Delhi District Court
M/S Salora International Ltd vs Kortek Electronics India Ltd on 21 January, 2025
IN THE COURT OF Ms. NIRJA BHATIA
DISTRICT JUDGE (COMM.) (DIGITAL-07),
SOUTH-EAST DISTRICT, SAKET COURT, NEW DELHI
CS (Comm) 150/2024
M/s Salora International Limited
having its registered office at:
D-13/4, Okhla Industrial Area,
Phase-II, New Delhi.
...... Plaintiff
M/s Kortek Electronics (India) Ltd.,
800, 8th Floor, Sabhyog Building,
Plot No. 58, Nehru Place,
New Delhi.
Also at:
Plot No. 35B, Udyog Vihar,
Industrial Area, Greater Noida,
Noida.
.....Defendant
Date of Institution: 06.03.2024
Arguments concluded on: 13.01.2025
Date of Judgment: 21.01.2025
JUDGMENT
This judgment shall decide the suit for recovery of Rs. 20,60,125/- (Rupees Twenty Lacs Sixty Thousand One Hundred and Twenty-Five).
2. The suit is filed by M/s Salora International Limited, a limited company, incorporated under Companies Act, and having its registered office at D-13/4, Okhla Industrial Area, Phase-II, New Delhi (hereinafter to be referred as plaintiff) through Sh. T. Digitally signed by NIRJA NIRJA BHATIA BHATIA Date:
2025.01.21 D. Joshi, AR, who has filed the suit. 18:00:20 +0530 Salora International Vs. Kortek Electronics Page 1 of 30
3. The institution of the suit is made against M/s Kortek Electronics (India) Limited, a company incorporated company under Companies Act and being engaged in the business of sale and resale of consumer electronic goods (hereinafter to be referred as defendant).
4. The facts enumerated in the plaint are excerpted as under:
(i) That the AR of defendant approached the plaintiff at its registered office at Delhi and requested for supply of consumer electronic goods i.e. loudspeakers on credit. Assurance was made that price shall be paid on credit within 30 days. Any delay beyond above was agreed to attract interest @ 18% upon outstanding.
(ii) That a "running account" was opened in the name of defendant by the plaintiff wherein debit and credit entries were recorded against the material sold and supplied from the manufacturing unit at Noida to defendant's works/ factory at Greater Noida in saleable condition to defendant's satisfaction under several invoices.
(iii) That defendant placed orders for products at plaintiff's registered office at D-13/4, Okhla Industrial Ara, Phase-II, New Delhi, details of payments received were entered in the credit in the statement of account.
(iv) That plaintiff has detailed the invoices (total amounting to
19), with dates, amounts and outstanding balance. It is claimed that the goods were received by the defendant's AR who signed and stamped the acknowledgment with the seal of defendant's company on the copies of invoices. No dispute was raised Digitally consequent to receipt.
signed by NIRJA NIRJA BHATIA BHATIA Date:
2025.01.21 18:00:25 +0530 Salora International Vs. Kortek Electronics Page 2 of 30
(v) Plaintiff states that after taking note of debit and credit entries and adjustments, it is observed that defendant is liable to pay Rs.
20,60,125/- to the plaintiff and is also liable to pay interest @ 18% till the date the actual payment is received in terms of the agreement reached between the parties.
(vi) Plaintiff alleges that despite number of reminders and personal visits of the sales representative/ authorized representative of plaintiff, defendant intentionally failed to pay the amounts and has retained the money, which it converted to own use.
(vii) A legal notice dated 13.10.2020 through speed post was sent calling upon for the payment of Rs. 24,08,005/-, which was served upon defendant on 16.10.2020.
(viii) It is claimed that after receipt of legal notice, defendant paid the amount of Rs. 1,00,000/- on 24.09.2021 and Rs. 1,47,980/- on 20.11.2021 through third party transfer. An amount of Rs. 1,00,000/- was paid on 24.01.2022 through cheque No. 001778. However, it was disonoured, whereafter various reminders and personal visits were made, however, the complete payments are unrealized as defendant paid an amount of Rs. 50,000/- on 15.02.2022 and Rs. 50,000/- on 28.03.2022, whereafter defendant neglected to pay the remaining amount of Rs. 20,60,125/-, which is still due.
(ix) Plaintiff states that pre-litigation mediation was attempted, as mandated under Commercial Courts Act, before DLSA, South- East. However, despite efforts the defendant failed to appear. Digitally signed by NIRJA NIRJA BHATIA BHATIA Date:
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(x) Plaintiff claimed extension of limitation due to Covid and has relied upon the law laid down by Hon'ble Supreme Court in Misc. Application No. 665 of 2021 in SMW(C) No. 3/2020.
Written Statement
5. Defendant filed its written statement and alleged that the suit is based on sham and bogus pleas. The invoices are alleged as false and fabricated. Plea of limitation is raised. Defendant claimed that the suit is beyond the limitation as it is filed beyond the available limitation period. It is averred that pleadings are hit by Order 7 Rule 11 (d) CPC. Reliance is placed upon the law laid down in Madanuri Sri Rama Chandra Murthy Vs. Syed Jalal, (2017) 13 SCC 174.
6. Defendant claimed that the plaint is bad for misjoinder of parties. It is averred that Kortek Electronics (India) Ltd. is a separate legal entity having individual CIN Number, PAN number and GST Number and import-export code. Defendant averred that it is an undisputed settled preposition of law that every transaction/ transportation/ invoice/ bill is a separate contract/ agreement having no concern with previous or later. It is stated that the plaintiff with intention to confuse the Court has filed the suit without specifically stating as how and against which particular invoice the amount is due or payable and how much amounts have already been realized. It is stated that for the above reasons, the pleadings are vague, indefinite and do not fulfill the requirements of CPC.
7. Defendant claimed that invoices relied upon by the plaintiff do not bear any acknowledgment from defendant. The Digitally signed by NIRJA NIRJA BHATIA Salora International Vs. Kortek Electronics Page 4 of 30 BHATIA Date:
2025.01.21 18:00:38 +0530 consignment notes relied upon by plaintiff are not addressed to the defendant and there is not privity of contract on the basis of consignment notes between the parties.
8. Defendant alleged that the suit is bad as the transaction dated 05.11.2018 "BG Debit Bal Transfer From Debit Note Lotte Electronics Transfer to Kortek Electronics amount of Rs. 16,99,744.85/-" and asserted that plaintiff has made a false and fabricated entry in its ledger at page 53. It is averred that Lotte Electronics is a separate entity and plaintiff by creating false and fictitious entry has tried to save himself from limitation and has inflated the amount, which is not due from the defendant.
9. Defendant challenged the jurisdiction and claimed that this Court has no territorial jurisdiction as no part of cause of action took place in Delhi. None of the documents filed by plaintiff bear any signature at any part by the defendant. In which background, the plain itself is liable to rejected under Order 7 Rule 11 CPC.
10. Defendant pleaded that suit is premised on false and bogus pleas. It is alleged that plaintiff is guilty of suppressing material facts and information from this Court. In which background itself, plaintiff is not entitled to any relief. The plaint is allegedly conceived on malicious intent and it is claimed that the plaint and documents are in contradiction as the details of the alleged invoices, inclusive of date and amount do not match alongwith the documents filed by the plaintiff, which is due to the documents having been fabricated and forged by the plaintiff for filing with the suit.
NIRJA BHATIA Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:00:43 +0530 Salora International Vs. Kortek Electronics Page 5 of 30
11. Defendant denied that, there was no issue with respect to the services of plaintiff. It is averred that plaintiff has concealed the fact that the goods were delivered with gross delay, as a matter of practice, on all occasions. Plaintiff delayed the transporting of goods from port to delivery location for which booking was done by consignor from time to time on the assurance that plaintiff shall render assured services of timely pick up of goods. However, plaintiff suffered grossly and did not provide sufficient and diligent services consequently. Defendant incurred heavy demurrage charges and the quality was compromised. It is alleged that due to above, the consignor had to hire a third party for transporting service on the last hours in order to transfer its goods from the port to desired location which resulted in expenses and loss to defendant.
12. Apart from above, various other objections regarding the signing, verification and capacity of the AR to initiate the proceedings are also raised.
Reply on merit:
13. While replying on merits, the status of parties is admitted as matter of record, however, rest of the submissions are denied. It is disputed that defendant ever authorized any person to receive the material from plaintiff company. It is claimed that plaintiff did not even disclose the name of the person who received the material on behalf of defendant. It is alleged that ledger of plaintiff is doctored and manufactured and hence, an unreliable statement of account.
14. Defendant admitted that it made all payments as per NIRJA BHATIA invoices, however, denied the statements of plaintiff regarding Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:00:50 +0530 Salora International Vs. Kortek Electronics Page 6 of 30 the outstanding. It is claimed that the application for mediation is misconceived. Rest of the paras are also disputed.
Replication
15. Plaintiff then filed the replication and challenged the defendant's pleas. It claimed that in terms of provision of Section 106 of Evidence Act, the pleas raised by the defendant in the written statement as well as that of the plaintiff must now be proved by the defendant.
16. It is denied that the present Court has no jurisdiction. Plaintiff claimed that as per master data of Ministry of Corporate Affairs, the registered office of defendant is at 8th Floor, Sahyog Building, Plot No. 58, Nehru Place which also finds mention in the affidavit of Sh. Navin Tiwari, authorized representative/ director of the defendant, which leaves no scope to raise a presumption that this Court has no territorial jurisdiction. It is averred that defendant has not filed any document with the written statement to give credence to any of its pleas. The written statement is allegedly not verified properly, in terms of Order 6 Rule 15 CPC.
Reply to preliminary objections:
17. Plaintiff while replying to preliminary objections raised in the written statement denied the statements made. It is denied that the invoices are forged and fabricated by the plaintiff and/ or are manufactured by its officials for the purposes of present case. It is denied that the plaintiff's claim is hopelessly barred by limitation. Plaintiff claimed that last alleged transaction as NIRJA claimed by defendant on 05.11.2019 did not take place. It is BHATIA Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:00:56 +0530 Salora International Vs. Kortek Electronics Page 7 of 30 asserted that defendant paid Rs. 1,00,000/- on 24.09.2021, Rs. 1,47,980/- on 20.11.2021, through third party transfer, Rs. 1,00,000/- on 21.01.2022 through cheque dated 31.12.2021 and Rs. 1,00,000/- drawn on HDFC Bank. However, upon dishonouring of the said cheque, defendant released the payment of Rs. 50,000/- (each) in two tranches on 15.02.2022 and 28.03.2022 to plaintiff. Plaintiff disputed that each invoice raised against the defendant is a separate independent contract having no concern with any other invoice. It is averred that the invoices were raised after the services were rendered in full and complete without any delay within the timeline assured by the plaintiff.
18. Plaintiff denied the assertion of defendant that the entry of Rs. 16,99,744.85 as "BG Debit Bal Transfer From Debit Note Lotte Electronics Transfer to Kortek Electronics" is a forged and fabricated entry. It is averred that the director of defendant, who was earlier Head of Accounts and Finance, had issued a letter 20.09.2018 addressing to the plaintiff stating his agreement to consider the aforementioned outstanding amount in the books of Kortek Electronics (India) Ltd. after approval of the auditor.
19. Plaintiff denied that a false suit is filed and that plaintiff has concocted facts with respect to false and fictitious entry to save limitation and/ or to inflate the amounts. On the element of jurisdiction, plaintiff has also relied upon the provisions of Section 20(3) CPC and the principle of debtor follows the creditor and claims that suit is well within limitation and under the jurisdiction of this Court. The pleas raised by the defendant are denied. It is denied that plaintiff was deficient in service and NIRJA negligent in respect to timelines. It is denied that the material was BHATIA Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:01:03 +0530 Salora International Vs. Kortek Electronics Page 8 of 30 supplied late leading to expenses and loss to the defendant. Rest of the pleas are disputed.
Note of the proceedings
20. The suit is received on 06.03.2024. Process was issued on 29.04.2024. On completion of pleadings, issues were framed on 02.08.2024. Parties led their evidence. Plaintiff moved an application under Order 11 Rule 5 CPC on 24.08.2024, which was allowed for want of opposition. PW-1 Sh. T. D. Joshi tendered his evidence on 26.10.2024 and PE was closed on 22.11.2024. Opportunity was then extended to defendant to lead evidence. DW-1 Sh. Navin Tiwari deposed in favour of defendant in 07.12.2024. During which period, the defendant also moved an application under Section 151 CPC which was allowed on 09.01.2025.
21. I propose to deal with the examination/ cross-examination of witnesses alongwith discussion while rendering decision with a view to brevity of judgment.
22. On completion of evidence, parties were given opportunity to tender their submissions. Ld. Counsel for the plaintiff did not file any written submissions. However, Sh. Shwetank Tyagi, Advocate for defendant has moved his submissions in writing.
Issues
23. Vide order dated 02.08.2024, issues as below were framed:
NIRJA BHATIA Digitally signed by NIRJA BHATIA Date: 2025.01.21 Salora International Vs. Kortek Electronics Page 9 of 30 18:01:09 +0530 "(1) Whether the plaintiff is entitled to the relief of recovery as prayed for? OPP (2) Whether any interest is payable if so at what rate? OPP (3) Whether the suit is barred by limitation? OPD (4) Whether the suit is bad for misjoinder of parties, if so, its effect? OPD"
24. Upon framing of issues, parties were called upon to lead their respective evidence.
Plaintiff's Evidence
25. PW-1 Sh. T. D. Joshi tendered his evidence by way of an affidavit and exhibited the documents as below:
(1) Copies of Incorporation Certification is Ex.PW1/A. (2) MSME Registration is Ex.PW1/B. (3) Board Resolution is Ex.PW1/C. (4) Copy of master data taken from website of Government of India Certificate U/S 65 B of Indian Evidence Act is Ex.PW1/D (colly).
(5) GST Data taken from GST Portal GOI along with Certificate u/s 65 B of Indian Evidence Act is Ex.PW1/E (colly). (6) Copy of statement of account along with Certificate u/s 65 B of Indian Evidence Act is Ex.PW1/F (colly). (7) Copy of letter dated 20.09.2018 is Ex.PW1/G. (8) Copy of invoice along with consignment note and GSTR-1 NIRJA return duly acknowledged and stamped by defendant along BHATIA Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:01:23 +0530 Salora International Vs. Kortek Electronics Page 10 of 30 with Certificate u/s 65 B of Indian Evidence Act is Ex.PW1/H (colly).
(9) Copy of legal notice dated 13.10.2020 along with postal receipt and tracking report is Ex.PW1/I. (colly). (10) Copy of non-starter report dated 05.09.2023 is Ex.PW1/J. (11) Ex.PW1/K (Colly) stands de-exhibited as it is the judgment of Hon'ble Supreme Court and can be relied upon during arguments.
26. He was cross-examined by Sh. Shwetank Tyagi, Ld. Counsel for the defendant, who claimed that the company was in manufacturing of LED TV, TV Components at the relevant time when the transaction with defendant was made. He stated that the orders were received in writing and the orders were dispatched through email and sometimes through telephone. He volunteered that orders were received in writing as is mentioned upon the invoices. The deliveries are claimed in terms of the requirements and made approximately two months from the date of receipt of advance purchase orders.
27. He could not state who acknowledged the receipt of material on behalf of defendant and volunteered that the acknowledgment though is made. He stated that acknowledgment made on invoices are proof of delivery.
28. Witness deposed that a debit note of Rs. 16,99,44.85 was raised for which a letter was received from the defendant, whereafter negotiations took place and defendant agreed to suffer a debit note of Rs. 16,99,44.85/- in the month of November. He stated that e-way bills alongwith material was sent and volunteered that plaintiff has also filed GSTR-1. He admitted that NIRJA BHATIA Digitally signed by NIRJA BHATIA Salora International Vs. Kortek Electronics Page 11 of 30 Date: 2025.01.21 18:01:28 +0530 no reference to e-way bill has been made in the plaint. Whereafter, vide separate statement, PE was closed on 22.11.2024.
Defendant's Evidence
29. DW-1 Sh. Navin Tiwari tendered his evidence by way of an affidavit and exhibited the board resolution dated 14.11.2022 as Ex. DW-1/1. He was cross-examined by Sh. Ajay Malviya, Ld. Counsel for the plaintiff. He admitted that he was HOD (Finance) on 20.09.2018 and he signed on Ex. PW-1/G at point X. He denied that his written statement and examination affidavit are false and he has no personal knowledge of the facts stated in his examination affidavit. No complaint is stated to have been filed for alleged fabrication of the documents as is stated in para 3 of his examination affidavit. He was not aware if the plaintiff's legal notice was replied, however, claimed that the contents of the legal note was false. Whereafter, his evidence was closed on 09.01.2025.
30. I have heard the final arguments as addressed by both parties and have carefully gone through the material placed on record.
Discussions and Findings
31. The plaintiff claimed its entitlement of Rs. 20,60,125/-, alleging it to be outstanding against defendant, for the supplies of electronic goods i.e. loudspeakers. It is claimed that against the purchase orders raised by defendant, the plaintiff effected the Digitally signed by NIRJA NIRJA BHATIA BHATIA Date:
2025.01.21 18:01:32 +0530 Salora International Vs. Kortek Electronics Page 12 of 30 supplies. The delivery of the goods was made to defendant who accepted them without raising any.
32. In furtherance of above, plaintiff relied upon invoices. The details of unpaid invoices is stated in para 7 of the plaint and is noted below:
S. No. Invoice No. Date Amount Balance outstanding amount
1. LSP0219F0052 23-May-19 310364 88116
2. LSP0219S0037 05-Aug-19 374674 374674
3. LSP0219S0038 05-Aug-19 198854 198854
4. LSP0219S0043 09-Aug-19 292369 292369
5. LSP0219S0085 18-Sep-19 62785 62785
6. LSP0219S0090 24-Sep-19 136314 136314
7. LSP0219S0091 24-Sep-19 112100 112100
8. LSP0219S0097 28-Sep-19 136314 136314
9. LSP0219S0098 28-Sep-19 112100 112100
10. LSP0219T0003 05-Oct-19 55779 55779
11. LSP0219T0012 15-Oct-19 126874 126874
12. LSP0219T0016 19-Oct-19 67260 67260
13. LSP0219T0017 19-Oct-19 59614 59614
14. LSP0219T0020 31-Oct-19 149294 149294
15. LSP0219T0034 18-Nov-19 47932 47932
16. LSP021T0037 19-Nov-19 81798 81798
17. LSP0219T0042 25-Nov-19 117670 117670
18. LSP0219T0067 24-Dec-19 77314 77314
19. LSP0219L0010 24-Jan-20 110994 110994 Total 2630353 2408105
33. Plaintiff claimed the acknowledgment against deliveries NIRJA and defendant having taken benefit of GST, mentioned in GSTR- BHATIA Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:02:04 +0530 Salora International Vs. Kortek Electronics Page 13 of 30 1, which all documents are relied by PW-1 Sh. T. D. Joshi as Ex. PW-1/H.
34. The above documents are claimed as proof(s) of the liability against the defendant qua which supplies were made. It is claimed that dues are balance against above 19 invoices. The invoices are Ex. PW-1/H(colly). They are raised from May 2019 till 24.01.2020.
35. From the above, the plaintiff attempts to prove its case claiming that the documents collectively Ex. PW-1/H i.e. the invoices, alleged acknowledgments of delivery by defendant and the GSTR-1 sufficiently shows that the transactions were made and the acceptance was without any objection or return of the material.
36. While the above is claimed, plaintiff submits that after tendering of above documents in evidence, the burden is suitably discharged and in terms of Section 106, the onus shifts upon the defendant to prove the contrary.
37. In order to probe the above plea, it is useful to take note of the evidence to assess whether before raising the plea that onus to shifts to defendant, whether plaintiff has discharged its own burden.
38. The burden for proving a fact claimed by party is upon the party claiming it. The provisions of Section 102 & 103 of Indian Evidence Act are beneficial at this stage for reference and are noted below:
"102. On whom burden of proof lies.-- The burden of proof in a suit or proceeding lies on that Digitally signed by NIRJA person who would fail if no evidence at all were given on either side.
NIRJA BHATIA BHATIA Date:
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103. Burden of proof as to particular fact.-- The burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person."
39. Under the light of above provisions, now the evidence produced by plaintiff is probed.
40. From the details of 19 invoices, it is noted that against the invoice bearing No. LSP0219F0052 dated 23.05.2019, only a balance of Rs. 88,116/- is claimed. It is shown that while the invoice is raised for an amount of Rs. 3,10,364/-, outstanding of Rs. 88,116/- is claimed reflecting that plaintiff has received an amount of Rs. 2,22,248/- against the said transaction.
41. The details stated in the plaint and thereafter in the examination affidavit show that rest of the 18 invoices are showing the same amount as outstanding as the amount 'invoiced'.
42. From the details of claimed outstanding, plaintiff has attempted to reflect its entitlement on invoice to invoice basis.
43. The above attempt could be satisfied only when the plaintiff is able to show the mode of receipt of payment is also based on invoice to invoice.
44. While the details in above paras show an outstanding of Rs. 24,08,105/-, the claim of plaintiff is lesser. At the cost of repetition, it is noted that plaintiff has raised the suit only for Rs/ 20,60,125/-. The aforesaid itself suggests that the plea pertaining NIRJA BHATIA Digitally signed by NIRJA BHATIA Salora International Vs. Kortek Electronics Page 15 of 30 Date: 2025.01.21 18:02:13 +0530 to entitlement based upon invoices is not well articulated and comprehended.
45. Moreover, when an attempt to establish entitlement based upon invoice is made, plaintiff must have supported the liability against each invoice specifically.
46. Plaintiff has brought the acknowledgments and has tagged them along the invoices. However, the perusal shows the "alleged" acknowledgments are not clear. They are neither showing the details of material nor the quantity. The claim that the acknowledgments are signed at the end of defendant is dispelled from the fact that Sh. T. D. Joshi in his examination and cross-examination stated that at the relevant time plaintiff was manufacturing TV set. His statement is observed as under:
"The plaintiff company was in manufacturing of LED T.V., T.V, Components at the relevant time when the transactions with defendant were made."
47. The aforementioned statement does not show any connect for recovery of dues against sale of loudspeakers.
48. Further, the acknowledgments do not show clear signatures of the recipient. The plaintiff who has simply tagged all the documents numbering 51 to 139 collectively exhibiting them, did not narrate the recipient's name or the person acknowledging the delivery. Sh. T. D. Joshi when asked specifically, claimed that he does not know, who from the side of defendant, accepted the deliveries. The perusal of the documents falls way short of proving the delivery of loudspeakers. Moreover, the invoices are also not supported with purchase orders, despite admitting that advance purchase orders were Digitally signed by NIRJA NIRJA BHATIA Salora International Vs. Kortek Electronics Page 16 of 30 BHATIA Date:
2025.01.21 18:02:17 +0530 received from the defendant and upon confirmation, the goods were delivered around two months after the receipt of purchase orders.
49. The invoices are held as an independent contract. In Modern Construction Company Delhi Vs. Hitech Enterprises, RFA (Comm) 76/2023 & CM Appl. 20581/2023, DOD 24.08.2023, the Hon'ble High Court while dealing with case in hand observed that in terms of law in M/s KglSystel Ltd. Vs. M/s Fujitsu Icim Ltd., 2001 SCC OnLine Del 440 that an invoice is a written contract. Similar observations is recorded in Indian Iron & Steel Company Ltd. Vs. Nada Brothers and ors., 2004 SCC OnLine Del 518, wherein the above judgment is echoed.
50. The plaintiff in above context, while raising a claim based on invoice, was under burden to prove completion of each contract raised through invoice. The plaintiff has fallen short to establish the above for keeping the details of transactions with itself.
51. As regards the mode of proof of document Ex. PW-1/H, the plaintiff did not bring the author of invoices or the cash memos/ bills relied upon by it to claim the deliveries and the acceptance. The aforementioned are attempted to be established through Sh. T. D. Joshi, whose connect with aforementioned documents or even the transaction in issue is not specified except the resolution Ex. PW-1/C. in his favour which shows that his capacity is that of Manager (legal) in which case his association with the transactions between the parties must have been specifically told and proved in absence of which, he cannot be held to be witness competent to depose in terms of law laid down NIRJA BHATIA Salora International Vs. Kortek Electronics Page 17 of 30 Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:02:20 +0530 in Janki Vashdeo Bhojwani and Anr. Vs. Indusind Bank Ltd. and ors., AIR 2005 SC 439.
52. At this stage, it is taken note that the plaintiff has appended the statement of account which is exhibited alongwith certification under Section 65-B as Ex. PW-1/F. The plaintiff in para 3 of the plaint has claimed that the account of defendant was maintained as "running and non-mutual".
53. The entitlement of plaintiff, hence, is now being assessed in addition to above invoices upon the statement of account as well. While the statement of account, must have been brought in corroboration of the invoices, the statement of the plaintiff in the plaint does not gel with the above intent. As an expression of dismay, it is noted that the plaintiff has presented disjunct and disconnected pleadings which are failing to adequately disclose the nature and source of debt against which the recovery is claimed.
54. Though, it is difficult to comprehend in the above set of circumstances as whether the invoices are brought as corroboration to the statement, or vice-versa, the perusal of statement of account reflects that against a trench of invoices, the defendant has made lumpsum payments. The plaintiff against the payments received in above mode, has not made any entry qua the invoices identifying against which transaction the payment is adjusted.
55. At this stage, the mandate of provisions of Section 59 to 61 of Contracts Act is taken note. The interpretation of above Sections has been detailed by Hon'ble High Court in Modern Construction Company (supra) in paras below:
Digitally signed by NIRJA Salora International Vs. Kortek Electronics Page 18 of 30 NIRJA BHATIA BHATIA Date:
2025.01.21 18:02:26 +0530
31. The accounts being maintained of the appellant being "running and non-mutual", the manner of apportionment of money in running accounts has been explained in Section 59 of the Contract Act, 1872 which reads as under:
"Section 59: Application of payment where debt to be discharged is indicated.--Where a debtor, owing several distinct debts to one person, makes a payment to him, either with express intimation, or under circumstances implying, that the payment is to be applied to the discharge of some particular debt, the payment, if accepted, must be applied accordingly.
32. In the event the debtor makes a payment without specifying the Invoice towards which the amount is paid, the apportionment of such a payment is made in accordance with the following provisions of the Indian Contracts Act, 1872:
"Section 60: Application of payment where debt to be discharged is not indicated.--Where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits. Section 61: Application of payment where neither party appropriates.--Where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. If the debts are of equal standing, the payment shall be applied in discharge of each proportionally."
33. The underlying principles of apportionment as contained in above sections according to Pollock & Mulla, Indian Contract Act, 12th Edition, is that when several debts are due owing to one person, NIRJA BHATIA Salora International Vs. Kortek Electronics Page 19 of 30 Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:02:31 +0530 any payment made by the debtor either with an express intimation or under circumstances from which an intimation may be implied, must be applied to the discharge of debt in the manner intimated or which can be implied from the circumstances.
34. Mulla proceeds to observe that "where several distinct debts are owed by a debtor to his creditor, the debtor has the right when he makes a payment to appropriate the money to any of the debts that he pleases, and the creditor is bound, if he takes the money, to apply it in the manner directed by the debtor. If the debtor does not make any appropriation at the time when he makes the payment, the right of appropriation devolves on the creditor".
35. The Rule of Appropriation of money was summed up by Mr. T.L. Venkatarama Aiyar, J. (as he then was) in the Full Bench decision of the Madras High Court in Marimella Suryanarayana vs. Venkataraman Rao (AIR 1953 Madras 458). It was stated:
"The principles governing appropriation of payments made by a debtor are under the general law well settled. When a debtor makes a payment, he has a right to have it appropriated in such manner as he decides and if the creditor accepts the payment, he is bound to make the appropriation in accordance with the directions of the debtor. This is what is known in England as the rule in 'Clayton's case" (1861) 1 Mar.572: 35E.R. 781 and it is embodied in Section 59, Contract Act. But when the debtor has not himself made any appropriation, the right devolves on the creditor who can exercise it at any time, vide 'Cory Bros. & Co. vs. Owners of the Turkish Steamship 'Mecca', (1897) A.C. 286; and even at the time of the trial :
Vide 'Symore vs. Picket', (1905) 1 K.B.
715. That is Section 60, Contract Act. It is only when there is no appropriation either by the debtor Digitally signed by NIRJA Salora International Vs. Kortek Electronics Page 20 of 30 NIRJA BHATIA BHATIA Date:
2025.01.21 18:02:35 +0530 or the creditor that the Court appropriates the payments as provided in Section 61, Contract Act."
36. In the case of Anmol Steel Processors Private Limited vs Colour Roof (India) Limited (MANU/MH/0167/2022) the Bombay High Court analysed Section 60 and 61 of the Indian Contracts Act and observed:
"55. Under section 60 of the Indian Contract Act, where the debtor has omitted to intimate and there are no settled circumstances undertaking the debt to be applied, the creditor may apply at his discretion to any lawful debt actually due and payable to him from the creditor, whether is regular or is not barred by law in force for the time being as to the limits of the suit"
"56. At this stage, it would be apposite to refer to section 61 of the Indian Contract Act which provides that where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of suits. If the debts are of equal standing, the payment shall be applied in discharge of each proportionably."
37. Thus, to summarize where a debtor, owing several distinct debts to one person, makes a payment indicating that the payment is to be applied to the discharge of some particular debt, the payment must be applied accordingly in terms of Section 59 of the Contract Act. However, where the debtor omits to so intimate, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits, according to Section 60 of the Contract Act. Where neither party makes any appropriation, the payment shall be applied in discharge of the debts in order of time, whether they are or are not barred Salora International Vs. Kortek Electronics Page 21 of 30 Digitally signed by NIRJA NIRJA BHATIA BHATIA Date:
2025.01.21 18:02:38 +0530 by limitation in terms of Section 61 of the Contract Act."
56. The Ex. PW-1/F, the statement of account, must in above case have stated the apportionment of the payment realized from defendant against the specific invoices which must have then been shown adjusted.
57. The plaintiff has presented no detail of apportionment. In which background, the plaintiff was left with no option except to adjust the payments in First-In-First-Out mode. The plaintiff could not have kept its entries of account "vague". The plaintiff being a company is obligated under law to follow the regulations and norms of audit and must have kept the accounts sane.
58. The entries of the statement Ex. PW-1/F neither corroborate the invoices nor the invoices are capable to prove the entries of the statement.
59. It is necessary, at at this stage, to note the manner in which the statement of account is brought as a proof.
60. The provisions of Section 34 Indian Evidence Act provide the statement of account as admissible evidence. The provision for reference is enumerated below:
"34. Entries in books of account when relevant.-- 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."
NIRJA BHATIA Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:02:42 +0530 Salora International Vs. Kortek Electronics Page 22 of 30
61. Though, a statement of account is held admissible in evidence, it would not be automatically proved. The plaintiff must undergo the rigours of unburdening itself while proving a document.
62. The statement of account Ex. PW-1/F on its face, is merely a printout of few pages showing entries from the year 2018. It is not shown to be signed by the auditor. The accountant who may have prepared the statement is not brought as a witness to establish the credit worthiness of the entries. At the cost of repetition it is noted that no connect of Sh. T. D. Joshi is shown with the above documents, the part of which is a certification under Section 65-B. Interestingly, the person issuing the certificate is also not produced as a witness and Sh. T. D. Joshi had only identified his signatures. It is difficult to comprehend as to how by mere identification of signatures the rigours of the provisions are met.
63. The mode in which a statement of account is expected to be proved is taken note in Madras Cements Limited Vs. T. M. T. Kannammal Educational Trust, S. A. No. 163 of 2008, Hon'ble Madras High Court DOD 27.11.2014 , wherein following paras, observations as below are made:
"19. In the decision reported in 2008-3-L.W.609 (S.Babu .v. M/s.J.K.Industries Ltd., Madurai), the learned Single Judge of this Court has held that a perusal of the decisions would leave no doubt in NIRJA BHATIA the mind of the Court that even if the original account books are produced, it would not Digitally signed by NIRJA BHATIA Date: 2025.01.21 constitute reliable evidence within the meaning of 18:02:54 +0530 Section 34 of the Indian Evidence Act. In support of the statement of accounts, there should be some evidence to prove that the entries are reflecting the Salora International Vs. Kortek Electronics Page 23 of 30 genuineness and honesty of the transactions concerned.
20. Further, the learned Single Judge has held that a person who wrote the entries or a person who has knowledge of them, should appear and depose before the Court and then only, it could be held to have been proved.
21. ......................................................... Moreover, PW.1 is not a competent person to depose in this case, since he is not a person dealing with accounts, but he is a person working under legal section of plaintiff company. As rightly argued by the learned counsel for the respondents/defendants, the initial burden lies only on the plaintiff to prove the claim by leading sufficient and cogent evidence, if there exists any. Till contrary is proved, onus then shifts on the defendant to rebut the presumption. The plaintiff cannot gain advantage on the mistakes done by the defendants and he has to prove his case by producing the relevant materials. It is a settled law that the plaintiff has to stand on his case and he cannot abandon his case and to rely upon the weakness of the defendant to succeed his case. The said principle has been laid down by the Honourable Apex Court in the judgment reported in 1993 Supp (2) Supreme court Cases 560 ( Sri Chand v. Inder).
22. The same principle is also upheld by the Honourable Apex Court in the judgment reported in (1998) 4 S.C.C. 539 (Punjab Urban Planning & NIRJA BHATIA Development Authority v. Shiv Saraswati Iron & Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:02:58 +0530 Salora International Vs. Kortek Electronics Page 24 of 30 Steel Re-rolling Mills). The relevant paragraph would run as follows:
"10. ..... The plaintiff/appellant must succeed or fail on his own case and cannot take advantage of weakness in the defendant/ respondent's case to get a decree."
23. Section 34 of the Evidence Act will not be satisfied by the production of accounts simpliciter. Such statements shall not alone be sufficient evidence to charge any person with liability. In the absence of production of original account book, this Court need not look into the dispute."
64. The Hon'ble High Court in above case of Madras Cements (supra) elaborately discussed in following paras (excerpted below) whether the plaintiff by merely exhibiting the statement has discharged its burden.:
"27. In the instant case on hand as already discussed above, neither account books nor ledgers are produced and a person who wrote the accounts was not examined. There is nothing on the side of the plaintiff except the statement of the accounts. Therefore, even as per the decision relied on by the learned counsel for the appellant, there is absolutely no evidence and no corroboration.
32. It is well settled that a person who wrote the entries or a person who has knowledge of them did not appear and depose before the Court and in such circumstances, it cannot be held that the case of the plaintiff has been proved. When the plaintiff has not proved its case by examining the person, who wrote the accounts and received the payments NIRJA from the defendants, the mere production of BHATIA Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:03:02 +0530 Salora International Vs. Kortek Electronics Page 25 of 30 statement of accounts will not be sufficient to charge the defendants with any liability."
65. The law that mere exhibiting the document would not transport a document to the proved category is well settled and no further case law is needed to give strength to above.
66. Moreover, in Rangammal Vs. Kuppuswami and anr, (2011) 12 SCC 220, the following observation is made:
"C. Evidence Act, 1872 S. 101 Burden of proof genuineness of a document burden lies on the party who relies on validity of a document to prove its genuineness only then onus will shift on the opposite party to dislodge such proof and establish that the document is sham or bogus fraud/ forgery/ malafides Civil Procedure Code 1908 Or. 6. R. 4 Transfer of Property Act 1882, Ss. 7 and 8."
67. The above leaves no more scope to discuss that the entries under Ex. PW-1/H are not reliable as evidence.
68. The perusal of the entries in Ex. PW-1/H further reveals that plaintiff has made arbitrary adjustments contrary to the expectation of law as is detailed in Sections 59 to 61 of the Contract Act.
69. It is noted that Ex. PW-1/F (colly) the statement, showed further anomalies in the entries of receipt of payments against the dates of 14.09.2021 for an amount of Rs. 1 lac, which is immediately below sale entry of Rs. 1,10,944/-, another entry of Rs. 1,47,980/- is made against credit note/cheque received from MAGIC. The subsequent entries are of 15.02.2022 and 28.03.2022 for Rs. 50,000/- each in favour of the defendant. NIRJA Against which the transaction descriptions are showing BHATIA Digitally signed Salora International Vs. Kortek Electronics Page 26 of 30 by NIRJA BHATIA Date: 2025.01.21 18:03:06 +0530 adjustment of payment for invoice No. Dt. LSP0219L0010 24.01.2020, LSP0219T0067 24.12.2019, LSP0219T0042 25.11.2019 are shown against the receipt of payment of Rs. 50,000/- on 15.02.2022. The realization is entered against transaction against invoice Dt. LSP0219L0010 24.01.2020, LSP0219T0067 24.12.2019. Similarly, for the entry of Rs. 50,000/- cash for 28.03.2022, entry is made for invoice No. Dt. LSP0219T0067 24.12.2019, LSP0219T0042 25.11.2019.
70. Plaintiff has not explained the settlement of account in above manner. The entries reveal that the plaintiff, out of his own whims, has partly adjusted the payments against several invoices regardless of the financial year. While the statement of account is generated with last entry of 28.03.2022, the plaintiff has sought to adjust the invoices pertaining to January 2019, which are apparently time barred for recovery.
71. The attempt to incorporate two cash entries of Rs. 50,000/- each apparently is to bring, the claim within the domain of limitation, as the invoices otherwise would have lapsed for payment.
72. The statement itself shows that plaintiff has been receiving the payments and transacting with defendant till 20.11.2021. It is not reflected why the adjustment of payment is not made against the last dues and the plaintiff has chosen to make adjustments for its time barred claims, which it could have done under Section 60 of the Act, provided the aforementioned is recorded in the statement and is also pleaded specifically. Limitation NIRJA BHATIA Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:03:11 +0530 Salora International Vs. Kortek Electronics Page 27 of 30
73. The plaintiff in order to seek the extension has placed reliance upon law laid down in Suo Motu, WP(C) 3 of 2020. It is claimed that in view of the above law, the suit is within limitation. However, the plaintiff ignored to read the intent of the judgment, which as per para 2 stipulates that all claims which could not be filed within limitation due to Covid conditions must be filed within 90 days w.e.f 15.03.2021, which period would expire around 14.06.2021. In intent, plaintiff as is revealed during the arguments, is seeking that the loss of time caused due to Covid condition must be allowed as exemption of the time for computing the period of limitation. In which context, this Court is conscious of law laid down in M/s Arif Azim Co. Ltd. Vs. M/s Aptect Ltd., (2024) 5 SCC 313 which provides for such relief. However, the law does not exempt the plaintiff to not show the application on facts stated.
74. The plaintiff has avoided to specifically state the date from which the limitation is claimed. Plaintiff has made no effort to file any computation of limitation showing period of exclusion of limitation in terms of law laid down by Hon'ble Supreme Court, whereafter, the suit would be shown under the domain of limitation. This is, more so, when the facts of plaintiff itself show from entries in record show that up till April 2022, plaintiff was physically transacting with defendant.
Debit note/ misjoinder
75. This now brings under the discussion the entry of Rs.
NIRJA 16,99,744/-. The defendant has vehemently contested the above BHATIA entry and has claimed that despite the plaintiff having made the Digitally signed by NIRJA BHATIA Date: 2025.01.21 18:03:15 +0530 Salora International Vs. Kortek Electronics Page 28 of 30 above entry, the defendant is not liable towards the same. The plaintiff in order to counter the above plea, has specifically put the document in confrontation to DW-1 Sh. Navin Tiwari, HOD (Finance and Accounts), who admitted his signatures. The document is Ex. PW-1/G and is dated 05.11.2018. The discussion on the above, however, is of no use as the plaintiff has not brought the credit note raised after receiving the letter dated 05.11.2018 (Ex. PW-1/G). There is no communication that the debit note raised was exchanged with the defendant and the accounts of plaintiff and defendant were mutually matched in context of the above entry.
76. It is pertinent to note that the above entry is pertaining to a third party, which is sister concern of defendant. The debit of a third party could have been adjusted against a claim of defendant provided the requisite entries in the record of plaintiff and the third party, in this case M/s Lotte Electronics, are shown to have reversed, which would be the expectation of Section 34 of GST Act. No adequate record to establish the above liability is brought. The plaintiff has merely relied upon the above entry without showing any justification and despite reflecting that it realized multiple payments thereafter.
77. The evidence, thus, falls inadequate to establish any of the pleas raised towards the claim of debt arising either through the credit note or through the invoices as the record of plaintiff is not lending due credence to the entries. In above wake, issues are decided against plaintiff in preponderance.
78. As plaintiff has failed to show any preponderance, suit is dismissed with no orders to costs.
NIRJA BHATIA Digitally signed by NIRJA BHATIA Salora International Vs. Kortek Electronics Page 29 of 30 Date: 2025.01.21 18:03:19 +0530
79. File be consigned to Record Room after completion of necessary formalities.
Digitally signed by NIRJA NIRJA Date:
BHATIA BHATIA 2025.01.21 18:03:24 +0530 Announced in open Court (Nirja Bhatia) today on 21st January, 2025 District Judge (Comm. Court) (Digital-07) South-East, Saket Court, New Delhi Salora International Vs. Kortek Electronics Page 30 of 30