Delhi District Court
Naresh Kumar Goyal vs Mansha Active Private Limited Through ... on 6 February, 2026
IN THE COURT OF SH. NARESH KUMAR MALHOTRA :
DISTRICT JUDGE (COMMERCIAL)-06
TIS HAZARI COURTS, WEST: DELHI
CS (COMM) No. 163/2024
CNR No. DLWT010012562024
06.02.2026
Naresh Goyal,
Proprietor of M/s. NKG Creations,
Through GPA Holder, Piyush Kanti Dey,
R/o C-6A-99A, Janakpuri,
New Delhi-110058.
.....Plaintiff
Vs.
1. Mansha Active Private Limited,
Through Director
2. Manoj Dua,
Managing Director,
Mansha Active Private Limited,
All At:-
1. WH 100, Second Floor,
Mayapuri Industrial Area,
Phase-1, New Delhi-110064.
2. Office: B-18, Block B,
Industrial Area, Phase-I,
Mayapuri, New Delhi-110064
3. Opposite Deepa Petrol Pump (Indian Oil)
Tauru Bu Pass, Tauru Gurgaon,
Haryana-122015.
....Defendants.
Date of filing : 14.02.2024
Date of arguments : 05.02.2026
Date of judgment : 06.02.2026
CS (Comm.) No. 163/2024 -1-
COMMERCIAL SUIT FOR RECOVERY OF Rs. 1,00,00,000/-
ALONGWITH FUTURE PENDENT LITE INTEREST.
JUDGMENT:
1. Vide this judgment, I am deciding the suit for recovery of Rs. 1,00,00,000/- along with future pendent-lite interest filed by the plaintiff against the defendants.
2. In the plaint, it is mentioned that the plaintiff is proprietor and engaged in the business of distribution of garments and apparel under the business style name M/s. NKG Creations @ "NKGC" and duly registered under the Goods and Services Tax (GST). The defendant no. 1 is a private limited company, incorporated & registered under the Company Act having registered office at WH-100 GF Phase-I, Mayapuri, Rewari Line New Delhi, West Delhi-110064. The defendant no. 2 is the Director of the defendant no. 1 and looking after day to day affairs of defendant no. 1 company. The defendant no. 1 deals in the importing, manufacturing, trading and supplying of sportswear. The defendant no. 2 approached the plaintiff for the distributorship of sportswear/Sprandi products. Defendant no. 2 executed Sprandi Exclusive Distribution Agreement dated 25.01.2017. The defendants started business dealings with the plaintiff. During business dealings, various invoices were issued to the defendants as per ledger account maintained by the plaintiff. It is mentioned that in the year 2019, the plaintiff and the defendants decided to discontinue and terminated the aforesaid contract/agreement dated 25.01.2017. At that time there was stock worth Rs. 1,08,25,183/- (including investment in stock) lying with the CS (Comm.) No. 163/2024 -2- plaintiff. As per the terms and conditions as agreed on 03.02.2019, the plaintiff returned the stock to the defendants. The defendants also verified the stock physically and also confirmed the same by sending email dated 25.02.2019. It is mentioned that the defendants as per the agreed terms and conditions of the "Sprandi Exclusive Distribution Agreement" dated 25.01.2017 issued 15 post dated cheques in July, 2021 of ICICI bank account no. 181805000342, Mayapuri, Phase-I, New Delhi-110064, of different dates with the assurances and promises that cheques will be encashed on their presentation. The details of the cheques are as under:-
S. No. Cheque No. Amount (In Rs) Date 1 001663 10,00,000 13.07.2021 2 001664 10,00,000 15.07.2021 3 001665 10,00,000 17.07.2021 4 001666 10,00,000 19.07.2021 5 001667 10,00,000 21.07.2021 6 001670 5,00,000 23.07.2021 7 001671 5,00,000 26.07.2021 8 001672 5,00,000 28.07.2021 9 001673 5,00,000 30.07.2021 10 001675 5,00,000 03.08.2021 11 001676 5,00,000 03.08.2021 12 001677 5,00,000 06.08.2021 13 001678 5,00,000 07.08.2021 14 001679 5,00,000 10.08.2021 15 001680 5,00,000 10.08.2021
On the assurance of the defendant no. 2, the plaintiff presented the cheques but all the cheques were dishonoured on their presentation to the bank on 16.08.2021 with the remarks "Fund Insufficient". Thereafter, plaintiff approached the defendants several times but they started avoiding the plaintiff. The plaintiff sent legal demand notice to the defendants through his counsel. The notice was duly served but the defendants failed CS (Comm.) No. 163/2024 -3- to make any payment. As per the plaintiff, the defendants are jointly and severally liable to make the payment of cheques amount of Rs. 1 crore. The plaintiff has filed complaint No. 23080/2021 u/s 138 NI Act which is pending adjudication. Plaintiff has approached Ld. Secretary, DLSA (West) but defendants did not appear and non-starter report was issued. It is prayed by the plaintiff to pass a decree of Rs. 1,00,00,000/- in his favour and against the defendants. Plaintiff has also claimed interest @ 18% per annum from the date of filing of suit till realization.
3. The defendants have filed written statement taking preliminary objections that present suit has been filed to harass the defendants. In preliminary objections, it is mentioned that Mr. Piyush Kanti Dey is not authorized by the plaintiff to file the present suit. The plaintiff has not complied with the mandatory provisions of Commercial Court Act in filing the present suit. Plaintiff has fabricated the ledger account of defendant no. 1 in his books of account for the period from 01.04.2017 to 03.02.2019 as well as agreement dated 25.01.2017. As per the defendants, if the agreement was executed between the parties then why the plaintiff has remitted the payment to the defendant no. 1 after one year of the date of execution of agreement. The agreement was never executed between the parties. A draft agreement was given by the defendants to the plaintiff and after reading the terms of the agreement, the plaintiff was not in a position to adhere the clause no. 3.6 of the agreement. Accordingly goods were supplied to the plaintiff by the defendant no. 1. The plaintiff has filed fabricated statement/ledger account in criminal complaint u/s 138 of NI Act CS (Comm.) No. 163/2024 -4- wherein, plaintiff has fabricated entries to the tune of Rs. 44,06,348/- to inflate the outstanding amount of Rs. 1,03,58,448/- against the defendant no. 1. The suit is based on forged and fabricated documents. The suit is bad for mis-joinder/non-joinder of necessary parties as defendant no. 2 cannot be personally liable for the business transactions being director of the defendant no. 1. It is mentioned that defendant no. 2 is only one of the Directors and admittedly no personal guarantee/indemnification deed in respect of the transactions with the defendant no. 1 have been signed or executed between the plaintiff and the defendant no. 2. The defendant no. 1 is a private limited company and separate legal entity. It is mentioned that in absence of any allegations of fraud or misrepresentation, Directors cannot be held personally liable. The suit is not maintainable against the the defendant no. 2 in personal capacity against the transactions with the defendant no. 1. The plaintiff has committed forgery with this court as notice was not served upon the defendants. It is mentioned that plaintiff is very much aware that defendants had left both the rented premises i.e. WH-100, SF & B-18, Block-B, Mayapuri Industrial Area, Phase-I, New Delhi and shifted to B-74, Mayapuri Industrial Area, Phase-I, New Delhi-64. The plaintiff has deliberately did not file on record the complaint and all the documents attached with the complaint to mislead this Court. The present suit is barred by limitation and instituted after the expiry of period of three years from the last invoice i.e. 03.02.2019. The cheques in question are security cheques given in the year 2017 and this fact is apparent from the para no. 8 of the complaint filed by the plaintiff u/s 138 of NI Act. The plaintiff has not approached the court with clean hands and suppressed the material facts. The defendant no. 1 is a CS (Comm.) No. 163/2024 -5- Distribution House for any kind of products manufactured by "Sprandi" and they do not deal in Retail Sales in Delhi, so the question of purchasing of the garments from the plaintiff does not arise. The ledger account of the plaintiff maintained by the defendants shows that defendant no. 1 is selling the goods to the plaintiff. It is mentioned defendants reserved right to file counter claim against the plaintiff. The plaintiff wants to stop business dealings with the defendant. The plaintiff returned stock/material worth Rs. 1,08,25,183/- which was inadvertently booked in separate ledger by the accountant of the defendant by opening new ledger account NKGC purchase account. This mistake came to the knowledge of the defendants during Audit conducted by statutory auditors Yogesh Bangia & Co. and this mistake was rectified vide report dated 02.09.2023 as per accounting principles. As per the defendants, a sum of Rs. 13,13,131/- is outstanding as creditor in the books of accounts of defendant no. 1 towards the plaintiff as on August, 2021 instead of Rs. 1,00,00,000/- as alleged by the plaintiff. The plaintiff was unable to make the payment of Rs. 85,35,326/-. It was decided that the plaintiff will return the unsold goods to the defendant no. 1 to the tune of Rs. 1,08,25,183/- and after sale of the goods by the defendant no. 1 in the open market, they will pay the balance amount of Rs. 22,89,857/- to the plaintiff. The defendants sold the returned goods in open market and a sum of Rs. 16,00,000/- was paid back to the plaintiff. After adjustment of this amount a sum of Rs. 13,13,131/- worth of the returned goods is still lying with the defendant no. 1. The plaintiff without intimation presented the security cheques. The security cheques were given to the plaintiff in 2018 by the defendant no. 1, at the initial stage after advancement of the payments by the plaintiff CS (Comm.) No. 163/2024 -6- towards purchase orders for the Sprandi Sports garments. The defendant no. 1 was not in a position to deliver the Sprindi Sports garments despite receipt of advance amount till second week of March, 2018, due to some shipment problem from Sprandi warehouse. The present suit is liable to be dismissed under the provisions of Order VII Rule 11 CPC. Plaintiff is not entitled to any interest @ 18% per annum as no contract regarding interest was executed between the parties.
In preliminary submissions, it is mentioned that defendants have vacated both the premises i.e. WH-100 Second Floor, Mayapuri Industrial Area, Phase-I, New Delhi & B-18, Mayapuri Industrial Area, Phase-I, New Delhi in May, 2019 and shifted to B-74, First Floor, Mayapuri Industrial Area, New Delhi. It is mentioned that the unsold stock of Rs. 1,08,25,183/- was returned back to the defendant no. 1 with the mutual understanding that firstly the outstanding of Rs. 85,35,326/- against the plaintiff will be adjusted and the remaining balance of Rs. 22,89,857/- will be paid back to the plaintiff as and when unsold goods were sold in open market by the defendant no. 1. It was also decided between the plaintiff and defendant no. 1 that said stock will be returned back to the defendant no. 1 through Debit Note. The plaintiff has returned the unsold stock through generation of E-way bill and further raised bills and due to which unnecessary GST was levied on the returned stock. The plaintiff returned the stock/material worth of Rs. 1,08,25,183/-, which was inadvertently booked in separate ledger by the accountant of defendant no. 1 by opening new ledger account.
In reply on merits, it is admitted that the plaintiff is a proprietor of M/s. NKG Creations and registered under GST Act.
CS (Comm.) No. 163/2024 -7-It is admitted that defendant no. 1 is a private limited company incorporated and registered under the Company Act. It is mentioned that registered office of defendant no. 1 has been shifted. It is mentioned that no agreement was executed between the parties. As per the defendants, agreement dated 25.01.2017 is forged and fabricated. The final summary as on date in respect of unsold goods lying with the defendant no. 1 is as under:-
S. Particulars Amount
No.
1. As per Para No. 6 of the suit goods were returned by 1,08,25,183
the plaintiff to the defendant.
2. Less outstanding in the books of account of the -85,35,326
defendant no. 1 in name of plaintiff as on 31.03.2019 (Annexure- D5)
3. Balance in INR 22,89,857
4. Less thrice the RTGS in tune of Rs. 11,00,000/- on -16,00,000 23.10.2020, Rs. 3,00,000/- on 05.02.2021 & Rs.
2,00,000/- on 19.08.2021 (Annexure-D6)
5. Balance in INR (serial-3 minus 4) 6,89,857 The ledger account is forged and fabricated. No amount of Rs. 1 crore is due towards the plaintiff. The cheques were given as security. It is admitted that a sum of Rs. 6,89,857/- is due and payable to the plaintiff. Dismissal of suit is prayed by the defendants.
4. The plaintiff has filed replication and controverted the allegations made in the written statement and further reaffirmed the averments made in the plaint.
5. On the basis of pleadings of the parties, following issues were framed by this court on 14.11.2024, which are as under:-
(i) Whether the present suit is filed by duly authorized person ? (OPP) CS (Comm.) No. 163/2024 -8-
(ii) Whether the suit of the plaintiff is within limitation ? (OPP)
(iii) Whether the present suit is bad for mis-joinder and non-joinder of necessary party ? (OPD)
(iv) Whether the plaintiff is entitled for recovery of Rs. 1,00,00,000/- from the defendants, as prayed ? (OPP)
(v) Whether the plaintiff is entitled to the interest on the amount of Rs. 1,00,00,000/-, if yes then at what rate and for what period ? (OPP)
(vi) Relief.
6. In evidence plaintiff has examined Sh. Piyush Kanti Dey S/o sh. Krishnapada Dey, AR/ GPA holder of plaintiff as PW-1. This witness has filed affidavit on the lines of plaint. This witness has proved GST Registration certificate of the plaintiff and GST forms and invoices as Ex. PW1/1 (colly ), Certified copy of GPA as Ex. PW1/2 (colly), copy of current company details downloaded from the website Zaubacorp.com and MCA as Ex. PW1/3 (colly), Copy of agreement of distributorship dated 25.01.2017 as Ex. PW1/4 (colly), Certified Copy of bank statement showing Rs. One Crore transaction being credited to the account of defendant as Ex. PW1/5 (colly), Certified copies of Invoices as Ex. PW1/6 (colly), Certified Copy of e-way bills as Ex. PW1/7 (colly), Copy of email communications dated 25.02.2019 along with attached summary of return goods of NKGC as Ex. PW1/8 (colly), Certified copies of fifteen post dated cheques as Ex. PW1/9 (colly), Certified Copy of bank return memos as Ex. PW1/10 (colly), Copy of email communications dated 20.08.2021 as Ex. PW1/11 (colly), Certified Copy of legal notice dated CS (Comm.) No. 163/2024 -9- 28.08.2021 as Ex. PW1/12, Certified Copy of speed post receipt dated 01.09.2021 as Ex. PW1/13, Certified Copy of tracking report of speed post as Ex.PW1/14, Certified Copy of DHL receipt dated 28.08.2021 as Ex. PW1/15 (colly), Certified Copy of tracking report of DHL as Ex. PW1/16 (colly), Legal notice sent to the defendant through email by the counsel as Ex. PW1/17, certified copy of returned envelope of speed post of the legal notice as Ex. PW1/18, copy of Non Starter Report Ex. PW1/19, Email communications personal and official IDs between plaintiff and defendants dated 26.11.2018, 24.01.2019, 25.02.2019, 11.04.2019, 11.08.2021, the email dated 25.02.2019 sent by the plaintiff along with the attached file of summary of returned goods NKGC, email dated 25.09.2020 showing the balance amount due upon the defendant of Rs. 1,03,58,449/- along with other demands as Ex. PW1/20 (colly), Copy of bank statement of plaintiff of Yes Bank Limited for October 2020 as Ex. PW1/21 (colly), Reply to the application U/s 143A of NI Act filed by the defendant in connected case of 138 NI Act which is Ex. P-1, Certificates U/s 65-B of Indian Evidence Act as Ex. PW1/23 to Ex. PW1/28.
This witness is duly cross examined by Ld. Counsel for defendants. In cross examination, this witness has stated that he is graduate. He is working as a Manager with the plaintiff firm. This witness has stated that as far as his knowledge is concerned the plaintiff is only running this Proprietorship firm i.e. NKG Creations. This witness has stated that in January 2017, he was Manager with the plaintiff and looking after all the affairs of his firm. This witness has stated that in the January 2017, he was residing at D-2/70A, Jeewan Park, Uttam Nagar, Delhi. This witness has admitted that he is not residing at C-6A-99A, CS (Comm.) No. 163/2024 -10- Janakpuri, Delhi. This witness has stated that he had purchased the stamp paper of Ex. PW-1/2 on behalf of the plaintiff. He has admitted that in Ex. PW-1/2 the residential address of Naresh Goyal i.e. plaintiff is mentioned. He has admitted that his address is not mentioned in Ex. PW-1/2. This witness has stated that he had got prepared Ex. PW-1/2. He has stated that the plaintiff has conveyed him to prepare Ex. PW-1/2. This witness has stated that he and the plaintiff were sitting together at the time of execution of Ex. PW-1/2. This witness has stated that firstly, he had signed Ex. PW-1/2 and thereafter, plaintiff has signed the same at Notary office. This witness has admitted that Ex. PW-1/4 was signed by the defendant as well as plaintiff at the premises of defendant. This witness has admitted that he has not signed as a witness on Ex. PW-1/4. This witness has voluntarily stated that he was present there and nobody asked him to sign this document. He has stated that the plaintiff has sent the email regarding termination of Ex. PW-1/4. The witness after seeing the file submits that email is already on record which is Ex. PW-1/11. This witness has voluntarily stated that prior to sending this email, the plaintiff has verbally terminated the Ex. PW-1/4. He has admitted that Ex. P-3 is the invoice in respect of goods/material supplied by the defendant to the plaintiff. He has stated that on 03.02.2019 when the material was returned by the plaintiff to the defendant the outstanding amount due towards the defendant was approximate Rs. 1,03,00,000/- (Rs. One crore three lacs only). This witness has stated that he cannot tell the exact amount of the material supplied by the defendant to the plaintiff during the period 2018-2019. This witness has stated that he cannot admit or deny if the defendant had supplied the material amounting to Rs. 2,10,07,927/- to the CS (Comm.) No. 163/2024 -11- plaintiff from the period 21.03.2018 to 17.11.2018. He has stated that Ex. D-1 is the same document which was filed by the plaintiff in the proceedings u/s 138 of NI Act at Dwarka Courts. This witness has stated that the defendant has instructed the plaintiff to deliver the material/ goods to Golden Hut Resorts and DM Enterprises and payments of these amounts were received by the defendant. So these amount is shown in the statement of account of the defendant. He has admitted that the plaintiff has sold material/goods to Kash N Kare for a sum of Rs. 1,57,773/-, Shiv Shakti Collections for a sum of Rs. 22,30,195/- and Vaani & Kashbi Enterprises for a sum of Rs. 1,12,595/- & Rs. 10,95,875/-. He has voluntarily stated that the goods were sold to these companies at the asking of the defendant. This witness has admitted that he had not placed on record any document to show that the defendant has asked the plaintiff to sold the goods to the above mentioned companies. This witness has stated that he cannot say if the defendant has to receive a payment of Rs. 90,07,927/- from the plaintiff as on November 2018. This witness has voluntarily stated that the plaintiff has returned the material amounting to Rs. One Crore eight lacs approximately. He has admitted that in October, 2020 the defendant had made the payment of Rs. 11 lacs through RTGS in the account of the plaintiff. He has voluntarily stated that this payment was received by the plaintiff as a profit of guarantee in the personal account of the plaintiff
7. Plaintiff has examined Ms. Kritika, Branch Head of Bank of Baroda, Tilak Nagar Branch, Delhi as PW-2. This witness has proved certified copy of bank statement of account bearing CS (Comm.) No. 163/2024 -12- number 32200200000506 in the name of M/s. Mansha Active Private Limited for the period 07.07.2020 to 31.08.2021 as Ex. PW-2/1 (colly). This witness is duly cross examined by Ld. Counsel for defendants. In cross examination, this witness has stated that she has no personal knowledge about the ongoing litigation between M/s. Mansha Active Pvt. Ltd. & Mr. Naresh Goyal. This witness has stated that there is entry dted 23.10.2020 in Ex. PW-2/1 at point-A and this entry is debit entry in the name of Mr. Naresh Kumar Goyal of Rs. 11,00,000/- by way of RTGS. This witness has stated that entry dated 05.02.2021 in Ex. PW-2/1 at point-B in this entry is a debit entry in the name of Mr. Naresh Goyal of Rs. 3,00,000/- by way of RTGS. This witness has also stated that entry dated 19.08.2021 in Ex. PW-2/1 at point-C of Rs. 2,00,000/- by way of NEFT to Mr. Naresh Goyal.
8. Plaintiff has also examined Mr. Jivanshu Pratap Singh, Manager, ICICI Bank, Mayapuri Branch, Delhi as PW-3. This witness has proved certified copy of bank statement of account bearing number 181805000342 in the name of Mansha Active Private Limited for the period 01.01.2018 to 31.03.2021 as Ex. PW-3/1 (colly). This witness is duly cross examined by Ld. Counsel for defendants. In cross examination, this witness has stated that he has no personal knowledge about the ongoing litigation between Naresh Kumar Goyal and M/s. Mansha Active Private Limited. He has admitted that there is no entry after 31.03.2021 as per Ex. PW-3/1.
9. Plaintiff has examined Mr. Surender Kumar, Lower Division Clerk, Ministry of Corporate Affairs as PW-4. This CS (Comm.) No. 163/2024 -13- witness has proved the Master Data of Mansha Active Private Limited along with Director/ Signatory details, certificate of incorporation as Ex. PW-4/1 (colly). This witness has also proved AOC-4 Form alongwith Auditor's report, balance sheet, director's report, MGT-7 Annual return and the list of shareholders as on 31.12.2020 running into 45 pages as Ex. PW-4/2 (colly). This witness has also proved AOC-4 Form alongwith Auditor's report, balance sheet, Board report, MGT-7 Annual return and the list of directorship and shareholders as on 28.11.2021 running into 46 pages as Ex. PW-4/3 (colly). This witness is duly cross examined by Ld. Counsel for defendants. This witness has stated that he has no personal knowledge about the ongoing litigation between M/s. Mansha Active Pvt. Ltd. & Mr. Naresh Goyal. This witness has stated that he has no knowledge about any revised return filed by Mansha Active for the financial year 2019-2020 and 2020-2021.
10. Plaintiff has also examined Sh. Dinesh Kumar, Record Keeper, State GST Office, Gurugram, Haryana as PW-5. This witness has proved certified copy of GST Registration Certificate of NKG Creations bearing GST registration no.
06ACBPG7331D1Z6 along with month-wise GST returns from April 2018 to February 2019 running into 47 pages as Ex. PW-5/1 (colly). This witness is duly cross examined by Ld. Counsel for defendants. This witness has stated that he has no personal knowledge about the ongoing litigation between the parties.
11. Plaintiff has examined Mr. Amit Kumar, Sr. Manager, Branch Banking, Yes Bank, Janakpuri C-3 Branch, Delhi as PW-6. This witness has proved certified copy of bank statement of CS (Comm.) No. 163/2024 -14- account no. 052250700001272 in the name of Mr. Naresh Kumar Goyal for the period 01.01.2018 to 31.08.2021 running into 5 pages as Ex. PW-6/1 (colly), certified copy of bank statement of the account no. 052284600000021 in the name of Narsing Decor for the period from 01.08.2018 to 31.08.2021 running into 49 pages as Ex. PW-6/2 (colly) and ownership of proprietorship account along with GST number running into four pages as Ex. PW-6/3. This witness is duly cross examined by Ld. Counsel for defendants. This witness has stated that he has no personal knowledge about the ongoing litigation between the parties. This witness has admitted that the entire statement produced by him is system generated. This witness has stated that he cannot say as to when the account of Narsing Decor opened and he does not know who was the proprietor at that time.
12. Plaintiff has also examined Ms. Kalpana, Judl. Assistant in the court of JMFC/DC-08, Dwarka (SW), Delhi as PW-7. This witness has brought the court record/ case file of CC NI Act 23080/2021, titled as " Naresh Goyal Vs. Mansha Active Pvt. Ltd. pending in the court of Ld. JMFC/DC-08, Dwarka (SW) and same is proved as Ex. PW-7/1 (colly). This witness is duly cross examined by Ld. Counsel for defendants. In cross examination, this witness has stated that she has no personal knowledge about the facts of the case CC NI Act 23080/2021. This witness has admitted that the said case is at the stage of examination of CW-1.
13. Plaintiff has examined Sh. Naresh Kumar Goyal, Proprietor of NKG Creations as PW-8. This witness has proved CS (Comm.) No. 163/2024 -15- GPA dated 21.09.2021 executed by him in favour of Piyush Kanti Dey which is already exhibited as Ex. PW-1/2 (colly). This witness is duly cross examined by Ld. Counsel for defendants. During cross examination, this witness has stated that he mentions his name both as "Naresh Goyal" and "Naresh Kumar Goyal" in transactions. He has stated that all day to day transactions pertaining to Mansha Active have taken place under his supervision. He has admitted that all the decision pertaining to Mansha Active were taken by him. He has voluntarily stated that Mr. Piyush Kanti also used to take decisions on his behalf. This witness has stated that he had authorized Mr. Piyush Kanti by way of GPA (Ex. PW-1/2) on 21.09.2021 in writing. This witness has stated that he had executed GPA (Ex. PW-1/2) prior to the filing of the present suit. He has stated that Mr. Piyush Kanti had the power to take all the decisions pertaining to defendant no. 1. He has denied the suggestion that Mansha Active transferred the funds to Narsing Decor on his instructions with respect to the return of goods. He has voluntarily stated that He has no connection with the Narsing Decor. He has stated that Mr. Piyush Kanti had purchased the stamp paper for GPA on his instructions from Janakpuri. This witness has stated that he had asked Mr. Piyush Kanti to prepare the draft of the GPA and he had done the same on his instructions. He has stated that Mr. Piyush Kanti had read over and explained the draft to him in Hindi. This witness has stated that he has executed GPA ( Ex. PW-1/2) for filing the case against Mansha Active. He has stated that Mr. Piyush Kanti stays at Janakpuri sometimes.
CS (Comm.) No. 163/2024 -16-14. On the other hand, defendant no. 2 has examined himself as DW-1. This witness has filed affidavit on the lines of written statement. This witness has proved Board Resolution dated 01.05.2024 as Ex. DW-1/1, certificate u/s 65B running into two pages as Ex. DW-1/2, ledger account of NKG Creations in the books of Mansha Active Pvt. Limited for the period 01.04.2017 to 31.03.2019 running into 2 pages as Ex. DW-1/3, ledger account of NKGC (Purchase Account) for the period 01.04.2018 to 31.03.2020 as Ex. DW-1/4, ledger account in the name of Narsing Decor for the period 01.04.2019 to 31.03.2022 as Ex. DW-1/5, bank statement of Bank of Baroda account no. 32200200000506 for the period 19.10.2020 to 25.10.2020, 01.02.2021 to 06.02.2021 and 15.08.2021 to 20.08.2021 running into 3 pages as Ex. DW-1/6 (colly) and certificate of CA Yogesh Bangia & Co. dated 02.09.2023 as Ex. DW-1/7 (colly).
This witness is duly cross examined by Ld. Counsel for plaintiff. During cross examination, this witness has stated that he is Director of Mansha Active Pvt. Limited and participates in the day to day affairs of the business. This witness has stated that he and Mr. Arun Dua are the Directors of defendant company. He has stated that Ms. Vandana Dua is his wife. He has admitted that his company received Rs. 1 crore from the plaintiff on account of business dealings. He has admitted that his company supplied "Sprandi" brand products/ stock to the plaintiff. He has admitted that his company issued invoices to the plaintiff for the stock supplied. This witness has admitted that he used to deal with the plaintiff in his individual capacity. This witness has stated that he cannot show any purchase order issued by the plaintiff from the court record. This witness has admitted that he dealt with the CS (Comm.) No. 163/2024 -17- plaintiff under commercial/business terms. This witness has denied to execute any agreement with the plaintiff. This witness has stated that his company started business with the plaintiff in around February 2018 and continued for about one year. This witness has stated that he had made the demand of cheques verbally. This witness has admitted that plaintiff company has returned goods worth Rs. 1,08,25,183/- to him on 03.02.2019. He has voluntarily stated that goods once sold are generally not returnable but in good faith, the said return of goods was accepted. This witness has stated that he does not know if defendant company acknowledged the receipt of returned stock via email dated 25.02.2019 which is Ex. PW-1/8 (colly). He has voluntarily stated that it is not his personal email ID and is managed by the accounts department. This witness has stated that he does not remember if his company ever send any running ledger to the plaintiff for the confirmation of acknowledging the receipt of the return of stock. This witness has admitted that his company has been auditing the financial statements and filed the audited reports time to time since the day of incorporation. This witness has stated that he does not know that after termination of the dealing with the plaintiff defendant company sent any running ledger for the confirmation regarding the payment and rendition of accounts with the plaintiff showing the amount due. He has stated that there is no document to show that he has sent request for return of cheques. This witness has admitted that his company is the domain owner and operates and used the domain "@mansaactive.com" for business purposes. He has admitted that the account @mansaactive.com, [email protected] and [email protected] are his email accounts. This witness CS (Comm.) No. 163/2024 -18- has stated that he is not aware about [email protected]. This witness has stated that he does not know if email ID [email protected] is official email of his company as shown in Ex. DW-1/PX-1 at point-A. He has admitted that the domain account @mansaactive.com stands deactivated. He has admitted that his company has not initiated any legal action for dishonor of 15 cheques after receiving the intimation about the same. This witness has admitted that he has not signed the Board Resolution dated 01.05.2024. This witness has admitted that his company has audited the financial statement for the Financial Year 2018-19 by CA Yogesh Bangia. This witness has admitted that defendant no. 1 company maintains record, prepared and finalized the ledger of plaintiff under director's approval after duly verifying the same. He has admitted that the defendant company maintained separate ledgers, one in the name of NKG Creations and NKGC for the same plaintiff. He has voluntarily stated two ledgers were created for the same plaintiff by mistake, however, they were corrected later. This witness has admitted that he has not sent the two ledgers to the plaintiff before filing the present suit. This witness has stated that he has hired accountants and professional auditors. He has admitted that the CA certificate dated 02.09.2023 Ex. DW-1/7 does not confirm or reflect the CIN of his company. This witness has stated that in the certificate dated 02.09.2023, he has admitted that a sum of Rs. 13,13,131/- is payable by the defendant to the plaintiff. This witness has admitted that he has shown the outstanding balance of Rs. 6,89,857/- towards the plaintiff in this written statement. He has admitted that tax audit report for the FY 2018-2019 to FY 2021-22 has not been filed.
CS (Comm.) No. 163/2024 -19-15. Defendants have also examined CA Mr. Yogesh Bangia Proprietor of M/s. Yogesh Bangia & Company as DW-2. This witness has stated that he was appointed as auditor of Mansha Active in the year 2018 and he has audited its accounts for four years. He has stated that Mr. Manoj Dua had approached him with his CA regarding some issues in the accounts of NKG Creations/ Naresh Kumar Goyal. This witness has stated that he had no role other than for the audit purpose. He has stated that as per Mr. Dua, different ledgers in name of different parties were created, and therefore, certain inconsistencies and mistakes appear to be there in the accounts, for which they requested him to rectify these accounts as he had audited them.
This witness is duly cross examined by Ld. Counsel for plaintiff. During cross examination, this witness has stated that he is not aware about the litigation between Mansha Active and NKG Creations. This witness has stated that he was not aware about the litigation on 02.09.2023 when the certificate was issued. This witness has stated that he had never issued a rectification or modification certificate to other companies after such a long time. This witness has stated that he would not issue certificate Ex. DW-1/7, if he was aware about the pending litigation. This witness has stated that he has not taken permission from any statutory authority. This witness has stated that he checked copies of old ledgers and new ledgers as given to him by the company accountant. This witness has admitted that he did not check the source document i.e. invoices, delivery challans, debit notes etc. but he checked some vouchers. This witness has voluntarily stated that he did not check all the entries and only sample entries. This CS (Comm.) No. 163/2024 -20- witness has stated that he has only checked the vouchers for the year 2018-2019 and 2019-2020. He has admitted that at the time of preparation of certificate in question, other sources like PAN card, Registration, GST etc were not verified for Narsing Decor. He has admitted that at the time of preparation of certificate in question, other sources like Registration, GST etc. were not verified for NKG Creations. However, he checked the PAN card for the said entity. He has admitted that the PAN number and GST number of NKG Creations and Narsing Decor are not same. He has admitted that at the time of preparation of certificate in question, other sources like Registration, GST etc. were not verified for NKGC. However, he checked the PAN card for the said entity. This witness has stated that as per his professional working, it is not correct to merge ledgers of two entities with different PAN number and GST numbers. He has admitted that the third page with the certificate Ex. DW-1/7 pertains to the ledger of NKG Creations maintained by Mansha Active Pvt. Limited for the period 01.04.2018 to 19.08.2021 is the part of his certificate. This witness has admitted that he has not prepared the said document i.e. third page with the certificate Ex. DW-1/7 which pertains to the ledger of NKG Creations maintained by Mansha Active Pvt. Limited for the period 01.04.2018 to 19.08.2021. He has admitted that opening will be reflected in the said document i.e. third page with the certificate Ex. DW-1/7 which pertains to the ledger of NKG Creations maintained by Mansha Active Pvt. Limited for the period 01.04.2018 to 19.08.2021 if there have been transactions prior to 01.04.2018. This witness has stated that he did not check the accounts prior to 01.04.2018. He has admitted that as per the third page with the CS (Comm.) No. 163/2024 -21- certificate Ex. DW-1/7 pertains to the ledger of NKG Creations maintained by Mansha Active Pvt. Limited for the period 01.04.2018 to 19.08.2021 (which is the merged letter of NKGC and Narsing Decor), there is no mention of sale entry of Rs. 5,00,000/- from Narsing Decor. This witness has admitted that he did not obtain permission from NKGC or Narsing Decor before merging their accounts/ ledgers. He has admitted that as per page no. 22 of the document Ex. PW-4/2, each entity so enlisted in sundry creditors is a separate entity, more specifically, Narsing Decor and NKGC are separate entities. He has admitted that in the list of Sundry creditors, the amount of Rs. 5,00,000/- is due towards Narsing Decor and Rs. 1,14,48,457/- is due towards NKGC as on 31.03.2020.
16. Defendant have also examined Mr. Pradeep Kumar Goyal, Proprietor of M/s. Narsing Decor as DW-3. This witness has proved ledger account of M/s. Narsing Decor maintained with respect to M/s. Mansha Active Pvt. Ltd. for the period between 01.04.2018 till 31.03.2025 as Ex. DW-3/1, bank statement of M/s. Narsing Decor of account no. 052284600000021 maintained with Yes Bank, Janakpuri C-3 Branch for the relevant period between 01.08.2018 til 31.03.2015, more specifically for the period 01.08.2018 to 31.08.2018, 01.02.2021 to 28.02.2021 and 01.08.2021 to 31.08.2021 as Ex. DW-3/2 (colly) and GST-1 and GST-B2B form for the FY 2021-22, FY 2022-23, FY 2023-24 and FY 2024-25 as Ex. DW-3/3 (colly). He has stated that there is no business relation between M/s. Narsing Decor and M/s. Mansha Active. He has stated that a sum of Rs. 5,00,000/- was given as a loan to M/s. Mansha Active. He has stated that Mr. Manoj Dua CS (Comm.) No. 163/2024 -22- had demanded the said loan from him. This witness has stated that he went to the office of his brother Mr. Naresh Kumar Goyal in the year 2018, where Mr. Manoj Dua was also present.
This witness is duly cross examined by Ld. Counsel for plaintiff. In cross examination, he has stated that plaintiff is his real brother. He has stated that the plaintiff is the Proprietor of NKG Creation. This witness has stated that he is having office at C-18, Basement, Janakpuri, Delhi. He has stated that the plaintiff is dealing in sports shoes and clothes. He is the Proprietor of M/s. Narsing Decor. This witness has stated that he is dealing in construction work and Alumunium fabrication. He has stated that the firm of the plaintiff and his firm is not doing any business together. This witness has stated that he had never given any permission to the defendant to consolidate the ledger of his firm and ledgers of the firm of the plaintiff. This witness has stated that he has no knowledge if the ledgers of his firm were ever merged with the ledgers of the plaintiff firm. This witness has admitted that he is having some money transactions with the plaintiff in his Yes bank account.
17. I have heard Ld. Counsels for both the parties at length and perused the record carefully.
18. My issue-wise findings are as under:-
19. Issue No. 1 -Whether the present suit is filed by duly authorized person (OPP) Burden to prove this issue is on the plaintiff. To prove this issue Ld. Counsel for the plaintiff has argued that the present suit CS (Comm.) No. 163/2024 -23- is filed by Sh. Piyush Kanti Dey who is duly authorized vide General Power of Attorney dated 21.09.2021. On the other hand, Ld. Counsel for the defendant has argued that the present suit is not filed by a duly authorized person as GPA dated 21.09.2021 is defective and therefore Sh. Piyush Kanti Dey had no power to give statement being witness on behalf of the plaintiff. I have carefully perused GPA dated 21.09.2021 marked as Ex. PW1/2. This document is executed by the plaintiff in favour of Sh. Piyush Kanti Dey and bears signature of the plaintiff and Sh. Piyush Kanti. Clause 7 of this document states as under: -
"That to do generally all other acts and things for the conduct of the said complaint/ suit/ claim as Executants could have done the same if personally present."
From plain reading of the GPA dated 21.09.2021 it can be said that Sh. Piyush Kanti Dey is duly competent to depose in the present matter. Furthermore, in cross-examination PW-1 stated that he is working as a manager with the plaintiff firm. He admitted that he purchased the stamp paper Ex.PW1/2 on behalf of the plaintiff and the residential address of the plaintiff is mentioned on it. He further admitted that he had signed Ex.PW1/2 first and thereafter the plaintiff had signed at the Notary Office. Moreover, the plaintiff appeared as PW-8 to prove execution of Ex. PW-1/2 in favour of Sh. Prashant Dey. Plaintiff admitted that he had authorized Mr. Piyush Kanti by way of GPA (Ex.PW1/2) on 21.09.2021 in writing. Plaintiff further stated that Sh. Piyush Kanti was already verbally authorized to take decisions on his behalf prior to the said GPA. During cross-examination Ld. Counsel for the defendant asked the plaintiff whether he had read the draft of CS (Comm.) No. 163/2024 -24- GPA (Ex.PW1/2)? To which the plaintiff replied that Mr. Piyush had read over and explained the draft to him in Hindi. Ld. Counsel for the defendant again asked if the plaintiff could tell the time and place of executing the GPA (Ex. PW1/2)? To which the plaintiff replied that he and Sh. Piyush Kanti Dey had signed the draft at the time and place where they had taken the print of Stamp Paper in Janakpuri. From the deposition of the plaintiff, it is clear that he had executed GPA (Ex. PW1/2) in favour of Sh. Piyush Kanti Dey. Ld. Counsel of the defendant has relied upon Man Kaur (Dead) by LRs. vs. Hartar Singh Sangha (2010) [10 SCC - 513] passed by Hon'ble Supreme Court wherein it has been held that if any attorney holder does not have personal knowledge and no specific authority to depose, then such evidence has no evidentiary value. However, in the present case PW-1 has valid power of attorney to depose in the present matter and moreover, PW-8 in cross- examination stated that PW-1 used to take decisions on his behalf. Thus, Man Kaur (Dead) by LRs. (Supra) is not applicable to the facts in hand. Therefore, the plaintiff is able to prove this issue in his favour. This issue is decided in favour of the plaintiff and against the defendants.
20. Issue No. 2 -Whether the suit of the plaintiff is within limitation ? (OPP) Burden to prove this issue is on the plaintiff. To prove this issue Ld. Counsel for the plaintiff has argued that the present suit has been filed on account of dishonoring of cheques and liabilities owed by the defendants towards the plaintiff. It is argued that on 25.02.2019 the defendant acknowledged the receipt of returned CS (Comm.) No. 163/2024 -25- stock with the attachment "Summary of Return Goods" to the plaintiff. Thereafter, on 23.10.2020, defendants themselves transferred an amount of Rs. 11,00,000/- to the plaintiff's personal bank account. In furtherance of discharge of liability, the defendant further issued 15 cheques in the month of July, 2021. However, when the cheques were presented in the bank for encashment, the same were dishonored on 16.08.2021. Thereafter, plaintiff informed about dishonor of cheques to the defendant on 20.08.2021. The present suit has been filed on 14.02.2024 which is within the period of limitation. On the other hand, Ld. Counsel for the defendant has argued that the present suit is barred by limitation as the present suit has been instituted after 3 years from the date of issuance of last invoice that is 03.02.2019.
I have heard both the counsels and carefully perused invoices Ex. PW1/6 and statement of account from the period 07.07.2020 to 31.08.2021 Ex. PW2/1. Plaintiff issued the last invoice to the defendant on 03.02.2019 and the defendant made the last payment to the plaintiff on 23.10.2020 as per the statement of accounts. Moreover, in RE: COGNIZANCE FOR EXTENSION OF LIMITATION (Suo Moto Writ Petition (C) 3/2022) passed by Hon'ble Supreme Court of India, it has been held that "It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23(4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe periods of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and CS (Comm.) No. 163/2024 -26- termination of proceedings". The same observation is given by the Hon'ble Supreme Court of India in judgment titled as "M/s. Arif Azim Co. Ltd. Vs. M/s. Aptech Ltd." Arbitration Petition No. 29/2023. Furthermore, time period utilised for pre-institution mediation under Section 12A of Commercial Courts Act deserves to be excluded. Plaintiff preferred application for pre-institution mediation on 10.07.2023 and non-starter report (Ex. P4) was issued on 21.08.2023 thereby utilising 43 days. Thus, if we calculate the period of limitation from the last date of payment made by the defendant i.e; 23.10.2020 the present suit is well within limitation. Moreover, the present suit is on the basis of cheques Ex. PW-1/9 (colly). All the cheques are from period 13.07.2021 to 10.08.2021. All these cheques were returned unpaid vide return memos Ex. PW-1/10 (colly). These return memos show date of return as 16.08.2021. If we count the period of limitation from 16.08.2021, the present suit being filed on 15.02.2024 i.e. within the period of limitation. Accordingly, this issue is decided in favour of the plaintiff and against the defendants.
21. Issue No. 3-Whether the present suit is bad for mis-joinder and non-joinder of necessary party ? (OPD) The burden to prove this issue is on the defendants. To prove this issue Ld. Counsel for the defendants has argued that defendant no. 2 i.e. Director of defendant no. 1 never made himself personally liable by execution of personal guarantees or indemnities therefore he cannot be held personally liable.
CS (Comm.) No. 163/2024 -27-Perusal of the file reveals that in para no. 12 of the plaint, the plaintiff has mentioned that "defendant No.1 along with defendant No.2 cheated, deceived, played a fraud with malafide intention, and committed a breach of trust for their unlawful gain. The conduct of the defendant No.2 is fraudulent, improper and malicious along with defendant No.1. Defendant No.1 has given the indemnity and guarantee towards the plaintiff. Defendant No.1 is under fiduciary obligation towards the plaintiff as defendant No.1 has taken the personal guarantee while issuing and signing the aforesaid fifteen cheques. Defendant No.2 has real control over the charge of the company/defendant No.1. On the assurance of defendant No.2, plaintiff has deposited the said cheques of defendant No.1. Defendant No.2 has issued the cheques on behalf of defendant No.1. Thus, both the defendants are jointly and personally liable to pay the outstanding dues arising out of the dishonour of the cheque of Rs. 01 Crore and have foreplay with malafide and malicious intention to make their unlawful gain and causes losses to the plaintiff".
In para No. 14, the plaintiff has mentioned that "defendant no. 2 issued aforesaid fifteen post-dated cheques; 001663, 001664, 001665, 001666, 001667, 001670, 001671, 001672, 001673, 001675, 001676, 001677, 001678, 001679, 001680 dated 13.07.2021, 15.07.2021, 17.07.2021, 19.07.2021, 21.07.2021, 23.07.2021, 26.07.2021, 28.07.2021, 30.07.2021, 03.08.2021, 03.08.2021, 06.08.2021, 07.08.2021, 10.08.2021, 10.08.2021 respectively of Rs. 10,00,000, Rs. 10,00,000, Rs.10,00,000, Rs. 10,00,000, Rs. 10,00,000, Rs. 5,00,000, Rs. 5,00,000, Rs.5,00,000, Rs. 5,00,000, Rs. 5,00,000, Rs. 5,00,000, Rs.
CS (Comm.) No. 163/2024 -28-5,00,000, Rs.5,00,000, Rs. 5,00,000 respectively total amounting to Rs. 100,00,000/-(Rupees One Crore) (PDC's) on behalf of defendant no. 1 of ICICI Bank account no. 181805000342, Mayapuri, Phase-I, New Delhi- 110064, on different dates with the assurances & promises that the same would be encashed on their presentation to the plaintiffs bank, on their due dates towards the agreement; "Sprandi Exclusive Distribution Agreement" dated 25.01.2017".
22. The plaintiff has proven Sprandi Exclusive Distribution Agreement dated 25.01.2017 (Ex. PW1/4) executed between the plaintiff and defendants. Defendant No.2 has signed this agreement though during the arguments it is denied by counsel for defendant No.2 that defendant No.2 has signed any agreement. It is an admitted case that defendant No.2 also gave cheques to the plaintiff.
23. Ld. Counsel for defendant No.2 has placed reliance on the Judgment of Sanuj Bathia and Ors Vs Manu Maheshwari MANU/DE/3911 of 2021 wherein it is held that "directors of the company cannot be made personally liable for the outstanding dues and liabilities of the Company, unless they have given a guarantee, indemnity etc or there are other allegations of fraud etc"
On the other hand counsel for the plaintiff has placed reliance on the judgment of Mukesh Hans & Anr. Vs Smt. Uma Bhasin & Ors RFA 14/2010 and CM No. 495/2010 decided on 16.08.2010 wherein Hon'ble High Court observed as under:-CS (Comm.) No. 163/2024 -29-
"It is equally well settled that a Director of a Company though he owes a fiduciary duty to the Company, he owes no contractual duty qua third parties. There are, however, two exceptions to this rule. The first is where the Director or Directors make themselves personally liable, ie, by execution of personal guarantees, indemnities, etc. The second is where a Director induces a third party to act to his detriment by advancing a loan or money to the Company.
On the third party proving such fraudulent misrepresentation, a Director may be held personally liable to the said third party. It is, however, well settled that this liability would not flow from a contract, but would flow in an action at tort, the tort being of misrepresentation and of inducing the third party to act to his detriment and to part with money."
Ld. Counsel for plaintiff also placed reliance on the Judgment of DDA Vs Skipper Construction Company (P) Ltd SC 1996 wherein it is held that:-
"The concept of corporate entity was evolved to encourage and promote trade and commerce; but not to commit illegalities or to defraud people. Where, therefore, the corporate character is employed for the purpose of committing illegality or for defrauding others, the court would ignore the corporate character and will look at the reality behind the corporate veil so as to enable it to pass appropriate orders to do justice between the parties concerned".
Ld. Counsel for plaintiff also placed reliance on the Judgments of N. Narayanan Vs Adjudicating Officer, Sebi, AIR CS (Comm.) No. 163/2024 -30- 2013 Supreme Court 3191 and Lala Shanti Swarup Vs Munshi Singh & Ors 1967 AIR 1315.
The plaintiff in para no.12 of the plaint has clearly mentioned about the role played by defendant No.2. Judicial assistant Ms. Kalpana (Ex. PW-7) attached with the Court of JMFC (DC-08), Dwarka District Court (SW) proved CC No. 23080/2021 titled "Naresh Goyal vs. Mansha Active Pvt. Ltd." marked as Ex. PW7/1. Perusal of this file reveals that 15 dishonoured cheques are duly signed by defendant No.2. Defendant no. 2 (DW-1) himself admitted that 15 cheques issued to the plaintiff were security cheques during cross-examination. DW-1 has also admitted that he used to deal with the plaintiff in his individual capacity.
In view of my above discussion, defendant no.2 is not a mis-joinder party to the present suit when he has executed the agreement and has given cheques to the plaintiff. Thus, this issue is decided in favour of the plaintiff and against the defendant.
24. Issue No. 4 -Whether the plaintiff is entitled for recovery of Rs. 1,00,00,000/- from the defendants, as prayed ? (OPP)
25. At the very Outset, I may observe that the provisions of Section 2 (1) (c)(xviii) of Commercial Courts Act, 2015 are very clear which reads as under:-
(c) "commercial dispute" means a dispute arising out of-
(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to CS (Comm.) No. 163/2024 -31- mercantile documents, including enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines, aircraft equipments and helicopters, including sales, leasing and financing of the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or commerce.
(viii) franchising agreements;
(ix) distribution and licensing agreements;
(x) management and consultancy agreements;
(xi) joint venture agreement;
(xii) shareholders agreements;
(xiii) subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage;
(xv)partnership agreements;
(xvi) technology development agreements; (xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;
(xviii) agreement for sale of goods or provision of services;
(xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum; (xx) insurance and re-insurance;
(xxi) contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.
26. The provisions of Section 2 (1) (c) (xviii) of Commercial Courts Act as above are very much clear. Sale of goods are governed by Sale of Goods Act, they pertain to movable properties, any dispute of sale or agreement to sale of goods of CS (Comm.) No. 163/2024 -32- specified value do come within the jurisdiction of Commercial Courts Act. The clause also includes the services and guarantee given for the goods sold. The service or guarantee may be oral or written. Therefore, the facts which alleged in the plaint comes under the Commercial disputes.
27. Secondly, now the question arises whether this Court has the pecuniary jurisdiction to adjudicate the matter which is dispute. In this regard, the provisions of Section 3 of Commercial Courts Act, 2015 provides that:
Section 3 : Constitution of Commercial Courts:
(1) The State Government, may after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under this Act:
[Provided that with respect to the High Courts having ordinary original civil jurisdiction, the State Government may, after consultation with the concerned High Court, by notification, constitute Commercial Courts at the District Judge level:
Provided further that with respect to a territory over which the High Courts have ordinary original civil jurisdiction, the State Government may, by notification, specify such pecuniary value which shall not be less than three lakh rupees and not more than the pecuniary jurisdiction exercisable by the District Courts, as it may consider necessary. ] 3[1A) Notwithstanding anything contained in this Act, the State Government may, after consultation with the concerned High Court, by notification, specify such pecuniary value which shall not be less than three lakh rupees or such higher value, for whole or part of the State, as it may consider necessary.] CS (Comm.) No. 163/2024 -33-
28. Admittedly, the Commercial Court Act was amended on 03.05.2018 and by virtue of the amendment and by virtue of the notification, the pecuniary value of the Commercial Courts Act shall not be less than Rs. 3,00,000/-. In the present case, the claim amount which is shown in the plaint is of Rs. 1,00,00,000/-. So, commercial court has jurisdiction to try and entertain the present suit.
29. The burden to prove this issue is upon the plaintiff. To prove this issue Ld. Counsel for the plaintiff has argued that the present suit has been instituted against the defendants on account of dishonour of 15 cheques issued in connection with business dealings arising out of return of stock of worth ₹1,08,25,183/-. Plaintiff invested a sum of Rs. 1,00,00,000/- in the stocks of the plaintiff as per clause 2 of the Sprandi Distribution Agreement (Ex. PW-1/4). On 30.02.2019 plaintiff returned the stock worth Rs. 1,08,25,183/- to the defendants supported by tax invoices (Ex. PW 1/6 ) and e-way bills (Ex. PW 1/7). Defendants confirmed the receipt of stock vide email dated 25.02.2019 (Ex. PW1/8). On 25.09.2020 plaintiff sent an email along with the running ledger showing balance confirmation of Rs. 1,03,58,449/- to defendants. However, the defendants chose not to reply to the same. Accordingly, in July 2021 defendant no. 1 and 2 issued 15 cheques towards discharge of their liability. Before presentation of the aforementioned cheques plaintiff informed the defendant vide email dated 11.08.2021 to ensure availability of sufficient funds in the bank. On 16.08.2021 plaintiff deposited the cheques and the same were dishonoured. Subsequently, plaintiff sent an intimation CS (Comm.) No. 163/2024 -34- of the same through email dated 20.08.2021 to the defendants. However, the defendant failed to respond to this email. Plaintiff sent legal notice dated 28.08.2021 and thereafter filed a complaint case under Section 138 of the Negotiable Instrument Act, 1881. On the other hand Ld. Counsel for the defendant has denied the existence of Sprandi Distribution Agreement (Ex. PW-1/4).
30. It is contended by Ld. Counsel for defendants that plaintiff has forged and fabricated Ex. PW-1/4 and this agreement is not proved as per law. It has been further argued that this agreement has not been stamped, witnessed by any witnesses or properly filled.
31. The photocopy of this agreement shows that it is signed by defendant no. 2, Sh. Manoj Dua and plaintiff but no question regarding agreement was asked by Ld. Counsel for defendants to PW-1 during cross examination. DW-1 has signed this document and the same signature has been appended on written statement filed by him. As such, the agreement has been executed without proper stamp. Ex. PW1/4 (Colly) was tendered in evidence without any objection from the Ld. Counsel for defendants who was present during tendering of evidence. The Hon'ble Supreme Court in JAVER CHAND AND OTHERS vs. PUKHRAJ SURANA (1961 AIR 1655) held that "That section is categorical in its terms that when a document has once been admitted in evidence, such admission cannot be called in question at any stage of the suit or the proceeding on the ground that the instrument had not been duly stamped. The only exception recognised by the section is the class of cases contemplated by s. 61, which is not CS (Comm.) No. 163/2024 -35- material to the present controversy. Section 36 does not admit of other exceptions. Where a question as to the admissibility of a document is raised on the ground that it has not been stamped, or has not been properly stamped, it has to be decided then and there when the document is tendered in evidence. Once the Court, rightly or wrongly, decides to admit the document in evidence, so far as the parties are concerned, the matter is closed. Section 35 is in the nature of a penal provision and has far-reaching effects. Parties to a litigation, where such a controversy is raised, have to be circumspect and the party challenging the admissibility of the document has to be alert to see that the document is not admitted in evidence by the Court. The Court has to judicially determine the matter as soon as the document is tendered in evidence and before it is marked as an exhibit in the case. The record in this case discloses the fact that the hundis were marked as Exs. P. 1 and P. 2 and bore the endorsement 'admitted in evidence' under the signature of the Court. It is not, therefore, one of those cases where a document has been inadvertently admitted, without the Court applying its mind to the question of its admissibility. Once a document has been marked as an exhibit in the case and the trial has proceeded all along on the footing that the document was an exhibit in the case and has been used by the parties in examination and cross-examination of their witnesses, s. 36 of the Stamp Act comes into operation. Once a document has been admitted in evidence, as aforesaid, it is not open either to the Trial Court itself or to a Court of Appeal or revision to go behind that order. Such an order is not one of those judicial orders which are liable to be reviewed or revised by the same Court or a Court of superior jurisdiction". In (2006) 11 SCC 331 - Shyamal Kumar Roy vs. CS (Comm.) No. 163/2024 -36- Sushil Kumar Agarwal, the Honourable Apex Court has held that if a document is received subject to objection, it is only tentatively marked and in such situation, Section 36 of the Indian Stamp Act would not be attracted. It was held that the party objecting to the admissibility of the document must raise an objection so as to enable the trial Judge to determine the issue upon application of his judicial mind, at the appropriate stage.
Lastly, ld. Counsel for the defendant has argued that Ex.PW1/4 is not signed by witnesses. I am not inclined to accept this contention of the ld. Counsel for the defendant. Ex. PW 1/4 is a distributorship agreement and as such there is no mandate in law that such an agreement needs to be mandatorily be signed by witnesses. In Asudamal vs. Kisanrao and Ors. [2004(2)BomCR 361], the Bombay High Court while discussing the requirements of witnesses under the provisions of the Contract Act held that, "11. None of the provision of the Indian Contract Act state that in order to prove an agreement it is necessary to examine the attesting witnesses. Only under the provision of the Indian Succession Act, for proving a Will, examination of attesting witness is essential. Thus, only where there is a specific provision made in the Act requiring that the document is to be attested then in such cases the examination of the attesting witnesses is necessary as laid down in Section 68 of the Indian Evidence Act. The finding of the appellate Court that though one of the attesting witness is alive, the original plaintiff was duty bound to examine him to prove the execution of the isarchitthi i.e. agreement of sale is, therefore, not correct."
Thus, from the forgoing discussion it can be ascertained that Ex. PW1/4 was executed between the plaintiff and the defendant.
CS (Comm.) No. 163/2024 -37-32. Now, it is to be seen whether the plaintiff has given an amount of Rs. 1 crore to the defendant no. 1 or not. The plaintiff has pleaded in the plaint that as per the terms and conditions of agreement dated 25.01.2017, the plaintiff made investment in stock by the distributorship on different intervals i.e. Rs. 25,00,000/- on 30.01.2018, Rs. 25,00,000/- on 07.02.2018, Rs. 25,00,000/- on 17.02.2018, Rs. 10,00,000/- on 14.03.2018, Rs. 10,00,000/- 07.04.2018 and Rs. 5,00,000/- on 11.04.2018. Plaintiff has also proved the statement of account as Ex. PW1/5 of Yes Bank, Janakpuri Branch which shows that a payment of Rs. 25,00,000/- was made on 30.01.2018, payment of Rs. 25,00,000/- was made on 07.02.2018, payment of Rs. 25,00,000/- was made on 17.02.2018, payment of Rs. 10,00,000/- was made on 14.03.2018, payment of Rs. 10,00,000/- was made on 07.04.2018 and payment of Rs. 5,00,000/- was made on 11.04.2018.
Moreover, when the defendant no. 2 appeared in the witness box as DW-1, he in clear terms admitted in answer to question no. 9 that his company received Rs. 1 crore from the plaintiff on account of business dealings. He has voluntarily stated that the amount came in part payments. Thus, in view of clear admission of DW-1, it is proved that plaintiff has given a sum of Rs. 1 crore to the defendants.
33. The second point is whether the plaintiff has returned the stock goods amounting to Rs. 1,08,25,183/- to the defendants or not as per clause 9.1 of Ex. PW1/4. Clause 9.1 of Ex. PW1/4 states as under :-
CS (Comm.) No. 163/2024 -38-"9.1 Material Breach : This Agreement may be terminated by either party by giving written notice of 90 days in advance, termination to the other party, such termination being immediately effective upon the giving of such notice of termination. Remaining stock in saleable condition from distributor will be taken back by supplier after liquidating in market and refund will be done by supplier in 30 days for remaining returned stocks received by supplier The amount aforementioned would be invested in the stock to be kept with the distributor."
The plaintiff has specifically averred that he has returned back the goods amounting to Rs. 1,08,25,183/- to the defendants. The defendants in para no. 9 (ii) of preliminary objections has admitted that the plaintiff returned the stock/material worth Rs. 1,08,25,183/-. Defendants in para no. 2 of preliminary submissions have also admitted that the unsold stock of worth Rs. 1,08,25,183/- was returned back to the defendant no. 1. The defendants in para no. 3 of preliminary submissions has stated that the plaintiff returned the stock/material worth of Rs. 1,08,25,183. Even in para no. 5 of preliminary submissions to the written statement, defendants have admitted that sum of Rs. 1,08,25,183/- was unsold stock which was returned by the plaintiff to the defendant.
Defendant no. 2 during cross examination has admitted in answer to question no. 27 that the plaintiff returned goods worth Rs. 1,08,25,183/- to him on 03.02.2019. DW-1 has voluntarily stated that there was an outstanding amount due to be paid by the plaintiff to the defendant. These goods were returned so that those goods may be sold by the defendant to set off the outstanding dues.
CS (Comm.) No. 163/2024 -39-In email dated 26.11.2018 (Ex. PW-1/20) Sh. Neeraj Dua vide email address "[email protected]" wrote "I Have asked Pooja to send a mail to NKG asking them to return the summer stock with details in lieu of the same they need to raise PO." During cross-examination DW-1 stated that he is unaware of email ID [email protected]. However, in the affidavit of admission and denial (Ex. DW-1/PX-1) defendant recognises his official email IDs as [email protected], [email protected] and [email protected] and states that the same have been deactivated by the service provider from 10.09.2019. As such Ex. PW1/20 is an email sent prior to 10.09.2019. Thus, the same have been duly sent by the defendant to the plaintiff asking him to return the summer stocks.
Email dated 24.01.2019 was sent by the plaintiff to the defendants. As per this email the plaintiff wrote "please find the attached sheet". This email includes 5 attachments namely "Apparels.xlsx", "Bag.xlsx", "footwear.xlxs", "staff uniform.xlxs" and "socks.xlxs". Following this defendants sent an email to plaintiff writing "please find attached physical verified stock sheet". This email contains an attachment namely "summary of return goods". Ld. Counsel for the defendants has argued that in this email the total amount is not mentioned. However, I am not inclined to accept this contention of the Ld. Counsel for the defendants as in written statement the defendant has duly admitted the value of return goods to be 1,08,25,183/-. Thus, it is proven from the foregoing discussion that the defendant accepted return goods sent by the plaintiff after duly verifying the physical stock amounting to Rs. 1,08,25,183/-.
CS (Comm.) No. 163/2024 -40-34. Now, I am dealing with contentions raised by Ld. Counsel for defendants one by one.
35. It is contended by Ld. Counsel for defendants that cheques Ex. PW-1/9 (colly) were given as security cheques. The defendants have admitted to issue the cheques but it is contention of Ld. Counsel for defendants that cheques were given at the time of execution of agreement dated 25.01.2017. It is contention of Ld. Counsel for plaintiff that cheques were given in discharge of liability. As per Sprandi agreement, plaintiff has invested amount of Rs. 1 crore with the defendants and this amount was returnable to the plaintiff at the time of termination of agreement. Admittedly, agreement dated 25.01.2017 was terminated and both the parties stopped doing business together.
The moot question which is to be decided by this Court as to whether cheques were given in discharge of liability or not. It is contended by Ld. Counsel for plaintiff that cheques were given in discharge of liability and at no point of time defendants had asked the plaintiff to return the cheques. I have perused the cross examination of DW-1. DW-1 in reply to the question no. 44 has stated that his company has not initiated any legal action for challenging the dishonor of 15 cheques. Even this witness has admitted that he has not sent reply to the legal notice sent to the defendant towards dishonor of 15 cheques in question. So, defendants at no point of time had demanded the cheques back from the plaintiff nor had sent any communication to the plaintiff to return the cheques. DW-1 has admitted that he has no document to show that he had made request for return of cheques. Thus, from the receipt of amount of Rs. 1 crore from the plaintiff, defendants CS (Comm.) No. 163/2024 -41- at no point of time asked the plaintiff to return back the cheques. Moreover, plaintiff has placed on record email 20.08.2020 Ex.
PW-1/11 which is sent to the email ID [email protected], [email protected],
[email protected], [email protected], [email protected], [email protected]. DW-1 in reply to the question no. 35 has duly admitted all these email IDs except [email protected]. However, DW-1 has identified this email in affidavit of admission denial Ex. DW1/PX1. Defendants have not sent reply to this email. It has been argued by the ld. Counsel counsel for the defendant that the domain name @manshaactive has been deactivated and no email in this regard had been sent to them. I have perused email dated 20.08.2021 carefully. This email has bounced on email IDs [email protected], [email protected], [email protected], [email protected], [email protected] but it was duly sent on [email protected]. So defendants were duly intimated about dishonor of cheques vide email dated 20.08.2020. This email states as under :-
Dear sir, As per our verbal discussion, we both agreed to discontinue our business dealings. In compliance of the same, we were ready to handed over the stock/goods lying with us, the same had been sent to you amounting to Rs. 1,08,25,183/- and received by you on 03.02.2019 in good condition. After receiving the goods, you had issued 15 Cheques for Rupees 1 Crore and further promised & assured us that the same would be en-cashed on their presentation on bank.
I would like to further inform you that as per our mutually agreed terms & conditions, you were also liable to pay Rs.60.00.000/- per CS (Comm.) No. 163/2024 -42- year as guarantee minimum gross profit, out of which you made only paid Rs. 11,00,000/- on 23.10.2021. You are still under due of balance guarantee minimum payment.
It is further inform you that the aforesaid Cheques which you had given to us for presentation have been dishonored.
So, you are requested to make the payment ASAP.
Thanks with Regards.
Naresh Kumar Goyal For, NKG Creations As per this email plaintiff duly communicated to the defendant that cheques given by the defendant were in respect of 1 Crore that would be enchased on its presentation. The defendant has duly received this email on [email protected] and has chosen not to reply to the same. The defendant has falsely denied receiving this email. Thus, from the foregoing discussion it can be ascertained that defendant issued 15 cheques in lieu of discharging its liability of 1 Crore to the plaintiff in respect of returned goods and not as security cheques.
36. It is the main contention of Ld. Counsel for defendants that after adjustment of return of goods of Rs. 1,08,25,183/-, there was balance of Rs. 85,35,326/- towards the defendant, there was balance of Rs. 22,89,857/- towards the plaintiff and defendant has made payment of Rs. 16,00,000/- through RTGS of Rs. 11,00,000/- on 23.10.2020, Rs. 3,00,000/- on 05.02.2021 & Rs. 2,00,000/- on 19.08.2021, there was balance of Rs. 6,89,857/- to be paid by the defendant to the plaintiff.
Plaintiff has summoned Mr. Surender Kumar, Lower Division Clerk, Ministry of Corporate Affairs as PW-4. This CS (Comm.) No. 163/2024 -43- witness has proved certificate of incorporation as Ex. PW-4/1 (colly). This witness has also proved AOC-4 Form alongwith Auditor's report, balance sheet, director's report, MGT-7 Annual return for the financial year 2019-2020 and the list of shareholders as on 31.12.2020 running into 45 pages as Ex. PW-4/2 (colly). This document shows that a sum of Rs. 1,14,48,457/- is shown as due and outstanding towards NKGC i.e. the plaintiff. Moreover, Mr. Yogesh Bangia, DW-2 Auditor/CA of the defendants in cross examination has admitted that that as per page no. 22 of the document Ex. PW-4/2, each entity so enlisted in sundry creditors is a separate entity. This witness in reply to the question no. 14.3 has admitted that in the list of sundry creditors, the amount of Rs. 5,00,000/- is due towards Narsing Decor and Rs. 1,14,48,457/- is due towards NKGC as on 31.03.2020. Thus, defendants himself in Ex. DW-4/2 has mentioned that a sum of Rs. 1,14,48,457/- was payable by the defendants to the plaintiff as on 31.03.2020.
37. It is the contention of Ld. Counsel for defendants that there was merger of accounts by the defendants in the Narsing Decor and NKGC and after calculating the amount only a sum of Rs. 6,89,857/- was due towards the plaintiff. It is also contended by Ld. Counsel for defendants that DW-1 has filed revised report in respect of defendant. DW-2 Mr. Yogesh Bangia, Auditor/ CA of the defendant has admitted that Ex. DW-1/7 was given by him on 02.09.2023. Admittedly, revised report was filed on 02.09.2023 for the period 2019-2020 which comes after filing of complaint case u/s 138 of NI Act by the plaintiff against the defendants. DW-2 has admitted that Mr. Manoj Dua has approached him and he requested him to rectify the accounts of different parties. This CS (Comm.) No. 163/2024 -44- witness has stated that he would not have issued certificate Ex. DW-1/7, if he was aware about the pending litigation. This witness has stated that he was not aware about the litigation on 02.09.2023 when the certificate was issued. This witness has stated that he had never issued a rectification or modification certificate to other companies after such a long time. This witness has stated that he checked copy of old ledgers and new ledgers as given to him by the company accountant. This witness has admitted that he did not check the source documents i.e. invoices, delivery challans, debit notes etc. but he checked some vouchers. This witness has voluntarily stated that he did not check all the entries and checked only sample entries. This witness has stated that he has only checked the vouchers for the year 2018-2019 and 2019-2020. He has admitted that at the time of preparation of certificate in question, other sources like Registration, GST etc. were not verified for NKGC i.e. plaintiff. He has admitted that the PAN number and GST number of NKG Creations and Narsing Decor are not same. This witness has stated that as per his professional working, it is not correct to merge ledgers of two entities with different PAN number and GST numbers. This witness has admitted that he did not obtain permission from NKGC or Narsing Decor before merging their accounts/ ledgers.
Moreover, defendants have himself produced Mr. Pradeep Kumar Goyal, Proprietor of M/s. Narsing Decor as DW-3. This witness has stated that he had never given any permission to the defendant to consolidate the ledger of his firm and ledger of the firm of the plaintiff. He has admitted that plaintiff is proprietor of M/s. NKG Creations.
CS (Comm.) No. 163/2024 -45-As defendant has not taken permission from NKGC for alteration and rectification of account of the defendant, I am of the view that DW-2 has given certificate Ex. DW-1/7 at the instance of defendant no. 2, so no reliance can be given to the certificate Ex. DW-1/7. Defendant cannot merge both the accounts of Narshing Decor and NKGC and cannot file rectification of account.
38. Ld. Counsel for plaintiff has drawn my attention towards Section of 131 of Companies Act, 2013 which states as under :-
131. Voluntary revision of financial statements or Board's report.--(1) If it appears to the directors of a company that--
(a) the financial statement of the company; or
(b) the report of the Board, do not comply with the provisions of section 129 or section 134 they may prepare revised financial statement or a revised report in respect of any of the three preceding financial years after obtaining approval of the Tribunal on an application made by the company in such form and manner as may be prescribed and a copy of the order passed by the Tribunal shall be filed with the Registrar:
Provided that the Tribunal shall give notice to the Central Government and the Income-tax authorities and shall take into consideration the representations, if any, made by that Government or the authorities before passing any order under this section:
Provided further that such revised financial statement or report shall not be prepared or filed more than once in a financial year:
Provided also that the detailed reasons for revision of such financial statement or report shall also be disclosed in the Board's report in the relevant financial year in which such revision is being made.
(2) Where copies of the previous financial statement or report have been sent out to members or delivered to the Registrar or laid before the company in general meeting, the revisions must be confined to--
(a) the correction in respect of which the previous financial statement or report do not comply with the provisions of section 129 or section 134; and CS (Comm.) No. 163/2024 -46-
(b) the making of any necessary consequential alternation.
(3) The Central Government may make rules as to the application of the provisions of this Act in relation to revised financial statement or a revised director's report and such rules may, in particular--
(a) make different provisions according to which the previous financial statement or report are replaced or are supplemented by a document indicating the corrections to be made;
(b) make provisions with respect to the functions of the company's auditor in relation to the revised financial statement or report;
(c) require the directors to take such steps as may be prescribed.
Section 131 of the Companies Act, intend to correct unintentional mistakes or non-compliance in previously files statement. This revision can be done only with approval of the National Company Law Tribunal (NCLT) for any of the three preceding financial years. The supervision of Hon'ble NCLT is necessary to ensure transparency, regulatory oversight and preventing misuse. Reliance can be placed on GOCON INFRASTRUCTURE AND PROJECTS PRIVATE LIMITED and REGISTRAR OF COMPANIES [Company Petition No. 106/131/ND/ of 2021] passed by National Company Law Appellate Tribunal, Court-V, New Delhi wherein procedure of rectification of financial statement was considered. Relevant paragraph of this judgment is as under:-
17. It is directed that a certified copy of the order be filed by the petitioner with the Registrar of Companies within 30 days after receipt of the same. A general meeting may be called within two months and notice of such general meeting along with reasons for the change in financial statements may be published in newspapers in English and in vernacular language. In the general meeting, the revised financial statements, statement of directors and the statement CS (Comm.) No. 163/2024 -47- of auditors may be put up for consideration before a decision is taken on the adoption of the revised financial statements.
18. On approval of the general meeting, the revised financial statements along with the statement of auditors or revised report of the Board, as the case may be, shall be filed with the Registrar of Companies within thirty days of the date of approval by the general meeting.
39. As it is evident from the above, rectification of financial statement cannot be carried out in a casual manner as done by the defendant in the present case. Furthermore, DW-2 Sh. Yogesh Bangai is a CA and as per his testimony he issued rectification certificate DW1/7 without checking ledger, voucher, credit note or any other document of the defendant company. It is also evident that he issued the said certificate at the instance of DW-1 after filing of the present case. Thus, DW1/7 cannot be relied upon to establish set off of dues against the plaintiff company.
40. DW-2 has admitted in answer to question 14.2 during cross examination that an amount of Rs. 1,14,48,457/- is due towards NKGS on 31.03.2020 as per Ex. PW4/2. AOC-4 Form alongwith Auditor's report, balance sheet, director's report, MGT-7 Annual return for the financial year 2019-2020 and the list of shareholders as on 31.12.2020 (Ex. PW-4/2 (colly) clearly show that an amount of Rs. 1,14,48,457/- is due towards NKGC. This alone constitutes as admission of due towards the plaintiff by the defendant. Ld. counsel fo the plaintiff has relied on MSTC Ltd. vs. Standard Chartered Bank [Appeal No. 10/2023] passed by DRAT Mumbai. Relevant paragraph of this judgment is as under :-
CS (Comm.) No. 163/2024 -48-"14. The ld. Presiding Officer had relied upon the decision of the Hon'ble Supreme Court in Uttam Singh Duggal (supra) which was followed by the Hon'ble Bombay High Court in Ultramatrix Systems (supra) to arrive at a conclusion that admission of liability in a balance sheet of the company can be the basis for passing a decree on admission unless the defendant places subsequent balance sheet showing that the discharge of liability shown in the earlier balance sheet. The Bombay High Court had held that the Rule does not require that the admission must be made by the defendant in the pleadings before the Tribunal. Mr Joshi has relied upon the decisions in Inteltech Automation Pvt. Ltd. do Ors vs. IndusInd Bank Ltd. Anr. ...............................in support of his arguments."
15. In Inteltek (supra) the Hon'ble Bombay High Court held that whilst a debt recovery Tribunal is allowed to order a decree on admission under Rule 12 (5)............................................... In that case, the Hon'ble Supreme Court noted that the denial was evasive and that the trial court was justified in holding that there was an unequivocal admission of the contents of the documents. Similarly, referring to the judgment in Ultramatix (Supra) it is observed that the division bench while adverting to Rule 12 (5) held that a statement contained in the Balance Sheet and Profit and Loss Account would be an admission o f liability unless a subsequent balance sheet was filed to show either that the amount has been paid or was not due and payable and/or any other materials provided to hold otherwise. It is observed that in that case, there was an express admission of the amount due and payable in the balance sheet.
..................................................................... .............."
Ld. counsel for the plaintiff has further placed reliance on IL&FS Financial Services Limited vs. Adhunik Meghalaya Steels Private Limited [Company Appeal (AT) (insolvency) No. 1379 of CS (Comm.) No. 163/2024 -49- 2024] passed by National Company Law Appellate Tribunal, Principal Bench, New Delhi. Relevant paragraph of this judgment is as under:-
26. We are also guided by the judgment of Hon'ble High Court of Andhra Pradesh in Vijaya Kumar Machinery & Electrical Stores Versus Alaparthi Lakshmikanthamma 1968 SCC OnLine AP 219 wherein it has been held that that the date on which the balance-sheet was signed is material to constitute an acknowledgment. It may be useful to refer to relevant portions of the said judgment................................................................
The principle that follows is that the date on which the balance-sheet was signed and presented is also material and that the presentation of the balance- sheet either to the general meeting of the company or to the Income-Tax authorities would constitute an acknowledgment of a subsisting liability as on the date of the signature and presentation of the balance-sheet.
I am of the view that as the defendant has shown an amount of Rs. 1,14,48,457/- as due towards the plaintiff in Ex. PW-1/4. This is an admission on the part of the defendant no. 1 in view of the judgments relied upon by the plaintiff.
41. It is contended by Ld. Counsel for defendants that goods returned to the defendants were in damaged conditions.
The defendant has not sent any letter or communication to the plaintiff that goods returned by the plaintiff were in damaged conditions. The defendants have sent the calculation sheet admitting the receipt of goods from the plaintiff. The defendant has sent email dated 24.01.2019 Ex. PW-1/8 regarding receipt of verified stock sheet. With this email, the defendant has annexed CS (Comm.) No. 163/2024 -50- receipt of verified stock sheet and in this email the defendant has not mentioned that goods returned by the plaintiff were defective. So, this contention of Ld. Counsel for defendants carries no force.
42. Defendants have admitted to receive payment of Rs. 1 crore from the plaintiff. Defendants have also admitted to receive returned goods from the plaintiff. I have perused Ex. PW-1/4, it states that the amount of Rs. 1 Crore was to be returned by the defendants to the plaintiff after termination of agreement Ex. PW-1/4. Para no. 3.4 & Para no. 9.1 of agreement Ex. PW-1/4 reads as under:-
"3.4: However, supplier will guarantee minimum gross profit (GP) of Rs. 60 lacs (Rs. Sixty lacs only) in a year for distributor by way of opening new stores or from repeat orders from stores by supplier. The GP will be calculated from the day of initial investment of Rs. 75 lacs (Seventy- Five Lacs only) by distributor. In case, Minimum Gross Profit of Rs. 60 lacs is not generated even with the help of supplier, then Supplier will be liable to pay such un- generated amount of Minimum Gross Profit of Rs. 60 lacs to the distributor".
9.1 Material Breach : This Agreement may be terminated by either party by giving written notice of 90 days in advance, termination to the other party, such termination being immediately effective upon the giving of such notice of termination. Remaining stock in saleable condition from distributor will be taken back by supplier after liquidating in CS (Comm.) No. 163/2024 -51- market and refund will be done by supplier in 30 days for remaining returned stocks received by supplier The amount aforementioned would be invested in the stock to be kept with the distributor."
In view to discharge its liability of Rs. 1,00,00,000/- the defendant had issued 15 post dated cheques. Ex. PW1/11 clearly shows that the defendant were aware that the cheques in respect of Rs. 1,00,00,000/- has been dishonoured but chose not to reply the same. Defendant has also admitted in its balance sheet filed before the Registrar of companies Ex. PW4/2 that a due of Rs. 1,14,48,457/- towards the plaintiff. Defendant has failed to take appropriate steps to rectify its financial statement as per Section 131 of Companies Act to set off any legal dues pending against the plaintiff. Additionally, in absence of any exercise being carried out by the defendant to correct its financial statement as per law, Balance sheet Ex. PW4/2 shall be treated as deemed acknowledgment of due of Rs. 1,14,48,457/- towards the plaintiff. DW-2 who is a expert witness also admitted that he issued DW1/7 at the instance of DW-1 and has not checked ledger, voucher, credit note, debit note or any other document before issuing the same. DW-2 also admitted that he is the writer of statement of profit and loss for the year ending on 31.03.2020 of Ex. PW4/2. Further, defendant failed to prove that any damaged goods were supplied to it as per email Ex. PW-1/8. Thus, plaintiff is able to prove that the he is entitled for recovery of Rs. 1 Crore from the defendants. Accordingly, this issue is decided in favour of the plaintiff and against the defendants.
CS (Comm.) No. 163/2024 -52-43. Issue No. 5- Whether the plaintiff is entitled to the interest on the amount of Rs. 1,00,00,000/-, if yes then at what rate and for what period ? (OPP) The burden to prove this issue is upon the plaintiff. It is contended by Ld. Counsel for defendants that plaintiff is not entitled to interest. The plaintiff has claimed interest @ 18% per annum from the defendants. Admittedly, no agreement regarding rate of interest was executed between the parties. Reliance can be placed in this regard on the judgment of Central Bank of India Vs Ravindra & Ors MANU/SC/0663/2001 passed by Hon'ble Supreme Court of India. In this judgment it is held that according to stroud's Judicial dictionary of Words and Phrases interest means, inter alia, compensation paid by the borrower to the lender for deprivation of the use of his money. In Secretary, Irrigation Department, Government of Orissa & Ors Vs G. C. Roy Manu/ SC/0297/1992 (1992) 2 SCC 508, it is held that the constitution bench opined that a person deprived of the use of money to which he is legitimately entitled has a right to be compensated for the deprivation, call it by any name. It may be called interest, compensation or damages. This is the principles of Section 34 CPC.
In this judgment, Judgment of Dr. shamlal Narula Vs CIT Punjab MANU/ SC/0109/1964 (53) was also relied upon wherein it is held that interest is paid for the deprivation of the use of the money. In this judgment it is also held that in whatever category "interest in a particular case may be put, it is a consideration paid either for the use of money or for forbearance in demanding it, after it has fallen due, and thus, it is charge for the use of CS (Comm.) No. 163/2024 -53- forbearance of money. In this sense, it is a compensation allowed by law or fixed by parties, or permitted by customs or usage, for use of money, belonging to another, or of the delay in paying money after it has become payable.
Reliance can also be placed on the judgment of Aditya Mass Communication (P) Ltd Vs APSRTC MANU/SC/0759/2003 wherein Hon'ble Supreme Court granted interest @ 12% p.a. Reliance can also be placed on the judgment of "M/s IHT Network Limited Vs. Sachin Bhardwaj" in RFA No. 835/2016 & CM Appl.14617/2020 wherein the Hon'ble High Court of Delhi has granted interest @12% per annum. I am of the view that interest claimed by the plaintiff is every excessive and plaintiff is entitled to interest @ 12% p.a. which is reasonable and usually prevailing market rate of interest on the amount of Rs. 1,00,00,000/- from 28.08.2021 since when the legal notice was issued.
44. RELIEF:
In view of my above discussions, the suit of the plaintiff is decreed and a decree of Rs. 1,00,00,000/- is passed in favour of the plaintiff and against the defendants. The plaintiff is also entitled to interest @ 12% per annum on the amount of Rs. Rs. 1,00,00,000/- from 28.08.2021 since when the legal notice was issued till realization. Plaintiff is also entitled to the cost of the suit. Decree sheet be prepared accordingly. File be consigned to record room, after necessary compliance.
Announced in the (NARESH KUMAR MALHOTRA)
open court on 06.02.2026 District Judge, Comm. Court-06
Digitally signed West, Tis Hazari Courts
NARESH by NARESH
KUMAR Extension Block, Delhi/06.02.2026
KUMAR MALHOTRA
MALHOTRA Date: 2026.02.06
16:31:10 +0530
CS (Comm.) No. 163/2024 -54-