Delhi District Court
Kamal Electronics vs Jmd Maya Marketing Pvt. Ltd on 5 October, 2023
IN THE COURT OF SHRI SANJAY SHARMAI :
DISTRICT JUDGE (COMMERCIAL COURT)
EAST DISTRICT
KARKARDOOMA COURTS : DELHI
CS (Comm) No. 32/2020
M/s JMD Maya Marketing Pvt. Ltd.
Through its Authorized Representative
Shri Taranjit Singh Bhatia
Registered Office at :
C163, Preet Vihar,
Delhi 110092 ................Plaintiff
Versus
M/s Kamal Electronics
38, Nagar Market, Main Road,
Khichripur, Opposite Kalyanvas,
Delhi - 110 091 ................Defendant
Date of institution : 23.1.2020
Date of reserving judgment : 02.9.2023
Date of judgment : 05.10.2023
AND
CS (Comm) No. 77/2023
M/s Kamal Electronics
38, Nagar Market, Main Road,
Khichripur, Opposite Kalyanvas,
Delhi - 110 091 ................CounterClaimant
CS (Comm) No. 32/2020
M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors.
and CS (Comm) No.77/2023 (CounterClaim)
M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 1 of 23
Versus
M/s JMD Maya Marketing Pvt. Ltd.
Through its Authorized Representative
Shri Taranjit Singh Bhatia ................Defendant
(Plaintiff in the main suit)
Date of institution : 02.4.2022
Date of reserving judgment : 02.9.2023
Date of judgment : 05.10.2023
JUDGMENT:
The plaintiff has filed the present suit for recovery of a sum of Rs.5,27,826/ against the defendant, alongwith future and pendent lite interest.
1.1 Countering the claim of the plaintiff, the defendant filed a counterclaim for recovery of a sum of Rs.2,61,40/ alongwith pendente lite and future interest @ 24% per annum.
1.2 By this common judgment, both the main suit as well as the counterclaim are being disposed of.
SUIT OF THE PLAINTIFF :
2.1 In brief, the facts as averred in the plaint are that the plaintiff is a company incorporated and registered under the Companies Act, 1956 and is engaged in the business of electrical and electronics household goods. The present suit has been filed by its authorized representative Shri Taranjit Singh Bhatia who has signed and verified the plaint. 2.2 The suit has been filed against defendant No. 1 stating that it CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 2 of 23 is a partnership firm with defendant No. 2 as one of its partner. 2.3 It has been averred that the defendants used to purchase electronics items from the plaintiff on credit basis for selling them at their shop and against the supply of goods made, the plaintiff issued various retail invoices duly received by the defendants. It has been averred that as on the date of filing of present suit, a sum of Rs.5,27,826/ stood due upon the defendant which remained unpaid despite several requests and visits to the defendant and despite serving legal notice dated 14.1.2019. Hence the present suit.
WRITTEN STATEMENT OF THE DEFENDANT :
3. Defendants were duly served with the summons of the suit and their Counsel Shri Ajay Tyagi entered appearance. However, the defendant failed to file the written statement within the statutory period and was thus, proceeded against exparte vide order dated 25.1.2021. Shri Taranjit Singh Bhatia - AR examined himself as PW1 in the exparte evidence and closed the same. Exparte final arguments were also heard. When the matter was fixed for passing exparte judgment, the defendants put in appearance through Shri Deepak Parashar - Advocate and filed an application under Order 9 Rule 7 CPC, which was dismissed vide order dated 15.12.2021. However, the said order was set aside by the Hon'ble High Court vide order dated 31.1.2022 passed in CM(M) No.14/2022 & CM Appeal No.470/2022, preferred by the defendants and the matter was remanded back with directions to rehear the arguments on the said application. Accordingly, arguments on the application of the defendants filed under Order 9 Rule 7 CPC were again heard and the application was CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 3 of 23 allowed subject to cost, vide order dated 15.3.2022 and the matter was fixed for filing written statement by the defendants. 3.1 The suit was filed by the plaintiff showing defendant No. 1 as a partnership firm and Shri Ankush Khanna as defendant No. 2, being one of its partners. However, an objection was taken by the defendant in the written statement that defendant No. 1 is a proprietorship firm and defendant No. 2 was not having any concern with it. 3.2 In the written statement, it was stated that the defendant has no liability towards the plaintiff and on the contrary, the plaintiff is liable to pay Rs.2,61,405/ on account of outstanding GST credit and therefore, a counterclaim was filed by the defendant which was registered separately.
3.3 It was also claimed that the defendant never purchased any goods on credit basis from the plaintiff but it was always purchased on cash on delivery basis. It was submitted that Shri Anuj Tyagi - Sales Executive of the plaintiff used to take orders from the defendant who used to make payment in cash after delivery of the goods. It was also stated that Shri Anuj Tyagi never gave any cash receipt to the defendant but used to make his endorsement on the tax invoices at the time of receiving payment. It was also stated that the amount against all the invoices raised by the plaintiff stand duly paid by the defendant and the account with the plaintiff was fully and finally settled on 11.8.2018 through Shri Anuj Tyagi who also made his endorsement 'Statement Nil. No dues' on the ledger account maintained by the defendant.
4. The plaintiff also filed replication reiterating the contents of CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 4 of 23 the plaint and denying the counter allegations.
COUNTERCLAIM OF THE COUNTERCLAIMANT/ DEFENDANT :
5. It has been claimed by the defendant/counterclaimant that the plaintiff had been charging CGST and SGST in the tax invoices from the defendant but had never credited the GST into the account of the defendant in violation of CGST and SGST Act. In January 2020, while checking the GST details for the month of December 2019, the defendant came to know about the said discrepancy as the plaintiff had supplied a washing machine to the defendant costing Rs.36,000/ while the plaintiff raised an invoice of Rs.36,300/ including Rs.2768.64p as CGST and SGST. The plaintiff gave discount of Rs.300/ on oral request and the defendant made the payment to the plaintiff through UPI transfer. Thereafter, the defendant checked the returns of previous years and found that the plaintiff had never credited any amount in the GST account of the defendant. The defendant contacted Shri Anuj Tyagi who had by then left the job of the plaintiff. Thereafter, the defendant raised the issue through Shri Taranjeet Singh Bhatia - AR of the plaintiff but he did not gave any satisfactory response. It has been stated that the plaintiff had forged the ledger account of the defendant and that the plaintiff owes the liability of the GST amount towards the defendant for which he has filed the counterclaim.
WRITTEN STATEMENT TO THE COUNTERCLAIM :
6. No separate written statement was filed to the counterclaim but it forms part of the replication to the written statement to the main CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 5 of 23 suit. In response to the claim of the counterclaimant, it was submitted by the defendant/plaintiff in the main suit, that in the year 2017, defendant No. 1 introduced himself as an unregistered dealer and did not submitted his GST number which is evident from the invoices raised by the plaintiff. It was also submitted that during the entire business period, the defendant never claimed or objected that his GST number was not mentioned on the invoices. However, it was admitted that defendant No. 1 is a proprietorship firm of Shri Divesh Khanna. The plaintiff further stated that it used to issue cash receipts against each cash transaction which is reflected in the ledger account of defendant No. 1. It was also pointed out that in every invoice, it is stated that cash payment will not be entertained without cash receipt. The plaintiff further averred that the ledger account filed by defendant No. 1 do not mention the name of the plaintiff company nor bears the signature or stamp of the defendant. It was also stated that defendant No. 1 purchased goods on B 2 C invoices issued to unregistered dealer with no GST number and they were acknowledged by the defendant.
7. The counterclaimant also filed replication to the written statement filed by the defendant (plaintiff in the main suit) to the counter claim.
ISSUES IN THE MAIN SUIT :
8. From the pleadings of the parties, following issues were framed on 07.10.2022 :
1) Whether the plaintiff is entitled for a decree against the defendant in the sum of CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 6 of 23 Rs.5,27,826/ with interest, if any, and if yes, at what rate and for which period? OPP
2) Relief.
ISSUES IN COUNTERCLAIM :
1) Whether the counterclaimant is entitled for a decree against the defendant (plaintiff in the main suit) in the sum of Rs.2,61,405/ with interest, if any, and if yes at what rate and for which period? OPP
2) Relief.
EVIDENCE :
9. Both the parties led their evidence at the trial in the suit as well as in the counterclaim. With the consent of the Ld. Counsels for both the parties and since the facts in issue were similar in the suit as well as in the counterclaim, common evidence was recorded in the suit as well as in the counterclaim which was recorded in the main suit and a copy thereof has been placed in the counterclaim.
9.1 Shri Taranjit Singh Bhatia - AR of the plaintiff company examined himself as PW1. He led his evidence by way of affidavit Ex.PW1/1 and additional affidavit Ex.PW1/1A and relied upon the following documents :
The Board Resolution dated 25.3.2019 in favour of PW1 as Ex.PW1/A .
Statement of account maintained by the plaintiff company in respect of the defendant as Ex.PW1/B .
Invoices as Ex.PW1/C (colly.).
Certificate under Section 65B of the Evidence Act in respect of the computer generated documents as Ex.PW1/D. Copy of Legal Notice dated 14.1.2019 sent to the defendant as Ex.PW1/E and its postal receipt as CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 7 of 23 Ex.PW1/F. Board Resolution dated 16.4.2022 in favour of PW1 as Ex.PW1/G. Memorandum and Articles of Association of the plaintiff company which includes incorporation certificate of the plaintiff company at Page 1 as Ex.PW1/G1.
Online Form GSTR3B pertaining to the financial year 20182019 qua GST Return as Ex.PW1/H and Certificate under Section 65B of the Indian Evidence Act in support thereof as Ex.PW1/I. 9.2 The plaintiff further examined its Director Shri Tilak Raj Sethi as PW2 who also led his evidence by way of affidavit Ex.PW2/A. Thereafter, Ld. Counsel for the plaintiff closed evidence on behalf of the plaintiff vide his separate statement.
10. The proprietor of the defendant firm namely Shri Divesh Khanna examined himself as DW1. He led his evidence by way of affidavit Ex.PW2/A and relied upon the following documents :
Copy of GST registration certificate as Ex.CW1/1.
Copy of ledger statement of the defendant as maintained by the plaintiff for the period 01.1.2018 to 31.3.2018 and 01.4.2018 to 05.10.2018 as Ex.CW1/2 (colly.).
Copy of Tax Invoice No.1920/1965 as Ex.PW1/D9.
Copies of invoices raised by the plaintiff company and received by the defendant as Ex.CW1/4 (colly.). (It was transpired that some of the invoices, as mentioned in para 17 of the affidavit of DW1, had already been exhibited as Ex.PW1/D1 to D6).
10.1 DW1 further tendered his evidence by way of affidavit Ex.DW1/B and relied upon GSTR2 returns of my firm for the period 01.1.2018 to 31.3.2020 as Ex.DW1/5 (colly.). (Pages 10 to 47 i.e. 38 CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 8 of 23 pages) 10.2 The defendant further examined Shri Anuj Tyagi, an ex employee of the Plaintiff company, as DW2 who tendered his evidence by way of affidavit Ex.DW2/A. He also proved copies of the tax invoices bearing endorsement of the Director of the plaintiff company regarding receipt of cash payment against the said invoices as Ex.DW2/1. (Page 48 to 61).
Ld. Counsel for the defendant closed evidence of the defendant vide his separate statement.
11. I have heard Shri IP Saini - Ld. Counsel for the plaintiff in the main suit and for the defendant/plaintiff in the counterclaim, Shri Deepak Parashar - Ld. Counsel for the defendant in the main suit and for counterclaimant and have also gone through the written submissions filed by the parties as well as records of the case.
My issuewise findings are as under:
ISSUE No. 1 (in the main suit) :
12. The suit of the plaintiff is defective per se. As already stated herein above, the suit was initially filed against M/s Kamal Electronics mentioning it as a partnership firm with defendant No. 2 Shri Ankush Khanna as one of its partners. An objection was taken in the written statement that M/s Kamal Electronics is a proprietorship firm owned by Shri Divesh Khanna and Shri Ankush Khanna has no concern with the said firm. This fact was affirmed by the plaintiff in the replication. On 28.4.2022, when this fact was agitated by Ld. Counsel for the defendant, Ld. Counsel for the plaintiff raised no objection and accordingly, the CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 9 of 23 name of defendant No. 2 was deleted from the array of the parties. Thus, the suit remained only against proprietorship firm namely Kamal Electronics.
12.1 It is stated in the written statement that the defendant had been doing business with the plaintiff company regularly since 2017 to 2018. This fact has not been categorically denied by the plaintiff in the replication. However, the ledger accounts relied by the plaintiff confirm this fact that the plaintiff company had been transacting with the defendant since 2017. It is not acceptable that the plaintiff company would not know the composition or constitution of the defendant firm for so long despite regularly having business transactions with it. Even if it is presumed that the plaintiff company could not come to know about the constitution of the defendant firm during the business dealings, it was expected that the plaintiff should have confirmed about its constitution at least before filing the suit. Even if it is accepted that the plaintiff could not come to know about the constitution of the said firm at the time of filing of the suit, it came to the knowledge of the plaintiff firm when the written statement was filed that M/s Kamal Electronics is a proprietorship firm of Shri Divesh Khanna and Shri Ankush Khanna had no concern with it. This fact was confirmed by the plaintiff in the replication and also before the Court on 28.4.2022. However, despite that the plaintiff continued the suit against the sole proprietorship firm alone without impleading its proprietor as a party and without amending the suit/memo of the parties. 12.2 It is a settled law that a sole proprietorship firm is not a legal entity and cannot sue or can be sued in its own name without impleading CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 10 of 23 or even naming its proprietor.
12.3 In Svapn Constructions Vs. IDPL Employees Cooperative Group Housing Society & ors. 127 (2006) DLT 80, it was held that :
"A sole proprietorship firm is not a legal entity which can sue in its own name, however under Order 30 of the CPC and under any other provision of Code, a person carrying on a business in a name other than his can sue in the name other than his."
The Court referred to the judgment in Miraj Marketing Corporation Vs. Vishakha Engineering 115 (2004) DLT 471 (DB) wherein it was held that :
"A sole proprietorship firm which is not a legal entity cannot sue in its own name."
Reliance was also placed on the judgment in PC Advertising Vs. Municipal Corporation of Delhi 73 (1998) DLT 259, wherein it was held that "The suit filed in the name of proprietorship firm which was neither a registered company nor a joint family nor a partnership firm, in the absence of any prayer to seek amendment to allow the sole proprietor to sue in his name was not maintainable."
12.4 It was observed in Svapn Construction's case (supra) that the petition was filed in the name of the firm and not in the name of its sole proprietor and no prayer was made seeking amendment to sue in the name of sole proprietorship firm and hence, the petition was held to be not maintainable.
12.5 Similarly, in the present suit, despite the defendant disclosing that M/s Kamal Electronics is a proprietorship firm with Shri Divesh CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 11 of 23 Khanna as its proprietor, no steps were taken by the plaintiff to amend the suit and the memo of parties for impleading the proprietor as the defendant and let the suit continued in the name of the firm which is not a legal entity and therefore, the suit is not legally maintainable. 12.6 Another fact which was pointed out by Ld. Counsel for the defendant during the arguments was that the suit has not been signed and verified by a duly authorized person . As per record, Shri Taranjit Singh Bhatia - the Accountant of the plaintiff firm was authorized to file the present suit vide Board Resolution of the plaintiff company dated 25.3.2019 Ex.PW1/A. The relevant part of the said Resolution reads as under :
" Shri Taranjit Singh Bhatia ...... is hereby authorized to represent and attend the Hon'ble Courts on behalf of the company in the legal matters/criminal complaints against Mr. Ankush Khanna C/o M/s Kamal Electronics."
12.7 After the filing of the counterclaim another Resolution dated 16.4.2022 was filed Ex.PW1/G also in favour of Shri Taranjit Singh Bhatia to represent the company in the legal matters/counterclaim filed by M/s Kamal Electronics through its proprietor. This Resolution never rectified the previous Resolution. Thus, the Resolution on the basis of which the present suit was filed, authorized Shri Bhatia to file legal matter only against Shri Ankush Khanna who had no concern with M/s Kamal Electronics. Thus, the authorization by the plaintiff company in favour of Shri Taranjit Singh Bhatia was defective and was not valid at the time of filing of the suit. No fresh authorization was filed even after the plaintiff came to know about the constitution of the defendant firm and the name CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 12 of 23 of its proprietor and as observed above, the second Resolution also did not rectify the first Resolution. Thus, the suit was not filed and verified by a duly authorized person.
12.8 Since issue has been framed in the suit and parties have led evidence, the Court is duty bound to give observations on the merits of the case as well.
12.9 It is observed that the plaintiff has not approached with clean hands and is guilty of pleading wrong facts. It is stated in the plaint that the defendant used to purchase electronics items from the plaintiff company on credit basis and used to make payment against the supplied goods. This very fact was also deposed by PW1 in his examinationin chief. However, it has come in the crossexamination that there used to be cash sales as well. He deposed that he could not remember as to how many cash sales invoices were issued to the defendant. He also failed to depose about the credit limit allowed to the defendant. He admitted that he had not mentioned any fact about the cash invoices in the plaint or in his affidavit. He was confronted with five tax invoices Ex.PW1/D2 to D6 and he replied that they were not mentioned in the ledger for the corresponding period since they were all in respect of cash sales transactions.
12.10 Similarly, PW2 the Director of the plaintiff company, also deposed in his crossexamination that the mode of payment in dealings with the defendant was mostly cash and the payments were collected by the Sales person after confirming with him. Thus, the submissions of the defendant that he used to purchase goods from the plaintiff company on CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 13 of 23 cash on delivery basis holds ground.
12.11 It was deposed by PW2 in his examinationinchief that he had never authorized his employee Shri Anuj Tyagi to collect money from defendant or any other firm at any point of time. However, in his cross examination he admitted that during the relevant period, his Sales person was Shri Anuj Tyagi and that the payments used to be collected by the Sales Person after confirmation from him. He also deposed that only credit sales are reflected in the ledger statement and no entry is made therein if payment is made on spot. He also deposed that in case of cash sale, cash is mentioned on the invoice. It shows that the plaintiff company was accepting cash payments which were never reflected in the ledger statement, contrary to its claim that the transactions with the defendant were on credit basis.
12.12 The plaintiff has relied upon ledger account statement of the defendant Ex. PW1/B (colly). Contrary to what PW1 & 2 deposed, the said ledgers reflect cash receipts as well. As per Accounting principle, no entry can be made in the ledger statement without a supporting document. In case of sale, the voucher or invoice number is mentioned in the ledger statement and in case of receipts, the mode of payment is also mentioned, that is to say, if payment is received through cheque, then cheque number and if through electronic mode, the mode. Similarly, if payment is received through cash, the cash receipt has to be maintained. Though cash receipt numbers are mentioned in the said ledger account, but no copy of such cash receipts have been placed on record by the plaintiff. Furthermore, the said cash receipts are all of more than Rs. 20,000/. As CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 14 of 23 per the Income Tax Act, no payment of more than Rs. 20,000/ can be made in cash. It appears that either the plaintiff company, in order to evade GST, has made incorrect entries or is maintaining 'double accounting'. It has already come on record that all the invoices do not find mention in the ledger account. Invoices Ex. PW1/D2 to D6 were admittedly not mentioned in the ledger account because they were of cash sale transactions as deposed by PW1. If that was the reason, then why other cash receipts have been shown in the ledger account. This remains unexplained.
12.13 PW1 was confronted with the ledger for the period 01.04.2017 to 31.03.2018 Ex. PW1/B(colly). He admitted that as per the said statement, the outstanding balance as on 05.11.217 was Nil, i.e., there was no outstanding balance from 05.11.2017 to 06.01.2018. He also admitted that plaintiff never charged late payment interest from the defendant before 31.12.2018. He deposed that the last sale transaction with the defendant was on 20.05.2018 and the last payment was received from the defendant on 28.04.2018. He deposed that the cash sale transactions are recorded in the Cash Book and not in the ledger account. However, neither the Cash Book nor the cash receipts were produced and the ledger account is contrary to his version as it depicts cash receipts. He also deposed that plaintiff does not have any policy of confirmation of ledger account from the customers including the defendant. Without confirmation, a company cannot claim any amount from the purchaser. It appears that the accounts of the plaintiff company have not been properly audited.
CS (Comm) No. 32/2020M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 15 of 23 12.14 PW1 further deposed in his cross examination that there was no issue with the defendant which required plaintiff to give any discount or issue any Credit Note, but when confronted with ledger account Ex. PW1/B(colly), he accepted the entry dated 30.06.2017 was pertaining to a Credit Note of Rs. 2000/ and entry dated 29.06.2017 of discount of Rs. 43,900/.
12.15 The defendant relied upon certain invoices issued by the plaintiff Ex. CCW1/4(colly). The said invoices bear the receiving of the Salesman of the payment under the said invoice. In the cross examination of DW1, only suggestion was given that they were forged and fabricated. Though DW1 admitted that they do not bear the signatures of Director of the plaintiff company, but deposed that they bear the signatures of the Salesman. It has already been deposed by PW1 and PW2 that the Salesman used to collect the cash payment after confirmation from PW2. Thus, the fact that the cash payment were received by the Salesman against the said invoices is correct and has to be accepted. 12.16 The plaintiff has also claimed interest towards late payment from the defendant. However, the ledger accounts proved by the plaintiff do not reflect any interest charged except one entry dated 31.12.2018 of Rs.75,411/. This entry has also not been explained as to for which period this interest has been calculated.
12.17 In light of the aforesaid, the deposition of DW2, the ex salesman of the plaintiff company Shri Anuj Tyagi, who was dealing with the defendant at the relevant time assumes importance. He deposed that at the time of joining the plaintiff company, he was told that there was no CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 16 of 23 outstanding amount in respect of the defendant. He further deposed about various issues which he faced with the plaintiff company including cash dealings without payment receipts with the retailers. He also deposed that PW1 & PW2 used to give symbolic endorsement of receiving using short initials on the third copy of the invoices. He also deposed that on the directions of the Director of the plaintiff company, at the time of receiving cash from the retailers, he used to give cash receiving endorsement to the retailers on invoices issued to them by the plaintiff company and while handing over cash to the Director, he would give his initials without any remark. He further deposed that all payments were collected by him from the defendant for the goods supplied between January 2018 to May 2018 and that the defendant had no outstanding amount payable to the plaintiff company before he started dealing with it. He further deposed that on 11.10.2018, he reached the shop of the defendant where PW2 also arrived and during the meeting, ledger accounts for the period 01.01.2018 to 05.10.2018, brought by the Director PW2 were tallied and thereafter, PW2 got satisfied that there was no outstanding due towards the plaintiff. Thereafter, on the instructions of PW2 he gave endorsement on the ledger account brought by Shri Sethi, PW2 regarding settling of accounts. The said statement is Ex. CCW1/2 (colly) wherein he identified his endorsement 'Statement Nil' at Point A. 12.18 It was pointed out by Ld. Counsel for the plaintiff that DW2 in his crossexamination deposed that he was never authorized by the plaintiff company through any authorization letter to receive cash from the dealers but denied the suggestion that he was not so authorized.
CS (Comm) No. 32/2020M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 17 of 23 However, thereafter, he submitted that the Director of the plaintiff company namely Shri Tilak Raj (PW2) had orally instructed him to receive payment either by cash or cheque. There was no further cross examination after that and therefore, this deposition about his oral authorization remained unrebutted. He further deposed that the cash payments used to be deposited with Shri Tilak Raj who used to deal with all the cash and cheque payments. Though he admitted that Shri Taranjit Singh (PW1) was the Accountant of the plaintiff company but deposed that the dealings regarding cash and cheque used to be done by Shri Tilak Raj and denied the suggestion to the contrary. It, thus, emerges from his deposition that he was authorized to collect cash from the dealers which used to be deposited with PW2.
12.19 It was further deposed by DW2 in his crossexamination that invoices Ex.DW2/PA (actually exhibited as Ex.DW2/1 (colly.) are the third copies of the original invoices on which on the top word 'OK' has been written by Shri Tilak Raj in token of having received cash payment from him against the cost of said invoices. He denied suggestion to the contrary. There was no further crossexamination of this witness on this fact. Thus, his testimony regarding PW2 having received cash payment against the said invoices and making his endorsement upon them withstood the test of crossexamination and is therefore, accepted. 12.20 In his further crossexamination, DW2 deposed that there was balance confirmation of accounts of the defendant and the plaintiff company which was made by Shri Tilak Raj in his own hand and identified it as Ex.CCW1/2 (colly.) whereupon he identified his signatures CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 18 of 23 at point X. Though he admitted that the said confirmation did not bear the signatures of Shri Tilak Raj but added that he himself prepared and tendered the said statement to Shri Tilak Raj on his request. He was further examined by Ld. Counsel for the defendant with the permission of the Court wherein he deposed that the said confirmation account was prepared and brought by Shri Tilak Raj Sethi. There was no cross examination of this witness on these facts except mere suggestions to the contrary which were denied by him.
12.21 It is, thus, clear from the testimony of DW2 that firstly, PW2 Shri Tilak Raj Sethi - Director of the plaintiff company, himself used to collect the cash and cheque payments from DW2, made to him by the dealers and thereafter, used to make initials of 'OK' upon them which include the invoices raised against the defendant and in dispute in the present suit. Secondly, it has also been duly proved by DW2 that Shri Tilak Raj Sethi had approved the balance confirmation of the ledger account Ex.CCW1/2 (colly.) in respect of the defendant whereupon he had endorsed as 'Statement Nil.' under his initials and on the instructions of Shri Sethi. It means that the accounts were finally settled between both the parties on 11.10.2018 which is the date mentioned on the said endorsement and as such nothing was payable by the defendant to the plaintiff. The plaintiff has claimed the suit amount for the invoices raised prior to the said date. However, once the account had already been settled, there is no question of any liability of the defendant to pay any amount including the suit amount to the plaintiff. As already observed above, the ledger accounts maintained by the plaintiff are defective and incorrect and CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 19 of 23 therefore, no reliance can be placed upon them. It is, thus, held that the defendant has no liability to pay the suit amount to the plaintiff. This issue is decided accordingly against the plaintiff.
ISSUE No. 1 (in the counterclaim) :
13. The defendant/counterclaimant has claimed the GST amount which according to him was paid by him on the invoices raised by the plaintiff but which was not deposited by the plaintiff with the GST Department and therefore, he could not get the credit input for the same. The plaintiff in the main suit has taken a defence that the defendant/counterclaimant had introduced himself as an unregistered dealer who was not having any GST number and therefore, it was never mentioned on any invoices. It was also stated that the defendant never objected to this fact during the two years period when the parties transacted with each other nor claimed the outstanding GST credit as claimed in the counterclaim. It was also submitted that the plaintiff is a private limited company and its accounts are regularly audited and there was never any objection about the nondeposit of the GST. It was also submitted that defendant/counterclaimant was purchasing goods on B 2 C invoices which are issued to unregistered dealers with no GST number which were duly acknowledged by the defendant and therefore, there is no question of credit of GST.
13.1 It was submitted by Ld. Counsel for the defendant/counter claimant that the plaintiff company deliberately failed to place on record the records of its GST return to verify the fact of having deposited the GST. However, in the crossexamination of PW1, he categorically CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 20 of 23 deposed that the plaintiff company is not liable to credit the GST of the defendant since it was not having any GST number and retail invoices were issued to the defendant.
13.2 The defendant/counterclaimant placed on record copy of its GST Registration Certificate which shows that it was registered with the GST Department w.e.f. 04.10.2017. However, it is a matter of record that the GST number of the defendant/counterclaimant does not appear on any of the invoices raised by the plaintiff company ever since 2017 when the business dealings started between the parties. It is also not the case of the defendant/counterclaimant that he ever raised any objection for non mentioning of his GST number on the invoices. The defendant/counter claimant has further failed to place on record any document to show that he ever approached the GST Department to avail the credit input. Admittedly, the plaintiff is a limited company and therefore, the accounts of the company are required to be audited on regular basis. There is nothing on record to suggest that there was any audit objection regarding nondeposit of the GST by the plaintiff company.
13.3 DW1 in his crossexamination admitted that his GST number is not mentioned on the invoices Ex.PW1/C (colly.). He deposed that he had telephonically informed the plaintiff about his GST number and also gave it in writing to the employees of the plaintiff for mentioning it on the invoices and repeatedly asked them to mention it on the invoices. However, no document to that effect was proved by the said witness. Though he produced the GSTR 3B for the period January 2018 to March 2020 Ex.DW1/PA (colly.) but deposed that the details of GSTR is not CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 21 of 23 maintained by him and therefore, he was unable to produce it. He only relied upon the GSTR 2A Form and the portal. In the absence of any record having been maintained by the witness in respect of the GST, he cannot claim the same. In the crossexamination he admitted that GST is always claimed from the Department and not from the party directly. As observed above, there is no record to suggest that the defendant ever asked the Department for the credit input which was declined on the ground that it was never deposited by the plaintiff. 13.4 It is, thus, clear that the defendant/counterclaimant failed to prove that he had provided his GST number to the plaintiff or had demanded the GST credit input from the Department which was declined on the ground of nondeposit of the same from the plaintiff company. 13.5 Apart from the aforesaid, it is also noteworthy that the defendant/counterclaimant is claiming the GST amount for the period prior to 11.8.2018. The counterclaim was filed on 02.4.2022. Thus, the claim of GST from the plaintiff has been filed beyond the period of limitation of three years and is as such a stale claim. Order 8 Rule 6A(4) CPC provides that "Counterclaim shall be treated as plaint and governed by the rules applicable to plaints."
13.6 Thus, even a counterclaim where a claim for money is made has to be filed within the limitation period of three years or in other words, the claim raised therein should not be a stale claim under the Limitation Act. Hence, the counterclaim is not maintainable either on facts or under law. This issue is decided against the defendant/counter claimant.
CS (Comm) No. 32/2020M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 22 of 23 ISSUE No. 2/ RELIEF (in the main suit as well as in the counter claim):
14. In light of the above discussion and findings on the above issues, the suit as well as the counterclaim are dismissed with no order as to costs.
A copy of this judgment be placed in the counterclaim. Decree Sheet be prepared accordingly in the suit as well as in the counterclaim.
Both the files be consigned to Record Room.
ANNOUNCED IN OPEN COURT ON 05th day of October 2023 (SANJAY SHARMAI) District Judge (Commercial Court) East District Karkardooma Courts, Delhi CS (Comm) No. 32/2020 M/s JMD Maya Marketing Pvt. Ltd. Vs. Kamal Electronics & ors. and CS (Comm) No.77/2023 (CounterClaim) M/s Kamal Electronics & anr. Vs. M/s JMD Maya Marketing Pvt. Ltd. 23 of 23