Delhi District Court
Bala Ji Steel (Through Its Porprietor ... vs Sialkot Shop And Anr on 1 June, 2026
IN THE COURT OF DISTRICT JUDGE (COMMERCIAL)-04
DISTRICT WEST : TIS HAZARI COURTS : DELHI
CS (COMM) No. 169/2021
CNR No. DLWT01-002042-2021
In Re:-
Bala Ji Steel
(Through its proprietor)
Sh. Ajay Lohia
R/o GF, BE-306, Main Road,
Hari Nagar, West Delhi,
Delhi-110064. .................. Plaintiff
VERSUS
1. Sialkot Shop
(Through its proprietor)
C-106/4 Naraina Industrial Area
Phase-1, South West Delhi.
2. Alka Mahajan
Proprietor: Sialkot Shop
R/o B-79, 1st Floor,
Naraina Vihar, Delhi-110028. .............. Defendant
Date of Institution : 02.03.2021
Date of Reserving Judgement : 18.05.2026
Date of Judgement : 01.06.2026
SUIT FOR RECOVERY OF RS. 29,71,990/- (RUPEES
TWENTY NINE LACS SEVENTY ONE THOUSAND
NINE HUNDRED AND NINETY RUPEES ONLY) OF
WHICH THE AMOUNT OF RS. 29,13,715/- (RUPEES
TWENTY NINE LACS THIRTEEN THOUSAND SEVEN
HUNDRED AND FIFTEEN ONLY) AS A PRINCIPAL
AMOUNT INCLUSIVE OF THE INTEREST @ 24% PER
ANNUM IS RS. 58,275/- (RUPEES FIFTY EIGHT
THOUSAND TWO HUNDRED AND SEVENTY FIVE
ONLY) FOR THE PERIOD OF ONE MONTH AND THE
CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026
CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 1 of 54
FURTHER INTEREST AS PENDENTE LITE IS TO BE
ACCRUED TILL THE REALISATION OF THE
AMOUNTS.
____
AND
Counter Claim (Comm.) No. 34/2021
CNR No. DLWT01-007212-2021
In Re:-
Alka Mahajan
W/o Late Romi Mahajan
Proprietress
M/s Sialkot Shop
C-106/4 Naraina Industrial Area
Phase-1, South West Delhi. ...............Counter Claimant
VERSUS
1. M/s Balaji Steel
(Through its proprietor)
Sh. Ajay Lohia
Ground Floor, BE-306, Main Road,
Hari Nagar, West Delhi,
Delhi-110064.
2. Sh. Ajay Lohia
Proprietor
M/s Balaji Steel
Ground Floor, BE-306, Main Road,
Hari Nagar, West Delhi,
Delhi-110064. ..............Non Counter Claimant/Plaintiff
Date of Institution : 04.10.2021
Date of Reserving Judgement : 18.05.2026
Date of Judgement : 01.06.2026
CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026
CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 2 of 54
Appearance
Sh. K. B. Shankar, Ld. Counsels for the plaintiff.
Sh. Manish Malhotra, Ld. Counsel for the Defendant/Counter
Claimant.
COMMON JUDGMENT
1. This common judgement shall dispose of the suit filed by the plaintiff and Counter Claim filed by the defendant both seeking recovery of money from each other with pendente lite and future interest besides costs of the suit and the Counter Claim.
Case of the Plaintiff
2. The case of the plaintiff, as set out in the plaint, is that the plaintiff is a proprietorship firm carrying on business under the name and style of Balaji Steel and is engaged in the business of trading and supplying steel pipes and other raw materials. The defendants are stated to be carrying on business under the name and style of Sialkot Shop through defendant no. 2, who is its proprietor, and are engaged in manufacturing and allied activities.
3. It is the case of the plaintiff that the parties had longstanding business relations from the year 2012 till 2019. During the said period, the defendants used to place orders for supply of steel pipes and other raw materials, pursuant to which the plaintiff supplied the goods and raised bills and invoices from time to time on a bill-to-bill basis. According to the plaintiff, though the defendants made certain payments against the invoices during the course of business dealings, substantial amounts pertaining CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 3 of 54 to supplies made during the financial year 2018-2019 remained unpaid.
4. The plaintiff has pleaded that it maintained regular books of accounts in the ordinary course of business, which were duly audited every financial year, and that all transactions between the parties were duly reflected therein. The ledger accounts maintained by the plaintiff show acknowledgment of transactions and part payments made by the defendants from time to time. The plaintiff has further averred that it regularly deposited GST and other taxes with the concerned authorities in respect of the transactions carried out with the defendants and also filed GST returns and Income Tax Returns for the relevant period.
5. According to the plaintiff, a sum of Rs. 29,13,715/- became due and payable by the defendants, and demands for payment were raised from June 2018 onwards. However, the defendants kept postponing payment on one pretext or another while continuing to place further orders, including supplies for another concern allegedly owned by defendant no. 2, namely Sign Design. The plaintiff claims that it continued business dealings with the defendants in the expectation that the outstanding dues would be cleared, but the defendants failed to discharge their liability.
6. The plaintiff has further stated that it received a notice dated 03.07.2019 under Section 133(6) of the Income Tax Act, 1961 from the Income Tax Department seeking clarification regarding certain financial transactions between the parties for the CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 4 of 54 assessment year 2017-2018. The plaintiff claims that, upon scrutiny, it was found that the defendants had failed to properly disclose an amount of Rs. 12,00,000/- out of a total transaction amount of Rs. 20,58,213/-. The plaintiff thereafter submitted a clarification/reply dated 08.08.2019 to the Income Tax Department.
7. It is further averred that despite repeated oral demands made after the financial year 2019-2020, the defendants neither cleared the outstanding dues nor responded positively to the plaintiff's requests. Consequently, the plaintiff got issued a legal notice dated 04.11.2020 through counsel calling upon the defendants to make payment of the outstanding amount. The said notice was duly served upon the defendants, but according to the plaintiff, neither any reply was received nor any payment was made.
8. Aggrieved by the conduct of the defendants, the plaintiff initiated pre-litigation mediation proceedings in compliance with the provisions of the Commercial Courts Act but in vain. Hence, the plaintiff instituted the present suit under the provisions of the Commercial Courts Act, 2015 seeking recovery of Rs. 29,71,990/- along with pendent lite and future interest at the rate of 24% per annum, besides costs of the suit.
Case of the Defendant in Defense & Counter Claim
9. The defendants, in their written statement as well as in the counter claim filed by defendant no.1/counter claimant Ms. Alka Mahajan, proprietress of M/s Sialkot Shop, raised several preliminary objections to the maintainability of the suit. It was CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 5 of 54 contended that the present dispute did not constitute a "commercial dispute" within the meaning of the Commercial Courts Act, 2015 and, therefore, the Commercial Court lacked jurisdiction to entertain the suit. The defendants also questioned the competence and locus standi of Shri Ajay Lohia to institute the suit on behalf of the plaintiff concern. Objections were further taken regarding limitation, insufficiency of court fees, improper verification of the plaint, non-compliance with mandatory pre-institution mediation under the Commercial Courts Act, and lack of territorial jurisdiction. According to the defendants, the mere existence of the plaintiff's office within the jurisdiction of the Court did not confer territorial jurisdiction. It was further pleaded that the plaint disclosed no valid cause of action and was liable to rejection under Order VII Rule 11 CPC. The defendants alleged that the suit was frivolous, vexatious, malicious and based upon forged, fabricated and manipulated documents instituted only to extract unlawful gains.
10. On merits, the defendants denied that any amount was due or payable to the plaintiff. While admitting that the parties had longstanding business dealings for about 9-10 years relating to the supply of stainless steel pipes and allied material, the defendants alleged that the plaintiff had deliberately concealed several payments received from them. It was specifically pleaded that a sum of Rs.5,00,000/- was paid to the plaintiff through cheque no.360635 dated 19.05.2018, which was duly encashed by the plaintiff but was intentionally omitted from the plaintiff's ledger accounts and pleadings.
CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 6 of 54
11. The defendants further alleged that in September 2019 the plaintiff approached them seeking financial assistance in cash on the pretext that he was required to make urgent cash payments to his vendors. Relying upon the cordial and longstanding business relationship between the parties, the defendants allegedly paid Rs.5,00,000/- in cash to the plaintiff on 24.09.2019 against a cash receipt voucher. It was further alleged that a cheque bearing no.722208 dated 23.10.2019 for Rs.1,00,000/- was also issued to the plaintiff and duly encashed by him. According to the defendants, the plaintiff assured them that the cash amounts would subsequently be returned, but despite repeated requests and assurances, the plaintiff failed to do so.
12. The defendants further pleaded that on the occasion of Rakshabandhan on 03.08.2020, the plaintiff visited the residence of defendant no.1/counter claimant, represented that he was in financial distress and again sought monetary help. Believing his representations, the defendants allegedly paid another sum of Rs.8,00,000/- in cash on 03.08.2020 against a receipt voucher and thereafter a further amount of Rs.10,00,000/- in cash on 13.08.2020 against another receipt voucher. In support of these transactions, the defendants relied upon computerized statement of accounts, bank statements, cash receipt vouchers and certificates under Section 65B of the Indian Evidence Act.
13. According to the defendants/counter claimant, despite repeated demands and assurances, the plaintiff never returned the aforesaid cash amounts. It was further alleged that because of these cash transactions and the conduct of the plaintiff, the CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 7 of 54 defendants suffered additional income tax liability to the extent of approximately Rs.7,15,662/-, which they had either already paid or become liable to pay. The defendants alleged that such liability arose solely due to the wrongful and deceitful conduct of the plaintiff, who induced them into making cash payments and thereafter failed to repay the same.
14. The defendants/counter claimant thus alleged that the plaintiff had acted fraudulently and with mala fide intention to make unlawful gains and, instead of repaying the cash amounts, instituted the present false recovery suit on the basis of forged and fabricated documents. The defendants denied the authenticity of the bills, ledger accounts and other documents relied upon by the plaintiff and denied the existence of any enforceable debt or liability towards the plaintiff. They also denied the plaintiff's allegations regarding outstanding dues, GST liabilities, legal notices and accrual of cause of action.
15. On the basis of the aforesaid averments, the defendants prayed for dismissal of the suit with exemplary costs. By way of counter claim, defendant no.1/counter claimant sought recovery of Rs.7,15,662/- towards damages/losses allegedly suffered on account of the income tax liability arising from the aforesaid transactions, along with pendente lite and future interest @12% per annum from April 2021 till realization and costs of the proceedings.
CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 8 of 54 Plaintiff's reply to the Counter Claim
16. Reiterating his stand in the plaint, the plaintiff/respondent opposed the counter-claim as false, frivolous, fabricated and a counterblast to the recovery suit filed by them. He asserted that the counter-claim had been filed only to delay the recovery proceedings and avoid payment of the outstanding dues claimed in the suit.
17. The plaintiff denied the allegations regarding cash transactions, alleged borrowings and liability towards any tax payments claimed by the counter-claimant. According to him, no such cash transactions ever took place and the vouchers, cash receipts, ledger entries and other documents relied upon by the counter- claimant were forged and fabricated. He, however, admitted receipt of Rs.1,00,000/- through cheque, stating that the same represented part payment towards business dues payable by the defendants and not any loan or financial assistance. He also admitted that an amount of Rs.5,00,000/- received through bank transaction in May 2018 had inadvertently not been reflected in their ledger account due to an accounting error, for which amendment in the suit was sought.
18. The plaintiff further contended that there were no business transactions between the parties during the financial years 2019- 2020 and 2020-2021 and, therefore, no tax liability could be attributed to them. He denied the alleged liability of Rs.7,15,662/- as well as the claim for interest. The plaintiff also challenged the maintainability of the counter-claim on technical CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 9 of 54 grounds, including defects in verification, affidavit and supporting documents, and prayed for dismissal of the counter- claim with costs.
Issues Framed
19. Upon consideration of the pleadings and documents on record, following issues were framed in the main suit vide order dt. 16.10.2023 for determination:
1. Whether the suit has not been filed by a competent person? OPD
2. Whether the suit is time barred? OPD
3. Whether the court has no territorial jurisdiction to entertain and try the present suit? OPD
4. Whether the plaintiff has concealed material facts as described in para 6 of the preliminary objections in the written statement? OPD
5. Whether the plaintiff is entitled for recovery of suit amount of Rs. 23,13,715/- (as per order dated 22.03.2025) along with interest as prayed for? OPP
6. Relief.
20. Vide same order following issues were framed in the counter claim:-
1. Whether the Counter-claimant is entitled to the counter claim amount with interest as prayed for? OPCC
2. Relief Common Evidence
21. Common evidence was recorded in main suit and counter claim.
CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 10 of 54 Plaintiff's Evidence
22. In support of its case, the plaintiff examined its proprietor Sh.
Ajay Lohia as PW1 who tendered his evidence (examination-in- chief) by way of affidavit Ex. PW1/1 wherein he deposed in line with stand of the plaintiff in the plaint and in reply to the counter claim relying upon following documents:-
a. Affidavit in evidence of PW-1 Ex. PW1/1, b. Copy of proprietorship document of Balaji Steel marked as Mark- A (de-exhibited from Ex. PW1/2), c. Web-generated copy of GSTIN record of defendants Ex.
PW1/3 marked as Mark- B (de-exhibited from Ex. PW1/3), d. Copies of bills and invoices for the period 2012-2019 Ex. PW1/4 (Colly) (one of the invoice No. 075 in book No.2 was de-exhibited and was marked as Mark-C), e. Ledger accounts/books of accounts for the period 2012- 2020 marked as Mark- D (de-exhibited from Ex. PW1/5 colly), f. Reply/clarification dated 08.08.2019 submitted to Income Tax Department marked as Mark- E (de-
exhibited from Ex. PW1/6), g. Legal notice dated 04.11.2020 along with postal receipts and delivery reports Ex PW1/7 (but tracking report forming part of Ex PW1/7 were de-exhibited and marked as Mark- F) h. Ledger account of plaintiff and K.P. Saar Engineering Ex. PW1/8.
i. Ledger account of plaintiff and defendants regarding Rs. 1 lakh transaction Ex. PW1/9.
j. IDBI Bank statement relating to Rs. 5 lakhs transaction Ex. PW1/10.
k. HDFC Bank statement relating to Rs. 1 lakh transaction Ex. PW1/11.
CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 11 of 54 l. Certificate under Section 65-B of the Indian Evidence Act Ex. PW1/12.
m. Aadhaar Card of PW-1 Ex. PW1/13.
23. PW-1 in his testimony specifically deposed that after filing of the written statement, amounts of Rs. 5 lakhs and Rs. 1 lakh were adjusted/deducted upon clarification by the plaintiff. He explained that an amount of Rs. 5 lakhs received on 19.05.2018 had inadvertently been reflected in the account of K.P. Saar Engineering, while another amount of Rs. 1 lakh had been received on 23.10.2019. In support thereof, the ledger accounts and bank statements were exhibited as Ex. PW1/8 to Ex. PW1/11, the certificate under Section 65-B of the Indian Evidence Act as Ex. PW1/12, and his Aadhaar Card as Ex. PW1/13. PW-1 deposed that after accounting for the aforesaid adjustments, the defendants remained liable to pay a sum of Rs. 23,13,715/- along with interest of Rs. 46,266/- calculated for one month at the rate of 24% per annum, besides pendente lite and future interest.
24. During the course of tendering of evidence, certain documents earlier exhibited were de-exhibited on the ground that they were photocopies and/or were not supported by a certificate under Section 65-B of the Indian Evidence Act.
25. Accordingly, Ex. PW1/2, Ex. PW1/3 and Ex. PW1/5 (Colly) were de-exhibited and marked respectively as Mark-A, Mark-B and Mark-D. Out of Ex. PW1/4 (Colly), the bill bearing Book No. 02 and Invoice No. 075 was also de-exhibited being a CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 12 of 54 photocopy and marked as Mark-C. Ex. PW1/6 was similarly de- exhibited and marked as Mark-E. Further, the tracking reports forming part of Ex. PW1/7 (Colly) were de-exhibited for want of a certificate under Section 65-B of the Indian Evidence Act and were marked as Mark-F.
26. PW-1 further stated that in view of the order dated 01.02.2025 passed by the Trial Court and the order dated 08.07.2025 passed by the High Court of Delhi in CM(M) No. 1167/2025, paragraph 11 of his affidavit Ex. PW1/1 stood deleted. He further stated that the averments contained in paragraphs 6, 8 and 12 of the affidavit, being beyond the pleadings in the original plaint, would also be treated as deleted. Para 6 of his affidavit relates to his deposition about his account being audited every year, para 8 relates to his testimony about his repeated demand of outstanding amount of Rs. 23,13,715/- and para 12 relates to his admission about receipt of Rs. 5 lacs and Rs. I lacs by way of cheques and adjustment given subsequently.
27. PW1 was duly cross examined by the Ld. Counsel for the defendant/counter claimant. In his cross examination PW1 deposed that he is a graduate and proprietor of Balaji Steel. He stated that the GST registration certificate and bank account statement filed on record establish that Balaji Steel is a proprietorship concern and denied the suggestion that there is no legal document to prove either the proprietorship concern or his authority to depose on behalf of the plaintiff. He stated that the last supply of goods to the defendant was made sometime in 2018, though he could not recall the exact month or date without CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 13 of 54 seeing the record. According to him, the accounts of the firm were maintained by a freelance accountant hired by him, who also worked for other persons. He was unable to state the exact date of the last payment received from the defendant without looking at the accounts, though voluntarily added that around ten days prior to Diwali in 2018, he had received Rs.1 lakh through cheque from the defendant after repeated requests. He further stated that he used to supply stainless steel pipes to the defendant and clarified that he was only a trader and not a manufacturer.
28. PW1 denied the suggestion that all payments received from the defendant were not reflected in the ledger and voluntarily stated that all payments were made through cheque and duly reflected therein. He admitted that he had dealings with two firms of the defendant, namely "Sialkot Shop" and "Sign Designs", though he did not know their constitution or composition. He stated that an amount of approximately Rs.1.5 lakh remained outstanding against Sign Designs, but admitted that he had neither filed any suit for recovery of the said amount nor obtained any confirmation from the defendant or Sign Designs regarding outstanding balances. He also did not remember whether he had shared his ledger account with them. PW1 further stated that payments of Rs.5 lakh and Rs.1 lakh received from the defendant had inadvertently been credited in the ledger under Sign Designs but that the mistake was later corrected. In support thereof, he stated that the corrected ledger had been placed on record. He denied the suggestion that the story regarding wrong reflection of payments was concocted during cross-examination.
CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 14 of 54
29. PW1 admitted that on 03.08.2020 he had gone to Ms. Alka Mahajan for getting Rakhi tied, while adding that he respected her as an elder sister. He stated that he had narrated all facts to his counsel who accordingly drafted the plaint and affidavit. According to him, the suit claim of about Rs.23 lakhs related to dues existing prior to 2018, when the defendant lastly paid Rs.1 lakh through cheque. He admitted ignorance about whether the defendant had filed a written statement or whether any replication had been filed. He also stated that all documents relating to the case had been filed with the plaint and affidavit.
30. With regard to transportation of goods, PW1 stated that he was unaware whether any transportation document had been filed and voluntarily added that the goods used to be transported through rickshaw. He admitted that the bills did not mention transportation through rickshaw. He further admitted that he did not know how many bills had been filed on record or for how many bills the suit amount was claimed, stating voluntarily that the ledger would reveal the same. He admitted that the plaint and affidavit did not specify the bill-wise details corresponding to the claimed amount. He further stated that payments were not made bill-wise and only part payments were received, though he could not tell to which bill the last part payment related, again stating that the ledger would disclose the same.
31. PW1 identified one "Sh. Ishwar Ji" as his freelance accountant, though he could not tell his full name. According to him, the accountant used to visit his establishment weekly. When confronted with paragraph 6 of the plaint regarding audited CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 15 of 54 account books, he stated that the paragraph referred to audit and approval of account books by a chartered accountant. However, when asked whether any duly authenticated or approved accounting record had been filed on record, he replied that only his accountant could answer and that he himself did not know. He admitted that no GST record relating to the invoices in question had been filed and also admitted that no income tax returns had been placed on record. He further stated that he had an email ID and had been using a smartphone since 2014-2015.
32. PW1 identified his signatures on pages 11 to 14 of the plaint and affidavit. However, upon being shown original vouchers dated 03.08.2020 and 13.08.2020, he denied that the signatures appearing thereon were his signatures. Those documents were marked as Mark R-1 and Mark R-2. He denied the suggestion that he had executed the vouchers after receiving cash payments mentioned therein. He also stated that he had no knowledge regarding the summary judgment order dated 22.03.2025 or whether the same had been challenged.
33. PW1 further deposed that there were no fixed payment terms or specific credit period between the parties and that transactions were dependent upon assurances. He stated that Balaji Steel had only one bank account at a time, initially with IDFC Bank and later with HDFC Bank, though he could not recall the exact duration of operation of each account. He also admitted having a separate personal bank account. He acknowledged that an accountant named Manoj worked with the defendant establishment and stated that he had learnt about his death two CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 16 of 54 years earlier. He also referred to his interactions with one Harish Ji and a female accountant employed with the defendant.
34. When questioned about a reply dated 08.08.2019 allegedly submitted before the Income Tax Department in relation to transactions with the defendant, PW1 stated that he did not remember whether such a document had been filed. He denied giving evasive answers deliberately. He admitted that apart from the legal notice, he had not made any written demand for payment, though he voluntarily stated that oral requests had been made, including on Raksha Bandhan. However, he could not specify the dates, months or years of such oral demands and admitted that no reference to them existed in the plaint or affidavit. He denied the suggestion that no such oral demands were ever made.
35. PW1 stated that he did not know the date of the legal notice and only knew that it was mentioned therein. He admitted that he used to regularly visit the defendant's establishment for payment and voluntarily stated that guards often prevented him from meeting the defendant, which compelled him to file the present case. He further admitted that as on 08.08.2019 he had not raised any demand for outstanding dues from the defendant, while adding that the ledger alone could show whether any amount was outstanding on that date. He also admitted that he himself had not seen the ledger.
36. PW1 stated that he did not remember whether he had visited the defendant on 13.08.2020. When confronted with voucher dated 24.09.2019, he denied the signatures thereon and the document CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 17 of 54 was marked as Mark R-3. He denied having executed the voucher after receiving cash payment. He further admitted that none of the bills relied upon by him bore the signatures of the defendant or its officials. He stated that he had shifted from his Hari Nagar address some years earlier and admitted that he had not informed the Court about the change of address.
37. Lastly, PW1 admitted that he had not brought the originals of bills Ex.PW1/4 (colly.) to Court. He could not orally state the last date on which goods were supplied to the defendant, again stating that the bills and ledger would reveal the same. He denied the suggestions that the documents filed by him were forged or fabricated, that no amount was due from the defendant, that instead he himself owed Rs.7,15,662/- to the defendant, that no legal notice had been served, or that he was deposing falsely. Thereafter, plaintiff closed their evidence.
Defendant's/Counter-Claimant's Evidence
38. In support Counter-Claimant/defendant's case, defendants/Counter Claimant examined three witnesses. Smt. Alka Mahajan, the proprietress of M/s Sialkot Shop and defendant no. 2 examined herself as DW1 who tendered her affidavit Ex. DW1/A in examination-in-chief wherein she reiterated the stand taken in the WS and Counter claim while relying upon following documents:
a. Downloaded GST Registration Ex.DW1/1 b. Statement of Bank Account Ex.DW1/2 c. Voucher dated 24.09.2019 Ex.DW1/3 d. Copy of Bank Account Statement of the defendant Ex.DW1/4 CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 18 of 54 e. Voucher dated 03.08.2020 Ex.DW1/5 f. Voucher dated 13.08.2020 Ex.DW1/6 g. Computerized Statement of Account for period 01.04.2013 to 31.03.2021 Ex.DW1/7 h. Certificate under Section 65B of Indian Evidence Act Ex.DW1/8 i. Income Tax Return Ex.DW1/9 j. Tax Audit Report and Tax Payment Receipt Ex.DW1/10
39. She was duly cross examined. In her cross-examination, DW1 stated that she had business dealings with the plaintiff for about 8 to 10 years and used to purchase stainless steel pipes from him. She denied the suggestion that payments were made bill-wise and stated that payments were generally made as lump-sum or on-account payments. She stated that she did not remember whether the income tax returns for the year 2017-18 had been placed on record and expressed lack of knowledge regarding any notice allegedly issued by the Income Tax Department to the plaintiff concerning transactions amounting to Rs. 20,58,213/- for goods supplied during the year 2017-18. She volunteered that she would have to check the records regarding the exact amount of transactions during that period.
40. DW1 further deposed that she was also running another firm, namely Sign Design, in partnership with her late mother and daughter, and that the said firm also had business transactions with the plaintiff. She stated that she had never received any legal notice from the plaintiff regarding any alleged outstanding dues. She admitted that the plaintiff's office was situated at Hari Nagar while her firm operated from Naraina and further admitted that goods supplied by the plaintiff were received at Naraina. CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 19 of 54
41. With regard to the disputed cash payments, DW1 stated that she had paid tax on the amount of Rs. 23,00,000/- allegedly paid to the plaintiff through vouchers dated 24.09.2019, 03.08.2020 and 13.08.2020. She admitted that she had not filed on record the income tax returns for the assessment year 2021-22 in respect of transactions amounting to Rs. 12,00,000/-, but volunteered that at the time of filing the written statement, the due date for filing the said return had not arrived. She further volunteered that the photocopy of the income tax return for the year 2020-21 was already on record and that she had brought the originals of the income tax returns for assessment years 2020-21 and 2021-22, wherein the tax paid concerning the aforesaid cash payments was duly reflected.
42. DW1 admitted that she was registered under GST and therefore must have been availing GST input credit. She further admitted that on 03.08.2020, the day of Rakshabandhan, the plaintiff had come to her and demanded money and also admitted that the plaintiff had demanded his outstanding dues. However, she stated that no separate ledger confirmation had been obtained from the plaintiff regarding the alleged cash payments and volunteered that the plaintiff had received the cash after duly signing the relevant vouchers.
43. She further admitted that the counterclaim filed by her was based upon the alleged cash payments made to the plaintiff vide vouchers Ex. DW1/3, Ex. DW1/5 and Ex. DW1/6. She denied the suggestion that no cash payments had been made, denied that the ledger account for the period 01.04.2013 to 31.03.2021 was CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 20 of 54 false and fabricated, and also denied that the certificate under Section 65B of the Indian Evidence Act was improper or not in accordance with law. She lastly denied the suggestion that she was deposing falsely.
44. Defendants examined Handwriting Expert Sh. Manas Mishra as DW2 who appeared as a summoned witness and deposed that he is a court-qualified forensic document and handwriting expert with approximately 17 years of experience. He stated that he had rendered scientific opinions in a large number of cases both in India and internationally. He further deposed that he possessed a postgraduate certificate in Forensic Science from Delhi University and had undergone a two-year apprenticeship in forensic document examination, handwriting identification, and CSI photography under Mr. V.N. Sehgal, former Director, CFSL, CBI, New Delhi. He proved on record his forensic report along with 13 photo-demonstrated charts, scientific reasons, extracts from scientific authorities, certificate under Section 65-B of the Indian Evidence Act, and copies of his qualifications, collectively exhibited as Ex. DW2/1 (colly). In his report he had concluded that that the three disputed signatures marked as D-1, D-2 and D-3 (appearing on Ex.DW1/3, Ex.DW1/5 and Ex.DW1/6) were written by the same person who wrote the admitted signatures marked as A-1 to A-4, namely Ajay Lohia. According to him, the disputed signatures were genuine signatures and not forged imitations.
45. In his cross-examination, DW-2 stated that his postgraduate certificate course was of one year duration and included field CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 21 of 54 training at CFSL, CBI, New Delhi. He admitted that the course itself was not specifically specialized in handwriting examination, but volunteered that he received specialized practical training during his two-year apprenticeship under Mr. V.N. Sehgal, where he was trained in identifying neuromuscular habits reflected in handwriting through actual case studies.
46. When questioned regarding the scientific methods adopted for scrutiny of the disputed and admitted signatures, DW-2 stated that he had examined the original documents, particulars of which were mentioned in his report. He explained that his examination was based on the principles of handwriting identification involving neuromuscular movement patterns, hidden class and individual characteristics, natural variations, line quality analysis, pen pressure patterns, hesitations, tremors, and the effect of ballpoint pen writing on moist and dry surfaces. He admitted that he had not specifically mentioned the optical instruments used in the examination and had not employed hygroscopy or hygrometer methods for detecting moisture on the revenue stamps. However, he volunteered that such methods were unnecessary in the present examination, as handwriting identification primarily concerned qualitative analysis.
47. With regard to the letters "L", "O", and "H" in the name "Lohia"
appearing in the disputed signatures, DW-2 stated that it was unnecessary to discuss every individual alphabet once the master writing pattern had been extracted from the admitted signatures. He explained that his conclusions were based on the cumulative effect of all scientific observations, connecting strokes, CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 22 of 54 movement impulses, and class and individual characteristics rather than isolated similarities or differences.
48. DW-2 further stated that there could be no fixed percentage for determining natural variations in signatures, as handwriting examination is essentially qualitative in nature. He deposed that he had expressed his opinion regarding pen pressure in his report and estimated that during his 17 years of experience he had examined more than 4,000 cases involving comparison of signatures. He also stated that the overlapping method was not required in the present case as there were no line quality defects in the signatures examined, and that the qualitative analysis regarding length and width had already been detailed in his report.
49. In response to a question regarding the percentage of natural variation when a person signs twice within a short span of time, DW-2 stated that it was subjective and varied from individual to individual. He denied the suggestions that he had failed to use appropriate scientific tools or apparatus for examination of the disputed and admitted signatures and further denied the suggestion that his report was false.
50. Defendants last witness was DW3 Sh. Mukesh Sagar, Office Superintendent from the office of the Income Tax Officer, Ward No. 50(1), New Delhi, appeared as a summoned witness and deposed that he had brought the summoned record pursuant to an authorization letter dated 29.04.2026 issued by Sh. Ashok Kumar, Income Tax Officer. The said authorization letter was exhibited as Ex. DW3/A. CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 23 of 54
51. He further deposed that he had produced the income tax return acknowledgments along with Form No. 3CB and Form No. 3CD pertaining to Smt. Alka Mahajan (PAN No. BAMTPM0572E) for the Assessment Years 2020-2021 and 2021-2022, together with a certificate under Section 65-B of the Indian Evidence Act in respect of the electronic records. The said documents running into pages 1 to 183 were collectively exhibited as Ex. DW3/B (colly). At the stage of exhibition, Ld. Counsel for the plaintiff raised an objection on the ground that the said documents were beyond the pleadings.
52. In his cross-examination, DW-3 denied the suggestion that the certificate under Section 65-B of the Indian Evidence Act was not in accordance with law. He further denied the suggestion that the information retrieved for Assessment Years 2020-2021 and 2021-2022 from the records maintained by the Income Tax Department was incorrect. He also denied the suggestion that he was deposing falsely.
Contentions of Ld. Counsel for Plaintiff
53. Ld. Counsel for the plaintiff argued that the plaintiff, namely Balaji Steel, had successfully established its claim for recovery through oral as well as documentary evidence. It was contended that the parties admittedly shared longstanding commercial dealings for nearly eight to ten years, a fact unequivocally admitted by DW1 herself during cross-examination. Ld. Counsel submitted that the defendants regularly purchased stainless steel pipes and allied materials from the plaintiff and that the supplies CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 24 of 54 were effected pursuant to continuous business transactions maintained in a running account.
54. It was argued that PW1, Sh. Ajay Lohia, had categorically proved that the plaintiff maintained regular books of account in the ordinary course of business and that the ledger accounts, invoices and bank records reflected the outstanding liability of the defendants. Ld. Counsel emphasized that even though certain documents were de-exhibited on technical grounds, the underlying transactions and business relationship stood admitted by the defendants themselves. The defendants never disputed receipt of goods supplied by the plaintiff and, significantly, admitted that payments were not made invoice-wise but on a running and lump-sum basis. According to the plaintiff, this admission completely demolished the defence that the plaintiff was required to correlate each payment with a specific invoice.
55. Ld. Counsel further submitted that the defendants had failed to produce any cogent evidence showing full and final payment of the outstanding dues. The plaintiff had candidly admitted an inadvertent accounting omission regarding the amount of Rs.5,00,000/- received in May 2018 and another amount of Rs.1,00,000/- received in October 2019. It was argued that instead of weakening the plaintiff's case, such candid disclosure reflected bonafides and transparency. PW1 explained that the said entries were mistakenly reflected in different's firm account and were subsequently corrected. Ld. Counsel submitted that after giving full adjustment of these amounts, the outstanding liability still remained at Rs.23,13,715/-.
CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 25 of 54
56. Ld. Counsel argued that the defence regarding alleged cash payments of Rs.23,00,000/- was wholly false, fabricated and inherently improbable. It was submitted that the defendants alleged that such huge cash amounts were paid merely as "financial assistance" without any written agreement, loan document, acknowledgment of debt, repayment schedule or independent witness. Ld. Counsel argued that no prudent businessperson would advance such enormous amounts in cash to a trader allegedly already indebted to them. It was contended that the story was concocted only after institution of the suit.
57. The plaintiff further contended that the alleged vouchers Ex.
DW1/3, Ex. DW1/5 and Ex. DW1/6 were forged and fabricated documents. PW1 specifically denied his signatures appearing on the vouchers. Ld. Counsel argued that the defendants failed to prove execution of the vouchers in accordance with law. No attesting witness, scribe or independent witness to the alleged cash transactions was examined. The alleged transactions were also contrary to ordinary commercial practice and income tax norms governing large cash dealings.
58. It was argued that the evidence of DW2, the handwriting expert, was unreliable and insufficient to conclusively prove the signatures. Ld. Counsel submitted that DW2 admitted in cross- examination that his postgraduate course was not specifically specialized in handwriting examination and that he had not employed various scientific tools or instrumental methods. It was contended that the opinion of a handwriting expert is merely advisory in nature and cannot override direct denial by PW1, CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 26 of 54 particularly in the absence of corroborative evidence regarding actual delivery of cash.
59. Ld. Counsel further submitted that the alleged income tax liability claimed in the counter-claim was entirely misconceived. The defendants failed to establish any legal nexus between the alleged cash payments and the supposed tax burden. Even assuming such payments were made, no cause of action for recovery of tax liability from the plaintiff arose in law. It was argued that the counter-claim was speculative, unsupported by law and filed merely as a pressure tactic to defeat the legitimate recovery claim of the plaintiff.
60. Ld. Counsel also emphasized that DW1 herself admitted during cross-examination that on Rakshabandhan, the plaintiff had demanded his outstanding dues. According to Ld. Counsel, this admission was extremely material because it corroborated the plaintiff's case that money remained payable by the defendants. It was contended that if the plaintiff had already received Rs.23,00,000/- in cash, there was no reason for him to repeatedly demand payment.
61. Ld. Counsel argued that the defendants never replied to the legal notice issued by the plaintiff, which constituted an adverse circumstance against them. The defendants also failed to produce any contemporaneous communication demanding return of the alleged cash assistance before institution of the suit. It was submitted that the silence of the defendants prior to litigation clearly demonstrated that the defence and counter-claim were afterthoughts.
CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 27 of 54
62. On the issue of competence, Ld. Counsel argued that PW1 sufficiently established that he was the sole proprietor of the plaintiff concern and competent to institute and prosecute the suit. The business dealings, bank accounts, GST registration and conduct of parties all established his authority. The defendants themselves dealt with PW1 throughout the business relationship and therefore could not now dispute his locus standi.
63. Ld. Counsel therefore prayed that the suit be decreed for the outstanding amount of Rs.23,13,715/- along with contractual and pendent-lite interest, while the counter-claim be dismissed with exemplary costs.
Contention of Ld. Counsel for Defendant/Counter-Claimant
64. Per Contra, Ld. Counsel for the defendants and counter-claimant argued that the suit filed by the plaintiff was false, exaggerated and based upon manipulated accounts and incomplete records. It was contended that the plaintiff had failed to prove either the exact outstanding amount or the specific invoices corresponding to the alleged dues. Ld. Counsel emphasized that PW1 repeatedly admitted during cross-examination that he could not specify the invoices against which the suit amount was claimed, could not identify the date of last supply, and could not correlate payments with bills.
65. It was argued that the plaintiff's entire case rested upon ledger accounts and invoices which were either de-exhibited or unsupported by statutory requirements. Ld. Counsel submitted that crucial documents such as Ex. PW1/2, Ex. PW1/3 and Ex.
CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 28 of 54 PW1/5 were de-exhibited, while certain invoices were marked only as photocopies. The plaintiff also failed to produce GST returns, audited books of account, transportation receipts, delivery challans or balance confirmations. According to Ld. Counsel, these deficiencies struck at the very root of the plaintiff's claim.
66. The defendants argued that PW1 admitted that no transport documents existed and that goods were allegedly transported through rickshaw despite invoices involving substantial commercial transactions. Ld. Counsel submitted that such explanation was inherently improbable and cast serious doubt upon the genuineness of the alleged supplies and ledger entries.
67. Ld. Counsel emphasized that the plaintiff had admittedly concealed material payments made by the defendants. PW1 admitted during cross-examination that payments of Rs. 5,00,000/- and Rs.1,00,000/- were wrongly reflected in another account and were not initially shown against the defendants. According to Ld. Counsel, this admission established manipulation and unreliability of the plaintiff's books of account. It was argued that once the plaintiff admitted concealment of two payments, the possibility of suppression of additional payments could not be ruled out.
68. Ld. Counsel submitted that the plaintiff's conduct throughout cross-examination demonstrated lack of credibility. PW1 expressed ignorance about numerous material facts including the contents of pleadings, filing of replication, number of invoices, CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 29 of 54 last dates of transaction, filing of income tax records and even the reply allegedly submitted to the Income Tax Department. It was argued that such evasive testimony rendered his evidence unreliable and insufficient for grant of a money decree.
69. The defendants further contended that the plaintiff failed to establish any acknowledgment of liability by the defendants. No balance confirmation, acknowledgment of debt or written admission was ever obtained despite alleged transactions spanning several years. Ld. Counsel argued that in ordinary commercial practice, particularly for large outstanding amounts, such confirmations are routinely obtained.
70. Ld. Counsel strongly relied upon the evidence led in support of the counter-claim. It was argued that DW1 consistently deposed regarding the cash transactions of Rs.5,00,000/-, Rs.8,00,000/- and Rs.10,00,000/- and proved the corresponding vouchers executed by the plaintiff. Ld. Counsel submitted that these vouchers were corroborated by the expert testimony of DW2, a forensic handwriting and document expert having extensive experience in scientific examination of signatures. DW2 categorically opined that the disputed signatures on the vouchers matched the admitted signatures of PW1 based upon scientific analysis of handwriting characteristics, line quality, pen pressure and neuromuscular movement patterns.
71. It was argued that despite extensive cross-examination, DW2's opinion remained unshaken. No contrary expert evidence was produced by the plaintiff. Ld. Counsel submitted that expert evidence coupled with the original vouchers sufficiently proved CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 30 of 54 execution of the documents by PW1. Moreover during the cross examination of DW1 not a single suggestion was given to her that disputed vouchers did not bear his signatures.
72. The defendants further contended that the income tax records produced through DW3 independently corroborated the defendants' case regarding disclosure of the disputed cash transactions and payment of additional tax liability. DW3, an official witness from the Income Tax Department, produced certified records along with valid certificates under Section 65- B of the Indian Evidence Act. Ld. Counsel argued that these official records lent substantial credibility to the defence version and demonstrated that the defendants had transparently disclosed the cash dealings before tax authorities.
73. Ld. Counsel submitted that the plaintiff's plea that the cash transactions were improbable was contradicted by PW1's own admission that there were no fixed payment terms between the parties and that transactions were conducted on the basis of mutual trust and assurances. It was argued that the parties shared close personal relations extending beyond business, as admitted by PW1 himself when he acknowledged visiting DW1 on Raksha Bandhan and treating her like an elder sister. According to Ld. Counsel, these admissions made the defendants' version regarding friendly financial assistance entirely believable. Ld. Counsel strenuosy urged the court to take circumstantial aspect into consideration to rule in favour defendant regarding the probability of cash payment to the plaintiff.
74. Ld. Counsel also argued that the plaintiff deliberately avoided CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 31 of 54 producing complete tax and GST records because the same would have exposed suppression of payments and inconsistencies in accounts. Adverse inference, therefore, deserved to be drawn against the plaintiff under the Evidence Act.
75. On limitation and jurisdiction, the defendants contended that the plaintiff failed to establish any legally enforceable debt within the limitation period. The alleged last supply itself was admitted by PW1 to have been made sometime in 2018. It was further argued that mere unilateral ledger entries of the plaintiff could not extend limitation.
76. Regarding the counter-claim, Ld. Counsel submitted that the defendants had suffered additional tax liability solely because the plaintiff induced them into cash transactions on assurances of repayment and thereafter dishonestly failed to return the money. The counter-claimant was therefore entitled to recover damages equivalent to the financial loss suffered due to the plaintiff's conduct.
77. Accordingly, Ld. Counsel prayed for dismissal of the suit with costs and for decree of the counter-claim in favour of the defendant/counter-claimant along with interest.
Analysis, Reasoning & Findings
78. Having considered the pleadings, evidence, and rival submissions, relevant case laws issues-wise findings are recorded hereinafter.
ISSUE No. 1: Whether the suit has not been filed by a competent CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 32 of 54 person? OPD
79. The onus to prove this issue squarely rested upon the defendants.
PW-1, Sh. Ajay Lohia, categorically deposed that he is the sole proprietor of M/s Balaji Steel. During his cross-examination, he specifically denied the suggestion that he lacked authority to depose on behalf of the plaintiff concern. He further stated that the GST registration certificate and the bank account statements placed on record sufficiently establish the proprietary character of the concern. Significantly, DW-1 admitted in her cross- examination that she had been dealing with PW-1 for the last 8 to 10 years and had regularly purchased stainless steel pipes from him, thereby unequivocally acknowledging PW-1 as the person representing the plaintiff concern throughout the course of business dealings between the parties.
80. It is a settled proposition of law that, in the case of a sole proprietorship concern, the proprietor and the concern are one and the same in the eyes of law. Reliance in this regard is placed upon the judgment of the Hon'ble Supreme Court in Raptakos Brett & Co. Ltd. v. Ganesh Property, AIR 1998 SC 3085, wherein it was held that a proprietary concern has no independent legal existence apart from its proprietor, and that the proprietor alone is competent to sue or be sued. The aforesaid judgment authoritatively settles the legal position that the proprietor of a sole proprietorship concern is fully competent to institute and prosecute legal proceedings concerning the business of such concern.
81. A perusal of the plaint reveals that the present suit has been CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 33 of 54 instituted in the name of the firm through its proprietor, Sh. Ajay Lohia. The memo of parties clearly reflects that the suit has been filed by M/s Balaji Steel through its proprietor, Ajay Lohia, who has signed and verified the plaint. He has also sworn the supporting affidavit in his capacity as proprietor of the said concern. Thus, it is manifest from the pleadings themselves that it is the proprietor of M/s Balaji Steel who is pursuing the present proceedings.
82. Merely describing the plaintiff initially in the trade name of the proprietorship concern instead of expressly mentioning the proprietor's name at the forefront constitutes, at best, a curable defect of form and not a substantive illegality affecting the maintainability of the suit. Although no formal amendment was sought to cure the said defect, it appears that the same was not considered necessary, particularly when the defendants themselves did not raise any objection to the suit being filed in the trade name of the proprietorship concern. The objection raised by the defendants is confined to the alleged lack of authority or competency of PW-1 to sign, verify, and institute the suit on behalf of the concern.
83. The fact that PW-1, Sh. Ajay Lohia, is the sole proprietor of M/s Balaji Steel stands duly established from his unrebutted testimony as well as the documentary material on record. Consequently, the objection raised by the defendants regarding the locus standi or competency of PW-1 is devoid of merit and unsustainable both in law and on facts.
84. At this stage, after the lapse of nearly six years and when the true CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 34 of 54 facts stand fully established before the Court, rejection of the plaint on account of such a purely technical and curable defect would defeat the cause of substantial justice. Procedural law is intended to advance justice and not to thwart it on hyper- technical considerations. Accordingly, for the sake of clarity and proper description, the plaintiff shall be read as "Ajay Lohia, Proprietor of M/s Balaji Steel" instead of merely "M/s Balaji Steel."
85. In view of the aforesaid discussion and reasons, Issue No. 1 is decided against the defendants and in favour of the plaintiff.
ISSUE No. 2: Whether the suit is time barred? OPD
86. The onus to establish this issue rested upon the defendants. It is an admitted position that the parties were engaged in continuous and running commercial transactions from the year 2012 till 2019. PW-1 deposed that the last supply of goods was made sometime in the year 2018. He further stated that the defendants made a part payment of Rs.1,00,000/- through cheque approximately ten days prior to Diwali, 2018. The said payment is duly reflected in Ex. PW1/11 (HDFC Bank Statement) as well as Ex. PW1/9 (Ledger Account), showing the transaction dated 23.10.2019.
87. The aforesaid payment constitutes the last acknowledged part payment towards the running account maintained between the parties and, therefore, amounts to a clear acknowledgment of subsisting liability within the meaning of Sections 18 and 19 of the Limitation Act, 1963, thereby giving rise to a fresh period of CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 35 of 54 limitation from the date of such acknowledgment and payment.
88. Further, a perusal of the ledger account maintained by the defendant in the name of the plaintiff, exhibited as Ex. DW1/7 (colly), reveals that the last purchase of goods by the defendant from the plaintiff was made on 30.09.2018. The said ledger further reflects that, as on 31.03.2019, a credit balance of Rs.24,06,958/- was outstanding against the defendant.
89. Even according to the defendants, subsequent payments were made towards the said outstanding liability, namely:
Rs.5,00,000/- in cash on 24.09.2019, Rs.1,00,000/- by cheque on 24.10.2019, Rs.8,00,000/- in cash on 03.08.2020, and Rs.10,00,000/- in cash on 13.08.2020. These payments, as admitted by the defendants themselves, unequivocally demonstrate the continued acknowledgment of liability and the subsistence of the running account between the parties. The present suit came to be instituted on 05.03.2021.
90. Under Article 14 of the Limitation Act, the limitation period for recovery of the price of goods sold and delivered commences from the date of delivery of the goods. Even if the dates of invoices are assumed to be the dates of delivery, the limitation period in respect of the invoices raised between 17.03.2017 and 15.03.2020 stood protected in view of the orders passed by the Hon'ble Supreme Court extending and suspending the period of limitation on account of the COVID-19 pandemic and the consequent nationwide lockdown. Consequently, the limitation in respect of such invoices could have commenced expiring only from 01.03.2022 onwards, depending upon the respective dates CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 36 of 54 of the invoices.
91. In the present case, the defendant's own ledger account, Ex.
DW1/7 (colly), reflects that the total value of purchases made during the period from 17.03.2017 to 15.03.2020 amounted to Rs.30,83,124/-. It further records that, as on 31.03.2017, a credit balance of Rs.8,58,213/- was already outstanding against the defendant.
92. The admitted payments made by the defendant between 01.04.2017 and 15.03.2020 aggregate to Rs.17,11,498/-. There is neither any pleading nor any evidence on record to show that the defendant made payments invoice-wise or issued any specific instructions regarding appropriation of payments towards particular invoices. In such circumstances, the payments are liable to be appropriated towards the earlier outstanding invoices in the ordinary course of business dealings between the parties.
93. Upon applying the admitted payments towards the older outstanding invoices, the invoices up to 08.10.2017 stand substantially discharged, with only a part of the invoice dated 27.10.2017 remaining unpaid. Consequently, the plaintiff remains entitled to recover the amounts due under the invoices dated 27.10.2017 onwards. Significantly, the cumulative value of the invoices from 27.10.2017 onwards, as reflected in the defendant's own ledger account Ex. DW1/7 (colly), comes to Rs.23,19,889/-, which substantially corresponds with the suit claim of Rs.23,13,715/- presently under adjudication.
94. Accordingly, this Court is satisfied that the present suit, having CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 37 of 54 been instituted on 05.03.2021 during the subsistence of the suspension of limitation ordered by the Hon'ble Supreme Court, is clearly within the prescribed period of limitation. Issue No. 2 is, therefore, decided against the defendants and in favour of the plaintiff.
ISSUE No. 3: Whether the Court has no territorial jurisdiction to entertain and try the present suit? OPD
95. The onus to prove this issue rested upon the defendants. PW-1 categorically deposed that the plaintiff, M/s Balaji Steel, carries on its business from premises bearing No. WZ-92, Tatar Pur, Tagore Garden, Hari Nagar, New Delhi, which falls within the territorial jurisdiction of this Court.
96. Section 20 of the Code of Civil Procedure, 1908 provides that a suit may be instituted in a Court within whose local limits the defendant resides or carries on business, or where the cause of action, wholly or in part, arises. In the present case, DW-1 herself admitted during her cross-examination that her office was situated at Naraina and that the goods supplied by the plaintiff were received by her at Naraina. The said place admittedly falls within the territorial jurisdiction of this Court.
97. Thus, not only did a substantial part of the cause of action arise within the jurisdiction of this Court, but the requirements contemplated under Section 20(a) and Section 20(c) CPC also stand duly satisfied. The business transactions between the parties, the supply and receipt of goods, and the outstanding liability all bear a direct nexus to the territorial jurisdiction of this Court.
CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 38 of 54
98. Reliance is placed upon the judgment of the Hon'ble Supreme Court in A.B.C. Laminart Pvt. Ltd. & Anr. v. A.P. Agencies, Salem, AIR 1989 SC 1239, wherein it was authoritatively held that even if a part of the cause of action arises within the territorial limits of a Court, such Court would have the jurisdiction to entertain and try the suit.
99. In view of the aforesaid facts and settled legal position, the objection raised by the defendants regarding territorial jurisdiction is without merit. Accordingly, Issue No. 3 is decided against the defendants and in favour of the plaintiff.
ISSUE No. 4: Whether the plaintiff has concealed material facts as described in para 6 of the preliminary objections in the written statement? OPD
100. The onus to prove this issue rested upon the defendants. The defendants alleged that the plaintiff had deliberately concealed a payment of Rs.5,00,000/- made through cheque No. 360635 dated 19.05.2018 and another payment of Rs.1,00,000/- made through cheque No. 722208 dated 23.10.2019.
101. During his cross-examination, PW-1 fairly and candidly admitted that the payment of Rs.5,00,000/-, received through IDBI Bank on 22.05.2018, had inadvertently been reflected in the account of K.P. Saar Engineering instead of the defendants' account. He further admitted that the payment of Rs.1,00,000/- received in October 2019 had also been mistakenly misposted in the books of accounts. PW-1, however, clarified that both the entries were subsequently rectified and the corrected ledger accounts were duly placed on record as Ex. PW1/8 to Ex. CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 39 of 54 PW1/11.
102. The conduct of the plaintiff in voluntarily acknowledging the accounting discrepancies during cross-examination and placing the corrected statements on record demonstrates transparency rather than any intention to suppress material facts from the Court. The evidence on record clearly indicates that the omissions were inadvertent clerical and bookkeeping errors arising in the course of maintaining running commercial accounts, and not deliberate concealment intended to mislead the Court or inflate the claim amount.
103. The plaintiff has further categorically stated that after granting full adjustment of the aforesaid payments of Rs.5,00,000/- and Rs.1,00,000/-, the outstanding amount payable by the defendants stood reduced to Rs.23,13,715/-, which is the amount claimed and adjudicated under Issue No. 5. Significantly, except for the aforesaid admitted payments, the defendants have failed to establish any further payment by producing cogent or reliable documentary evidence.
104. In these circumstances, the contention of the defendants that the plaintiff concealed material facts or approached the Court with unclean hands is without substance and unsupported by the evidence on record. Accordingly, Issue No. 4 is decided in favour of the plaintiff and against the defendants.
ISSUE No. 5: Whether the plaintiff is entitled to recovery of Rs.23,13,715/- (as per order dated 22.03.2025) along with interest as prayed for? OPP CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 40 of 54
105. The onus of proving this issue rested upon the plaintiff. The record reveals that the plaintiff had initially instituted the present suit seeking recovery of Rs. 29,71,990/-, comprising a principal amount of Rs. 29,13,715/- along with interest of Rs. 58,275/- calculated for one month at the rate of 24% per annum. Upon filing of the written statement by the defendant, the plaintiff admitted that amounts of Rs. 5,00,000/- and Rs. 1,00,000/-, received through cheques from the defendant, had inadvertently not been adjusted in the accounts. Consequently, the plaintiff moved an application under Order VI Rule 17 CPC seeking amendment of the plaint. Before the said application could be decided, another application under Order VI Rule 17 CPC was filed. Vide order dated 22.03.2024, the first application was dismissed as not pressed and the second application was allowed. However, by subsequent order dated 16.11.2024, the order dated 22.03.2024 was reviewed and both amendment applications were directed to be heard afresh.
106. Thereafter, both the applications under Order VI Rule 17 CPC were withdrawn on 09.12.2024 with liberty to file a fresh and proper application. Subsequently, the plaintiff filed a third amendment application, which came to be dismissed vide order dated 01.02.2025. Thereafter, vide order dated 22.03.2025, the defendant's application under Order XIII-A CPC was allowed and the plaintiff's claim to the extent of Rs. 6,00,000/- stood dismissed, resulting in reduction of the principal claim from Rs. 29,13,715/- to Rs. 23,13,715/-. Significantly, by way of the third amendment application, the plaintiff itself had sought reduction CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 41 of 54 of the principal amount to Rs. 23,13,715/-. Although the plaintiff challenged the order dated 01.02.2025 before the Hon'ble High Court, in the meantime the order dated 22.03.2025 had already curtailed the plaintiff's claim by Rs. 6,00,000/-. The Hon'ble High Court, while disposing of the challenge, observed as under:-
"6. Fact remains that what plaintiff wanted to incorporate by moving the abovesaid amendment application has already been ordered by the learned Trial Court albeit in a different manner.
7. In view of the above, no purpose would be achieved by permitting amendment now."
107. Accordingly, the controversy surviving for adjudication is whether the plaintiff is entitled to recover Rs. 23,13,715/- instead of the originally claimed sum of Rs. 29,13,715/-. This constitutes the core issue in the present suit and necessitates a careful examination of the pleadings, documentary evidence, and oral testimony led by the parties. For the sake of clarity and convenience, the issue is examined under the following heads:
(A) Whether the plaintiff has established the existence of an outstanding debt; and (B) Whether the defendants have discharged the burden of proving payment of the suit amount.
(A) Whether the plaintiff has established the outstanding debt:
108. It is an admitted position on record that the parties had longstanding business relations spanning approximately 8 to 10 years, during which the defendants regularly purchased stainless steel pipes and allied materials from the plaintiff. This fact was unequivocally admitted by DW-1 during cross-examination. It is CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 42 of 54 further admitted that payments between the parties were not made invoice-wise, but were maintained on a running account basis. The plaintiff placed on record invoices collectively exhibited as Ex. PW1/4 (Colly), though one invoice therein was subsequently de-exhibited, along with ledger accounts for the period 2012 to 2020 marked as Mark-D. Merely because certain documents were de-exhibited on technical grounds and marked as Mark-A to Mark-F, including the ledger Mark-D, does not ipso facto obliterate the admitted commercial relationship between the parties or the oral testimony of PW-1 regarding the transactions.
109. Importantly, the defendants never disputed the factum of supply of goods; their defence was confined to disputing the quantum allegedly outstanding and asserting that the dues had already been discharged through cash payments. Significantly, the defendants' own ledger account, Ex. DW1/7 (Colly), maintained in the name of the plaintiff, reflects a credit balance of Rs. 24,06,958/- as on 31.03.2019. Thereafter, according to the defendants, payments of Rs. 5,00,000/- in cash on 24.09.2019, Rs. 1,00,000/- by cheque on 24.10.2019, Rs. 8,00,000/- in cash on 03.08.2020, and Rs. 10,00,000/- in cash on 13.08.2020 were made, resulting in a closing balance of Rs. 6,958/- as on 31.03.2021.
110. The plaintiff has already admitted and adjusted the cheque payment of Rs. 1,00,000/- dated 24.10.2019 (including payment of Rs. 5 lacs by cheque which was prior to reference period) while reducing the principal claim from Rs. 29,13,715/- CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 43 of 54 to Rs. 23,13,715/-. Thus, even as per the defendants' own ledger, an amount of Rs. 24,06,958/- was payable to the plaintiff. Consequently, unless the defendants successfully establish the alleged cash payments aggregating to Rs. 23,00,000/-, the liability outstanding would remain approximately Rs. 23,06,958/-. The marginal variation of Rs. 6,757/- between Rs. 23,13,715/- and Rs. 23,06,958/- is negligible, particularly in the context of a running commercial account maintained over nearly a decade. This Court is therefore satisfied that the plaintiff has sufficiently proved the existence of commercial transactions and an outstanding running account balance of approximately Rs. 23,13,715/-.
(B) Whether the defendants have discharged the burden of proving payment through cash transactions:
111. The entire defence of the defendants, as well as the foundation of the counter-claim, rests upon the allegation that cash payments aggregating to Rs. 23,00,000/- were made to the plaintiff on three occasions, namely: Rs. 5,00,000/- on 24.09.2019, Rs. 8,00,000/- on 03.08.2020, and Rs. 10,00,000/- on 13.08.2020. In support of this plea, the defendants rely upon three receipt vouchers, Ex. DW1/3, Ex. DW1/5, and Ex. DW1/6, allegedly bearing the signatures of the plaintiff's proprietor, Sh. Ajay Lohia. PW-1 has consistently denied both the signatures on the vouchers as well as receipt of any cash payment.
112. Before examining the vouchers and the expert evidence, this Court considers it necessary to evaluate the inherent probability of the defendant's version in light of ordinary commercial CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 44 of 54 conduct and prudence. The improbability of a transaction is a relevant circumstance while assessing the credibility of evidence. The Hon'ble Delhi High Court, in N.G. Dev v. State (NCT of Delhi) & Ors. (2026:DHC:3265), reiterated that allegations involving substantial cash transactions cannot be accepted merely on the basis of assertions of trust or oral understanding and must be supported by cogent and reliable evidence.
113. Tested on this touchstone, the defendant's version appears inherently improbable. According to the defendants themselves, the plaintiff had allegedly been delaying repayment/return of cash since the year 2018. In such circumstances, it appears commercially inconceivable that a prudent businessperson, to whom substantial sums were already allegedly due, would further advance cash amounts of Rs. 5,00,000/-, Rs. 8,00,000/-, and Rs. 10,00,000/- without any written agreement, promissory note, acknowledgment, repayment schedule, security, or independent witness. The alleged transactions are claimed to have been undertaken entirely in cash and solely on oral assurances, despite the parties admittedly maintaining computerized accounts, GST records, and regular banking transactions. Such a course of conduct is wholly inconsistent with normal commercial practice.
114. The explanation advanced by the defendant that the cash was paid owing to a close and familial relationship with the plaintiff also fails to inspire confidence. PW-1 admitted visiting DW-1 on Rakshabandhan on 03.08.2020; however, DW-1 herself admitted CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 45 of 54 during cross-examination that on that very occasion the plaintiff had come to demand payment of his outstanding dues. If, as alleged, the plaintiff had already received Rs. 5,00,000/- in September 2019 as a temporary financial accommodation, it is difficult to reconcile why, nearly nine months later, he would approach the defendant demanding payment as a creditor rather than addressing the alleged loan repayment. This circumstance materially undermines the credibility of the defence.
115. The aggregate amount of the alleged cash payments is Rs.
23,00,000/-. Transactions of such magnitude in cash are inherently unusual and attract scrutiny under the framework of the Income Tax Act, 1961. Equally significant is the fact that the defendant's counter-claim itself is founded upon the alleged tax consequences arising from disclosure of these cash transactions. If the defendant had merely advanced temporary financial assistance repayable by the plaintiff, there would ordinarily be no occasion to treat such amounts as taxable income or incur tax liability thereon. The very basis of the counter-claim is therefore internally inconsistent with the plea that the payments were friendly loans or temporary financial accommodations.
116. The defendants rely upon three vouchers, namely Ex. DW1/3 dated 24.09.2019, Ex. DW1/5 dated 03.08.2020, and Ex. DW1/6 dated 13.08.2020, purportedly bearing the signatures of Sh. Ajay Lohia acknowledging receipt of cash. PW-1 denied his signatures on all the vouchers during cross-examination, whereupon the documents were marked as Mark R-3, Mark R-1, and Mark R-2 respectively. PW-1 also categorically denied receipt of any cash CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 46 of 54 payment whatsoever.
117. To prove the disputed signatures, the defendants examined DW-2, Sh. Manas Mishra, a private handwriting expert. DW-2 opined that the disputed signatures appearing on the vouchers, marked D-1, D-2, and D-3 in his report, were executed by the same person who had signed the admitted signatures marked A-1 to A-4, namely Sh. Ajay Lohia. The expert based his opinion upon examination of neuromuscular movement patterns, pen pressure, line quality, connecting strokes, and other identifying characteristics.
118. The law relating to evidentiary value of handwriting expert opinion is well settled. In Murari Lal v. State of Madhya Pradesh (1980) 1 SCC 704, the Hon'ble Supreme Court held that although expert opinion is admissible, it must be approached with caution and ordinarily requires corroboration by independent circumstances, having regard to the imperfect nature of handwriting analysis. More recently, in C. Kamalakkannan v. State of Tamil Nadu (2025 INSC 309), the Hon'ble Supreme Court reiterated that expert evidence is merely opinion evidence and cannot substitute substantive proof. The expert's role is confined to furnishing scientific criteria so as to assist the Court in arriving at its own independent conclusion.
119. This Court has independently examined the expert report, the oral testimony of DW-2, and the disputed documents. During cross-examination, it emerged that the expert possessed a one- year postgraduate certification not specifically specialized in handwriting examination, though supplemented by a two-year CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 47 of 54 apprenticeship. He admitted that the report did not specify the optical instruments employed and that no hygroscopic or hygrometer methods were used. He further acknowledged that handwriting examination is essentially qualitative in nature and that no fixed percentage exists for determining natural variations in signatures. While this Court does not doubt the sincerity of DW-2, the manner in which the expert opinion is sought to be relied upon in the present case raises serious reservations.
120. The vouchers in question are unilateral documents allegedly prepared by the defendant or on her behalf. They are neither executed on stamp paper nor attested by independent witnesses. They contain no particulars regarding the purpose of the alleged payment, the nature of the transaction, or any repayment terms. Most importantly, no independent witness to the alleged delivery of cash has been produced. The only corroborative circumstance relied upon is the expert's opinion regarding the signatures. Even assuming, arguendo, that the signatures are genuine, mere proof of signatures on an unattested voucher does not, by itself, establish actual receipt of cash. In the course of commercial dealings, signatures may at times be obtained on blank or partially filled documents, which by themselves cannot conclusively prove disbursement of the amounts mentioned therein.
121. More fundamentally, even if the expert opinion is accepted at its highest, it remains merely advisory in nature and cannot substitute proof of actual delivery of Rs. 23,00,000/- in cash. No bank withdrawal slips or contemporaneous banking records have CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 48 of 54 been produced to show withdrawal of Rs. 5,00,000/- on or before 24.09.2019, Rs. 8,00,000/- on or before 03.08.2020, or Rs. 10,00,000/- on or before 13.08.2020. The bank statement Ex. DW1/4 pertains only to the earlier cheque transaction and does not support the alleged cash payments. Likewise, the defendants' own account statement Ex. DW1/7 does not contain contemporaneous entries evidencing such substantial cash outflows. The income tax records proved through DW-3 merely show subsequent disclosure of the alleged transactions and payment of tax thereon; however, such post facto disclosures cannot, in themselves, establish actual payment of cash to the plaintiff.
122. It is also a matter of judicial notice that disclosures in income tax records may, at times, be made with a view to support a legal claim or defence rather than as a contemporaneous reflection of genuine transactions. The timing of the disclosures in the present case, coinciding with the dispute between the parties, does not furnish reliable independent corroboration of the defendant's plea.
123. In view of the foregoing discussion, this Court is unable to accept the defendants' plea of cash payments. The alleged vouchers, even when read alongside the handwriting expert's opinion, remain unsubstantiated in the absence of independent corroborative evidence regarding actual delivery of cash. Expert opinion, standing alone and unsupported by contemporaneous bank withdrawals, independent witnesses, or prior correspondence demanding repayment, is insufficient to CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 49 of 54 discharge the burden resting upon the defendants.
124. An equally significant circumstance is that prior to institution of the present suit, the defendants never issued any written demand, notice, or communication seeking return of the alleged cash amounts totaling Rs. 23,00,000/-. Had such substantial sums genuinely been advanced as loans or financial assistance, an ordinary prudent person would reasonably be expected to maintain some contemporaneous record or demand repayment in writing. The plea regarding the alleged cash payments surfaced for the first time only in the written statement filed in response to the recovery suit. This lends credence to the plaintiff's contention that the defence was conceived as a counterblast to the present proceedings.
125. Upon a cumulative appreciation of the pleadings, documentary evidence, and oral testimony, this Court is satisfied that the plaintiff has successfully established its claim for recovery of Rs. 23,13,715/- arising out of commercial transactions between the parties. The existence of longstanding business dealings and regular supply of goods stands admitted. Even the defendants' own ledger reflects substantial outstanding dues payable to the plaintiff. The defendants, however, have failed to prove discharge of the said liability through the alleged cash payments of Rs. 23,00,000/-. The defence of cash payment is accordingly rejected for the reasons discussed hereinabove. Consequently, the revised suit amount of Rs. 23,13,715/-, after giving due credit for all admitted payments, is held to be due and payable by the defendants to the plaintiff.
CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 50 of 54
126. The plaintiff has claimed interest @ 24% per annum for one month and from the date of institution of the suit till realisation. There is no written agreement between the parties stipulating any rate of interest; however, considering the commercial nature of the transactions and the wrongful withholding of payment by the defendant, the plaintiff is certainly entitled to reasonable pendentelite and future interest. Therefore, this Court must exercise its discretion under Section 34 of the Code of Civil Procedure, 1908. In the case of Cimmco Limited v. Pramod Krishna Agrawal 2019 SCC OnLine Del 7289, it is held as follows:
"3. .........Hon'ble Supreme Court has now mandated that lower rates of interest be granted and therefore the pre- suit and also the pendente lite and future interest is liable to be reduced by this Court. Reliance is placed upon the judgments in the cases of Rajendra Construction Co. v. Maharashtra Housing & Area Development Authority, (2005) 6 SCC 678, McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181, Rajasthan State Road Transport Corporation v. Indag Rubber Ltd., (2006) 7 SCC 700, Krishna Bhagya Jala Nigam Ltd. v. G. Harischandra, (2007) 2 SCC 720 & State of Rajasthan v. Ferro Concrete Construction Pvt. Ltd. (2009) 3 Arb. LR 140 (SC)."
127. In the present case, considering that the transactions are commercial in nature, that the plaintiff is a small sole proprietorship trader who has been deprived of substantial working capital, and keeping in mind the general commercial rates prevalent, this Court considers it just and reasonable to award pendente-lite and future simple interest at the rate of 9% per annum on the principal sum of Rs.23,13,715/- from the date of institution of the suit till realisation of the whole of the CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 51 of 54 amount. Issue No. 5 is accordingly decided in favour of the plaintiff.
ISSUE No. 1 (Counter-Claim): Whether the counter-claimant is entitled to the counter-claim amount with interest as prayed for? OPCC
128. The onus on this issue lay upon the counter-claimant. The counter-claimant, Smt. Alka Mahajan, seeks recovery of Rs.7,15,662/- being the additional income tax liability allegedly suffered by her on account of the cash transactions with the plaintiff. The entire cause of action for the counter-claim is predicated on the assertion that the plaintiff induced the defendants into making cash payments totaling Rs.23,00,000/- and thereafter failed to repay the same, thereby exposing the counter-claimant to additional tax liability on undisclosed cash flows. This Court has, while dealing with Issue No. 5, found that the defendants have not established on a preponderance of probability that the cash transactions in question constituted payments in settlement of the suit dues owed by the defendants to the plaintiff. Even assuming, for the purposes of this issue, that some form of cash payments were made between the parties, the counter-claimant has failed to establish: (a) that such payments were induced by any fraudulent or actionable misrepresentation by the plaintiff as required to found a claim in tort or under the law of contract; (b) that there is a direct causal nexus between the alleged conduct of the plaintiff and the income tax liability suffered by the counter-claimant; and (c) that the quantum of Rs.7,15,662/- is a legally recoverable head of damage arising from the plaintiff's alleged conduct. It is a well-settled principle CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 52 of 54 that only damages which flow directly and naturally from the breach can be recovered. Reliance in this regard can be had on rulings in Maula Bux v. Union of India, (1969) 2 SCC 554. Any tax liability suffered by the counter-claimant on account of cash declared in her own income tax returns is attributable to her own voluntary disclosure and her own tax position; the plaintiff cannot be held liable therefor in a civil court. The income tax liability of one assessee cannot be converted into a civil claim for damages against another party without a clear legal basis in contract, tort or statute, none of which has been established on the record. Accordingly, the counter-claim fails and is liable to be dismissed. Issue No. 1 framed in Counter claim is decided against the counter-claimant and in favour of the plaintiff.
Relief
129. In view of the findings recorded on the issues above, followings reliefs are ordered:
a. The suit of the plaintiff is allowed and a decree for recovery of Rs, 23,13,715/- (Rupees Twenty Three Lacs, Thirteen Thousand Seven Hundred and Fifteen Only) is hereby passed in favour of the plaintiff and against the defendants, along with simple interest @ 9% p.a. from the date of institution of the suit till the realisation of whole amount.
b. The Counter-claim filed by the Counter-claimant/ defendant no.2, Smt. Alka Mahajan, is hereby dismissed CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 53 of 54 c. The defendants/counter-claimant shall pay the costs of the suit and Counter-claim to the plaintiff.
130. The decree sheet be drawn up accordingly in each files.
131. A signed copy of the judgment be placed in both judicial files.
132. File be consigned to Record Room after necessary compliance.
Digitally signedHARISH by HARISH KUMAR KUMAR Date: 2026.06.01 15:22:15 +0530 (Harish Kumar) District Judge (Commercial)-04 Announced in the open Court. District West, Tis Hazari Courts (Judgement contains 54 pages) Delhi / 01.06.2026 CS (comm) No.169/2021 Balaji Steel v. Sailkot Shop & Ors. DoJ 01.06.2026 CC (Comm) No. 34/2021 Alka Mahajan v. Balaji Steel DoJ 01.06.2026 Page No. 54 of 54