Delhi District Court
M/S. Ab Steel And Anr vs M/S. Hindustan Aerosystems Pvt Ltd And … on 14 August, 2025
DLCT010092442023
IN THE COURT OF SH. VIDYA PRAKASH
DISTRICT JUDGE (COMMERCIAL COURT)-01
CENTRAL DISTRICT, TIS HAZARI COURTS, DELHI
CNR NO.: DLCT010092442023
CS (COMM.)/1024/2023
IN THE MATTER OF:-
1. M/s A B Steel
[Through its proprietor Sh. Ashok Bisnoi]
2. Sh. Ashok Bisnoi s/o Sh. Vasudev
Both at:
10570/1, GF, Gali No.3
Bagichi Allauddin
Motia Khan, Pahar Ganj
Delhi-1100055
.... PLAINTIFFS
VERSUS
1. M/s Hindustan Aerosystems Private Limited
2. Sh. Aneesh Bhatia
Director, M/s Hindustan Aerosystems Private Limited
3. Sh. Resshi Gulshan Gulaati
Director, M/s Hindustan Aerosystems Private Limited
All at:
31, Ground Floor, Jor Bagh
Delhi-110003
Also at:
Plot No.20, Ecotech 1st Extension
Kasana, Greater Noida
UP- 201308
Mobile Nos.: 9818111103 and 9818328833
...... DEFENDANTS
CS (Comm.)/1024/2023 Page 1 of 35
Date of Institution of Suit : 12-07-2023
Date of Reserving Judgment : 26-07-2025
Date of Pronouncement of Judgment : 14-08-2025
JUDGMENT
1. Vide this judgment, I shall decide the present
suit for recovery of ₹12,14,309.84Paise along with
costs, and interest, filed by plaintiffs against the
defendants.
2. At the outset, it must be mentioned that the plaintiff/
M/s A.B. Steel, which is stated to be a proprietorship
concern of Sh. Ashok Bisnoi, was initially made party as
plaintiff, in the Memo of Parties, despite the fact that a
proprietorship firm, is not a juristic person and it can
neither sue nor it can be sued in its own name.
However, after conclusion of evidence and when the case
was listed for final arguments, an application under
Order 1 Rule 10 CPC was moved by plaintiff/ M/s A.B.
Steel seeking incorporation of the name of its proprietor
[plaintiff no.2] in the array of parties and in the suit.The
said application was opposed by the defendant. After
considering the submissions made on behalf of both the
sides, the said application was allowed, vide detailed order
dated 05-7-2025, passed by this Court. Accordingly,
Amended Memo of Parties filed by plaintiffs, wherein M/s
A. B. Steel [Through its proprietor Sh. Ashok Bisnoi] is
shown as plaintiffs no.1 and Sh. Ashok Bisnoi is shown as
plaintiffs no.2, was taken on record.
CS (Comm.)/1024/2023 Page 2 of 35
BRIEF FACTS OF THE CASE:
3. The case of the plaintiffs, as culled out from the plaint,
in brief is as under:-
3.1 The plaintiff firm (now plaintiff no.1) is stated to be
a proprietorship firm engaged in the business of
trading and supplying of different items such as SS
Pipe, SS Sheet, SS Plate, etc. [ hereinafter referred to
as the ‘said goods’] at all over India, which is owned
and operated by Sh. Ashok Bisnoi (the
plaintiff no.2).
3.2 Defendant no.1 is stated to be a private limited
company and defendant nos.2 and 3 are stated to be
its directors and responsible for its day-to-day
affairs.
3.3 It is stated that the defendant nos.2 and 3 had
approached the plaintiffs and represented to have
good reputation in the market and offered to give
good business to the plaintiffs and assured to
purchase the items/ goods from the plaintiffs on
regular basis and further promised to clear the dues
accordingly. It is further stated that believing upon
such representation of the defendants, the plaintiffs
agreed to supply the goods as per orders placed by
the defendants.
3.4 It is stated that the defendants had purchased
different items such as SS Pipes/ SS Sheet etc. at
different occasions from the plaintiffs from
01-04-2020 to 26-07-2022. It is stated that the
CS (Comm.)/1024/2023 Page 3 of 35
plaintiffs used to maintain the books of accounts in
regular course of business in respect of transactions
taken place between the parties. It is stated that as
per books of accounts, the carried forward of the
purchases made by defendants, was ₹23,60,205.84
paise till March, 2022 and the defendants had made
the payment (including the credit note adjustments)
for a sum of ₹11,45,896.00 only and hence, it is
stated that a sum of ₹12,14,309.84 paise is
outstanding, due and payable by the defendants as
on 30-03-2022.
3.5 It is stated that the defendants had given two
cheques bearing nos. 348236 and 577352, dated
05-11-2021 and 24-04-2022 for ₹5,00,000/- and
₹2,50,000/- respectively, towards discharge of their
part liability, however, same got dishonoured on
being presented by the plaintiffs on their due dates
with its banker i.e. Kotak Mahindra Bank Ltd. DB
Gupta Road, Paharganj, Delhi, for which, separate
criminal proceedings have been initiated by the
plaintiffs.
3.6 It is further stated that despite several requests,
demands and reminders, the defendants did not clear
the said outstanding amount. Even despite being
served with the legal notice dated 11-08-2022 for the
payment of cheques’ amount, the defendants, instead
of making payment towards the same, had
threatened the plaintiffs to face dire consequences
for asking to pay dues.
CS (Comm.)/1024/2023 Page 4 of 35
3.7 Further, it is stated that in pursuant to S.12A of the
Commercial Courts Act, 2015, the plaintiffs had
applied for pre-institution mediation before filing of
the suit, but to no avail, as a result of which,
Non-Starter Report dated 02-05-2023 was got
issued.
3.8 It is further stated that at the time of taking of the
goods, the defendants had agreed to pay the bill
amount within a period of 30 days of the date of
purchase of the goods, as also to pay the bill amount
along with interest @ 24% per annum in case the bill
payment is made beyond the period of 30 days.
3.9 Hence, the present suit for recovery of
₹12,14,309.84 Paise along with pendent-lite and
future interest @ 24% per annum came to be filed by
plaintiffs against the defendants.
4. On being served with the summons of the suit, the
defendants put their appearance through counsel and also
filed their joint written statement contesting the suit. In
their joint written statement, the defendants took various
preliminary objections, inter alia, that:-
4.1 The plaintiffs have not come before the Court with
clean hands and has suppressed and concealed the
actual and material facts from this Court;
4.2 The plaintiffs have filed the present suit against the
defendants just to harass and humiliate them and just
to grab money from them;
CS (Comm.)/1024/2023 Page 5 of 35
4.3 As a matter of fact, the plaintiffs and defendants
were having business relations with each other and
the plaintiffs had supplied various products of S.S
materials to the defendants as per their demands and
orders and the defendants were making the payment
of said material to the plaintiffs from time to time.
The business transactions between the parties started
from June 2019 and not from 01.04.2020 ( sic) and
during the year 2021-2022, the material supplied by
plaintiffs to the defendants, was of inferior and low
quality, but, the defendants had already made the
full and final payment of the said material to the
plaintiffs, hence, the defendants disclosed the said
fact to the plaintiffs, upon which, the plaintiffs
admitted their guilt in this regard and assured the
defendants that they will return payment of said
defective material to the defendants and requested
the defendants to firstly make the claim regarding
GST amount of the said bills and when the
defendants will receive the GST Amount from GST
Department, then they will make the remaining
payment of said defective material after deducting
the GST received amount. On believing the words of
plaintiffs, the defendants claimed the GST amount
from GST Department.
4.4 It is stated that thereafter, the defendants told the
plaintiffs to make the remaining amount of defective
material, upon which, the plaintiffs told the
defendants that the plaintiffs will sent the draft of
CS (Comm.)/1024/2023 Page 6 of 35
compromise, so, the defendants could check the
same and thereafter, the defendants will sign
the same and then, the plaintiffs will make
the balance payment of defective material to the
defendants. When after repeated requests
and reminders of the defendants, the plaintiffs
did not fulfill their promise, then the defendants
stopped the payment of cheques in question,
drawn on Yes Bank, which were issued by them
in advance in favour of the plaintiffs against
payment of material supplied by plaintiffs to
the defendants.
4.5 After the stop payment of above said cheques by
defendant company, the plaintiffs requested the
defendants that soon plaintiffs will sent the draft of
compromise and the plaintiffs was in urgent need of
money and requested the defendants to release the
cheques amount, so that, he can make the payment
to his supplier. Believing on plaintiffs words and in
view of good relations with the plaintiffs, the
defendants paid the amount of ₹5,00,000/- to the
plaintiffs on 30.12.2021 against the said cheques of
₹5,00,000/- and requested the plaintiffs to return the
bounced cheques, but, the plaintiffs told defendants
that he had kept the cheques somewhere and was not
able to trace out the same and the moment he will
find it, he will return the same to the
defendant company.
CS (Comm.)/1024/2023 Page 7 of 35
4.6 In the month of January 2022, the defendant
company was in urgent need of material, and hence,
it approached the plaintiffs for supply of the
material. On this, the plaintiffs requested the
defendants for some payment and requested to
release the same so that their matter can be settled,
on which, the defendant company released further
payment of ₹5,00,000/- on 31.01.2022 and finally
the balance payment ₹15,000/- on 14.03.2022 before
the financial year closing and further requested the
plaintiffs to send the compromise draft and to settle
the matter forever after reconciliation, if any, but the
plaintiffs did not give any heed towards the request
of defendants and after that, the defendant company
stopped giving orders to the plaintiffs.
4.7 Thus, it is stated that huge amount of defendants is
outstanding towards the plaintiffs and the
defendants reserve their right to recover the said
amount from the plaintiffs by filing civil suit as well
as by taking legal necessary action against
the plaintiffs.
4.8 Due to present false suit, the image of the defendants
is also tarnished in the eyes of business society, due
to which, the defendants have suffered a lot of
business as well as financial loss and also suffered
from mental tension, agony and harassment, for
which, the defendants are entitled to get
compensation from the plaintiffs.
CS (Comm.)/1024/2023 Page 8 of 35
5. Likewise, by way of ‘Reply Para-wise’, the defendants
have controverted and denied the averments made in
corresponding paras of the plaint.
6. The plaintiffs filed replication to the written
statement, thereby controverting and denying
the averments made therein, while reaffirming the
averments made in the plaint. It is categorically denied that
the goods supplied by the plaintiffs to the defendants were
of inferior quality.
ISSUES:
7. From pleadings of the parties, the following issues were
framed, vide order dated 13-03-2024, passed by
Ld. Predecessor of this Court:-
i. Whether the plaintiffs have supplied the
defective/ inferior quality of material to the
defendant, if so to what amount and what
effect? OPDii. Whether the plaintiffs are entitled for
recovery of sum of ₹12,14,309.84 Paise?
OPP.
ii. Whether the plaintiffs are entitled to
pendent- lite and future interest on the said
amount, if so, at what rate and for which
period? OPP.
iii. Relief.
PLAINTIFFS' EVIDENCE:
CS (Comm.)/1024/2023 Page 9 of 35
8. In support of his case, the plaintiffs namely Sh. Ashok
Bisnoi has examined himself, as PW1, apart from
examining one official witness namely Sh. Sandeep Kumar
Tiwari, Superintendent, Central GST Range-II, Division-3,
Gautam Budh Nagar, U.P., as PW2.
9. PW1 Sh. Ashok Bisnoi led his chief examination by way
of affidavit (Ex. PW1/A) and deposed on the lines of
averments made in the plaint. He has also relied
upon/proved the following documents:-
Srl. Document/Particulars Exhibit(s)
no
1. Account statement and Ex.PW1/1 and
Certificate under S. 65- Ex.PW1/1A
B of Indian Evidence [These documents are
Act referred to as Ex.PW1/1
(Colly.) in affidavit in
evidence]
2. 18 tax invoices Ex.PW1/2A to
Ex.PW1/2R
[These documents are
referred to as Ex.PW1/2
(Colly.) in affidavit in
evidence]
3. Two cheques and Ex.PW1/3A and
memos Ex.PW1/3B
[These documents are
referred to as Ex.PW1/3
(Colly.) in affidavit in
evidence]
4. Legal notice Mark PW1/4
[This document is
referred to as Ex.PW1/4
in affidavit in evidence]
5. Non-Starter Report Ex.PW1/6
CS (Comm.)/1024/2023 Page 10 of 35
10. PW1 has been cross-examined at length by the defendants.
However, the same is not being mentioned herein and shall
be considered in subsequent paras of this judgment, while
rendering findings on the issues.
11. PW2 Sh. Sandeep Kumar has proved summoned record i.e.
GSTR-2A pertaining to sales, purchase, sales returns and
purchase returns between the parties for the period from
June, 2019 till March, 2022, as Ex.PW-2/1 (Colly. 36
pages).
DEFENDANTS’ EVIDENCE
12. In their defence, the defendants have examined only one
witness i.e. the defendant no.2 namely Sh. Aneesh Bhatia/
its director as DW1. He led his examination in chief by
way of affidavit (Ex.DW1/A) and deposed on the lines of
averments made in the written statement.
13. DW1 has also been cross-examined at length, and the
relevant portion of his cross-examination shall be
considered in subsequent paras of this judgment, while
rendering findings on the issues.
14. I have already heard Sh. Rakesh Garg, Advocate for
plaintiffs and Sh. Rakesh Jaiswal, Advocate for
defendants. I have also gone through the material available
on record, including the pleading of the parties, evidence,
oral as well as documentary, led by both the sides, as
available on record. I have also duly considered the
submissions made on behalf of the parties, including the
written submissions filed on behalf of the parties and
CS (Comm.)/1024/2023 Page 11 of 35
judicial precedents cited at bar.
15. My issue-wise findings are as under:-
ISSUE NO.1
16. Firstly, I shall take up the issue no.1, which reads as
under:-
Issue no. (i)-Whether the plaintiffs have supplied the
defective/ inferior quality of material to the
defendant, if so to what amount and what effect?
OPD
17. The initial burden to prove this issue was placed upon the
defendants in view of preliminary objection raised in the
written statement that materials supplied by plaintiffs to
them during the year 2021-2022, was of inferior and low
quality. As already noted above, in order to discharge the
said onus and to prove their defence, the defendants have
examined only one witness i.e. the defendant no.2
Sh. Aneesh Bhatia as DW1 towards DE. In his
examination-in-chief by way of affidavit (Ex.DW1/A), he
has deposed on the identical lines while testifying that
during the year 2021-2022, the material supplied by
plaintiffs to the defendants, was of inferior and low
quality. He further deposed that since the defendants had
already made full and final payment of said material to the
plaintiffs, hence, they informed the said fact to the
plaintiffs, on which, the plaintiffs admitted their guilt in
this regard and assured them to repay/ refund the payment
of said defective material. He also deposed that the
CS (Comm.)/1024/2023 Page 12 of 35
plaintiffs had requested the defendants to firstly make
payment of GST amount of the relevant bills and when the
defendants will receive GST Amount from GST
Department, then they would make remaining payment of
said defective material after deducting the GST received
amount and based on said assurance, the defendants
claimed the GST amount from GST Department.
18. During his cross-examination, DW1 admitted that
defendants have not placed on record any document
complaining to the plaintiffs that the supplied raw material
was defective. He further deposed that no debit note was
raised by defendant company qua the defective goods
supplied by plaintiffs, however, he volunteered that as per
mutual understandings with the plaintiffs, the defective
goods used to be returned through returnable gate pass and
plaintiffs used to replace the defective materials. However,
he admitted that no such returnable gate pass has been
placed on record. He denied the suggestion that since the
plaintiffs never supplied any defective raw material, no
such document is placed on record. He could not even tell
the exact value of defective goods allegedly supplied by
plaintiffs to them. However, he denied the suggestion that
he has made false statement in para-7(iii) of his evidence
affidavit (Ex.DW1/A) that there was remaining amount
qua the defective material supplied to the defendants.
Arguments advanced on behalf of the Parties:
19. After referring to the material available on record and
the evidence led by both the sides, Ld. Counsel of
CS (Comm.)/1024/2023 Page 13 of 35
defendants vehemently argued that since,
the material supplied by plaintiffs to the defendants during
the year 2021-2022, was defective and of inferior quality,
therefore, the plaintiffs are not entitled to seek
recovery of suit amount from them. He also submitted
that the plaintiffs are rather liable to refund
excess payment already received by them from
the defendants. However, this submission is totally
unfounded for the simple reason that the defendants
have not filed any counter claim seeking recovery of any
such amount till date.
20. On the other hand, Ld. Counsel of plaintiffs, while
refuting the aforesaid arguments raised on behalf of
defendants, vehemently argued that the
defendants have failed to discharge the initial burden
of proving this issue. He submitted that the
defendants have not led any evidence to show that
material supplied by plaintiffs to them in the year
2021-2022, was of inferior quality or defective. For the
said purpose, he also referred to relevant portion of
cross-examination of DW1, as already referred to
in the preceding Para of the judgment.
Therefore, he urged that this issue may
be decided against the defendants and in favour of
the plaintiffs.
Analysis & Findings:
21. Before proceeding to deal with the rival submissions made
on behalf of both the sides, it would be apposite to refer to
CS (Comm.)/1024/2023 Page 14 of 35
the legal provisions contained in the Sales of Goods Act.
To quote:-
41. Buyer’s right of examining the goods.–
(1) Where goods are delivered to the buyer which he has
not previously examined, he is not deemed to have
accepted them unless and until he has had a reasonable
opportunity of examining them for the purpose of
ascertaining whether they are in conformity with the
contract.
(2)Unless otherwise agreed, when the seller tenders
delivery of goods to the buyer, he is bound, on request, to
afford the buyer a reasonable opportunity of examining the
goods for the purpose of ascertaining whether they are in
conformity with the contract.
42. Acceptance.–
The buyer is deemed to have accepted the goods when he
intimates to the seller that he has accepted them, or when
the goods have been delivered to him and he does any act
in relation to them which is inconsistent with the
ownership of the seller, or when, after the lapse of a
reasonable time, he retains the goods without intimating to
the seller that he has rejected them.
22. The aforesaid statutory provisions came up for
consideration before our own Hon’ble High Court in the
case titled as “KLG Systel Ltd. vs Fujitsu ICIM Ltd.“,
reported as MANU/DE/0406/2001. Hon’ble Delhi High
Court has observed therein as under:-
“12. The disputes between the parties cannot be decided do
hors the sundry provisions of the Sale of Goods Act. Part-
payment to a substantial extent has been made by the
Defendant/Applicant. When a buyer such as the
Defendant/Applicant asserts that the merchandise/goods were
defective, it is not open to it to withhold payment once the
delivery is accepted; since they are deemed to have been
accepted by operation of law. In Nagandas Mathuradas vs.
N.V. Valmamohomed and Others, AIR 1930 Bombay 249, in
the opinion of the Bench, the Buyer was playing fast and
loose inasmuch as the initial credit entry recorded in favor of
the Seller was subsequently reversed. The fact that a
substantial part payment had been made by the Defendant to
the plaintiffs was found very relevant, in this context. It
reiterated the view approved by the House of Lords that “if a
buyer orders goods of a certain description, and the seller
CS (Comm.)/1024/2023 Page 15 of 35
delivers goods of a different description, it is open to the
buyer to reject them. But if he does not reject them but keeps
the goods, even if he does so in ignorance of the fact that they
are of a description different from that provided for by the
contract he is debarred from rejecting the goods thereafter,
and can only fall back upon a claim for damages, as upon a
breach of warranty.” These observations apply, a fortiori,
where the goods supplied were according to the
specifications, and their price had been substantially paid.
xxxx
13. xxxx
Sections 41 and 42 of the Act conjointly indicate that if
defects in the goods are not recorded within a reasonable
time, they will have been deemed to have been accepted.
Furthermore, by making substantial payments for the price of
the goods the Defendant has acted in a manner, which would
render it inconsistent for the plaintiffs to still claim ownership
thereon. On a careful reading of the Act, it appears that the
intendment is generally that the price of the goods must be
paid and if there is a subsequent defect (in contradistinction
to a defect detected within a reasonable time of the delivery)
the remedy that is envisaged is for the Buyer to sue for
damages. This is obviously impregnated with sound
commonsense and business ethics. In the present case, raising
questions pertaining to the suitability of the supply after one
year is not reasonable. A friable issue does not arise because
what was supplied by the plaintiffs, was what was ordered by
the Defendant, if it did not suit the latter’s requirements the
plaintiffs cannot be made responsible and liable.
Significantly, it has not been shown that any legal action has
been filed even by FEDO for recovery of damages from the
Defendant. Some prima facie evidence of such an action
should have been filed by the Defendant to justify the grant
of leave to defend.”
23. In the light of law as laid down in the above cited
judgment, let us examine the facts of the present case.
24. During his cross-examination,PW1 has categorically stated
that the goods were never returned by defendants due to
low quality. But for mere suggestion put to him on behalf
of defendants that plaintiffs had supplied low quality
material to them, which has been denied by the witness, no
CS (Comm.)/1024/2023 Page 16 of 35
other question whatsoever has been put to PW1 on behalf
of defendants.
25. Apart from above, the sole witness of defendants i.e. DW1
has categorically admitted during his cross-examination
that no document raising any complaint regarding poor
quality of raw material supplied by plaintiffs in that
particular year, has been placed on record. Although, he
made feeble attempt to support such false defence by
saying that as per mutual understandings between the
parties, the defective goods used to be returned through
returnable gate pass and the plaintiffs used to replace the
defective materials, however, the falsity of such claim
came to fore in view of his candid admission that no such
returnable gate pass showing that defective material was
actually returned back to the plaintiffs, has been placed
on record.
26. Indisputably, the defendants have not filed any document
on record, which may show that they had ever raised any
complaint or grievance with the plaintiffs regarding
inferior or low quality of material supplied to them during
the year 2021-2022. It is also an admitted position on
record that the defendants had made payment(s) against
such material as was supplied to them by the plaintiffs
during the relevant period. Pertinently, the defendants have
not seriously disputed the relevant entries regarding sale of
material by plaintiffs and the part payments received from
them from time to time, as reflected in Ledger Account
Statement Ex.PW1/1, as also in Ex.PW1/D1. As already
CS (Comm.)/1024/2023 Page 17 of 35
noted above, the defendants are alleging that the material
supplied by plaintiffs during the year 2021-2022 was of
inferior and low quality, however, a bare perusal of their
ledger account statement Ex.PW1/D1 would reveal that the
defendants had paid a sum of ₹5,00,000/- on 03-12-2021
and also paid a further sum of ₹5,00,000/- on 31-01-2022
to the plaintiffs. It is difficulty to digest that the defendants
would have still made payment of such a huge amounts of
₹10,00,000/- to the plaintiffs, despite the fact that they
were in receipt of defective and low quality material from
the plaintiffs during that particular period. Such conduct on
the part of defendants would go to show that there was no
complaint from their side in so far as the quality of
supplied material in that particular year is concerned and
also that the defendants had accepted the supplied material
without any objection whatsoever. Rather, the relevant
records i.e. GSTR 2A (Ex.PW2/1 and Ex. PW2/2) of the
defendants, as proved by PW2, would go to show that the
defendants had duly claimed the input of GST component
from GST Department against the material purchased by
them from the plaintiffs during that particular period.
27. Thus, it is quite evident from the material available on
record and the evidence, oral as well as documentary, led
during trial that the defendants have made just bald
allegation in the written statement in this regard. It is also
relevant to note that had it been the situation where
material supplied by plaintiffs during that particular year,
would have been of poor quality, as alleged by the
defendants, nothing had prevented them from returning the
CS (Comm.)/1024/2023 Page 18 of 35
said defective material to the plaintiffs and/or to raise debit
note in respect thereof. Admittedly, no such debit note qua
said alleged defective raw material has been raised by
defendants either during the relevant period itself, or even
thereafter. No explanation whatsoever is forthcoming from
the side of defendants in this regard. Pertinently, it is an
admitted position on record that the defendants had been
issuing several debit notes in regular business dealings,
which had taken place between the parties in the past.
Thus, it is not explained by defendants as to why they did
not raise any debit note with the plaintiffs against the
alleged substandard quality of goods and remained mute
spectator throughout the period till the filing of the present
suit.
28. In fact, the ledger account statement (Ex.PW1/1), as also
Tax Invoices (Ex.PW1/2A to Ex.PW1/2R) available on
record, would show that the plaintiffs had supplied
material worth ₹19,795/- only to the defendants in the year
2021-2022, whereas, in the preceding year i.e. 2020-2021,
the value of materials purchased by defendants from the
plaintiffs, is running into several lacs of rupees. In fact,
credit balance of ₹23,40,410.84 paise is shown as due and
payable by defendants to the plaintiffs as on 31-03-2021.
This would show that major portion of the claim of
plaintiffs is for the transactions held during the financial
year 2020-2021. However, the defendants are alleging that
material supplied by plaintiffs during the financial year
2021-2022, which was worth only ₹19,795/-, was of
substandard quality. This would clearly show that false and
CS (Comm.)/1024/2023 Page 19 of 35
sham defence has been raised by defendants in order to
avoid their liability to pay the outstanding dues in respect
of the invoices raised by plaintiffs against the material
supplied to the defendants during the previous financial
year, as also during subsequent period w.e.f. 01-04-2021
onwards.
29. Hence, the defense raised by defendants that the material
supplied by plaintiffs was of poor quality quality, seems
highly improbable and unacceptable under the law. Thus,
the Court is of the view that the defendants have failed to
discharge the burden of proving this issue even on the
basis of preponderance of probability. Accordingly, the
issue is decided against the defendants and in favour of the
plaintiffs.
ISSUE NO.2
30. Now, I shall take up the issue no.2, which reads as under:-
Issue no. (ii) – Whether the plaintiffs are entitled for
recovery of sum of ₹12,14,309.84 Paise? OPP.
31. The initial burden to prove this issue was placed upon the
plaintiffs. PW1 Sh. Ashok Bisnoi has deposed on the
identical lines of averments made in the plaint during his
chief-examination by way of affidavit [Ex.PW1/A].
During his cross-examination, he deposed that invoices
were prepared in triplicate, out of which, two copies used
to be provided to the transporter and third was kept by
plaintiffs. The goods used to be sent by hired vehicles like
tempo, rickshaw etc. and sometimes defendants used to
CS (Comm.)/1024/2023 Page 20 of 35
take goods from the premises of plaintiffs. Normally
receiving against delivery of goods used to be taken from
the officials of the defendants, however, he volunteered
that there used to be no receiving as and when goods were
delivered on holidays. He admitted not to have filed
receipts of goods received by officials of defendant
company. He further deposed that purchase orders used to
be given by owner Mr. Bhatia, sometimes by
S/Sh. Mayank Dhiman, and Ramkisan/ Ramkesh. He
further deposed that sometimes, the purchase order used to
be issued either in writing or through whatsapp or mostly
through phone calls, however, no copy of such purchase
order has been placed on record. He produced ledger
account statement for the period from 01.04.2020 to
14.09.2022 and proved it as Ex.PW1/D1. The dealings
between the parties had started from 25-06-209. The
invoices used to be generated from computer, which used
to remain under his control, however, his staff, as also CA
could also use the said computer. Nevertheless, he alone
had password of said computer. He admitted not to have
filed the relevant invoice against which entry of
₹4,37,723/- is made against voucher No.222 dated 01-03-
2021 in the ledger account statement [Ex.PW1/1]. He
denied the suggestion that after 2021, no order was given
by defendants to plaintiffs and volunteered that defendant
had purchased goods from his shop through its staff on
four occasions after 2021 and also made payments against
purchase of those goods through cheque of ₹15,000/- and a
CS (Comm.)/1024/2023 Page 21 of 35
sum of ₹4,800/- is still balance out of those purchased
goods.
32. PW2 Sh. Sandeep Kumar is official from Central GST
Department and has proved GSTR-2A relating to business
transaction between the parties to the suit for period from
June, 2019 till March, 2022, as Ex.PW-2/1
(Colly. 36 pages). During his cross-examination, he
deposed that said record pertains to M/s A B Steel i.e.
plaintiff no.1 herein.
33. No doubt, DW1 has disputed the liability of defendants to
pay suit amount during chief examination by way of
affidavit [Ex.DW1/A] while deposing on the identical lines
of defence as raised in written statement. He, however,
admitted during his cross-examination that defendants
used to purchase raw material from the plaintiffs. Mainly
Mr. Mayank Dhiman & Mr. Amrish Tyagi used to deal on
behalf of defendant no.1/company regarding purchase of
material from suppliers. He could not give any definite
answers to the specific questions put to him on behalf of
plaintiffs that as to when and how much amount was
released to the plaintiffs by the defendant company after
stopping the payment of the cheques of ₹5,00,000/- &
₹2,50,000/-, as also how much payment was made by the
defendant in year 2021-22. He also could not disclose as to
how much huge amount as mentioned by him in para-6 of
affidavit [Ex.DW1/A], was to be taken from plaintiffs by
the defendants.
CS (Comm.)/1024/2023 Page 22 of 35
Arguments advanced on behalf of the Parties:
34. Ld. Counsel of plaintiffs vehemently argued that the
factum of supply of material to them, is nowhere disputed
by defendants in this matter. Further, he submitted that all
the invoices in question are duly shown in GSTR-2A filed
by plaintiffs with GST Department for the relevant period.
He further submitted that the defendants have neither
produced their ledger account statement showing details of
payment(s), if any, other than those as reflected in ledger
account statement [Ex. PW1/1] was made by them against
the invoices in question. He further argued that the
testimony of DW1 is not worth reliable as he has not given
answers to specific questions as to when and how much
amount was released to plaintiffs by the defendant
company after stopping the payment of cheques of
₹5,00,000/- & ₹2,50,000/-, as also how much payment
was made by defendants in year 2021-22. He also
contended that all the invoices [Ex.PW1/2A to
Ex.PW1/2R] coupled with ledger account statements
[Ex.PW1/1 and Ex.PW1/D1], as also GSTR2A Return
proved by PW2, would conclusively prove the case of
plaintiffs on the basis of preponderance of probability and
thus, the plaintiffs are entitled to decree forthwith against
all defendants.
35. Per contra, Ld. Counsel of defendants opposed the
aforesaid arguments advanced on behalf of the plaintiffs.
He submitted that the plaintiffs have failed to prove their
case for the following reasons:-
CS (Comm.)/1024/2023 Page 23 of 35
35.1 The plaintiffs have filed only selective invoices on
record and in the absence of all invoices showing
total business transactions between the parties, it
cannot be said that the plaintiffs are entitled to
recover any amount from the defendants;
35.2 Ledger account statement (Ex.PW1/1) is incomplete
and has not been proved in accordance with law of
evidence. In this regard, it is argued that Certificate
under S. 65-B of Indian Evidence Act [Ex.PW1/1A]
is defective and does not conform to the requirement
of said provision. In support of this submission,
reliance has been placed on judgments in the cases
titled as ‘Anvar P. V. v. P. K. Basheer ‘ reported as
(2014) 10 SCC 473 and ‘Arjun Panditrao Khotkar v.
Kailash Kushanrao Gorantyal’ reported as (2020) 7
SCC 1;
35.3 The ledger account statement (Ex.PW1/1) is
incomplete, one sided and does not fulfill the
requirements of S. 34 of Indian Evidence Act, which
expressly requires that the books of account are to be
kept in regular course of business. It is pointed out
that ledger account statement [Ex.PW1/1] is for the
period from 01-04-2020 to 14-09-2022 and other
ledger account statement [Ex.PW1/D1] is for the
period from 01-04-2019 to 19-04-2024. It is argued
that it was the bounden duty of plaintiffs to file
proper ledger account statement showing relevant
entries financial year-wise, whereas, both these
CS (Comm.)/1024/2023 Page 24 of 35
ledger account statements reflect entries without any
breakup and thus, said ledger account statements do
not have any evidentiary value attached thereto.
In this regard, reliance is placed on judgment in the
case of ‘Ishwar Dass Jain v. Sohan Lal‘ reported as
(2000) 1 SCC 434;
35.4 Institution of suit in itself is defective inasmuch as
the plaintiffs have not made complete disclosure in
the plaint and have not filed complete documents in
support of their claim. In this regard, reliance has
been placed on decisions of Hon’ble Apex Court in
cases of ‘Tirumala Balaji Cooperative Bank Ltd. v.
State of A.P.’, reported as AIR 2015 SC 2751;
‘Union of India v. Ibrahim Uddin‘, reported as
(2012) 8 SCC 148, as also judgment of Hon’ble
Bombay High Court in case of ‘Hansa V. Gandhi v.
Deep Shankar Roy’, reported as 2005 SCC OnLine
Bom 151, decision of Hon’ble Punjab & Haryana
High Court in case of ‘M/s Modern Laminates v.
M/s Haryana Board’, reported as 2009 SCC OnLine
P&H 1231 and decision of Hon’ble Madras High
Court in case of ‘K. R. Steel Union v. United
Engineers’, reported as 2018 SCC OnLine Mad
2294; and
35.5 The plaintiffs have filed defective Statement of
Truth and thus, same is inadmissible under the law.
While relying upon the provision contained in Order
VI Rule 15 A CPC, as applicable to the Commercial
CS (Comm.)/1024/2023 Page 25 of 35
Courts Act, 2015, it is argued that Statement of Truth
has to necessarily declare that all the relevant
documents have been placed on record.
ANALYSIS & FINDINGS:
36. Before embarking upon the rival submissions made on
behalf of both the sides, it would be apposite to summarize
the admitted position, which has emerged on record by
way of pleadings of the parties and the evidence led during
trial. Same is delineated as under:-
36.1 The defendants used to purchase raw material from
the plaintiffs;
36.2 The defendants used to make part payments against
the invoices issued by plaintiff in respect of the
material supplied to them. In fact, the defendants
have admitted in their written statement regarding
issuance of two cheques bearing nos. 348236 and
577352, dated 05-11-2021 and 24-04-2022 for
₹5,00,000/- and ₹2,50,000/- respectively; and36.3 The defendants had lastly made part payment of
₹15,000/- to the plaintiff through bank transfer on
14-03-2022.
37. There is no substance in the arguments advanced on behalf
of the defendants that ledger account statements
(Ex.PW1/1 and Ex.PW1/D1) cannot be read or that the
Certificate under S.65-B of Indian Evidence Act
(Ex.PW1/1A) is not in conformity with the said provision.
CS (Comm.)/1024/2023 Page 26 of 35
Firstly, it may be noted that the said Certificate has been
exhibited by PW1 without any sort of objection from the
side of defendants. Secondly, the defendants have failed to
point out as to how and on what basis, it is claimed on
their behalf that said certificate is not in conformity with
the aforesaid provision of law. Thirdly, perusal of said
certificate would show that the plaintiff no.2 (PW1) has
categorically stated therein that the plaintiff firm used to
maintain its books of account, tax invoices and other
related documents in computer system and printer having
make of HP and also that they use TALLY PRIME
software for feeding the data regarding sale and purchase
of goods in its day-to-day affairs. Not only this, he has also
affirmed on oath that the ledger account of defendants is
the extract from the books of account as maintained by
plaintiff in its computer system in regular course of
business and such computer system was used regularly to
store and process the information for the purpose of its
activities and he was having lawful control over the use of
said computer and also that such computer system was
operating properly throughout the period and same was
password protected and had restrictive access to it and
there is no addition/alteration/changes/manipulation in the
entries made in the ledger accounts.
38. In view of aforesaid facts and circumstances, the reliance
placed by defendants on the decisions of in the cited cases
of Anvar P. V. (supra) and Arjun Panditrao Khotkar
(supra) are not of any help to them. Having not questioned
the authenticity and correctness of the said certificate
CS (Comm.)/1024/2023 Page 27 of 35
Ex.PW1/1A, this Court is of the view that now, it is no
more open for the defendants to question the validity of
said certificate at the stage of final arguments. Moreover, it
is settled law that there has to be substantial compliance of
S. 65B of Indian Evidence Act on the part of party
producing it.
39. As regards the contention raised on behalf of defendants
regarding Statement of Truth, it is not explained as to how
the same is defective and in what manner. Every defect
therein may not be fatal to the case of the plaintiffs.
Moreover, it is trite law that rules and procedures are hand
made of justice and procedural technicalities should not be
allowed to stand in the way of doing the substantial justice,
and the Court must endeavour to decide the matter on
merits.
40. The argument raised on behalf of defendant that the suit
should be dismissed for failure on the part of plaintiffs to
file complete invoices, is misconceived and thus, same is
hereby rejected. The defendants have nowhere disputed
supply of material to them against the invoices in question.
The only defence raised by them is that part of the supplied
material was defect and of low quality. In this backdrop,
this Court is entirely in agreement with the submission
made on behalf of the plaintiffs that they were under no
obligation to file all the invoices from the date of
commencement of business dealings between the parties.
The filing of relevant invoices which remained unpaid by
the defendants, is sufficient for the purpose of complete
CS (Comm.)/1024/2023 Page 28 of 35
and effective adjudication of the present suit. Moreover, no
one had prevented the defendants to call for other invoices
during cross-examination of PW1, if so advised under the
law. Having not so done, the defendants are not permitted
to agitate this argument at the final stage of the
proceedings.
41. The defendants, since failed to disclose as to how aforesaid
ledger account statements submitted by plaintiffs, is
incomplete or does not fulfill the requirement of S. 34 of
Indian Evidence Act, said argument raised on their behalf,
is devoid of any merit and thus, is hereby rejected. For
similar reason, the reliance placed by them in the cited
decision of Ishwar Dass Jain (supra) is misplaced. Even
otherwise, the facts of cited decision are entirely
distinguishable from the facts and circumstances of the
present case. Moreover, the defendants have not been able
to impeach the testimony of PW1 through litmus test of
cross-examination, so as to create any doubt with respect
to the correctness and authenticity of the entries mentioned
in ledger account statements [Ex.PW1/1 and Ex.PW1/D1].
42. In fact, the plaintiffs are found to have duly proved their
case regarding their entitlement to recover suit amount on
the basis of preponderance of probability. On the other
hand, the testimony of DW1 is not reliable inasmuch as he
is found to have given evasive replies to all the relevant
questions put to him on behalf of plaintiffs. In fact, the
testimony of DW1 is liable to be discarded in toto for the
simple reason that apart from extracts of minutes of the
CS (Comm.)/1024/2023 Page 29 of 35
meeting of Board of Directors, which is Ex.DW1/P1, there
is nothing record to show that DW1 happens to be one of
the directors of the defendant no.1 company. Moreover,
the said witness failed to produce original Minutes Book
containing the said Board Resolution of Meeting held on
25-11-2022, either during the stage of his chief-
examination or during his cross-examination on behalf of
plaintiffs.
43. In view of foregoing reasons, this Court is of the view that
the plaintiffs have been able to prove this issue on the basis
of preponderance of probability and thus, it is held that
plaintiffs are entitled to recover the suit amount of
₹12,14,309.84 Paise.
44. This brings me down to the next question as to which of
the defendants would be liable to pay the suit amount to
the plaintiffs. As already noted above, the defendant no.1
is a duly incorporated company and defendant nos. 2 and 3
are its directors.
45. In the additional written arguments filed by the plaintiffs,
it is stated that since the defendant nos.2 and 3 were
involved in day-to-day affairs of defendant no.1 company
and did not raise any objection as their impleadment in the
present suit and also did not move any application for their
deletion from the array of defendants, they are very much
liable to pay suit amount alongwith interest and costs of
the proceedings. It is further stated therein that defendant
no.2 himself entered into the witness box and was
authorized by defendant no.1 company as its AR and has
CS (Comm.)/1024/2023 Page 30 of 35
also issued cheque in favour of plaintiff firm towards
discharge of liability, it is a fit case where corporate veil
should be lifted by this Court.
46. On the other hand, Ld. Counsel of defendants vehemently
opposed the aforesaid arguments advanced on behalf of
plaintiffs and submitted that defendant no.1 being a private
limited company has separate and distinct legal entity
under the law. He further submitted that it is nowhere the
case of the plaintiffs that either of defendant nos. 2 and 3
had stood personal guarantor for repayment of debts of
defendant no.1 company or that either of them had played
any fraud regarding the affairs of the said company and
thus, no decree can be passed as against said two
defendants.
47. A bare perusal of averments made in the plaint, would
reveal that the plaintiff nowhere averred therein that either
of defendant nos. 2 and 3 had furnished any personal
guarantee towards repayment of debts of defendant no.1
company. It is also nowhere case of the plaintiffs that
either of said two defendants had played fraud during day-
to-day affairs of defendant no.1 company or had
malafidely induced the plaintiffs to supply material to the
defendant no.1 company, while making any
misrepresentation etc. In the absence of any pleading
thereto in terms of Order VI Rule 4 CPC, the plaintiffs
cannot be allowed to raise any arguments regarding lifting
of corporate veil for the first time during the course of final
arguments.
CS (Comm.)/1024/2023 Page 31 of 35
48. It is trite law that a company is a juristic person, which acts
through living human being i.e. its directors and other
officials. Our own Hon’ble High Court in case titled
“Tristar Consultants v. V. Customer Service India Pvt. Ltd
& Anr” reported as 139 (2007) DLT 688 has held that
directors of the company owe no fiduciary or contractual
duties or any duty of care to third parties who deal with the
company. Similar view has been taken by Hon’ble Delhi
High Court in subsequent decisions in the cases titled as-
‘ACE Innovators Pvt. Ltd. v. Hewlett Packard India Sales
Pvt. Ltd. & Ors.‘ bearing I.A. No. 15446/2013 in CS(OS)
1712/2012 decided on 04-10-2013; ‘M/s Faith Mercantile
Pvt. Ltd. v. M/s Simbhaoli Sugars Ltd. & Ors.’ reported as
2018 SCC OnLine Del 10772; and ‘Sanju Bathla & Anr v.
Manu Maheshwari & Anr,’ bearing C.R.P. 166/2018 &
CM APPL. 32378/2018 & 10441/2021, decided on
12-04-2021.
49. That being so, this Court is of the view that no decree can
be passed against defendant nos.2 and 3 in their personal
capacity, since, they were discharging their duties on
behalf of defendant no.1 company in their official capacity
and nothing beyond that. Thus, it is held that defendant
no.1/company alone shall be liable to pay the suit amount
to the plaintiffs. Accordingly, the suit stands dismissed as
against defendant nos. 2 and 3.
50. Thus, in view of foregoing reasons and the discussion
made herein above, the Court is of the considered opinion
that the plaintiffs have succeeded in proving this issue on
CS (Comm.)/1024/2023 Page 32 of 35
the basis of preponderance of probability as against
defendant no.1/company. Accordingly, the plaintiffs are
held entitled to recover ₹12,14,309.84 Paise from
defendant no.1/company.
ISSUE NO.3
51. Now, I shall take up the issue no.3, which reads as under:-
Issue no. (iii) – Whether the plaintiffs are entitled to
pendent- lite and future interest on the said amount,
if so, at what rate and for which period? OPP
52. The plaintiffs have claimed pendent lite and future interest
@ 24% per annum from the date of filing of the present
suit till realization. In this regard, the plaintiffs have relied
upon terms and conditions of invoices in question
[Ex.PW1/2A to Ex.PW1/2R], which clearly stipulate that
interest @ 24% p.a. will be charged if the payment is not
made within 30 days. In view thereof, Ld. Counsel for
plaintiffs contended that there is an agreement between the
parties in so far as the rate of interest on delayed payment
is concerned and hence, pendent-lite and future interest @
24 % p. a. may be awarded in favour of plaintiffs against
the defendant.
53. Section 34 CPC clearly provides that where the liability in
relation to the sum so adjudged had arisen out of
commercial transaction, the rate of such further interest
may exceed 6% per annum but shall not exceed the
contractual rate of interest, or where, there is no
contractual rate, the rate at which moneys are lent or
CS (Comm.)/1024/2023 Page 33 of 35
advanced by nationalized banks in relation to the
commercial transactions.
54. While rendering findings on issue no.2, it is held that the
defendant company has illegally withheld the legitimate
dues of the plaintiffs and thus, this Court is of the
considered opinion that the plaintiffs are entitled to recover
pendent-lite and future interest from the said defendant.
55. Now, the question arises as regards the rate of interest
payable by defendant no.1/company to the plaintiffs on the
aforesaid amount. Although, there is contractual agreement
between the parties to pay interest @ 24% per annum on
delay payment, however, keeping in view overall facts and
circumstances of the case and nature of transactions
between the parties being commercial, interest @ 24% per
annum, in the opinion of this Court, seems to be
unreasonable, unjustifiable and on higher side. Thus,
interest of justice would be met by awarding pendent-lite
and future interest @ 10% per annum on the said
outstanding amount of ₹12,14,309.84 Paise from the date
of filing of the suit till its realization. It is so ordered
accordingly.
56. The plaintiffs have also claimed the cost of the suit.
Keeping in view the provisions contained in Sections 35
and 35A CPC, it has been established that the defendant
no.1/company failed to pay the outstanding dues not only
despite service of legal notice, but also, despite service of
summons of the suit upon it. Therefore, the defendant no.1
is held responsible for cost of the litigation to the extent of
CS (Comm.)/1024/2023 Page 34 of 35
court fee and lawyers fee etc. as per the relevant rules. In my
view, the plaintiffs are accordingly entitled for the cost of
litigation against defendant no.1.
57. The issue no.3 stands decided in the aforesaid terms.
RELIEF:
58. In the light of the aforesaid discussion, Court
is of the view that the plaintiffs have been able to prove
their case on the basis of preponderance of probability as
against defendant no.1/company, however, have failed to
prove its case as against the remaining two defendants, who
are directors of defendant no.1/company. Thus, the present
suit is decreed in favour of plaintiffs and against defendant
no.1/company and thus, the following reliefs are granted:-
58.1 The plaintiffs are entitled to recover ₹12,14,309.84
Paise from defendant no.1/company;
58.2 Pendent-lite and future interest are awarded on the
aforesaid amount @ 10% per annum from the date of
filing of the suit till the date of its realization; and58.3 Costs of proceeding is also awarded in favour of the
plaintiffs.
59. Decree sheet be prepared accordingly.
60. File be consigned to Record Room, after due compliance.
Digitally signed
by VIDYA
Announced in the open Court VIDYA PRAKASH
PRAKASH Date:
2025.08.14
On 14th Day of August,2025. 17:24:51 +0530(VIDYA PRAKASH)
DISTRICT JUDGE (COMMERCIAL COURT)-01
CENTRAL DISTRICT/THC/DELHI
CS (Comm.)/1024/2023 Page 35 of 35