Delhi District Court
Canadian Specialty Vinyls vs Rational Business Corporation on 17 April, 2025
DLCT010161962022
IN THE COURT OF SH. M. K. NAGPAL,
DISTRICT JUDGE (COMMERCIAL COURT)-13,
CENTRAL DISTRICT, TIS HAZARI COURTS,
DELHI
CS (COMM) NO. 2556-2022
CNR No. DLCT01-016196-2022
IN THE MATTER OF:-
CANADIAN SPECIALTY VINYLS
Through its Authorised Representative,
Mr. Shikhar Mahajan,
Registered Office At:
49, Rani Jhansi Road, New Delhi-110055.
...PLAINTIFF
VERSUS
RATIONAL BUSINESS CORPORATION (P) Ltd.
Through its Director,
N-10, Satyawati Nagar,
Ashok Vihar, Phase-III, Delhi-110052.
Also at:
Bahalgarh Chowk, Delhi Sonepat Road,
Sonepat, Haryana-131001,
Also at:
Village Satiwala Post Office, Bata Mandi Tehsil,
Paonta Sahib District, Sirmour,
Himachal Pradesh-173025.
E-mail ID: [email protected]
...DEFENDANT
CS (Comm.) No. 2556/2022 1/19
DLCT010161962022
ORDER ON PRELIMINARY ISSUE No. (2)
1.By this order, I shall decide the issue no. 2 framed by the court in this suit on 31.07.2023 on the point of limitation, which has been directed by the court to be treated as a preliminary issue. Simultaneously, the application dated 30.11.2024 filed by defendant before this court on 02.12.2024 under the provisions of Order 7 Rule 11 read with Section 151 CPC seeking dismissal of the suit on above said ground is also being taken up for disposal by the court.
2. This is the commercial civil suit filed by plaintiff against the defendant seeking recovery of a sum of Rs. 29,73,266.99 along pendente lite and future interest.
CASE OF PLAINTIFF
3. Facts of this case, briefly stated and as far as the same are necessary for disposal of the present issue and application, are that the plaintiff claims itself to be a registered partnership firm and defendant to be a private limited company. It has been averred that the plaintiff firm is one of the prominent manufactures of various kinds of PVC films and sheets and it was approached by defendant's representative in or around May, 2012 at its above registered office for purchase of the said goods/material. It is also averred that after due negotiations, the defendant started placing orders upon plaintiff and the plaintiff CS (Comm.) No. 2556/2022 2/19 DLCT010161962022 had duly supplied the goods/material as ordered by defendant against the invoice(s) which was/were raised by it.
4. It is the case of plaintiff firm that the defendant had violated the essential and material terms of the agreement entered into between parties by not remitting and withholding its legitimate dues against the goods supplied by it to defendant. It is averred that as per the mutual, open and current account being maintained by plaintiff firm in respect to the said transactions made with defendant, a sum of Rs. 29,73,266.99 is still due and outstanding from defendant as on 30.11.2019 and it consists of an amount of Rs. 15,62,507/- as the principal and outstanding balance of said invoice(s) issued by the plaintiff, an amount of Rs. 9,89,387.99 being interest that had accrued on the above said amount for the period from 12.04.02017 to 30.11.2019 and @ 24% pa in terms of said agreement and and also another amount of Rs. 4,21,872/-, which was debited in the account of defendant by plaintiff due to failure of defendant to submit C-Forms in respect to the said transactions.
5. It has been specifically averred by plaintiff that the first entry of its above ledger account is dated 05.09.2012 and the last entry is dated 30.11.2019 and defendant only used to make lump- sum/part payments against the said invoice(s) to plaintiff and not as per the amounts of the invoice(s). It is also found specifically CS (Comm.) No. 2556/2022 3/19 DLCT010161962022 averred by plaintiff that the last transaction between parties took place on 11.04.2017 by way of cash deposit at a cash deposit machine. It is being claimed that since the defendant failed to pay the above said outstanding amount despite repeated requests and demands of plaintiff, the plaintiff has no option but to file the present suit. The plaintiff also has claimed to have complied with the pre-litigation mediation proceedings under the provisions of Section 12A of the Commercial Courts Act, 2015.
SERVICE OF SUMMONS AND FILING OF WRITTEN STATEMENT BY DEFENDANT
6. Summons of the suit were duly served upon defendant company and it had also filed its written statement in the case, along with an application under Order 8 Rule 1 read with Section 151 CPC since the written statement was filed after a delay of around 71 days. The written statement of defendant was taken on record vide order dated 31.07.2023 of the court and on the same date, the replication also came to be filed by plaintiff firm as advance copy of the written statement was supplied.
CASE OF DEFENDANT
7. The defendant company in its written statement has specifically denied the claims of plaintiff firm regarding there being any business dealings between them or the supply of any goods or material by plaintiff to the defendant, as has been CS (Comm.) No. 2556/2022 4/19 DLCT010161962022 claimed in the suit by plaintiff. It is the case of defendant that the present suit filed by plaintiff is an abuse of process of law having been without any cause of action, based on concocted facts, wrong submissions and fabricated documents and further the same is also hopelessly barred by the period of limitation and hence, liable to be dismissed under the provisions of Order 7 Rule 11 CPC.
8. The defendant company in its written statement is also found to pleaded specifically that the case of plaintiff is based only on one invoice dated 05.09.2012 valuing for Rs. 17,04,972/- and a limitation period of 3 years was available to plaintiff for claiming the amount of said invoice and it expired in September, 2015 and hence, this suit is clearly barred by law of limitation. The defendant has also denied the averments of plaintiff regarding the account between them being mutual, open and a current account, while submitting that the same could not be so in terms of provisions contained in Article 1 of the Limitation Act as it pertained to a single transaction only. It is also the submission of defendant that it never paid the cash amount of Rs. 1,00,000/- to plaintiff and the alleged credit entry of Rs. 1,00,000/- dated 11.04.2017 reflected in statement of account filed by plaintiff also cannot extend the period of limitation and the plaintiff has made self-serving and false entries in the said statement. It is also the submission of defendant that by way of CS (Comm.) No. 2556/2022 5/19 DLCT010161962022 clever drafting and taking undue advantage of the passage of time, the plaintiff has tried to burden the defendant with absolutely false, frivolous, illegitimate and non-existent liability which on the face of it is barred by limitation. The defendant has, inter alia, also challenged the claim of plaintiff firm regarding it being a registered firm and further, the territorial jurisdiction of this court.
REPLICATION OF PLAINTIFF
9. The replication filed by plaintiff firm to the written statement of defendant contains its reiteration of the contents and facts mentioned in plaint and also a denial of the contrary claims and submissions made by defendant in his written statement.
ISSUES
10. On the basis of above pleadings of parties, one of the Ld. predecessors of this court had framed the following issues vide his order dated 31.07.2023 for disposal of the claim of plaintiff raised through this suit:-
1. Whether this court does not have territorial jurisdiction to decide this case? OPD
2. Whether the suit is barred by the period of limitation? OPD
3. Whether plaintiff is entitled to recover suit amount from defendant? OPP CS (Comm.) No. 2556/2022 6/19 DLCT010161962022
4. Whether plaintiff is entitled for pendente-lite and future interest and, if so, at what rate and for which period?OPP
5. Relief EVIDENCE LED BY PLAINTIFF AND FILING OF APPLICATION UNDER ORDER 7 RULE 11 CPC BY DEFENDANT
11. It is necessary to mention here that though the evidence of plaintiff firm was supposed to be recorded and concluded as expeditiously as possible, keeping in view the nature of this suit and the provisions contained in Commercial Courts Act, 2015, but somehow and due to different reasons, like non-availability or change of AR of plaintiff and the time taken in procuring or summoning the record pertaining to registration of plaintiff firm etc., the same could not be concluded till 02.12.2024, when an application under Order 7 Rule 11 read with Section 151 CPC came to be filed on behalf of defendant company seeking rejection of the plaint or dismissal of this suit on the ground of limitation. This application has straightaway been argued by Ld. Counsels for parties as no formal reply thereto has been filed on behalf of plaintiff. Since an issue on the aspect of limitation was already framed by this court earlier, this court has then directed for treating the above issue no. 2 as preliminary issue and has heard extensive arguments advanced by Sh. Abu John Mathew, Ld. Counsel representing the plaintiff and Sh. Aditya Sharma, Ld. Counsel representing the defendant on the above aspect of limitation.
CS (Comm.) No. 2556/2022 7/19DLCT010161962022 APPRECIATION OF ARGUMENTS AND FINDINGS ON THE ABOVE ISSUE NO. (2)
12. Article 1 of the Schedule of Limitation Act, 1963 prescribes a limitation period of 3 years for filing of a suit for the balance amount due on a mutual, open and current account, where there have been reciprocal demands between the parties and this period is to be computed or counted by close of the year in which the last item admitted or proved has been entered in the statement of account.
13. However, as gathered from the above pleadings of parties and the documents filed on record, this suit filed by plaintiff firm and seeking recovery of the above outstanding amount of Rs. 29,73,266.99 from defendant is based on a single invoice dated 05.09.2012 valuing for Rs. 17,04,972/- and due to this reason and further since transactions between the parties were admittedly one sided transactions of sale of goods by plaintiff to defendant and the same were not two sided or mutual transactions creating reciprocal demands or obligations between the parties, the ledger account being maintained by plaintiff in respect to the above transaction cannot be said to be a mutual, open and current account in terms of Article 1 of the Schedule of Limitation Act. Reference in this regard can also be made to the judgment dated 21.03.2012 of the Hon'ble High Court in case bearing RFA No. 286/2004 titled as M/S Videocon International Ltd. Vs. CS (Comm.) No. 2556/2022 8/19 DLCT010161962022 M/S City Palace Electronics Pvt. Ltd. and the relevant observations made by their Lordships in said case are as under:-
"8. A reading of the ratio of the aforesaid judgments of the Supreme Court in the case of Hindustan Forest Company (supra) and Shillong Banking Corporation (supra) shows that before an account can be said to be an open, mutual and current account, it is necessary that either there are shifting balances or there are reciprocal demands. In case, two parties are engaged in a single legal relationship, then there is required shifting balances i.e. sometimes one person has to take moneys from the other and on other occasions, the first person, in fact, has to pay moneys to the second person i.e. sometimes there is credit balance in favour of one person and sometimes there is credit balance in favour of another person. This is how the shifting balances have been defined. Reciprocal demands have been defined (and when there is no requirement of shifting balances) to mean when two persons do not have a single relationship but two separate relationships and consequently pursuant to those separate relationships independent obligations or reciprocal demands arise................"
14. Article 14 of the Schedule of Limitation Act prescribes a limitation period of 3 years for recovery of the price of goods sold and delivered, where no fixed period of credit has been agreed upon between the parties and it starts from the date of delivery of goods. Article 15 of the said Schedule deals with cases where the goods have been sold and delivered by the seller to a buyer on credit basis and a fixed period of credit has been agreed between the parties. In such a case, the limitation period commences from the date when the above credit period expires.
15. As far as the present case is concerned, it is observed that during the course of evidence led by plaintiff firm so far in this CS (Comm.) No. 2556/2022 9/19 DLCT010161962022 trial, it has brought on record only a photocopy of the above invoice dated 05.09.2012 issued by it in name of defendant and the same has been brought as Mark B and since the original invoice was not produced during examination of PW-1 Sh. Akshay Sharma, the said document had to be marked only though it was found exhibited in his evidence affidavit as Ex.PW- 1/3. Even if the above document is considered and read in evidence as it is, a perusal of the contents thereof or of the terms printed thereon shows that no such fixed period of credit for payment of the amount of said invoice was agreed between parties and it has been mentioned thereon that payment was due from buyer from the date of said invoice or bill, otherwise interest @ 2% per month was to be charged.
16. Hence, it is clear that in view of above term printed on the said invoice/bill itself, the period of limitation which was available to plaintiff of this case was to commence from the date of delivery of the goods mentioned in said invoice itself. Since it is not the case of plaintiff that goods of said invoice to defendant were supplied on any other date, the same should be taken to have been supplied on the date of said invoice itself and therefore, a limitation period of 3 years commencing from 06.09.2012 and ending on 05.09.2015 was available to plaintiff for claiming the amount of said invoice.
CS (Comm.) No. 2556/2022 10/19DLCT010161962022
17. However, the present suit is found to have been filed by plaintiff firm on 25.11.2022 i.e. more than 7 years after the date of expiry of the said limitation period.
18. The ledger account statement of plaintiff brought in evidence as Ex.PW-1/4 pertains to the period between 01.04.2012 to 30.11.2019 and it contains total five entries in the form of debit or credit. The first of these entries is of date 05.09.2012 and it is a debit entry for the invoice amount of Rs. 17,04,972/-, the second and third entries are of date 31.03.2015 and 11.04.2017 and these are credit entries for the amounts of Rs. 42,465/- and Rs. 1,00,000/- respectively and besides these entries, it also reflects two other debit entries for the amounts of Rs. 9,89,387.99 and Rs. 4,21,372/-, both of date 30.11.2019, which are found to have been made towards interest that had accrued on the outstanding principal amount being reflected in the said ledger.
19. It is the contention of Ld. Counsel for plaintiff that if all the above entries of ledger account statement Ex.PW-1/4 are taken into consideration, the present suit filed by plaintiff on 25.11.2022 comes within the period of limitation. It is also his submission that the plaintiff firm is even entitled to benefit of exclusion of the period between 15.03.2020 to 28.02.2022 in terms of the judgment/order dated 10.01.2022 of the Hon'ble CS (Comm.) No. 2556/2022 11/19 DLCT010161962022 Supreme Court passed in case of Re: Cognizance for Extension of Limitation, bearing Suo Moto Writ Petition No.3/2020 and also to the exclusion of period between 30.05.2022 to 14.11.2022, which was spent by plaintiff in Pre-Institution Mediation, and hence, even if the last two interest entries dated 30.11.2019 are not considered, the suit of plaintiff is still within limitation.
20. Per contra, it is the contention of Ld. Counsel for defendant that all the above entries dated 31.03.2015, 11.04.2017 and 30.11.2019 are manipulated and false entries made by plaintiff just to extend the period of limitation and to bring the claim of plaintiff within limitation, though there is no document on record to explain or justify the said entries. It is also his contention that the cash amount of Rs. 1,00,000/- was never deposited by defendant in any account of plaintiff on 11.04.2017, as has been averred, and even if this cash entry is taken into consideration, the same cannot extend the period of limitation in terms of Section 19 of the Limitation Act, 1963, as it stood already expired on 05.09.2015 and the same cannot even be treated as an acknowledgment of its liability by the defendant company. It is further his submission that even if the above two entries are taken into consideration and the plaintiff is given benefit thereof and also the benefit of exclusion of period in terms of above judgment/order of the Hon'ble Supreme Court CS (Comm.) No. 2556/2022 12/19 DLCT010161962022 and the period spent in Pre-Institution Mediation, the suit of plaintiff firm is still barred by limitation. It is further his contention that the entries dated 30.11.2019 on account of interest cannot bring the claim of plaintiff within limitation as the same were made unilaterally and with a malafide intent and these entries are also does not amount to any admission of liability on part of defendant and cannot extend the period of limitation.
21. On a careful perusal of the contents of above ledger account statement Ex.PW-1/4 in light of the above contentions made by Ld. Counsels representing the parties, as already discussed, the last two entries dated 30.11.2019 being reflected in said document are of Rs. 9,89,387.99 and Rs. 4,21,372/- respectively and these have been made on account of interest which is being claimed to have accrued on the outstanding amount shown due from defendant in the said ledger. However, such type of interest entries made by a seller cannot extend the period of limitation available to the seller nor the same can make available to him a fresh period of limitation as these are unilateral entries made by a party and the same cannot amount to an acknowledgment or admission of liability on the part of other party in terms of provisions contained in Section 18 and 19 of the Limitation Act, 1963 or even under any other provision of the said Act. If such type of entries are to be acted upon or believed for the purposes of limitation, then the very purpose of CS (Comm.) No. 2556/2022 13/19 DLCT010161962022 prescribing different periods of limitation under the above said Act for initiating actions or proceedings in different matters shall stand defeated as a party can always and easily manipulate such an entry to ensure that the limitation for his claim never ends. Hence, these two entries dated 30.11.2019 cannot be taken into consideration by this court for determining or calculating the period of limitation available to plaintiff for filing of the present suit.
22. As discussed earlier, the first entry made in said document is of the date of issuance of invoice itself i.e. 05.09.2012 and it is a debit entry for the invoice amount of Rs. 17,04,972/- for the goods sold by plaintiff to defendant. As also stated above, the limitation period available to plaintiff for recovering the amount of said invoice was to commence from 06.09.2012 and it expired on 05.09.2015 and the credit entry for the cash amount of Rs. 1,00,000/- is admittedly of a date subsequent to expiry of the limitation period of 3 years as this cash amount is shown to have been deposited in a bank account of plaintiff on 11.04.2017 i.e. more than 1½ year after the expiry of limitation period on 05.09.2015. Though, no further document has been placed on record by plaintiff to explain or elaborate this entry of deposit of the cash amount of Rs. 1,00,000/- by defendant, but even if this entry is taken as it is and the claim of plaintiff regarding deposit of said amount in cash in its account by defendant is taken as CS (Comm.) No. 2556/2022 14/19 DLCT010161962022 true, the same cannot extend the above period of limitation or it cannot provide a fresh limitation period of 3 years to the plaintiff because it can neither be treated as written acknowledgment of its liability by defendant in terms of provisions of Section 18 and 19 of the Limitation Act, 1963 nor the said payment or alleged acknowledgment has been made within the above limitation period or before expiry of the prescribed limitation period of 3 years, as available to the plaintiff.
23. Coming to the credit entry dated 31.03.2015 of the amount of Rs. 42,465/-, this entry is though found to have been made in the above said document before expiry of limitation period available to plaintiff, but as per details contained in the said document, this entry has been made on account of or has been referred to as "BEING AMOUNT TRFD TO RATIONAL BUSINESS". Neither there is any document on record to explain the basis of this entry nor Ld. Counsel for plaintiff has been able to explain as to on what count the said entry has been made and the above amount has been shown as credit in the said document. It is not the case of plaintiff that it had overcharged for the goods supplied to defendant vide the above invoice Mark B or that any of the said goods were found defective or returned back by defendant and the plaintiff had given credit for the above said amount of Rs. 42,465/- to defendant against these returned goods. Hence, in considered opinion of this court, this unilateral CS (Comm.) No. 2556/2022 15/19 DLCT010161962022 credit entry of Rs. 42,465/- dated 31.03.2015 made by plaintiff in its ledger account statement Ex.PW-1/4 also cannot have the effect of extending the period of limitation available to plaintiff for recovery of the amount of above invoice, which was scheduled to expire on 05.09.2015.
24. Again, even if both these entries dated 31.03.2015 and 11.04.2017 of the ledger account statement of plaintiff are taken as correct and true for a moment, it can be demonstrated here that the suit and claim of plaintiff is still beyond the prescribed period of limitation. It is so because in such a case, a fresh limitation period of 3 years would have been available for plaintiff with effect from the date 12.04.2017, on the basis of the entry dated 11.04.2017 for cash amount of Rs. 1,00,000/-, and even this period should have ended on 11.04.2020.
25. In terms of the above guidelines/directions given by the Hon'ble Supreme Court in Re: Cognizance for Extension of Limitation, bearing Suo Moto Writ Petition No.3/2020, the limitations came to be suspended with effect from 15.03.2020 and it remained suspended till 28.02.2022. Further, in terms of the said directions/guidelines, in cases where the period of limitation available to a party was to expire during the above time bracket from 15.03.2020 to 28.02.2022, the period of limitation which was available to a party on 15.03.2020 was to be CS (Comm.) No. 2556/2022 16/19 DLCT010161962022 made available to him on 01.03.2022. Hence, going by the said directions, a limitation period of only 27 days was available to plaintiff to file his claim based on the said invoice as on the date when the above directions came into operation.
26. It was also directed by the Hon'ble Supreme Court in said case that in cases where the period of limitation available to a party was less than 90 days, then the said party has to be provided a minimum period of 90 days with effect from date 01.03.2022 for bringing his claim. Again, it was also specifically provided by the Hon'ble Supreme Court in the said order that in case a period greater than 90 days was available to a party, then the said period has to be made available to that party as on 01.03.2022. Therefore, in terms of the above directions /guidelines, a period of 90 days starting from 01.03.2022 and ending on 29.05.2022 was available to plaintiff for filing of the present suit. As stated above, the present suit has been filed by plaintiff on 25.11.2022 i.e. much beyond the above date.
27. However, as also discussed earlier, besides the above COVID effected period, the plaintiff is also entitled to the benefit of exclusion of the period spent in Pre-Institution Mediation. The Non-Starter Report issued by the Central District Legal Service Authority is a part of the case record and it shows that plaintiff had applied for Pre-Institution Mediation on 30.05.2022 and the CS (Comm.) No. 2556/2022 17/19 DLCT010161962022 above report issued to plaintiff is of date 14.11.2022. One other date as 27.08.2022 is also found written in the said report and it is the date of second or last scheduled hearing before the concerned authority and it is the contention of Ld. Counsel for defendant that this date should be taken as the date of conclusion of mediation proceedings and if the plaintiff had not visited the said authority till 14.11.2022 or the said certificate was issued to or collected by him on this date only, it cannot be said that mediation proceedings remained pending before the said authority till that date.
28. As per practice being followed by this court, the time which has been spent by parties in Pre-Institution Mediation proceedings is being taken as the time starting from date of application and ending on the date on which the Non-Starter Report has been finally issued to the said party, which in the present case starts from 30.05.2022 and ends on 14.11.2022. This court is of opinion that there is no requirement or necessity of going into the merit or legality of the above submission being made by Ld. Counsel for defendant for exclusion of only the period starting from 30.05.2022 and ending on 27.08.2022 in computing the limitation period of this case as it has been observed by this court that even if the entire period from 30.05.2022 till 14.11.2022 as stated above is excluded by this court in calculating the limitation period of this case, the present CS (Comm.) No. 2556/2022 18/19 DLCT010161962022 suit filed by plaintiff on 25.11.2022 is still found to have been filed beyond or after expiry of the prescribed period of limitation and with a delay of around 10 days.
29. Hence, in view of the above discussion, it is held that the present suit filed by plaintiff and the claim raised therein is barred by law as the same is beyond the prescribed period of limitation. This preliminary issue no. 2 framed in the suit, thus, stands decided accordingly against the plaintiff and in favour of defendant and a result thereof, the present suit filed by plaintiff is being dismissed.
30. In view of the above conclusion, no separate findings are felt necessary or required to be given in respect to the application under Order 7 Rule 11 CPC filed by the defendant.
31. Decree sheet be drawn accordingly.
32. File be consigned to the Record Room after due compliance.
Digitally
signed by M K
NAGPAL
MK Date:
NAGPAL 2025.04.17
Announced in the open court 16:32:15
+0530
Dated: 17.04.2025
(M. K. Nagpal)
District Judge, Commercial Court-13
Central District, Tis Hazari Courts,
Delhi/17.04.2025
CS (Comm.) No. 2556/2022 19/19