Delhi High Court
India Yamaha Motor Pvt Ltd vs Seema Bhatia on 3 July, 2019
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 3rd July, 2019
+ CS(COMM) 725/2017
INDIA YAMAHA MOTOR PVT LTD ..... Plaintiff
Through: Mr. Sachin Dutta, Sr. Adv. with Mr.
Rahul Malhotra, Ms. Rijuta Mohanty
& Mr. Manmeet Singh Nagpal,
Advs.
Versus
SEEMA BHATIA ..... Defendant
Through: Ms. Zubeda Begum, Ms. Sana Ansari
& Mr. Zubin Sengh, Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
IA No.8753/2013 (of the plaintiff under Section 14 of the Limitation
Act, 1963 for condonation of delay of 2095 days in institution of the
suit).
1. The plaintiff has instituted this suit for recovery of Rs.1,46,59,899/-
from the defendant. The suit was accompanied with the application
aforesaid under Section 14 of the Limitation Act, 1963 for condonation of
delay in filing thereof.
2. The suit came up first before the Joint Registrar on 24th May, 2013,
when summons thereof were ordered to be issued.
3. The pleadings in the suit and the application were completed.
4. The suit came up before this Court on 22nd November, 2018, when
the same was ordered to be listed for arguments, presumably on this
application under Section 14 of the Limitation Act.
CS(COMM) No.725/2017 Page 1 of 21
5. The matter came up before the undersigned on 16 th May, 2019, when
it was straightaway enquired from the counsels, how a plea of Section 14 of
the Limitation Act could be decided without evidence. Section 14 of the
Limitation Act permits exclusion of time, in computing the period of
limitation for filing a suit, during which the plaintiff has been prosecuting
with due diligence another civil proceeding, whether in a Court of first
instance or of appeal or revision, against the defendant, where the
proceeding relates to the same matter in issue and is prosecuted in good
faith in a Court which from defect of jurisdiction or other cause of a like
nature, is unable to entertain it. The findings of due diligence and good
faith are factual findings and ordinarily cannot be returned without
evidence. Reference in this regard may be made to State of Bombay Vs.
Ram Krishna Govind Bhanu AIR 1958 SC 767 and State Farms
Corporation of India Ltd. Vs. Mahendra Singh (2013) 205 DLT 326.
6. However, on the counsel for the defendant contending that even after
excluding the period of limitation for which the other proceeding was going
on, there is a delay in institution of the suit, hearing of arguments on the
said aspect was commenced.
7. The senior counsel for the plaintiff contended, that (i) the suit is for
recovery of money and Article of the Schedule to the Limitation Act
applicable thereto is Article 1 and the closing of the accounting year of the
parties was according to the Gregorian Calendar i.e. from 1st January to 31st
December of the year and according to the plaintiff, the claim in the suit is
within time on the basis of transactions in the account at the close of the
year 2004 i.e. 1st December, 2004 to 31st December, 2004 and the limitation
CS(COMM) No.725/2017 Page 2 of 21
will commence running from 1st January, 2005; it was further contended
that the suit was thus required to be filed by 31st December, 2008 but was
instituted on 21st May, 2013; (ii) the plaintiff / its predecessor in interest,
had earlier referred the disputes with the defendant to arbitration; (iii) the
defendant, on 18th October, 2006 filed CS(OS) No.1996/2006 challenging
the existence of any arbitration agreement and vide order dated 19 th
October, 2006 therein, the arbitration proceedings were stayed; the said suit
was decreed in favour of the defendant on 13th September, 2007; (iv) the
plaintiff filed RFA(OS) No.71/2008 on 22nd January, 2008, delay in filing
of which was condoned; (v) the appeal was dismissed on 19th April, 2012;
and, (vi) if the period from 18th July, 2006, when arbitration was invoked,
to 19th April, 2012, when the appeal was dismissed, is subtracted, the suit
would be within time.
8. Per contra, the counsel for the defendant, on 16th May, 2019
contended that the arguments on behalf of the plaintiff were contrary to the
pleadings of the plaintiff.
9. During the hearing on 16th May, 2019, it was enquired from the
counsels, whether Section 14 of the Limitation Act applies to arbitration
proceedings, inasmuch as the same provides for exclusion of time only in a
proceeding in a Court, and attention of the Counsels was drawn to Lal
Mahal Limited Vs. Abdul Ghaffar 2018 SCC OnLine Del 8597 and upon
the counsels seeking time to consider the matter from this aspect, the
hearing adjourned. The counsels were further heard to some extent on 23 rd
May, 2019 and hearing adjourned to today.
CS(COMM) No.725/2017 Page 3 of 21
10. Today, the senior counsel for the plaintiff, on the aspect of exclusion
under Section 14 of the Limitation Act, of time so spent by the plaintiff in
arbitration and challenge thereto, has referred to:
(i) M.P. Steel Corporation Vs. Commissioner of Central Excise
(2015) 7 SCC 58, holding that Section 14 should be liberally
construed, to advance the cause of justice and that the word
„Court‟ in Section 14 takes its colour from the preceding words
„civil proceedings‟; civil proceedings need not be confined to
suits which are made only in Courts.
(ii) P. Sarathy Vs. State Bank of India (2000) 5 SCC 355, relied
on in M.P. Steel Corporation supra.
(iii) Consolidated Engineering Enterprises Vs. Principal
Secretary, Irrigation Department (2008) 7 SCC 169, holding
that proceedings referred to under Section 43 of the Arbitration
and Conciliation Act, 1996 are original proceedings which can
be equated with a suit in a Court.
(iv) Panchu Gopal Bose Vs. Board of Trustees for Port of
Calcutta (1993) 4 SCC 338, observing that the proceedings
before the arbitrator are like civil proceedings before the
Court, within the meaning of Section 14 of the Limitation Act.
(v) Fatechand Ganeshram Agarwal Vs. Wasudeo Shrawan
Dalal AIR (35) 1948 Nagpur 334, holding that time spent in
arbitration proceedings is to be excluded from the computation
of the period of limitation in a suit instituted subsequently in
CS(COMM) No.725/2017 Page 4 of 21
respect of the same subject matter, provided the other
requirements of Section 14 are satisfied, and disagreeing with
the judgments to the contrary.
(vi) Paragraphs 8.52 and 8.53 of the 76th Report of the Law
Commission of India on the Arbitration Act, 1940.
(vii) State of Goa Vs. Western Builders (2006) 6 SCC 239, holding
that Section 43 of the Arbitration Act clearly says that
Limitation Act, 1963 shall apply to arbitration as it applies to
proceedings in a Court and thus Section 14 of the Limitation
Act has not been excluded qua arbitral proceedings.
11. The senior counsel for the plaintiff has also fairly disclosed that the
view of Justice Chagla, speaking for the High Court of Bombay, in
Purshottamdas Hassaram Sabnani Vs. Impex (India) Ltd. AIR 1954 Bom
309 was to the contrary and which led to the 76th Report of the Law
Commission.
12. The senior counsel for the plaintiff thus contends that Section 14 of
the Limitation Act is applicable in the present case.
13. With respect to „mutual, open and current account‟ within the
meaning of Article 1 of the Schedule to the Limitation Act, the senior
counsel for the plaintiff has today drawn attention to A.M. Shaik Ali Vs.
DS&A Co. Employees Stores 1991 SCC OnLine AP 83 holding that even
in the absence of a plea in the plaint that the suit transactions constituted a
mutual, open and current account, Article 1 is applicable inasmuch as
whether there is a mutuality and reciprocity of demands is a legal inference
CS(COMM) No.725/2017 Page 5 of 21
to be drawn from the facts, by looking into the accounts and they need not
to be pleaded.
14. The senior counsel for the plaintiff has also drawn attention to page
61 of the Part-IIIA file, being the Dealer Ledger Report filed by the plaintiff
of the transactions with the defendant, which show entries on (a) 31st May,
2003 of "Warranty Instant Credit Note"; (b) 1st April, 2003 of "Debit
Note"; and, (c) 31st December, 2003 of "credit of interest on deposit for the
period April, 2003 to December, 2003" .
15. The senior counsel for the plaintiff otherwise agrees that the
question, whether the plaintiff is entitled to the benefit of Section 14 or not,
cannot be decided without evidence.
16. The counsel for the defendant has also not controverted that the
application, if maintainable in this proceeding, is to be decided after
evidence and not at this stage. The counsel for the defendant also fairly
states that she has not found any direct judgment holding Section 14 benefit
to be not available in the facts and circumstances of the present case. It is
however her contention that as per the pleadings of the plaintiff, even after
exclusion of time spent in other proceedings, the suit claim is barred by
time. The counsel for the defendant thus contends that there is no need for
trial on merits on the aspect of Section 14.
17. The counsel for the defendant has in this regard, drawn attention to
the plaint, where the plaintiff has inter alia pleaded that (i) the plaintiff is
an Indian subsidiary of Yamaha Corporation, Japan; (ii) the defendant
carrying on business in the name and style of Doon Motorcycles, was the
dealer of Motorcycles and Scooters of Escorts Ltd.; (iii) the business of
CS(COMM) No.725/2017 Page 6 of 21
motorcycles and scooters of Escorts Ltd. was purchased by the plaintiff,
and the defendant, under a Dealer‟s Sales Agreement dated 1st November,
1996, became a dealer of the plaintiff; (iv) the plaintiff used to supply its
products to the defendant for further sale to customers and the invoices for
the same were raised on the defendant from time to time; (v) the defendant
failed to pay the due amount against such invoices on time, despite repeated
reminders; (vi) the defendant also did not furnish the requisite „C‟ forms;
(vii) as on 25th November, 2000, a sum of Rs.2,04,00,000/- was due from
the defendant to the plaintiff; (viii) a Memorandum of Understanding
(MoU) dated 8th December, 2000 was entered into between the plaintiff and
the defendant qua further working and outstanding; (ix) the defendant did
not take any steps as agreed by her, for clearance of the outstanding dues
and violated the terms and spirit of the Dealer‟s Sales Agreement as well as
the subsequent MoU; (x) the plaintiff invoked the arbitration clause in the
Dealer‟s Sales Agreement dated 1st November, 1996 and referred the
dispute with the defendant to the Indian Council of Arbitration; and, (xi)
however the defendant filed CS(OS) No.1996/2006 for declaration that
there was no subsisting arbitration agreement between the parties and vide
order dated 13th September, 2007 in the said suit, the arbitration
proceedings were stayed and the said suit and the appeal filed thereagainst
were decided in favour of the defendant, bringing a closure to the
arbitration proceedings.
18. I may mention that the plaintiff, in the plaint has also given
particulars of how it is the successor of the entities to which the payments
CS(COMM) No.725/2017 Page 7 of 21
are due but the said facts are not relevant for the present purpose and have
thus not been incorporated in the aforesaid narration.
19. The counsel for the defendant, has particularly drawn attention to
paras no.31 to 33 of the plaint, which are as under:
"(31) It is respectfully submitted that the cause of action in favour of YMIL and
against the Defendant arose when the Defendant entered into the Dealer
Agreement with YMEL. The cause of action in favour of predecessor of
Plaintiff and against the Defendant arose on 8.12.2000 when YMEL entered into
the Memorandum of Understanding. The cause of action further arose, when the
Defendant failed to honor the terms of the MOU. The cause of action arose in
November, 2003, when YMIL was constrained to stop supply of its products to
the Defendant. The cause of action also arose when the Defendant got issued a
legal notice dated 2nd August, 2004 against YMIL and when YMIL Plaintiff
replied to the said notice on 28th September, 2004. The cause of action further
arose on 13.09.2007 when the Hon‟ble High Court decreed CS(OS)
No.1996/2006 in favour of the Defendant and granted liberty to YMIL to take
recourse to proper civil remedy for recovery of dues from the Defendant. The
cause of action further arose on 19.04.2012 when the appeal being RFA (OS)
No.71/2008 filed by YMIL challenging the order dated 13.09.2007 was
dismissed by the Hon‟ble High Court. The cause of action further arose on
15.03.2008 when entire business of YMIL was purchased by Plaintiff herein as
going concern. The cause of action is continuous and still subsists in favour of
the Plaintiff.
(32) It is submitted that on account of non-payment of legal debts as per the
open, running and mutual statement of account maintained by predecessors of
Plaintiff and thereafter being continued by Plaintiff in the regular course of
business in view of purchase of entire business of YMIL by Plaintiff herein as
going concern vide Business Transfer Agreement dated 15.03.2008, an amount
of Rs.1,46,59,899/- (Rupees One Crore Forty Six Lakhs Fifty Nine Thousand
Eight Hundred Ninety Nine only) is due and payable by the Defendant to
Plaintiff herein.
CS(COMM) No.725/2017 Page 8 of 21
(33) As stated hereinabove, since earlier the predecessors of Plaintiff were
pursuing its claim for recovery against Defendant in arbitration, the Plaintiff has
filed accompanying application under Section 14 of the Limitation Act for
exclusion of time consumed in said proceedings, the contents of which are not
repeated herein again for the sake of brevity and to avoid prolixity. It is
therefore submitted that suit filed by Plaintiff is well within the period of
limitation."
(Emphasis added)
20. The counsel for the defendant has contended that as per the plaint,
the cause of action for the present suit accrued to the plaintiff, in
November, 2003, when the plaintiff admits to having stopped supply of its
products to the defendant. It is argued that even if the period during which
the arbitration and challenge thereto was being undertaken is excluded, the
suit is still barred by time.
21. The senior counsel for the plaintiff, though agrees that if the
computation of limitation is done on the basis of November, 2003, the suit
claim is barred by time but has drawn attention to the rejoinder to the reply
of the defendant to the application of the plaintiff under Section 14 of the
Limitation Act.
22. I may mention that the plaintiff, in the application under Section 14
of Limitation Act, has pleaded as under:
"(4) That despite MOU dated 08.12.2000 the Defendant failed to discharge its
admitted liabilities towards the Plaintiff. That when the Plaintiff started
pressurizing the Defendant for payment of the outstanding dues, the Defendant,
in order to avoid payment of the outstanding dues, sent a false, frivolous and
concocted legal notice dated 2nd August, 2004. However, it is pertinent to note
that in legal notice dated 02.08.2004 the Defendant admitted execution of MOU
dated 08.12.2000.
CS(COMM) No.725/2017 Page 9 of 21
(5) It is submitted that the cause of action for filing of suit against the
Defendant for recovery of outstanding amount arose on 02.08.2004 and expired
on 01.08.2007. It is submitted that the Plaintiff invoked the arbitration clause
and filed its statement of claim before the Indian Council of Arbitration on
18.07.2006 i.e. well within limitation period.
(12) As stated above, since the last date of limitation for filing of the present
suit was 01.08.2007, there occurred a delay of 2093 days in filing the present
suit. However, as stated above, since the period during which the Plaintiff was
pursuing its remedy before different forums from the period 18.07.2006 to
01.05.2012 i.e. 2113 days is excluded, the filing of present suit by Plaintiff on
27.04.2013 is within time in terms of statutory provision laid down in Section 14
of the Limitation Act, 1963."
(Emphasis added)
23. However in rejoinder, the plaintiff has pleaded as under:
"(2) That the cause of action for filing the instant suit against the Defendant
for recovery of outstanding amount arose on 01.01.2005 as the Plaintiff was
maintaining mutual, open and current account and the last admitted entry in the
open running, and mutual account of Defendant is one payment received from
Defendant on 19.03.2004. Consequently, the period of limitation started from
close of the year 2004 i.e., 01.01.2005 and was expiring on 31.12.2008. It is
pertinent to mention here that the Plaintiff invoked arbitration clause under DSA
dated 01.11.1996 and filed its statement of claim before the Indian Council of
Arbitration on 18.07.2006 i.e. after 564 days from original start date of
limitation i.e., 01.01.2005, well within the limitation period."
24. The senior counsel for the plaintiff contends that even though the
plaintiff has not pleaded, what is pleaded in the rejoinder aforesaid, in the
plaint or in the application under Section 14 of the Act, but it is a question
of law and once it has been held in A.M. Shaik Ali supra that there need not
be a plea of mutual, open and current account, the pleadings in the plaint
CS(COMM) No.725/2017 Page 10 of 21
and in the application are irrelevant. It is further argued that mutual, open
and current account has been pleaded in para no.32 of the plaint.
25. The counsel for the defendant has drawn attention to the judgment of
the Division Bench of this Court in Bharath Skins Corporation Vs. Taneja
Skins Company Pvt. Ltd. (2012) 186 DLT 290 and Era Constructions
(India) Ltd. Vs. D.K. Sharma 2007 SCC OnLine Del 1317 on the aspect of
what constitutes a mutual, open and current account within the meaning of
Article 1 of the Schedule to the Limitation Act. It is argued, that 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, with those on the other being merely complete
or partial discharge of such obligations. It is argued that where the
relationship is that of a seller and buyer of goods, where the seller has
undertaken to make delivery of goods and the buyer has agreed to pay for
them and has made part payments from time to time, there can be no
question that insofar as the payments have been made after the goods have
been delivered, they have been made towards the price due and such
payments were in discharge of obligations created in the buyer and do not
create any obligations on the sellers in favour of the buyer. It is contended
that there was no shifting balances in the account between the plaintiff / its
predecessor and the defendant and it was not as if on any occasion there
was balance in favour of the defendant. It is however clarified that the
defendant does not admit the right pleaded by the plaintiff to recover the
dues of others, with whom the defendant earlier had relationship. It is
argued that in the present case, bills were raised from time to time on the
CS(COMM) No.725/2017 Page 11 of 21
defendant and against these bills the defendant has been making payments
from time to time; though the payments did not correspond to the bills
raised, the amounts that represented invoices have been shown on the debit
side of the account and the amount received from the defendant have been
shown on the credit side and such account has been held to be not a mutual,
open and current account.
26. The counsel for the defendant has further contended that single entry
alleged by the plaintiff of 19th March, 2004 cannot constitute open, mutual
and current account. It is contended that the plaintiff having pleaded the
MOU dated 8th December, 2000 and having pleaded that in November,
2003 supplies to the defendant were stopped, there could be no reciprocal
demands in terms of the MOU of after November, 2003.
27. The counsel for the defendant has also contended that it has been
held in M.P. Steel Corporation supra that the time available will only be
the balance of the days left at the time the proceedings were initiated in a
wrong forum. It is contended that even after the time taken from 18 th July,
2006 when the arbitration was initiated and till 19 th April, 2012 when the
Division Bench of this Court upheld the judgment of non-existence of the
arbitration agreement, the suit is barred by time. It is stated that as per the
plea in the plaint, the cause of action arose on 1st December, 2003; the
period of limitation available to the plaintiff was of three years and the suit
could have been instituted till 30th November, 2006. Counting from 1st
December, 2003 till 18th July, 2006 when the arbitration proceedings were
initiated, 959 days had been exhausted and balance days left to the plaintiff
were only 137; on the contrary, the 2102 days between 18th July, 2006 and
CS(COMM) No.725/2017 Page 12 of 21
19th April, 2012, are far beyond the period of limitation and the suit is
barred by time.
28. The counsel for the defendant has also referred to S.R. Dutta Vs.
Chuni Lal Bhatia 1980 SCC OnLine Del 335, to contend that contents of
the replication do not constitute a pleading. It is argued, that the cause of
action pleaded in the plaint has to be considered and pleading in the
rejoinder to be ignored, as the defendant had no opportunity to respond
thereto.
29. I have considered the rival contentions.
30. Though I have in Lal Mahal Limited supra, relying on
Purshottamdas Hassaram Sabnani supra approved by a three Judge bench
of the Supreme Court in The Commissioner of Sales Tax, U.P. Lucknow
Vs. Parson Tools and Plants, Kanpur (1975) 4 SCC 22 and also referring
to Consolidated Engineering Enterprises supra and reasoning, that Section
43(4) of the Arbitration Act having expressly provided for computing the
time prescribed by the Limitation Act for commencement of proceedings
(including arbitration) with respect to disputes submitted to arbitration and
arbitral award wherein is set aside by the Court, held that the provisions of
Section 14 of the Limitation Act will have no application to the said
situation and the computation of limitation will be under Section 43(4) of
the Arbitration Act only, but refrain from deciding the question of exclusion
of time spent in arbitration under Section 14 of the Limitation Act in this
suit as I am of the opinion that the suit of the plaintiff is liable to be
dismissed otherwise. The said question is left to be further decided in
another appropriate case.
CS(COMM) No.725/2017 Page 13 of 21
31. I am also of the opinion that the question, whether the account
maintained by the plaintiff / its predecessor, of transactions with the
defendant, was a mutual, open and current account within the meaning of
Article 1 of the Schedule to the Limitation Act or not is also beyond the
scope of the present stage of the proceedings. Suffice, it is to observe that
the judgments cited by the counsel for the defendant do appear to suggest
that considering the relationship pleaded by the plaintiff, there was no
occasion for a mutual, open and current account.
32. I however otherwise find against the plaintiff and dismiss the suit.
My reasons therefor are as under:
A. Order VII Rule 1 of the Code of Civil Procedure, 1908 (CPC)
mandates the plaint to contain the particulars of "(e) the facts
constituting the cause of action and when it arose;" and
Appendix „A‟ of the CPC prescribing the form of pleadings,
also in Form No.1 thereof requires, "facts showing when the
cause of action arose" to be pleaded. A plaint, not complying
with the said formalities, cannot be entertained and is liable to
be rejected under Order VII Rule 11(a) of the CPC.
B. The plaintiff, in compliance of the aforesaid provisions, in the
plaint, in paragraph 31 pleaded that (i) the cause of action first
accrued to the plaintiff against the defendant when the Dealer‟s
Sales Agreement was entered into and which as per the
averments in the plaint was on 1st November, 1996; (ii) the
cause of action arose against the defendant on 8th December,
2000 when the MOU was executed; (iii) the cause of action
CS(COMM) No.725/2017 Page 14 of 21
further arose when the defendant failed to honour the terms of
the MOU; (iv) the cause of action arose in November, 2003,
when supplies to the defendant were stopped; (v) the cause of
action also arose when legal notices dated 2nd August, 2004
and 28th September, 2004 were exchanged; (vi) the cause of
action further arose on 13th September, 2007 when CS(OS)
No.1996/2006 filed by the defendant was decreed in favour of
the defendant, and on 19th April, 2012 when RFA(OS)
No.71/2008 preferred by the plaintiff thereagainst was
dismissed; and, (vii) the cause of action further arose on 15 th
March, 2008 when the plaintiff purchased the business of the
entity with which the defendant had dealings.
C. Needless to state that for the purpose of computation of
limitation for a suit, the dates pleaded by the plaintiff, of when
the cause of action accrued, only till November, 2003 are
relevant and the dates given thereafter are not relevant.
Issuance of a legal notice and reply thereto does not constitute
a cause of action in a suit for recovery of money. Reference if
any required can be made to Santanu Sur Vs. Gail India Ltd.
2014 SCC OnLine Del 4354 (DB), XS Infosol Pvt. Ltd. Vs.
GLS Technologies Pvt. Ltd. 2018 SCC OnLine Del 6601,
Gautam Motors Pvt. Ltd. Vs. Autocop India Pvt. Ltd. 2012
SCC OnLine Del 3629, Colgate-Palmolive (India) Ltd. Vs.
Rajendra 2011 SCC OnLine Bom 1481, Sunil Goel Vs.
Rajesh Gupta (2018) 246 DLT 228, A.P. Sreedharan Vs. N.
CS(COMM) No.725/2017 Page 15 of 21
Bhuvaneswari 2017 SCC OnLine Mad 5902, Shakti Bhog
Food Industries Ltd. Vs. The Central Bank of India 2017
SCC OnLine Del 6395, C. Nallamuthu Vs. D. Durga Devi
2016 SCC OnLine Mad 21942 and Shiv Kumar Gupta Vs.
Kumkum Gupta 2007 SCC OnLine Del 316. Similarly, the
dates when cause of action accrued, pleaded of thereafter, are
relevant only for the purpose of application of Section 14 of
the Limitation Act and not for the purpose of computing the
period of limitation for the suit.
D. Paragraphs 32 and 33 of the plaint referred to by the senior
counsel for the plaintiff are not pertaining to when cause of
action accrued. The plaintiff therein has merely pleaded that
as per the open, running and mutual statement of account
maintained by the predecessors of the plaintiff and being
continued by the plaintiff in the regular course of business, an
amount of Rs.1,46,59,899/- is due and payable by the
defendant.
E. It is not the pleaded case of the plaintiff that the suit is for the
balance due on a mutual, open and current account where there
have been reciprocal demands between the parties and that the
year of the account was the Gregorian calendar or that the last
item admitted or approved is entered in the said account in the
year 2004 or that the cause of action accrued on 1 st January,
2005, as is now argued by the senior counsel for the plaintiff,
CS(COMM) No.725/2017 Page 16 of 21
obviously with his own legal ingenuity but without any
foundation therefor in the pleadings.
F. The senior counsel for the plaintiff, fully aware thereof, has in
this context drawn attention to the rejoinder filed by the
plaintiff to the reply of the defendant to the application of the
plaintiff under Section 14 of the Limitation Act. However, the
averments in the said rejoinder cannot take the place of
pleadings required to be made in the plaint as per the mandate
of law and in which pleadings the plaintiff has clearly not
pleaded so. The counsel for the defendant, in this context has
rightly relied upon S.R. Dutta supra. Thereafter also it has
been held in Anant Construction (P) Ltd. Vs. Ram Niwas
1994 SCC OnLine Del 615, Hatim Attar Vs. Sylvie Goudchau
1968 SCC OnLine AP 68 (DB), Thakkar Babulal
Dayashanker Vs. Mehta Natwarlal Kaluram 1976 SCC
OnLIne Guj 35, S. Venkatram Reddy Vs. S. Vinod Reddy
1986 SCC OnLine AP 196, Ajanta Enterprises Vs. Bimla
Charan Chatterjee 1987 SCC OnLine Raj 516, State of
Rajasthan Vs. Mohammed Ikbal 1998 SCC OnLine Raj 46
and Gurjant Singh Vs. Krishan Chander 2000 SCC OnLine
Raj 237 that pleadings in the replication in addition to what is
pleaded in the plaint or in contradiction thereto cannot be
considered. I may mention that the defendant in her written
statement, in response to paragraph 31 supra of the plaint, has
denied that cause of action accrued to the plaintiff on the dates
CS(COMM) No.725/2017 Page 17 of 21
alleged and expressly pleaded that legal notice could not
extend limitation. The defendant, in response to paragraph 32
of the plaint denied that there was any open, running and
mutual statement of account in the regular course of business
and pleaded that the plaintiff on the one hand was claiming
amount to be due as the balance as per the MOU and on the
other hand claiming the amount due of the unpaid invoices.
The plaintiff, though has filed replication to the said written
statement, still did not plead what is being argued today and
merely reiterated the contents of the plaint.
G. It is only at the stage of filing rejoinder to the application
under Section 14 of the Limitation Act that the plaintiff, then
realizing that computing from November, 2003 and even after
excluding the time from 18th July, 2006 to 19th April, 2012, the
suit was barred by time, plead that the cause of action accrued
on 1st January, 2005.
H. The question which arises is, whether the plaintiff is entitled to
do so. In my view, no. Once the law i.e. the CPC requires the
plaintiff to, in the plaint, plead the cause of action and when it
accrued, the plaintiff is bound by the pleas so made in the
plaint and cannot in pleadings not even replication to the
written statement, but in rejoinder to an application set up a
contradictory stand and seek trial on the basis thereof. If the
same were to be permitted and the plaintiff were to be relieved
from its pleaded case, it would throw to the winds the very
CS(COMM) No.725/2017 Page 18 of 21
necessity of pleadings and the entire procedure of a suit would
go haywire, with parties / counsels, at any stage of the suit
arguing anything, dehors the pleaded or the proven case.
I. To that extent, I am unable to agree with A.M. Shaik Ali supra.
It has rightly been held in Bhagwati Prasad Vs. Chandramaul
AIR 1966 SC 735, Ram Sarup Gupta Vs. Bishun Narain
Inter College (1987) 2 SCC 555, D.M. Deshpande Vs.
Janardhan Kashinath Kadam (1998) 8 SCC 315, Bachhaj
Nahar Vs. Nilima Mandal (2008) 17 SCC 491 and
Transformative Learning Solutions Pvt. Ltd. Vs. Pawajot
Kaur Baweja 2019 SCC OnLine Del 9229 that in a suit no
evidence beyond pleadings can be led or read and no decision
on the basis thereof rendered.
J. As per the pleaded case of the plaintiff, the cause of action
accrued in November, 2003 and it is admitted by the senior
counsel for the plaintiff also that if limitation were to be
computed therefrom, even excluding the period, exclusion
whereof the plaintiff claims, the suit is barred by time.
K. I may also notice that the plaintiff, in its statement of claim
filed in arbitration and a copy whereof has been filed by the
plaintiff along with its documents, is found to have pleaded in
paragraph 39 thereof as under:
"39. The cause of action in favour of the Claimant and against the
Respondent arose on 1.11.1996, when the Claimant and the
Respondent entered into the Dealer Agreement. The cause of
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action in favour of the Claimant and against the Respondent arose
on 8.12.2000 when the Claimant Company and the Respondent
entered into the Memorandum of Understanding. The cause of
action further arose, when the Respondent failed to honor the terms
of the MOU. The cause of action arose in November, 2003, when
the Claimant was constrained to stop supply of its products to the
Respondent. The cause of action also arose when the Respondent
got issued a legal notice dated 2nd August, 2004 against the
Claimant and when the Claimant replied to the said notice on 28th
September, 2004."
The plaintiff in the statement of claim, though has referred to
"statement of account maintained by the Claimant in the
regular course of business" (in paragraph 33) and "running
account" (in paragraph 35), is not found to have pleaded
mutual, open and current account, as is now being argued for
the first time. Section 14 of the Limitation Act permits
exclusion of time thereunder, only when the proceeding in a
Court which from defect of jurisdiction or other cause of like
nature, is unable to entertain it and relates to the same matter in
issue and is prosecuted in good faith. The plaintiff invoked
arbitration, time spent wherein is sought to be excluded, by
pleading cause of action to have accrued in November, 2003
and for this reason also cannot be permitted to, in this
proceeding contend the cause to action to have accrued on 1 st
January, 2005.
L. The mala fides of the plaintiff are also evident from the
averments of the plaintiff, in the plaint, replication, application
CS(COMM) No.725/2017 Page 20 of 21
under Section 14 of the Limitation Act and in the rejoinder to
the reply thereto, pleading different dates on which cause of
action accrued. The same demonstrate lack of good faith.
33. Resultantly, the suit is dismissed. The defendant is found entitled to
costs of the suit; professional fee assessed at Rs.3 lacs.
Decree sheet be drawn up.
RAJIV SAHAI ENDLAW, J.
JULY 03, 2019 „gsr‟..
(corrected & released on 8th August, 2019) CS(COMM) No.725/2017 Page 21 of 21