Delhi District Court
Vikhyat Laefin And Portfolio Ltd vs Manoj Seth, Proprietor, M/S O B ... on 17 January, 2025
DLCT010057932022
IN THE COURT OF SH. SANJEEV KUMAR AGGARWAL : DISTRICT
JUDGE (COMMERCIAL) -01 : CENTRAL, TIS HAZARI COURTS,
DELHI
CS (Com.) No. 1002/2022
Vikhyat Laefin And Portfolio Limited,
Having Registered Office at :
55/6, Ground Floor, Old Rajinder Nagar,
New Delhi - 110060. ..... Plaintiff.
Versus
Sh. Manoj Seth,
Proprietor : M/s. O.B. Enterprises,
R/o House No. 2054, 5th Floor,
Sanskriti Apartment, Plot No. 35,
Sector-10, Dwarka, New Delhi - 110075.
Office at :
414-415, 4th Floor, City Center,
Plot No. 5, Sector-12, Dwarka,
New Delhi - 110075.
Suit (Com.) No. 1002/2022 Page No. 1 of 29
Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth
Also at :
Gala No. 1-2, Plot No. 27-28,
Shri Sadgurukripa Complex,
Shinde Saheb Industries,
Bhiwandi, Thane, Maharashtra - 421302. .... Defendant.
Date of institution : 04.04.2022
Date of reserving Judgment : 25.11.2024
Date of decision : 17.01.2025
SUIT FOR RECOVERY OF RS. 34,97,797/- ALONGWITH PENDENTE
LITE AND FUTURE INTEREST.
JUDGMENT
1. Vide this Judgment, I shall decide the suit filed by the plaintiff for recovery of Rs. 34,97,797/- along with interest against the defendant.
2. The brief facts as stated in the plaint are that the plaintiff is a company duly registered under the Companies Act and is also registered as an Non Banking Finance Company vide certificate dated 12.6.2006 as issued by the Reserve Bank of India. It is further stated that the defendant is engaged in various businesses and had approached the plaintiff company seeking loan of Rs. 20 lacs to augment his working capital and considering his request, the plaintiff disbursed the said amount to the defendant on 21.3.2011 through bank account No. 01792090006172 maintained with Kotak Mahindra Bank, Rajinder Nagar, New Delhi as unsecured loan. The plaintiff company had initially disbursed the said loan with payable interest @ 7% per annum for the Suit (Com.) No. 1002/2022 Page No. 2 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth financial years 2011-12, 2012-13 and 2013-14 respectively and subsequently payable interest was revised to 9% per annum for the year 2014-15 and thereafter. It is further stated that the defendant in order ot continue with the loan amount, has deducted and paid TDS over the accrued interest over the payable amount till financial year 2018-19 from the financial year 2011-12 but the defendant did not deposit TDS after financial year 2019-2020. The plaintiff company inquired about the same from defendant and in response to the query raised by the plaintiff, the defendant shared ledger maintained by him for the financial years 2016- 17 to 2019-2020 vide e-mail dated 6.8.2020 however no amount has been paid by the defendant post financial year 2018-19. It is further stated that on telephonic inquiry to the defendant made by the plaintiff company for non payment of the TDS amount and repayment of principal loan amount, defendant cited pandemic circumstances for the same and assured to repay the entire amount at earliest vide e-mail dated 6.8.2020. It is also stated that as per the documents, the defendant is liable to pay amount of Rs. 34,97,797/- till 31.3.2021 along with interest for the overdue period and pendente lite and future interest @ 9% per annum. It is also stated that the plaintiff company initiated Pre Institution Mediation before the DLSA and the non starter report was issued on 18.2.2022 and thus the plaintiff has filed the present suit for recovery of Rs. 34,97,797/-.
3. Summons of the suit were sent to the defendant and defendant contested the suit by filing written statement. In the written statement, defendant has taken the preliminary objections that :
i. the suit is barred by limitation;
ii. the suit is not maintainable on factual stand as pleaded law of CPC and Commercial Courts Act;
iii. the plaintiff has not filed the court fees properly as per the valuation of the suit; and Suit (Com.) No. 1002/2022 Page No. 3 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth iv. the suit is bad for non joinder and mis joinder of necessary parties.
4. Further, the defendant made preliminary submissions that the defendant never knew the plaintiff and his company and it is stated that the defendant was having a C.A namely Ashwani Sharma who used to do all kind of work regarding working capital and he was signing the balance sheet from 2005 to 2012 and after that because he and his brother has given entries and he gave the authority to CA Ankit Khemka FCA whose membership number is 524586 who signed the balance sheet and all the financial documents on behalf of defendant hence due to good faith, blank cheques and some blank signed documents were kept by the CA from the defendant reason being defendant used to sit in Mumbai approximately 6 days in week and the CA suggested the defendant that for improving the capital, they need white entry in balance sheet and he further told the defendant about the plaintiff company and assured that he can arrange the said amount just a kind of financial entry hence this was not a kind of loan because defendant's CA had taken this entry in book through cheque by paying of cash amount to the plaintiff. The defendant paid this amount in cash with the help of his friend namely Taranjit Singh Chadha in the year 2012-13 who is also the owner of M/s. JAAP Finance and Investment Pvt. Ltd.
5. On merits, the defendant has denied the contents of the plaint. It is denied that Viney Kant Dubey is one of Director of defendant and further stated that as per the documents, one unknown Director namely Seema Jain signed the board resolution filed by plaintiff however not a single word is mentioned that said Seema Jain is authorizing Viney Kant Dubey. Further, it is denied that the defendant made any representation before the plaintiff for said loan and stated that it was the financial entry which was done by the CA without any knowledge to the defendant and this was not a kind of loan because defendant's CA had taken this entry in book through cheque by paying cash amount to the Suit (Com.) No. 1002/2022 Page No. 4 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth plaintiff which was arranged with the help of his friend Taranjit Singh Chadha in the year 2012-13 who is also the owner of M/s. JAAP Finance and Investment Pvt. Ltd. Defendant has further stated that the TDS entry was raised by the CA himself and the defendant never paid any interest to the plaintiff nor any TDS was given to the plaintiff. The plaintiff did not sent any legal notice or any reminder to the defendant. The defendant has also denied that the defendant is liable to pay interest upon outstanding amount @ 9% per annum and further stated that no cause of action arose in favour of the plaintiff and against the defendant and as per the jurisdiction aspect, the defendant is residing at Dwarka, his office is at Dwarka and his second office in Mumbai hence this court has no territorial jurisdiction to entertain the present suit therefore defendant prays for dismissal of the suit.
6. No replication was filed by the plaintiff. Admission / denial of documents done. Plaintiff has denied following documents of the defendant by way of affidavit :
1. Balance sheet of JAAP Finance And Investment Private Limited for the period 2012 and 2013.
7. Defendant has denied following documents of plaintiff by way of affidavit :
1. True copies of certificate of incorporation along with certificate for commencement of business in favour of plaintiff.
2. Certificate dated 12.6.2006 as issued by RBI acknowledging plaintiff company as NBFC.
3. Board resolution dated 15.11.2021 in favour of Sh.
Vinay Kant Dubey.
4. True copy of transaction dated 20.3.2011 disbursing Suit (Com.) No. 1002/2022 Page No. 5 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth loan of Rs. 20,00,000/- from bank account of plaintiff.
5. TDS certificates of plaintiff company.
6. E-mail dated 6.8.2020.
7. Ledger maintained by defendant for the year 2016-17 to 2019-20 shared by the defendant.
8. Ledger maintained by the plaintiff.
9. Non starter report dated 18.2.2022.
8. On the basis of pleadings of the parties, following issues were framed vide order dated 29.9.2023 for consideration :-
1. Whether plaintiff has given the loan of Rs.
20,00,000/- to the defendant? Onus on parties.
2. Whether the defendant has only taken entry from the plaintiff regarding the loan of Rs. 20,00,000/-? Onus on parties.
3. Whether the plaintiff has advanced the loan as per law of land? Onus on parties.
4. Whether the suit is barred by limitation? Onus on parties.
5. Whether showing the deduction of TDS amount by the defendant in its income tax return would amount to acknowledgment of debt? Onus on parties.
6. Whether the plaintiff is entitled for decree of recovery of sum of Rs. 20,00,000/- from the defendant as principal amount? OPP.
7. Whether the plaintiff is entitled to interest on the Suit (Com.) No. 1002/2022 Page No. 6 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth aforesaid amount? If so, at what rate and for which period? OPP.
8. Relief.
9. In order to prove its case, plaintiff has examined six witnesses i.e. Sh. Viney Kant Dubey, Director and AR of the plaintiff as PW1; Sh. Gaurav Garg, Notice server, Income Tax Department as PW2; Ms. Avinash Kaur, Branch Operation Manager, Kotak Mahindra Bank as PW3; Sh. Brij Lal Belwal, Multi Tasking Staff, Office of Registrar of Company as PW4; Sh. Mohit, Deputy Manager, Axis Bank as PW5 and Sh. Lokesh Kumar, SWO, Class-B, PNB as PW6. PW1, PW2 and PW3 were cross examined by Ld. Counsel for the defendant however PW4, PW5 and PW6 were not cross examined.
10. On the other hand defendant did not lead any evidence.
11. Final arguments were heard from Sh. Anant Bhushan, Ld. Counsel for plaintiff and Sh. Rajiv Kapoor, Ld. Counsel for defendant.
12. It is argued by Ld. Counsel for the plaintiff that from the testimonies of PW1 to PW6, it is proved that the plaintiff company has given Rs. 20 lacs to the defendant as loan vide bank transfer dated 21.3.2011 as unsecured loan which was repayable with interest @ 7% per annum for the financial years 2011-12, 2012-13 and 2013-14 respectively and subsequently payable interest was revised to 9% per annum for the year 2014-15 and thereafter. It is further stated that the defendant in order to continue with the loan amount, has deducted and paid TDS over the accrued interest over the payable amount till financial year 2018-19 from the financial year 2011-12 but the defendant did not deposit TDS after financial year 2019-2020 nor paid interest and principal amount therefore the defendant is liable to pay the suit amount Suit (Com.) No. 1002/2022 Page No. 7 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth along with pendente lite and future interest. In support of his contentions, Ld. Counsel for plaintiff has relied upon the following Judgments :
i. Rahul Jain Vs. Vasant Raj Pandit, CS (OS) No.
623/2005;
ii. Asset Reconstruction Company (India) Ltd. Vs. Tulip
Star Hotels Ltd. & Ors., 2022 Livelaw (SC) 648;
13. On the other hand, Ld. Counsel for the defendant submits that the plaintiff did not prove any document that the defendant has taken loan from the plaintiff. He submits that it was just an entry as defendant required white money and therefore the said entry was made by his CA who was maintaining accounts of defendant and the said CA was only making TDS entries in the returns of defendant but actually there is no interest paid therefore TDS entries are bogus entries and same does not amount to acknowledging of loan amount by the defendant from the plaintiff therefore suit of the plaintiff is liable to be dismissed. In support of his contentions, Ld. Counsel for defendant has relied upon the following Judgments :
i. Zion Steel Ltd. Vs. Subtlewigh Electric I Pvt. Ltd., 2014 SCC Online Cal 2044;
ii. Alliance Paints and Varnish Works Pvt. Ltd. Vs. Hari Kishan Gupta, 2010 SCC Online Del 571;
iii. J.K. Engineering Pvt. Ltd. Vs. ANE Industries Pvt.
Ltd., CS No. 213/2016;
iv. P.M. Cold Storage Pvt. Ltd. Vs. Goouksheer Farm Fresh Pvt. Ltd., Company Appeal (AT) (Insolvency) Suit (Com.) No. 1002/2022 Page No. 8 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth No. 615 of 2020;
v. M/s. Zed C. Infra Vs. M/s. Samsung India Electronics, CS No. 761/2011; and vi. Suresh Batheja Vs. M/s. Big-B Plastic Works Pvt. Ltd., CS No. 321/2014.
EVIDENCE.
14. The main witness of the plaintiff is PW1 Vinay Kumar Dubey who has deposed in his examination in chief led by way of affidavit Ex. PW1/1 and Ex. PW1/2 that he is Director of the plaintiff company and has been authorized to represent the plaintiff company by virtue of Board Resolution dated 15.11.2019 Ex. PW1/C. He further deposed that plaintiff company is duly incorporated vide certificate of commencement of business and also depose that it is a Non-Banking Finance Company registered with RBI vide certificate Ex. PW1/B. He further deposed that defendant approached the plaintiff company for unsecured loan of Rs 20 lacs to augments its working capital and plaintiff company disburse said amount on 21.03.2011 vide bank account and prove bank account statement as Ex. PW1/D. He further deposed that initially said amount was disbursed @ 7.21% interest per annum for the year 2011-2012 but subsequently revised to 7% p.a. for the financial year 2012-2013 and 2013-2014 and then 9% per annum for 2104-15 and 2015-16 and proved the ledger account of the plaintiff company as Ex. PW1/G and Book of accounts as Ex. PW1/H. He further deposed that defendant deducted TDS of the interest amount till financial year 2018-19 as reflected in Form 26AS of the plaintiff company which he proved as PW1/E (Colly.). Since the defendant did not deposit the TDS for the financial year 2019-20 the plaintiff inquired about the same from defendant and defendant share the ledger Ex. PW1/G vide its email Suit (Com.) No. 1002/2022 Page No. 9 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth dated 06.08.20 Ex. PW1/F for year 2016-17, 2017-18, 2018-19 and 2019-20. He further deposed that from ledger for year 2019-20 it is evident that TDS of said year has been deducted but failed to deposit the same. Plaintiff suspected the action of the defendant repeatedly tried to contact but defendant did not respond to any of the call. He further deposed that defendant is liable to pay Rs. 34,97,797/- as principal amount and interest till 31.03.2021 and pendente lite and future interest.
15. In his cross examination, he deposed that he joined the plaintiff company in year 2011 as a Director. He does not know the defendant personally. The defendant was given loan on the recommendation of CA known to some old Director of plaintiff company. He does not know the name of the CA or the said Director. He does not know whether the said CA is Ashwani Sharma or Ankit Khemka or not. He was not personally present when the loan transaction with defendant took place. No loan agreement / affidavit with defendant has been placed on record with respect to the grant of loan to the defendant. Generally person who takes the loan approach them through known persons for taking loan. They do not make the person who referred the person for taking loan as guarantor. There is no printed performa of loan agreement. They prepared the loan agreement on affidavit and voluntarily deposed that they do not prepare any loan agreement for the persons whose other loans are continue. No security is kept for granting loan. The amount of loan is transferred in the bank account of the person to whom loans are granted. The loan was sanctioned @ 7.21% per annum and it was later on reduced to 7% per annum at the time of final grant of loan. There was no fixed tenure for repayment of the loan amount. He admitted that no document has been filed on record to prove that the rate of interest was 7% and there was no period fixed for repayment of loan. He also admitted that no document has been placed on record with respect to the previous loan granted to the defendant and voluntarily deposed that the same may be in office. Previous loan was Suit (Com.) No. 1002/2022 Page No. 10 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth also unsecured loan. The loan in question was given in the year 2011 and after grant of loan, no payment was made by the defendant either as interest or as part payment of loan amount. He admitted that no legal notice / letter was sent to the defendant demanding the interest or the principal payment of the loan from 2011 till the filing of suit. He denied the suggestion that plaintiff has neither granted any previous loan to the defendant nor has granted the loan in question. The plaintiff has taken the benefit of TDS deducted by defendant in their income tax liabilities but he admitted that no income tax statement of taking the said benefit by plaintiff has been filed on record. He denied the suggestion that in 26AS of plaintiff no TDS amount as paid / credit by defendant is shown qua the interest of the loan amount in question. He depose that If the party is depositing the TDS of interest then we do not file case for recovery even for 5, 7 or 9 years. He denied that the amount of Rs. 20 lacs which has been transferred to the account of defendant was an entry only for the purpose of manipulating the accounts.
16. PW2 Sh. Gourav Garg, who is from income tax dept has only produced the TDS certificates in respect of TAN No. DELM15928D registered in name of Sh. Manoj Seth since 2011-12 till date as Ex. PW2/1 (15 pages), balance sheets of Sh. Manoj Seth, proprietor M/s. O.B. Enterprises for the year 2017-18 and 2018-19 as Ex. PW2/2 (5 pages) and income tax returns filed by Sh. Manoj Seth having PAN No. AIDPS0551K from the year 2011-12 to 2023-24 as Ex. PW2/3 to Ex. PW2/15 respectively. In his cross examination, he stated that he has no personal knowledge of the summoned record.
From his cross examination, it is proved that defendant has given no suggestion to PW2 that documents brought by him are forged and fabricated. Hence documents produced by this witness stand proved.
17. PW3 Ms. Avinash Kaur, Branch Operation Manager, Kotak Suit (Com.) No. 1002/2022 Page No. 11 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth Mahindra Bank, Old Rajinder Nagar Branch, produced the bank account statement of current account No. 01792090006172 in the name of Vikhyat Laefin & Portfolio Ltd. reflecting transaction dated 21.3.2011 whereby a sum of Rs. 20 lacs was transferred vide RTGS in favour of Manoj Seth in his bank account bearing No. 611010017770 as Ex. PW3/2. In her cross examination she admitted that the details of bank account of Manoj Seth is not mentioned in Ex. PW3/2 and voluntarily deposed that the details have been mentioned in covering letter Ex. PW3/1. She deposed that current account No. 01792090006172 in the name of Vikhyat Laefin & Portfolio Ltd. was closed on 31.8.2016.
From her cross examination it is proved that defendant has given no suggestion to PW2 that documents brought by her are forged and fabricated thus nothing come out in her testimony to disbelieve authenticity of documents prove by her hence said documents stand proved.
18. PW4 Sh. Brij Lal Belwal, Multi Tasking Staff, Office of Registrar of Company, NCT of Delhi and Haryana brought the summoned record i.e. certified copy of DIN detail of Sh. Manoj Seth having DIN No. 02083012 along with office order dated 5.2.2024 to that effect are now Ex. PW4/1 and Ex. PW4/1A. He depose that inadvertently in the office order, the name has been wrongly typed as Manoj Sethi instead of Manoj Seth. He prove Certified copy of company master data of O.B. Enterprises Pvt. Ltd. is now Ex. PW4/2, Certified copy of company master data of O.B. Fluoro Chems Pvt. Ltd. is now Ex. PW4/3, Certified copy of company master data of Mexfluor India Pvt. Ltd. is now Ex. PW4/4. He further depose that said data was obtained from the site of MCA Portal and certificate under Section 65B of the Indian Evidence Act in this regard is now Ex. PW4/5. He was not cross examined. Hence authenticity of documents brought by him stand proved.
19. PW5 Sh. Mohit S/o Sh. Kamal Kumar, Deputy Manager, Suit (Com.) No. 1002/2022 Page No. 12 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth Axis Bank, Rajender Nagar Branch brought the summoned record i.e. account statement qua A/c No. 915020046448757 maintained in the name of Vikhyat Leafin & Portfolio Limited for the period from 01.04.2016 till 31.03.2018 as Ex. PW5/1 (Colly). He also brought details of following transactions :-
i. Transaction dt. 30.05.2016 for an amount of Rs. 35,00,000/- vide referrence no. UTIBH16151094835 got transferred in favour of Sh. Manoj Seth having account no. 13381000010513 maintained with HDFC Bank, which is Ex. PW5/2.
ii. Transaction dt. 09.09.2016 for an amount of Rs. 35,00,000/- got transferred in favour of Vikhyat Leafin & Portfolio Limited from OB Enterprises having A/c No. 916020038658648, which is Ex. PW5/3. [vol. In details I brought today the A/c No. of Vikhyat Leafin & Portfolio Limited has wrongly typed as 915020046448787 instead of 915020046448757] iii. Transaction dt. 10.10.2016 for an amount of Rs. 20,00,000/-
vide referrence no. UTIBR52016101000351968/224 got transferred in favour of Sh. Manoj Seth having account no. 13381000010513 maintained with HDFC Bank, which is Ex. PW5/4.
iv. Transaction dt. 10.03.2017 for an amount of Rs. 45,024/- vide cheque no. 000051 HDFC, New Delhi of account no. 13381000010513 in the name of Manoj Seth maintained with HDFC Bank and the amount got transferred in favour of Vikhyat Leafin & Portfolio Limited, which is Ex. PW5/5. [vol. In details I brought today the A/c No. of Vikhyat Leafin & Portfolio Limited has wrongly typed as 915020046448787 instead of 915020046448757] Suit (Com.) No. 1002/2022 Page No. 13 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth v. Transaction dt. 24.10.2017 for an amount of Rs. 25,00,000/- vide cheque No. 236696 of A/c No. 915020046448757 of Vikhyat Leafin & Portfolio Limited to OB Enterprises having A/c No. 916020038658648 AND transaction dt. 06.12.2017 for an amount of Rs. 25,00,000/- vide cheque No. 236708 of A/c No. 915020046448757 of Vikhyat Leafin & Portfolio Limited to OB Enterprises having A/c No. 916020038658648, which is Ex. PW5/6.
vi. Transaction dt. 15.01.2018 for an amount of Rs. 59,178/- from OB Enterprises having A/c No. 916020038658648 through IMPS / NEFT / net banking in favour of Vikhyat Leafin & Portfolio Limited, which is Ex. PW5/7.
Since he was not cross examined. Therefore documents produced by him stand proved.
20. PW6 Sh. Lokesh Kumar S/o Sh. Kanwal Singh, Employee ID No. 5154925, presently posted as SWO Class-B, PNB, Old Rajender Nagar, brought the summoned record i.e. the details of transaction dated 01.11.2019 for an amount of Rs. 57,37,415/- which got transferred from OB Enterprises in the PNB A/c No. 01391132000917 in the name of Vikhyat Leafin & Portfolio Limited through NEFT. Since he was not cross examined. Therefore documents brought by him stand proved.
FINDINGS.
ISSUE NO. 1.
Whether plaintiff has given the loan of Rs. 20,00,000/- to the defendant? Onus on parties.
And ISSUE NO. 2.
Whether the defendant has only taken entry from the Suit (Com.) No. 1002/2022 Page No. 14 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth plaintiff regarding the loan of Rs. 20,00,000/-? Onus on parties.
And ISSUE NO. 3.
Whether the plaintiff has advanced the loan as per law of land? Onus on parties.
21. All the above issues are interconnected therefore I shall decide the same together. The case of the plaintiff is that plaintiff provided loan of Rs. 20 lacs to defendant company but defendant did not pay the interest and principal amount thus defendant is liable to pay the suit amount but defendant in the written statement stated that it is an entry taken for augmentation of capital by his CA and cash amount was paid in lieu of said entry and thus no loan was taken.
22. In my view, the onus is upon the plaintiff to prove the fact that plaintiff granted loan of Rs. 20 lacs to defendant and that too on interest as alleged in the plaint in view of Section 101 to 103 of Indian Evidence Act. Section 101 and 102 of Indian Evidence Act deals with burden of proof which are reproduced as under:
"101. Burden of proof.--Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person. Illustrations
(a) A desires a Court to give judgment that B shall be punished for a crime which A says B has committed. A must prove that B has committed the crime.
(b) A desires a Court to give judgment that he is entitled to certain land in the possession of B, by reason of facts which he asserts, and which B denies, to be true. A must prove the existence of those facts.
102. On whom burden of proof lies.--The burden of proof Suit (Com.) No. 1002/2022 Page No. 15 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side. Illustrations
(a) A sues B for land of which B is in possession, and which, as A asserts, was left to A by the will of C, B's father. If no evidence were given on either side, B would be entitled to retain his possession. Therefore the burden of proof is on A.
(b) A sues B for money due on a bond. The execution of the bond is admitted, but B says that it was obtained by fraud, which A denies. If no evidence were given on either side, A would succeed, as the bond is not disputed and the fraud is not proved. Therefore the burden of proof is on B".
23. Whereas Section 103 & 106 of The Indian Evidence Act provide that burden of proof of a particular facts on that person who wants courts to believe existence of any particular facts. Section 103 is reproduced as under:-
"103.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."
"106.When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him."
24. As stated above, the plaintiff has examined five witnesses to prove the said facts. The main witness of the plaintiff is PW1 Vinay Kumar Dubey Director of the plaintiff company. On analyzing his testimony it is evident that though he deposed that defendant approached the plaintiff company for unsecured loan of Rs 20 lacs to augments its working capital and plaintiff company gave said loan on interest @ 7.21% per annum for the year 2011-2012 but subsequently revised to 7% per annum for the financial year 2012-2013 and 2013- 2014 and then 9% per annum for 2104-15 and subsequently 2015-16.
Suit (Com.) No. 1002/2022 Page No. 16 of 29Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth He has proved the statement of account of the plaintiff's bank as Ex. PW1/D which reflects that a sum of Rs. 20 lacs has been transferred from the bank account No. 0179200006172 of plaintiff company to the bank account of defendant bearing No. 611010017770 which is also corroborated by the PW3 who prove plaintiff bank account statement as PW3/2. Even defendant in written statement or in cross examination of PW1 and PW3 has given no suggestion that plaintiff has not transferred an amount of Rs. 20 lacs in his firm account therefore, the said fact has remained unrebutted. Hence, plaintiff through the testimony of PW1 and PW3 is able to prove that plaintiff has transferred a sum of Rs. 20 Lacs in the bank account of defendant on 21.03.2011.
25. Now the issue is whether said amount of Rs. 20 lacs was transferred by plaintiff as loan or was just a entry and actually plaintiff received the said amount in cash. Though PW1 has deposed in his testimony that the Rs. 20 lacs was given as loan by the plaintiff company to defendant when defendant approached for loan to augment his capital but in his cross examination he has admitted that he does not know the defendant personally which means defendant did not approach to him personally. Plaintiff is a company therefore defendant can approach through some living person but plaintiff neither in the plaint nor PW1 in his testimony has specified who on behalf of plaintiff has made conversation for grant of loan or on which date defendant approached the plaintiff. Though PW1 deposed that defendant was given loan on the recommendation of CA known to some old Director of plaintiff company. He does not know the name of the CA or the said Director. He was not personally present when the loan transaction with defendant took place. He did not depose who told him that loan was given to defendant on the recommendation of CA or old Director who plaintiff company as admittedly he was not present at the time of transaction. He deposed that he does not know whether the said CA is Ashwani Sharma or Ankit Khemka or not. He is Director of the plaintiff company and does not Suit (Com.) No. 1002/2022 Page No. 17 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth know name of CA of the company which clearly led to presumption that either he is deposing falsely or not associated with day to day working of the plaintiff otherwise he would have known plaintiff's Chartered Accountant's name. He also admitted that no documents were signed by defendant. He did not prove any loan agreement or any other written document to corroborate his testimony that Rs. 20 lacs transferred in the bank account of defendant was loan much less loan with interest of 7.21% per annum. Further plaintiff did not prove any document regarding communication of sanction of loan, hence, there is no evidence in writing that the said amount of Rs. 20 lacs was given as loan.
26. PW1 in his testimony has not given any specific date or month when defendant approached for grant of loan or when the said loan was sanctioned. Admittedly no loan agreement was executed in writing containing terms of loan i.e. the rate of interest and whether interest will be payable monthly, quarterly or annually, period for repayment of loan amount i.e. whether it is to be paid in installment or in lumpsum. The plaintiff is a Non Banking Finance Company and a private limited company. In my view no company can give or take loan in cash as per practice guidelines issued by RBI to non banking finance company issued vide circular RBI/2006-2007/138/DNBS( PD)CC No. 80/ 03.10.042/ 2005-2006 dated 28.09.2006. The guideline 1(a) provides there should be a loan application form which should include necessary information which affects the interest of borrower so that he could take informed decision. Further guideline I (ii) provides that NBFC must convey in writing to the borrower by means of sanction letter or otherwise the amount of loan sanction alongwith the terms and conditions including annualized rate of interest. Further same guidelines has been reiterated by the RBI in its circular RBI/2013-14/42 DNB( PD) CC no.340/03.10.042/2013-2014 dt. 01.02013. Since admittedly plaintiff is a NBFC registered with RBI it is bound to follow said guidelines but since admittedly no written loan application form was taken or sanction Suit (Com.) No. 1002/2022 Page No. 18 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth letter was issued therefore it is evident that said guidelines was not complied by plaintiff hence transfer of Rs. 20 lakh by plaintiff to defendant cannot be considered as loan being violative of said guideline.
27. Further PW1 has not specify if defendant No. 1 was not paying the interest despite showing the same in his income tax return and deducting TDS on said interest then why plaintiff did not demand the said interest from defendant. After all plaintiff is a NBFC whose entire survival is income from interest of the loan given by it. I found substance in the contention of Ld. Counsel for defendant, that plaintiff did not demand the interest much less principal amount despite passing of around 9 years as it was only an entry taken by defendant, as plaintiff has already received the cash in lieu of said Rs. 20 lacs which it paid to defendant through bank transfer.
28. As far as the contention of the Ld. Counsel for the plaintiff that the defendant deducted TDS on interest amount and same is reflected in plaintiff company 26AS which proved that the amount of Rs. 20 lacs was given and thus same is an acknowledgment of loan and deduction of interest on the loan amount and depositing the same with income tax would extend period of limitation, and therefore period of limitation would commence from the date when lastly defendant has paid tax on interest amount shown to be paid to plaintiff i.e. 2018-19 hence suit is with in limitation, I am not agree with the said contention. Undoubtedly from testimony of PW2 Sh. Gaurav Garg, Deputy Commissioner of Income Tax has proved the TAN No. DELM15928D registered in name of Sh. Manoj Seth since 2011-12 till date as Ex. PW2/1 (15 pages), balance sheets of Sh. Manoj Seth, proprietor M/s. O.B. Enterprises for the year 2017-18 and 2018-19 as Ex. PW2/2 (5 pages) and income tax returns filed by Sh. Manoj Seth having PAN No. AIDPS0551K from the year 2011-12 to 2023-24 as Ex. PW2/3 to Ex. PW2/15 respectively it is proved that defendant shown payment of interest to plaintiff in its income tax return, and also deducted TDS on Suit (Com.) No. 1002/2022 Page No. 19 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth interest and same. Further from 26AS of defendant Ex. PW1/E (colly) it is also proved that defendant shown payment of interest of Rs. 1,44,219/- for year 2011-2012, 1,40,000/- for year from 2012-13 and 2013-14, 1,80,000/- for year 2014-15, 1,40,000/- for year 2015-2016, Rs. 2,84,276/- for year 2016-17, Rs. 3,92,203/- for year 2017-18 and Rs. 6,30,000/- for year 2018-19 and deducted approximate 10% each year as TDS but I am not agree with the contention that presumption can be raised from the said TDS statement that defendant has taken Rs. 20 lacs as loan on interest and said TDS deduction is the acknowledgment of debt by defendant. Further as stated above there is no averment by plaintiff either in the pleadings or in the testimony of PW1 that plaintiff demanded the said interest from defendant shows that plaintiff company was also involved in said tax fraud as it mutually benefiting both plaintiff and defendant as it is reducing income of defendant and thus reducing tax liability, whereas plaintiff was taking benefit of TDS shown in its account and thus reducing tax payment. This create doubt that the account of defendant No. 1 showing the payment of interest to plaintiff in its income tax return and plaintiff not asking the payment of said interest is nothing more than the tax fraud committed by the defendant No. 1 in connivance with plaintiff, because plaintiff has never complaint to Income Tax authority that he has not received the interest amount shown by defendant in its income tax. Therefore, in my view the documents proved by PW1 & PW2 do not help the plaintiff to prove that the defendant has taken the loan of Rs. 20 lacs from plaintiff.
29. Further PW1 even has not produced any document that plaintiff company was showing the amount of Rs. 20 lakh as loan given defendant in its balance sheet/ income tax return and also showing that interest is not being paid on the said amount. Plaintiff has also not produced any documents that it was availing benefit of tax payment which defendant was depositing as TDS for interest paid to plaintiff in its income tax return. I am agree with the contention of Ld. Counsel for Suit (Com.) No. 1002/2022 Page No. 20 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth defendant that if defendant was taking said benefits of TDS then plaintiff would have shown the same as income arising out of interest in its income tax returns but in that case PW1 either deposed falsely that plaintiff shown the income of interest reflected in its 26AS in its income tax returns or filed false income tax returns. Plaintiff has also not produced any other document except the RTGS statement of transfer of Rs. 20 lacs and the said Income Tax TDS statement corroborated the testimony of PW1 that said Rs. 20 lacs was disbursed as loan to defendant, therefore, I held that though plaintiff has been able to prove it transferred Rs. 20 lacs in the bank account of defendant on 21.03.2011 but the plaintiff has miserably failed to prove that it had given said Rs. 20 lacs to the defendant as loan on interest.
30. As far as testimony of defendant is concerned that the defendant did not take Rs. 20 lacs as loan but it was merely an entry which was arranged by his CA Ankit Khemka who used to sign on balance sheets and financial documents on his behalf and he arranged the entry of Rs. 20 lacs in lieu of the cash paid through his friend Taranjeet Singh Chadha, undoubtedly the defendant has not examined said Taranjeet Singh Chadha and his CA Ankit Khemka as witness to corroborate his testimony thus, not able to prove his defence but in my view, the onus was upon the plaintiff to prove that the plaintiff has given Rs. 20 lacs as loan and as stated above, the plaintiff has failed to prove the said fact.
31. As far as the Judgment relied upon by the plaintiff i.e. Asset Reconstruction Company (India) Ltd. (supra.) is concerned, said Judgment is passed on an appeal under Section 62 of the Insolvency and Bankruptcy Code 2016 (IBC) against an order passed by the NCLT holding that the Corporate Insolvency Resolution Process (CIRP) initiated by the appellant against the Corporate Debtor, V. Hotels Ltd. was barred by limitation. The facts of the said case were that, the respondents No. 1 and 2 were the share holders of the Corporate Debtor, Suit (Com.) No. 1002/2022 Page No. 21 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth V. Hotels Ltd. and the agreement was entered into between the Corporate Debtor and Consortium of banks consisting of Bank of India, Punjab National Bank and other banks for grant of loan to the extent of Rs. 129 Crores to the Corporate Debtor. The account of Corporate Debtor was classified as NPA on 1.12.2008 but the Corporate Debtor, by letter dated 7.2.2011 address to the appellant, proposed the settlement which was later on revised and thereafter the Corporate Debtor and the Banks entered into a settlement. Thereafter the Corporate Debtor sought extension of time for making agreed payment and acknowledged the outstanding liability and considering the same, the appellant extended the time for making the payment but later on, on 17.6.2015 the appellant revoked the settlement due to default of the condition of settlement and sent notice to the Corporate Debtor under Section 13 (2) of the SARFAESI Act and also revoked the personal guarantee of Managing Director of the Corporate Debtor and thereafter filed an application under Section 7 (2) of IBC in the NCLAT for insolvency of the Corporate Debtor and same was allowed in favour appellant and Resolution Professional was appointed in the NCLAT. The NCLAT held that the book of accounts of a company cannot be treated as an acknowledgment of liability in respect of the debts payable to the Asset Reconstruction Company (India) Ltd. (Financial Creditor) signed by the Corporate Debtor or its authorized signatory and the said order was challenged before the Hon'ble Supreme Court and the Hon'ble Supreme Court held that the entries in books of accounts and / or balance sheets of a Corporate Debtor would amount to an acknowledgment under Section 18 of The Limitation Act whereas in the present case, situation is different. Though the defendant in its ITR has shown the interest deduction from his income but categorically stated that the same was merely an entry as amount was paid in cash therefore in my view even if the defendant has shown the amount of Rs. 20 lacs given by plaintiff to defendant on interest, same cannot be considered as acknowledgment as this is nothing but a tax fraud because the plaintiff has never demanded Suit (Com.) No. 1002/2022 Page No. 22 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth payment of interest from the defendant though it was very well aware that the defendant is not paying the interest to them and only shown payment of interest and deducting TDS. Hence it is noting more than just a tax fraud. Therefore the said Judgment is not applicable to the facts of the present case.
32. As far as the Judgment Rahul Jain (supra.) is concerned, said Judgment does not help the plaintiff rather goes against the plaintiff as in this case it is held in said case that the TDS certificate would be evidentiary admissions only and not judicial admissions of evidence. Therefore even if defendant has admitted of showing payment of interest to plaintiff in its income tax return and deducting TDS on said amount but since it is admitted case of plaintiff that no such interest allegedly shown to be paid to plaintiff has been actually paid and since plaintiff has not demanded said unpaid interest till commencement of proceeding of this case prove that defendant and plaintiff were involve in tax fraud and no such interest was actually payable to plaintiff.
33. On the other hand, I found Judgment relied upon by the defendant passed by the Hon'ble High Court of Delhi passed in the matter of Utility Powertech Ltd. Vs. Amit Traders, (2018) SCC Online Del 9606, wherein it was held that TDS deduction is not an admission of liability. Relevant para is reproduced as below:
"19. On the issue of TDS deduction, the Trial Court may have erred as the settled position is that deduction of TDS does not constitute an admission of liability. The Trial Court may be wrong in holding that the TDS certificate by itself constitutes an admission of liability. This is not so, inasmuch as the TDS can be deducted even on the expectation of estimated liability. Independently of the TDS certificate, the liability of the Defendant is quite clear. The Supreme Court in Commissioner of Income Tax v. Gujarat Fluoro Chemicals (2012) 13 SCC 731 categorically held that "both advance Suit (Com.) No. 1002/2022 Page No. 23 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth tax as well as TDS are based on estimation of income by the assessee." The Bombay High Court as well, in S.P. Brothers v. Biren Ramesh Kadakla (2009) 1 Bom CR 453 has held that "the issuance of TDS certificates does not amount to an acknowledgement of defendant within the meaning of Section 25 of the Indian Evidence Act.......The TDS certificate is primarily to acknowledge the deduction of tax at source." The judgement dated 27th November, 2012 in Bigdot Advertising & Communications Pvt. Ltd. v. Union of India [CS(OS) No.226/2000] was dealing with the question of the person who is liable once the TDS certificate is issued. It is not a precedent on the proposition that if a TDS certificate is issued, it amounts to admission of liability. In light of this, though the deduction of TDS by itself cannot be sufficient to impose liability, but on a totality of facts it is clear that the defendant is liable".
34. Further, the Mumbai Bench of the National Company Law Tribunal has ruled that TDS payments do not amount to an acknowledgment of debt. The two-member bench of Justice P.N. Deshmukh (Judicial Member) and Shyam Babu Gautam (Technical Member) has relied on the decision of NCLAT in the case of P.M. Cold Store Pvt. Ltd. Vs. Goouksheer Farm Fresh Pvt. Ltd. & Anr., in which the Hon'ble Tribunal has held that, "the fact that the payment of TDS on interest cannot be considered as acknowledgment in writing of the liability by the corporate debtor and therefore, such TDS payment will not have any effect of being an acknowledgment of said debt.
35. Therefore in these circumstances, I held that though plaintiff is able to prove that it gave Rs. 20 Lakh to defendant but the plaintiff has failed to prove that said amount was paid as loan much less on interest therefore considering the facts and circumstances, I decide issue No. 1 in favour of the plaintiff but decide issues No. 2 & 3 against the plaintiff and in favour of defendant.
Suit (Com.) No. 1002/2022 Page No. 24 of 29Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth ISSUE NO. 4.
Whether the suit is barred by limitation? Onus on parties.
And ISSUE NO. 5.
Whether showing the deduction of TDS amount by the defendant in its income tax return would amount to acknowledgment of debt? Onus on parties.
36. It is argued by the Ld. Counsel for defendant that suit is liable to be dismissed on another ground as admittedly the plaintiff has given the alleged loan of Rs.20 lacs to the defendant on 21.03.2011 whereas the plaintiff has filed the suit for recovery on 04.04.2022 therefore same is time barred.
37. On the other hand it is argued by Ld. Counsel for plaintiff that from testimony of PW1 and documents proved by him and PW2 it is proved that defendant was showing payment of interest to plaintiff in his income tax return and deducting TDS on interest till 2018-2019 which was reflected in 26AS of plaintiff hence same is an acknowledgment of debt therefore period for filing suit will commence from the date when plaintiff lastly shown the TDS on interest on his income tax return and since same in year 2018-2019 therefore suit is with in limitation.
38. I have considered the submission. As stated above, it is undisputed fact that plaintiff gave Rs. 20 lakh to defendant through RTGS transfer on 21.03.2011. The period for limitation for recovery of money is three year from the date it was given as per entry 23 of the Limitation Act. Admittedly, the plaintiff has not stated that there is any particular period fixed for return of the said amount, hence in normal circumstances it would expire on 20.03.2014. However since case of Suit (Com.) No. 1002/2022 Page No. 25 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth plaintiff is that said money was given on interest. therefore as per Entry 25 of Limitation Act, 1963, when money was given on interest, the money became due from the date when the interest become due. Though as held above plaintiff has failed to proved that it gave Rs. 20 lacs as loan to defendant on interest but even if I presume the same was given as loan, there should have some terms and conditions of loan to count the period of limitation if loan or interest is not paid. Plaintiff neither in the plaint nor PW1 in is testimony has deposed what was the term for repayment of interest i.e. monthly, quarterly, bi-yearly or yearly but even if I assume that the interest was to be paid annually the plaintiff can file the suit for recovery of money within three years from 21.03.2012, when first year interest become due, whereas the present suit was filed on 04.04.2022, admittedly defendant did not pay a single penny to plaintiff either as principal amount or interest prior to three years of filing of the suit.
39. As far as the contention of the Ld. Counsel for the plaintiff that the defendant was acknowledging the debt by depositing the TDS and therefore, the period of limitation extends from the year when the defendant deposited the TDS on interest amount, is concerned; I am not agree with the said submissions because even if I presume that the said TDS was deposited towards amount of interest due, then the same cannot be consider as acknowledgment under Section 18 of Limitation Act which clearly provides that the acknowledgment would be when it is given 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. Section 18 of Limitation Act is reproduced as under:
"18. Effect of acknowledgment in writing. - (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 Suit (Com.) No. 1002/2022 Page No. 26 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth 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 1872), oral evidence of tis 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 authorized 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".
40. Admittedly, defendant did not admitted in writing that plaintiff gave Rs. 20 lacs as loan to him. As held above showing of payment of interest by defendant in his income tax return and deducting TDS on said amount and depositing said TDS with Income Tax department cannot be considered as an acknowledgment of debt in writing. Therefore defendant showing payment of interest to plaintiff in its income return and paying TDS on the said interest which got reflected in plaintiff 26AS would not extend the period of limitation would not be an acknowledgment of debt by defendant and thus would not extend period of limitation.
Suit (Com.) No. 1002/2022 Page No. 27 of 29Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth
41. In view of the above facts and circumstances, I held that payment of income tax to income tax department on the interest amount and showing the same in income Tax return by defendant is not an acknowledgment of debt and since suit is filed three year after the day when plaintiff transferred Rs. 20 lacs to defendant, hence suit is barred by limitation. Issues No. 4 and 5 are accordingly decided against the plaintiff.
ISSUE NO. 6.
Whether the plaintiff is entitled for decree of recovery of sum of Rs. 20,00,000/- from the defendant as principal amount? OPP.
42. In view of my finding of above issues I held that though plaintiff has been able to proved that it gave Rs. 20 lacs to plaintiff but has failed to proved that same was given as loan and further since suit is barred by limitation I held that plaintiff is not entitle to recover any amount from defendant. Issue no.6 is decided accordingly.
ISSUE NO. 7.
Whether the plaintiff is entitled to interest on the aforesaid amount? If so, at what rate and for which period? OPP.
43. Onus of proving this issue is upon the plaintiff. In view of my findings on the Issue No. 6 that the plaintiff has failed to prove that the plaintiff company has given a sum of Rs. 20 lacs to the defendant as loan on interest and thus not entitle to recover any amount from defendant, therefore, the question of granting pendente lite and future interest to the plaintiff does not arise. Issue No. 7 is decided accordingly.
RELIEF.
44. In view of my finding of aforesaid issues, I held that the plaintiff is not entitled to recover any amount from defendant. Therefore, Suit (Com.) No. 1002/2022 Page No. 28 of 29 Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth the suit of the plaintiff is dismissed with costs. Decree Sheet be prepared accordingly. File be consigned to record room.
Announced in the open court (Sanjeev Kumar Aggarwal)
on 17.01.2025 DJ (Commercial)-01, Central,
THC/Delhi / 17.01.2025
Digitally signed
SANJEEV by SANJEEV
KUMAR
KUMAR AGGARWAL
AGGARWAL Date: 2025.01.17
17:05:49 +0530
Suit (Com.) No. 1002/2022 Page No. 29 of 29
Vikhyat Laefin And Portfolio Limited Vs. Manoj Seth