Delhi District Court
Manish Garg Prop Of M/S Mecha Innovative ... vs Arsh Associates Pvt Ltd Through Its ... on 3 July, 2024
In the court of Ms. Anu Grover Baliga, District Judge
(Commercial Court-04), South-East District
Saket Courts, New Delhi
CS (Comm) 799/2023
Manish Garg Prop of M/s Megha Innovative Solutions Vs. Arsh Associates Pvt
Ltd.
In the matter of:
Manish Garg
Proprietor of M/s Megha Innovative Solutions
Having office at: 94, Navyug Market
Ghaziabad, U.P.-201 001. ......Plaintiff
Versus
Arsh Associates Pvt Ltd
Through its Managing Director
Regd. Office at: 167/7, 3rd Floor
Hanuman Mandir Gali
Sarai Jullena
Delhi-110025. ......Defendant
Date of institution : 28.08.2023
Date of reserving judgment : 03.07.2024
Date of pronouncement of Judgment : 03.07.2024
JUDGMENT
1. This is a suit filed under Order XXXVII CPC seeking recovery of Rs.5,32,697.81/- along with interest @ 18% per annum w.e.f. 05.07.2022.
2. The material averments made by the Plaintiff in the suit which are necessary to decide the disputes raised by the Plaintiff are reproduced herein CS (Comm) 799/23 Manish Garg Vs. Arsh Associates Pvt Ltd. Page 1 of 9 below:
(a) The Plaintiff is engaged in the business of manufacturing and trading of concrete and other construction related materials in the name and style of "M/s Megha Innovative Building Solutions" being its sole proprietor, and having office at 94, Navyug Market, Ghaziabad, U.P. (201001).
(b) The Defendant is a private limited company registered under the Companies Act, 1956, having its registered office at 167/7, 3rd Floor, Hanuman Mandir Gali, Sarai Jullena, Delhi-110025 and is engaged in construction/building activities.
(c) In the year 2016, the Defendant approached the Plaintiff for making purchase of 'GYPSUM' - a product manufactured and traded by the Plaintiff, and since then the Defendant had been making purchases of 'GYPSUM' from the Plaintiff on credit basis against various invoices raised by the Plaintiff from time to time, during the period from 30.11.2016 to 30.07.2017.
(d) All the goods supplied by the Plaintiff were delivered to the Defendant to its utmost satisfaction, which have been duly acknowledged by the Defendant from time to time against proper receipt and the Defendant had been making part payment(s) to the Plaintiff from time to time thereby acknowledging its liability to make payment of the amount of the various invoices raised by the Plaintiff.
(e) The entire transactions of sale-purchase, as well as part payment(s) made by the Defendant, have been duly reflected in a running statement of account/ledger account being maintained by the Plaintiff in its regular and ordinary course of business.
(f) In March 2017, the Defendant issued and handed over 04 (four) cheques bearing No.733147 dated 20.05.2017, 933709 dated 26.05.2017, CS (Comm) 799/23 Manish Garg Vs. Arsh Associates Pvt Ltd. Page 2 of 9 933710 dated 03.06.2017 and 933724 dated 10.06.2017 to clear its liability of the then outstanding invoices/amounts.
(g) However, later at the time when the abovesaid cheques became due, the Defendant Company requested the Plaintiff not to present the said cheques as it was short of funds at the said time and asked the Plaintiff to wait for some time. Owing to the continuous requests of the Defendant, the Plaintiff never presented any of the abovementioned cheques with his banker.
(h) As per the Ledger Account maintained by the Plaintiff in the name of the Defendant, a sum of Rs. 6,43,795.30/- (Rupees Six Lakhs Forty-Three Thousand Seven Hundred Ninety-Five and Thirty Paise Only) became due, outstanding and payable by the Defendant as on 30.07.2017.
(i) The Defendant duly acknowledged and confirmed its liability to make payment of the amount of Rs. 6,43,795.30/-(Rupees Six Lakhs Forty- Three Thousand Seven Hundred Ninety-Five and Thirty Paise Only) to the Plaintiff by making endorsement dated 16.10.2017 under its stamp and sign of duly authorized/ responsible/ competent person on the running statement of account/ledger account being maintained by the Plaintiff. The Defendant at this time also issued and handed over 04 (four) new cheques for clearing of the said amount as the earlier ones had become stale.
(j) However, again, later at the time when the abovesaid new cheques became due, the Defendant again requested the Plaintiff not to present the said cheques as it was short of funds. Again, owing to the continuous requests of the Defendant, the Plaintiff never presented any of the abovementioned new cheques with his banker.
(k) On many occasions, the Plaintiff requested the Defendant to make payment of the above stated due and outstanding amount, but the Defendant kept on procrastinating the matter on one pretext or the other and failed to make CS (Comm) 799/23 Manish Garg Vs. Arsh Associates Pvt Ltd. Page 3 of 9 any payment to the Plaintiff.
(l) Under compelling circumstances, the Plaintiff was constrained to get issued a Legal Notice dated 03.10.2019 to the Defendant thereby calling upon it to make payment of the then outstanding amount of Rs. 3,68,795.30/- (Rupees Three Lakh Sixty-Eight Thousand Seven Hundred Ninety-Five and Thirty Paise Only) along with interest @ 18% p.a. within a period of 10 days which was not complied by the Defendant. The said Legal Notice was duly served upon the Defendant through electronic mode/e-mail on 29.12.2019, but to no avail.
(m) On 20.10.2020, the Plaintiff filed a Company Petition against the Defendant before the Hon'ble NCLT (National Company Law Tribunal) thereby seeking invocation of insolvency proceedings against the Defendant and when the Defendant came to know that the aforesaid proceedings had been initiated, the Defendant approached the Plaintiff and requested him not to proceed further with the said petition.
(n) On 22.11.2021, the Defendant Company made cash payment of Rs.25,000/- (Rupees Twenty-Five Thousand Only) to the Plaintiff, subsequent to which, believing upon the representations made by the Defendant to make payment of the balance amount very soon, the Plaintiff on 15.12.2021 withdrew the abovementioned Company Petition bearing no. IB-57/ND/2021.
(o) However, the Defendant despite all his assurances did not make any further payment to the Plaintiff thereafter and when the Plaintiff approached the Defendant, the Defendant showed its inability to make payment at that time due to losses suffered by it during ongoing covid-19 pandemic period till the things are normalized.
(p) When even after Covid-19 pandemic period was over the Defendant did not come forward and make payment of the balance sum to the CS (Comm) 799/23 Manish Garg Vs. Arsh Associates Pvt Ltd. Page 4 of 9 Plaintiff, the Plaintiff was constrained to file a Pre-Institution Mediation Petition against the Defendant on 09.05.2022 before the DSLSA, South-East, Delhi. The Defendant however failed to appear before the competent authority.
(q) However on 05.07.2022, the Defendant made part-payment of Rs. 20,000/- (Rupees Twenty Thousand Only) to the Plaintiff and requested the Plaintiff not to file any commercial suit against it and advanced assurance to start making payment of the balance due and outstanding amount to the Plaintiff w.e.f. September, 2022 in regular monthly interval and therefore, the Plaintiff did not file and institute any commercial suit against the Defendant at that time.
(r) However, the Defendant yet again despite its repeated assurances did not make any payment to the Plaintiff as promised, and only kept on procrastinating and prolonging the matter of making payment from time to time with false assurances.
(s) As per the ledger account, an amount of Rs. 5,32.697.81/-(Rupees Five Lakh Thirty-Two Thousand Six Hundred Ninety-Seven and Eighty-One Paise Only) has become due, outstanding and payable by the Defendant as on 05.07.2022 and as the Defendant is guilty of withholding the above stated amount without and justified or valid reason, it has also therefore rendered itself liable to make payment of interest @18% per annum on the above due and outstanding amount w.e.f. 05.07.2022 and hence, the present suit.
3. This Court vide its order dated 28.08.2023 after taking note of the aforementioned averments, in particular the fact that the suit was based on the acknowledgment made by the Defendant Company on the bills/invoices/ledger account maintained by the Plaintiff, had directed that the summons of the suit in the format prescribed by the provisions of Order XXXVII CPC be issued to the Defendant Company. As per record, the summons sent to the Defendant CS (Comm) 799/23 Manish Garg Vs. Arsh Associates Pvt Ltd. Page 5 of 9 Company in pursuance to the said order through speed post and registered AD were received back with the report of 'left'. Thereafter on an application filed on behalf of the Plaintiff under Order V Rule 20 CPC, the Defendant Company was allowed to be served through publication in 02 newspapers and through affixation at its last known address. Admittedly, despite service through publication and through affixation, the Defendant Company has failed to enter any appearance till date. In such circumstances, Ld. Counsel for the Plaintiff has contended that the suit of the Plaintiff must be decreed in terms of Order XXXVII Rule 3(6) CPC. Ld. Counsel for the Plaintiff has pointed out that the original bills/invoices/ledger account which bear the acknowledgment of the Defendant Company have all been placed on record and since the Defendant Company has failed to enter appearance despite service, the said documents should be taken as true and correct and the suit of the Plaintiff must be decreed for a principal amount of Rs.3,23,795.30. It has been pointed out by Ld. Counsel for the Plaintiff that though the suit amount of Rs.5,32,697.81 claimed by the Plaintiff includes the interest amount calculated at the rate of 18% per annum, he fairly concedes that since the rate of interest being claimed by the Plaintiff is not a part of the agreement/terms of the invoices agreed between the parties, this Court may consider the principal amount as only Rs.3,23,795.30 and award interest on the said principal amount @18% per annim w.e.f. 05.07.2022 which is the date on which the Defendant Company made the last payment of Rs.20,000/- to the Plaintiff.
4. I have carefully considered the submissions made by the Ld. Counsel for the Plaintiff and have also gone through the records of the present case.
5. Order XXXVII Rule 3(6) CPC lays down that in case the Defendant fails CS (Comm) 799/23 Manish Garg Vs. Arsh Associates Pvt Ltd. Page 6 of 9 to enter appearance despite being served with the summons of the suit filed under Order XXXVII CPC, the Plaintiff would be entitled to judgment forthwith. Now in the present case, the ledger account maintained by the Plaintiff and filed on page 34 alongwith the plaint reflects that as on 30.07.2017, a principal amount of Rs.6,43,795.30 was outstanding against the Defendant Company and the Defendant Company acknowledged the said amount as outstanding on 16.10.2017. The said acknowledgment appears on the said ledger account statement and reflects that the Defendant Company undertook to pay Rs.5 Lakhs of the said outstanding by 13.09.2017. The said acknowledgment also apparently bears the signatures of the A/R of the Defendant Company alongwith stamp of the Defendant Company. In such view, it is to be taken that as on 16.10.2017, the Defendant Company acknowledged that it owed an amount of Rs.6,43,795.30 to the Plaintiff. The subsequent ledger account filed on page 35 and 36 of the plaint also reflects that after October, 2017, the Defendant Company made various payments to the Plaintiff, the last payment of Rs.20,000/- having been made by it on 05.07.2022. If one considers the said payments made by the Defendant Company, a principal amount of Rs.3,23,795.30 was admittedly outstanding against the Defendant Company as on the date of filing of the suit. It is being rightly contended that the aforementioned acknowledgment alongwith the fact that the Defendant Company had also issued cheques to discharge the said liability and has not entered appearance despite being served with the summons of the present suit, is sufficient to hold that the Plaintiff is entitled to the said principal amount, in terms of the provisions of Order XXXVII Rule 3(6) CPC.
6. As regards the interest being claimed at the rate of 18% per annum w.e.f. 05.07.2022, taking into consideration that the Plaintiff had demanded the said CS (Comm) 799/23 Manish Garg Vs. Arsh Associates Pvt Ltd. Page 7 of 9 rate of interest in its legal notice dated 03.10.2019 and also taking into account the provisions of Section 80 of the Negotiable Instruments Act, the Plaintiff is to be held entitled to the same. It is to be borne in mind that to discharge its liability, the Defendant Company had issued cheques in favour of the Plaintiff and therefore the Plaintiff is entitled to claim interest @18% per annum in terms of Section 80 of the N.I. Act. Section 80 of the Negotiable Instruments Act, 1881 provides as follows:
"Section 80 - The Negotiable Instruments Act, 1881
80. Interest when no rate specified. - When no rate of interest is specified in the instrument, interest on the amount due thereon shall, 1[notwithstanding any agreement relating to interest between any parties to the instrument], be calculated at the rate of 18[eighteen per centum] per annum, from the date at which the same ought to have been paid by the party charged, until tender or realization of the amount due thereon, or until such date after the institution of a suit to recover such amount as the Court directs. Explanation.--When the party charged is the indorser of an instrument dishonoured by non-payment, he is liable to pay interest only from the time that he receives notice of the dishonour."
7. As regards the pendente lite and future interest, learned Counsel for the Plaintiff has submitted that in terms of Section 34 of CPC, since the liability in relation to the sum adjudged has arisen out of a commercial transaction, this Court must award interest at the rate of 10% per annum for the same is the rate on which moneys are lent and advanced by nationalised banks in relation to commercial transactions. Taking into consideration that many suits are pending in this Court wherein nationalized banks are claiming recovery of unpaid loan amounts along with interest at the rate of 10% per annum, the aforesaid contention of the learned Counsel is accepted.
8. As such, the suit of the Plaintiff is hereby decreed against the Defendant Company for an amount of Rs.3,23,795.30 (Rupees Three Lakhs Twenty Three Thousand Seven Hundred Ninety Five and Paise Thirty Only). Interest on the CS (Comm) 799/23 Manish Garg Vs. Arsh Associates Pvt Ltd. Page 8 of 9 principal amount adjudged of Rs.3,23,795.30 is allowed @18% p.a. from 05.07.2022 till the date of filing of the suit i.e. 28.08.2023. Pendente lite and future interest is awarded at the rate of 10% per annum, on the principal amount adjudged of Rs. 3,23,795.30. Costs of the suit are also allowed. Decree Sheet be prepared accordingly. This file be consigned to Record Room.
ANU Digitally signed by
ANU GROVER BALIGA
GROVER Date: 2024.07.04
BALIGA 20:14:12 +0530
Announced in the Open (Anu Grover Baliga)
Court on 3rd July, 2024. District Judge (Commercial Court-04) South-East/Saket Court New Delhi.
CS (Comm) 799/23 Manish Garg Vs. Arsh Associates Pvt Ltd. Page 9 of 9