Delhi District Court
Kapil Saboo Huf vs Hk Garments Through Its Proprietor ... on 26 September, 2025
IN THE COURT OF SH. MOHAMMAD EHTESHAM,
DISTRICT JUDGE-03, SHAHDARA DISTRICT,
KARKARDOOMA COURTS, DELHI
CS No. 47/2022
CNR No. DLSH01-000542-2022
Sh. Kapil Saboo, HUF
Through Its Karta Sh. Kapil Saboo
R/o 2A, Under Hill Road, Civil Lines, Delhi - 110054
........Plaintiff
versus
H K Garments
Through its proprietor Mr. Hemant Mannot
Address : 2910, Raghubarpura 2,
Gali no. 5, Gandhi Nagar, Delhi - 110031
......Defendant
Date of Institution of suit : 03.02.2022
Final arguments concluded on : 11.08.2025
Date of pronouncement of Judgment : 26.09.2025
Decision : Suit decreed.
JUDGMENT
1. This is a suit for recovery for a sum of Rs.18,20,548/- (Rs.15,00,000/- as principal amount and Rs. 3,20,548/- as pre-suit interest) alongwith pendente-lite and future interest and damages filed by the plaintiff against the defendant.
2(a). The case of the plaintiff is that the plaintiff is a Hindu Undivided Family (HUF) and Mr. Kapil Saboo is its karta. It is further the case of the plaintiff that defendant is a proprietorship firm and is engaged in the business of manufacturing and supply of clothing and jeans materials.
CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 1 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date: 2025.10.06 15:21:17 +0530 (b). It is further the case of the plaintiff that in the month of
September 2019, the Defendant had approached the Plaintiff to advance a hand loan of Rs. 15,00,000/- on the account of some financial emergency and owing to the representations made by the Defendant regarding its credibility and standing in the market, the Plaintiff agreed to the request of the Defendant and an amount of Rs. 15,00,000/- was handed by the Plaintiff to the Defendant, in the nature of hand loan on 18.09.2019 by way of RTGS through cheque bearing no. 605632 drawn on Karnataka Bank, Chandani Chowk Branch, Delhi-110006. Defendant acknowledged the above loan by issuing a Promissory Note dated 18.09.2019 in favour of the Plaintiff.
(c). It is further the case of the plaintiff that Defendant promised to repay the said loan of Rs. 15,00,000/- lacs at the earliest and had also agreed to pay interest @12% p.a. on the said loan amount. Plaintiff alleged that in discharge of its liability against the said hand loan, the Defendant had also paid on several occasions interest @12% p.a. between 18.09.2019 to 31.03.2020, amounting to a total of Rs. 89,100/- and no payment has been received by Plaintiff from the Defendant after 31.03.2020, despite the fact that the Plaintiff has reminded the Defendant about the same on numerous occasions. It is further stated that at the time of granting loan, the Defendant had assured that the terms of understanding will be honored, however, to the utter shock and disbelief of the Plaintiff, the Defendant has stopped paying the loan amount or the interest. A legal notice was also issued by the plaintiff on 17.12.2021 through registered post to the Defendant thereby demanding the payment of the outstanding dues along with CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 2 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date: 2025.10.06 15:21:22 +0530 interest; however, the same was never replied by the defendant. Hence the present suit.
3. After service of the summons, defendant i.e. H. K. Garments filed written statement through its proprietor Sh. H. K. Mahnot, wherein he took preliminary objection that the present suit is not maintainable as the alleged transaction between the parties is "commercial" within the Section 2(c) of the Commercial Courts Act, 2015; questioned the validity of Promissory Note on the ground of alleged non presentation/noting/ protest under the provisions of Negotiable Instruments Act, 1881; that Plaintiff has failed to bring interest certificate to demonstrates the existence of the loan agreement; that the plaintiff has no license to engage in the activity of granting financial loan; Defendant contested the execution of the alleged Promissory Note. Defendant denied that he has taken any loan from the Plaintiff and alleged that transaction dated 18.09.2019 was a mercantile transaction The defendant denied rest of the contentions made in the plaint and prayed for dismissal of the suit.
4. No replication has been filed by the plaintiff to the written statement of the defendant.
5. Perusal of record shows that 6 issues were framed vide order dated 23.12.2023. However inadvertently these issues were numbered as 7,8,9,10,11 and 12. These 6 issues are now renumbered as 1 to 6. Vide order dated 23.12.2023, following issues were framed : -
1. Whether the plaintiff is entitled to recovery of Rs.18,20,548/- as prayed for? OPP
2. Whether the plaintiff is entitled to pendente lite and future interest at the rate of 18% p.a., as prayed for? OPP CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 3 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date: 2025.10.06 15:21:28 +0530
3. Whether the plaintiff is entitled for recovery of damages on account of mental agony and harassment suffered by the plaintiff on on account of malafide and fraudulent conduct of the defendant? OPP
4. Whether the present suit is barred by law before this court by virtue of Commercial Court Act, 2015? OPD
5. Whether the promissory note was executed in favour of the plaintiff and has been duly presented, notes and protested in accordance with the statutory provision as enumerated under the aegis of Negotiable Instrument Act, 1881?
OPD
6. Relief.
6. Perusal of record shows that vide Order dated 23.12.2023, Ld. Local Commissioner was appointed for recording of evidence of both the sides.
7. The plaintiff as PW-1 deposed on affidavit Ex. PW1/A in evidence and relied & proved the documents viz. Ledger account maintained by the plaintiff showing the credit of loan amount of Rs.15,00,000/- as Ex.PW1/1; Promissory Note dated 18.09.2019 as issued by the defendant HK Garments to the tune of Rs.15,00,000/- lakhs as Ex.PW1/2; Ledger account maintained by the plaintiff showing the remittance of interest made by defendant as Ex.PW1/3; Legal notice dated 17.12.2021 sent by the plaintiff as Ex.PW1/4; Receipt of courier and speed post of the legal notice dated 17.12.2021, with tracking report as Ex.PW1/5 and 6; and Certificate under Section 65B of the Indian Evidence Act filed by the plaintiff as Ex.PW1/6. 8(a). Proprietor of Defendant Sh.Hemant Kumar Mannot examined himself as DW-1 and deposed on affidavit Ex. DW1/A in evidence. He has not placed any document on record.
CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 4 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date: 2025.10.06 15:21:33 +0530
(b). Defendant examined Sh. Arun Kumar as DW2, who deposed on affidavit Ex.DW2/A in evidence and relied and proved on record his Aadhar card and certificate of membership of ICAI as DW- 2/Mark - 1, uncertified copy of cross examination of PW1 Mr. Kapil Saboo as DW-2/Mark - 2, extract of Bare Act of section 171 of Income Tax Act, 1961 as DW-2/Mark - 3, extract of Bare Act of section 2 of Commercial Courts Act 2015 as DW-2/Mark - 4, copy of judgment of Hon'ble Supreme Court of India in the case of Union of India vs. MV Valliappan (1999) 6 SCC 259 as DW-2/Mark - 5.
9. I have heard the final arguments as addressed by Ld. Counsel for plaintiff and ld. Counsel for defendant.
10. Ld. counsel for plaintiff has argued that defendant has not denied the transfer of Rs.20 lacs in his account. Ld. Counsel further argued that that the defendant has not produced any document on record to substantiate that the transaction between the parties is commercial in nature. Ld. Counsel further argued that the defendant is only trying to avoid its liability to repay the loan on the ground of allegations of commercial dispute and promissory note being not been presented, noted and protested which are only technical in nature and are unsubstantiated allegations.
11. Ld. counsel for Defendant has argued that Plaintiff is residing in HUF and cannot grant friendly loan to the other. Ld. Counsel further argued that the transaction between the parties is commercial in nature as it is an admitted fact that Defendant is a proprietorship firm and is engaged in the business of manufacturing and supply of clothing and jeans material. Ld. Counsel further argued that DW-2 is Chartered CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 5 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date: 2025.10.06 15:21:38 +0530 Accountant and he has also deposed on the lines of defence taken by the defendant/ DW-1 that the transaction with a HUF can only fall within the ambit of Section 2 of the Commercial Courts Act, 2015. Ld. Counsel further argued that Kapil Saboo HUF (plaintiff herein) is an illegal entity in view of Section 171 (9) (c) of the Income Tax Act, 1961. Ld. Counsel has relied on the judgment of Hon'ble Supreme Court of India in the case of Union of India vs. MV Valliappan (1999) 6 SCC
259.
12. I have perused the material available on record. I have also gone through the written arguments filed by the defendant.
13. My issue-wise findings are as under:-
14. Issue no. 4: Whether the present suit is barred by law before this court by virtue of Commercial Court Act, 2015? OPD a. Issue no. 4 is taken up first as the same relates to the maintainability of the present suit. The onus to prove this issue was upon the Defendant.
b. The defendant has pleaded that the present case involves a "commercial dispute" under Section 2(c) of the Commercial Courts Act. The defendant has not produced any document on record to show that RTGS transfer of Rs. 20 lacs on 18.09.2019 by the plaintiff in the account of defendant formed part of a mercantile dealing rather than a friendly hand loan. Further no particulars and details of such transaction have been averred in the pleadings by the defendant.
CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 6 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date:
2025.10.06 15:21:45 +0530 c. The defendant/ DW1 in his cross examination dated 08.02.2024 has admitted that his CA maintains ledger account, income tax return and other related record of payments and receipt. DW1 also admitted that he has not placed on record any documents to show that there was any mercantile transaction between him and plaintiff.
d. The defendant has also examined Sh. Arun Kumar /DW-2 a Chartered Accountant, who has not deposed on any factual aspect of alleged mercantile transaction between the plaintiff and defendant. DW2 has deposed that he has no personal, commercial, or professional relationship with plaintiff or defendant. Therefore it is concluded that DW2 is not in a position to depose on the aspect of alleged commercial/mercantile transactions between the parties. e. It is interesting to note here that defendant produced DW2 as an expert witness to give opinion on Section 2 of the commercial courts Act, 2015 and Income Tax Act, 1961. In this regard it is observed that Section 45 of the Indian Evidence Act recognizes those persons as experts who are especially skilled in foreign laws, science or art, or identification of handwriting or finger impression. It is further observed that no question of interpretation of any "foreign law" is involved in the present case. Therefore the opinion of the DW2 on the above stated Indian Laws is not relevant and as such the same is of no help to the defendant.
CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 7 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date: 2025.10.06 15:21:50 +0530 f. In view of the above discussion the defendant has failed to substantiate his allegation that the transaction dated 18.09.2019 is a commercial transaction. Accordingly, Issue No. 4 is decided against the defendant.
15. Issue no.5: Whether the promissory note was executed in favour of the plaintiff and has been duly presented, notes and protested in accordance with the statutory provision as enumerated under the aegis of Negotiable Instrument Act, 1881? OPD a. The onus to prove this issue was upon the Defendant. b. The plaintiff proved execution of the promissory note Ex.PW1/2. The defendant challenge to Ex. PW1/2 was confined to technical averments about presentation/noting/protest.
c. The defendant has not adduced any evidence or has confronted PW-1 with any substantive challenge to execution or consideration for which the promissory note Ex.PW1/2 dated 18.09.2019 was issued by the defendant in favor of the plaintiff. Thus no legal bar to the present civil suit for recovery has been demonstrated by the defendant's by the alleged non presentation/noting/protest under the NI Act.
d. The defendant has not led any evidence to show that the consequences of any alleged non-compliance of provisions of NI Act will result in to extinguishment of the right of the plaintiff to initiate the present civil suit for recovery under the proved promissory note and loan. Thus in the absence CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 8 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date: 2025.10.06 15:21:56 +0530 of any such proof, Issue No. 5 is decided against the defendant.
16. Issue no. 1 : Whether the plaintiff is entitled to recovery of Rs.18,20,548/- as prayed for? OPP a. The onus to prove this issue was upon the Plaintiff. b. The present suit has been filed by the plaintiff for sum of Rs. 18,20,548/- which includes Rs.15,00,000/- as principal amount and Rs.3,20,548/- as pre-suit interest. The disbursement of Rs. 15,00,000/- by RTGS on 18.09.2019 by the plaintiff to the defendant is an admitted fact. Further the plaintiff has also proved the above transaction through ledger Ex.PW1/1. The case of the plaintiff is that the said Rs. 15,00,000/- lacs were given as friendly loan to defendant. The plaintiff/ PW1 entered in to witness box and deposed on the line of his averments in the plaint. PW1 remained unrebutted in his cross examination. c. The defendant in his cross examination dated 08.02.2024 has admitted that he has not returned the money to the plaintiff which he had received from him. The defendant has not produced any contrary account or documentary proof for rebuttal which further reinforces the plaintiff's version of the said RTGS transfer being on account of loan. The promissory note dated 18.09.2019, Ex.PW1/2, corroborates the acknowledgment of liability of the defendant for the said loan amount. Ex.PW1/3 shows CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 9 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date: 2025.10.06 15:22:01 +0530 admitted interest payments at 12% p.a. aggregating Rs. 89,100/-/- up to 31.03.2020 before cessation of payments, which further corroborates the existence of the said loan. d. As discussed above the defendant/DW1 has not given any particulars in support of his allegation that the said RTGS transfer dated 18.09,2019 been in respect of mercantile transaction. In his cross examination dated 08.02.2024 the defendant/ DW1 made a new allegation that he has suffered double loss due of the business transaction with the plaintiff and that the payment was made by the plaintiff as an advance for the orders placed by the plaintiff. However the defendant in his written statement has not averred about any such loss and has also not placed on record any documentary proof regarding any business transaction with plaintiff.
e. The DW2 a Chartered Accountant by profession himself has deposed in his evidence affidavit EX DW2/A that he has no personal, commercial, or professional relationship with plaintiff or defendant. As such the evidence of DW2 is of no help to defendant.
f. The defendant has also objected that Kapil Saboo HUF (plaintiff herein) is an illegal entity in view of Section 171 (9) (c) of the Income Tax Act, 1961 and has relied on the judgment of Hon'ble Supreme Court of India in the case of Union of India vs. MV Valliappan (1999) 6 SCC 259. I have already dealt with the said objection of the defendant CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 10 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date: 2025.10.06 15:22:07 +0530 vide order dated 11.08.2025 whereby the application of the defendant under Order 14 Rule 5 CPC to frame an additional issue in the present matter i.e. Whether the Plaintiff Kapil Saboo HUF is an illegal entity? And if yes, then, is it competent to contract with the Defendant? was dismissed with costs of Rs. 10,000/- to be paid to the plaintiff.
g. Thus in view of above discussions it follows that on the one hand PW-1's affidavit evidence supported by contemporaneous ledgers, the promissory note, and the legal notice with dispatch proofs constitutes cogent primary and secondary evidence, bolstered by a Section 65B certificate for electronic records in compliance with the mode-of-proof requirement, and remained unshaken in his cross examination on material particulars. Whereas on the other hand there is a complete absence of any substantive defence as DW-1 filed no documents. DW-2's testimony was largely argumentative on legal conclusions rather than factual impeachments, carrying no probative value against the plaintiff's documentary case. Thus on the civil standard of proof, plaintiff's version is more probable. h. In view of the above discussion it is concluded that the plaintiff is entitled for the recovery of Rs.15,00,000/- as principal amount. The plaintiff has also claimed pre-suit interest of Rs.3,20,548/- which has been calculated at the rate of 12% per annum on the principal amount. However CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 11 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date: 2025.10.06 15:22:11 +0530 the interest rate at 12% per annum is unreasonable. Considering the present economic scenario the interest of justice would be served if pre-suit interest at the rate of 6% per annum on the principal amount of Rs.15,00,000/- is awarded to the plaintiff against the defendant for the period of 31.03.2020 till the date of filing of this suit. The pre-suit interest is decided accordingly.
i. Thus the issue no. 1 is decided in above terms in favor of the plaintiff and against the defendant.
17. Issue no. 2:. Whether the plaintiff is entitled to pendente lite and future interest at the rate of 18% p.a., as prayed for? OPP a. The onus to prove this issue was upon the Plaintiff. b. The plaintiff has claimed pendent lite and future interest at the rate of 18% per annum. However the interest at the rate of 18% per annum is unreasonable. Thus by applying the same logic which has been discussed while deciding issue no. 1 whereby the plaintiff has been found to be entitled for pre-suit interest at the rate of 6% per annum, the interest of justice would be served if the plaintiff is awarded the same rate of interest of 6% per annum on the principal amount of Rs.15,00,000/- as pendent lite and future interest against the defendant.
c. Thus issue no. 2 is decided accordingly in favour of the plaintiff and against the defendant.
CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 12 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date:
2025.10.06 15:22:17 +0530
18. Issue no. 3 : Whether the plaintiff is entitled for recovery of damages on account of mental agony and harassment suffered by the plaintiff on on account of malafide and fraudulent conduct of the defendant? OPP a. The onus to prove this issue was upon the Plaintiff. b. The plaintiff has not led separate evidence to establish quantifiable damages for mental agony or harassment distinct from the pecuniary loss the remedy for which has already been awarded by interest on principal amount while deciding issues no.1 and 2.
c. As no medical or corroborative proof has been tendered to discharge the onus on this head consequently, Issue No. 3 is answered against the plaintiff.
RELIEF In view of my findings on Issues no. 1 to 5, the present suit stands decreed in favour of Plaintiff and against the Defendant for the following reliefs:-
i. Recovery of principal amount of Rs.15,00,000/- (Rupees Fifteen Lacs only) .
ii. Pre suit, pendente lite and future interest at the rate of 6% per annum on the principal amount of Rs.15,00,000/- from 01.04.2020 till realization of the same.
iii. Costs of the suit CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 13 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date: 2025.10.06 15:22:21 +0530 Perusal of record shows that vide Order dated 23.12.2023 the Local Commissioner was appointed in this matter for recording of evidences. Thus, in view of para D (4) and (5) of the said Order, the Plaintiff is also awarded Rs.6,000/- as part of costs of litigation on account of recording of evidence of PW-1.
Further, the costs of Rs.10,000/- imposed on the Defendant vide Order dated 11.08.2025 is also awarded to the Plaintiff as part of decree.
Pending applications, if any, are disposed off. Decree sheet be prepared accordingly.
File be consigned to record room after necessary compliance.
Announced in the open court on this 26th day of September 2025.
(MOHAMMAD EHTESHAM) District Judge-03 (Shahdara), Karkardooma Courts, Delhi. 26.09.2025 CS No. 47/22 Kapil Saboo HUF-v/s. H K Garments Page No. 14 of 14 Digitally signed by MOHAMMAD MOHAMMAD EHTESHAM EHTESHAM Date:
2025.10.06 15:22:27 +0530