Delhi District Court
Arun Goel vs Ananta Ortho System P. Ltd on 14 November, 2025
IN THE COURT OF SHRI DEVENDER KUMAR, DISTRICT JUDGE
(COMMERCIAL COURT-01), EAST DISTRICT
KARKARDOOMA COURTS : DELHI
CS (Comm.) No. 206/2023
Arun Goel
Proprietor of Swati Enterprises
Address - 105, Ansal Vikas Deep Building,
Laxmi Nagar, District Centre,
Delhi -110092 ...... Plaintiff
Vs.
1. Ananta Ortho System Pvt. Ltd.
2. Sharma Orthopaedic India Pvt. Ltd.
3. Sharma Pharmaceutical Pvt. Ltd.
(Though its Authorized Representatives)
Office address at : 444, GIDC State, Waghodia Road,
Baroda, Gujrat
Also at: 3/4, Girikandra Society,
near HDFC ATM, Opposite Bapodtalav,
Waghodia Road, Vadodara, Gujrat. ...... Defendants
Date of Institution : 02.06.2023
Date of Arguments: 03.09.2025
Date of Judgment : 14.11.2025
JUDGMENT:
1. Vide this judgment, I shall dispose of the suit for recovery of Rs. 20,00,000/- along with interest @ 18% per annum with litigation charges filed by the plaintiff and against the defendants. Brief facts of the case are as under:
Digitally signed by DEVENDRA CS (Comm) No. 206/2023 DEVENDRA KUMAR Arun Goel Vs. Ananta Ortho System Pvt. Ltd. KUMAR Date: 1/27 2025.11.14 16:05:48 +0530
2. Plaintiff is a proprietorship firm M/s Swati Enterprises and is being represented through its proprietor, whereas the defendant no.1 is a company M/s Ananta Ortho System Private Ltd. and other defendants M/s Sharma Orthopaedic India Private Ltd. and M/s Sharma Pharmaceutical Private Ltd., owned by same owner Mr. Dayanand Sharma. It is further alleged that the defendant no.1 is dealing in artificial orthopaedic and appointed the plaintiff as stockist for Delhi-NCR Area. It is further alleged that the plaintiff deposited a security amount of Rs. 20 Lacs with the defendant no.1 through its AR, Mr. Rachit Chauhan to become stockiest. It is further alleged that the defendant no.1 is manufacturing orthopaedic implants at Gujrat and assured the plaintiff to earn atleast Rs. 90,000 - Rs. 1,00,000/- per month on commission basis @ 10% against total sale value of Rs. 9- 10 Lacs and the plaintiff believed and become stockiest of the defendant/s for Delhi-NCR Area. It is further alleged that Mr. Dayanand Sharma used to issue invoices in the name of the defendant no. 1 but suddenly started issuing in the name of the defendant nos. 2 & 3, as he was managing all business activities of all the defendants.
2.1. Plaintiff has further alleged that the plaintiff faced various difficulties in business since inception, as the defendants did not attend his representation, due to he served legal notices dated 24.05.2019, 04.07.2019 and 21.08.2020 to draw their attention to address his concerns. It is further alleged that the defendants unable to receive credit notes on time from the defendants or AR, unable to achieve sales targets projected by the defendants despite depositing of security amount of Rs. 20 Lacs, low sales of products and defective supply, delay receipt of articles, confusion of Digitally signed CS (Comm) No. 206/2023 by DEVENDRA Arun Goel Vs. Ananta Ortho System Pvt. Ltd. KUMAR 2/27 DEVENDRA Date:
KUMAR 2025.11.14
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rates of products and dishonour of cheques issued by customers of the defendants were the main concerns which could not be addressed by the defendants.
2.2. Plaintiff has further alleged that he deposited a sum of Rs. 20 Lacs with the defendant no. 1 as security mentioned in promissory note issued by AR Rachit Chauhan. It is further alleged that the plaintiff repeatedly contacted the defendant/s but his grievances could not be addressed by the defendants despite written communication / letter dated 03.07.2018 and rather letter was replied on 12.07.2018 in which the defendants acknowledged fault in supply and lack of services by their employees.
2.3. Plaintiff has further alleged that the plaintiff also sent repeated emails during 03.07.2018 to 07.03.2019 but were not replied by the defendants, due to the plaintiff again served legal notice dated 25.05.2020 through his advocate, which was again not replied. It is further alleged that the plaintiff served another legal notice dated 21.08.2020 calling upon the defendants refund his security amount of Rs. 20 Lacs deposited during the years 2014-15, as mentioned in promissory note dated 27.11.2014. It is further alleged that the plaintiff again sent email dated 07.03.2018 for seeking full and final settlement of pending inventories and the payments with intent to terminate business with the defendants and refund of security amount of Rs. 20 Lacs, which was also not replied, whereas contract between the parties has come to end on 07.03.2019 when the plaintiff again asked to settle disputes and terminated contract vide notice dated 24.05.2020 and 21.08.2020, whereas the defendant/s has/ have not paid Digitally signed by CS (Comm) No. 206/2023 DEVENDRA Arun Goel Vs. Ananta Ortho System Pvt. Ltd. DEVENDRA KUMAR 3/27 KUMAR Date:
2025.11.14 16:06:07 +0530 amount, hence present suit for recovery of Rs. 20 Lacs along with interest @ 18% per annum and litigation charges.
3. Defendant nos. 1 & 3 filed their written statement thereby alleging that the defendant no. 1 is a company, having business relations with the plaintiff, whereas the defendant no. 3 has nothing to do with this dispute being a separate legal entities and suit is not maintainable against the defendant no. 3. It is further alleged that this court has no territorial jurisdiction to entertain this case, as none of the defendants is carrying on business within the territorial jurisdiction of this court and even this suit is also barred by limitation. Defendants have denied that the plaintiff was ever appointed super stockist and he was super distributor of the defendant no. 1 and defendant no. 1 used to supply him goods against invoices and no promissory note was ever executed by the defendant/s as alleged and same is forged and fabricated.
3.1. Defendants have further alleged that the plaintiff has not filed any ledger / statement of account showing transactions with the defendant/s, whereas the defendants have to recover huge principal amount of Rs.
5,85,440.96/- plus interest against sales to the plaintiff, which is duly reflected in ledger / statement of accounts of the defendants. Defendants have further denied that the plaintiff ever paid any security amount of Rs. 20 Lacs and have alleged this false suit has been filed just to avoid to pay outstanding amount. It is further denied that all allegations of the plaintiff are false and fabricated and this suit is liable to be dismissed.
Digitally
signed by
DEVENDRA
CS (Comm) No. 206/2023 DEVENDRA KUMAR
Arun Goel Vs. Ananta Ortho System Pvt. Ltd. KUMAR Date: 4/27
2025.11.14
16:06:11
+0530
4. Defendant no. 2 failed to appear and was proceeded ex-parte vide order dated 05.02.2024.
5. Plaintiff has filed replication to written statement of the defendants no. 1 & 3 thereby denying all allegations of the defendants and has reiterated his pleadings.
6. On the basis of pleadings of the parties, issues were framed vide order dated 26.04.2024, but later on two additional issues no. 1A & 1B were also framed vide order dated 22.05.2024. Now issues framed by this court are as under:
ISSUES
1. Whether the plaintiff is entitled for a decree against the defendants in the sum of Rs. 20,00,000/- with interest, if any, and if yes at what rate and for which period ? OPP.
1A. Whether this court has territorial jurisdiction to entertain and try the present matter ? OPD 1B. Whether the present suit is barred by limitation? OPD
2. Relief.
7. To prove case, the plaintiff has examined PW1, Arun Goel, who has deposed in verbatim of plaint in examination in chief and has relied upon documents Ex. PW1/A to Ex. PW1/I and Mark A to Mark C. 7.1. During cross examination, PW1 has deposed that he has not filed any documents to show that he is owner of proprietorship firm M/s Swatee Enterprises. It is further deposed that he initially had business relations Digitally signed CS (Comm) No. 206/2023 by DEVENDRA Arun Goel Vs. Ananta Ortho System Pvt. Ltd. KUMAR 5/27 DEVENDRA Date:
KUMAR 2025.11.14
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with the defendant no. 1, but subsequently and without information, the defendant no. 1 started billing in the name of defendant no. 2 & 3 and on his objection company's executive stated that the defendant no. 2 & 3 were same as of the defendant no. 1, however, he did not object in writing. It is further deposed that he was dealings in Ortho Pedic Implants and was sole supplier of the defendant's company and was supplying the products to their dealers in Delhi and NCT on commission basis @ 10% and security amount of Rs.20,00,000/- was deposited by him. It is further deposed that the defendants are based at Baroda, Gujarat and business dealings with them started in the years 2014-15.
7.2. PW1 has further deposed that initially, he was dealing with Ms. Mukherji and Sh. Dayanand Sharma, who came to him and asked to appoint him a dealer for their products in Delhi & NCR, subject to deposit of refundable security of Rs.20,00,000/-. It is further deposed that he paid cheque of Rs.1,00,000/- at the same time and later paid rest of the amount of Rs.19,00,000/-. It is admitted that the office of the defendants is in Gujarat but payments were made from Delhi in the presence of employee of the defendants through NEFT. However, HDFC bank and ICICI bank of the defendants were situated at Baroda, Gujarat. It is further deposed that he used to make payment after selling of goods and after deduction of commission. It is admitted that he has not filed bank statement regarding payments of security amount to the defendants but has filed statement of stocks Ex.PW1/H (colly), having details of equipment supplied by the defendants. It is further deposed that stocks lying with him is about Rs.28- 29 Lacs including GST.
Digitally signed by DEVENDRACS (Comm) No. 206/2023 KUMAR
Arun Goel Vs. Ananta Ortho System Pvt. Ltd.
DEVENDRA 6/27
Date:
KUMAR 2025.11.14
16:06:21
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7.3. PW1 has further deposed that he sent written reminders/mails to the defendants to take back their stocks lying with him but they did not respond and rather, Mr. Dayanand Sharma replied email Ex.PW1/F (colly) by stating "see it later". It is admitted that the material much more than value of suit amount was supplied by the defendant no. 1 and is lying with him. It is further deposed that it was settled that whenever the dealings would close, the defendant/s would take back material and refund security amount. It is further deposed that he made last payment to the defendant no. 3 on 25.03.2017 and obviously the goods supplied by the defendant pertains to before 25.03.2017.
7.4. PW1 has further deposed that negotiation between him and representative of the defendant no. 1, Mr. Mukherji and Mr. Dayanand Sharma, owner of the company, took place at his premises at 105, Ansal Vikas Deep Building, Laxmi Nagar, Delhi-110092, but no document was signed. However, he paid cheque of Rs.1,00,000/- as token money/part payment and written document Ex.PW1/E was signed at Delhi by Mr. Rachit Chauhan at his office, who disclosed him to be representative of the defendant no. 1. It is further deposed that the representative of the defendant brought a visiting card along with abovesaid document and handed over to him. It is further deposed that he paid balance security amount subsequently against Ex.PW1/E but has not placed on record visiting card of Mr. Rachit Chauhan. However, he did not know Mr. Rachit Chauhan prior to handing over of document Ex.PW1/E. It is further admitted that he did not know whether any authority letter was given to Mr. Rachit Chauhan by the defendant no. 1.
Digitally signedCS (Comm) No. 206/2023 by DEVENDRA
Arun Goel Vs. Ananta Ortho System Pvt. Ltd. KUMAR 7/27
DEVENDRA
Date:
KUMAR 2025.11.14
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7.5. PW1 has denied that he was appointed dealer by the defendant no. 1 and the payments made by him were against invoices and supply of equipment. It is denied that documents Ex.PW1/E was not executed by authorized representative of the defendant company. It is further denied that this court has no territorial jurisdiction to entertain and try this suit, as no cause of action ever arose within territorial jurisdiction of this Court. It is denied that present suit is time barred as last payment was made on 25.03.2017 no amount of Rs.20,00,000/- was ever paid as security money.
8. Defendant has examined Harendra Jha as DW1, who has deposed in verbatim of written statement and has relied upon documents Ex.DW1/1 to Ex.DW1/4A.
8.1. During cross examination, DW1 has produced original minutes book in a loose form, photocopies are Ex.DW1/P1 and Ex.DW1/P2. It is denied that Minute Book Ex.DW1/P1 and Ex.DW1/P2 are forged and fictitious documents, or that no meeting of Board of Directors ever held to pass board resolution. It is denied that Minutes of Meeting Ex.DW1/P1 and P2 are not having signatures of all Directors. It is further deposed that meeting was attended by both directors of the company i.e. Dayanand Kishore Mithlesh Kishore Sharma and Seema Kumari Dayanand Kishore Sharma, whose signatures are appearing at Point A and B respectively. It is denied that he is not authorized to depose on behalf of the defendants. DW1 has further deposed that the defendant no. 1 & 3 have two Directors namely Dayanand Kishore Mithlesh Kishore Sharma and Seema Kumar Dayanand Kishore Sharma. It is further deposed that he has been working with the Digitally signed by DEVENDRA CS (Comm) No. 206/2023 KUMAR Arun Goel Vs. Ananta Ortho System Pvt. Ltd. DEVENDRA 8/27 Date:
KUMAR 2025.11.14
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defendant's company since the year 2020.
8.2. DW1 has further deposed that he is not aware about any document Ex.PW1/E and there is no person namely Rachit Chauhan in the company. It is denied that the plaintiff was appointed as super-stockist by the defendant no. 1 & 3 for Delhi/NCR region Vol. Plaintiff was given dealership for Delhi/NCR region, but it is denied that the plaintiff deposited a refundable security of Rs.20 lacs and rather amount was paid to the defendants no. 1 & 3 for supply of goods purchased from the defendants worth of around Rs.25 lac. It is further deposed that email id of the defendant no. 1 & 3 is info@sharmapharmaceuticalpvtltd. It is further denied that email Ex.PW1/G was sent by the defendant no. 1 & 3 to the plaintiff, which was also replied by the plaintiff, but the defendant no. 1 & 3 did not receive any email from the plaintiff.
8.3. DW1 has further deposed that the defendant no. 1 & 3 did not write any letter to the plaintiff demanding around Rs.5 lac from him. Vol. The director of defendant no. 1 & 3 and Manager of defendant no. 3 have been communicating with the plaintiff telephonically. It is further deposed that the defendant no. 1 & 3 did not send any letter to the plaintiff for cancellation of his dealership and even they did not receive legal notices Ex.PW1/B and Ex.PW1/C. It is further deposed that the address at Point A in legal notice Ex.PW1/B is correct address of the defendant no. 3. It is denied that the defendant nos. 1 & 3 received notices Ex.PW1/B and Ex.PW1/C but did not reply it.
Digitally signedCS (Comm) No. 206/2023 by DEVENDRA
Arun Goel Vs. Ananta Ortho System Pvt. Ltd. KUMAR 9/27
DEVENDRA
Date:
KUMAR 2025.11.14
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8.4. DW1 has admitted that goods were transferred by the plaintiff from Vadodara, Gujarat to Delhi but it is denied that the plaintiff sent various notices to the defendant no. 1 & 3 for taking back goods but they did not take back. It is admitted that the defendants no. 1 & 3 are regularly maintaining their books of accounts, but it is denied that the plaintiff paid a sum of Rs.20 Lacs as security which was refundable by the defendant nos. 1 & 3 or that they have not returned security amount.
9. I have heard the arguments and perused the record. My issue wise findings are as under: -
ISSUE No. 1A: - I am taking up Issue No. 1A first, as it pertains to the territorial jurisdiction of this court. The onus to prove this issue was fixed upon the defendants and to discharge the onus, the defendants have examined DW1 and have also cross examined PW1. Plaintiff has disclosed the territorial jurisdiction of this court in Para 11 of the plaint that the plaintiff was operating business within local limits of this court and even the plaintiff paid security amount to the defendants at Laxmi Nagar. It is further alleged that Promissory Note dated 27.11.2024 was also signed at Delhi and entire business was within the territorial jurisdiction of this court during the year 2014 to 2018, due to this court has the territorial jurisdiction. On the other hand, the defendants have replied Para 11 of the plaint in WS thereby denying that this court has no territorial jurisdiction to entertain this case. However, nothing has been explained as to why this court has no territorial jurisdiction to entertain this case. In fact, the defendants have not specifically denied this territorial jurisdiction of this court.Digitally signed by DEVENDRA KUMAR
CS (Comm) No. 206/2023 DEVENDRA
Date:
Arun Goel Vs. Ananta Ortho System Pvt. Ltd. KUMAR 2025.11.14 10/27
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10. Admittedly, the territorial jurisdiction of the court is material to consider a lis and the courts where wholly or partly cause of action arises have jurisdiction to entertain a suit. Usually, a territorial jurisdiction is a mixed question of facts and law which must be inferred by facts and surrounded circumstances of the case and after trial, it must be considered on the basis of the pleadings and evidence of the parties.
11. The Hon'ble Apex Court has held in case titled Indian Performing Rights Society Ltd. v. Sanjay Dalia , (2015) 10 SCC 161 and the relevant observations are as under:
17. Accrual of cause of action is a sine qua non for a suit to be filed.
Cause of action is a bundle of facts which is required to be proved to grant relief to the plaintiff. Cause of action not only refers to the infringement but also the material facts on which right is founded. Section 20 CPC recognises the territorial jurisdiction of the courts inter alia where the cause of action wholly or in part arises. It has to be decided in each case whether cause of action wholly or in part arises at a particular place, as held by this Court in Rajasthan High Court Advocates' Assn. v. Union of India [(2001) 2 SCC 294 : AIR 2001 SC 416]. Thus, a plaintiff can also file a suit where the cause of action wholly or in part arises.
12. In another case titled ONGC v. Utpal Kumar Basu (1994) 4 SCC 711, it has further held that:
"6. It is well settled that the expression 'cause of action' means that bundle of facts which the petitioner must prove, if traversed, to entitle him to a judgment in his favour by the Court. ... Therefore, in determining the objection of lack of territorial jurisdiction the court must take all the facts pleaded in support of the cause of action into consideration albeit without embarking upon an enquiry as to the correctness or otherwise of the said facts. In other words the question whether a High Court has territorial jurisdiction to entertain a writ petition must be answered on the basis of the averments made in the petition, the truth or otherwise whereof being immaterial. To put it differently, the question of territorial jurisdiction must be decided on the facts pleaded in the petition."Digitally signed
CS (Comm) No. 206/2023 by DEVENDRA
KUMAR
Arun Goel Vs. Ananta Ortho System Pvt. Ltd. DEVENDRA 11/27
Date:
KUMAR 2025.11.14
16:06:50
+0530
13. Further, in case titled A.B.C. Laminart (P) Ltd. v. A.P. Agencies, (1989) 2 SCC 163, it has held that;
12. A cause of action means every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff.
15. In the matter of a contract there may arise causes of action of various kinds. In a suit for damages for breach of contract the cause of action consists of the making of the contract, and of its breach, so that the suit may be filed either at the place where the contract was made or at the place where it should have been performed and the breach occurred. The making of the contract is part of the cause of action. A suit on a contract, therefore, can be filed at the place where it was made. The determination of the place where the contract was made is part of the law of contract. But making of an offer on a particular place does not form cause of action in a suit for damages for breach of contract. Ordinarily, acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a court within whose jurisdiction the acceptance was communicated. The performance of a contract is part of cause of action and a suit in respect of the breach can always be filed at the place where the contract should have been performed or its performance completed. If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else. In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract, the place where repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the court where the suit is filed and that contract Digitally signed by CS (Comm) No. 206/2023 DEVENDRA Arun Goel Vs. Ananta Ortho System Pvt. Ltd. DEVENDRA KUMAR 12/27 KUMAR Date:
2025.11.14 16:06:57 +0530 is found to be invalid, such part of cause of the action disappears. The above are some of the connecting factors.
In view of abovesaid law, it stands proved that the court has to consider entire material available on record to consider the cause of action, whether wholly or partly, to confer the territorial jurisdiction of the court.
14. In the present case, firstly the plaintiff has alleged in the pleadings that the cause of action arose within the territorial jurisdiction of this court, as the plaintiff has been running business in Delhi-NCR Area and the material was also supplied from Baroda to Delhi, within the territorial jurisdiction of this court, which is not denied by the defendants specifically.
Order 8 rule 5 of CPC deals with specific denial in written statement and if there is no specific denial, then that is not a denial and amounts to admission.
15. Order 8 Rule 5 of CPC dealt with in case titled Thangam v. Navamani Ammal, (2024) 4 SCC 247 and relevant observations are as under:
25. Order 8 Rules 3 and 5CPC clearly provides for specific admission and denial of the pleadings in the plaint. A general or evasive denial is not treated as sufficient. Proviso to Order 8 Rule 5CPC provides that even the admitted facts may not be treated to be admitted, still in its discretion the Court may require those facts to be proved. This is an exception to the general rule. General rule is that the facts admitted, are not required to be proved.
24. In the absence of para-wise reply to the plaint, it becomes a roving inquiry for the Court to find out as to which line in some paragraph in the plaint is either admitted or denied in the written statement filed, as there is no specific admission or denial with reference to the allegation in different paragraphs.
Digitally signed by DEVENDRA CS (Comm) No. 206/2023 DEVENDRA KUMAR Arun Goel Vs. Ananta Ortho System Pvt. Ltd. KUMAR Date: 13/27 2025.11.14 16:07:02 +0530
26. The requirements of Order 8 Rules 3 and 5CPC are specific admission and denial of the pleadings in the plaint. The same would necessarily mean dealing with the allegations in the plaint para-wise. In the absence thereof, the respondent can always try to read one line from one paragraph and another from different paragraph in the written statement to make out his case of denial of the allegations in the plaint resulting in utter confusion.
28. The issue regarding specific admission and denial of the pleadings was considered by this Court in Badat & Co. v. East India Trading Co. [Badat & Co. v. East India Trading Co., 1963 SCC OnLine SC 9] While referring to Order 8 Rules 3 to 5 CPC it was opined that the aforesaid Rules formed an integrated Code dealing with the manner in which the pleadings are to be dealt with. Relevant parts of para 11 thereof are extracted below;
"11. Order 7 of the Code of Civil Procedure prescribes, among others, that the plaintiff shall give in the plaint the facts constituting the cause of action and when it arose, and the facts showing that the court has jurisdiction. The object is to enable the defendant to ascertain from the plaint the necessary facts so that he may admit or deny them. Order 8 provides for the filing of a written statement, the particulars to be contained therein and the manner of doing so; ... These three rules form an integrated code dealing with the manner in which allegations of fact in the plaint should be traversed and the legal consequences flowing from its non-compliance. The written statement must deal specifically with each allegation of fact in the plaint and when a defendant denies any such fact, he must not do so evasively, but answer the point of substance. If his denial of a fact is not specific but evasive, the said fact shall be taken to be admitted. In such an event, the admission itself being proof, no other proof is necessary."
In view of order 8 rule 5 of CPC, if the point of the territorial jurisdiction alleged by the plaintiff is not denied by the defendant, then it amounts to admission of the factum of jurisdiction.
16. Besides it, PW1 has deposed that the defendants companies are based at Baroda, Gujrat and business dealings started with them in the years 2014-15. It further proved that he was appointed product dealer/ stockiest of the defendants for Delhi-NCR Area. It is further deposed that Digitally signed CS (Comm) No. 206/2023 by DEVENDRA Arun Goel Vs. Ananta Ortho System Pvt. Ltd. DEVENDRA KUMAR 14/27 KUMAR Date:
2025.11.14 16:07:09 +0530 he used to receive products at Delhi and used to sell throughout Delhi
-NCR. It is further proved that the products were received and sold out within the territorial jurisdiction of this court and such evidence has proved that the partly cause of action arose within the territorial jurisdiction of this court in terms of Section 20 (c) of CPC.
17. Ld. Counsel for defendants has submitted that the bank account of the defendants as well as entire operation is at Baroda, Gujrat and even goods were also sent from Baroda to Delhi, due to this court has no territorial jurisdiction to entertain this suit. However, if the goods were received and sold at Delhi-NCR Area at the office of the plaintiff, then this court has the cause of action to file this case at Delhi and the defendants have failed to discharge the onus to prove Issue no. 1A and this issue is decided in favour of the plaintiff and against the defendants.
18. Issue No. 1B: - The onus to prove this issue was fixed upon the defendants and to discharge the onus, the defendants have examined DW1 and have also cross examined PW1. Ld. Counsel for defendants has argued that this suit is barred by limitation, as the amount was allegedly paid way back in the year 2014 and the plaintiff allegedly served legal notices dated 24.05.2019, 04.07.2019 and 21.08.2021 seeking refund of security amount, whereas this suit has been filed on 02.06.2023, which is admittedly barred by limitation.
19. On the other hand, Ld. Counsel for plaintiff has argued that this suit is within limitation, as both the parties were exchanging notices and emails and never denied for the payment of security amount and rather kept on Digitally signed by CS (Comm) No. 206/2023 DEVENDRA Arun Goel Vs. Ananta Ortho System Pvt. Ltd. DEVENDRA KUMAR 15/27 KUMAR Date:
2025.11.14 16:07:14 +0530 supplying material, due to there was no cause of action to file this suit. It is further argued that the cause of action further arose only when the defendants refused to pay security amount, due to this suit is within limitation from termination of stock dealership and suit is liable to be decreed.
20. Admittedly, the plaintiff has alleged in Para 14 of the plaint that the present suit is within limitation but it is not explained, as to how this case is within limitation. Plaintiff has not mentioned from which point the limitation would start to file this case, due to limitation to file this suit has to be determined. Before deciding limitation, it is necessary to see, as to whether the plaintiff paid security amount of Rs. 20 Lacs to the defendants or not. It is also to be determined as to when said security amount was paid.
21. As per case of the plaintiff, However, as per version of the plaintiff, the plaintiff deposited security amount of Rs. 20 Lacs against Promissory Note, which is Ex.PW1/E. It is further alleged that the plaintiff initially paid Rs. 1 Lac and thereafter in installments on 04.02.2014, 15.12.2014, 16.12.2014 and 06.04.2015. Perusal of testimony of PW1 has proved that no statement of accounts has been exhibited or proved by the plaintiff / PW1 and rather PW1 has admitted that he has not filed any statement of accounts regarding the payment of security amount.
22. Plaintiff has alleged in Para 5 (b) of the plaint that he deposited amount of Rs. 20 Lacs with the defendants, whereas Para 3 has disclosed that the amount of Rs. 1 Lac was paid through Cheque No. 151878 dated 04.12.2014, Rs. 7 Lacs through Cheques No. 151896 dated 15.12.2014 and Digitally signed by DEVENDRA CS (Comm) No. 206/2023 KUMAR Arun Goel Vs. Ananta Ortho System Pvt. Ltd. DEVENDRA 16/27 Date:
KUMAR 2025.11.14
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Cheque No. 151897 dated 16.12.2014 and Rs. 5 Lacs through Cheque No. 427161. However, the plaintiff has not proved any statement of accounts to prove this payment/s and in the absence of any statement of accounts, it could not be proved that the plaintiff paid this amount to the defendant/s. Even the plaintiff has not examined any bank official to prove that any such amount/s was paid to the defendants by the plaintiff as security amount. However, DW1 has admitted that both the parties-maintained statement of accounts and the defendants have proved statement of account Ex.DW1/3 (colly). This statement of accounts has proved certain amounts deposited by the plaintiff with the defendants as under:
Rs. 1 Lac through Cheque No. 151878 on 27.12.2014, Rs. 7 Lacs through Cheque No. 151896, Rs. 7 Lacs through Cheque No. 151897 dated 01.03.2015 Rs. 2,03,000/- through RTGS on 01.03.2015 and, Rs. 283914/- on 23.12.2014 through RTGS.
23. However, none of the abovesaid payments has proved that any amount was paid towards security. Contrary to it, the defendants have denied that the plaintiff paid any such security amount and rather have alleged that the defendants supplied substantial articles / material to the plaintiff during the period from 27.12.2014 to 06.04.2015 so such amount/s cannot be said to be security amount and it was against sales. In fact, the plaintiff was making regular payments to the defendants and the defendants were supplying regular articles/ material, due to such payments cannot be distinguished between security amount and payments of amounts for articles.
Digitally signed by DEVENDRA DEVENDRA KUMAR CS (Comm) No. 206/2023 KUMAR Date:
Arun Goel Vs. Ananta Ortho System Pvt. Ltd. 2025.11.14 17/27 16:07:27 +0530
24. Defendants have proved statement of accounts Ex.DW1/3 (colly) and invoices / documents Ex.DW1/4 (colly), as per which, the plaintiff paid amount of Rs. 1 Lac on 04.12.2014 and thereafter on 15.12.2014, 16.12.2014 and 06.04.2015, whereas the defendants had already supplied substantial material to the plaintiff by 01.12.2014, comprising of 11 invoices of substantial amounts. Even, thereafter, the defendants issued repeated invoices Ex.DW1/4 (colly) which prove that the defendants were supplying material much than of the payments made by the plaintiff. In fact, in the absence of any specific entry of proving consolidated payments in the manner stated in the plaint, the plaintiff has no evidence to prove that any such amount/s was ever made by the plaintiff. In fact, amount/s disclosed in statement of account Ex.PW1/3 (colly) was also not Rs. 20 Lacs to consider it as part amount of security amount, or advance to the business of the plaintiff with the defendant, which cannot be said to be a security of stockiest. As such, it could not be proved that the plaintiff paid this security amount of Rs. 20 Lacs to the defendants.
25. However, Ld. Counsel for plaintiff has over emphasized that the amount was paid against Promissory Note dated 27.11.2014, which is Ex.PW1/E, due to nomenclature of Ex.PW1/E has to be determined. In fact, Ex.PW1/E is a letter allegedly issued by representative of the defendant/s at the time of accepting amount of Rs. 1 Lac, due to the contents of this document have to be determined. Ex.PW1/E contains two material contents as under:
About Security Money As super stockiest, as per company protocol party should (must) Rs. 20 Lac as security deposit.Digitally signed
CS (Comm) No. 206/2023 by DEVENDRA
Arun Goel Vs. Ananta Ortho System Pvt. Ltd. KUMAR 18/27
DEVENDRA
Date:
KUMAR 2025.11.14
16:07:47
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Regarding covering area
Stockiest will cater our product Delhi & NCR region (Delhi, Ghaziabad, Gurgaon, Noida, Meerut supply matter of technomed & J K Viklang.
Company will direct supply to 1) Technomed (Delhi), 2) J K Viklang Kendra (Gurgaon).
26. The abovesaid both terms suggest that this document alleged to be a promissory note by the plaintiff cannot be considered as promissory note. Rather, it is showing terms of workorder between the parties and just an intimation about payment of security money of Rs. 20 Lacs proposed to be paid. However, introductory portion of Ex.PW1/E made it clear that it was just an agreement containing averments- "After receiving agreement letter you might have some doubt", which suggests that agreement must have followed and signed between the parties, which is not placed on record by the parties.
27. The definition of Promissory Note has been provided in Section 4 of the Negotiable Instruments Act, 1881 as under:-
"4. "Promissory note". -A "promissory note" is an instrument in writing (not being a bank-note or a currency-note) containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument."
28. Further, Sub section (22) of Section 2 of the Indian Stamp Act, 1899 defines a promissory note as under:--
"(22) "Promissory note" means a promissory note as defined by the Negotiable Instruments Act, 1881 (26 of 1881);
It also includes a note promising the payment of any sum Digitally signed CS (Comm) No. 206/2023 by DEVENDRA Arun Goel Vs. Ananta Ortho System Pvt. Ltd. 19/27 DEVENDRA KUMAR KUMAR Date:
2025.11.14 16:07:54 +0530 of money out of any particular fund which may or may not be available, or upon any condition or contingency which may or may not be performed or happen;"
29. A perusal of Section 4 read with Section 13 of the Negotiable Instruments Act, 1881 reveals that in order to be a promissory note, a document must conform to the following conditions: -
(a) it should be in writing,
(b) it must contain an unconditional undertaking by the maker of the document,
(c) such unconditional undertaking must be to pay certain sum of money to a certain person or to the order of that person or to the bearer of the instrument; and
(d) the maker should sign it.
30. The definition of Promissory Note came into interpretation in case titled Packing Paper Sales (Regd.) v. Veena Lata Khosla, 2007 SCC OnLine Del 434 and relevant observations are as under:
25. A comparison of the definition of a promissory note as defined vide sub-section 22 of Section 2 of the Indian Stamp Act, 1899 and the definition of a promissory note as defined under Section 4 of the Negotiable Instruments Act, 1881 read with the definition of a negotiable instruments as defined in Section 13 of the Negotiable Instruments Act, 1881 reveals that the definition of a promissory note in the Indian Stamp Act, 1899, for the purposes of stamp duty, is wider than the definition of a promissory note under the Negotiable Instruments Act, 1881, but it is only to the extent that in order to fail within the extended meaning, a document should be a promissory note in all respects except for the contingencies affecting the payment in the 2 cases envisaged in the proviso (to Article 1) in the ordinary mercantile sense.
31. As I read the law, to be labelled as a promissory note, not only must the document be negotiable and not only should it satisfy the 4 CS (Comm) No. 206/2023 Digitally signed Arun Goel Vs. Ananta Ortho System Pvt. Ltd. by DEVENDRA 20/27 DEVENDRA KUMAR KUMAR Date:
2025.11.14 16:08:00 +0530 requirements referred to in para 23 above, the document must pass 3 further tests, namely: (a) the promise to pay must be the substance of the instrument, (b) there must be nothing else inconsistent with the character of the document as substantially a promise to pay, and (c) the instrument must be intended by the parties to be a promissory note.
32. In order to find out whether a particular document is a promissory note or not, the intention of the parties at the time of execution of the document is to be looked into with reference to the substance of the document, the surrounding circumstances in which the document has been executed and its negotiability in the popular sense, whether the document was intended to be a promissory note or was intended to be a mere acknowledgment of a debt or receipt of consideration. This is a question of fact in each case and requires to be so interpreted and determined with reference to the backdrop facts constituting the transaction.
31. After going through abovesaid law, it stands proved that a Promissory Note must contain a written and singed unconditional undertaking to pay a certain amount to the bearer of said instrument on demand, only then it may qualify the conditions of Promissory Note. Besides it, a Promissory Note must be sufficiently stamped and if a Promissory Note is not sufficiently stamped, then it cannot be admitted to evidence, whereas in this case, no stamp has been affixed to consider it as promissory note. In fact, Ex.PW1/E has failed to qualify criteria of promissory note, as it is neither duly signed by the defendant/s nor promising to pay any amount on demand and even it is not qualifying criteria of receipt / acknowledgment, as it has nowhere acknowledged any receipt of amount as well.
32. In fact, the payment under heading About Security Money- As super stockiest, as per company protocol party should (must) Rs. 20 Lac as Digitally signed by DEVENDRA CS (Comm) No. 206/2023 KUMAR Arun Goel Vs. Ananta Ortho System Pvt. Ltd.
DEVENDRA 21/27Date:
KUMAR 2025.11.14
16:08:07
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security deposit has proved that it was just an information that to be a super stockiest the plaintiff was supposed to pay Rs. 20 Lacs and there is no whisper as to whether this security amount was paid on not. Plaintiff was supposed to prove that he paid security amount to become a super stockiest but he has failed to prove that any such amount was paid to the defendants.
33. So far a period of limitation to file this case is concerned, it is clear by evidence on record that the plaintiff has not proved any statement of accounts, whereas Ld. Counsel for plaintiff has relied upon statement of accounts of the defendant Ex.DW1/3(colly), as per which last transaction between the parties took place on 25.04.2016 and PW1 has admitted that the last payment was made on 25.03.2017. If last payment was made on 25.03.2017 after all failed efforts to continue with business, then limitation to seek recovery of alleged security amount would start from that day when first demand was made to refund security amount. PW1 has relied upon legal notices dated 04.07.2019 and 24.05.2019 and emails dated 18.12.2015 besides series of notices / letters dated 23.09.2018 and 21.8.2020 to prove extended limitation to file this suit.
34. Ld. Counsel for plaintiff has argued that the plaintiff served legal notices which created regular cause of action to demand security amount. However, continuous service of legal notices dated 24.05.2019, 04.07.2019 and 21.08.2020 cannot extend limitation by serving such notices. Admittedly, case for recovery of money has to be filed within three years, whereas this suit was filed on 02.06.2023, which is admittedly barred by limitation.
Digitally signedCS (Comm) No. 206/2023 by DEVENDRA
Arun Goel Vs. Ananta Ortho System Pvt. Ltd. DEVENDRA KUMAR 22/27
KUMAR Date:
2025.11.14
16:08:12 +0530
35. Ld. Counsel for plaintiff has tried to treat legal notices as acknowledgment of liability of the defendants to extend period of limitation. However, acknowledgment of debt must be within the existing period of limitation and that too for complete amount of due balance, only then limitation may be extended through acknowledgement. However, in this case, the defendant was supposed to acknowledge liability of security amount which is nowhere admitted. Rather the defendants have already denied even the person who allegedly signed Ex.PW1/E did not belong to them and the plaintiff has not examined Mr. Rachit Chauhan to prove that he was employee or representative of the defendants, due to issuance of Ex.PW1/E also could not be proved.
36. Besides it, it has held in case titled CLP (India) (P) Ltd. v. Gujarat Urja Vikas Nigam Ltd., (2020) 5 SCC 185 that repeated letters, or exchange of communications, do not extend the period of limitation, provided by law u/s 18 of Limitation Act. Similarly, again in case titled Syndicate Bank v. R. Veeranna, (2003) 2 SCC 15 has held that an unqualified acknowledgement of liability only saves the period of limitation and also gives a fresh cause of action to the plaintiff to base its claim. In view of abovesaid judgments, it is clear that merely exchange of letters/ emails could not extend the period of limitation and rather it was no acknowledgement of debt.
37. As such, this case remained based upon statement of accounts Ex.PW1/3(colly) as well as oral testimony of PW1, as per which, last transaction between the parties took place on 25.03.2017, whereas suit has Digitally signed by DEVENDRA CS (Comm) No. 206/2023 KUMAR Arun Goel Vs. Ananta Ortho System Pvt. Ltd.
DEVENDRA 23/27Date:
KUMAR 2025.11.14
16:08:19
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been filed on 02.06.2023, which is definitely barred by limitation. Defendnats have discharged the onus to prove this issue and issue is decided in favour of the defendants and against the plaintiff.
38. ISSUE No. 1- The onus to prove Issue No.1 was put upon the plaintiff and to discharge onus, the plaintiff has examined PW1 and has also cross examined DW1. Plaintiff has claimed that he deposited security amount of Rs. 20 Lacs with the defendants vide document Ex.PW1/E, but the defendants failed either to provide property work and earning and also failed to provide proper services to his customers, due to the plaintiff suffered financial losses and now wants to get refunded his security amount, which was not refunded by the defendants despite repeated legal notices and e-mails. Though I have already observed while giving my findings on issues no. 1A & 1B that the plaintiff has failed to prove that amount of Rs. 20 Lacs was ever deposited or paid as refundable security, yet certain pleas of the defendants are yet to be decided.
39. Ld. Counsel for defendants has argued that the plaintiff allegedly paid security amount to the defendant no.1 but the defendants no. 2 & 3 have also been impleaded without any reason, whereas they have no concerned with the plaintiff being separate legal entities and this suit is liable to be dismissed. On the other hand, Ld. Counsel for plaintiff has argued that the defendants no. 2 &3 supplied goods and representative of the defendant no.1 stated that they were also same as the defendant no.1 and owned by same owner Mr. Dayanand Sharma, due to this suit a very well maintainable against the defendant no. 2 & 3 and same is liable to be Digitally signed by CS (Comm) No. 206/2023 DEVENDRA Arun Goel Vs. Ananta Ortho System Pvt. Ltd. DEVENDRA KUMAR 24/27 KUMAR Date:
2025.11.14 16:08:24 +0530 decreed against all the defendants.
40. Admittedly, every company is a separate legal entity irrespective of facts that it is owned by another company, or partnership firm, or by same director/s in another company. Entity of the company is distinguished by its directors / owners and the business of each company is also separate to other company and any director of one company may be director in a number of companies and that director cannot be prosecuted just being director of many companies or ownership of such entities. In fact, each company is distinguished entity for business as well as prosecution and has to be governed by the provisions of the Companies Act.
41. In the present case, case of the plaintiff is that he started his business with the defendant no.1 and deposited security of Rs. 20 Lacs. It is further alleged that initially, the defendant no.1 was issuing invoices in the name of the defendant no.1 and even he started business with the defendant no.1 but, suddenly, the defendant no.1 started issuing invoices in the name of the defendant no.2 & 3 and representatives of the defendant no.1 stated that those were also owned by the defendant no.1. However, this case is confined to security deposit of the plaintiff, which was allegedly made with the defendant no.1 and cannot be considered as qua other defendants. I have already observed that no such security deposit was made by the plaintiff and rather amount paid to the defendant no.1 was qua payment of transactions between the parties. Even no payment was made to the defendant no. 2 & 3 and if no security payment was made to the defendants no. 2 & 3, then this suit cannot be maintainable qua them.
Digitally signed by DEVENDRA KUMAR DEVENDRA CS (Comm) No. 206/2023 Date: KUMAR 2025.11.14 Arun Goel Vs. Ananta Ortho System Pvt. Ltd. 16:08:29 25/27 +0530
42. Besides the fact that no payment was made by the plaintiff to the defendants no. 2 & 3, the defendants no. 2 & 3 cannot be made party to this suit just because they were/ are owned by the defendant no.1, as informed by representative of the defendant no.1. Defendants no.2 & 3 are separate legal entities and they cannot be impleaded in this manner and that too without any cause of action against them.
43. Further, I have already given my findings while deciding issue no. 1A & 1B that the plaintiff has failed to prove that he ever paid / deposited any security amount of Rs. 20 Lacs to the defendant no.1 and even his claim is also barred by limitation, due to this suit is not maintainable. Contrary to it, PW1 duly admitted during cross examination that stock lying with him is about Rs. 28-29 Lacs including GST, which is much more than the value of the suit amount. If the plaintiff has stock of such amount that, he cannot claim that the defendant/s has/have usurped his security amount.
44. Plaintiff has pleaded that one Rachit Chauhan issued Ex.PW1/E, whereas the defendants have denied that any Rachit Chauhan was their employee and even PW1 has admitted that Rachit Chauhan was not known to him prior to execution of Ex.PW1/E. Plaintiff did not know about his authority and believed him on the basis of his visiting card, which is also not placed on record. If the defendants have denied and disowned the identity of Rachit Chauhan, then the plaintiff was supposed to examine him prove authority of Rachit Chauhan to whom he allegedly made payment but the plaintiff has not examined him, which could not prove his claim.
Digitally signed by DEVENDRACS (Comm) No. 206/2023 KUMAR
Arun Goel Vs. Ananta Ortho System Pvt. Ltd. DEVENDRA 26/27
Date:
KUMAR 2025.11.14
16:08:34
+0530
Even Rachit Chauhan ought to be made party to this suit which is not done, due it could not be proved that the plaintiff ever paid any amount to Rachit Chauhan, who allegedly issued Ex.PW1/E. As such, the plaintiff has failed to prove that he is entitled for any recovery of Rs. 20 Lacs paid to the defendants as security money and has failed to discharged the onus to prove this issue and Issue no. 1 is decided in favor of the defendants and against the plaintiff.
45. Relief: - Since the plaintiff has failed to prove that he ever paid any security amount of Rs. 20 Lacs to the defendants and even his claim is also barred by limitation, due to the plaintiff is not entitled for any relief. In view of my findings on issues, this suit of the plaintiff is hereby dismissed. Decree sheet be prepared. No order as to cost. File be consigned to Record Room after necessary compliance. Digitally signed by DEVENDRA KUMAR DEVENDRA Date:
KUMAR 2025.11.14
16:08:40
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ANNOUNCED IN OPEN COURT
ON 14th day of November, 2025 (DEVENDER KUMAR)
District Judge (Commercial Court-01)
East District
Karkardooma Courts, Delhi
CS (Comm) No. 206/2023
Arun Goel Vs. Ananta Ortho System Pvt. Ltd. 27/27