Delhi District Court
Montage Enterprises Pvt Ltd vs Shree Anjaneya Agro Tech Pvt Ltd on 27 April, 2026
IN THE COURT OF SHRI DEVENDER KUMAR, DISTRICT JUDGE
(COMMERCIAL COURT-01), EAST DISTRICT
KARKARDOOMA COURTS : DELHI
CS (Comm) No. 75/2024
M/s Montage Enterprises Pvt. Ltd.
C-53, Shashi Garden, Near Pocket-V
Gurudwara, Mayur Vihar, Phase-1
New Delhi-110091 ................Plaintiff
Versus
1. Shree Anjaneya Agro-Tech Pvt. Ltd.
Office at: RMC Link Road, Bamboo Bazar,
Davangree, Karnataka-577004
through its Director ...........Defendant No. 1
2. Patanjali Ayurved Ltd.
Patanjali Food & Herbal Park
Vill-Padartha, Haridwar - Laksar Road
Haridwar-249404, Uttarakhand
Through its Managing Director ................Defendant No.2
Date of institution : 01.03.2024
Date of arguments : 17.04.2026
Date of judgment : 27.04.2026
(Suit for recovery of Rs. 21,38,985/- alongwith interest)
JUDGMENT :
–
1. Vide this judgment, I shall dispose off this suit for recovery of Rs.
21,38,985/- alongwith interest @ 24% per annum filed by the plaintiff
against the defendants. Brief facts of the case are as under:
Digitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 1/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:10:39
+0530
2. Plaintiff is a company incorporated under the Companies Act and is
being represented through its authorized representative Mr. Sanjay Kumar
Singh, who is authorized to sign, verify and institute this suit on behalf of
the plaintiff through board resolution dated 03.09.2018. It is further alleged
that the defendants are also a Private Limited Companies incorporated
under the Companies Act. It is further alleged that the defendants are
manufacturers of refined cooking oils like rice oil, mustard oil and coconut
oil etc. and approached to the plaintiff through AR/director of the defendant
no.1 for supply of flexible laminates of different variants and placed
purchase order of multilayer plastic films dated 01.06.2017. It is further
alleged that the plaintiff agreed to supply material to the defendant no.1
against purchase orders including order dated 01.06.2017 and supplied the
material against invoices dated 28.02.2017, 16.03.2017, 23.03.2017 and
31.05.2017. It is further alleged that the defendants also paid amount time
to time and last payment was made through RTGS on 20.12.2017.
2.1. Plaintiff has further alleged that the plaintiff company maintained a
running accounts of the defendant no.1 in ordinary course of business, as
per which, the defendant no.1 has outstanding liability of Rs. 21,38,985/-.
It is further alleged that the defendants failed to pay outstanding amount
despite various telephonic calls and reminders. It is further alleged that the
plaintiff also served a legal notice dated 12.02.2019 thereby demanding
outstanding amount of Rs. 21,38,985/-, which was duly replied by the
defendant no.1 vide reply dated 19.02.2019 and refused to pay amount. It is
further alleged that the defendants have failed to pay amount deliberately
due to they are liable to pay interest @ 24% per annum against outstanding
Digitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 2/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:10:44
+0530
amount. It is further alleged that the defendants also dispatched a letter
dated 01.05.2019 thereby seeking to pay demurrage charges, loading/
uploading and other expenses for supply of defective material of M/s
Patanjali Ayurved thereby alleging that the material was still lying in their
godown since June, 2017.
2.2. Plaintiff has further alleged that the company supplied the material to
the defendants according to design approved by third party i.e. M/s
Patanjali Ayurved Ltd. and the defendants are trying to shift blame of
supply of defective goods upon the plaintiff to avoid their liability to pay
due amount. It is further alleged that the defendants have falsely alleged
that the material supplied against invoice dated 30.07.2017 was supplied
without purchase order, whereas it was supplied against verbal order on
urgent basis and purchase order dated 01.06.2017 was issued subsequently.
It is further alleged that this suit is within limitation and even this court also
have territorial jurisdiction to entertain this suit. Plaintiff has prayed for a
decree of suit amount of Rs. 21,38,985/- along with interest 24% per
annum.
3. Defendant No. 1 has filed WS thereby denying its liability to pay
outstanding amount and has alleged that this court has no territorial
jurisdiction to entertain this case. It is further alleged that this suit is
without cause of action and is also barred by limitation and is liable to be
dismissed. It is further alleged that the plaintiff has concealed the material
facts from this court and is not entitled for any relief. It is further alleged
that the defendant no.1 was a Private Limited Company and was doing
Digitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 3/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:10:48
+0530
business of packaging of edible oils under brand name of M/s Patanjali
Ayurved Ltd., Haridwar and the packaging material was sourced by the
plaintiff under the requirement of the defendants but its design and make
was finalized by the plaintiff and M/s Patanjali Ayurved Ltd. It is further
alleged that the defendant no.1 was making payments under the instructions
of M/s Patanjali Ayurved Ltd. after due satisfaction of quality and
confirmation of the material by the defendant no.2.
3.1. Defendant no.1 has further alleged that on 01.06.2017, the defendant
no.1 agreed to receive the material under the instructions of M/s Patanjali
Ayurved Ltd. and issued purchase order for supply of 10 tons of RBO films
but M/s Patanjali Ayurved instructed that new laminates were not suitable
for packaging. It is further alleged that invoice no. 1031 of Rs. 20,87,248/-
was raised by the plaintiff on 31.05.2017, whereas the material was
dispatched through transporter M/s Swarn Road Lines Pvt. Ltd. on
31.05.2017, which was prior to the date of purchase and even no transport
receipt has been placed on record. It is further alleged that the material was
received by the defendant no. 1 after 32 days on 02.07.2017 against order
on 31.05.2017, whereas standard practice of delivery was within 8-10 days.
It is further alleged that M/s Patanjali Ayurved Ltd. instructed the defendant
no.1 not to use said material with incorrect print and the material is still
lying with the defendant no.1.
3.2. Defendant no.1 has further alleged that AR of the plaintiff sent an e-
mail dated 10.07.2017 to M/s Patanjali Ayurved and it was revealed that it
was a pre-existing dispute between the plaintiff and M/s Patanjali Ayurved
Digitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 4/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:10:52
+0530
regarding said material and both the parties had already discussed on
29.04.2017 regarding defective material but still the plaintiff dispatched
said material to the defendant no.1 by citing space crunch. It is further
alleged that the defendant no.1 also dispatched a letter dated 12.03.2018 to
the plaintiff asking to take back defective material lying in its godown for
the last more than 9 months and also to pay suitable demurrage charges and
loading/ uploading expenses, which was followed by reminder dated
01.11.2018, but still the plaintiff did not respond. It is further alleged that
the plaintiff has initiated insolvency proceedings against the defendant no.1
besides filing of this suit. Defendant has denied all the allegations of the
plaintiff and has prayed that this suit is liable to be dismissed.
4. During pendency of this suit, the plaintiff moved an application
under Order 1 Rule 10 of CPC to implead the defendant No. 2 M/s
Patanjali Ayurved Limited, which was allowed and M/s Patanjali Ayurved
Limited was added as the defendant no. 2.
5. Defendant no.2 has filed written statement thereby denying all the
facts of this case and has alleged that entire suit is based upon false and
fraudulent averments and has failed to disclose any cause of action and
same is liable to be dismissed. It is further alleged that the defendant no. 2
is not a necessary party to this case, as no relief has been claimed against it,
due to suit is liable to be dismissed. It is further alleged that many
commercial transactions took place between the plaintiff and defendant no.
1, whereas the defendant no. 2 is a third party to all such transactions and
has no privity of contract with the plaintiff, due to the defendant is not
CS (Comm) No. 75/2024 Digitally
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. signed by 5/48
DEVENDRA
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:10:57
+0530
liable to pay any amount. It is further alleged that the defendant no. 1 was
responsible for production of edible oils and the plaintiff was supplying
packaging material but there was no transaction between the plaintiff and
the defendant no.2. It is further alleged that the defendant No. 2 had
disclosed to the plaintiff that the material supplied to the defendant no.1
was defective and was against specific instructions and could have not been
used for packaging, though there was no direct dealing with the plaintiff
and the defendant No. 2. It is further alleged that the defendant no.2 has no
concerned with payment of the plaintiff and has further alleged that this
court has no territorial jurisdiction to entertain this case. Defendant No. 2
has denied all the allegations of the plaintiff and has prayed that this suit is
liable to be dismissed.
6. Plaintiff has filed replication to written statements thereby denying
all allegations of the defendants and has reaffirmed its pleadings.
7. On the basis of pleadings of the parties following issues were framed
vide order dated 11.09.2025 as under:
ISSUES
1. Whether the suit is within limitation? OPP
2. Whether this court has territorial jurisdiction to entertain this
suit? OPP
3. Whether the plaintiff is entitled for recovery of Rs. 21,38,985/- as
prayed? OPP
4. Whether the plaintiff is entitled for interest against the decretal
amount as prayed, if so, at what rate and for what period? OPP
5. Relief.
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 6/48
KUMAR Date:
2026.04.27
16:11:02
+0530
8. To discharge the onus, the plaintiff has examined PW1 Sh. Sanjay
Kumar Singh, who has deposed in verbatim of the plaint and has relied
upon documents Ex.PW1/1 to Ex. PW1/9.
8.1. During cross examination, PW1 has deposed that he has been
working with the plaintiff company since 2007 and has personal knowledge
regarding transactions between the parties. It is further deposed that the
plaintiff supplied the material to the defendants against purchase orders
Ex.PW1/2 placed at Haridwar, whereas corporate office of the plaintiff
company is at C-20/22, Sector-57, Noida-201301, Gautam Buddha Nagar,
UP and all marketing operations of the plaintiff company are being
conducted therefrom. It is further deposed that he did not remember how
many invoices were issued by the plaintiff regarding supply of material to
the defendant no. 1, whereas last invoice was dated 31.05.2017 by which
material was supplied. It is admitted that transport receipt Ex. PW1/3
(Colly.) does not indicate the date of delivery of the material but it bears
stamp and signature of the defendant no. 1. It is further deposed that two
months credit period was orally agreed between the parties from the date of
issuance of invoice, though as per invoice dated 31.05.2017, due date of
payment was by 30.07.2017.
8.2. PW1 has further deposed that the parties were at good terms and
were also communicating so the plaintiff waited for payment till 2024
before institution of this suit. It is further deposed that he did not remember
whether the material supplied against invoice dated 31.05.2017 were
misprinted. It is further deposed that he did not remember that there was
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 7/48
KUMAR Date:
2026.04.27
16:11:10
+0530
some pre-existing misprinting dispute between the parties or that e-mails
dated 01.06.2017, 06.07.2017 and 10.07.2017 were exchanged. It is denied
that there was a direction by the defendant no. 2 to the plaintiff company
not to supply goods/material against invoice dated 31.05.2017 to the
defendant no. 1. It is further denied that there was a direction of the
defendant no. 2 to the plaintiff company to supply material against invoice
dated 31.05.2017 to Shree Enterprises, or that the material against invoice
dated 31.05.2017 was supplied to the defendant no. 1 by citing space
constraints in the plant of the defendant no. 2. It is further deposed that he
did not remember whether material against invoice dated 31.05.2017 was
supplied to the defendant No. 1 on 02.07.2017.
8.3. PW1 has further deposed that the material was supplied against
purchase order dated 01.06.2017 and invoice was also issued but he did not
remember whether he has placed on record copy of such purchase order
dated 01.06.2017. It is further deposed that he did not remember whether
there was a delay in supply of material against invoice dated 31.05.2017. It
is admitted that there was no existing liability of the defendants on account
of misprinting in packaging material. It is denied that the defendants are not
liable to pay interest @ 24% per annum.
9. Defendants have examined DW1 Athani Kotrappa Prashant, who has
deposed in verbatim of written statement and has relied upon documents
Ex.DW1/1 to Ex. DW1/8.
Digitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 8/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:11:15
+0530
9.1. DW1 has deposed during cross examination that he has not placed on
record any Board Resolution to authorize him to appear before the court to
depose or to file written statement. It is further deposed that he was
instructed by the defendant No. 2 through e-mail dated 10.07.2017 and
purchase order dated 01.06.2017 to receive the material from the plaintiff.
It is admitted that he has no document to prove any arrangement between
the plaintiff and defendant no.2 to finalize design and make of the material.
It is further deposed that he did not remember whether there was any
communication from M/s Patanjali Ayurved to raise purchase order dated
01.06.2017 (Ex.DW1/2) and no such communication has been placed on
record. It is admitted that he did not raise any objection regarding invoice
dated 31.05.2017 before issuance of purchase order. It is further admitted
that he did not raise any objection about delay of 32 days in delivery of the
material but he raised objection before the defendant no.2.
9.2. DW1 has further deposed that the defendant no. 2 sent e-mails dated
06.07.2017 thereby stating not to use packaging material, whereas e-mail
dated 06.07.2017 was not communicated to him personally but
representative of the defendant No. 2 Nitesh Kumar Sharma communicated
said e-mail to the defendant No. 2. It is further deposed that there was a
direct written communication by the defendant No. 2 to the defendant
No. 1 whereby the defendant No. 1 was asked not to use the material.
9.3. DW1 has further deposed that the rejected material was lying at the
factory of the defendant No. 1 till the period factory was taken over by
Canara Bank under Sarfaesi Act in the year, 2018, whereas the plaintiff was
Digitally
CS (Comm) No. 75/2024 signed by
DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 9/48
KUMAR Date:
2026.04.27
16:11:19
+0530
not intimated by the defendant no.1 to lift the material, however letters
dated 12.03.2018 & 01.11.2018 were sent to inform the plaintiff that
operation of the defendant no. 1 was shut down and requested to lift the
material. It is admitted that the material lying in the factory was neither
sold nor used by the defendant No. 1 but was taken over by Canara Bank
while taking over the possession of the factory and assets. It is further
deposed that he was not aware about value of the material fetched by the
banker from the material lying in the factory of the defendant no. 1. It is
admitted that he has not made payment against invoice dated 31.05.2017 of
Rs. 20,87,284/- as the material was defective. It is further deposed that all
payments to the plaintiff were under the instructions of the defendant no. 2
but the defendant no. 2 did not issue any instruction to make payment of
invoice dated 31.05.2017, as the material was defective.
9.4. DW1 has admitted that he has not placed on record ledger accounts
of the plaintiff but there was no amount outstanding on the part of the
defendant no. 1 towards the defendant no. 2 except invoice dated
31.05.2017 of Rs. 20,87,284/-. It is further deposed that ledger accounts for
the years 2016-17 and 2017-18 of the plaintiff company is Ex.DW1/9
showing debit amount of Rs. 20,87,284/-, as debit note was issued to the
plaintiff. It is further deposed that he sent debit note to the plaintiff through
post but neither postal receipt has been placed on record nor he can produce
it. It is denied that ledger accounts Ex. DW1/9 is forged and fabricated but
it was never communicated to the plaintiff and has been shown the
plaintiff/court for the first time.
Digitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 10/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:11:24
+0530
9.5. DW1 has further deposed that email dated 01.06.2017 (Ex. DW1/10
(colly)) was regarding invoice Ex. DW1/1 but new stock was received on
02.07.2017. It is further deposed that copy of possession notice taking over
possession of immovable and movable property of the defendant no. I is
Ex. DW1/11 (colly) issued by Canara Bank and State Bank of India. It is
further deposed that balance sheets for the financial year 2016-17 and
2017-18 is Ex. DW1/12 (colly) but he has not brought details of individual
list of creditors, whereas consolidate amounts of sundry creditors has been
shown in balance sheet. It is further deposed that schedule for sundry
creditors for the financial years 2016-17 and 2017-18 is Ex.DW1/13
(colly). He has failed to reply as to how balance of Rs 21,39,323/- shown
due on 31.03.2017 reduced to nil on 31.03.2018 in list of creditors
Ex.DW1/13 (colly).
9.6. DW1 has further deposed that he did not remember whether debit
note dated 30.06.2017 was sent to the plaintiff or not, but debit note was
communicated on 13.08.2018 through email Ex.DW1/10 (colly), whereas
debit notice was not annexed with email dated 13.08.2017. It is further
admitted that debit note was dated 30.06.2017 as mentioned in statement of
accounts, whereas email was sent on 13.08.2017, as actual e-mail was
dated 08.12.2017 and its sequel email was dated 13.08.2017. It is admitted
that entry of amount of Rs. 6,66,311/- shown in ledger Ex. DW1/9 (colly)
is pertaining to the defendant no. 2 and not to the defendant no. 1 and
amount was paid directly to the plaintiff. It is further admitted that he has
not annexed any proof of the payment of Rs. 6,66,311/- to prove that
payment was made by the defendant no. 2 to the plaintiff as shown in
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 11/48
KUMAR Date:
2026.04.27
16:11:28
+0530
ledger accounts. It is further admitted that he has not annexed statement of
the defendant no. 2 on record. It is further deposed that he did not receive
back four rolls sent to Shree Enterprises under the instruction of the
defendant no. 2 and has not shown transfer of these rolls in his statement of
accounts.
9.7. DW1 has further deposed that he wrote a letter dated 20.11.2025 (Ex.
DW1/14) to the Chief Manager, Canara Bank to provide details of total
amount recovered by sale of the plant, machinery, land, building and other
assets under Sarfaesi Act, but did not receive any response. However, assets
were taken over by the bank for a value of Rs. 17,52,10,000/- as reflected
in statement of the defendant no. 1 Ex. DW1/15. It is admitted that there is
no operation in the defendant no.1’s company and there is nil transaction in
the bank accounts, whereas the defendant no. 2 has not made any payment
or adjustment of transactions held between the plaintiff and defendant no. 1
in excess of ledger placed on record. It is further deposed that apart from
debit note dt. 30.06.2017, he also issued two more debit notes on the
plaintiff dated 22.04.2017 and 11.05.2017.
10. I have heard the arguments and perused the record. My issue-wise
findings are as under.
ISSUE No. 1: – The onus to prove issue no.1 was put upon the plaintiff and
to discharge the onus, the plaintiff has examined PW1 and has also cross
examined DW1. However, before giving my findings on issues, it is
necessary to ascertain, as to whether both the parties are being represented
through their Authorized Representatives or not. Plaintiff has filed this suit
CS (Comm) No. 75/2024 Digitally signed
by DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. KUMAR 12/48
DEVENDRA
Date:
KUMAR 2026.04.27
16:11:33
+0530
through AR, Mr. Sanjay Kumar Singh, who has been authorized to institute
this suit through Board Resolution Ex.PW1/1. Ld. Counsel for defendants
has argued that PW1 is not authorized representative of the plaintiff to
institute this suit, as Board Resolution was passed way back on 11.02.2019,
whereas this suit has been filed in the year 2024 which suggests that no
board resolution was in favor of the plaintiff to institute this suit. It is
further argued that suit filed without authority is liable to be dismissed.
11. On the other hand, Ld. Counsel for plaintiff has opposed this
submission and has argued that a board resolution was passed in favor of
Mr. Sanjay Kumar Singh, who is PW1 and has proved said board resolution
Ex.PW1/1. It is further argued that board resolution was duly passed in
meeting of the board of directors and cannot be nullified merely because it
was passed in the year 2019. It is further argued that the plaintiff has
proved due institution of this suit, whereas the defendants are also
corporate identities but they have not filed or proved any authority of AR to
defend this case, due to written statements filed by them are liable to be
rejected and suit may be decreed in favor of the plaintiff.
12. Admittedly, both the parties are commercial entities due to their
authorities are to be ascertained as under:
Authority of AR to file / contest this Case
Admittedly, both the parties are Private Limited Companies and they
were supposed to institute / contest this suit only under authority by board
of directors through board resolution. Plaintiff has instituted this suitDigitally
CS (Comm) No. 75/2024 signed by
DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 13/48
KUMAR Date:
2026.04.27
16:11:38
+0530
through Mr. Sanjay Kumar Singh and PW1 has proved his authority Ex.
PW1/1 through which he was authorized to institute this suit, whereas both
the defendants have not filed or proved any board resolution / authority of
AR to contest this case or to file written statements.
13. Admittedly, a civil suit by a company / corporation has to be signed
and verified by authorized representative in terms of Order XXIX Rule 1 of
CPC, whereas appointment of authorized representative must be in terms of
Order III Rule 2 of CPC. Order XXIX Rule 1 is as under:
Order XXIX Rule 1. Subscription and verification of pleading.– In
suit by or against a corporation, any pleading may be signed and
verified on behalf of the corporation by the secretary or by any
director or other principal officer of the corporation who is able to
depose to the facts of the case.
14. In view of Order XXIX Rule1 of CPC, authority mentioned in
abovesaid provision must sign and verify pleadings like Secretary,
Director, or any other Principal Officer of the company / corporation.
Particular authority may sign and verify pleadings besides other
authorized representatives appointed by the company / corporation on its
behalf through board resolution. The authority of recognized agent has
been prescribed under Order III Rule 1 & 2 of CPC as under:
Rule 1. Appearances, etc., may be in person, by recognized agent or
by pleader.–Any appearance, application or act in or to any Court,
required or authorized by law to be made or done by a party in such
Court, may, except where otherwise expressly provided by any law
for the time being in force, be made or done by the party in person, or
by his recognized agent, or by a pleader [appearing, applying or
acting, as the case may be, on his behalf :
Provided that any such appearance shall, if the Court so directs, be
made by the party in person.
Digitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 14/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:11:44
+0530
Rule 2. Recognised agents.–The recognised agents of parties by
whom such appearances, applications and acts may be made or done
are–
(a) persons holding powers-of-attorney, authorising them to make and
do such appearances, applications and acts on behalf of such parties;
(b) persons carrying on trade or business for and in the names of
parties not resident within the local limits of the jurisdiction of the
Court within which limits the appearance, application or act is made
or done, in matters connected with such trade or business only, where
no other agent is expressly authorised to make and do such
appearances, applications and acts.
15. In view of abovesaid legal proposition, it stands proved that the
recognized representative may be authorized by way of power of attorney /
board resolution by board of directors in terms of Section 291 of the
Companies Act, 1956 (Now corresponding Section 179 of the Companies
Act, 2013). The authority of authorized representative under Order III Rule
1 & 2 CPC viz-a-viz signing authority of authorized representative under
Order XXIX Rule 1 & 2 of CPC has been defined in case titled Nibro Ltd.
v. National Insurance Co. Ltd., (1991) 70 Comp Cas 388 (Delhi) as under:
Order 3, rule 1 provides that any appearance, application or act in or
to any court required or authorise by law can be made or done by the
party in person or by his recognized agent or by a pleader appearing,
applying or acting, as the case may be, on his behalf. Provided of
course, such an appearance, application or act in or to any court is
required or authorised by law to be done or done by a party in such
court. Where, however, there is an express provision of law, then that
provision will prevail. Thus, if an authority is given to a pleader or a
recognised agent as provided by law, the recognised agent or pleader
can file an appearance or file a suit in court if the party himself is not
in a position to file it. In my view, if a party is a company or a
corporation, the recognised agent or a pleader has to be authorise by
law to file such a plaint. Such an authority can be given to a pleader or
an agent in the case of a company by a person specifically authorised
in this behalf. In other words, a pleader or an agent can be authorised
to file a suit on behalf of a company only by an authorised
representative of the company. If a director or a secretary is authorisedDigitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 15/48
KUMAR Date:
2026.04.27
16:11:49
+0530
by law, then he can certainly give the authority to another person as
provided under Order 3, rule 1.
The authority of a principal offic”r of’a company in relation to suits
filed on behalf of the limited company does not extend beyond what is
laid down in Order 29 of the Code of Civil Procedure. That provision
does not entitle the principal officer of a company to file a suit on its
behalf and for that the authority has to be found either in the articles
of association of the company or in the resolution of its board of
directors. In the articles of association of several companies, provision
is generally made authorizing their managing directors and other
officers to file and defend suits on their behalf. Similarly, the board of
directors of a company can authorize the institution of a suit on behalf
of the company by a resolution. In the case of some companies the
articles empower the managing director or directors to appoint general
attorneys and general managers and given them authority to institute
suits on behalf of the company. But in the absence of any proof in
regard to any such power having been conferred on Shri Ram Lal
Choudhary, it is not possible to accept his statement that he was
authorised to file the suit as the principal officer of the plaintiff hotel.
It is well-settled that under section 291 of the Companies Act except
where express provision is made that the powers of a company in
respect of a particular matter are to be exercised by the company in
general meeting, in all other cases the board of directors are entitled to
exercise all its powers. Individual directors have such powers only as
are vested in them by the memorandum and articles. It is true that
ordinarily the court will not unsuit a person on account of
technicalities. However, the question of authority to institute a suit on
behalf of a company is not a technical matter. It has far-reaching
effects. It often affects the policy and finances of the company. Thus ,
unless a power to institute a suit is specifically conferred on a
particular director, he has no authority to institute a suit on behalf of
the company. Needless to say such a power can be conferred by the
board of directors only by passing a resolution in that regard.
16. Further, in another landmark judgment titled United Bank of India v.
Naresh Kumar, (1996) 6 SCC 660, it has held that;
9. In cases like the present where suits are instituted or defended on
behalf of a public corporation, public interest should not be permitted
to be defeated on a mere technicality. Procedural defects which do not
go to the root of the matter should not be permitted to defeat a just
cause. There is sufficient power in the courts, under the Code of Civil
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 16/48
KUMAR Date:
2026.04.27
16:11:55
+0530
Procedure, to ensure that injustice is not done to any party who has a
just case. As far as possible a substantive right should not be allowed
to be defeated on account of a procedural irregularity which is
curable.
10. It cannot be disputed that a company like the appellant can sue
and be sued in its own name. Under Order 6 Rule 14 of the Code of
Civil Procedure a pleading is required to be signed by the party and its
pleader, if any. As a company is a juristic entity it is obvious that some
person has to sign the pleadings on behalf of the company. Order 29
Rule 1 of the Code of Civil Procedure, therefore, provides that in a
suit by or against a corporation the Secretary or any Director or other
Principal Officer of the corporation who is able to depose to the facts
of the case might sign and verify on behalf of the company. Reading
Order 6 Rule 14 together with Order 29 Rule 1 of the Code of Civil
Procedure it would appear that even in the absence of any formal
letter of authority or power of attorney having been executed a person
referred to in Rule 1 of Order 29 can, by virtue of the office which he
holds, sign and verify the pleadings on behalf of the corporation. In
addition thereto and dehors Order 29 Rule 1 of the Code of Civil
Procedure, as a company is a juristic entity, it can duly authorise any
person to sign the plaint or the written statement on its behalf and this
would be regarded as sufficient compliance with the provisions of
Order 6 Rule 14 of the Code of Civil Procedure. A person may be
expressly authorised to sign the pleadings on behalf of the company,
for example by the Board of Directors passing a resolution to that
effect or by a power of attorney being executed in favour of any
individual. In absence thereof and in cases where pleadings have been
signed by one of its officers a corporation can ratify the said action of
its officer in signing the pleadings. Such ratification can be express or
implied. The court can, on the basis of the evidence on record, and
after taking all the circumstances of the case, specially with regard to
the conduct of the trial, come to the conclusion that the corporation
had ratified the act of signing of the pleading by its officer.
13. The court had to be satisfied that Shri L.K. Rohatgi could sign the
plaint on behalf of the appellant. The suit had been filed in the name
of the appellant company; full amount of court fee had been paid by
the appellant-Bank; documentary as well as oral evidence had been
led on behalf of the appellant and the trial of the suit before the Sub-
Judge, Ambala, had continued for about two years. It is difficult, in
these circumstances, even to presume that the suit had been filed and
tried without the appellant having authorised the institution of the
same. The only reasonable conclusion which we can come to is that
Shri L.K. Rohatgi must have been authorised to sign the plaint and, in
Digitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 17/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:12:01
+0530
any case, it must be held that the appellant had ratified the action of
Shri L.K. Rohatgi in signing the plaint and thereafter it continued with
the suit.
17. A combined reading of both judgments made it clear that the
pleadings must be signed by any authority mentioned under Order XXIX
Rule 1, or by any authorized agent / representative. The authorization of
any authorized representative may be in terms of Order III Rule 2 of CPC,
or by the company through resolution of board of directors in terms of
Section 291 of the Companies Act, 1956 (corresponding Section 179 of the
Companies Act, 2013). However, authority of any person/s mentioned
under Order XXIX Rule 1 of CPC to sign the pleadings must be proved by
Article of Association/ Resolution of Board of Directors, as held in case
titled State Bank of Travancore v. Kingston Computers (I) (P) Ltd. , (2011)
11 SCC 524 as under:
14. In our view, the judgment under challenge is liable to be set aside
because the respondent had not produced any evidence to prove that
Shri Ashok K. Shukla was appointed as a Director of the Company
and a resolution was passed by the Board of Directors of the
Company to file a suit against the appellant and authorised Shri Ashok
K. Shukla to do so. The letter of authority issued by Shri Raj K.
Shukla, who described himself as the Chief Executive Officer of the
Company, was nothing but a scrap of paper because no resolution was
passed by the Board of Directors delegating its powers to Shri Raj K.
Shukla to authorise another person to file a suit on behalf of the
Company.
13. The Division Bench of the High Court did take cognizance of the
fact that the Company had not summoned any witness from the office
of the Registrar of Companies to prove that Shri Ashok K. Shukla was
a Director of the Company and that the minute book of the Company
had not been produced to prove the appointment of Shri Ashok K.
Shukla as a Director, but reversed the finding of the trial court on
Issue 1 on the basis of the authority letter issued by Shri Raj K.
Shukla and resolutions dated 14-2-2001 and 19-4-2001, by which the
Board of Directors of the Company had authorised some persons to
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 18/48
KUMAR Date:
2026.04.27
16:12:06
+0530
operate the bank account.
In view of abovesaid law, it stands proved that any company / corporation
must be represented through Authorized Representative duly authorized by
Board Resolution / Power of Attorney.
18. In this case, PW1 has tendered his board resolution Ex.PW1/1 duly
passed by board of directors of the plaintiff company. Defendants have just
disputed this board resolution but no specific reason has been cited as to
how board resolution is defective except stating that it was passed way
back in the year 2019, whereas board resolution cannot be nullified /
discarded merely because it was passed way back to grant general power to
contest a case against the company. Plaintiff has pendency of various cases
and if a person has been authorized through board resolution to contest
other cases also, then such authorization cannot be disputed. As such, the
plaintiff has duly authorized PW1 to represent the plaintiff before this court
and authorization stands proved.
19. However, the defendants are also companies and the defendant no. 1
has filed written statement through one Mr. A. K. Prashant, Managing
Director and the defendant No. 2 has filed WS through one Neha Dutta,
whereas both the defendants have not relied upon or filed any board
resolution or authority to contest this case. Admittedly, any company
cannot contest any case through any individual director without board
resolution or authorization and even pleading must be singed in terms of
Order 29 Rule 1 CPC which prescribes that director, secretary or authorized
representative of a company may institute / defend suit on behalf of theDigitally signed
CS (Comm) No. 75/2024 by DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. KUMAR 19/48
DEVENDRA
Date:
KUMAR 2026.04.27
16:12:11
+0530
company but authority of said director must be proved through Article of
association that the person signing plaint / WS was really a director to sign
said pleadings. However, in this case, the defendant No. 1 has been
represented through Managing Director but there is no board resolution/
Article of association of the company to prove this authority. Managing
Director of the defendant no.1 has examined himself as DW1 but he has
not proved any document to prove his authority, due to WS filed by the
defendant no.1 was without authority.
20. Similarly, the defendant No. 2, M/s Patanjali Ayurved Ltd. is also a
company and has filed WS through one Ms. Neha Dutta, whereas there is
no board resolution / authority on record to prove that the defendant No. 2
authorized her to contest this case on behalf of the company. As such, both
the defendants have contested this suit without authority and have failed to
comply with Order 29, Rule 1 CPC. If both the defendants have contested
this suit without authority, then their written statements on record cannot be
considered and shall be considered that they have no defense on merit.
21. Now merit of the case has to be seen. The onus to prove issue no. 1
was put upon the plaintiff and the plaintiff was supposed to prove that this
suit has been filed within limitation. Ld. Counsel for plaintiff has argued
that this suit is within limitation, as the plaintiff supplied the material and
last invoice was raised on 31.05. 2017, whereas last payment was made by
defendant no.1 in the year 2017. It is further argued that both the parties
were at good terms, due to the plaintiff waited up to 2024 to institute this
suit. It is further argued that the defendants never refused to make paymentDigitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 20/48
KUMAR Date:
2026.04.27
16:12:17
+0530
and the plaintiff kept on sending them legal notice, which was duly replied
and ultimately the defendant no.1 refused to make payment through reply
to legal notice dated 01.05.2019 and only then this suit has been filed. It is
further argued that limitation remained suspended during corona period and
the plaintiff has filed this suit immediately after corona period, due to this
suit is within limitation and same is liable to be decreed. It is further argued
that plea of defective material was raised by the defendants in the year
2018 and both the parties remained in contact through correspondence
before filing of this suit and limitation shall started from final refusal by the
defendant no.1. It is further argued that this suit is liable to be decreed.
22. On the other hand, Ld. Counsel for defendants has opposed
submissions and has submitted that suit is barred by limitation, as
limitation to file this suit started in the year 2017 which kept on running up
to 2020, whereas this suit has been filed in the year 2024, which is
admittedly barred by limitation and same is liable to be dismissed.
23. Admittedly, both the defendants have no defense on merit for the
want of any authority for and on behalf of their companies to file written
statement, whereas still they may dispute their liability on legal grounds.
Defendants have taken a defense of limitation and Section 3 of Limitation
Act cast a duty upon the court to ascertain limitation in every case even
without citing limitation as defense by opposite party. Section 3 of
Limitation Act is as under:
Section-3. Bar of limitation.–(1) Subject to the provisions contained
in Sections 4 to 24 (inclusive), every suit instituted, appeal preferred,
and application made after the prescribed period shall be dismissedDigitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 21/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:12:22
+0530
although limitation has not been set up as a defence.
(2) For the purposes of this Act,–
(a) a suit is instituted,–
(i) in an ordinary case, when the plaint is presented to
the proper officer;
(ii) in the case of a pauper, when his application for
leave to sue as a pauper is made; and
(iii) in the case of a claim against a company which is
being wound up by the court, when the claimant first
sends in his claim to the official liquidator;
(b) any claim by way of a set off or a counter-claim, shall be treated as
a separate suit and shall be deemed to have been instituted–
(i) in the case of a set off, on the same date as the suit in
which the set-off is pleaded;
(ii) in the case of a counter claim, on the date on which the
counter claim is made in court;
(c) an application by notice of motion in a High Court is made when
the application is presented to the proper officer of that court.
24. Section 3 came into interpretation before Hon’ble Apex Court in case
titled Noharlal Verma v. Distt. Coop. Central Bank Ltd., (2008) 14 SCC
445 and relevant observations are as under:
33. Sub-section (1) of Section 3 of the Limitation Act, 1963 reads as
under:
“3. Bar of limitation.–(1) Subject to the provisions contained in
Sections 4 to 24 (inclusive), every suit instituted, appeal preferred,
and application made after the prescribed period shall be dismissed
although limitation has not been set up as a defence.”
(emphasis
supplied)
Bare reading of the aforesaid provision leaves no room for doubt that
if a suit is instituted, appeal is preferred or application is made after
the prescribed period, it has to be dismissed even though no such plea
Digitally
CS (Comm) No. 75/2024 signed by
DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 22/48
KUMAR Date:
2026.04.27
16:12:28
+0530
has been raised or defence has been set up. In other words, even in
absence of such plea by the defendant, respondent or opponent, the
court or authority must dismiss such suit, appeal or application, if it is
satisfied that the suit, appeal or application is barred by limitation.
25. Further, in case titled V.M. Salgaocar and Bros. v. Board of Trustees
of Port of Mormugao, (2005) 4 SCC 613, it has held that;
20. The mandate of Section 3 of the Limitation Act is that it is the
duty of the court to dismiss any suit instituted after the prescribed
period of limitation irrespective of the fact that limitation has not been
set up as a defence. If a suit is ex facie barred by the law of limitation,
a court has no choice but to dismiss the same even if the defendant
intentionally has not raised the plea of limitation.
21. This Court in Manindra Land & Building Corpn. Ltd. v. Bhutnath
Banerjee [(1964) 3 SCR 495;
“Section 3 of the Limitation Act enjoins a court to dismiss any suit
instituted, appeal preferred and application made, after the period of
limitation prescribed therefor by Schedule I irrespective of the fact
whether the opponent had set up the plea of limitation or not. It is the
duty of the court not to proceed with the application if it is made
beyond the period of limitation prescribed. The Court had no choice
and if in construing the necessary provision of the Limitation Act or in
determining which provision of the Limitation Act applies, the
subordinate court comes to an erroneous decision, it is open to the
court in revision to interfere with that conclusion as that conclusion
led the court to assume or not to assume the jurisdiction to proceed
with the determination of that matter.”
After going through the abovesaid cases, it stands proved that the limitation
is material to determine a lis and litigation barred by limitation shall be
dismissed without any exception and it shall also be duty of the court to
dismiss such litigation.
26. To prove limitation, it is necessary to go through documents of the
parties. Defendant no.1 has relied upon purchase order dated 01.06. 2017
(Ex. PW1/2) which was followed by various invoices Ex. PW1/3 (Colly.)
Digitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 23/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:12:33
+0530
The last invoice was dated 31.05.2017. However, this case is not based
upon individual invoice and rather based upon statement of accounts
Ex.PW1/4, due to the limitation has to be considered on the basis of entries
of statement of accounts. As per statement of accounts, the transactions
between the parties started w.e.f. 28.02.2017 and last supply was made on
31.05.2017 of Rs. 20,87,284/-, whereas the last payment of Rs. 6,66,311/-
was made through RTGS on 20.12.2017. In fact, limitation to file this suit
started from last payment in terms of Section 19 of Limitation Act.
27. However, Ld. counsel for plaintiff has argued that the limitation shall
start from the date of refusal of payment by the defendants which was
through reply dated 01.05.2019 (Ex.PW1/7), whereas Ld. Counsel for
plaintiff has not cited any provision under Limitation Act to support this
contention. Even, Ld. Counsel has argued that reply to legal notice
Ex.PW1/7 was acknowledgment of debt by the defendants in terms of
Section 18 of Limitation Act, due to limitation stands extended. On the
other hand, Ld. Counsel for defendants has argued that once limitation
started shall continue till expiry and limitation in this case started when last
payment was made and not from the date of denial of the payment, due to
this suit is barred by limitation. It is further argued that reply to legal notice
cannot be considered acknowledgment, especially when the defendants
have denied their liability to pay any amount and this suit is liable to be
dismissed.
28. Admittedly, this suit is not based upon individual invoice and is
based upon ledger accounts maintained regarding supply of goods and
Digitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 24/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:12:43
+0530
record of payment/s. There are two articles in Limitation Act to deal with
such cases i.e. Article 14 and 113 of Schedule under Limitation Act. Both
the articles are as under:
PERIOD OF LIMITATION
[See Sections 2(j) and 3]
FIRST DIVISION–SUITS
Part I–Suits Relating To Accounts
Description of suit Period of Time from which period
limitation begins to run
Part II–Suits Relating To Contracts
14. For the price of goods sold and Three The date of the
delivered where no fixed period of credit is years delivery of the
agreed upon. goods.
Part X–Suits for which there is no prescribed period
113. Any suit for which no period of Three When the right to
limitation is provided elsewhere in this years sue accrues
Schedule.
In view of abovesaid Articles, it is clear that both the Articles deal with
different limitations, as per Article 14, the limitation starts from the date of
delivery of the goods, whereas as per Article 113, it starts when right to sue
accrues.
29. Ld. Counsel for plaintiff has argued that there was no fixed time to
pay amount, due to limitation would start from the date of reply of legal
notice in terms of Article 113 of Schedule of Limitation Act, though PW1
CS (Comm) No. 75/2024 Digitally
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. signed by 25/48
DEVENDRA
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:12:48
+0530
has deposed that credit line was of 2 months agreed between the parties.
However, to determine application of any specific Article, it is necessary to
ascertain criteria of application of both the Articles, which depends upon
the cause of action set out in the pleadings. The Hon’ble Supreme Court of
India has held in case titled B & T AG v. Union of India, (2024) 5 SCC 358
that:
65. Cause of action becomes important for the purposes of calculating
the limitation period for bringing an action. It is imperative that a
party realises when a cause of action arises. If a party simply delays
sending a notice seeking reference under the 1996 Act because they
are unclear of when the cause of action arose, the claim can become
time-barred even before the party realises the same.
64. “Cause of action” means the whole bundle of material facts, which
it is necessary for the plaintiff to prove in order to entitle him to
succeed in the suit. In delivering the judgment of the Board in Chand
Kour v. Partab Singh [Chand Kour v. Partab Singh, 1888 SCC OnLine
PC 14 : ILR (1889) 16 Cal 98] , Lord Watson observed : (SCC OnLine
PC)
“… Now the cause of action has no relation whatever to the defence
which may be set up by the defendant, nor does it depend upon the
character of the relief prayed for by the plaintiff. It refers entirely to
the grounds set forth in the plaint as the cause of action, or, in other
words, to the [Ed. : The matter between two asterisks has been
emphasised in original.] media [Ed. : The matter between two
asterisks has been emphasised in original.] upon which the plaintiff
asks the court to arrive at a conclusion in his favour.”
(emphasis supplied)
68. Whether any particular facts constitute a cause of action has to be
determined with reference to the facts of each case and with reference
to, the substance, rather than the form of the action. If an infringement
of a right happens at a particular time, the whole cause of action will
be said to have arisen then and there. In such a case, it is not open to a
party to sit tight and not to file an application for settlement of dispute
of his right, which had been infringed, within the time provided by the
Limitation Act, and, allow his right to be extinguished by lapse of
time, and thereafter, to wait for another cause of action and then file
an application under Section 11 of the 1996 Act for establishment of
his right which was not then alive, and, which had been long
extinguished because, in such a case, such an application would mean
Digitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 26/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:12:52
+0530
an application for revival of a right, which had long been extinguished
under the 1963 Act and is, therefore, dead for all purposes. Such
proceedings would not be maintainable and would obviously be met
by the plea of limitation under Article 137 of the 1963 Act.
73. Negotiations may continue even for a period of ten years or
twenty years after the cause of action had arisen. Mere negotiations
will not postpone the “cause of action” for the purpose of limitation.
The Legislature has prescribed a limit of three years for the
enforcement of a claim and this statutory time period cannot be
defeated on the ground that the parties were negotiating.
In view of abovesaid case law, it stands proved that the cause of action is
not a single fact but a bundle of facts which gives a cause to file a case.
However, when infringement of any right happens at a particular time, the
whole cause of action starts immediately to file a case and mere
negotiations cannot postpone “cause of action” for the purpose of
limitation.
30. In the present case also, the different paragraphs of the plaint have
proved that initially, cause of action started way back in the years 2017
when the purchase order was placed and goods were supplied and it
continued till the last payment was made on 20.12.2017. Further, the
plaintiff served a legal notice dated 12.02.2019 which was replied by the
defendants on 01.05.2019 by which they denied their liability. However,
the limitation cannot be extended in whimsical manner. The plaintiff got a
cause of action to file this suit soon after last payment and subsequent
development was just sequence of events and could not extend the
limitation. In fact, the limitation once starts shall continue till the period of
limitation extinguish.
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 27/48
KUMAR Date:
2026.04.27
16:12:57
+0530
31. However, the main issue in this case is by which article of limitation
this suit shall govern. Ld. Counsel for plaintiff has cited Article 113,
whereas Ld. Counsel for defendants has claimed Article 14. The Hon’ble
High Court of Delhi has held in case titled Bharath Skins Corporation v.
Taneja Skins Company Pvt. Ltd., 2011 SCC OnLine Del 5523 that:
23. The upshot of the above discussion is that Article 14 of the
Schedule to the Limitation Act, 1963 does not apply to suits for
recovery of money due on a running and current but a non-mutual
account between the buyer and seller i.e. an account of the kind with
which we are dealing.
24. There being no Article in the Schedule to the Limitation Act, 1963
dealing with suits for recovery of money due on running and current
but non-mutual accounts, in such circumstances, the residual article
viz. Article 113 applies to such suits.
25. Under Article 113, the period for limitation for filing a suit is three
years and the same begins to run when the right to sue would accrue
when claim was denied in response to the legal notice dated
26.06.1985 on 13.07.1985 but since Rs. 7,000/- was paid on
13.07.1985 and 24.07.1985 (Rs. 2,000/- on the former date and Rs.
5,000/- on the latter date), limitation would commence from
24.07.1985. The suit being filed on 02.09.1985, governed for purposes
of limitation by Article 113 the suit would be within limitation.
32. Contrary to it, it has held in case titled XS Infosol Pvt. Ltd. v. GLS
Technologies Pvt. Ltd., 2018 SCC OnLine Del 6601 as under:
6. The subject suit is a suit for services provided by the
appellant/plaintiff and with respect to which the Bill dated 7.11.2012
was raised and last payment under which was made on 13.2.2013. If
the suit was a suit for recovery of price of goods not paid for then the
suit would have been governed by Article 14 of the Limitation Act,
1963 and which provides limitation to be three years from the date of
delivery of goods. The present suit would be governed by Article 113
of the Limitation Act and because there is no Article provided for sale
of services, however, when we have to apply Article 113 of the
Limitation Act in the facts of the present case the same will have to be
on the same principles contained in Article 14 of the Limitation Act
with respect to providing for sale of goods because sale of goods and
services more or less stand on the same footing.
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. 28/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:13:02
+0530
33. In view of comparison of both judgments, it is clear that case titled
XS Infosol Pvt. Ltd. (Supra) is more applicable on the facts of this case,
which has laid down a clear criteria to apply Article 113 according to the
parameters of Article 14 of Schedule of Limitation Act, 1963. The cause of
action in cases of supply of the goods and services shall start from the date
of supply of the goods in terms of Article 14 and Article 113 of the
Limitation Act shall be read in reference of Article 14 and the limitation
shall start from the date of supply of the goods / services. Article 14
provides the limitation of 3 years to recover amount from the date of supply
of the goods, which was during the period from 2017 to 2020. Plaintiff has
served a legal notice dated 12.02.2019 (Ex.PW1/5), which was definitely
after a lot of delay and reply to legal notice by the defendants was
thereafter, due to cause of action cannot be from the date of reply to legal
notice and rather from the date of last payment by the defendants.
34. Ld. Counsel for defendants has argued that this case is based upon
ledger, due to limitation shall start from last payment. It is not disputed if
ledger account has been maintained in regular course of business, then the
limitation shall start from the last payment. Defendants have not pointed
out any deficiency in statement of accounts of the plaintiff and even they
have not taken any such defense, due to it may be considered that statement
of accounts of the plaintiff had been maintained in regular course of
business and the limitation to file this suit shall start from the last payment.
35. Ld. Counsel for plaintiff has further argued that reply to legal notice
Ex.PW1/7 was also acknowledgments of debt in terms of Section 18 of the
Digitally signed
by DEVENDRA
KUMAR
DEVENDRA
CS (Comm) No. 75/2024 Date:
KUMAR
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. 2026.04.27 29/48
16:13:07
+0530
Limitation Act. Law to determine nature of written acknowledgement/ part
payment has been provided under Sections 18 & 19 of Limitation Act,
1963, which are as under:
Section – 18. Effect of acknowledgment in writing.–(1) Where,
before the expiration of the prescribed period for a suit or application
in respect of any property or right, an acknowledgment of liability in
respect of such property or right has been made in writing signed by
the party against whom such property or right is claimed, or by any
person through whom he derives his title or liability, a fresh period of
limitation shall be computed from the time when the acknowledgment
was so signed.
(2) Where the writing containing the acknowledgment is undated, oral
evidence may be given of the time when it was signed; but subject to
the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral
evidence of its contents shall not be received.
Explanation.–For the purposes of this section–
(a) an acknowledgment may be sufficient though it omits to specify
the exact nature of the property or right, or avers that the time for
payment, delivery, performance or enjoyment has not yet come or is
accompanied by a refusal to pay, deliver, perform or permit to enjoy,
or is coupled with a claim to set off, or is addressed to a person other
than a person entitled to the property or right,
(b) the word “signed” means signed either personally or by an agent
duly authorised in this behalf, and
(c) an application for the execution of a decree or order shall not be
deemed to be an application in respect of any property or right.”
&
Section-19. Effect of payment on account of debt or of interest on
legacy.–Where payment on account of a debt or of interest on a
legacy is made before the expiration of the prescribed period by the
person liable to pay the debt or legacy or by his agent duly authorised
in this behalf, a fresh period of limitation shall be computed from the
time when the payment was made:
Provided that, save in the case of payment of interest made before the
1st day of January, 1928, an acknowledgment of the payment appearsDigitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 30/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:13:13
+0530
in the handwriting of, or in a writing signed by, the person making the
payment.
Explanation.–For the purposes of this section–
(a) where mortgaged land is in the possession of the mortgagee, the
receipt of the rent or produce of such land shall be deemed to be a
payment;
(b) “debt” does not include money payable under a decree or order of
a court.”
In view of abovesaid sections, it is clear that written acknowledgment of
debt under section 18 must be in writing and part payment u/s 19 must be
within the period of limitation to extend period of limitation.
36. Section 18 of Limitation Act came into interpretation before Hon’ble
Apex Court in case titled Tilak Ram v. Nathu, 1966 SCC OnLine SC 99
and relevant observations are as under:
8. The section requires (i) an admission or acknowledgment (ii) that
such acknowledgment must be in respect of a liability in respect of a
property or right, (iii) that it must be made before the expiry of the
period of limitation and (iv) that it should be in writing and signed by
the party against whom such property or right is claimed. Under the
Explanation such an acknowledgment need not specify the exact
nature of the property or the right claimed. It is manifest that the
statement relied on must amount to an admission or acknowledgment
and that acknowledgment must be in respect of the property or right
claimed by the party relying on such a statement.
37. Further, in case titled Food Corpn. of India v. Assam State Coop.
Marketing & Consumer Federation Ltd., (2004) 12 SCC 360, it has held
that;
14. According to Section 18 of the Limitation Act, an
acknowledgement of liability made in writing in respect of any right
claimed by the opposite party and signed by the party against whom
such right is claimed made before the expiration of the prescribed
period for a suit in respect of such right has the effect of commencing
Digitally
signed by
DEVENDRA
CS (Comm) No. 75/2024
DEVENDRA KUMAR
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. 31/48
KUMAR Date:
2026.04.27
16:13:17
+0530
a fresh period of limitation from the date on which the
acknowledgement was so signed. It is well settled that to amount to an
acknowledgement of liability within the meaning of Section 18 of the
Limitation Act, it need not be accompanied by a promise to pay either
expressly or even by implication.
15. The statement providing foundation for a plea of
acknowledgement must relate to a present subsisting liability, though
the exact nature or the specific character of the said liability may not
be indicated in words. The words used in the acknowledgement must
indicate the existence of jural relationship between the parties such as
that of debtor and creditor. The intention to attempt such jural
relationship must be apparent. However, such intention can be
inferred by implication from the nature of the admission and need not
be expressed in words. A clear statement containing acknowledgement
of liability can imply the intention to admit jural relationship of debtor
and creditor. Though oral evidence in lieu of or making a departure
from the statement sought to be relied on as acknowledgement is
excluded but surrounding circumstances can always be considered.
Courts generally lean in favour of a liberal construction of such
statements though an acknowledgement shall not be inferred where
there is no admission so as to fasten liability on the maker of the
statement by an involved or far-fetched process of reasoning.
(See Shapoor Freedom Mazda v. Durga Prosad Chamaria [AIR 1961
SC 1236] and Lakshmirattan Cotton Mills Co. Ltd. v. Aluminium
Corpn. of India Ltd. [(1971) 1 SCC 67 : (1971) 2 SCR 623] ) So long
as the statement amounts to an admission, acknowledging the jural
relationship and existence of liability, it is immaterial that the
admission is accompanied by an assertion that nothing would be
found due from the person making the admission or that on an
account being taken something may be found due and payable to the
person making the acknowledgement by the person to whom the
statement is made.
38. Further, in case titled New Mangalore Port Trust v. Clifford D’Souza,
(2025) 5 SCC 577, it has observed that
25. Section 18 of the Limitation Act is very clear that where liability
is acknowledged in respect of any property or right, a fresh limitation
may be computed from the time when the acknowledgment was so
signed. Clause (a) of the Explanation to Section 18 declares that an
acknowledgment would be sufficient for various reasons to be stated
therein, which includes the time for payment has not yet come as one
of the reasons. In the present case this reason squarely applies.
CS (Comm) No. 75/2024 Digitally signed
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. by DEVENDRA 32/48
KUMAR
DEVENDRA
Date:
KUMAR 2026.04.27
16:13:23
+0530
39. Section 19 was also dealt with by Hon’ble Apex Court in case titled
Shapoor Freedom Mazda v. Durga Prasad Chamaria , 1961 SCC OnLine SC
147 and relevant observations are as under:
6. It is thus clear that acknowledgment as prescribed by Section 19
merely renews debt; it does not create a new right of action. It is a
mere acknowledgment of the liability in respect of the right in
question; it need not be accompanied by a promise to pay either
expressly or even by implication. The statement on which a plea of
acknowledgment is based must relate to a present subsisting liability
though the exact nature or the specific character of the said liability
may not be indicated in words. Words used in the acknowledgment
must, however, indicate the existence of jural relationship between the
parties such as that of debtor and creditor, and it must appear that the
statement is made with the intention to admit such jural relationship.
Such intention can be inferred by implication from the nature of the
admission, and need not be expressed in words. If the statement is
fairly clear then the intention to admit jural relationship may be
implied from it. The admission in question need not be express but
must be made in circumstances and in words from which the court can
reasonably infer that the person making the admission intended to
refer to a subsisting liability as at the date of the statement. In
construing words used in the statements made in writing on which a
plea of acknowledgment rests oral evidence has been expressly
excluded but surrounding circumstances can always be considered.
Stated generally courts lean in favour of a liberal construction of such
statements though it does not mean that where no admission is made
one should be inferred, or where a statement was made clearly
without intending to admit the existence of jural relationship such
intention could be fastened on the maker of the statement by an
involved or far-fetched process of reasoning. Broadly stated that is the
effect of the relevant provisions contained in Section 19, and there is
really no substantial difference between the parties as to the true legal
position in this matter.
40. In another case titled Shanti Conductors (P) Ltd. v. Assam SEB ,
(2020) 2 SCC 677, it has further observed that:
16. We may notice the judgment of this Court dealing with Section 20
of the Limitation Act, 1908, which was akin to present Section 19 of
the Limitation Act, 1963. In Sant Lal Mahton v. Kamla Prasad , 1951
Digitally
signed by
DEVENDRA
CS (Comm) No. 75/2024
DEVENDRA KUMAR
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. KUMAR 33/48
Date:
2026.04.27
16:13:28
+0530
SCC 1008, this Court held that for applicability of Section 20 of the
Limitation Act, 1908, two conditions were essential that the payment
must be made within the prescribed period of limitation and it must be
acknowledged by some form of writing either in the handwriting of
the payer himself or signed by him. This Court further held that for
claiming benefit of exemption under Section 20, there has to be
pleading and proof. In paras 9 and 10, the following has been laid
down :
“9. It would be clear, we think, from the language of Section 20,
Limitation Act, that to attract its operations two conditions are
essential: first, the payment must be made within the prescribed period
of limitation and secondly, it must be acknowledged by some form of
writing either in the handwriting of the payer himself or signed by
him. We agree with the Subordinate Judge that it is the payment which
really extends the period of limitation under Section 20, Limitation
Act; but the payment has got to be proved in a particular way and for
reason of policy the legislature insists on a written or signed
acknowledgment as the only proof of payment and excludes oral
testimony. Unless, therefore, there is acknowledgment in the required
form, the payment by itself is of no avail. The Subordinate Judge,
however, is right in holding that while the section requires that the
payment should be made within the period of limitation, it does not
require that the acknowledgment should also be made within that
period. To interpret the proviso in that way would be to import into it
certain words which do not occur there. This is the view taken by
almost all the High Courts in India and to us it seems to be a proper
view to take.
10. … If the plaintiff’s right of action is apparently barred under the
statute of limitation, Order 7 Rule 6, Civil Procedure Code makes it
his duty to state specifically in the plaint the grounds of exemption
allowed by the Limitation Act, upon which he relies to exclude its
operation; and if the plaintiff has got to allege in his plaint the facts
which entitle him to exemption, obviously these facts must be in
existence at or before the time when the plaint is filed; facts which
come into existence after the filing of the plaint cannot be called in aid
to revive a right of action which was dead at the date of the suit. To
claim exemption under Section 20, Limitation Act the plaintiff must
be in a position to allege and prove not only that there was payment of
interest on a debt or part-payment of the principal, but that such
payment had been acknowledged in writing in the manner
contemplated by that section.”
Digitally signed
CS (Comm) No. 75/2024 by DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. KUMAR 34/48
DEVENDRA
Date:
KUMAR 2026.04.27
16:13:33
+0530
41. After going through abovesaid case law, it stands proved that a
written acknowledgment / or part payment must be within the existing
period of limitation and must be a clear acknowledgment of outstanding
debt. In view of abovesaid legal proposition, the contents of reply to legal
notice Ex.PW1/7 would show that the defendants have nowhere
acknowledged their liability to pay outstanding amount. Rather they have
denied any liability to pay amount under the pretext of supply of defective
material. Even e-mails Ex.DW1/10 (colly) have also not proved any such
acknowledgment of debt and have proved supply of material. As such,
there was no written acknowledgment of debt to increase the period of
limitation by reply to legal notice and plea taken by the plaintiff has no
force.
42. Now limitation of this suit has to be seen. Article 14 of the
Limitation Act provides the limitation for 3 years from the date of cause of
action. In this case, this suit is based upon statement of account / ledger Ex.
PWPW1/4, as per which, last payment was made on 20.12.2017 and the
limitation started w.e.f. from 21.12.2017, which continued up to
15.03.2020, when the courts stopped functioning during COVID-19
outbreak and the limitation remained suspended during the period from
15.03.2020 to 28.02.2022 under the direction of Hon’ble Apex Court. As
such, it is necessary to go through judgment dealing with exclusion of
corona period from limitation titled Cognizance for Extension of
Limitation, In re, (2022) 3 SCC 117 as under:
5. Taking into consideration the arguments advanced by the learned
counsel and the impact of the surge of the virus on public health and
adversities faced by litigants in the prevailing conditions, we deem itDigitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA 35/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:13:37
+0530
appropriate to dispose of MA No. 21 of 2022 with the following
directions:
5.1. The order dated 23-3-2020 [Cognizance for Extension of
Limitation, In re, (2020) 19 SCC 10 : (2021) 3 SCC (Cri) 801] is
restored and in continuation of the subsequent orders dated 8-3-2021
[Cognizance for Extension of Limitation, In re, (2021) 5 SCC 452 :
(2021) 3 SCC (Civ) 40 : (2021) 2 SCC (Cri) 615 : (2021) 2 SCC
(L&S) 50] , 27-4-2021 [Cognizance for Extension of Limitation, In re,
(2021) 17 SCC 231 : 2021 SCC OnLine SC 373] and 23-9-2021
[Cognizance for Extension of Limitation, In re, 2021 SCC OnLine SC
947] , it is directed that the period from 15-3-2020 till 28-2-2022 shall
stand excluded for the purposes of limitation as may be prescribed
under any general or special laws in respect of all judicial or quasi-
judicial proceedings.
5.2. Consequently, the balance period of limitation remaining as on 3-
10-2021, if any, shall become available with effect from 1-3-2022.
5.3. In cases where the limitation would have expired during the
period between 15-3-2020 till 28-2-2022, notwithstanding the actual
balance period of limitation remaining, all persons shall have a
limitation period of 90 days from 1-3-2022. In the event the actual
balance period of limitation remaining, with effect from 1-3-2022 is
greater than 90 days, that longer period shall apply.
5.4. It is further clarified that the period from 15-3-2020 till 28-2-
2022 shall also stand excluded in computing the periods prescribed
under Sections 23(4) and 29-A of the Arbitration and Conciliation Act,
1996, Section 12-A of the Commercial Courts Act, 2015 and provisos
(b) and (c) of Section 138 of the Negotiable Instruments Act, 1881
and any other laws, which prescribe period(s) of limitation for
instituting proceedings, outer limits (within which the court or
tribunal can condone delay) and termination of proceedings.
43. In view of abovesaid judgment, it is clear that the limitation to file all
suits / proceedings was halted during corona period and if the period of
limitation was going to expire during corona period, then a balance period
of 90 days was granted to file a litigation. In this case also, the period of
limitation started on 21.12.2017 and was going to expired on 21.12.2020
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
DEVENDRA KUMAR
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. 36/48
KUMAR Date:
2026.04.27
16:13:42
+0530
thereby meaning a balance period of 8 months 6 days left after corona
period till 28.02.2022. The limitation upto 01.11.2022 was available to the
plaintiff, whereas this suit has been filed on 01.03.2024, which is definitely
barred by limitation. As such, the plaintiff has failed to discharge the onus
to prove this issue and issue no.1 is decided in favor of the defendants and
against the plaintiff.
44. Issue No. 2: The onus to prove issue no.2 was fixed upon the
plaintiff. To discharge the onus, the plaintiff has examined PW1 and has
also cross examined DW1. Though the defendants have no defense on
merit for the want of authority of ARs to contest this case, yet the
defendants may rebut admitted case of the plaintiff to dispute territorial
jurisdiction of this court. Plaintiff has made averments regarding territorial
jurisdiction of this court in Paragraph 33 of the plaint as under.
33. That the subject matter of the recovery of debt due falls within the
jurisdiction of this Hon’ble Court. This Hon’ble Court has the
territorial jurisdiction to entertain and try this suit as the plaintiff
company has its registered office at C-53, Shashi Garden Mayur Vihar
Phase-1, Delhi which falls within the territorial jurisdiction of this
Hon’ble Court. Also all the business meetings between the plaintiff
and defendants were held at plaintiff’s registered office and the
payment of the outstanding dues were also received in the Mayur
Vihar branch bank account of the plaintiff. Furthermore, all the
invoices which were raised to the defendant’s company contain a
clause wherein it has been mentioned that “any dispute is subject to
Delhi Jurisdiction only”. The cause of action within the territorial
jurisdiction of this Hon’ble Court. Hence, this Hon’ble Court has
jurisdiction to try and entertain this present case.
45. In view of abovesaid paragraph, it stands proved that the plaintiff
invoked territorial jurisdiction of this court on the basis of its registered
office. However, PW1 has admitted that the corporate office of the plaintiff
Digitally
signed by
DEVENDRA
CS (Comm) No. 75/2024 DEVENDRA KUMAR
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. KUMAR Date: 37/48
2026.04.27
16:13:46
+0530
company is at Noida, UP, wherefrom all marketing operations are also
conducted, and its manufacturing plants are at Noida, Madhya Pradesh,
Uttarakhand and J& K. Plaintiff has local office at Haridwar, Uttarakhand
as mentioned in invoice Ex.PW1/3 (colly). It is also not disputed that the
purchase order Ex.PW1/2 was placed at Noida from address of the
defendant no.1 at Bangalore, Karnataka, whereas the material was supplied
from Haridwar, Uttarakhand to Bangalore, Karnataka through transporter
and transport receipts as well as invoices have duly corroborated it. As
such, no part of cause of action arose at Mayur Vihar, Delhi.
46. However, Ld. counsel for plaintiff has argued that this court has
territorial jurisdiction to entertain this case, as the company has its
registered office at Mayur Vihar, Delhi. The territorial jurisdiction of the
courts on the basis of Registered Office has been dealt with in case titled
Patel Roadways Ltd. v. Prasad Trading Co., (1991) 4 SCC 270 and relevant
observations are as under:
9. Clauses (a) and (b) of Section 20 inter alia refer to a court within
the local limits of whose jurisdiction the defendant inter alia “carries
on business”. Clause (c) on the other hand refers to a court within the
local limits of whose jurisdiction the cause of action wholly or in part
arises. It has not been urged before us on behalf of the appellant that
the cause of action wholly or in part arose in Bombay. Consequently
clause (c) is not attracted to the facts of these cases. What has been
urged with the aid of the Explanation to Section 20 of the Code is that
since the appellant has its principal office in Bombay it shall be
deemed to carry on business at Bombay and consequently the courts
at Bombay will also have jurisdiction. On a plain reading of the
Explanation to Section 20 of the Code we find an apparent fallacy in
the aforesaid argument. The Explanation is in two parts, one before
the word “or” occurring between the words “office in India” and the
word “in respect of” and the other thereafter. The Explanation applies
to a defendant which is a corporation, which term, as seen above,
would include even a company such as the appellant in the instantDigitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA38/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:13:52
+0530
case. The first part of the Explanation applies only to such a
corporation which has its sole or principal office at a particular place.
In that event the courts within whose jurisdiction the sole or principal
office of the defendant is situate will also have jurisdiction inasmuch
as even if the defendant may not be actually carrying on business at
that place, it will “be deemed to carry on business” at that place
because of the fiction created by the Explanation. The latter part of the
Explanation takes care of a case where the defendant does not have a
sole office but has a principal office at one place and has also a
subordinate office at another place. The words “at such place”
occurring at the end of the Explanation and the word “or” referred to
above which is disjunctive clearly suggest that if the case falls within
the latter part of the Explanation it is not the court within whose
jurisdiction the principal office of the defendant is situate but the court
within whose jurisdiction it has a subordinate office which alone shall
have jurisdiction “in respect of any cause of action arising at any
place where it has also a subordinate office”.
10. Here we may point out that the view which we take finds support
from a circumstance which, in our opinion, is relevant. Section 20 of
the Code before its amendment by the Code of Civil Procedure
(Amendment) Act, 1976 had two Explanations being Explanations I
and II. By the Amendment Act Explanation I was omitted and
Explanation II was renumbered as the present Explanation.
Explanation I so omitted read as hereunder:
“Explanation I.– Where a person has a permanent dwelling at one
place and also temporary residence at another place, he shall be
deemed to reside at both places in respect of any cause of action
arising at the place where he has such temporary residence.”
11. This Explanation dealt with the case of place of residence of the
defendant and provided with regard to a person having a permanent
dwelling at one place and also temporary at another place that such
person shall be deemed to reside at both places in respect of any cause
of action arising at the place where he has such temporary residence.
The language used in Explanation II on the other hand which is the
present Explanation was entirely different. Had the intention been that
if a corporation had its principal office at one place and a subordinate
office at another place and the cause of action arose at the place where
it had its subordinate office it shall be deemed to be carrying on
business at both places the language used in Explanation II would
have been identical to that of Explanation I which was dealing with a
case of a person having a permanent dwelling at one place and also
temporary residence at another place. The marked difference in the
language of the two Explanations clearly supports the view which we
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 39/48
KUMAR Date:
2026.04.27
16:14:02
+0530
have taken with regard to the interpretation of the present Explanation
to Section 20 of the Code which was Explanation II earlier as
indicated above.
12. We would also like to add that the interpretation sought to be
placed by the appellant on the provision in question renders the
Explanation totally redundant. If the intention of the legislature was,
as is said on their behalf, that a suit against a corporation could be
instituted either at the place of its sole or principal office (whether or
not the corporation carries on business at that place) or at any other
place where the cause of action arises, the provisions of clauses (a),
(b) and (c) together with the first part of the Explanation would have
completely achieved the purpose. Indeed the effect would have been
wider. The suit could have been instituted at the place of the principal
office because of the situation of such office (whether or not any
actual business was carried on there). Alternatively, a suit could have
been instituted at the place where the cause of action arose under
clause (c) (irrespective of whether the corporation had a subordinate
office in such place or not). This was, therefore, not the purpose of the
Explanation. The Explanation is really an Explanation to clause (a). It
is in the nature of a clarification on the scope of clause (a) viz. as to
where the corporation can be said to carry on business. This, it is
clarified, will be the place where the principal office is situated
(whether or not any business actually is carried on there) or the place
where a business is carried on giving rise to a cause of action (even
though the principal office of the corporation is not located there) so
long as there is a subordinate office of the corporation situated at such
place. The linking together of the place where the cause of action
arises with the place where a subordinate office is located clearly
shows that the intention of the legislature was that, in the case of a
corporation, for the purposes of clause (a), the location of the
subordinate office, within the local limits of which a cause of action
arises, is to be the relevant place for the filing of a suit and not the
principal place of business. If the intention was that the location of the
sole or principal office as well as the location of the subordinate office
(within the limits of which a cause of action arises) are to be deemed
to be places where the corporation is deemed to be carrying on
business, the disjunctive “or” will not be there. Instead, the second
part of the Explanation would have read “and, in respect of any cause
of action arising at any place where it has a subordinate office, also at
such place”.
13. As far as we can see the interpretation which we have placed on
this section does not create any practical or undue difficulties or
disadvantage either to the plaintiff or a defendant corporation. It is
CS (Comm) No. 75/2024 Digitally
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. signed by 40/48
DEVENDRA
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:14:06
+0530
true that, normally, under clauses (a) to (c), the plaintiff has a choice
of forum and cannot be compelled to go to the place of residence or
business of the corporation and can file a suit at a place where the
cause of action arises. If a corporation desires to be protected from
being dragged into litigation at some place merely because a cause of
action arises there it can save itself from such a situation by an
exclusion clause as has been done in the present case. The clear
intendment of the Explanation, however, is that, where the corporation
has a subordinate office in the place where the cause of action arises,
it cannot be heard to say that it cannot be sued there because it does
not carry on business at that place. It would be a great hardship if, in
spite of the corporation having a subordinate office at the place where
the cause of action arises (with which in all probability the plaintiff
has had dealings), such plaintiff is to be compelled to travel to the
place where the corporation has its principal place. That place should
be convenient to the plaintiff; and since the corporation has an office
at such place, it will also be under no disadvantage. Thus the
Explanation provides an alternative locus for the corporation’s place
of business, not an additional one.
14. There may be only one extraordinary situation in which this
interpretation may cause an apparent anomaly. This is where the
plaintiff has also his/its place of business at the same place as the
corporation but the cause of action has arisen at some other place. The
above interpretation would preclude him from filing a suit in that
place of business common to both parties and compel him to go to a
court having jurisdiction over the place where the cause of action has
arisen. But this is not really a hardship because such plaintiff must
have had some nexus or connection with the place since some part of
the cause of action had arisen there; if he can have dealings with the
corporation at such a place giving rise to the cause of action, there is
no reason why he should find it disadvantageous or difficult to file a
suit at such place. Equally, the corporation, having a subordinate
office at the place, will suffer no disadvantage.
In view of abovesaid judgment, it stands proved that the territorial
jurisdiction of the court cannot be considered on the basis of Registered
Office, until and unless some part of cause of action also arose there in
terms of section 20 of CPC. However, in this case, no other part of cause of
action arose at Delhi, due to this court has no territorial jurisdiction on the
Digitally
CS (Comm) No. 75/2024 signed by
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA41/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:14:11
+0530
basis of registered office of the plaintiff.
47. Next plea taken by the plaintiff is that all business meetings between
the parties took place at registered office of the plaintiff, due to a partly
cause of action arose at Delhi. However, Hon’ble High Court of Delhi has
held in case titled Jain Irrigation Systems Vs. Pragyawan Technolgies Pvt.
Ltd, 2024 SCC online 6514 that pre-contract negotiations cannot form part
of cause of action and no jurisdiction may be conferred upon the court,
until and unless those negotiations were part of contract, which is not in
this case. (Para 33). Accordingly, on the basis of such averments, this court
has no territorial jurisdiction to entertain this case. It is pertinent to mention
here that PW1 has deposed that the material supplied to the defendants was
manufactured at Haridwar, Uttarakhand and all marketing operations were
being carried out at Noida, UP, then there was no cause of action at Delhi.
Even transport receipts by which the material was supplied have also
corroborated that the material was supplied from Uttarakhand to Bangalore,
Karnataka.
48. Next argument led by Ld. Counsel for plaintiff is that this court has
territorial jurisdiction as payment was received by the plaintiff in its bank
account at Mayur Vihar, Delhi. Even all invoices were raised from the same
address. Admittedly, the purchase order Ex.PW1/2 has proved that it was
placed on the plaintiff at Noida, UP, whereas invoices were issued from
Haridwar, Uttarakhand to Bangalore, Karnataka. As such, none of the
invoices has proved that invoices were raised from Delhi.
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 42/48
KUMAR Date:
2026.04.27
16:14:15
+0530
49. So far as part payment to the plaintiff by the defendants is concerned,
no place of payment was agreed by the parties in purchase order Ex.PW1/2
or invoices Ex.PW1/3 (colly). The place of payment may create a partly
cause of action if place of payment is agreed by the parties at a particular
place as held in Auto Movers V/s. Luminous Power Technologies Private
Limited, 2021 SCC Online Del 4387, as per which, the court may have
jurisdiction where payment was agreed between the parties. However, there
was no agreed place of payment in this case and merely mentioning that
payments by A/c Payee Cheques / DD in favor of Montage Enterprises
Private Ltd. in invoices cannot be agreed place of payments. As such, this
court has no territorial jurisdiction to entertain this case.
50. Further, Ld. Counsel for plaintiff has argued that both the parties
agreed for territorial jurisdiction of Delhi Courts, due to this court has
territorial jurisdiction to entertain this suit and suit is liable to be decreed.
On the other hand, Ld. Counsel of defendants has opposed the submission
and has argued that parties cannot confer territorial jurisdiction upon a
court through agreement, if no part of cause of action arose there, due to
this court has no territorial jurisdiction to entertain this case and this suit is
liable to be dismissed for the want of territorial jurisdiction.
51. Admittedly, it is settled proposition of law that both the parties
cannot confer territorial jurisdiction upon a particular court which
otherwise has no jurisdiction. The Hon’ble Apex Court has held in case
titled A.B.C Laminart Pvt. Ltd. and Another Vs. A.P. Agencies, Salem (1989) 2
SCC 163 that if both the parties have two different jurisdictions of two
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 43/48
KUMAR Date:
2026.04.27
16:14:20
+0530
different courts, then they may choose a particular place of jurisdiction by
agreement but they cannot choose any exclusive jurisdiction of a place to
adjudicate their disputes. In view of this judgment, both the parties are not
free to select territorial jurisdiction by any court so jurisdiction cannot be
determined on the basis of exclusive clause of jurisdiction in agreement /
invoices/ purchase order. As such, no part of cause of action arose at Delhi
and the plaintiff has failed to discharge the onus to prove issue no.2 and
this issue is decided in favor of the defendants and against the plaintiff.
52. Issues No. 3 and 4: The onus to prove both the issues was put upon
the plaintiff and to discharge the onus, the plaintiff has examined PW1 and
has also cross examined DW1. PW1 has deposed that the plaintiff is
engaged in the production of flexible packaging material and the defendant
no.1 placed purchase order Ex.PW1/1 and material was supplied against
invoices Ex.PW1/3 (colly). It is further deposed that the plaintiff
maintained running ledger accounts of the defendant and all payments were
entered into said accounts Ex. PW1/4. It is further deposed that the material
was supplied to the defendant no.1 as per design and description approved
by the defendant no. 2. It is further proved that the defendant no. 1 failed to
pay amount of material and when the plaintiff raised issue of payment, the
defendant no.1 raised a debit note thereby stating that the material was
defective and still lying in its godown. DW1 has proved statement of
accounts Ex.DW1/9 to counter the case of the plaintiff. As such, the
defendants have pleaded that the material supplied by the plaintiff was
defective and was also declined earlier by the defendant no.2 for
misprinting but still the plaintiff supplied citing space crunch and later on
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd.DEVENDRA KUMAR 44/48
KUMAR Date:
2026.04.27
16:14:26
+0530
claimed its amount.
53. Ld. Counsel for defendants have argued that the plaintiff is not
entitled for any recovery, as the material supplied by the plaintiff was
defective and was lying in the godown of the defendant no.1 and was not
lifted despite specific communication to left. However, it is not disputed
that the material was not returned to the plaintiff and stated to be lying in
godown, whereas subsequently godown and assets of the defendant no.1
were taken over by Canara Bank under SARFAESI, Act thereby meaning
that the material was considered as assets of the defendant no.1 and was
part of valuation of assets of Rs. 17,52,10,000/- as reflected in statement
Ex.DW1/15.
54. Admittedly, the material was supplied by the plaintiff and was duly
received by the defendant no.1 despite delay of 32 days in supply of
material without any objection but no payment made. Since the material
was accepted by the defendant no.1 despite delay on 02.07.2017,
accordingly the defendant no.1 cannot object supply or payment on this
ground of delay. Even there is no evidence on record that the material was
defective and merely communication between the defendants could not
prove it. No doubt the defendants communicated the plaintiff about lifting
of material from the spot but still they did not bother to return it and merely
raised debit note. If the material was not returned and merely debit note
was issued, then the defendants cannot escape of their liability to pay due
amount. So far as issuance of debit note is concerned, DW1 has admitted
that debit note was dispatched through post but no proof of delivery of such
Digitally
signed by
DEVENDRA
CS (Comm) No. 75/2024
DEVENDRA KUMAR
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. KUMAR 45/48
Date:
2026.04.27
16:14:30
+0530
debit note has been proved on record. In fact, issuance of debit note is
routine process in commercial field but it must be proved coupled with
genuine purpose, which is not proved in this case. As such, the defendants
shall be liable to pay amount of the supply of material.
55. So for as privity of contract between the defendant no.2 and plaintiff
is concerned, the defendant no.2 has pleaded that there was no privity of
contract between the parties. Admittedly, purchase order Ex.PW1/1 was
placed by the defendant no.1, though for and on behalf of the defendant
no.2 and under its approval, yet merely approval of the product by the
defendant no.2 does not make the defendant no.2 liable to pay amount of
the plaintiff. In fact, there were direct business relations between the
defendant no.1 and the plaintiff and the material was supplied by the
plaintiff to the defendant no.1 and there was no privity of contract between
the plaintiff and the defendant no.2 to pay outstanding amount. Ld. Counsel
for plaintiff has argued that the defendant no.2 also paid amount to the
plaintiff directly as reflected in ledger of the plaintiff, but merely making
payment directly to the plaintiff by the defendant no.2 without placing any
work order shall be considered to be made on behalf of the defendant no.1
only. As such, the defendant no.1 and the plaintiff had not privity of
contract to make the defendant no.2 liable to pay this amount.
56. In fact, the plaintiff supplied the material to the defendant no.1 and
the defendant no.1 communicated to the plaintiff repeatedly that the
material was defective but still the defendant no.1 failed to return defective
material and merely issuing of debit not could not save from liability to pay
Digitally
CS (Comm) No. 75/2024 signed by
DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. 46/48
DEVENDRA KUMAR
KUMAR Date:
2026.04.27
16:14:34
+0530
the amount, especially when the material has been taken over by the bank
and considered assets of the defendant no.1. As such, the plaintiff has
proved that it is entitled for recovery of suit amount.
57. So far as interest against outstanding amount is concerned, the
transaction between the parties was commercial in nature and commercial
transactions definitely carry interest against outstanding amount. Purchase
order Ex.PW1/2 and invoices Ex.PW1/3 (colly) have no interest clause due
to there was no contract for agreed rate of interest, due to the plaintiff shall
be entitled for normal interest against outstanding amount. As such, the
plaintiff has discharged the onus to prove both the issues and both issues
no.3 & 4 are decided in favour of the plaintiff and against the defendants.
58. Relief : Plaintiff has discharged the onus to prove issues no. 3 & 4
but has failed to discharge the onus to prove issues no. 1 & 2. I have
already observed that the claim of the plaintiff is barred by limitation and
even this court also has no territorial jurisdiction to entertain this suit.
Normally, if the court comes to conclusion that the court has no territorial
jurisdiction to entertain a suit, the plaint has to be returned under Order 7
Rule 10 of CPC to present the same before the court of appropriate
territorial jurisdiction. However, in this case, this suit is also barred by
limitation and Section 3 of Limitation Act cast a duty upon the court to
dismiss such suit. The purpose of return of a plaint is to enable the plaintiff
to present the suit again to seek similar remedy before the court of
appropriate territorial jurisdiction, whereas if suit is barred by limitation,
then such remedy also extinguish and no purpose shall serve by return of
Digitally
signed by
CS (Comm) No. 75/2024 DEVENDRA
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. DEVENDRA KUMAR 47/48
KUMAR Date:
2026.04.27
16:14:40
+0530
the suit. Accordingly, the suit shall be dismissed. As such, the plaintiff has
failed to prove that it is entitled for relief, hence suit is hereby dismissed.
No such order of cost. Decree sheet be prepared.
Digitally signed
by DEVENDRA
59. File be consigned to Record Room. KUMAR
DEVENDRA
Date:
KUMAR 2026.04.27
16:14:45
+0530
ANNOUNCED IN OPEN COURT (DEVENDER KUMAR)
th
ON 27 day of April, 2026 District Judge (Commercial Court-01)
East District
Karkardooma Courts, Delhi
CS (Comm) No. 75/2024
Montage Enterprises Pvt. Ltd. Vs. Shree Anjaneya Agro Tech Pvt. Ltd. 48/48
