Delhi District Court
M/S. Myco Electricals (P) Ltd vs Uflex Limited on 22 November, 2016
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IN THE COURT OF MS. NAVITA KUMARI BAGHA, ADJ01 (SOUTH),
SAKET COURTS, NEW DELHI
CS No.5838/2016 (Old No.286/11)
Unique Case ID No.DLST010000332011
M/s. Myco Electricals (P) Ltd.
Having its registered office at
A25, Nizamuddin West,
New Delhi110013
...............Plaintiff
Vs.
UFLEX Limited
110, 1st Floor, Bhanot Corner,
Pamposh Enclave, GKI,
New Delhi110048
.............Defendant
Summary Suit U/O.37 CPC for Recovery of ₹8,86,657.41 with
Pendentelite and Future Interest
O R D E R :
1.Vide this order, I shall dispose of the application of defendant filed on 24.12.2011 U/O.37 R.3(5) CPC for seeking leave to defend.
2. The brief facts of the suit as narrated in the plaint are as follows: "The plaintiff is a Private Limited Company having its registered of fice at A25, Nizamuddin West, New Delhi110013. The defendant UFLEX Limited was earlier running its business in the name and CS No.5838/2016 (Old No.286/11) Myco Electricals (P.) Ltd.
Vs. UFLEX Ltd.
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style of Flex Industries Ltd. and then converted into UFLEX Lim ited. The defendant used to supply raw material to the plaintiff and the plaintiff used to manufacture polyfilms for the defendant from the said raw material, from time to time on the purchase orders placed by the defendant. The defendant used to make payment to plaintiff on delivery of manufactured polyfilms. The supplies made by the plaintiff were duly received by the defendant and as per ac count maintained by the plaintiff, as on 01.04.2010 an amount of ₹8,86,657.41 was due and payable by the defendant to the plain tiff, but the defendant failed to make the payment and therefore a legal notice dated 20.01.2011 was sent to the defendant through advocate. But despite service of legal notice no payment was made by the defendant. Hence the present suit U/O.37 CPC was filed by the plaintiff for recovery of ₹8,86,657.41.
2. After service of summons for judgment, the application for seeking leave to defend was filed by the defendant on 24.12.2011, wherein the defendant has sought leave to defend on the following grounds:
(i) That the suit is barred by limitation as the invoices against which the plaintiff is claiming the suit amount are prior to CS No.5838/2016 (Old No.286/11) Myco Electricals (P.) Ltd.
Vs. UFLEX Ltd.
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31.12.2007 and the present suit has been filed after the expiry of period of 3 years from the date of last invoice.
(ii) That the present suit is not maintainable U/O.37 CPC as the suit is based on alleged invoices & ledger account and not on any written contract, bill of exchange, Hundi, etc. and that as per settled law, a suit U/O.37 CPC is not maintainable if the same is based on running account or ledger account.
(iii) That this Court has no territorial jurisdiction to try and entertain the present suit as the order for supply of alleged material was placed by the defendant at Noida and the material was also supplied at Noida.
(iv) That the material supplied by the plaintiff to the defendant was of substandard quality and was rejected by the defendant and the said fact was duly communicated to the plaintiff. That due to supply of substandard material by the plaintiff, the defendant had to purchase the material from open market on higher rate to make up the deficit and thus the plaintiff is liable to pay the damages to the defendant and the defendant is not CS No.5838/2016 (Old No.286/11) Myco Electricals (P.) Ltd.
Vs. UFLEX Ltd.
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liable to pay any amount to the plaintiff on any account.
3. In reply to the leave to defend application, the plaintiff has denied that the suit is barred by limitation and has submitted that the plaintiff was maintaining a running account of defendant and the part payment of the supplied material was received from defendant by the plaintiff from time to time as per the running account and thus there is no question of suit being barred by limitation. The plaintiff has denied that the suit is not maintainable U/O.37 CPC. It has also denied that this Court has no territorial jurisdiction to try and entertain the present suit and has submitted that the defendant had placed purchase order to the plaintiff at its registered office at Delhi and the plaintiff had received the payment of the supplied material at Delhi and maintained the ledger account as well as running account of the defendant at its Delhi office. Regarding the contention of substandard material, the plaintiff has denied that it had supplied substandard material to the defendant or that the defendant had to purchase the material from open market by paying higher amount. It has submitted that the defendant has neither filed any bills/invoices/details of making payment of material purchased by CS No.5838/2016 (Old No.286/11) Myco Electricals (P.) Ltd.
Vs. UFLEX Ltd.
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him in open market at higher rate nor made any complaint to the plaintiff regarding the supply of substandard material.
4. I have heard the arguments on leave to defend application from counsel Sh. A.S. Rana for plaintiff and proxy counsel Sh. Shashank Sharma for defendant and perused the record.
5. The first ground for seeking leave to defend is that the plaintiff's suit is barred by limitation. It is argued by counsel for defendant that the plaintiff has filed the present suit on the basis of invoices pertaining to the year 20052006 and therefore the present suit is clearly barred by limitation. But it is submitted by counsel for plaintiff that the suit is not barred by limitation as it is filed on the basis of invoices and running account maintained by the plaintiff and as per the said running account, the last payment was made by the defendant on 31.03.2008 and thus the suit is not barred by limitation. Though the point of limitation raised by the defendant in itself is a triable issue and leave is required to be granted for the same, yet even if the version of the plaintiff is presumed to be true, it is clear that the present suit is filed on the basis of invoices and CS No.5838/2016 (Old No.286/11) Myco Electricals (P.) Ltd.
Vs. UFLEX Ltd.
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running statement of account and it is a settled law that the suit on the basis of statement of account could not be filed as a summary suit U/O.37 CPC. The provision of O.37 R.1 CPC is clear that the suits can be filed under O.37 CPC for contractual matters in basically two categories. One is that there is a dishonoured negotiable instrument and the second is that there is an agreement in writing containing the liquidated demand claimed in the suit, with or without interest arising. The object of O.37 CPC, which provides a summary procedure, is that there is quite clearly an admitted liability as claimed in the plaint and therefore special procedure is provided for. (GE Money Services India Vs. May Flower Healthcare, CS(OS) 2859/11, DOD 31.08.12)
6. It has been held by Hon'ble High Court of Delhi in M/s. Associate India Financial Services (P) Ltd. Vs. M/s. Atwal and Associates & Ors., CS(OS) No.2109/2002, DOD 09.08.12 that the suit filed for recovery of balance amount due at the foot of the running account is not maintainable under O.37 CPC. It has held as follows:
"The object of an Order 37 CPC suit is that on the CS No.5838/2016 (Old No.286/11) Myco Electricals (P.) Ltd.
Vs. UFLEX Ltd.Page 7 of 10
basis of the documents specified therein the liability towards the plaintiff is admitted. Only when the liability which is admitted in the dishonoured instrument or in the written document containing a liquidated demand as payable to the plaintiff, suits can be filed under Order 37 CPC. Those suits claiming amounts which are only balances due at the foot of account cannot be treated as falling under Order 37 CPC because the suit claim is based on the account and the amount claimed is not a liquidated amount arising/payable to the plaintiff on an instrument on the limited types which are the subject matter of Order 37 CPC. Entries and statements of account have necessarily to be proved as per Section 34 of the Evidence Act, 1872 for the balance at the foot of the account to be arrived at."
It has been held by Hon'ble High Court of Delhi in M/s. K&K Healthcare Pvt. Ltd. Vs. M/s. Pehachan Advertising, RFA No.202/2011, DOD 23.01.2012, "In the present case the suit is not based on the invoices only but the amount claimed in the suit is the balance due at the foot of a running account i.e. CS No.5838/2016 (Old No.286/11) Myco Electricals (P.) Ltd.
Vs. UFLEX Ltd.
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after giving adjustment/credit for certain payments made for the invoices/bills. The suit is therefore definitely not only on the basis of invoice amounts alone for the same to be covered under Order 37 CPC."
7. Since the present suit is also filed for the recovery of balance amount due at the foot of the running account, so, it is held that the present suit not maintainable under O.37 CPC. Hence, the defendant is held entitled to unconditional leave to defend.
8. The next ground for seeking leave to defend is that this Court has no territorial jurisdiction to try and entertain the present suit. As per the defendant the entire cause of action has taken place at Noida whereas the version of the plaintiff is that the part of cause of action has arisen in Delhi also as the purchase order was placed at plaintiff's registered office at Delhi and the part payment was also received by the plaintiff at its Delhi office. Thus it is also a triable issue that whether this Court has territorial jurisdiction to try and entertain the present suit and hence leave to defend is required to be granted to the defendant.
CS No.5838/2016 (Old No.286/11) Myco Electricals (P.) Ltd.
Vs. UFLEX Ltd.
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9. So far as the ground regarding supply of substandard material is concerned, though the defendant has failed to substantiate the same by placing any material on record to corroborate the same, yet as observed above, it is already held that the present suit is not maintainable U/O.37 CPC and further that triable issues regarding limitation and territorial jurisdiction have been raised by the defendant, so, in view of the same, the present application for leave to defend is allowed and defendant is directed to file Written Statement within 30 days from today.
(Announced in open Court on 22.11.2016) (Navita Kumari Bagha) ADJ01, South District Saket Courts, New Delhi CS No.5838/2016 (Old No.286/11) Myco Electricals (P.) Ltd.
Vs. UFLEX Ltd.
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CS No.5838/16 (Old no.286/11) Myco Electricals (P) Ltd. Vs. UFLEX Ltd.
22.11.2016 Present: Sh. Mahender Pratap, Intern, for plaintiff.
None for defendant.
Vide separate order, defendant's application U/O.37 R.3(5) CPC for seeking leave to defend is allowed and defendant is directed to file Written Statement on record within 30 days from today and supply copy of the same to the plaintiff.
Put up on 20.02.2017 for Replication, admission/denial of documents and framing of issues.
(Navita Kumari Bagha) ADJ01 (South), New Delhi.
22.11.2016 (Renu) CS No.5838/2016 (Old No.286/11) Myco Electricals (P.) Ltd.
Vs. UFLEX Ltd.