1,36,92,255/- plaintiff is relying on 51 unpaid invoices issued between 17.09.2014 to 10.01.2020. It is admitted case of both the sides that plaintiff through his firm M/s Vardhman paper and Late Sh. Daljit Singh through his firm Monarch Package of India ltd. had long standing business relations from 2013 onwards whereunder plaintiff used to supply paper material directly and indirectly to the defendant. It is also admitted that Late Sh. Daljit Singh had issued two cheques of Rs.75 lakhs each for discharging the liability which were dishonoured on presentation qua which two Section 138 Act complaints Ex.PW1/88 and Ex.PW1/89 were pending against him. It is also admitted that Page 26 CS (Comm.) No. 488/2022 Digitally signed Ankit Jain Vs. Hitesh Kumar by SURINDER S RATHI SURINDER Date:
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Late Sh. Daljit Singh entered into a settlement with the plaintiff for a sum of Rs.96,44,880/-. Although submission is made on behalf of defendants that plaintiff had misused the two security cheques of their father of Rs.75 lakhs each but this plea is ex-facie is too little and too late. Once late Sh. Daljit Singh himself settled the two NI Acts with the plaintiff and paid partial settlement amount of Rs.37,30,610/-. 24 settlement cheques were issued several of which were dishonoured on presentation with a stipulation in case the settlement amount is not paid as agreed the entire dues of Rs.1.50 crores shall become payable.
73.The 51 invoices filed and relied by the plaintiff herein can be divided into two categories. The first being set of five invoices Mark X1 to X7 which are admittedly not drawn and issued by the plaintiff or his firm but have been issued by third parties namely M/s Magnum Ventures Ltd. and M/s Devpriya Industries Ltd. Also admittedly these five invoices does not carry any name of plaintiff or his firm and there is nothing on record to show that these two industries had permitted plaintiff to file a suit on their behalf against the defendant.
74.This Court do not find any substance in the contention of the plaintiff that under an oral understanding with Late Sh. Daljit Singh and the above two companies he used to receive orders from Late Sh. Daljit Singh and place the same with the paper mills who would in turn supply the goods directly under an invoice issued in the name of Daljit Singh's firm M/s Monarch but it is the plaintiff who used to pay up the mills and seek money from Late Sh. Daljit Singh. This system even if believed is akin to purchase/assignment of a cause of action which is a concept alien to civil jurisprudence in the Country.
Unlike Negotiable Instrument Court where assignment is permissible under the law or a decree of the court which can be assigned/sold/traded, a cause of action or an unpaid invoice cannot be assigned or purchased or traded. Even Page 27 Digitally CS (Comm.) No. 488/2022 signed by Ankit Jain Vs. Hitesh Kumar SURINDER SURINDER S RATHI S RATHI Date:
2024.09.25 16:12:34 +0530 otherwise neither of these invoices carry any endorsement of their assignment to the plaintiff or his firm.
75.In this regard plaintiff has examined PW2 Arun Sharma and PW3 Gurmeet Singh who stated that they were maintaining two separate ledgers qua payments received from plaintiff and goods supplied to M/s Monarch. Be that as it may the manner in which plaintiff claims to have purchased the 7 unpaid invoices is unbelieveworthy more so when no invoice was issued by him.
76.In the fitness of things the plaintiff should have purchased the material from the mills under an invoice issued in his name and then further sold it to the defendant so that appropriate revenue could have been generated by way of GST or VAT as applicable.
77.It is pointed out by Ld. Counsel for plaintiff that the cumulative value of these 7 invoices is Rs.17,49,167/-. It is submitted that even though plaintiff has not been able to show through business documents his liability to seek this money from the defendant but as per understanding arrived at with late Sh. Daljit Singh he acknowledged his liability to pay this up by issuing two cheques of Rs.75 lakhs each.
78.It is submitted by Ld. counsel for Defendant no. 1 that the acknowledgment of debt by Vivek Pathak on document Ex.PW1/81 is not binding on heirs of Late Daljit Singh because this acknowledgement has not been signed by late Daljit Singh in person. Ld. Counsel for Defendant no. 1 has relied on AIR 1964 Madras 169 to stress that an acknowledgement of liability under Section 19 of Limitation Act has to be made by the person liable to pay. I do not find any strength in this plea firstly for the reason that the cited judgment has no application on the facts of this case since therein the issue pertained qua a mortgager and mortgagee of an immovable property unlike the case in hand where acknowledgement is shown to have been made employee/agent of late Daljit Singh who was working as his accountant at the relevant time. An Digitally Page 28 CS (Comm.) No. 488/2022 signed by Ankit Jain Vs. Hitesh Kumar SURINDER SURINDER S RATHI S RATHI Date:
2024.09.25 16:12:43 +0530 employee working as an accountant is akin to an agent of a principal as defined under Section 182 of Indian Contract Act, 1872. For ready reference the same is reproduced hereunder:
Section 182 of Indian Contract Act: Agent and principal defined An "agent" is a person employed to do any act for another, or to represent another in dealing with third persons. The person for whom such act is done, or who is so represented, is called the "principal".
79. It is a settled legal proposition that an act of an agent done for and under instructions of the principal binds the principal as per Section 186 and 187 of Indian Contract Act. For ready reference the same are reproduced hereunder:
Section 186 of Indian Contract Act: Agent's authority may be expressed or implied "The authority of an agent may be expressed or implied." Section 187 of Indian Contract Act: Definitions of express and implied authority "An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case."
80.A related submission is made by Ld. Counsel for Defendant no.1 that according to his client Vivek Pathak was not employee of his late father Daljit Singh. It is submitted by Ld. Counsel for plaintiff in this regard that in para 3 of the plaint it is specifically pleaded that Late Daljit Singh had been settling accounts and balance confirmations with him through document Ex.PW1/81 and the fact that Vivek Pathak was employee of M/s Monarch Package of India is also duly mentioned in the same para. As already mentioned supra in his WS Defendant no.1 has not specifically denied that Vivek Pathak was employee of his father's firm or that he had no authority to sign the balance confirmation letter for the year 2015-16 Ex.PW1/81. Perusal of this document clearly shows that it not only contains signatures of Vivek Pathak but also carries rubber stamp of defendant firm M/s Monarch.
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81. The plea of ld. Counsel for Defendant no.1 that Vivek Pathak was not an employee of M/s Monarch is also refuted by virtue of emails Ex.PW1/83 which clearly shows that they were sent by Vivek Pathak from email id [email protected]. As such the factum of employment of Vivek Pathak is duly established on record. As regards the proof of signatures of Vivek Pathak, it is pleaded case of the plaintiff that it is Late Daljit Singh who got the document Ex.PW1/81 signed from his accountant followed by application of his firm's rubber stamp before he handed it over personally to the plaintiff and is not been specifically denied by the defendant. It stands duly proved and established. Even otherwise execution of out of court settlement between plaintiff and Late Daljit Singh Ex.PW1/91 was duly placed before the Court of Ld. MM, KKD in the order sheet Ex.PW1/90 whereunder two 138 NI Act complaints for cumulative Rs.1.50 crores cheques was settled for Rs.96,44,880/- and was acted upon whereby Late Daljit Singh paid bank draft of Rs.30 lakhs before the Court as mentioned in the judicial order, the liability to pay up already stands accepted.
82.I do not find any strength in the submission of Ld. Counsel for Defendants that the original settlement between plaintiff and Late Daljit Singh Ex.PW1/91 was not produced in this Court. The fact that certified copy issued by Copying agency of District Court KKD would suffice the same. Once the same was placed on judicial record and certified copy is filed, there is no need to call for the original.
83.Case titled Sampat Singh Vs. Bhagwanti and Ors. 2010 SCC Online P&H 3823 and 2010 AIHC (NOC) 775 (P & H) filed on behalf of defendants are distinguishable on facts as they do not belong to certified copy of judicial order.
84.As far as inability on the part of plaintiff to show to the Court his liability to seek recovery of Rs.15,79,167/- for want of direct cause of action in his Page 30 CS (Comm.) No. 488/2022 Digitally signed by SURINDER Ankit Jain Vs. Hitesh Kumar S RATHI SURINDER Date:
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favour as it was based on invoices issued by third party which he claims to have paid on behalf of Late Daljit Singh is concerned, Ld. Counsel for plaintiff has relied on case titled Hiralal vs. Badkulal, AIR 1953 SC 225 in para 11 and Section 25 Indian Contract Act illustration (e). For ready reference the same are reproduced hereunder:
"11.Mr. Bindra next urged that the plaintiff's suit should have been dismissed because it could not be maintained merely on the basis of an acknowledgement of liability, that such an acknowledgment could only save limitation but could not furnish a cause of action on which a suit could be maintained. The Judicial Commissioner took the view that an unqualified acknowledgement like the one in the suit, and the statement of the account under which the entry had been made, were sufficient to furnish a cause of action to the pliantiffs for maintaining the present suit. We are satisfied that no exception can be taken to this conclusion. It was held by the Privy Counsil in Maniram v. Seth Rupchand 33 Ind. App. 165 (P.C) (C) that an unconditional acknowledgement implies a promise to pay because that is the natural inference of nothing is said to the contrary. It is what every honest man would mean to do. In Fateh Mahomed Vs. Ganga Singh AIR 1929 Lah. 264 (D) the same view was taken. It was held that a suit on the basis of a balance was competent. In Kahanchand Dularam V. Dayaram Amritlal AIR 1929 Lah.263 (E), the same view was expressed and it was observed that the three expressions "balance due" "account adjusted" and "balance struck" must mean that the parties has been through the account. The deft. there accepted the statement of account contained in the plaintiff's account book, and made it his own by signing it and it thus amounted to an "account stated between them" in the language of Article 64 of Limitation Act. The same happened in the present case. The acknowledgement which forms the basis of the suit was made in the ledger of the plaintiff s in which earlier mutual accounts had been entered and truly speaking, the suit was not based merely on this acknowledgement but was based on mutual dealings and the accounts stated between them and was thus clearly maintainable."
Section 25 illustration e of Indian Contract Act:
"(e) A owes B for Rs.1,000, but the debt is barred by the Limitation Act. A signs a written promise to pay B Rs.500 on account of the debt. This is a contract."
85.In so far as the two dishonoured cheques Ex.PW1/84 and Ex.PW1/85 of Rs.1.5 crores covered almost the entire debit balance of Rs1,51,08,528/-, the above amount of Rs.15,79,167/- per se stands acknowledged. The acknowledgement of the same is also evident from acknowledged ledger balance Ex.PW1/81 as also from the balance sheet submitted with income tax Ex.PW1/104. As such plaintiff is entitled to decretal of the entire suit amount.
86.As regards the liability of the defendant LRs to pay it is admitted case of all Digitally Page 31 CS (Comm.) No. 488/2022 signed by Ankit Jain Vs. Hitesh Kumar SURINDER S SURINDER RATHI S RATHI Date:
2024.09.25 16:13:07 +0530 the defendants that Late Daljit Singh left three immovable properties namely two land masses of khaata no. 00440 and 00441 Village Khatta Prahladpur, Baghpat, UP and an independent house at C-5, Sector 27, Noida, UP. Although Ld. Counsel for the defendants submitted that a portion of the UP land was sold to pay up the creditors of their late father but it does not absolve them from discharging the liability their late father had qua the plaintiff. Likewise, the plea that the Noida house has been mortgaged with some bank too does not mean that Late Daljit Singh died a pauper or did not leave any estate which all the three defendants inherited.
87.It has already come on record as in the order sheet dated 22.03.2023 that admittedly a portion of the UP land was sold for Rs.73 lakhs to two persons namely Shilpi Goyal and Raghav Goyal vide registered sale deed dated Mark A and Mark B.
88.A submission is made on behalf of Defendant no.3 Sanjeev Kumar that under a family settlement he did not inherit anything from M/s Monarch Package of India from his father. A plea is also raised that he was supposed to be paid Rs.1 crore by his Defendant no. 1 and Defendant no.2 brothers for distancing himself from M/s Monarch Package of India but no document or statement has been filed or proved on record. In the absence of any cogent evidence, no case of exempting the Defendant no. 3 from inheriting the financial liability of Late Daljit Singh can be carved out. As such the decree in the case in hand shall be against all the three defendants jointly and severally. Interest
89. Although as per Section 34 of CPC in general civil suits the rate of interest applicable is 6%. But as per proviso to the same statute the commercial disputes shall attract interest as per RBI Directive for commercial transactions which is 9%.
90. In the suit in hand plaintiff is entitled to interest @18% per annum as per Page 32 CS (Comm.) No. 488/2022 Digitally Ankit Jain Vs. Hitesh Kumar signed by SURINDER S SURINDER RATHI S RATHI Date:
2024.09.25 16:13:17 +0530 dishonoured cheques which he has placed on record. The interest payable on a dishonoured Negotiable Instrument as per Section 80 Negotiable Instruments Act, 1881 which reads as under:
Section 80 NI Act: Interest when no rate specified "When no rate of interest is specified in the instrument, interest on the amount due thereon shall, notwithstanding any agreement relating to interest between any parties to the instrument, be calculated at the rate of 18% per annum, from the date at which the same ought to have been paid by the party charged, until tender or realization of the amount due thereon, or until such date after the institution of a suit to recover such amount as the Court directs."
Explanation: When the party charged is the endorser of an instrument dishonoured by non- payment, he is liable to pay interest from the time that he receives notice of the dishonour.
Relief:-
91. Accordingly, the suit of the plaintiff is decreed with cost for the suit amount i.e. Rs.1,36,92,255/- alongwith 18% interest against all the three defendants jointly and severally as heirs of Late Sh. Daljit Singh pendente lite and till realization. Plaintiff's Lawyer's fees is assessed as Rs.50,000/-.
92. Decree sheet shall be prepared accordingly. File be consigned to Record Room after due compliance. Digitally signed by SURINDER S RATHI SURINDER Date:
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(SURINDER S. RATHI)
District Judge,
Commercial Court -03
Shahdara District, KKD
Delhi/06.09.2024
Page 33
CS (Comm.) No. 488/2022
Ankit Jain Vs. Hitesh Kumar