Delhi District Court
Mrs Satwant Kaur Prop M/S Karam Singh ... vs Jsm Hks Llp on 27 September, 2024
IN THE COURT OF SH. SANJAY JINDAL,
DISTRICT JUDGE (COMMERCIAL COURT)-04,
WEST, TIS HAZARI COURTS DELHI.
CS (Comm) No.136/2023
MRS. SATWANT KAUR
W/o Late S. Joginder Singh
Proprietor
M/s Karam Singh Grandsons
through her attorney
S. Gurnam Singh
1/19, WHS, Kirti Nagar
New Delhi-110015.
....Plaintiff
Versus
1. JSM HKS LLP
191, Ground Floor,
Exotica Greens Commercial
Zoo road, Guwahati (Aasam)
PIN No.781021.
E-mail [email protected]
CS (Comm) No. 136/2023
Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28
Also at:
3rd floor, Todi Building
Mathuradass Mill Compound
NMJ Marg, Lower Parel,
Mumbai-400013.
2. Mr. Hironya Kumar Saikia
Mobile 9101323771
e-mail:[email protected]
3. Mr. Sanjay Lalchand Mahtani
Mobile 9880818888
e-mail:[email protected]
4. Mr. Samudrajit Sarma
Mobile 9678074940
e-mail:[email protected]
5. Mrs. Kashmiri Nath
Mobile 9864039828
e-mail: [email protected]
CS (Comm) No. 136/2023
Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28
2 to 5 Partners of
M/s JSM HKS LLP
at 3rd Floor, Todi Building
Mathuradass Mill Compound
NMJ Marg, Lower Parel
Mumbai-400013.
.... Defendants
Date of filing of the suit: 02.02.2023
Date of hearing of arguments: 26.09.2024
Date of Judgment: 27.09.2024
SUIT FOR RECOVERY OF Rs.6,97,770/- ALONG WITH
PENDENTE LITE AND FUTURE INTEREST AND COSTS
ARISING OUT OF COMMERCIAL DISPUTE UNDER THE
COMMERCIAL COURTS ACT, 2015
JUDGEMENT
1. The plaintiff has filed the present commercial suit for recovery of Rs.6,97,770/- with pendente lite and future interest and cost.
CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
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2. As per the case of plaintiff, the plaintiff is proprietor of M/s Karam Singh Grandsons and engaged in the business of manufacturing and trading in all kinds of office furniture, home furniture and garden furniture etc. The present suit is filed through S. Gurnam Singh, the son/attorney holder of the plaintiff. The defendant no.1 is a limited liability partnership firm registered with the Registrar of Companies while defendants no.2 to 5 are the partners/designated signatories of the defendant no.1.
3. It is contended by the plaintiff that vide purchase order dated 20.06.2019, the defendants placed an order upon the plaintiff for purchase of furniture for their restaurant. Further, that the terms of said purchase order were modified from time to time by the defendant no.1. It was agreed that the fabrics of the furniture shall be selected and directly paid by the CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 defendants to the vendor. The balance payment was to be made immediately after delivery of the goods. The freight charges and insurances charges were to be borne by the defendants.
4. Further, that in the month of October 2020 the plaintiff manufactured the furniture, however, same could not be fully fabricated/finished as it took considerable time for the architect and designer appointed by the defendants to select the fabrics. Also, that the cost of the fabrics was also not paid directly to the vendor by the defendants and payments were made by the plaintiff on the requests of the defendants, as described in para 5 of the plaint. It is also claimed that as per desire of the defendant no.1, the plaintiff supplied the goods/furniture by handing over the same to the transporter of the defendants, namely, M/s DASH Logistics on 28.01.2020. Plaintiff also raised invoice dated 28.01.2020 of CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 Rs.23,95,046/-. The goods were duly received and acknowledged by the defendant no.1 through its General Manager at Guwahati.
5. It is alleged that the defendant no.1 paid a sum of Rs.21 lakh in 7 instalments from 01.07.2019 to 21.01.2020 but, the balance payment has not been paid despite several reminders and service of legal notice dated 16.09.2021. It is stated that the defendants are liable to pay a sum of Rs.5,13,066/- along with interests amount of Rs.1,84,704/-, making the total liability as Rs.6,97,770/-. Pre-institution mediation was also initiated but, to no avail. Hence, this suit.
6. Summons of the suit were sent to the defendants and the same were duly served. No appearance was made by defendants no.1, 3 & 5 and they were proceeded against ex CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 parte vide order dated 27.09.2023. So far as defendants no.2 & 4 are concerned, appearance was duly made by them and a written statement was also filed.
7. The defendants no.2 & 4 have taken certain preliminary objections in their written statement and controverted the case of the plaintiff on merits. It is submitted that the defendants no.2 & 4 are not partners of defendant no.1 and as such, they are not necessary parties in the present suit. Further, that the suit is bad for non-joinder of JSM Corporation Private Limited and HKS Inc., who are partners of the defendant no.1. It is contended that the plaintiff has no cause of action against the answering defendants and this court does not have territorial jurisdiction.
8. Thereafter, replication was filed by the plaintiff to the written statement of defendants no.2 & 4, wherein the facts CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 mentioned in the written statement have been denied and those mentioned in the plaint have been reiterated.
9. After completion of pleadings, following issues were framed on 27.09.2023:-
1. Whether the suit is not maintainable against defendants no.2 &4 as they are not partners of defendant no.1, as claimed?OPD-2&4
2. Whether the suit is bad for non-joinder of JSM Corporation Pvt. Ltd. and SAS INC.(must be HKS INC)? OPD-2&4
3. Whether the plaintiff is entitled to recovery of suit amount with interests and cost, as prayed for? OPP
4. Relief.
10. At the time of trial, the plaintiff has examined her attorney, namely, Mr. Gurnam Singh as PW-1 and Mr. CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 Vaibhavnath Mishra from the office of Transporter, namely, M/s DASH Logistics as PW-2. On the other hand, defendants no.2 to 4, who are the only contesting defendants, have not examined any witness.
11. I have heard Ld. Counsel for the plaintiff. No one has appeared on behalf of defendants no.2 &4 for final arguments.
12. It is argued on behalf of the plaintiff that the case of the plaintiff is duly proved with the help of testimonies of PW-1 & PW-2 and different documents proved by them. Further, that the defendants have failed to rebut the case of the plaintiff or to prove their defence. It is submitted that all the five defendants are jointly and severally liable to pay the outstanding dues of the plaintiff. It is also explained that the plaintiff has not been examined herself due to old age and CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 she has examined her power of attorney, who is her own son, as PW-1 and the said witness is very much competent as he has personal knowledge of all the relevant facts. During courses of arguments, Ld. Counsel for plaintiff has relied upon the provisions of Section 29 of the Limited Liability Partnership Act, 2008 besides the following judgments of different superior courts:-
➢ Man Kaur vs. Hartar Singh Sangha (2010) 10 SCC 512 ➢ A.B. Grains Spirits Pvt Ltd. vs. Rakesh Kumar Pahwa 2018 SCC OnLine Del. 8909.
➢ Shankar Bhure vs. Sita Devi 2006 (2) Mh. L. J. 513. ➢ Durga Das Banka vs. Ajit Singh and Others ILR (2012) I Delhi 607.
➢ Khera Handloom Supply vs. O.B. Exports and Ors. 1990 (18) DRJ 337.
CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
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13. I have carefully perused the record in the light of the submissions made before me. My issue-wise findings are as under:-
ISSUES NO.1 & 2
1. Whether the suit is not maintainable against defendants no.2 &4 as they are not partners of defendant no.1, as claimed?OPD-2&4
2. Whether the suit is bad for non-joinder of JSM Corporation Pvt. Ltd. and SAS INC.(must be HKS INC)? OPD-2&4
14. These two issues are inter-related, hence the same are taken up together.
15. Onus was on the defendants no.2 & 4 to show that the suit is not maintainable against them or that the suit is CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 bad for non-joinder of JSM Corporation Pvt. Ltd. and HKS INC.
16. On these issues, it is the case of the plaintiff, as mentioned in the plaint, that the defendants no.2 to 5 are the partners of defendant no.1 and as such, they are jointly and severally liable for all the acts and omissions of defendant no.1. On the other hand, it is claimed by the defendants no.2 & 4 that the JSM Corporation Pvt. Ltd. and HKS INC. are the partners of defendant no.1 and not the defendants no.2 to 5, particularly defendants no.2 & 4.
17. This question was considered to some extent on 09.01.2024 when the queries raised by Ld. Counsel for defendants no.2 & 4 regarding service of summons etc. were considered. Though, it is not mentioned in the plaint but, it is matter of record now that the defendant no.1 i.e. CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 JSM HKS LLP is a limited liability partnership firm created vide limited liability partnership agreement dated 16.04.2019. As per the said agreement, there are two partners of the defendant no.1 i.e. JSM Corporation Pvt. Ltd. (in short JSM), a private limited company and HKS Inc. (in short HKS), a partnership firm. As per requirements of Sections 7& 8 of the Limited Liability Partnership Act, 2008 (the Act), various persons were nominated as designated partners/designated signatories. Mr. Sanjay Mahatani (defendant no.3), Mr. Siddharth Mankani & Mr. Shailender Subbaraya were nominated as designated partners/signatories on behalf of JSM while Mr. Hironya Kumar Saikia (defendant no.2) Mr. Kashmiri Nath (defendant no.5) and Mr. Samudarjit Sharma (defendant no.4) were nominated as designated partners on behalf of HKS. Out of above named six persons/designated partners, CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 the plaintiff has impleaded only four in array of parties as defendants no.2 to 5.
18. The scheme of the Limited Liability Partnership Act, 2008 makes a difference between the terms 'Partner' and 'Designated Partner'. The partners are the actual parties to the limited liability partnership firm while the designated partners have the limited role within the ambit of Sections 7 & 8 etc. of the Act. As per Section 3 of the Act, A Limited Liability Partnership (LLP) is a body corporate formed and incorporated under the Act and is a legal entity separate from that of its partners. As per Section 26 of the Act, every partner of a Limited Liability Partnership is, for the purpose of business of the Limited Liability Partnership, the agent of the limited liability partnership, but not of other partners. Further, as per Section 27 (3) of the Act, an obligation of the Limited Liability Partnership whether arising in contract CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 or otherwise, shall be solely the obligation of the Limited Liability Partnership. Section 28 of the Act, says that the liability of the partners is also limited and a partner is not personally liable, directly or indirectly for an obligation under Section 27 (3) of the Act solely by reason of being a partner in such LLP. So far as designated partners are concerned, they are appointed only for the purpose of functioning of the LLP and they do not have any liability as such qua the acts of the LLP.
19. The plaintiff has described the defendants no.2 to 5 as partners of the defendant no.1 firm but, they are actually not the partners and they are merely the designated partners/designated signatories having no liability qua acts of the defendant no.1. Further, the defendants no.2 to 5 are there in the organization of the defendant no.1 only in the capacity of the representatives CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 of the actual partners, namely, JSM and HKS, who are not there in array of parties. Since, partners of an LLP would not have liability qua acts of the firm by virtue of Section 28 of the Act, it cannot be said that JSM and HKS are necessary parties to the present suit. At the same time, when the main/actual partners are not in array of parties, the defendants no.2 to 5, who are the representatives of the main partners, cannot be termed either proper or necessary parties to the present suit.
20. Ld. Counsel for plaintiff has tried to show the liability of defendants no.2 to 5 by referring to provisions of Section 29 of the Act which deals with the concept of 'Holding out'. It is submitted that defendants no.2 to 5 have represented through their act and conduct that they are partners of defendant no.1. It is pointed out that the specific averments have been made in this regard in para CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 12 of the replication where it is mentioned that from the date of entering into negotiations with the plaintiff for supply of the furniture to the date of placing of the order, the defendants no.2 to 5 have always represented to be the partners of the defendant no.1. It is also submitted that the above fact is fortified from the MCA data of the defendant no.1 where the defendants no.2 to 5 are shown as the directors/authorized signatories of the defendant no.1. It is also stated that the PW-1 has also claimed the similar facts during his examination/cross examination.
21. The above submissions of the Ld. Counsel for plaintiff are not of much force as there is no cogent evidence to show that the defendants no. 2 to 5 are covered by the provisions of Section 29 of the Act under the concept of holding out. The MCA data of the defendant no.1 makes it clear that the defendants no.2 to 5 are only the authorized CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 signatories and not the partners of the LLP. Simply because the defendants no.2 to 5 have been dealing with the plaintiff on behalf of defendant no.1, it cannot be assumed that they were representing themselves to be partners of the LLP. An LLP being a body corporate has to, after all, conduct its business through some individuals and that does not mean that those individuals are representing themselves to be partners of such LLP. The plaintiff has failed to bring on record any document which may suggests that the defendants no.2 to 5 were acting as partners of the LLP/defendant no.1. The whole case of the plaintiff regarding the concept of holding out in respect of defendants no.2 to 5 is based on bare averments which cannot be taken as proof of such facts. The PW-1 has admitted during his cross examination that the defendants no.2 & 4 had given no confirmation in writing that they had received the goods. The PW-1, though claimed orally that CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 the defendants no.2 to 5 had given their personal guarantee but, he admitted that no document was prepared in that regard.
22. The oral submissions made on behalf of the plaintiff are not sufficient to impose the liability of defendant no.1 on defendants no.2 to 5 by applying the provisions of Section 29 of the Act which deals with 'Holding out'.
23. In such circumstances, though it cannot be said that the suit is bad for non joinder of JSM Corporation Pvt Ltd. and HKS INC. but it is clear that the defendants no.2 & 4, and for that matter, the defendants no.2 to 5, are not the necessary or proper parties. So, it can be said that it has been established that suit is not maintainable against defendants no.2 to 5.
CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
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24. With these observations, the issue no.1 is decided against the plaintiff and issue no.2 is decided in favour of the plaintiff.
Issue no.3
3. Whether the plaintiff is entitled to recovery of suit amount with interests and cost, as prayed for? OPP
25. Onus was on the plaintiff to prove her entitlement for recovery of suit amount, as prayed.
26. To prove her case, the plaintiff has examined her son/attorney Mr. Gurnam Singh as PW-1, who tendered his affidavit of evidence as Ex. PW1/A and deposed as per case of the plaintiff. The PW-1 has relied upon following documents:-
1. GPA in his favour as Ex. PW1/1. CS (Comm) No. 136/2023
Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
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2. Copy of master data downloaded from www.mca.gov.in as Ex. PW1/2.
3. Purchase order dated 20.06.2019 as Ex. PW1/3.
4. Invoice no. KSGS-288-2019-20 dated 18.12.2019 for Rs.42,642 as Ex.PW1/4.
5. Invoice no. KSGS-290-2019-20 dated 19.12.2019 for Rs.44,074 as Ex.PW1/5.
6. Invoice no. KSGS-292-2019-20 dated 20.12.2019 for Rs.46,709 as Ex.PW1/6.
7. Invoice no. KSGS-296-2019-20 dated 23.12.2019 for Rs.45,818 as Ex.PW1/7.
8. Invoice no. KSGS-298-2019-20 dated 25.12.2019 for Rs.38,777 as Ex.PW1/8.
9. Copies of E-way bills, details of lorry etc. as Mark A.
10. Copy of the bill dated 28.01.2020 as Ex. PW1/10.
11. E-mails exchanged between plaintiff and defendants as Ex. PW1/11.
12. Legal notice dated 16.09.2021 as Ex. PW1/12.
CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
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13. Speed post receipts as Ex PW1/13 & Ex. PW1/14.
14. Returned notice from defendant no.1 as Ex PW1/15.
15. Print out of e-mail sent to defendant no.5 as Ex. PW1/16.
16. Certified copy of statement of account as Ex. PW1/17.
17. Certificate under Section 65-B of Evidence Act as Ex. PW1/18.
27. The PW-1 has been cross examined in detail by Ld. Counsel for defendants no.2 & 4. He deposed that the plaintiff is proprietor of the proprietorship concern but, the business is conducted by him (PW-1) and his brother Sh. Inderjeet Singh. Further, that all the transactions of the business pertaining to the defendant have been conducted by him and he was aware of all the relevant facts. He told that the purchase order dated 20.06.2019 CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 was received through email and the same was not placed personally by defendant no.2 or defendant no.4. He admitted that word "Partners" is nowhere mentioned in the Master Data (Ex. PW1/2) of the defendant no.2. It is also apprised by PW-1 that they did not deliver the goods at the address of the defendants and actually the goods were collected by the defendants through their own transport vehicle from site of the plaintiff. In reply to one of the questions, the PW-1 deposed that all the defendants no.2 to 5 had come to the plaintiff at the time of transactions and had committed that payment shall be made even before delivery of goods and lateron, they assured that the payment shall be made once goods are received by the defendants. He also claimed that the defendants (defendants no.2 to 5) had given their personal guarantee also in this regard but, no document was CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 prepared. He had been cross examined on certain other aspects.
28. The plaintiff has also examined PW-2 Mr. Vaibhavnath Mishra, the Sales Manager of the transporter namely, M/s DASH Logistics. He deposed about the goods transported by them vide builties Ex.PW2/B, Ex. PW2/C and E-way bills Ex.PW2/D & Ex.PW2/E. He also placed on record his authority letter Ex.PW2/A and copy of aadhar card Ex. PW2/A-1.
29. It is matter of record that the plaintiff herself has not been examined in this case and she has examined her son/attorney Mr. Gurnam Singh. It is submitted by Ld. Counsel for plaintiff that the PW-1 is a competent witness even in the absence of the plaintiff herself as he is having personal knowledge about all the facts of the case. He has CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 also relied upon certain judgments in this regard i.e. judgment in Man Kaur (supra), A.B. Gains Spirits (supra), Shankar Bhure (supra) and Durga Das Banka (supra). The sum and substance of these judgments is that if the attorney holder has done any act or handled any transactions, in pursuance of the power of attorney granted by the Principal, he may be examined as a witness to prove those acts or transactions. Further, if, the attorney holder alone has personal knowledge of such acts and transactions, and not the Principal, the attorney holder shall be examined if those acts and transactions have to be proved. Also, that where the Principal at no point of time had personally handled or dealt with or participated in the transaction and has no personal knowledge of the transaction, and where the entire transaction has been handled by an attorney holder, necessarily the attorney CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 holder alone can give evidence in regard to the said transaction.
30. It is a matter of record that the present suit has been filed by PW-1 only in the capacity of attorney of the plaintiff and he has claimed in his affidavit of evidence that he has dealt with the defendants with regard to the commercial transactions which are subject matter of the present suit. He also explained that the plaintiff, due to her old age, is unable to involve herself in day to day business and the business is being done through her sons, namely, S. Inderjeet Singh and S. Gurnam Singh (PW-1). Also that the entire transactions pertaining to the present case have been conducted through the sons of the plaintiff, therefore the suit has been filed through her attorney/son i.e. PW-1. CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
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31. The defendants have failed to rebut the above claim of the PW-1 regarding his competence to depose on behalf of plaintiff. If the facts and circumstances of the case are analysed in light of the facts deposed by PW-1 and the above mentioned judgments of the superior courts relied upon by the Ld. Counsel for plaintiff, it can be said that PW-1 is competent to depose on behalf of the plaintiff even in the absence of examination of the plaintiff.
32. So far as the question of entitlement of the plaintiff qua recovery of suit amount is concerned, the PW-1 and PW-2 have proved all the basic facts and averments regarding the alleged transactions between the parties. The documents in the form of invoices, E-way bills and ledger etc. have been proved on record by the PWs. The PW-2, who is from the office of the Transporter, namely DASH Logistics, has corroborated the documents CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 tendered in evidence by PW-1. No effective cross examination of PW-1 & PW-2 has been done on the material facts pertaining to transactions in question. Only PW-1 has been cross examined by Ld. Counsel for defendants no.2 & 4 and the main focus of the said cross examination is on the role of defendants no.2 & 4 and not the transactions in dispute. The witnesses have not shown any discrepancies or contradictions in the case put forward by the plaintiff in the plaint.
33. So, it is duly proved on record that the plaintiff is entitled to recover the suit amount with interest. So far as fixation of liability of the different defendants is concerned, in view of findings and discussions held under issues no.1 & 2, no liability can be fixed upon defendants no.2 to 5 and the whole liability is of the defendant no.1 firm which CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
Page No. 28 is a separate legal entity. No valid case has been proved by the plaintiff against the defendants no.2 to 5.
34. Accordingly, issue no.3 is decided in favour of the plaintiff and against the defendant no.1 only. Relief
35. In view of findings on issues no.1 to 3, the suit filed by the plaintiff is decreed in favour of the plaintiff and against the defendant no.1. The suit against defendants no.2 to 5 stands dismissed. Following reliefs are awarded in favour of plaintiff and against the defendant no.1:-
(i) Sum of Rs.6,97,770/-(Rupees Six Lakh Ninety Seven Thousand Seven Hundred Seventy Only) as outstanding amount.
CS (Comm) No. 136/2023
Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
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(ii) Simple interest @9% per annum on the outstanding amount, from the date of filing of the present suit till realization.
(iii) Costs of the suit.
36. Decree-sheet be prepared accordingly.
37. File be consigned to record room after completing the necessary formalities.
Passed & announced in the open court today. Digitally signed by SANJAY
SANJAY JINDAL
JINDAL Date:
2024.09.27
16:01:53 +0530
(Sanjay Jindal)
District Judge, Commercial Courts-04, West/THC,Delhi 27.09.2024 CS (Comm) No. 136/2023 Mrs. Satwant Kaur vs. JSM HKS LLP & Ors.
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