Delhi District Court
M/S Paramount Iron Steel Works Pvt Ltd vs San Automotive Industries Pvt Ltd on 28 April, 2026
IN THE COURT OF SH. DEVENDER KUMAR JANGALA,
DISTRICT JUDGE (COMMERCIAL COURT)-01,
NORTH WEST, ROHINI, NEW DELHI
CS (COMM) No.213/20
CNR NO.DLNW010078642020
Paramount Iron & Steel Works Pvt. Ltd.,
Regd. Office:-55-B, Block-ED,
Madhuban Chowk, Pitampura, Delhi-110088
Factory at: T-1, Industrial Area,
Sonepat, Haryana
(A Private Limited Company through its Director
and authorized person Sh. Shivam Gupta,
S/o Sh. Parveen Gupta,
R/o E-40, Industrial Area, Sonepat, Haryana)
........Plaintiff
Versus
San Automotive Industries Pvt. Ltd.,
Reg. Office at Plot No.15,
Sector-24, Faridabad-121005
2nd Address: Plot No. 66,
Sector-6, Faridabad-121006
(A Private Limited Company)
........Defendant.
SUIT FOR RECOVERY OF RS.6,31,730/-(RUPEES SIX
LAKHS THIRTY ONE THOUSAND SEVEN HUNDRED
THIRTY ONLY) ALONGWITH PENDENTELITE AND
FUTURE INTEREST.
Date of institution of Suit : 18.11.2020
Date of final argument : 13.04.2026
Date of Judgment : 28.04.2026
CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 1/29
JUDGMENT
1. By way of this judgment I shall adjudicate upon the suit of the plaintiff for recovery of Rs.6,31,730/- alongwith pendente lite and further interest, filed against the defendant.
2.1 Brief facts: The facts of the case in brief as per plaint are that the plaintiff is a Private Limited Company, duly incorporated under the Companies Act, 1956 with the office of Registrar of Companies, Delhi and Haryana. The present suit has been instituted by the plaintiff through its Director Sh. Shivam Gupta who is stated to be authorized vide board resolution dated 29.08.2020.
2.2 It is stated that the defendant is a Private Limited Company, Registered with ROC, Delhi, with CIN No. U34300HR2004PTC035483, Registration No.035483. It is stated that the plaintiff is a manufacturer of metal sheet / packing materials. That the defendant contacted the plaintiff, at its registered office, for purchasing the material on credit basis. That the defendant assured that the amount, against the purchase, will be cleared by the defendant in due course, without any delay. That on the assurances, the plaintiff agreed to sell to the defendant the said material of metal sheet/packing materials, on credit basis.
2.3 It is stated that the defendant started purchasing the said material, from the plaintiff, on regular basis, against the various invoices, time to time, on credit basis. That against the purchases by the defendant, and the amount paid by the defendant, plaintiff also maintained a running computerized Ledger Account, in the regular course of its business.
CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 2/29 2.4 It is stated that on 01/04/2016, the opening balance against the defendant was Rs.1,00,70.62/-. That during the period from 01/04/2016 to 31/03/2017, against 5 invoices, the defendant had purchased the material from time to time. That the defendant had paid the amount of Rs.2,04,588/- on 22/06/2016, and further the amount of Rs.20,000/- on 05/04/2019, leaving the principal balance as Rs.3,52,418.62/-, as per the computerized Ledger Account, maintained by the plaintiff . It is stated that defendant is also liable to pay the interest @ 18% p.a. from the respective due dates, as stipulated on the invoices. The plaintiff has claimed the following outstanding amount against the defendant S.No. Particulars Amount
a) Balance principal amount Rs.3,72,418/-
as on 05/07/2016
b) Interest from 05/07/2016
till 05/04/2019 on Rs.3,72,418/-
@ 18% per annum Rs.1,84,346/-
c) Paid on 05/04/2019 Rs.20,000/-
d) Due on 05/04/2019 Rs.5,36,764/-
e) Interest on Rs.3,72,418/- from
05/04/2019 to 05/09/2020
@ 18% per annum Rs.94,966/-
f) Due as on 05/09/2020 Rs.6,31,730/-
2.5 It is stated that the plaintiff is entitled to recover the
aforesaid amount of Rs.6,31,730/-alongwith future and pendentlite interest @ 18% from the date of filing of the suit till the date of realization.
CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 3/29 2.6 It is stated that despite the repeated calls and personal requests by the plaintiff, defendant has not paid the said amount. That the legal notice dated 05/09/2020 was also got served upon defendant, through e-mail but the defendant did not respond to the same.
2.7 It is stated that the cause of action arose on dates when the goods and material was purchased and the payment was due upon defendant and further arose on each and every date when the payment was given and lastly it arose on 05/04/2019 when the last transaction was made between the parties.
2.8 It is stated that the articles were purchased by defendant from plaintiff from Delhi. That all the above mentioned payments and cheques were delivered at Delhi office of plaintiff, within the jurisdiction of this Court. Hence this Court has jurisdiction to try and entertain the present suit.
2.9 It is prayed that decree for the amount of Rs.6,31,730/- (Rupees Six Lac Thirty One Thousand Seven Hundred and Thirty only) with pendentlite and future interest @ 18% per annum along with costs, may kindly be passed in favour of plaintiff and against the defendant.
3. Vide order dated 30.09.2021 the summons of the present suit were issued to the defendant. The defendant on being served put the appearance and filed the written statement.
CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 4/29 WRITTEN STATEMENT 4.1 In its written statement, the defendant has pleaded that the suit of the plaintiff has been instituted beyond three years from the date of last bill/invoice dated 05.07.2016 for Rs.1,84,346/- which was the last transaction of selling material by the plaintiff to the defendant. That thereafter no single transaction between the parties had occurred. That the plaintiff attempted to create a false transaction of payment of Rs.20,000/- by the defendant to the plaintiff on 05.04.2019 showing cash payment without receipt or any voucher in writing or authorized by the defendants in any manner. That the defendants never made any payment of Rs.20,000/- to the plaintiff in cash as alleged and the said transaction has been falsely shown by the plaintiff in order to bring the suit within period of limitation which is manifestly time barred.
4.2 It is stated that the suit is liable to be dismissed for being camouflaged in form and substance in a bid to bring the same within period of limitation by showing a credit entry of Rs.20,000/- which is fake and fictitious.
4.3. It is stated that in view of the nature of the business between the parties there was no scope of mutual, open and running forward reciprocal account as the transactions were against invoices with payment of the purchased material against invoices to be reckoned. That for all intents and purposes the case of the plaintiff falls under article 14 of the Limitation Act, 1963 (hereinafter referred to as "LA, 1963") under which for the price of the goods sold and delivered where no fixed period of credit is agreed upon, the limitation to claim the price has to be reckoned three years from the CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 5/29 date of delivery of the goods but the plaintiff has tried to bring the suit under Article 1 of the LA, 1963 stating the account to be mutual and reciprocal. The averments on merits of the case are denied. It is prayed that the suit may kindly be dismissed.
5. No replication to the written statement of defendant has been filed on behalf of the plaintiff.
6. After completion of pleadings of parties, following issues were framed vide order dated 30.01.2023:-
1. Whether plaintiff is entitled to recover Rs.3,72,418/-
towards principal amount due on 05-07-2016 from defendant ? O.P.P.
2. Whether plaintiff is entitled to recover interest, if yes, at what rate and for which period. ? O.P.P.
3. Whether suit is barred by limitation? O.P.D.
4. Relief?
7. After framing of issues, the matter was fixed for evidence of the parties. In view of powers under order XV A Rule 6(o) and (p) CPC, the evidence of the parties was directed to be recorded on commission basis by Sh. P. C. Ranga, Retired Adl. District & Sessions Judge.
PLAINTIFF EVIDENCE
8. Before the Ld. Local Commissioner, the plaintiff examined Sh.Shivam Gupta, Director of the plaintiff company as PW-1. He tendered his evidence by way of affidavit Ex. PW1/A. In his affidavit Ex. PW1/A, the PW-1 has reiterated the averments made in the plaint CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 6/29 and relied upon the following documents:
Ex PW 1/1 Certificate of Incorporation Ex PW 1/2 Board resolution dated 29.08.2020.
Ex PW 1/3 Master Data of the Plaintiff as available on official website of Ministry of Corporate Affairs.
Ex PW1/4 (colly) Computerised Ledger Account, Ex PW1/5 (colly) Five invoices.
Ex PW1/6 legal notice 04.09.2020 Ex PW1/7 is the certificate u/s 65B of the Indian Evidence Act.
9. PW-1 was cross-examined at length by Ld. Counsel for defendant. The detailed cross-examination of PW-1 is reproduced as under:-
"Q-1 As per your claim in the plaint which bills/ invoices are due for payment?
A-Bill no 2121 dtd 05.07.2016, Bill no 604 dated 05.07.2016, Bill no 1704 dtd 13.06.2016, Bill no 501 dtd 21.04.2016 and Bill no 212 dated 09.04.2016. these are the only bills against which the amount is due from the defendant.
Q 2 Is it correct that your last transaction for supply of material to the defendant is 05.07.2016?
A Yes.
Q 3 The material supplied by you vide Bill no 1704 dated 13.06.2016 and Bill no 2121 dated 05.07.2016 was not appropriated by the defendant as being substandard?
A As per my knowledge there was no rejection.
Q-4 Did you take back the material supplied against bills mentioned in Q no 3?
A-No, not in my knowledge.
Q-5 Is it correct that You were intimated about the rejection of the material?
CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 7/29 A-No. It is not in my knowledge.
Q-6 Was the transaction dated 05.07.2016 is the last transaction between you and defendant?
A-No, the last transaction was on dated 05.04.2019. Q-7 What was the last transaction?
A-Defendant had Sent cash Rs 20,000/-
Q-8 Where was the cash sent by the defendant and by whose hand? A- The cash was sent by Employee of defendant at our office situated at 55b ED-block Madhuban chowk Pitampura New Delhi. Q-9 Can you tell name and designation of the employee of defendant company who had allegedly brought the money? A-No. Q-10 Have you taken in writing from the alledged person who has brought the cash?
A-No. (vol. Its confirmation was done through phone call) Q-11 Have you ever received the payment in cash from the defendant other than the above mentioned?
A- It is not in my knowledge.
It is incorrect to suggest that the entry of Rs 20000 is false and fictitious being incorporated by you to create a false cause of action. Q-12 have you any document in writing to show that Rs 20000/- was received in cash by you?
A No. Q-13 Did defendant company used to do any Job work for your company?
A. No. it is not in my knowledge.
Q-14 Do you know the whole facts of the case?
A- Yes.
It is incorrect to suggest that defendant company irrespective of purchase of material from the plaintiff company also used to do Job work for the plaintiff company It is also incorrect to suggest that no dues are payable by the defendant and that I have filed a false suit against the defendant. It is also incorrect to suggest I have been deposed falsely."
CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 8/29
10. No other witness was examined on behalf of plaintiff and PE was closed vide statement/order dated 10.07.2023.
DEFENDANT EVIDENCE
11. The defendant in support of its case had examined Sh. Rajesh Kumar, AR of the defendant company as DW1. He tendered his evidence by way of affidavit Ex. DW1/A. DW1 has relied upon the following documents.
1. Authority letter Ex. D1.
2. Certificate of incorporation mark X,
3. Statement of account/ledger Ex.D2(colly).
4. Certificate under Section 65B of Indian Evidence Act Ex.D3.
12. DW1 was cross-examined at length by Ld.counsel for plaintiff. The material cross-examination of DW1 is reproduced as under:-
"It is correct that the resolution by the Board of director of the company was passed in my favour dated 27.01.2022, I have not produced the Minutes Books of the company regarding the resolution dated 27.01.2022 because the same was not demanded. It is wrong to suggest that I have not submitted the Minutes Book as no such meeting was ever held and also that no entry was made in Minutes Book. I cannot say whether the copy of Minutes Book was submitted in ROC regarding the said resolution or not.
It is wrong to suggest that I am not authorized on behalf of defendant company. It is also wrong to suggest that there was no board meeting held on 27.01.2022. It is correct that the opening balance in respect of this transactions with the plaintiff company is shown in the ledger account maintained by defendant company until the date 01.04.2020. I have not placed any letter or notice regarding rejected goods by the defendant.
Q-1 Have you filed any proof regarding return of material to the plaintiff?
CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 9/29 A No such document is placed on record. (vol) This matter of rejection of goods was discussed on phone.
It is wrong to suggest that no such document was placed on record because goods were neither sub-standard, rejected nor were returned to the plaintiff. It is wrong to suggest that any amount is payable by the defendant to the plaintiff. It is further wrong to suggest that the entry of Rs. 20,000/- is not fake or fictitious. It is wrong to suggest that the suit is filed within the period of limitation. It is wrong to suggest that the notice was not replied because I was aware and knew that there is legal recoverable debt payable by the defendant company to the plaintiff as stated in the legal notice and also the contents of the legal notice were correct."
13. No other witness was examined on behalf of defendant. In view of submissions and statement dated 09.10.2023, DE was closed.
14. I have already heard the arguments at length advanced by Sh. Vikas Deep Jain, Ld.counsel for plaintiff and Sh. Rohan Khanna, Ld.counsel for defendant. Written submissions on behalf of parties also filed.
15. It is argued on behalf of plaintiff that the defendant was purchasing the goods from the plaintiff but failed to clear the outstanding amount. It is argued that the defendant in his own ledger statement has shown the credit balance till 01.04.2020, therefore, the objection of limitation is not maintainable. That the defendant has shown its own ledger showing the credit balance as Rs.2,95,369/- while the actual credit balance is Rs.3,52,418/-. That the defendant has stipulated that certain material was sub-standard which was returned, but there is no document on record which shows the return of material and also no credit note was ever issued.That in view of submissions made in the plaint and documents produced on record, the plaintiff is entitled for recovery of the alleged dues against the CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 10/29 defendant.
16. On the other hand it is argued on behalf of defendant that the suit of the plaintiff is time barred and last entry of Rs.20,000/- is fictitious entry and no payment as alleged was made. That the plaintiff is not entitled to any relief in a time barred suit. It is prayed that the suit of the plaintiff may kindly be dismissed.
17. I have considered the submissions made by Ld.counsel for plaintiffs and perused the entire material on record.
18. It may be relevant now to consider the law pertaining to discharge of burden of proof of the issues as relevant and applicable to the Civil Jurisdiction. In the binding authority of the Hon'ble Supreme Court of India, in M/s. Gian Chand & Brothers and Another v. Rattan Lal @ Rattan Singh: [2013] 3 S.C.R. 601; it has been laid down:-
1.3. It is well settled principle of law that a person who asserts a particular fact is required to affirmatively establish it. The burden of proving the facts rests on the party who substantially asserts the affirmative issues and not the party who denies it but the said principle may not be universal in its application and there may be an exception thereto.
19. After careful perusal of the record and law of land, my issue wise findings are as under:
ISSUE NO. 33. Whether suit is barred by limitation? O.P.D. CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 11/29
20. It is necessary to first decide Issue No. 3 regarding limitation as it goes to the root of the maintainability of the suit. The law of limitation is not a mere technicality but a substantive and salutary principle of law designed to ensure legal certainty. As the Hon'ble Supreme Court of India held in Popat and Kotecha Property v. State Bank of India Staff Association, decided on 29.08.2005,, reported as (2005) 7 SCC 510:
"Bar of limitation does not obstruct the execution. It bars the remedy. (See V. Subba Rao and Ors. v. Secretary to Govt. Panchayat Raj and Rural Development, Govt. of A.P. and Ors. (1996 (7) SCC 626.) Rules of limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. The law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and wasted time would never revisit. During the efflux of time, newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So, a life-span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. The law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae ut sit finis litium (it is for the general welfare that a period be put to litigation). The idea is that every legal remedy must be kept alive for legislatively fixed period of time. (See N. Balakrishanan v. M. Krishna Murthy (1998 (7) SCC 123)."
21. Thus, the law of limitation does not extinguish the underlying right, it merely restricts the enforceability of the remedy through courts after the prescribed period. Its purpose is not to defeat legitimate claims, but to ensure that parties act with reasonable diligence and do not indulge in unnecessary delay. The legal system provides remedies to redress injuries, but such remedies cannot be kept open indefinitely. Thus, limitation law is grounded in considerations of public policy, encapsulated in the maxim interest CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 12/29 republicae ut sit finis litium, meaning that it is in the interest of the State that litigation must come to an end. The legislative intent is to ensure that every legal remedy is pursued within a fixed and reasonable time.
22. The central controversy in present issue, is the date of the last transaction between the parties, and whether the alleged cash payment of Rs.20,000/- paid on 05.04.2019 can be treated as a valid transaction so as to save the limitation. It is admitted by PW-1 himself in cross-examination that the last supply of material by the plaintiff to the defendant was vide Bill No.2121 dated 05.07.2016. All five bills dated 09.04.2016, 21.04.2016, 13.06.2016, and two on 05.07.2016 are the only bills against which any amount is claimed due. While answering to Ques. 2, in his cross examination, PW-1 initially confirmed that 05.07.2016 was the last transaction, before volunteering that the alleged cash payment of 05.04.2019 was the last transaction. The suit was filed on 18.11.2020. If the last transaction between the parties is taken as 05.07.2016, the three-year period of limitation under the LA, 1963 would have expired on 05.07.2019. The present suit, filed on 18.11.2020, is thus manifestly beyond limitation period. The entire case of the plaintiff on limitation rests on the alleged cash payment of Rs.20,000/- on 05.04.2019.
23. PW-1 has made a categorical, unequivocal admission while answering to Ques. 9, 10, 12 in his cross-examination that he does not know the name and designation of the employee of the defendant who allegedly brought the cash. No written receipt, acknowledgment, or voucher was taken from the person who brought the cash. No document in writing exists, to show that Rs.20,000/- was received in CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 13/29 cash. The only confirmation of the payment was through a phone call which is inadmissible without any requisite proof under Evidence Act. This oral evidence of PW-1 is wholly insufficient to establish a cash transaction.
24. In the aforesaid backdrop, it becomes necessary to examine whether the present suit is saved by any of the exceptions to the prescribed period of limitation, particularly under Sections 18 and 19 of the LA, 1963, which provide for extension of limitation in cases of acknowledgment or part payment. Section 18 of the LA, 1963 provides for extension of limitation by way of written acknowledgement. The Hon'ble High Court of Delhi in Technical Construction Company v. Engineering Project (India) Limited, decided on 15th March, 2024, reported as 2024 SCC OnLine Del 1924 discussed in detail on aspect of written acknowledgement vis-a- vis Section 18 of the LA, 1963 while relying upon the celebrated decision of Hon'ble Supreme Court in Food Corporation of India v. Assam State Cooperative Marketing & Consumer Federation Ltd, decided on 26.10.2004, reported as (2004) 12 SCC 360. The relevant paragraphs of the Technical Construction (supra) are extracted hereinbelow:
"22. Section 18 of the Limitation Act, reads:
(1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
(2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 14/29 1872), oral evidence of its contents shall not be received. Explanation.-For the purposes of this section,--
(a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right,
(b) the word "signed" means signed either personally or by an agent duly authorised in this behalf, and
(c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right.
23. The above-mentioned provision clearly provides that if there is an express acknowledgement of liability in writing by the opposite party, a fresh period of limitation shall be computed from the time when acknowledgement was signed. The same has also been laid down by the Supreme Court in Food Corporation of India (supra), wherein it was held that that to amount to an acknowledgement of liability within the meaning of Section 18 of the Limitation Act, it need not be accompanied by a promise to pay either expressly or even by implication. The relevant paragraphs of the said judgment are set out below:
"14. According to Section 18 of the Limitation Act, an acknowledgement of liability made in writing in respect of any right claimed by the opposite party and signed by the party against whom such right is claimed made before the expiration of the prescribed period for a suit in respect of such right has the effect of commencing a fresh period of limitation from the date on which the acknowledgement was so signed. It is well settled that to amount to an acknowledgement of liability within the meaning of Section 18 of the Limitation Act, it need not be accompanied by a promise to pay either expressly or even by implication.
15. The statement providing foundation for a plea of acknowledgement must relate to a present subsisting liability, though the exact nature or the specific character of the said liability may not be indicated in words. The words used in the acknowledgement must indicate the existence of jural relationship between the parties such as that of debtor and creditor. The intention to attempt such jural relationship must be apparent. However, such intention can be inferred by implication from the nature of the admission and need not be expressed in words. A clear statement containing acknowledgement of liability can imply the intention to admit jural relationship of debtor and creditor. Though oral evidence in lieu of or making a departure from the statement sought to be relied on as acknowledgement is excluded but surrounding circumstances can always be considered. Courts generally lean in favour of a CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 15/29 liberal construction of such statements though an acknowledgement shall not be inferred where there is no admission so as to fasten liability on the maker of the statement by an involved or far-fetched process of reasoning. So long as the statement amounts to an admission, acknowledging the jural relationship and existence of liability, it is immaterial that the admission is accompanied by an assertion that nothing would be found due from the person making the admission or that on an account being taken something may be found due and payable to the person making the acknowledgement by the person to whom the statement is made."
25. Thus, it can be said that if there is an express written acknowledgment of liability by the defendant, a fresh period of limitation shall start from the time when such acknowledgment was signed. While strongly relying upon Food Corporation of India (supra), the Hon'ble High Court of Delhi in Technical Construction (supra) said that within the meaning of Section 18 of the LA, 1963, it need not be accompanied by a promise to pay either expressly or even by neccessary implication. The statement which provides foundation for a plea of acknowledgement must relate to a present subsisting liability, though the liability may not be indicated in words. The words as used in the acknowledgment must show that there is an existing jural relationship between the parties which can be implied by a clear statement containing acknowledgement of liability. Courts generally apply a liberal construction method of statutory interpretation in ascertaining whether an acknowledgement of debt results in extension of limitation under Section 18 of the LA, 1963.
26. The Court shall also discuss current judicial position with respect to part payment and its effect on limitation expressly provided under Section 19 of the LA, 1963. The Hon'ble Supreme Court of India in Shanti Conductors (P) Ltd. v. Assam SEB, CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 16/29 decided on 18.12.2019, reported as (2020) 2 SCC 677 discussed in detail while excerpting Section 19 of the LA, 1963. The relevant portion is provided as follows:
"12. Section 19 of the Limitation Act is as follows:
"19. Effect of payment on account of debt or of interest on legacy.--Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made:
Provided that, save in the case of payment of interest made before the 1st day of January, 1928, an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.
Explanation.--For the purposes of this section--
(a) where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment;
(b) "debt" does not include money payable under a decree or order of a court."
15. Order 7 Rule 6 uses the words "the plaint shall show the ground upon which exemption from such law is claimed". The exemption provided under Sections 4 to 20 of the Limitation Act, 1963 are based on certain facts and events. Section 19, with which we are concerned, provides for a fresh period of limitation, which is founded on certain facts i.e. (i) whether payment on account of debt or of interest on legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy, (ii) an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.
16. We may notice the judgment of this Court dealing with Section 20 of the Limitation Act, 1908, which was akin to present Section 19 of the Limitation Act, 1963. In Sant Lal CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 17/29 Mahton v. Kamla Prasad, AIR 1951 SC 477, this Court held that for applicability of Section 20 of the Limitation Act, 1908, two conditions were essential that the payment must be made within the prescribed period of limitation and it must be acknowledged by some form of writing either in the handwriting of the payer himself or signed by him. This Court further held that for claiming benefit of exemption under Section 20, there has to be pleading and proof. In paras 9 and 10, the following has been laid down : (AIR p. 479) "9. It would be clear, we think, from the language of Section 20, Limitation Act, that to attract its operations two conditions are essential : first, the payment must be made within the prescribed period of limitation and secondly, it must be acknowledged by some form of writing either in the handwriting of the payer himself or signed by him. We agree with the Subordinate Judge that it is the payment which really extends the period of limitation under Section 20, Limitation Act; but the payment has got to be proved in a particular way and for reason of policy the legislature insists on a written or signed acknowledgment as the only proof of payment and excludes oral testimony. Unless, therefore, there is acknowledgment in the required form, the payment by itself is of no avail. The Subordinate Judge, however, is right in holding that while the section requires that the payment should be made within the period of limitation, it does not require that the acknowledgment should also be made within that period. To interpret the proviso in that way would be to import into it certain words which do not occur there. This is the view taken by almost all the High Courts in India and to us it seems to be a proper view to take. (See Mohd. Moizuddin Mia v. Nalini Bala Devi [Mohd. Moizuddin Mia v. Nalini Bala Devi, 1937 SCC OnLine Cal 20 : AIR 1937 Cal 284 : ILR (1937) 2 Cal 137] ; Lal Singh v. Gulab Rai [Lal Singh v. Gulab Rai, 1932 SCC OnLine All 265 : ILR (1933) 55 All 280] , Venkata Subbhu v. Appu Sundaram [Venkata Subbhu v. Appu Sundaram, ILR (1894) 17 Mad 92] , Ram Prasad Babu v. Mohan Lal Babu [Ram Prasad Babu v. Mohan Lal Babu, 1922 SCC OnLine MP 10 : AIR 1923 Nag 117] and Vishwanath Raghunath Kale v. Mahadeo Rajaram Saraf [Vishwanath Raghunath Kale v. Mahadeo Rajaram Saraf, 1933 SCC OnLine Bom 3 : ILR (1933) 57 Bom 453] .) CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 18/29
10. ... If the plaintiff's right of action is apparently barred under the statute of limitation, Order 7 Rule 6, Civil Procedure Code makes it his duty to state specifically in the plaint the grounds of exemption allowed by the Limitation Act, upon which he relies to exclude its operation; and if the plaintiff has got to allege in his plaint the facts which entitle him to exemption, obviously these facts must be in existence at or before the time when the plaint is filed; facts which come into existence after the filing of the plaint cannot be called in aid to revive a right of action which was dead at the date of the suit. To claim exemption under Section 20, Limitation Act the plaintiff must be in a position to allege and prove not only that there was payment of interest on a debt or part- payment of the principal, but that such payment had been acknowledged in writing in the manner contemplated by that section."
(Emphasis supplied)
27. Thus, the Hon'ble Supreme Court in Shanti Conductors (supra) while relying upon Sant Lal Mahton v. Kamla Prasad, decided on 17.10.1951, reported as AIR 1951 SC 477, gave two essentials for a part payment to come under Section 19 of the LA, 1963 which are as follows:
(i) whether payment on account of debt or of interest on legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy,
(ii) an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.
28. The Hon'ble Supreme Court in Shanti Conductors (supra) while relying upon Sant Lal (supra) held that the part payment for extension of limitation is to be proved in only by a written or signed acknowledgment and not by oral testimony. Unless there is a written CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 19/29 acknowledgment in the required form, the payment by itself is of no avail.
29. Hence, in view of Section 19 of LA, 1963, the new limitation period begins from the time of payment for a debt or interest on a legacy only if the payment is made before the original period expired. The payment is required to be made by the person liable to pay or duly authorised agent. A plaintiff can claim exemption only when there was a payment of interest on a debt or part-payment of the principle along with an acknowledgment in writing by the person making the payment.
30. The plaintiff has failed to discharge even the most basic burden of proof. There is no cash receipt issued by the plaintiff. No written acknowledgment was obtained in place of alleged cash payment of Rs. 20,000/-. No contemporaneous bank entry or cash book entry has been produced. The defendant has specifically denied the alleged cash payment of Rs.20,000/-. In its written statement, the defendant has asserted that no such payment was ever made and that the entry has been fabricated solely to bring the suit within limitation. DW-1 has maintained this stand in his affidavit and cross- examination.
31. Secondly, the nature of the alleged transaction is itself suspicious. It is highly improbable in the normal course of business between two Private Limited Companies that a payment of Rs.20,000/- would be sent in cash by an unnamed employee, without any written receipt or without any written confirmation. The defendant company's own ledger Ex. PW 1/4 (Colly.) does not reflect any such payment. The only support for this payment is a unilateral ledger entry in the plaintiff's books. It is significant that PW-1, the Director of the plaintiff company who is stated to have personal CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 20/29 knowledge of the affairs, cannot identify even the name of the employee of the defendant who allegedly delivered cash to his very office. This is a most extraordinary circumstance. If such a payment were actually received, the person receiving it would ordinarily know, or at least record, the name of the messenger. The complete absence of any such detail destroys the credibility of the alleged transaction.
32. Thirdly, the timing of the alleged payment is itself suspect. The payment is stated to have been made on 05.04.2019, i.e., nearly three years after the last supply of goods on 05.07.2016 and almost immediately after the three-year limitation period was about to expire.
33. There is no written acknowledgment of debt by the defendant of any liability required under Section 18 of the LA, 1963. The defendant has specifically denied the entry of Rs.20,000/- and its own ledger does not show this payment. The alleged cash payment which is denied and undocumented cannot constitute a payment within the meaning of Section 19 of the LA, 1963. The plaintiff does not even know the name of the alleged person who brought the payment. There is no authority letter, no voucher, no receipt, and no entry in the defendant's books. Thus, the alleged cash payment of Rs.20,000/- cannot be treated as a payment within the meaning of Section 19 so as to give rise to a fresh period of limitation.
34. In the totality of the above circumstances, I am of the considered and firm view that the plaintiff has miserably failed to establish that any cash payment of Rs.20,000/- was made by the defendant on 05.04.2019. The said entry in the plaintiff's ledger is a unilateral and self-serving entry, wholly uncorroborated and CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 21/29 specifically denied by the defendant. The entry cannot be treated as a payment / acknowledgement within the meaning of Section 19 of the LA, 1963 or as a transaction sufficient to save limitation.
35. Consequently, the last established transaction between the parties was on 05.07.2016. The three-year period of limitation, whether computed under Article 14 or Article 1 of the LA, 1963, would have expired on 05.07.2019. The present suit having been filed on 18.11.2020 is therefore barred by limitation.
36. In view of the foregoing, Issue No. 3 is decided against the plaintiff and in favour of the defendant. It is held that the suit of the plaintiff is barred by limitation. The present suit is accordingly not maintainable.
ISSUE NO. 11. Whether plaintiff is entitled to recover Rs.3,72,418/- towards principal amount due on 05-07-2016 from defendant ? O.P.P.
37. In the present case, the onus to prove Issue No. 1 was upon the plaintiff. The plaintiff sought recovery of the principal amount on the basis of alleged outstanding dues arising from supply of goods. However, before adjudicating the entitlement on merits, the Court has already returned a categorical finding under Issue No. 3 that the suit itself is barred by limitation.
38. Once it is held that the suit is time-barred, the Court is precluded from granting any relief, irrespective of the merits of the claim. The law is well settled that limitation goes to the root of the maintainability of the suit, and even a legally valid claim cannot be CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 22/29 enforced if it is instituted beyond the prescribed period. (See Popat and Kotecha (supra)).
39. Even on merits, the present case does not fall forward in favour of the plaintiff and against the defendant. The Plaintiff has relied upon the computerised ledger account Ex.PW1/4 (colly) and bills/invoices Ex.PW1/5 (colly), pertaining to the supply of metal sheet/packing materials to the defendant vide Bill No.212 dated 09.04.2016, Bill No.501 dated 21.04.2016, Bill No.1704 dated 13.06.2016, Bill No.604 dated 05.07.2016, and Bill No.2121 dated 05.07.2016, containing details of quantity and value. The plaintiff has also relied upon Certificate of Incorporation Ex.PW1/1, Board Resolution dated 29.08.2020 Ex.PW1/2, Master Data of the plaintiff as available on the official website of the Ministry of Corporate Affairs Ex.PW1/3, legal notice dated 04.09.2020 Ex.PW1/6, and certificate under Section 65B of the Indian Evidence Act Ex.PW1/7.
40. Before adverting to the merits of the claim, it is necessary to examine the evidentiary value of the documents relied upon by the plaintiff, particularly the computerised ledger account Ex.PW1/4 (colly) and the bills/invoices Ex.PW1/5 (colly), which form the bedrock of the plaintiff's case for recovery. In this context, it is necessary to discuss Section 34 of the Indian Evidence Act, 1872 (Section 28 of the Bharatiya Sakshya Adhiniyam, 2023) (hereinafter referred to as "IEA" and "BSA" respectively)). Section 34 reads as under:
"34. Entries in books of account, including those maintained in an electronic form, when relevant.--
CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 23/29 1[Entries in the books of account, including those maintained in an electronic form], regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability."
41. Section 34 of the Indian Evidence Act, 1872 makes it clear that entries in books of account regularly maintained by the plaintiff is not a conclusive piece of evidence and is to be corroborated with independent documentary evidence. In the absence of such documents, an adverse inference must be drawn in accordance with the principles laid down by the Hon'ble Supreme Court of India in CBI v. VC Shukla, (1998) 3 SCC 410. The Hon'ble Supreme Court of India in Manohar Lal Sharma v. Union of India, (2017) 11 SCC 731 while reiterating the settled position of law as laid down in V.C. Shukla (supra) held as under:
"279. It has further been laid down in V.C. Shukla as to the value of entries in the books of account, that such statement shall not alone be sufficient evidence to charge any person with liability, even if they are relevant and admissible, and that they are only corroborative evidence. It has been held that even then independent evidence is necessary as to trustworthiness of those entries which is a requirement to fasten the liability."
42. The Hon'ble Gujarat High Court in Jay Ambe Industries Proprietor Shri Dinesh Kumar Bajranglal Somani Versus Garnet Specialty Paper Ltd., decided on 02.02.2022, reported as 2022 LiveLaw (Guj) 18 discusses Section 34 IEA while taking help from landmark judgments. The relevant portion of Jay Ambe (supra) is reproduced below for easy reference:
"15) In Chandi Ram vs. Jamind Kanta Deka, reported in AIR 1952 Assam 92, the Assam High Court held that if a CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 24/29 ledger is not supported by any Day-book or Roznama, it would not fulfill the requirement of Section 34 of the Evidence Act and cannot be regarded relevant under that section. In the opinion of the Assam High Court there is no daily opening or closing balance in the ledger accounts which is maintained in some other books and ledger can be prepared at any time.
Therefore, it cannot be regarded as relevant
16) In Hira Meher vs. Birbal Prasad Agarwal, reported in AIR 1958 Orissa 4, the Orissa High Court held that if the plaintiff relies on the entries in his credit ledger which he himself has scribed out, the plaintiff does not assert that the transaction on credit took place actually the credit register cannot be relied upon because there will be no corroboration of the entries made therein.
17) In Sohan Lal vs. Gulab Chand, reported in AIR 1966 Raj. 229, the Rajasthan High Court held that Bahi Khata is an account book if maintained in regular course of business and entries therein are not admissible if not supported by corresponding entries on Rokam or Nagal Behi.
18) In Zehna Sorabji vs. Mirabella Hoter Col. (Pvt.) Ltd., reported in AIR 1981 Bom 446, the Bombay High Court held that a ledger by itself cannot be a book of account of the character contemplated by Section 34 of the Evidence Act unless it is corroborated by the entries in the cash-book.
19) In Beni vs. Bisan Dayal, reported in AIR 1925 Nag. 445, the Nagpur High Court held that, the entries in the books of account by itself are not sufficient to charge any person with liability unless there is independent evidence of the transaction to which the entries relate.
20) The proposition laid down in the above referred authorities about the admissibility of ledger without the corroborative evidence being led in support of the entries in the ledger cannot be disputed. It is well settled that a ledger, though an account book, has no evidentiary value unless the entries made therein are proved by independent evidence which, in other words, CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 25/29 would mean that there must be corroboration of entries which corroboration can be supplied by proving the transaction or by proving the entries in the Daily cash book or Roznama. Without corroboration, entries in the ledger cannot be brought within the purview of Section 34 of the Evidence Act. In the instant case, it is, therefore, to be seen, whether apart from the entries in the ledger, there was corroborative evidence in support of the entries in the ledger. This matter would largely depend on the facts of each case."
43. The legal position emerging from judicial precedents is that entries in books of account, do not automatically become reliable evidence merely because they are maintained in the course of business. A recurring concern highlighted by various High Courts is the inherent nature of a ledger. A ledger is not a primary record of transactions; rather, it is a secondary compilation derived from original books like day-books, cash books, or roznama. Since it can be written up at a later stage and does not necessarily reflect contemporaneous entries, courts have treated it with caution. In the absence of supporting primary records, a ledger loses its evidentiary reliability. Mere bookkeeping cannot substitute proof of an actual transaction. In other words, the existence of a debt or liability must be independently established, and ledger entries can only support and not create that proof.
44. The consistent thread running through all these decisions is that corroboration is indispensable. Such corroboration may come in different forms, where it may be oral testimony, documentary proof of transactions or supporting entries in primary books of account. Without this supporting evidence, ledger entries remain insufficient to impose liability. Ultimately, the admissibility and evidentiary value CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 26/29 of ledger entries depend on the facts of each case. Courts undertake a factual inquiry to determine whether there is adequate independent evidence to support the entries. If such corroboration exists, the ledger can be relied upon as supporting evidence; if not, it remains merely a self-serving document with limited legal value.
45. Applying the settled position of law to the facts of the present case, the computerised ledger account Ex.PW1/4 (colly) reflecting the business transactions between the parties is a unilateral document created and maintained by the plaintiff. Mere invocation of entries in the ledger account without any bank account statement or any independent bank witness as per Section 34 IEA does not create any entitlement in favour of the plaintiff. (See VC Shukla (Supra); Gopal Krishna Ketkar v. Mohamed Haji Latif, AIR 1968 SC 1413; Mohinder Kumar Gandhi vs. Praveen Kumar, 2025:DHC:8843-DB).
46. Though the plaintiff has placed on record copies of bills/invoices Ex.PW1/5 (colly) and computerised ledger account Ex.PW1/4 (colly), these documents without any corroboratory evidence in support do not establish the actual transactions and payments allegedly made or received. In the absence of any corroboratory proof of the underlying transactions, these documents cannot be relied upon. Further, the plaintiff has relied upon legal notice dated 04.09.2020 Ex.PW1/6. However, this document only shows that a demand was raised by the plaintiff and does not constitute proof of liability of the defendant. The Certificate of Incorporation Ex.PW1/1, Board Resolution Ex.PW1/2, and Master CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 27/29 Data of the plaintiff from the Ministry of Corporate Affairs website Ex.PW1/3 are formal documents going to the identity and authorization of the plaintiff company and do not advance the case of the plaintiff on merits of the claim. The certificate under Section 65B IEA Ex.PW1/7 is procedural in nature and does not independently establish any liability of the defendant.
47. In view of the foregoing discussion and upon careful appreciation of the entire evidence on record, this Court is of the considered opinion that the plaintiff has failed to prove its case by cogent, reliable and independent evidence as required in law. The suit is liable to be dismissed even on merits.
Accordingly, Issue No. 1 is decided against the plaintiff and in favour of the defendant.
ISSUE NO. 22. Whether plaintiff is entitled to recover interest, if yes, at what rate and for which period. ? O.P.P.
51. In view of the finding that the suit is not maintainable, the question of entitlement to interest does not arise for consideration on merits.
Accordingly, Issue No. 2 is decided against the plaintiff and in favour of the defendant.
ISSUE NO. 44. Relief?
52. In view of the findings returned on Issues No. 1, 2, and 3, no relief can be granted to the plaintiff. Accordingly, the suit CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 28/29 of the plaintiff bearing CS (COMM) No.213/2020 titled Paramount Iron & Steel Works Pvt. Ltd. v. M/s San Automotive Industries Pvt. Ltd. is hereby dismissed.
Decree sheet be drawn accordingly.
File be consigned to the record room after due compliance. Announced in the open Court today on this 28th day of April, 2026 (DEVENDER KUMAR JANGALA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
28.04.2026
Digitally signed
by DEVENDER
DEVENDER KUMAR
JANGALA
KUMAR Date:
JANGALA 2026.04.30
13:13:48
+0530
CS (Comm.) No213/20 M/s Paramoount Iron Steel Works Pvt. Ltd. Vs. San Automotive Industries Pvt. Ltd. 29/29