Delhi High Court
Sanjana Agarwal vs Namoshivai Apparels Private Limited on 24 December, 2024
Author: Vibhu Bakhru
Bench: Vibhu Bakhru
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Pronounced on: 24.12.2024
+ RFA(COMM) 212/2023
SANJANA AGARWAL ..... APPELLANT
versus
NAMOSHIVAI APPARELS PRIVATE
LIMITED ..... RESPONDENT
+ RFA(COMM) 213/2023 & CM APPL. 49338/2023
SANJANA AGARWAL ..... APPELLANT
versus
NAMOSHIVAI APPARELS PRIVATE
LIMITED ..... RESPONDENT
Advocates who appeared in this case:
For the Appellant : Mr. Pulkit Thareja, Ms. Aerika Singh
and Mr. J.P. Patri, Advocates.
For the Respondent : Mr. Febin Mathew Varghese, Mr.
Dhiraj Abraham Philip and Ms. Shrishti
Agarwal, Advocates.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
HON'BLE MS. JUSTICE TARA VITASTA GANJU
JUDGMENT
TARA VITASTA GANJU, J.:
CM Appl.49338/2023 in RFA (COMM) 213/2023 [Stay]
1. A Coordinate Bench of this Court by an order dated 22.09.2023
passed in RFA(COMM) 213/2023 directed Molmek to deposit 75% of
the decretal amount during the pendency of the present Appeals. TheSignature Not Verified
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report of the Registry is that no decretal amount has been deposited till
today by Molmek. In these circumstances, CM Appl. 49338/2023 is
dismissed.
RFA(COMM) 212/2023
RFA(COMM) 213/2023
2. The present Appeals filed by Appellant/Plaintiff impugn the
judgment dated 07.06.2023, passed by the District Judge, Commercial
Court-02, South West, Dwarka Courts, Delhi, in CS (Comm)
No.324/2022 & Counter-Claim No.05/2023 [hereinafter referred to as
“Impugned Judgment and Decree”], whereby the Suit for Recovery filed
by the Appellant/Plaintiff was dismissed and Counter-Claim filed by the
Respondent/Defendant was allowed against the Appellant/Plaintiff for an
amount of Rs.7,62,930/- alongwith interest at 9% per annum from the
date of filing of Counter-Claim till realization.
3. Two Appeals were filed by the Appellant/Plaintiff; RFA(COMM)
212/2023 captioned as Sanjana Agarwal vs. Namoshivai Apparels
Private Limited was filed by the Appellant/Plaintiff seeking to set aside
the Impugned Judgment and Decree, whereby the Suit for Recovery filed
by the Appellant/Plaintiff, in the sum of Rs.74,91,565.70/- along with
interest and costs, was dismissed by the learned Commercial Court. The
second appeal, i.e., RFA(COMM) 213/2023 captioned as Sanjana
Agarwal vs. Namoshivai Apparels Private Limited was filed by the
Appellant/Plaintiff against the Impugned Judgment and Decree, whereby
the Counter-Claim of the Respondent/Defendant was allowed. Both
these appeals seek to impugn the Judgment passed by the learned
Commercial Court.
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4. Briefly, the facts are that the Appellant/Plaintiff, as the proprietor
of a firm called Molmek Enterprises [hereinafter referred to as
“Molmek”], filed a Suit for Recovery being CS (Comm) No.324/2022
captioned as Ms. Sanjana Agarwal v. Namoshivai Apparels Private
Limited before the learned Commercial Court against the
Respondent/Defendant, i.e. Namoshivai Apparels Private Limited
[hereinafter referred to as “NAPL”]. Both Molmek and NAPL are
engaged in online trading of items like garments, electronics and general
products. In August, 2018, Molmek and NAPL entered into an
agreement for the supply by Molmek to NAPL, pursuant to which,
supplies were made during the period from August, 2018 to February,
2019. In pursuance of this arrangement, Molmek supplied electronic
goods to the NAPL against credit notes and invoices from August, 2018
to February, 2019, maintaining a running account in its books.
5. Molmek’s case rests on 57 (fifty-seven) invoices raised between
August 2018 and June 2020, contending that from August 2020, NAPL
began defaulting on payments and failed to maintain financial discipline.
Despite a legal notice dated 16.07.2021 and subsequent response from
NAPL dated 26.07.2021, no payments were forthcoming, leading to the
filing of Suit for Recovery of Rs.74,91,565.70/- with interest at 12% per
annum and costs by Molmek.
6. NAPL filed a written statement disputing that there were any
amounts due to Molmek. In addition, it filed a Counter-Claim in the sum
of Rs.7,62,930/- against Molmek for payments that were due from
Molmek for goods supplied by NAPL to Molmek. It is the contention of
NAPL that as a part of an understanding between the parties, NAPL also
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supplied goods to Molmek, raising invoices and maintaining a
corresponding running account. The crux of its defence and subsequent
Counter-Claim for Rs. 7,62,930/- centres on five specific invoices
totalling Rs. 82,35,736.50/-, which NAPL claims Molmek/Plaintiff has
failed to account for.
7. By an Order dated 31.01.2023, the learned Commercial Court,
framed the following issues:
“1. Whether the plaintiff is entitled for decree of sum of Rs.
74,91,565.70/-, as prayed for OPP
2. Whether the plaintiff is entitled for any interest, if so, on what
amount and on what rate OPP
3. Whether the defendant is entitled for decree of sum of Rs. 7,62,930/-
, as prayed in the counter claim OPD
4. Whether the defendant is entitled for any interest, if so, on what
amount and at what rate OPD
5. Relief”
8. The learned Commercial Court held that it is admitted that there
were business transactions between the parties, and the crux of the
dispute revolved around 5 invoices numbered 615, 620, 628, 630, and
654 [hereinafter referred to as “5 disputed invoices”] whilst Molmek
claimed that these invoices were forged, NAPL asserted that they were
genuine. It claimed that goods were supplied against these invoices but
the credit was not given by Molmek. NAPL relied on invoices, ledger
entries, “e-way bills”, GSTR-1 B2B Invoices – Receiver-Wise-Summary,
and WhatsApp chats in support of its Counter-Claim.
9. Molmek did not examine any witness. NAPL examined five
witnesses, including its Authorized Representative (CCW-1),
Accountant of NAPL (CCW-2), a Bank Official who attested bank
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statements of NAPL (CCW-3), a CGST official (CCW-4), and the driver
who delivered goods on behalf of NAPL to Molmek (CCW-5).
10. The learned Commercial Court observed that except for the 5
disputed invoices, all other transactions between the parties were
admitted. Neither party brought original books of accounts on record.
The learned Commercial Court gave a finding that Molmek had not
mentioned receiving any supply from NAPL in its plaint, however
entries with regard to purchase of material from NAPL are reflected in
the ledger details filed by Molmek on record.
11. The learned Commercial Court found, after examining the
evidence as produced by NAPL, including the examination/cross-
examination of the witnesses, that although there was no separate
delivery receipt with regard to the material supplied by NAPL, “e-way
bills” and GSTR-1 B2B Invoices had been filed by NAPL in relation to
the delivery of goods.
12. The learned Commercial Court relied on Rule 138 of the Central
Goods and Services Tax Rules, 2017 [hereinafter referred to as “CGST
Rules”], particularly Sub-rules (11) and (12), which stipulate that if a
recipient does not communicate acceptance or rejection within 72 hours
of the “e-way bill” details being made available, it shall be deemed that
they have accepted the said details. The learned Commercial Court found
that Molmek never objected to the generation of “e-way bills”, which
demonstrated their acceptance of the goods.
13. The learned Commercial Court held that NAPL had successfully
proven the deemed acceptance of goods by Molmek against the 5
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disputed invoices and GSTR-1- B2B Invoices. Thus, the onus shifted to
Molmek to disprove the NAPL’s claim, which Molmek failed to do. The
learned Commercial Court found that Molmek did not bring on record
any GST related documents including GSTR-2B summary to show that
it had not claimed an Input Credit for the GST or that Molmek had
rejected the goods based on the 5 disputed invoices of NAPL.
14. The learned Commercial Court placed reliance on Sabiha Sultana
& Ors. v. Ahmad Aziz & Anr.1, Om Prakash v. Amit Choudhary &
Ors.2, Ishwar Bhai C. Patel v. Harihar Behera & Anr.3, and
Vidhyadhar v. Manikrao & Anr.4, to record that the party setting up a
claim must prove its case, and an adverse inference can be drawn if a
party does not lead evidence or enter the witness box.
15. The learned Commercial Court also analyzed WhatsApp chats
between the parties, which corroborated the NAPL’s version of events. It
found the Molmek’s demand for only Rs. 1,00,000/- on 06.01.2021, was
inconsistent with its claim of a much larger outstanding amount.
16. The learned Commercial Court concluded that Molmek failed to
prove its claim for recovery of Rs. 74,91,565.70/-. Conversely, it held
that NAPL was entitled to its Counter-Claim of Rs. 7,62,930/- and
awarded interest at 9% per annum from the date of filing of the Counter-
Claim until realization. The parties were directed to bear their own costs.
This led to the filing of the present Appeals by Molmek.
1
2017 SCC OnLine Del 10229
2
2019 SCC OnLine Del 9311
3
(1999) 3 SCC 457
4
AIR 1999 SC 1441
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Contentions of Molmek
17. The learned Counsel for Molmek, at the outset, contests that as
Counter-Claim was deemed to be a separate and new suit, NAPL were
bound by Section 12A of Commercial Courts Act, 2015, to again initiate
pre-suit mediation, once it filed its Counter-Claim, and as such the
Counter-Claim, was impermissible, in absence of the pre suit mediation.
Reliance in this regard is placed on M/s. Patil Automation Private
Limited and Ors. Vs Rakheja Engineers Private Limited5.
18. In addition, learned Counsel for Molmek contended that NAPL
did not prove its statement of account in terms of Section 34 of the
Indian Evidence Act, 1872 [hereinafter referred to as “Evidence Act“],
and that merely providing the extracts of the accounts without producing
the accounts book is insufficient to prove the transactions. Reliance was
placed by learned Counsel for Molmek on Ishwar Das Jain (Dead)
Through LRs v. Sohan Lal (Dead) by LRs6 in this regard.
18.1 It was contended that there was no evidence to prove the delivery
of goods to Molmek against the 5 disputed invoices. One of the
witnesses of NAPL (CCW2) himself admitted that there is no document
showing the receipt of the goods by Molmek. The learned Counsel for
Molmek relied on the judgment of the Division Bench of this Court in
Harish Mansukhani vs. Ashok Jain7 to submit that merely raising of a
bill and showing the same in a statement of account is not good evidence
without establishing the delivery of the goods.
5
(2022) 10 SCC 1
6
(2000) 1 SCC 434
7
2008:DHC:3069-DB; 2008 SCC OnLine Del 1242
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18.2 The learned Counsel for Molmek further submitted that the
alleged delivery as per these 5 disputed invoices were done by three
vehicles, out of which only one vehicle belonged to NAPL. The learned
Counsel for Molmek, further submitted that the Impugned Judgement
and Decree has relied on WhatsApp chats to establish the alleged
deliveries were made by NAPL, although, the said chats were denied by
Molmek.
18.3 The learned Counsel for Molmek submits that (CCW-1) Shri
Raghav Kant, the authorized representative of NAPL, during his cross
examination, had admitted that that NAPL made payment of
Rs.1,00,000/- on 06.08.2020 to Molmek. This shows a contradiction in
the testimony of NAPL, since as NAPL who had allegedly to receive
payments from Molmek there was no reason for it to make a payment of
Rs.1,00,000/- to Molmek.
Contentions of Respondent/NAPL
19. Learned Counsel for NAPL contended that the Impugned
Judgment and Decree does not suffer from any infirmity. He contended
that the facts are undisputed with respect to the 57 invoices, where goods
have been supplied by Molmek, however, Molmek has not taken into
account the goods supplied by NAPL to Molmek at their premises at
West Punjabi Bagh, New Delhi. It is averred that NAPL also supplied
various goods for the period from 20.10.2018 onwards to 08.01.2021 to
Molmek. Learned counsel for NAPL has relied on the extract of
evidence of (CCW-1), of Mr. Raghav Kant in this regard, which details
the goods delivered to Molmek below:
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“11. I say that the Counter Claimant Company raised the following
invoices/Debit Notes on the Defendant against sale of said goods and
products:
S. No. Date Invoice No. Amount (Rs.)
1 20-10-2018 NAPL/2018-19/267 1,90,080
2 20-10-2018 NAPL/2018-19/268 6,00,600
3 29-10-2018 NAPL/2018-19/269 3,08,640
4 02-11-2018 NAPL/2018-19/273 2,01,840
5 15-11-2018 NAPL/2018-19/744 2,83,200
6 02-01-2019 NAPL/2018-19/934 8,94,712
7 09-02-2019 NAPL/2018-19/277 21,76,802
8 11-02-2019 NAPL/2018-19/278 2,95,680
9 25-02-2019 NAPL/2018-19/1052 22,14,242
10 26-02-2019 NAPL/2018-19/1053 3,33,600
11 28-02-2019 NAPL/2018-19/1065 7,99,584
12 28-02-2019 NAPL/2018-19/1067 18,97,202
13 08-03-2019 NAPL/2018-19/1109 3,08,160
14 14-03-2019 NAPL/2018-19/1132 1,73,280
15 22-03-2019 NAPL/2018-19/1162 15,94,561
16 04-04-2019 NAPL/19-20/16 2,65,920
17 03-06-2019 NAPL/19-20/264 2,54,400
18 04-06-2019 NAPL/19-20/268 4,08,300
19 10-06-2019 NAPL/19-20/292 4,44,850
20 18-07-2019 NAPL/19-20/375 4,39,791
21 18-07-2019 NAPL/19-20/376 5,00,499
22 12-08-2019 NAPL/19-20/422 4,43,520
23 21-09-2019 NAPL/19-20/476 27,33,979
24 07-10-2019 NAPL/19-20/486 4,68,791
25 10-10-2019 NAPL/19-20/487 6,85,884
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26 15-10-2019 NAPL/19-20/489 2,80,337
27 25-10-2019 NAPL/19-20/503 2,90,160
28 07-11-2019 NAPL/19-20/513 4,41,649
29 08-01-2020 NAPL/19-20/564 21,59,325
30 16-01-2020 NAPL/19-20/570 23,80,343.20
31 18-01-2020 NAPL/19-20/573 22,20,878
32 30-01-2020 NAPL/19-20/588 21,26,754
33 04-02-2020 NAPL/19-20/599 3,62,420
34 04-02-2020 NAPL/19-20/600 2,45,760
35 07-02-2020 NAPL/19-20/609 25,11,600
36 15-02-2020 NAPL/19-20/615 22,65,900
37 24-02-2020 NAPL/19-20/620 24,36,525
38 27-02-2020 NAPL/19-20/621 3,09,360
39 27-02-2020 NAPL/19-20/625 4,73,110
40 28-02-2020 NAPL/19-20/628 5,57,397
41 29-02-2020 NAPL/19-20/630 20,44,302.80
42 17-03-2020 NAPL/19-20/652 5,03,030
43 17-03-2020 NAPL/19-20/654 9,31,612.50
44 07-08-2020 NAPL/20-21/020 96,000
45 08-08-2020 NAPL/20-21/021 59,493
46 08-01-2021 NAPL/20-21/092 4,59,000
Total (Rs.) 4,20,73,073.50/-
19.1 NAPL has also averred that for the goods received by it from
Molmek, payments aggregating Rs. 1,57,49,516/- were made by NAPL
to Molmek. To evidence the same, NAPL produced its bank statement,
which was authenticated by its Bank Official (CCW-3). Learned Counsel
for NAPL has also relied upon the extract of the affidavit of evidence ofSignature Not Verified
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the authorized representative of NAPL(CCW-1) in support of its
contentions. The said extract is set out below:
12. I say that on account of receiving the goods supplied to the
Counter Claimant by the Defendant, Counter Claimant made the
following payments to the Defendant:
S. No. Date of Payment Amount (Rs.)
1 04-01-2019 4,70,000
2 07-01-2019 10,00,000
3 16-01-2019 9,29,000
4 16-01-2019 71,000
5 06-02-2019 15,00,000
6 16-02-2019 12,00,000
7 06-03-2019 10,00,000
8 06-04-2019 10,00,000
9 06-04-2019 5,00,000
10 06-04-2019 2,06,680
11 16-04-2019 10,00,000
12 07-05-2019 3,80,000
13 07-05-2019 10,00,000
14 17-05-2019 5,00,000
15 17-05-2019 5,50,000
16 30-05-2019 2,50,000
17 06-06-2019 5,00,000
18 06-06-2019 1,84,000
19 17-06-2019 2,33,734
20 16-07-2019 1,50,000
21 06-08-2019 6,50,000
22 09-09-2019 5,00,000
23 30-09-2019 2,00,000
24 07-10-2019 3,00,000
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25 16-10-2019 2,25,000
26 07-12-2019 2,00,000
27 07-01-2020 2,00,000
28 06-02-2020 3,00,000
29 06-03-2020 2,00,000
30 08-06-2020 1,00,000
31 07-07-2020 1,50,000
32 06-08-2020 1,00,000
Total (Rs.) 1,57,49,516/-
Copy of bank statement of Counter Claimant is exhibited herewith as
Exhibit CCW-1/2.”
20. The learned Counsel for NAPL contends that the total value of the
goods purchased is Rs.5,70,59,659/-, while the payment made to
Molmek is Rs.5,78,22,589.50/-. Thus, the sum of Rs.7,62,930.50/- is due
from Molmek. It is contended that the disputes have only arisen with
respect to the 5 disputed invoices totalling to Rs.82,35,736.5/- and it is
this discrepancy in the running accounts between the parties that has led
to an outstanding.
20.1 Learned Counsel for NAPL further contended that payments were
made from 04.01.2019 onwards till 06.08.2020, which included the
payment referred to on the Whatsapp chat in the sum of Rs.1,00,000/-.
20.2 Learned Counsel for NAPL further submitted that Molmek did not
prove any of its invoices as no evidence was led by him before the
learned Commercial Court, however, this amount was not disputed by
NAPL. Learned Counsel for NAPL further submitted that the summoned
CGST official (CCW-4) appeared and brought with him the record of
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computer generated duly, certified “e-way bills” pertaining to NAPL,
which have been placed on record.
20.3 Lastly, it is contended that Molmek has alleged that these bills are
false and fabricated only with a view to escape its liability and that no
evidence was placed on record by Molmek with respect to this averment.
Analysis and Reasoning
21. The first issue raised by Molmek is with regard to the fact that a
separate pre-institution mediation was not initiated for the Counter-
Claim. Relying on the judgment of the Supreme Court in M/s. Patil
Automation case, Molmek has contended that the pre-institution
mediation is also compulsory for instituting a Counter-Claim.
22. The Commercial Courts (Pre-Institution Mediation and
Settlement) Rules, 2018 [hereinafter referred to as “Pre-Institution
Mediation Rules”] provides that a party to a commercial dispute is
required to initiate mediation prior to the filing of a suit. Sub-rule (8) of
Rule 3 of Pre-Institution Mediation Rules provides that the mediation
process should be completed within a period of three months.
22.1 A commercial dispute is defined as a dispute referred to in Section
2(1)(c) of Commercial Courts Act, 2015 [hereinafter referred to as “CC
Act“]. Section 2(1)(xviii) of the CC Act includes “agreements for sale of
goods or provision of services”. Concededly, the dispute between the
parties is commercial in nature and is subject to the Pre-Institution
Mediation Rules.
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23. The Supreme Court in the judgment of Yamini Manohar vs.
T.K.D Keerthi8, relying on the M/s. Patil Automation case, has held that
pre-litigation mediation is mandatory unless the suit contemplates urgent
relief. It was further held that a plaintiff should not be permitted to file
an application for interim relief as a subterfuge to wriggle out of the
requirement of mandatory pre-institution mediation. The Court held that
in order that the provision is not bypassed, the learned Commercial
Court has a role, although a limited one, to examine whether the suit
contemplates an urgent relief so as to keep a check that legislative intent
behind the enactment of Section 12A of the CC Act is not defeated. The
relevant extract of the decision in Yamini Manohar case is set out
below:
“11. Having stated so, it is difficult to agree with the proposition that
the plaintiff has the absolute choice and right to paralyse Section 12-
A of the CC Act by making a prayer for urgent interim relief.
Camouflage and guise to bypass the statutory mandate of pre-
litigation mediation should be checked when deception and falsity is
apparent or established. The proposition that the commercial courts
do have a role, albeit a limited one, should be accepted, otherwise it
would be up to the plaintiff alone to decide whether to resort to the
procedure under Section 12-A of the CC Act. An “absolute and
unfettered right” approach is not justified if the pre-institution
mediation under Section 12-A of the CC Act is mandatory, as held by
this Court in Patil Automation [Patil Automation (P) Ltd. v. Rakheja
Engineers (P) Ltd., (2022) 10 SCC 1 : (2023) 1 SCC (Civ) 545].
12. The words “contemplate any urgent interim relief” in Section 12-
A(1) of the CC Act, with reference to the suit, should be read as
conferring power on the court to be satisfied. They suggest that the
suit must “contemplate”, which means the plaint, documents and facts
should show and indicate the need for an urgent interim relief. This is
the precise and limited exercise that the commercial courts will
undertake, the contours of which have been explained in the earlier
paragraph(s). This will be sufficient to keep in check and ensure8
2024 (5) SCC 815Signature Not Verified
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that the legislative object/intent behind the enactment of Section 12-
A of the CC Act is not defeated.”
[Emphasis is ours]
24. In the present case, pre-litigation mediation was initiated by
Molmek prior to instituting the suit. Molmek has relied upon the copy of
the Non-Starter Report of the authority appointed for pre-institution
mediation, South-West, DLSA, Dwarka Courts, New Delhi, dated
15.03.2022 to submit NAPL did not attend the Mediation proceedings as
these were closed as a “non-starter”. NAPL filed its combined Written
Statement and Counter-Claim on 31.08.2022 raising a Counter-Claim of
Rs.7,62,930/- against Molmek before the learned Commercial Court.
24.1 The record of the learned Trial Court shows that although an
objection was taken by Molmek before the learned Trial Court, it was
conceded by Molmek before the learned Commercial Court, on
27.09.2022, that for the filing of the Counter-Claim, NAPL is not
required to exhaust the remedy of pre-institution mediation. The order
dated 27.09.2022 passed by learned Commercial Court records the
following:
“27.09.2022 at 12.15 PM
Present: Mr. Vishwajeet Dubey, Ld. Counsel for plaintiff
Mr. Samuel David, Ld. Counsel for defendant
Ld. Counsel for defendant submits that for filing of the
counter claim, the defendant is not required to exhaust the
remedy of pre-institution mediation. Ld. Counsel for plaintiff has
fairly conceded to the same.
Replication not filed by the plaintiff. Ld. Counsel for plaintiff
submits that plaintiff does not want to file replication. This fact is
recorded accordingly.”
[Emphasis is ours]
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25. There is no cavil that under the provisions of the Code of Civil
Procedure, 1908, a counter-claim is to be treated as a plaint and
governed by the rules applicable to plaint. However, in the case of
commercial disputes to say that each counter-claim will be subject to
pre-institution mediation process separately when the Plaintiff has
already exhausted the remedy of pre-institution mediation, may not be
apposite. The object of the CC Act is to ensure speedy resolution of
commercial disputes to accelerate economic growth and improve the
international image of the Indian Justice System and to restore the faith
of the investors. Once a party has taken steps to exhaust the remedy of
pre-institution mediation to then ask the opposite party in a case where
the subject matter of dispute is entirely the same, to once again undertake
pre-institution mediation, prior to filing its counter-claim would defeat
the very purpose of the CC Act and delay adjudication of the commercial
dispute between the parties.
25.1 The Supreme Court in Ambalal Sarabhai Enterprises Ltd. v. K.S.
Infraspace LLP9 case has held that the statement of object and reasons
for the enactment of the CC Act was the early and speed resolution of
the commercial disputes and thus, there was an amendment made and
fast track procedure set in place by the CC Act. The relevant extract is
set out below:
“31…
The object and purpose of the Commercial Courts Act is to ensure
that the Commercial Courts, Commercial Appellate Courts,
Commercial Division and Commercial Appellate Division of the
High Courts and also to ensure that the commercial cases are
disposed of expeditiously, fairly and at reasonable cost to the9
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litigant.
…
34. The Schedule to the Commercial Courts Act amends various
provisions of the Code of Civil Procedure and thereby makes
significant departure from the Code. After Order 13 of the Code,
Order 13-A — “Summary Judgment” has been inserted. Order 13-
A contains the scope and classes of suits to which Order 13-A
applies, grounds for summary judgment, procedure to be followed,
evidence for hearing of summary judgment, orders that may be
made by Court in such proceedings for summary judgment, etc.
After Order 15 of the Code, Order 15-A–“Case Management
Hearing” has been inserted. Order 15-A provides for first case
management hearing (Rule 1); recording of oral evidence on a
day-to-day basis (Rule 4); powers of the court in a case
management hearing (Rule 6); adjournment of case management
hearing (Rule 7); consequences of non-compliance with orders
(Rule 8). By way of amendment, several rules have been
incorporated to make the matters of commercial disputes on fast
track. In Order 20 of the Code — “Judgment”, Rule 1 has been
substituted that within ninety days of the conclusion of arguments,
the Commercial Court/Commercial Division/Commercial Appellate
Division to pronounce the judgment and copies thereof shall be
issued to all the parties to the dispute through electronic mail or
otherwise.
35. Various provisions of the Act, namely, case management
hearing and other provisions makes the court to adopt a pro-
active approach in resolving the commercial dispute. A new
approach for carrying out case management and strict guidelines
for completion of the process has been introduced so that the
adjudicatory process is not delayed. I have referred to the various
provisions of the Act and the Schedule bringing in amendments
brought to the Civil Procedure Code to deal with the commercial
disputes, only to highlight that the trial of the commercial dispute
suits is put on fast track for disposal of the suits expeditiously.
Various provisions of the Act referred to above and the
amendments inserted to the Civil Procedure Code by the Schedule
is to ensure speedy resolution of the commercial disputes in a time
bound manner. The intent of the legislature seems to be to have a
procedure which expedites the disposal of commercial disputes
and thus creates a positive environment for investment and
development and make India an attractive place to do business.”
[Emphasis is ours]
25.2 The Supreme Court analysed the provisions of the CC Act and
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based on such analysis held that statutory provisions of the CC Act and
the language therein should be interpreted purposefully to facilitate the
swift resolution of commercial disputes, thereby benefiting litigants
involved in trade and commerce and contributing to the country’s
economic growth. The relevant extract reads as follows:
“42. The object and purpose of the establishment of Commercial
Courts, Commercial Divisions and Commercial Appellate Divisions of
the High Court is to ensure that the cases involved in commercial
disputes are disposed of expeditiously, fairly and at reasonable cost to
the litigants. Keeping in view the object and purpose of the
establishment of the Commercial Courts and fast tracking procedure
provided under the Act, the statutory provisions of the Act and the
words incorporated thereon are to be meaningfully interpreted for
quick disposal of commercial litigations so as to benefit the litigants
especially those who are engaged in trade and commerce which in
turn will further economic growth of the country. On the above
reasonings, I agree with the conclusion arrived at by my esteemed
Brother A.S. Bopanna, J.”
[Emphasis is ours]
26. In the present case, non-starter report which is available shows
that the service of the pre-institution mediation was done through email
to NAPL and that there was no appearance of NAPL leading to the
closure of the pre-institution mediation.
26.1 There is another reason as well. In the present case as both the
plaint and the counter-claim emanate from the same series of
transactions between the parties. The dispute revolved around the 5
disputed invoices and to that extent the counter-claim is an integral part
of NAPL’s defence to Molmek’s claim as articulated in the plaint. In
such a scenario, to relegate the parties a period to a second round of pre-
institution mediation would be contrary to the object of the CC Act for a
speedy resolution of commercial disputes.
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26.2 In any event, as stated above, although initially an objection on
this aspect was taken by Molmek before the learned Commercial Court,
Molmek conceded that the remedy of pre-institution mediation prior to
filing the counter-claim was not requisite. Thus, Molmek is now
precluded from raising such a challenge.
27. NAPL, inter alia, has relied upon “e-way bills” and GST Returns
to submit that 5 disputed invoices have already been proved by NAPL
before the learned Commercial Court. Reliance in this regard has been
placed on the testimony of the authorized representative (CCW-1) of
NAPL, the CGST official (CCW-4) and the driver (CCW-5) of the
goods.
28. The record reflects that there were two parallel sets of transactions
going on between the parties. Molmek was supplying goods to NAPL,
and simultaneously, NAPL was also supplying goods to Molmek. Both
parties had a running account and that the debit notes were also being
raised by both, simultaneously.
29. NAPL has established that between the period 20.10.2018 and
08.01.2021, it supplied goods to Molmek and raised 46 invoices/debit
notes totalling to a sum of Rs. 4,20,73,073.50/-, the details of these
invoices are set out in paragraph 19 above. It also produced its bank
statement to evidence that a sum of Rs. 1,57,49,516/- was paid by NAPL
to Molmek, as is set out in paragraph 19.1 above. Thus, the accounts
between the two parties were reconciled in the following manner:
S. Description Amount (Rs.)
no
(i) Debit notes/invoices of NAPL Rs. 4,20,73,073.50/-
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(ii) Payment made by NAPL Rs. 1,57,49,516/-
(iii) Goods supplied by Molmek Rs. 5,70,59,659/-
(iv) Total (i + ii) - iii Rs. 7,62,930.50/-
30. Molmek in his reply to Counter Claim did not deny that NAPL
had business relationship with Molmek which included supply of goods
by NAPL to Molmek, however, it is contended that, after 15.02.2022, no
goods were supplied by NAPL to Molmek.
30.1 The defence raised by Molmek in its reply to Counter-Claim is
that the 5 disputed invoices are false invoices, and that no goods were
ever delivered with respect to those invoices.
31. NAPL, on the other hand, has provided both “e-way bills” and
GST Returns with respect to the 5 disputed invoices. A tabular
representation of the documents filed by NAPL is below:
Date Invoice No. Amount(Rs.) E-Way Bill No. GST
Return
15-2-2020 NAPL/19-20/625 22,65,900 731119869157 Filed
24-2-2020 NAPL/19-20/620 24,36,525 741121546014 Filed
28-2-2020 NAPL/19-20/628 5,57,397 711122625974 Filed
29-2-2020 NAPL/19-20/630 20,44,302 741122625974 Filed
17-3-2020 NAPL/19-20/654 9,31,612.50 721125443559 Filed
Total (Rs.) Rs.82,35,736.50/-
32. The accountant (CCW-2) of NAPL appeared in the witness box
and the duplicate copies of debit notes and invoice were exhibited as
CCW2/1 (colly) by the learned Commercial Court. The accountant
stated, on oath on 24.02.2023 that he had prepared the invoices and that
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all invoices bear has initials/signatures at Point A. He has further
deposed that two of the invoices contained a vehicle number mentioned,
while the other two invoices do not, and that he has generated the “e-way
bills” for all the invoices including the 5 disputed invoices, in the
following manner:
“… I have prepared the invoices ExCCW2/1. I have prepared these
invoices as per directions of Mr. Raghav Kant. I never communicated
directly with the plaintiff company. All the invoices bear my initials at
point A. It is correct that my signatures at point A and B in my
affidavit of evidence ExCCW2/A and my initials at point A on all the
invoices ExCCW2/1 does not match. Volunteered, in my affidavit
ExCCW2/A, I have put my full signatures whereas on the invoices
ExCCW2/1, I have put my initials, that is why both are different. It is
wrong to suggest that I have not signed any invoice ExCCW2/l(colly).
Volunteered, I can prove this facts by putting my initials again on all
these documents.
The plaintiff company has not considered and not made the
payment of the invoices mentioned at point X-1 to X-5 in my affidavit
of evidence Ex.CCW2/A. It is correct that on invoice No. 615, 620
(part of ExCCW2/1) the columns of delivery date, destination,
despatch through and despatch document Numbers are blank.
It is correct that in the invoice No. 628, 630 (part of ExCCW2/1)
the vehicle number has been mentioned but the remaining columns
are blank. It is correct that invoices mentioned at point X-1 to X-5
does not bear signature of plaintiff I have never gone to the premises
of the plaintiff company to deliver any material at any point of time. I
do not know who has delivered the material against the said invoices.
Volunteered, my job is to look after the accounts of the defendant
company only.
1 did not hand over the said invoices to anyone to take the
signatures at the time of delivery. Volunteered, it is not my job as my
job was only to prepare invoices of the company bring accountant. I
have generated the e-way bills of invoices as mentioned at point X-1
to X-5 on ExCCW2/1. We used to hire the vehicles for transporting
the material. I do not know who own the vehicles mentioned in the e-
way bills. Again said, the vehicle No. DLILX6372 mentioned in the e-
way bill No. 7111 2233 5131 dated 28.02.2020 and e-way bill No.
721125443559 dated 17.03.2020 is owned by one person namely
Sonu. I am not aware about the ownership of the other vehicles
mentioned in the e-way bills corresponding to the invoices as
mentioned at point X-1 to X-5, 1 have not handed over e-way bills toSignature Not Verified
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the transporter. Volunteered, it was not my job as I was working as
accountant. I have not placed on recced any document to show that
the goods were delivered to the plaintiff.”
[Emphasis is ours]
33. The authorized representative of the Banker of NAPL (CCW-3)
produced the bank statement of NAPL evidencing the payments made to
Molmek. NAPL also produced testimony of the driver of the vehicle
(CCW-5).
34. The learned Commercial Court after examining the documents and
evidence produced also relied on a series of Whatsapp chats, which were
not denied by Molmek and the ledger details filed on 17.03.2020 to give
a finding that an amount of Rs.84,56,058.70/- was outstanding.
34.1 Molmek had contended that payments aggregating Rs.3.5 lacs
were made by NAPL on 08.06.2020, 07.07.2020 and 06.08.2020. There
would be no need to make these payments if on those dates amounts
were outstanding and payable by Molmek to NAPL. According to
Molmek, this established that the invoices raised by NAPL are false. In
our view, this contention is not disputed by Molmek that there were
simultaneous transactions taking place between the parties. Hence, it is
plausible that periodic payments would be made by a party (NAPL) to
the other (Molmek). The witnesses of NAPL explained in their testimony
that supply of goods were not stopped on account of non-receipt of
payments as the accounts used to be reconciled periodically, from time
to time.
35. The learned Commercial Court relied on the Whatsapp chat dated
04.01.2021, which was sent by Molmek to NAPL on 04.01.2021
requesting to clear “small acc pending” and held that the contention of
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the Molmek cannot be correct since it has claimed approximately Rs. 79
lacs were pending at that time.
36. The learned Commercial Court found that NAPL had proved the
dispatch/delivery of the goods by the “e-way bills” and forms GSTR-1,
and that these goods were not rejected by Molmek. Thus, the Impugned
Judgement and Decree found that NAPL had succeeded in proving its
Counter-Claim while Molmek had failed to prove its claim for recovery.
37. The contention of the learned Counsel for Molmek that NAPL did
not prove its invoices is without merit. Section 34 of the Evidence Act,
states that entries in books of accounts are not sufficient by themselves
to discharge any liability and reads as follows:
“34. Entries in books of account when relevant.– [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.”
37.1 However, NAPL’s claim is not founded on book entries alone. In
addition to the ledgers, NAPL has led evidence as is discussed above
which includes statement of witnesses including a CGST official (CCW-
4). It has established “e-way bills” and produced copies of the GST
Returns as well. The reliance placed by Molmek on this provision of the
Indian Evidence Act, 1872 is unpersuasive.
38. Rule 138 of CGST Rules provide for the rules for generation of
“e-way bills”. Sub-Rule (11) and (12) of Rule 138 of the CGST Rules
provide that the details of “e-way bills” generated under Rule 138 of the
CGST Rules shall be available on the common portal and the supplier or
the recipient, as the case may be, shall communicate his acceptance or
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rejection of the assessment of the goods covered in the “e-way bills”.
Sub-Rule (12) of Rule 138 of the CGST Rules provides that if a rejection
is not made available within 72 hours on the common portal or at the
time of delivery, it shall be deemed that the recipient has accepted the
goods. Sub-Rule (11) and (12) of Rule 138 of the CGST Rules are
reproduced below:
“138. Information to be furnished prior to commencement of
movement of goods and generation of e-way bill.
…
(11) The details of the e-way bill generated under this rule shall
be made available to the –
(a) supplier, if registered, where the information in Part A of
FORM GST EWB-01 has been furnished by the recipient or the
transporter; or
(b) recipient, if registered, where the information in Part A of
FORM GST EWB-01 has been furnished by the supplier or the
transporter,
on the common portal, and the supplier or the recipient, as the
case may be, shall communicate his acceptance or rejection of
the consignment covered by the e-way bill.
(12) Where the person to whom the information specified in sub-
rule (11) has been made available does not communicate his
acceptance or rejection within seventy two hours of the details
being made available to him on the common portal, or the time
of delivery of goods whichever is earlier, it shall be deemed that
he has accepted the said details.”
[Emphasis is ours]
38.1 NAPL contended that this option was not exercised by Molmek.
Although Molmek has denied receipt of these goods, it has not provided
any credible explanation regarding compliance with these Rules.
39. NAPL has relied on the “e-way bills”, which were produced by its
witness (CCW-4), the Inspector from the Customs and Excise
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Department proved these “e-way bills”. These include purchases such as
Solar Lantern with Portable Cooler. Molmek has not denied that goods
were supplied by NAPL to them. The 5 disputed invoices are at serial
nos. 36, 37, 40, 41 and 43 in table reproduced in Paragraph 19 above.
The tabular chart extracted in paragraph 19 shows that goods were
supplied even thereafter in August, 2020 and August, 2021. The supply
of goods happened during, before and after that period. Those supplies
have not been denied by Molmek. Therefore, the contention of Molmek
that the supply has not been proved by NAPL is misconceived.
39.1 NAPL has placed evidence before the learned Trial Court which
remains uncontroverted with respect to the supplies of goods by it to
Molmek to show a total number of 46 deliveries between the period
26.10.2018 and 08.01.2021. NAPL has given invoice numbers, “e-way
bill” numbers and all filed requisite evidence. The 5 disputed invoices
also form part of its GST returns that were filed. The learned Trial Court
has conducted a detailed examination and found that NAPL has proved
its delivery.
40. In view of the discussions above, this Court finds no reason to
interfere with these findings. The Appeals are accordingly dismissed.
(TARA VITASTA GANJU)
JUDGE
(VIBHU BAKHRU)
JUDGE
DECEMBER 24, 2024/ ha/pa/r
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