Delhi District Court
M/S Jaquar Mercantile vs Ms Shimera Project Lighting on 17 September, 2025
M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting
IN THE COURT OF SH. JITEN MEHRA: DISTRICT
JUDGE-10: TIS HAZARI COURTS: DELHI.
CS DJ NO.615219/16
CNR NO.DLCT01-000623-2011
In the matter of:
M/s. Jaquar Mercantile
(Through its constituted attorney)
Sh. B. B. Duggal
Office at: D-26, SMA Industrial Estate,
G.T. Karnal Road, Delhi-110035.
......Plaintiff
Versus
M/s. Shimera Project Lighting
Through its Managing Partner:
Ms. Sonia Chhabria
Office at: Unit No.5, Raghuvanshi Mansion,
Raghuvanshi Compound,
SB Marg, Lower Parel,
Mumbai-400013.
.....Defendant
Date of institution: 01.12.2011
Date on which reserved for judgment: 22.08.2025
Date of decision : 17.09.2025
SUIT FOR RECOVERY OF RS.11,59,739/- (RUPEES
ELEVEN LAKHS FIFTY NINE THOUSAND
SEVEN HUNDRED THIRTY NINE ONLY).
JUDGMENT
1. The present civil suit has been filed by the plaintiff partnership firm against the defendant seeking recovery of Rs.11,59,739/-.
CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.1/52
M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Plaintiff's version as per the plaint:
2. The plaintiff is a partnership firm duly registered under 'The Registration of Firm Rules, 1972' and is a world renowned manufacturer of bath fittings and sanitary wares, electrical lightings and fittings, commanding a sizeable market share in the same in India and abroad. The plaintiff firms has filed the present suit through Sh. B.B. Duggal, its constituted special attorney, who has been authorized to institute the present suit through a special power of attorney dated 01.12.2011 executed in his favour.
3. The defendant is also stated to be a partnership firm, with Ms. Sonia Chhabria being its Managing Partner and Principal Officer responsible for its day to day business decisions. The defendant is stated to be the plaintiff firm's authorized dealer and involved in the business of sale and trading of electrical lights and fittings.
4. The defendant is stated to have placed a specific order for purchase of electrical lighting and fittings with the plaintiff and CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.2/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting was supplied with its exclusive range of 'ARTEMIDE' electrical lights and fittings, for which the invoice was also raised.
5. The said material was duly transported through a transport carrier and was delivered at the defendant's desired and chosen destination. The representatives of the defendant inspected the 'ordered lighting & fittings', which was supplied strictly as per the order placed with the plaintiff, before the actual delivery was taken. The equipments supplied to the defendant were to their entire satisfaction and the transport GR was generated in respect of delivery of the said order.
6. The plaintiff raised invoices for the equipments dispatched to the defendant and has been duly maintaining its running ledger account in its books of account which are being maintained in the usual course of business. After incorporating all credits of payments by the defendants and debits of amounts due from it, the ledger statement pertaining to the defendant shows a debit balance of Rs.11,59,739/-, which the defendant is liable to pay for the goods purchased, along-with interest @ 18% per annum thereon till the final realization of the dues.
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M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting
7. The defendant had duly acknowledged the delivery of the ordered equipments as per order being placed with the plaintiff, however, did not honour the promises regarding the payments against the goods supplied. Despite passage of sufficient time and taking ample opportunities to pay the outstanding dues, the defendant has failed to remit the same giving the excuse of acute financial crisis.
8. The defendant has also confirmed to the plaintiff the outstanding amount and acknowledged the same and many a times and also gave its commitment to pay the same, however the defendant has failed to pay the said amount to the plaintiff and has been requesting further time for the same.
9. Hence, the present suit for recovery of Rs. 11,59,739/- along-with interest pendente lite and future compound interest @ 24% p.a..
Defendant's version as per the Written Statement
10. The defendant filed his written statement to the plaint in CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.4/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting which he raised the preliminary objection that the suit was barred as per the provisions of section 69 of the Indian Partnership Act, 1932 as the plaintiff firm was not registered and its partners were also not it's registered partners. Further, the present suit has not been validly instituted signed and verified by the registered partners or their attorney. The alleged SPA filed by the plaintiff is false and fabricated and the same is not registered.
11. Further, this court has no territorial jurisdiction to try and entertain the present suit as no part of cause of action had arisen in Delhi. The defendant has its registered office in Mumbai and carries on their business in Mumbai. The dealership agreement was signed at Mumbai; goods were supplied either from Burari Rajasthan or Mumbai to the defendant at Mumbai and even the payments were made at Mumbai.
12. The plaintiff has not approached the Court with clean hands and has indulged in large scale suppressio verii and suggesto falsii. It is submitted that defendant carries on its business of sale and trading of electrical lightings and fittings. It was appointed as a Channel Partner for dealership in the City of CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.5/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Mumbai by the Plaintiff for the business of sale and trading in 'Artemide' products which are manufactured and traded by the Plaintiffs. Accordingly, the defendant was issued Letter of Intent for dealership by the Plaintiffs and the defendant was appointed as a Channel Partner/exclusive dealer of the Plaintiff for trading of the Artemide products of the plaintiff in the city of Mumbai. The defendant also allocated a space in its showroom exclusively to the plaintiff for display of Artemide products of the plaintiff.
13. The plaintiff had set up "Channel Partner Sales & Support Programme" whereby terms and conditions of the Dealership Agreement were set up with certain particulars, such as the details of the pricing, the Commission to be paid to the Channel Partner, the rates of such commission payable to the Channel Partner, discounts, bonuses etc. The original Channel partner/dealership agreement duly signed by the defendant is in power and possession of the plaintiff. Under the said "Channel Partner Sales & Support Programme", it was agreed that the plaintiff shall not make direct sales of its product for which the Dealership Agreement was arrived at with the Defendant, i.e. Artemide products, in the area for which the Defendant was CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.6/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting appointed as a Channel Partner, i.e. Mumbai City and that all Sales will be made through the Defendant only. This important fact and material documents substantiating the same have been suppressed by the Plaintiff.
14. According to the terms of the said programme of the plaintiff, the defendant was entitled to commission and various discounts the details of which are as under:
a. Commission - 5%
b. Cash discount - 5%
c. Turnover Discount -
* 3% in case of quarterly turnover between 10-20 Lacs during the said quarter.
* 4% (in case of quarterly turnover more than 20 Lacs during the said quarter.) The turnover discount was to be given to the defendant/ dealer at the end of the financial year. d. Special Quantity Discount Ranging between 3% to 5% depending upon the quantity / value of order.
e. Annual Bonus 2% of the total annual purchases to be given at the end of the financial year.
f. In addition to this the defendant was also entitled to a very special discount of 30% to 50% for material purchased by the defendant for display as per the following:-
* Purchases for display more than Rs. 15 Lacs 50%. * Purchases for display between Rs. 11 Lacs and Rs.CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.7/52
M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting
15 Lacs - 45%.
* Purchases for display between Rs. 5 Lacs an Rs.
10 Lacs - 40%.
* Purchases for display upto Rs. 5 Lacs - 30%.
15. All the discounts were to be given to the defendant at the end of the financial year either by issuing credit notes or by payment except the commission which was to be paid or credited at the end of the quarter.
16. As per the defendant, the Plaintiffs have neither given the credit of above agreed discounts and commissions either by issuing credit notes or by payment, despite repeated requests and demands nor reconciled and rendered the true and correct account but the plaintiffs evaded the same on one pretext or other, whereupon, an amount of Rs.1,50,000/- (approx.) shall be payable by the Plaintiffs to the defendant. It is further submitted that apart from above, the defendant is also entitled to damages or compensation for breach of contract committed by the Plaintiff as the plaintiff started selling its goods directly without taking defendant in loop despite granting it the exclusive dealership for the city of Mumbai i.e. that the plaintiff shall sell its product in the city of Mumbai through defendant. The plaintiff is liable to CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.8/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting render its accounts of the sales made by it in the state of Maharashtra without the defendant and pay commission on it as compensation. In reply on merits, it was categorically denied that after taking credit and debit entries, there was a debit balance of Rs.11,59,739/- outstanding against it or there was any confirmation or acknowledgment of the dues by the defendant. It is prayed that the suit of the plaintiff be dismissed with exemplary cost.
Replication of the Plaintiff
17. In the replication filed by the plaintiff to the written statement of the defendant, the averments of the plaint were reiterated and the allegations in the written statement of the defendant were denied. It is submitted that the present suit had been through Sh. B.B. Duggal who had been authorized vide an SPA dated 01.12.2011 executed by the plaintiff firm. The plaintiff is a partnership firm which is duly registered under the Registration of Firm Rules 1972. The negotiations of the initial contract were made at Delhi in the plaintiff's office and the orders were finally received at its Delhi office only. The accounts were maintained at Delhi and all the payments were to be remitted at Delhi. Further, its suit is based on invoices, ledger CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.9/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting statement and is purely a commercial transaction. It is further submitted that there was no agreement between the plaintiff and the defendant, hence, all the submissions made in the written statement are wrong. The defendant is only entitled to normal commissions as paid by the plaintiff company from time to time but not as per the channel partner. The plaintiff had paid all its dues in respect to commissions or other trade discounts as agreed between them.
Issues framed:
18. That vide order dated 05.10.2012, the following issues were framed in the suit by the ld. Predecessor of the Court:
(1) Whether the plaintiff is entitled for the recovery of Rs.11,59,739/- as prayed for? OPP (2) Whether plaintiff is entitled for interest, if so, at what rate and for what period? OPP (3) Whether the suit is barred u/s 69 of partnership Act? OPD (4) Whether this court has no jurisdiction to try the present suit? OPD (5) Whether the plaintiff has not approached the court with clean hands? OPD (6) Whether the suit of the plaintiff is time barred? OPD CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.10/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting (7) Relief.
Evidence adduced by the Plaintiff
19. The plaintiff examined two witnesses in support of its contentions.
20. Sh. B. B. Duggal, SPA of the plaintiff was examined as PW-1 and he tendered his evidence by way of affidavit (Ex. PW-1/A) in which the contents of the plaint were reiterated.
21. He relied upon the following documents in support of his testimony:
(a) SPA dated 1.12.2011 as Ex. PW1/1 (objected to on mode of proof, admissibility and delayed filing;
(b) Photocopy of Form B 'Acknowledgement of Registration of Firm' as Mark A and partnership deed as Mark B;
(c) copy of letter of intent of partnership and application form as Mark C;
(d) Nineteen invoices as Ex. PW1/3 to Ex. PW1/21 (objected as to mode of proof and admissibility as no notice under Order 12 rule 8 CPC served for secondary CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.11/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting evidence);
(e) copies of transport GR and courier receipts as Ex.
PW1/22 to Ex. PW1/33;
(f) Ledger statement as per Certificate under Section 65 of the Indian Evidence Act as Ex. PW1/34;
(g) Legal notice 17.2.2011 as Ex. PW1/35 and postal receipts as Ex. PW1/36 and Ex. PW1/37.
22. In his cross-examination dated 25.04.2019, the witness denied the suggest that the plaintiff firm M/s. Jaquar Mecantile had not authorized him to file, sign or verify the present suit. He stated that the copy of SPA at page 20 on the court file had been signed by him at points A and B and the same was exhibited as Ex. PW-1/D1. He admitted that Ex. PW-1/D1 was not signed by any partner nor witnessed by anyone. He denied the suggestion that Ex. PW-1/1 was a forged document. Thereafter, the further cross-examination of the witness was deferred.
23. During his cross-examination dated 14.08.2019, PW-1 stated that there are around 12-14 partners in the plaintiff firm and volunteered to state that there had partners had been inducted CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.12/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting and retired from time to time. He stated that he could not remember as to how many inductions and retirements of partners had taken place in the period from 2000 to 2013. He stated that there were many common partners, who are still active and still partners in the partnership firm. He denied the suggestion that Ex. PW-1/1 had not been signed by any of the partners of the plaintiff partnership firm. He stated that Ex. PW-1/1 was first signed by him and thereafter by the other witnesses. He denied that the suggestion that when signed Ex. PW-1/1, it had not been signed by anyone. He stated that Ex. PW-1/D1 was not the true copy of Ex. PW-1/1. He and volunteered to state that the only difference was that Ex. PW-1/D1 bears the signatures of Sh. Rajesh Mehra and witness which was not present on Ex. PW-1/D1. He denied the suggestion that Sh. Rajesh Mehra had not signed on Ex. PW-1/1. He denied the suggestion that Sh. Rajesh Mehra was not the partner of the plaintiff firm. He denied the suggestion that Sh. Rajesh Mehra had not been authorized by the by the other partners of the plaintiff firm to execute an SPA in his favour and and volunteered to state that being a partner himself, he was authorized to do so. He also denied the suggestion that the power of attorney Ex. PW-1/1 was not CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.13/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting notarized and was a forged and fabricated document. He also denied the suggestion that the plaintiff firm was not registered with the registrar of firms. He also denied the suggestion that the defendant had been appointed as its exclusive channel partner for the city of Mumbai and volunteered to state that it was appointed as a dealer. He also denied the suggestion that 'channel partner' and 'dealer' meant the same thing. He also denied the suggestion that the dealership agreement was executed at Mumbai and volunteered to state that only the discussions took place in Mumbai, however the dealership certificate was issued from Delhi. He also admitted that the head office of the plaintiff firm was located at Gurgaon at present. He denied the suggestion that the head office of the plaintiff firm had been located at Gurgaon since the year 2000 till presently. He also admitted that the detailed terms and conditions of the dealership/Channel partner were recorded in an agreement and volunteered to state that they were mentioned in the dealership letter. He denied the suggestion that an agreement was executed and signed between the parties containing all the terms and conditions, including discount, incentive etc. He stated that he did not remember whether 5% commission was agreed between the plaintiff and defendant for CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.14/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting the good supplied by the plaintiff to the defendant. He admitted that 5% cash discount was agreed to between the parties and volunteered to state that it was the policy of the plaintiff to give 5% cash discount to all dealers. He deposed that he did not remember exactly that there was a turnover discount of 3% for quarterly turnover if the supply was between 10-20 lakhs per quarter and there was a discount of 4% per quarter if supply was more than 20 lakhs, which was agreed to between the parties. He volunteered to state that as per the plaintiff's policy, the different turnover discounts were fixed for the dealers depending upon the size of the market and the capacity of the dealer. He also stated that there were different turnover discounts for dealers and channel partners. He denied the suggestion that the aforesaid turnover discount were supposed to be given at the end of the financial year and volunteered to state that all the turnover discounts and other entitlements of the dealer were given to them by way of credit notes etc., which is reflected in their copy of the accounts. He further deposed that he did not remember that special quarterly discount of 3-5% was also agreed to between the parties. He denied the suggestion that annual bonus of 2% was also agreed between the parties. He denied that special CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.15/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting discount ranging from 30-50% was also agreed between the parties for the goods meant for display. He denied the suggestion that 50% discount of the value of display items was more than 15 lakhs, 45% of the value of goods was between 11-15 lakhs, 40 % if the value was between 5-10 lakhs and 30% if the value was upto five lakhs. He denied the suggestion that he had not annexed the annexures and other terms of the agreement containing all the terms and conditions agreed to between the parties along with the copy of dealer agreement Mark C.
24. He also denied that the defendant was appointed as a 'channel partner' for Artemide and volunteered to state that the defendant was only appointed as a 'dealer'. The witness PW-1 was then shown the document Ex. PW-1/D2 (running into 10 pages), he denied the suggestion that the same was the dealership agreement and and volunteered to state that it was the terms and conditions of the channel partner agreement. He denied the suggestion that Ex. PW-1/D2 was part of Mark C. He also denied the suggestion that Mark C was executed between the plaintiff and defendant and volunteered to state that it was an application form of the plaintiff's firm. He denied the suggestion that Mark C CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.16/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting was meant for appointment as channel partner and again said that the same was only an 'intent'. He denied the suggestion that Ex. PW-1/D2 was the detailed terms and conditions agreed to between the parties. He also denied the suggestion that the original terms and conditions, executed by both parties, was in the power and possession of the plaintiff firm. He also denied the suggestion that the supplies were effected to the defendant from either Bhiwadi, Rajasthan or from Maharashtra and volunteered to state that it all depended on where the stock was lying. He admitted that he did not participate in the negotiations between the plaintiff and the defendant and volunteered to state that he was informed about the terms and conditions by the sales team. He stated that no minutes were prepared by the sales team regarding the terms and conditions agreed to between the parties. He deposed that the plaintiff did not prepare the record of the terms and conditions agreed to between the parties and volunteered to state that whatever discounts were agreed to between the parties were mentioned and given in the bills or through credit notes itself. He further deposed that the bills and challans were prepared by the logistic and accounts department. He stated that he was not sure whether the plaintiff firm was ISO CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.17/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting approved at the relevant time of negotiations of the terms and conditions and stated that at present it was ISO approved. He stated that the accounts department while preparing bills and credit notes takes information from the sale department. He admitted that the sale department gave information about the discount on the basis of the record, and volunteered to state that it was on the basis of correspondences, distributor/dealer letters etc. He denied the suggestion that the accounts department and sales department prepared bills and credit notes on the basis of detailed terms and conditions containing details of all discounts and incentive which are duly agreed and reduced in writing between the parties. He denied the suggestion that the plaintiff firm was deliberately concealing the terms and conditions agreed to between the parties, which contained various discounts and incentives between the parties. Thereafter, the further cross- examination of the witness was deferred.
25. PW-1 was next cross-examined on 18.09.2019 during which he denied the suggestion that the plaintiff had not accounted for the discounts and commissions to be given to the defendant either by way of credit notes or actual payments. He CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.18/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting also denied the suggestion that discounts and commissions were only given to the dealers/channel partners at the end of the financial year. He volunteered to state that they were given at the time of their entitlement from time to time by way of credit notes. He stated that the credit notes were generated by the accounts department on the instructions of the sales department. He stated that these instructions were given internally between the sales and accounts department on the basis of records/agreed terms from customer to customer. He deposed that the records/agreed terms were maintained by the sales department, which could be either by way of company policy or verbal communication or written agreement as per the discretion of the company. He deposed that the record of internal communication between the sales and accounts department was maintained, however the same is weeded out after sometime. He deposed that he did not remember whether the supplies were to be effected to the defendant from Bhiwadi, Rajasthan to Mumbai or from Mumbai itself and volunteered to state that the plaintiff had its office and warehouse in Bhiwadi, Rajasthan as well as in Mumbai.
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26. He further deposed that he had personal knowledge about the bills Ex. PW-1/3 to Ex. PW-1/32 as the same were raised by his company. He denied the suggestion that the bills/invoices Ex. PW-1/3 to Ex. PW-1/21 were fictitious documents. He admitted that the bills/invoices did not bear any stamp, signatures or acknowledgment of receipt by the defendant. He stated that Ex. PW-1/3 to Ex. PW-1/21 were not generated on his computer and volunteered to state that they were generated by the accounts department.
27. He further stated that the Goods Receipt or Lorry Receipt corresponding to the invoices, signed by the defendant acknowledging the receipt of the goods was placed on record as Ex. PW-1/22 to Ex. PW-1/33. He denied the suggestion that the same were fictitious documents. He admitted that Ex. PW-1/22 to Ex. PW-1/33 were not signed, stamped or acknowledged by the defendant confirming their receipt. He stated that he could not show the goods receipt/ lorry receipt corresponding to the invoices Ex. PW-1/6 to Ex. PW-1/11 from the record and volunteered to state that the same was related to the accounts and logistics department of the plaintiff firm. He admitted that he had CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.20/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting not personally delivered the goods. He also admitted that the accounts were not being prepared and maintained by him personally and volunteered to state that it was being maintained by the accounts department. He denied the suggestion that the accounts filed in the Court were false and fabricated. He also denied the suggestion that the ledger account filed by the plaintiff contained various unauthorized entries.
28. He denied the suggestion that he did not have personal knowledge of the accounts Ex. PW-1/34 (Colly). He deposed that the entry at point B to B on page 29 of Ex. PW-1/34 was an internal transfer entry from the plaintiff's Mumbai Branch to Jaquar Mercantile and stated that the details would be explained by the accounts department. He deposed that he could not explain entries at point Y to Y on page 30, entries at Point Z to Z at page 31, at point Z to Z at page 32 and at point A to A on page 32 stating the same were matters of record. He also denied the suggestion that there was no outstanding amount of Rs.11,59,739/- against the defendants due to the plaintiff. He deposed that the orders were placed by the defendant either verbally or upon personal visit to the defendant by the sales CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.21/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting officials of the plaintiff at the Mumbai office of the defendant. He also denied the suggestion that no legal notice Ex. PW-1/35 was served upon or sent to the defendant. He stated that he could not show any AD card or tracking report of delivery of the aforesaid legal notice. He admitted that the lawyers of the plaintiff firm were based in Delhi. He denied the suggestion that the postal receipts Ex. PW-1/36 and Ex. PW-1/37 were fictitious and did not correspond to the Ex. PW-1/35. He further deposed that the inspection mentioned by him in para no.6 of the evidence by way of affidavit Ex. PW-1/A did not take place in his presence and deposed that it took place at the destination chosen by the defendant in the presence of the official of the transport company. He denied the suggestion that no such inspection took place. He also denied the suggestion the true and correct accounts would reveal a sum of Rs. 1,50,000/- was payable to the defendant by the plaintiff. Thereafter, PW-1 was discharged as a witness.
29. The plaintiff next examined Sh. Divakar Gupta, AGM/Accountant of the plaintiff firm as PW-2, who deposed in his examination in chief that he was relying on a certificate under CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.22/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting section 65B of the Indian Evidence Act as Ex. PW-2/1 and certified the ledger statement of account Ex. PW-1/34 to be true and correct as he and his team operated the said books of accounts in their computers and he certified the same.
30. PW-2 was cross-examined at length by the Ld. Counsel for defendant on 28.08.2019. He deposed that presently, he was posted in Manesar Accounts Department and that he working in that organization since 2001. He was semi-qualified CA (by semi-qualified, he meant that he had done CA Inter but had not completed the same). He deposed that he was never posted in Bhiwadi and Mumbal and that in Manesar, he was posted for last 3-4 years and that in their organization, they maintained central accounting and no accounts were maintained at branches and that their accounts were maintained on computers prior to 2001. He was asked as to what document was prepared and seen before posting an entry in the ledger account, to which he replied that initially the invoices were raised which were posted in sales register and from there automatically it went to party ledger and that whenever payment was received, the same was credited in the bank ledger and from there automatically, it went to the party CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.23/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting ledger. He was asked the procedure of making any entry of the debit / credit note in the ledger account, to which he replied that whenever there was a debit note raised, the working was done and approval was taken and thereafter the same was posted in the party ledger account and same was the procedure followed in case of credit note and the same was communicated to the party.
31. He deposed that the debit notes and credit notes were prepared before posting the entry of debit/credit note into the party ledger. He went on to depose that the bills, credit/ debit notes were prepared by the team of the plaintiff and not by him personally and that the credit notes for any purpose were prepared on the basis of agreement between the parties, or by Divisional Head depending upon the negotiations and agreements between the parties. He deposed that the Divisional Head was corresponding to the sales team and normally the written agreements, written minutes of negotiations were in the custody and possession of the Divisional Head (Sales) and from there only, they received the information about the agreement and negotiations. He went on to depose that whenever the credit notes for commission and discounts were to be given, they received CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.24/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting written information from the sales team or referred as per agreement. He further deposed that the computers were personally operated by him and every accountant had a separate computer, but, he was not sure whether Ex.PW1/34 was generated from his computer. He went on to depose that it could be generated from any computer and that he had not personally posted debit/credit entries in the ledger account. He denied the suggestion that debit entries and credit entries could be posted and removed at the sweet will of the party. He deposed that the software used for generating Ex.PW1/34 was in-house developed software, however, he did not know its name. Normally they were called ERP and sometimes MIS. He denied the suggestions that Ex.PW2/1 and Ex.PW1/34 were wrong, fabricated and false documents.
32. During the course of the cross-examination, the witness was shown debit entry dated 27.06.2009 (J0004) of ledger at Page 32 of Ex.PW1/34, from Point A to A. He denied the suggestion that the debit entry was a fake entry. He was asked to show the debit note or voucher or any document duly signed by the defendant for this debit entry from the court record. The CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.25/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting witness replied that it was not a debit entry and no debit note had been raised against the same and that the same was inter-unit entry and the said entry was initially shown as credit entry on page no.29 dated 27.06.2009 through voucher no. J0003 in the ledger account the defendant maintained by the plaintiff Ex.PW1/34, marked from Point B to B and for that reason, he called it inter-unit entry. He stated that the said ledger at page 29 was the ledger of the defendant maintained by the plaintiff for Delhi location and the ledger at page 32 was the ;edger of the defendant maintained by the plaintiff for Bhiwadi Location. He denied the suggestion that the plaintiff had wrongly entered the entry on page 32 in the ledger as a debit entry.
33. PW-2 was then asked to show any bill/invoice of debit entry at point C on page 28, to which he pointed to Ex. PW-1/3. He denied the suggestion that Ex. PW-1/3 was a fabricated invoice. A suggestion was put to the witness that Ex. PW-1/3 was neither signed, nor stamped by the defendant, to which it was submitted that Ex. PW-1/3 was generated by the plaintiff's office, however the goods were sent by AIR and LR was also attached as Ex. PW-1/32. He denied the suggestion that Ex as per. CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.26/52
M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting PW-1/32, only one piece was sent and volunteered to state that one packet contained two pieces in the same. He deposed that they maintained sales ledger/sales register. The sales register was the first register of accounts in sales and the same was generated at the place of sale, i.e. in the present case at Bhiwadi, Mumbai and Delhi. He stated that Ex. PW-1/3, Ex. PW-1/4, Ex. PW-1/5, Ex. PW-1/6 and Ex. PW-1/7 were generated at Delhi and Ex. PW-1/8 to Ex. PW-1/10 were generated at Mumbai, whereas Ex. PW-1/11 to Ex. PW-1/21 were generated at Bhiwadi.
34. PW-1 denied that he had no personal knowledge about the sales effected from Bhiwadi and Mumbai and deposed that as he was sitting in the corporate office and looking after pas India account, it was in his knowledge. He denied the suggestion that all the invoices and lorry receipts Ex. PW-1/22 to Ex. PW-1/33 were fabricated, however admitted that they did not bear the signature/stamp or receiving of the defendant and volunteered to state that the receiving may be on the lorry receipts of the driver. He denied the suggestion that the plaintiff had deliberately not filed the driver receipt as goods were not supplied. He further denied the suggestion that the plaintiff had not filed its sales CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.27/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting register as there were no sales mentioned in Ex. PW-1/32. He denied the suggestion that the opening balance of Rs. 4,80,403.42/- show in the ledger maintained by the plaintiff at page no.29 was wrong. The witness was then asked whether any supporting document could be produced for proving the debit balance of Rs. 4,80,403.42? to which he replied that the same could be proved by him if time was given.
35. He also denied the suggestion that the sales entries shown on page no. 29 in Ex. PW-1/34 from point X to X (nineteen entries) were fictitious. He was then also asked whether he could produce any document to prove the aforesaid entries at point X to X in Ex. PW-1/34 to which he stated that it can be proved if time is given and also stated that there was CST liability on the defendant as well. He was then asked whether he could show the vouchers mentioned in entry marked Y to Y on page 30 of Ex. PW-1/34 and also tell the purpose of the credit notes, to which he deposed that he could prove it, provided that time was given. He denied the suggestion that the debit entry at Point Z to Z on pages 31 and 32 of Ex. PW-1/34 were fictitious. He denied the suggestion that all accounts maintained by the plaintiff were CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.28/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting wrong and he did not have personal knowledge of the same. He further denied the suggestion that account Ex. PW-1/34 contained various fictitious entries. He denied the suggestion that credit of discounts and commissions had not been given by the plaintiff to the defendant. He denied the suggestion that he was deposing falsely. Thereafter, PW-2 was discharged as a witness and the plaintiff firm also closed its evidence on 18.09.2019. Evidence adduced by the Defendant
36. The defendant examined Sh. Manoj Yadav, Technician, as DW-1, who tendered and he tendered his evidence by way of affidavit as Ex. DW-1/A on 27.11.2019, in which he reiterated the contents of the written statement.
37. DW-1 relied on the following documents in support of his case:
1. Copy of letter of intent, application and agreement already marked as Mark C. (Objected to as to mode of proof, objection to be decided at later stage).
2. Annexure with agreement already exhibited as Ex.
PW1/D2.
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38. DW-1 was cross-examined on 04.12.2019, during which he deposed that he was senior technician in the defendant company for last 15 years. The owners of the defendant company are Sh. Prakash Chhabaria, Director and Sh. Vinod Tekchandani who are looking after day to day affairs of the defendant company. He stated that he had not been authorized in writing to depose before the Court by any of the directors of the defendant and volunteered to state that he was verbally instructed. He admitted that there was no board resolution in my favour from the defendant company, and volunteered to state that since defendant is a small company. Further, a question was put to him that the defendant is a partnership firm and not a private limited company, to which he replied that he did not know whether the defendant is a partnership firm or a private limited company. He stated that the bank account of the defendant was located at Bank of Baroda, Javeri Bazar, Mumbai. He stated that he could not tell about the other accounts, as he was not from the accounts department. He denied the suggestion that he am not aware of the facts of the case. He further denied the suggestion that he had not been authorized to appear and depose before this court on behalf of the defendant. He denied the suggestion that the defendant was CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.30/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting a dealer and not a channel partner, and volunteered to state that 'Dealer' and the 'Channel Partner' were the same. He denied the suggestion that 'Dealer' and 'Channel Partner' were not the same. DW-1 was then shown document Mark C and asked to identify the signatures at point A, to which he stated he could identify the same. He denied that the respective commissions pertaining to all the sales were duly paid to the defendant from time to time. He denied that the defendant was not eligible for various commissions as claimed by the defendant in para no.6 of Ex. DW-1/A. He also denied the suggestion that only the commission pertaining to 'dealer' could have been claimed by the defendant, which was duly paid. He stated that he could not show any written document signed by the plaintiff in which the rates of commission mentioned in para no.6 of the affidavit Ex. DW-1/A appeared. He denied the suggestion that there was no such document in existence. He stated that no bill was raised for the commission to which the defendant was entitled and volunteered to state that the said commission was to be adjusted from the amount of the bill raised by the plaintiff.
39. He stated that the bills Ex. PW-1/3 and Ex. PW-1/21 were CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.31/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting forged as no goods were supplied qua the said bills and hence, there was no question of overtaking any commission qua the said bills. He deposed that he could not say whether the commission of bills Ex. PW-1/3 to Ex. PW-1/21 was credited into the account of the defendant or not, as he needed to check the same from the accounts department. He denied the suggestion that the legal notice Ex. PW-1/35 was issued to it. Thereafter, the witness was discharged and the defendant also closed its evidence on 04.12.2019.
Arguments of the parties
40. The Ld. counsel for the plaintiff Sh. Adhita Gaur has argued that the plaintiff has duly proved its case against the defendant firm and the suit be decreed as prayed for. On the other hand, Ld. Counsel for the defendant Sh. Praveen Pahuja has submitted that the plaintiff firm has failed to prove its case against the firm. He has submitted that the plaintiff firm has not even proved that it is registered as only a photocopy of the alleged Form B of the Acknowledgment of Registration of Firm has been placed on record as Mark A, the original of which has CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.32/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting not been produced and no foundational facts to lead secondary evidence have also been pleaded or proved by the plaintiff firm.
41. I have heard the arguments advanced by the ld. Counsels for the parties and perused the record.
Issue wise findings and reasons:
Issue no.3
42. I shall first decide issue no.3, which is reproduced below for the sake of convenience:
(3) Whether the suit is barred u/s 69 of partnership Act?
OPD
43. Section 69 of the Partnership Act, 1932 provides as follows:
69. Effect of non-registration.--
(1) No suit to enforce a right arising from a contract or conferred by this Act shall be instituted in any Court by or on behalf of any person suing as a partner in a firm against the firm or any person alleged to be or to have been a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm.
(2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm. (3) The provisions of sub-sections (1) and (2) shall apply also to a claim of set-off or other proceeding to enforce a right arising from a contract, but shall not affect--
(a) the enforcement of any right to sue for the dissolution of a firm or for accounts of a dissolved firm, or any right or power to realise the property of a dissolved firm, or
(b) the powers of an official assignee, receiver or Court under CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.33/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting the Presidency-towns Insolvency Act, 1909 (2 of 1909), or the Provincial Insolvency Act, 1920 (5 of 1920), to realise the property of an insolvent partner.
(4) This section shall not apply--
(a) to firms or to partners in firms which have no place of business in the territories to which this Act extends, or whose places of business in the said territories are situated in areas to which, by notification under section 56, this Chapter does not apply, or
(b) to any suit or claim of set-off not exceeding one hundred rupees in value which, in the Presidency-towns, is not of a kind specified in section 19 of the Presidency Small Cause Courts Act, 1882 (15 of 1882), or, outside the Presidency-
towns, is not of a kind specified in the Second Schedule to the Provincial Small Cause Courts Act, 1887 (9 of 1887), or to any proceeding in execution or other proceeding incidental to or arising from any such suit or claim.
44. Section 69 (2) of the Partnership Act provides that no suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm.
45. The plaintiff has claimed that it is a registered partnership firm, duly registered under the Registration of Firm Rules, 1972. In order to prove the same, the plaintiff's witness PW-1 has relied upon a photocopy of the Certificate of Registration as Mark A. Further, the partnership deed dated 01.04.2009 of the plaintiff firm has been placed on record as Mark B. No certified copy of CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.34/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting the Register of Firms has been produced by the plaintiff to show the partners of the plaintiff firm as well. The plaintiff firm has not produced the original of the said acknowledgment of registration and no foundational facts with respect to the original being missing have been pleaded either in the plaint or even in the evidence by way of affidavit of the witness PW-1. No effort has also been made by the plaintiff firm to summon any official witness from the Registrar of Firms to prove the document Mark A as well or to produce the Register of Firms pertaining to the plaintiff firm as well. Further the document Mark A is not even a certified copy, which could have been produced as proof of the fact of the registration of such firm as per section 68 (2) of the Partnership Act, 1932.
46. The Hon'ble Apex Court has held in the decision of Ashok Dulichand Vs. Madahavlal Dube and Anr., [1976] 1 SCR 246 as under :
"According to Clause (a) of Section 65 of Indian Evidence Act, Secondary evidence may be given of the existence, condition or contents of a document when the original is shown or appears to be in possession or power of the person against whom the document is sought to be proved or of any person out of reach of, or not subject to, the process of the Court of any person legally bound to produce it, and when, after the notice mentioned in Section 66 such person does not produce it. Clauses (b) to (g) of Section 65 specify some CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.35/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting other contingencies wherein secondary evidence relating to a document may be given."
47. Further, in Rakesh Mohindra vs. Anita Beri and Ors., (2016) 16 SCC 483 the Hon'ble Apex Court has held as follows:
"15. The preconditions for leading secondary evidence are that such original documents could not be produced by the party relying upon such documents in spite of best efforts, unable to produce the same which is beyond their control. The party sought to produce secondary evidence must establish for the non-production of primary evidence. Unless, it is established that the original documents is lost or destroyed or is being deliberately withheld by the party in respect of that document sought to be used, secondary evidence in respect of that document cannot accepted."
48. Again in Jagmail Singh and Anr vs Karamjit Singh and Ors, (2020) 5 SCC 178, the Hon'ble Apex Court has held as follows:
"10. For proper appraisal of the matter in controversy, it would be appropriate to reproduce Sections 65 and 66 of the Act which read as under:
"65. Cases in which secondary evidence relating to documents may be given.--Secondary evidence may be given of the existence, condition, or contents of a document in the following cases--
(a) when the original is shown or appears to be in the possession or power --
of the person against whom the document is sought to be proved, or of any person out of reach of, or not subject to, the process of the Court, or of any person legally bound to produce it, and when, after the notice mentioned in Section 66, such person does not produce it;
(b) when the existence, condition or contents of the original have been proved to be admitted in writing by the person against whom it is proved or by his representative in interest;
(c) when the original has been destroyed or lost, or when the party offering evidence of its contents cannot, for any other reason not arising from his own default or neglect, produce it in reasonable time;
(d) when the original is of such a nature as not to be easily movable;
(e) when the original is a public document within the meaning of Section 74;
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(f) when the original is a document of which a certified copy is permitted by this Act, or by any other law in force in India to be given in evidence;
(g) when the originals consists of numerous accounts or other documents which cannot conveniently be examined in Court, and the fact to be proved is the general result of the whole collection.
-- In cases (a), (c) and (d), any secondary evidence of the contents of the document is admissible.
-- In case (b), the written admission is admissible.
-- In case (e) or (f), a certified copy of the document, but no other kind of secondary evidence, is admissible.
-- In case (g), evidence may be given as to the general result of the documents by any person who has examined them, and who is skilled in the examination of such documents.
66. Rules as to notice to produce.--Secondary evidence of the contents of the documents referred to in Section 65, clause ( a), shall not be given unless the party proposing to give such secondary evidence has previously given to the party in whose possession or power the document is, [or to his attorney or pleader] such notice to produce it as is prescribed by law; and if no notice is prescribed by law, then such notice as the Court considers reasonable under the circumstances of the case:
Provided that such notice shall not be required in order to render secondary evidence admissible in any of the following cases, or in any other case in which the Court thinks fit to dispense with it--
(1) when the document to be proved is itself a notice; (2) when, from the nature of the case, the adverse party must know that he will be required to produce it;
(3) when it appears or is proved that the adverse party has obtained possession of the original by fraud or force;
(4) when the adverse party or his agent has the original in court; (5) when the adverse party or his agent has admitted the loss of the document;
(6) when the person in possession of the document is out of reach of, or not subject to, the process of the court."
11. A perusal of Section 65 makes it clear that secondary evidence may be given with regard to existence, condition or the contents of a document when the original is shown or appears to be in possession or power against whom the document is sought to be produced, or of any person out of reach of, or not subject to, the process of the court, or of any person legally bound to produce it, and when, after notice mentioned in Section 66 such person does not produce it. It is a settled position of law that for secondary evidence to be admitted foundational evidence has to be given being the reasons as to why the original evidence has not been furnished....
14. It is trite that under the Evidence Act, 1872 facts have to be established CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.37/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting by primary evidence and secondary evidence is only an exception to the rule for which foundational facts have to be established to account for the existence of the primary evidence. In H. Siddiqui v. A. Ramalingam [H. Siddiqui v. A. Ramalingam, (2011) 4 SCC 240 : (2011) 2 SCC (Civ) 209] , this Court reiterated that where original documents are not produced without a plausible reason and factual foundation for laying secondary evidence not established it is not permissible for the court to allow a party to adduce secondary evidence."
49. As already mentioned, the plaintiff has laid no foundational facts to adduce only the photocopy of the Form B issued under the Delhi Partnership (Registration of Firms) Rules, 1972 as Mark B. In view of the settled law with respect to production of secondary evidence, the document Mark B cannot be read in evidence. Accordingly, the plaintiff has failed to prove that it was a registered partnership firm under the provisions of the Partnership Act, 1932 and hence, the present suit is deemed to be barred as per the provisions of section 69 (2) of the Partnership Act, 1932. Therefore, the issue no.3 is decided in favour of the defendant and against the plaintiff. Issues no. 1,2 and 6
50. I shall next decide issues no.1, 2 and 6 which are reproduced below for the sake of convenience:
(1) Whether the plaintiff is entitled for the recovery of Rs.11,59,739/- as prayed for? OPP (2) Whether plaintiff is entitled for interest, if so, at what rate and for what period? OPP (6) Whether the suit of the plaintiff is time barred? OPD
51. The plaintiff has filed the present suit on 27.12. 2011 on the CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.38/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting basis of a running ledger account maintained by it claiming that an amount of Rs.11,59,739/- as being due and payable by the defendant. The plaintiff has placed on record a copy of its ledger account for the period 01.04.2009 to 01.12.2011 as Ex. PW-1/34 (Colly).
52. A perusal of the same reveals that the plaintiff has brought forward an amount of Rs.4,80,403.22/- as a debit balance, however no ledger for the previous year has been produced to show as to how this amount was due and payable by the defendant.
53. The Hon'ble High Court of Delhi has held in the decision of Continental Advertising Pvt. Ltd. Vs Karan & Co, 2018 SCC OnLine Del 11921 that a running account implies that the account between the parties is an open, mutual and current account. An open, mutual and current account under Article 1 of the Limitation Act, 1963 would only exist if there are shifting balances vide Hindustan Forest Company v. Lal Chand, AIR 1959 SC 1349 and Kesharichand Jaisukhal v. Shillong Banking Corporation, AIR 1965 SC 1711. In the absence of any shifting CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.39/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting balances, such an account cannot be termed as a current account.
54. The Hon'ble High Court of Delhi in the decision of Era Constructions (India) Ltd. vs S.K. Sharma, 2007 SCC OnLine Del 1317 that a running account is required to be mutual, open and current. An account can be termed as mutual only when there are shifting balances on the basis of reciprocal demands by the parties:
"5. Blacks Law Dictionary, 6th Edition, defines a running account in the following manner:--
"Running account. An open unsettled account, as distinguished from a stated and liquidated account. Running accounts mean mutual accounts and reciprocal demands between the parties, which accounts and demands remain open and unsettled."
In other words, a running account is one which is unsettled and is open. It is distinct and different from a stated and/or liquidated account where the amount stands crystalised. In this context, it would be fruitful to refer to Article 1 and Article 26 of the Schedule to the Limitation Act, 1963. Article 1 relates to suits in respect of balance due on a mutual open and current account, where there have been reciprocal demands between the parties. The period of limitation prescribed is three years from the close of the year in which the last item admitted or proved is entered in the account and such year is to be computed as in the account. If the statement of account between the parties is to be regarded as a mutual open and current account, then the period of limitation of three years would begin from the close of the year in which the last item admitted or proved is entered in the account. .......
6. Article 26 of the said Schedule refers to suits for money payable to the plaintiff for money found to be due from the defendant to the plaintiff on accounts stated between them. The period of limitation that is prescribed under this Article is of three years and the time from which it begins to run is when the accounts are stated in writing signed by the defendant or his agent duly authorised in this behalf, unless where the debt is, by a simultaneous agreement in writing signed as aforesaid, made payable at a future time, when that time arrives. This is certainly not the case here. CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.40/52
M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting
8. As already pointed out above, there is no difficulty in concluding that the account between the parties in the present case was open and current and had not been settled or stated. The only question that needs to be considered is whether the account could be construed as a mutual account where there have been reciprocal demands between the parties. As observed by the Supreme Court in the case of Kesharichand Jaisukhlal v. Shillong Banking Corpn. Ltd., AIR 1965 SC 1711, the leading case on mutual accounts is that of Hirada Basappa v. Gadigi Muddappa, (1871) VI Madras High Court Reports 142, 144 wherein it was observed as under:--
"To be mutual there must be transactions on each side creating independent obligations on the other, and not merely transactions which create obligations on the one side, those on the other being merely complete or partial discharges of such obligations."
In The Hindustan Forest Company v. Lal Chand & Ors., AIR 1959 SC 1349, the Supreme Court observed that the question of what is a mutual account had been considered by the courts frequently and the test to determine the same was well settled. In this context, the Supreme Court referred to the case of Tea Financing Syndicate Ltd. v. Chandrakamal Bezbaruah, (1930) ILR 58 Calcutta 649. In the said Calcutta decision the following test had been laid down:--"There can, I think, be no doubt that the requirement of reciprocal demands involves, as all the Indian cases have decided following Halloway, A.C.J., transactions on each side creating independent obligations on the other and not merely transactions which create obligations on one side, those on the other being merely complete or partial discharges of such obligations. It is further clear that goods as well as money may be sent by way of payment. We have therefore to see whether under the deed the tea, sent by the defendant to the plaintiff for sale, was sent merely by way of discharge of the defendant's debt or whether it was sent in the course of dealings designed to create a credit to the defendant as the owner of the tea sold, which credit when brought into he account would operate by way of set-off to reduce the defendant's liability." The Supreme Court after quoting the aforesaid observations made in the Calcutta decision, noted that the same has never been dissented from and that it lays down the law correctly. In Kesharichand Jaisukhlal (supra), a decision which follows the earlier decision in the case of The Hindustan Forest Company (supra), the Supreme Court while considering the transactions in the case before it held as under:--"In the instant case, there were mutual dealings between the parties. The respondent Bank gave loans on overdrafts, and the appellant made deposits. The loans by the respondent created obligations on the appellant to repay them. The respondent was under independent obligations to repay the amount of the cash deposits and to account for the cheques, hundis and drafts deposited for collection. There were thus transactions on each side creating independent obligations on the CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.41/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting other, and both sets of transactions were entered in the same account. The deposits made by the appellant were not merely complete or partial discharges of its obligations to the respondent. There were shifting balances; on many occasions the balance was in favour of the appellant and on many other occasions, the balance was in favour of the respondent. There were reciprocal demands between the parties, and the account was mutual. This mutual account was fairly active up to June 25, 1947. It is not shown that the account ceased to be mutual thereafter. The parties contemplated the possibility of mutual dealings in future. The mutual account continued until December 29, 1950 when the last entry in the account was made. It is conceded on behalf of the appellant that if the account was mutual and continued to be so until December 29, 1950, the suit is not barred by limitation, having regard to Section 45(0) of the Banking Companies Act. The Courts below, therefore, rightly answered issue No. 1 in the negative."
A Division Bench of this Court in the case of Manish Garg v. East India Udyog Ltd., 2001 III AD (Delhi) 493, after examining the aforesaid two decisions of the Supreme Court, held as under:--
"8. Thus for an account properly to be called Mutual Account there must be mutual dealing in the sense that both the parties come under liability under each other. In this case, this ingredient is not satisfied. It was simply a case of debtor and creditor only and not a case of mutual obligations which will in the ordinary way result in enforceable liabilities on each side. Mutual Account is when each has a demand or right of action against the other."
9. On an examination of the well settled law on the subject, it is clear that for an account to be not nominated as mutual, there must be transactions on each side creating independent obligations. The nature of such an account has been aptly demonstrated in the case of Kesharichand Jaisukhlal (supra) where the deposits made by one party were not merely complete or partial discharges of such obligations towards the other party but there were shifting balances. On many occasions the balance was in favour of one party and on many other occasions, the balance was in favour of other party. There were reciprocal demands between the parties and, therefore, the account was held to be mutual. In the present case, as has been pointed out above, the statement of account reveals that the bills had been raised from time to time by the respondent on the petitioner. As against these bills, the petitioner had been making payments to the respondent from time to time. Though there was no one-to-one correspondence between the payments made and the bills raised, the amounts that represented payments have been shown on the debit side of the account and the amounts received from the petitioner were shown on the credit side. The said statement of account demonstrates that the payments made by the petitioner to the respondent were merely in discharge of its obligation to the respondent. CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.42/52
M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting There were no reciprocal demands between the parties. It was only that bills continued to be raised by the respondent from time to time and the petitioner continued to make payments in discharge of its obligation to pay the amounts reflected in the bills. The account that was maintained between the parties cannot, therefore, be construed to be a mutual account. Consequently, Article 1 of the Schedule to the Limitation Act, 1963 would not apply and, therefore, the benefit of that provision cannot be availed of by the respondent (claimant) for saving part of the claim from being barred by limitation. In the Award itself it is noted that the contract between the parties was essentially one for payment of wages in respect of the security personnel provided by the respondent to the petitioner. The specific period of limitation provided in respect of such contracts is indicated in Article 7 of the Limitation Act, 1963 and it is three years from when the wages accrue due. This being the position, the claim would have to be limited to the period 06.06.1997 onwards. Consequently, the amount awarded would have to be limited to Rs 4,44,392/- and not to the amount of Rs 10,61,990/- as awarded by the learned Arbitrator. The learned counsel for the respondent had sought to invoke the provisions of Section 19 of the Limitation Act, 1963 in order to save part of the claim being barred by limitation. But, in my view that provision has no application in the facts of the present case."
55. A perusal of the statement of accounts Ex. PW-1/34 reveals that there are no shifting balances on the basis of reciprocal demands and the same only reflects only bills raised by the plaintiff as credit and the payments made by the defendants from time to time as debit balance. Hence, there in such a situation, the account of the plaintiff, Ex. PW-1/34 cannot be said to be a mutual account. The relevant article of limitation applicable to the present case therefore would be Article 14 of the Limitation Act, 1963 which provides as follows:
Description of Suit Period of limitation Time from which period CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.43/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting begins to run
14. For the price of Three years The date of the delivery goods sold and delivered, of the goods.
where no fixed period of credit is agreed upon
56. The present suit was filed on 27.12.2011, hence the plaintiff can only seek recovery of the price of goods delivered on or after 27.12.2008, being the limitation period of three years as provided for under Article 14 of the Limitation Act, 1963. The issue no.6 is decided in the said terms in favour of the defendant.
57. The plaintiff has placed on record the following invoices and transporter bills:Invoice dated 17.09.2009 for an amount of Rs. 14,812/- as Ex. PW-1/3, for which no transport bill has been placed on record.
*Invoice dated 18.09.2009 for an amount of Rs. 7888/- as Ex. PW-1/4 and transporter bill as Ex. PW-1/29.
*Invoice dated 08.10.2009 for an amount of Rs. 15,642/- as Ex. PW-1/5, for which no transport bill has been placed on record. *Invoice dated 26.11.2009 for an amount of Rs. 84,354/- as Ex. PW-1/6, for which no transport bill has been placed on record. *Invoice dated 28.11.2009 for an amount of Rs. 22,483/- as Ex. CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.44/52
M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting PW-1/7, for which no transport bill has been placed on record. *Invoice dated 30.06.2009 for an amount of Rs. 15,525/- as Ex. PW-1/8, for which no transport bill has been placed on record. *Invoice dated 15.07.2009 for an amount of Rs. 1,20,263/- as Ex. PW-1/9, for which no transport bill has been placed on record. *Invoice dated 17.09.2009 for an amount of Rs. 16,256/- as Ex. PW-1/10 , for which no transport bill has been placed on record. *Invoice dated 25.05.2009 for an amount of Rs. 38,964/- as Ex. PW-1/11 and transporter bill as Ex. PW-1/22.
*Invoice dated 05.06.2009 for an amount of Rs. 2,82,442/- as Ex. PW-1/12 and transporter bill as Ex. PW-1/23.
*Invoice dated 25.06.2009 for an amount of Rs. 87,761/- as Ex. PW-1/13 and transporter bill as Ex. PW-1/24.
*Invoice dated 29.07.2009 for an amount of Rs. 13,650/- as Ex. PW-1/14 and transporter bill as Ex. PW-1/25.
*Invoice dated 08.10.2009 for an amount of Rs. 8784/- as Ex. PW-1/15 and transporter bill as Ex. PW-1/26.
*Invoice dated 08.10.2009 for an amount of Rs. 73,966/- as Ex. PW-1/16 and transporter bill as Ex. PW-1/27.
*Invoice dated 31.08.2009 for an amount of Rs. 20,262/- as Ex. PW-1/17 and transporter bill as Ex. PW-1/28.
CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.45/52
M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting *Invoice dated 03.09.2009 for an amount of Rs. 1,53,878/- as Ex. PW-1/18 and transporter bill as Ex. PW-1/31.
*Invoice dated 07.09.2009 for an amount of Rs. 7,888/- as Ex. PW-1/19 and transporter bill as Ex. PW-1/29.
*Invoice dated 23.09.2009 for an amount of Rs. 39,438/- as Ex. PW-1/20 and transporter bill as Ex. PW-1/30.
*Invoice dated 24.09.2009 for an amount of Rs. 4392/- as Ex. PW-1/21 and transporter bill as Ex. PW-1/30.
58. As mentioned above, the plaintiff has not placed on record any transport bill with respect to the invoices Ex. PW-1/3, Ex. PW-1/5, Ex. PW-1/6 to Ex. PW-1/10. Further, even the transport bills placed on record for the other invoices, do not contain any receiving of the defendant to show that the goods were actually delivered by the plaintiff to the defendant. It was incumbent on the plaintiff to prove the said delivery of the goods, as the defendant had disputed the same in it's written statement.
59. Accordingly, I find that the plaintiff has failed to prove the goods as mentioned under the invoices Ex. PW-1/3 to Ex. PW-1/21 were actually delivered to the defendant. Hence, the CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.46/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting issues no.1 and 2 are decided against the plaintiff. Issue no.4
60. I shall next decide issue no.4, which is being reproduced below for the sake of convenience:
(4) Whether this court has no jurisdiction to try the present suit? OPD
61. The plaintiff has pleaded in para no.22 of the plaint with respect to territorial jurisdiction as follows:
22. That the cause of action in favour of the Plaintiff and against the Defendants has arisen in Delhi as the Defendant had negotiated the initial contractual negotiations in plaintiff's office at Delhi and finally placed the orders received at plaintiff's Delhi office as per business norms and convention. The payments were to be remitted and received at the registered office of the plaintiff at Delhi. The amount against the orders was meant to be delivered at Delhi. The accounts were maintained at Delhi, all payments were to be remitted at Delhi and as such substantive cause of action took place within the jurisdiction of the Hon'ble Court and hence this Hon'ble Court has the territorial jurisdiction to entertain and try the instant suit.
62. Sections 16-20 of the Code of Civil Procedure, 1908 (CPC) provide for the place of suing. The present suit is for payment of goods sold/supplied and would fall under the residuary section 20 CPC, which provides as follows:
14. Section 20 of CPC governs the jurisdiction and reads as under:--CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.47/52
M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting "Section 20. Other suits to be instituted where defendants reside or cause of action arises.
Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction
(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally works for gain, as aforesaid, acquiesce in such institution; or
(c) The cause of action, wholly or in part, arises."
Explanation.--A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.
63. Hence, as per section 20 (c) this Court would have territorial jurisdiction to entertain the present suit, if any part of the cause of action, wholly or in part arose within the territorial jurisdiction of this Court.
64. The Hon'ble High Court of Delhi has held in Satyapal vs CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.48/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Slick Auto Accessories Pvt. Ltd. & Ors., AIR 2014 Del 115 that where, under a contract no place of payment is specified, the debtor must seek his creditor and therefore a suit for recovery is maintainable at the place where the creditor resides or works for gain, because a part of the cause of action arises at that place also with the contemplation of section 20(c) of the Code of Civil Procedure. The relevant portion is extracted below as follows:
"5. The first appellate court has surprisingly and illegally not at all referred to even remotely the detailed analysis and reasoning which has been given by the trial court to hold that the courts at Delhi have the territorial jurisdiction. Since the trial court has written, in my opinion, a very thorough and an excellent judgment, I would like to reproduce the relevant paras of the judgment of the trial court instead of using my words. The relevant paras of the trial court are 19 to 25 and the same read as under:
"ISSUE NO. 1:
"19. The question to be answered is as to whether this court has no territorial jurisdiction to try and entertain the present suit. The onus to prove this issue was upon the defendant.
20. The defendants have contended that the office/factory of the defendants is situated in Bhiwadi, District-Alwar, Rajasthan and the delivery of the goods was also made at Bhawadi, District-Alwar, Rajasthan at the office/factory of the defendants and therefore no part of the cause of action arose within the jurisdiction of this court. DW 1 has deposed on these lines.
21. There is no doubt the material was supplied by the plaintiff to the defendants at Bhiwadi, District-Alwar, Rajasthan. The same is clear from the invoices Ex. PW1/A and Ex. PW1/B. However even if the material was delivered at Bhiwadi, District-Alwar, Rajasthan it is clear that the material was supplied from the office/factory of the plaintiff situated at Jwala Nagar, Shahdara, Delhi-32 which falls within the jurisdiction of this court.
22. It is a well established principle of law that where, under a contract no place of payment is specified, the debtor must seek his creditor and therefore a suit for recovery is maintainable at the place where the creditor resides or works for gain, because a part of the cause of action arises at that place also with the contemplation of section 20(c) of the Code of Civil Procedure. Reference may be made to the judgments titled as "State of Punjab v. A.K. Raha" reported as AIR 1964 CALCUTTA 418 (DB), "Jose Paul v. Jose"CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.49/52
M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting reported as AIR 2002 KERALA 397 (DB), "Rajasthan State Electricity Board v. Dayal Wood Works" reported as AIR 1998 ANDHRA PRADESH 381, "Munnisa Begum v. Noore Mohd." Reported as AIR 1965 ANDHRA PRADESH 231 and "State of U.P. v. Raja Ram" reported as AIR 1966 Allahabad 159.
23. In the judgment titled as "State of Punjab v. A.K. Raha" reported as AIR 1964 CALCUTTA 418 (DB) it was clearly held:
"...........The general rule is that where no place of payment is specified in the contract either expressly or impliedly, the debtor must seek the creditor, see The Eider (1893) P 119 at p. 136, Drexel v. Drexel. (1916) 1 Ch 251 at p. 261, North Bengal, Das Brothers Zemindary Co. Ltd v. Surendera Nath Das, ILR (1957) 2 Cal 8. The obligation to pay the debt involves the obligation to find the creditor and to pay him at the place where he is when the money is payable. The application of the general rule is not excluded because the amount of debt is disputed...."
24. In the judgment titled as Sreenivasa Pulvarising v. Jal Glass & Chemicals Pvt. Ltd. reported as AIR 1985 Cal 74 it was also held:
"......In a contract of the nature now under consideration performance of the contract consists not only of delivery of the goods but also of payment of the price. Therefore, cause of action for a suit on breach of such a contract would arise not only where the goods were to be delivered but alsowhere the price would be payable on such delivery....."
It was further held:".......9. Therefore, the law continues to remain the same and in a suit arising out of a contract, a part of the cause of action arises at the place where in performance of the contract any money to which the suit relates in payable...."
Adverting to the facts of the present case office/factory of the Plaintiff is situated at Jwala nagar, Shahdara, Delhi-32. No place of payment has been specified in the contract/bills/invoices. The defendants are liable to make the payment for the goods supplied to them. No application was made by the defendants to the plaintiffs for fixing a place of payment and Sec. 49 of the Indian Contract Act cannot apply to the facts of the case. Therefore, the payment was to be made at the office of the plaintiff. Further the purchase order was placed at Jwala Nagar, Shahdara, Delhi-32 and the goods were supplied from Jwala nagar, Shahdara, Delhi-32 Therefore a part of th cause of action definitely arises at Jawala Nagar, Shahdara, Delhi-32. Hence the present suit for recovery of the sale price can be filed before this court as the office of the plaintiff is situated within the territorial limits of the jurisdiction of the court.
25. I therefore hold that this court has the territorial jurisdiction to try and entertain the present suit. This issue is therefore decided in favour of the plaintiff and against the defendants." (underlining added)
26. I completely agree with the conclusion of the trial court because it is CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.50/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting settled law that the debtor has to seek the creditor and since no place of payment was agreed upon, payment would have been made to the seller/appellant who is residing and working for gain at New Delhi. Trial court has also rightly relied upon Section 49 of the Indian Contract Act, 1872 that it was upon the respondent no. 1/defendant no. 1 to fix the place of payment and which has not been done, and therefore payment would have been made by the debtor to the creditor at the place of the creditor/plaintiff/appellant. As already stated the first appellate court has not even bothered to refer to the analysis and reasoning of the trial court for holding that the courts at Delhi have jurisdiction. Accordingly, the findings of the first appellate court are set aside and it is held that the courts at Delhi have territorial jurisdiction."
65. In the present case, admittedly there was no place of payment mentioned in the any of the invoices, Ex. PW-1/3 to Ex. PW-1/21 and hence, by application of the principle of debtor must seek creditor, the plaintiff was entitled to file the suit at Delhi. Accordingly, the issue no. 4 is decided against the defendant.
Issue no.5
66. I shall next decide issue no.5, which is reproduced below for the sake of convenience:
(5) Whether the plaintiff has not approached the court with clean hands? OPD
67. The onus of the issue was on the defendants and no CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.51/52 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting specific evidence has been led to prove that the plaintiff has not approached the Court with clean hands. Accordingly, the issue no.5 is decided against the defendant.
Relief.
68. In view of the aforementioned facts and circumstances, the suit of the plaintiff is dismissed with no order as to costs. Decree sheet be drawn up accordingly. File be consigned to the record room after due compliance.
Digitally
signed by
JITEN JITEN MEHRA
Announced in the open court (JITEN
MEHRAMEHRA)
Date:
2025.09.17
16:36:14
on 17.09.2025 DJ-10/Central/THC +0530
Delhi.
CS DJ No.615219/16 M/s. Jaquar Merchantile Vs. M/s. Shimera Project Lighting Page No.52/52