Delhi District Court
Naresh Kumar Goyal vs Mansha Active Private Limited Through … on 6 February, 2026
IN THE COURT OF SH. NARESH KUMAR MALHOTRA :
DISTRICT JUDGE (COMMERCIAL)-06
TIS HAZARI COURTS, WEST: DELHI
CS (COMM) No. 163/2024
CNR No. DLWT010012562024
06.02.2026
Naresh Goyal,
Proprietor of M/s. NKG Creations,
Through GPA Holder, Piyush Kanti Dey,
R/o C-6A-99A, Janakpuri,
New Delhi-110058.
.....Plaintiff
Vs.
1. Mansha Active Private Limited,
Through Director
2. Manoj Dua,
Managing Director,
Mansha Active Private Limited,
All At:-
1. WH 100, Second Floor,
Mayapuri Industrial Area,
Phase-1, New Delhi-110064.
2. Office: B-18, Block B,
Industrial Area, Phase-I,
Mayapuri, New Delhi-110064
3. Opposite Deepa Petrol Pump (Indian Oil)
Tauru Bu Pass, Tauru Gurgaon,
Haryana-122015.
....Defendants.
Date of filing : 14.02.2024
Date of arguments : 05.02.2026
Date of judgment : 06.02.2026
CS (Comm.) No. 163/2024 -1-
COMMERCIAL SUIT FOR RECOVERY OF Rs. 1,00,00,000/-
ALONGWITH FUTURE PENDENT LITE INTEREST.
JUDGMENT:
1. Vide this judgment, I am deciding the suit for recovery of
Rs. 1,00,00,000/- along with future pendent-lite interest filed by
the plaintiff against the defendants.
2. In the plaint, it is mentioned that the plaintiff is proprietor
and engaged in the business of distribution of garments and
apparel under the business style name M/s. NKG Creations @
“NKGC” and duly registered under the Goods and Services Tax
(GST). The defendant no. 1 is a private limited company,
incorporated & registered under the Company Act having
registered office at WH-100 GF Phase-I, Mayapuri, Rewari Line
New Delhi, West Delhi-110064. The defendant no. 2 is the
Director of the defendant no. 1 and looking after day to day affairs
of defendant no. 1 company. The defendant no. 1 deals in the
importing, manufacturing, trading and supplying of sportswear.
The defendant no. 2 approached the plaintiff for the distributorship
of sportswear/Sprandi products. Defendant no. 2 executed Sprandi
Exclusive Distribution Agreement dated 25.01.2017. The
defendants started business dealings with the plaintiff. During
business dealings, various invoices were issued to the defendants
as per ledger account maintained by the plaintiff. It is mentioned
that in the year 2019, the plaintiff and the defendants decided to
discontinue and terminated the aforesaid contract/agreement
dated 25.01.2017. At that time there was stock worth Rs.
1,08,25,183/- (including investment in stock) lying with the
CS (Comm.) No. 163/2024 -2-
plaintiff. As per the terms and conditions as agreed on 03.02.2019,
the plaintiff returned the stock to the defendants. The defendants
also verified the stock physically and also confirmed the same by
sending email dated 25.02.2019. It is mentioned that the
defendants as per the agreed terms and conditions of the “Sprandi
Exclusive Distribution Agreement” dated 25.01.2017 issued 15
post dated cheques in July, 2021 of ICICI bank account no.
181805000342, Mayapuri, Phase-I, New Delhi-110064, of
different dates with the assurances and promises that cheques will
be encashed on their presentation. The details of the cheques are
as under:-
S. No. Cheque No. Amount (In Rs) Date 1 001663 10,00,000 13.07.2021 2 001664 10,00,000 15.07.2021 3 001665 10,00,000 17.07.2021 4 001666 10,00,000 19.07.2021 5 001667 10,00,000 21.07.2021 6 001670 5,00,000 23.07.2021 7 001671 5,00,000 26.07.2021 8 001672 5,00,000 28.07.2021 9 001673 5,00,000 30.07.2021 10 001675 5,00,000 03.08.2021 11 001676 5,00,000 03.08.2021 12 001677 5,00,000 06.08.2021 13 001678 5,00,000 07.08.2021 14 001679 5,00,000 10.08.2021 15 001680 5,00,000 10.08.2021
On the assurance of the defendant no. 2, the plaintiff
presented the cheques but all the cheques were dishonoured on
their presentation to the bank on 16.08.2021 with the remarks
“Fund Insufficient”. Thereafter, plaintiff approached the
defendants several times but they started avoiding the plaintiff.
The plaintiff sent legal demand notice to the defendants through
his counsel. The notice was duly served but the defendants failed
CS (Comm.) No. 163/2024 -3-
to make any payment. As per the plaintiff, the defendants are
jointly and severally liable to make the payment of cheques
amount of Rs. 1 crore. The plaintiff has filed complaint No.
23080/2021 u/s 138 NI Act which is pending adjudication.
Plaintiff has approached Ld. Secretary, DLSA (West) but
defendants did not appear and non-starter report was issued. It is
prayed by the plaintiff to pass a decree of Rs. 1,00,00,000/- in his
favour and against the defendants. Plaintiff has also claimed
interest @ 18% per annum from the date of filing of suit till
realization.
3. The defendants have filed written statement taking
preliminary objections that present suit has been filed to harass the
defendants. In preliminary objections, it is mentioned that Mr.
Piyush Kanti Dey is not authorized by the plaintiff to file the
present suit. The plaintiff has not complied with the mandatory
provisions of Commercial Court Act in filing the present suit.
Plaintiff has fabricated the ledger account of defendant no. 1 in his
books of account for the period from 01.04.2017 to 03.02.2019 as
well as agreement dated 25.01.2017. As per the defendants, if the
agreement was executed between the parties then why the plaintiff
has remitted the payment to the defendant no. 1 after one year of
the date of execution of agreement. The agreement was never
executed between the parties. A draft agreement was given by the
defendants to the plaintiff and after reading the terms of the
agreement, the plaintiff was not in a position to adhere the clause
no. 3.6 of the agreement. Accordingly goods were supplied to the
plaintiff by the defendant no. 1. The plaintiff has filed fabricated
statement/ledger account in criminal complaint u/s 138 of NI Act
CS (Comm.) No. 163/2024 -4-
wherein, plaintiff has fabricated entries to the tune of Rs.
44,06,348/- to inflate the outstanding amount of Rs. 1,03,58,448/-
against the defendant no. 1. The suit is based on forged and
fabricated documents. The suit is bad for mis-joinder/non-joinder
of necessary parties as defendant no. 2 cannot be personally liable
for the business transactions being director of the defendant no. 1.
It is mentioned that defendant no. 2 is only one of the Directors
and admittedly no personal guarantee/indemnification deed in
respect of the transactions with the defendant no. 1 have been
signed or executed between the plaintiff and the defendant no. 2.
The defendant no. 1 is a private limited company and separate
legal entity. It is mentioned that in absence of any allegations of
fraud or misrepresentation, Directors cannot be held personally
liable. The suit is not maintainable against the the defendant no. 2
in personal capacity against the transactions with the defendant
no. 1. The plaintiff has committed forgery with this court as notice
was not served upon the defendants. It is mentioned that plaintiff
is very much aware that defendants had left both the rented
premises i.e. WH-100, SF & B-18, Block-B, Mayapuri Industrial
Area, Phase-I, New Delhi and shifted to B-74, Mayapuri Industrial
Area, Phase-I, New Delhi-64. The plaintiff has deliberately did
not file on record the complaint and all the documents attached
with the complaint to mislead this Court. The present suit is barred
by limitation and instituted after the expiry of period of three years
from the last invoice i.e. 03.02.2019. The cheques in question are
security cheques given in the year 2017 and this fact is apparent
from the para no. 8 of the complaint filed by the plaintiff u/s 138
of NI Act. The plaintiff has not approached the court with clean
hands and suppressed the material facts. The defendant no. 1 is a
CS (Comm.) No. 163/2024 -5-
Distribution House for any kind of products manufactured by
“Sprandi” and they do not deal in Retail Sales in Delhi, so the
question of purchasing of the garments from the plaintiff does not
arise. The ledger account of the plaintiff maintained by the
defendants shows that defendant no. 1 is selling the goods to the
plaintiff. It is mentioned defendants reserved right to file counter
claim against the plaintiff. The plaintiff wants to stop business
dealings with the defendant. The plaintiff returned stock/material
worth Rs. 1,08,25,183/- which was inadvertently booked in
separate ledger by the accountant of the defendant by opening new
ledger account NKGC purchase account. This mistake came to the
knowledge of the defendants during Audit conducted by statutory
auditors Yogesh Bangia & Co. and this mistake was rectified vide
report dated 02.09.2023 as per accounting principles. As per the
defendants, a sum of Rs. 13,13,131/- is outstanding as creditor in
the books of accounts of defendant no. 1 towards the plaintiff as
on August, 2021 instead of Rs. 1,00,00,000/- as alleged by the
plaintiff. The plaintiff was unable to make the payment of Rs.
85,35,326/-. It was decided that the plaintiff will return the unsold
goods to the defendant no. 1 to the tune of Rs. 1,08,25,183/- and
after sale of the goods by the defendant no. 1 in the open market,
they will pay the balance amount of Rs. 22,89,857/- to the plaintiff.
The defendants sold the returned goods in open market and a sum
of Rs. 16,00,000/- was paid back to the plaintiff. After adjustment
of this amount a sum of Rs. 13,13,131/- worth of the returned
goods is still lying with the defendant no. 1. The plaintiff without
intimation presented the security cheques. The security cheques
were given to the plaintiff in 2018 by the defendant no. 1, at the
initial stage after advancement of the payments by the plaintiff
CS (Comm.) No. 163/2024 -6-
towards purchase orders for the Sprandi Sports garments. The
defendant no. 1 was not in a position to deliver the Sprindi Sports
garments despite receipt of advance amount till second week of
March, 2018, due to some shipment problem from Sprandi
warehouse. The present suit is liable to be dismissed under the
provisions of Order VII Rule 11 CPC. Plaintiff is not entitled to
any interest @ 18% per annum as no contract regarding interest
was executed between the parties.
In preliminary submissions, it is mentioned that defendants
have vacated both the premises i.e. WH-100 Second Floor,
Mayapuri Industrial Area, Phase-I, New Delhi & B-18, Mayapuri
Industrial Area, Phase-I, New Delhi in May, 2019 and shifted to
B-74, First Floor, Mayapuri Industrial Area, New Delhi. It is
mentioned that the unsold stock of Rs. 1,08,25,183/- was returned
back to the defendant no. 1 with the mutual understanding that
firstly the outstanding of Rs. 85,35,326/- against the plaintiff will
be adjusted and the remaining balance of Rs. 22,89,857/- will be
paid back to the plaintiff as and when unsold goods were sold in
open market by the defendant no. 1. It was also decided between
the plaintiff and defendant no. 1 that said stock will be returned
back to the defendant no. 1 through Debit Note. The plaintiff has
returned the unsold stock through generation of E-way bill and
further raised bills and due to which unnecessary GST was levied
on the returned stock. The plaintiff returned the stock/material
worth of Rs. 1,08,25,183/-, which was inadvertently booked in
separate ledger by the accountant of defendant no. 1 by opening
new ledger account.
In reply on merits, it is admitted that the plaintiff is a
proprietor of M/s. NKG Creations and registered under GST Act.
CS (Comm.) No. 163/2024 -7-
It is admitted that defendant no. 1 is a private limited company
incorporated and registered under the Company Act. It is
mentioned that registered office of defendant no. 1 has been
shifted. It is mentioned that no agreement was executed between
the parties. As per the defendants, agreement dated 25.01.2017 is
forged and fabricated. The final summary as on date in respect of
unsold goods lying with the defendant no. 1 is as under:-
S. Particulars Amount
No.
1. As per Para No. 6 of the suit goods were returned by 1,08,25,183
the plaintiff to the defendant.
2. Less outstanding in the books of account of the -85,35,326
defendant no. 1 in name of plaintiff as on 31.03.2019
(Annexure- D5)
3. Balance in INR 22,89,857
4. Less thrice the RTGS in tune of Rs. 11,00,000/- on -16,00,000
23.10.2020, Rs. 3,00,000/- on 05.02.2021 & Rs.
2,00,000/- on 19.08.2021 (Annexure-D6)
5. Balance in INR (serial-3 minus 4) 6,89,857
The ledger account is forged and fabricated. No amount of
Rs. 1 crore is due towards the plaintiff. The cheques were given as
security. It is admitted that a sum of Rs. 6,89,857/- is due and
payable to the plaintiff. Dismissal of suit is prayed by the
defendants.
4. The plaintiff has filed replication and controverted the
allegations made in the written statement and further reaffirmed
the averments made in the plaint.
5. On the basis of pleadings of the parties, following issues
were framed by this court on 14.11.2024, which are as under:-
(i) Whether the present suit is filed by duly authorized
person ? (OPP)CS (Comm.) No. 163/2024 -8-
(ii) Whether the suit of the plaintiff is within limitation ?
(OPP)
(iii) Whether the present suit is bad for mis-joinder and
non-joinder of necessary party ? (OPD)
(iv) Whether the plaintiff is entitled for recovery of Rs.
1,00,00,000/- from the defendants, as prayed ? (OPP)
(v) Whether the plaintiff is entitled to the interest on the
amount of Rs. 1,00,00,000/-, if yes then at what rate and
for what period ? (OPP)
(vi) Relief.
6. In evidence plaintiff has examined Sh. Piyush Kanti Dey
S/o sh. Krishnapada Dey, AR/ GPA holder of plaintiff as PW-1.
This witness has filed affidavit on the lines of plaint. This witness
has proved GST Registration certificate of the plaintiff and GST
forms and invoices as Ex. PW1/1 (colly ), Certified copy of GPA
as Ex. PW1/2 (colly), copy of current company details
downloaded from the website Zaubacorp.com and MCA as Ex.
PW1/3 (colly), Copy of agreement of distributorship dated
25.01.2017 as Ex. PW1/4 (colly), Certified Copy of bank
statement showing Rs. One Crore transaction being credited to the
account of defendant as Ex. PW1/5 (colly), Certified copies of
Invoices as Ex. PW1/6 (colly), Certified Copy of e-way bills as Ex.
PW1/7 (colly), Copy of email communications dated 25.02.2019
along with attached summary of return goods of NKGC as Ex.
PW1/8 (colly), Certified copies of fifteen post dated cheques as
Ex. PW1/9 (colly), Certified Copy of bank return memos as Ex.
PW1/10 (colly), Copy of email communications dated 20.08.2021
as Ex. PW1/11 (colly), Certified Copy of legal notice dated
CS (Comm.) No. 163/2024 -9-
28.08.2021 as Ex. PW1/12, Certified Copy of speed post receipt
dated 01.09.2021 as Ex. PW1/13, Certified Copy of tracking report
of speed post as Ex.PW1/14, Certified Copy of DHL receipt
dated 28.08.2021 as Ex. PW1/15 (colly), Certified Copy of
tracking report of DHL as Ex. PW1/16 (colly), Legal notice sent
to the defendant through email by the counsel as Ex. PW1/17,
certified copy of returned envelope of speed post of the legal
notice as Ex. PW1/18, copy of Non Starter Report Ex. PW1/19,
Email communications personal and official IDs between plaintiff
and defendants dated 26.11.2018, 24.01.2019, 25.02.2019,
11.04.2019, 11.08.2021, the email dated 25.02.2019 sent by the
plaintiff along with the attached file of summary of returned goods
NKGC, email dated 25.09.2020 showing the balance amount due
upon the defendant of Rs. 1,03,58,449/- along with other demands
as Ex. PW1/20 (colly), Copy of bank statement of plaintiff of Yes
Bank Limited for October 2020 as Ex. PW1/21 (colly), Reply to
the application U/s 143A of NI Act filed by the defendant in
connected case of 138 NI Act which is Ex. P-1, Certificates U/s
65-B of Indian Evidence Act as Ex. PW1/23 to Ex. PW1/28.
This witness is duly cross examined by Ld. Counsel for
defendants. In cross examination, this witness has stated that he is
graduate. He is working as a Manager with the plaintiff firm. This
witness has stated that as far as his knowledge is concerned the
plaintiff is only running this Proprietorship firm i.e. NKG
Creations. This witness has stated that in January 2017, he was
Manager with the plaintiff and looking after all the affairs of his
firm. This witness has stated that in the January 2017, he was
residing at D-2/70A, Jeewan Park, Uttam Nagar, Delhi. This
witness has admitted that he is not residing at C-6A-99A,
CS (Comm.) No. 163/2024 -10-
Janakpuri, Delhi. This witness has stated that he had purchased the
stamp paper of Ex. PW-1/2 on behalf of the plaintiff. He has
admitted that in Ex. PW-1/2 the residential address of Naresh
Goyal i.e. plaintiff is mentioned. He has admitted that his address
is not mentioned in Ex. PW-1/2. This witness has stated that he
had got prepared Ex. PW-1/2. He has stated that the plaintiff has
conveyed him to prepare Ex. PW-1/2. This witness has stated that
he and the plaintiff were sitting together at the time of execution
of Ex. PW-1/2. This witness has stated that firstly, he had signed
Ex. PW-1/2 and thereafter, plaintiff has signed the same at Notary
office. This witness has admitted that Ex. PW-1/4 was signed by
the defendant as well as plaintiff at the premises of defendant. This
witness has admitted that he has not signed as a witness on Ex.
PW-1/4. This witness has voluntarily stated that he was present
there and nobody asked him to sign this document. He has stated
that the plaintiff has sent the email regarding termination of Ex.
PW-1/4. The witness after seeing the file submits that email is
already on record which is Ex. PW-1/11. This witness has
voluntarily stated that prior to sending this email, the plaintiff has
verbally terminated the Ex. PW-1/4. He has admitted that Ex. P-3
is the invoice in respect of goods/material supplied by the
defendant to the plaintiff. He has stated that on 03.02.2019 when
the material was returned by the plaintiff to the defendant the
outstanding amount due towards the defendant was approximate
Rs. 1,03,00,000/- (Rs. One crore three lacs only). This witness has
stated that he cannot tell the exact amount of the material supplied
by the defendant to the plaintiff during the period 2018-2019. This
witness has stated that he cannot admit or deny if the defendant
had supplied the material amounting to Rs. 2,10,07,927/- to the
CS (Comm.) No. 163/2024 -11-
plaintiff from the period 21.03.2018 to 17.11.2018. He has stated
that Ex. D-1 is the same document which was filed by the plaintiff
in the proceedings u/s 138 of NI Act at Dwarka Courts. This
witness has stated that the defendant has instructed the plaintiff to
deliver the material/ goods to Golden Hut Resorts and DM
Enterprises and payments of these amounts were received by the
defendant. So these amount is shown in the statement of account
of the defendant. He has admitted that the plaintiff has sold
material/goods to Kash N Kare for a sum of Rs. 1,57,773/-, Shiv
Shakti Collections for a sum of Rs. 22,30,195/- and Vaani &
Kashbi Enterprises for a sum of Rs. 1,12,595/- & Rs. 10,95,875/-.
He has voluntarily stated that the goods were sold to these
companies at the asking of the defendant. This witness has
admitted that he had not placed on record any document to show
that the defendant has asked the plaintiff to sold the goods to the
above mentioned companies. This witness has stated that he
cannot say if the defendant has to receive a payment of Rs.
90,07,927/- from the plaintiff as on November 2018. This witness
has voluntarily stated that the plaintiff has returned the material
amounting to Rs. One Crore eight lacs approximately. He has
admitted that in October, 2020 the defendant had made the
payment of Rs. 11 lacs through RTGS in the account of the
plaintiff. He has voluntarily stated that this payment was received
by the plaintiff as a profit of guarantee in the personal account of
the plaintiff
7. Plaintiff has examined Ms. Kritika, Branch Head of Bank
of Baroda, Tilak Nagar Branch, Delhi as PW-2. This witness has
proved certified copy of bank statement of account bearing
CS (Comm.) No. 163/2024 -12-
number 32200200000506 in the name of M/s. Mansha Active
Private Limited for the period 07.07.2020 to 31.08.2021 as Ex.
PW-2/1 (colly). This witness is duly cross examined by Ld.
Counsel for defendants. In cross examination, this witness has
stated that she has no personal knowledge about the ongoing
litigation between M/s. Mansha Active Pvt. Ltd. & Mr. Naresh
Goyal. This witness has stated that there is entry dted 23.10.2020
in Ex. PW-2/1 at point-A and this entry is debit entry in the name
of Mr. Naresh Kumar Goyal of Rs. 11,00,000/- by way of RTGS.
This witness has stated that entry dated 05.02.2021 in Ex. PW-2/1
at point-B in this entry is a debit entry in the name of Mr. Naresh
Goyal of Rs. 3,00,000/- by way of RTGS. This witness has also
stated that entry dated 19.08.2021 in Ex. PW-2/1 at point-C of Rs.
2,00,000/- by way of NEFT to Mr. Naresh Goyal.
8. Plaintiff has also examined Mr. Jivanshu Pratap Singh,
Manager, ICICI Bank, Mayapuri Branch, Delhi as PW-3. This
witness has proved certified copy of bank statement of account
bearing number 181805000342 in the name of Mansha Active
Private Limited for the period 01.01.2018 to 31.03.2021 as Ex.
PW-3/1 (colly). This witness is duly cross examined by Ld.
Counsel for defendants. In cross examination, this witness has
stated that he has no personal knowledge about the ongoing
litigation between Naresh Kumar Goyal and M/s. Mansha Active
Private Limited. He has admitted that there is no entry after
31.03.2021 as per Ex. PW-3/1.
9. Plaintiff has examined Mr. Surender Kumar, Lower
Division Clerk, Ministry of Corporate Affairs as PW-4. This
CS (Comm.) No. 163/2024 -13-
witness has proved the Master Data of Mansha Active Private
Limited along with Director/ Signatory details, certificate of
incorporation as Ex. PW-4/1 (colly). This witness has also proved
AOC-4 Form alongwith Auditor’s report, balance sheet, director’s
report, MGT-7 Annual return and the list of shareholders as on
31.12.2020 running into 45 pages as Ex. PW-4/2 (colly). This
witness has also proved AOC-4 Form alongwith Auditor’s report,
balance sheet, Board report, MGT-7 Annual return and the list of
directorship and shareholders as on 28.11.2021 running into 46
pages as Ex. PW-4/3 (colly). This witness is duly cross examined
by Ld. Counsel for defendants. This witness has stated that he has
no personal knowledge about the ongoing litigation between M/s.
Mansha Active Pvt. Ltd. & Mr. Naresh Goyal. This witness has
stated that he has no knowledge about any revised return filed by
Mansha Active for the financial year 2019-2020 and 2020-2021.
10. Plaintiff has also examined Sh. Dinesh Kumar, Record
Keeper, State GST Office, Gurugram, Haryana as PW-5. This
witness has proved certified copy of GST Registration Certificate
of NKG Creations bearing GST registration no.
06ACBPG7331D1Z6 along with month-wise GST returns from
April 2018 to February 2019 running into 47 pages as Ex. PW-5/1
(colly). This witness is duly cross examined by Ld. Counsel for
defendants. This witness has stated that he has no personal
knowledge about the ongoing litigation between the parties.
11. Plaintiff has examined Mr. Amit Kumar, Sr. Manager,
Branch Banking, Yes Bank, Janakpuri C-3 Branch, Delhi as PW-6.
This witness has proved certified copy of bank statement of
CS (Comm.) No. 163/2024 -14-
account no. 052250700001272 in the name of Mr. Naresh Kumar
Goyal for the period 01.01.2018 to 31.08.2021 running into 5
pages as Ex. PW-6/1 (colly), certified copy of bank statement of
the account no. 052284600000021 in the name of Narsing Decor
for the period from 01.08.2018 to 31.08.2021 running into 49
pages as Ex. PW-6/2 (colly) and ownership of proprietorship
account along with GST number running into four pages as Ex.
PW-6/3. This witness is duly cross examined by Ld. Counsel for
defendants. This witness has stated that he has no personal
knowledge about the ongoing litigation between the parties. This
witness has admitted that the entire statement produced by him is
system generated. This witness has stated that he cannot say as to
when the account of Narsing Decor opened and he does not know
who was the proprietor at that time.
12. Plaintiff has also examined Ms. Kalpana, Judl. Assistant
in the court of JMFC/DC-08, Dwarka (SW), Delhi as PW-7. This
witness has brought the court record/ case file of CC NI Act
23080/2021, titled as ” Naresh Goyal Vs. Mansha Active Pvt. Ltd.
pending in the court of Ld. JMFC/DC-08, Dwarka (SW) and same
is proved as Ex. PW-7/1 (colly). This witness is duly cross
examined by Ld. Counsel for defendants. In cross examination,
this witness has stated that she has no personal knowledge about
the facts of the case CC NI Act 23080/2021. This witness has
admitted that the said case is at the stage of examination of
CW-1.
13. Plaintiff has examined Sh. Naresh Kumar Goyal,
Proprietor of NKG Creations as PW-8. This witness has proved
CS (Comm.) No. 163/2024 -15-
GPA dated 21.09.2021 executed by him in favour of Piyush Kanti
Dey which is already exhibited as Ex. PW-1/2 (colly). This witness
is duly cross examined by Ld. Counsel for defendants. During
cross examination, this witness has stated that he mentions his
name both as “Naresh Goyal” and “Naresh Kumar Goyal” in
transactions. He has stated that all day to day transactions
pertaining to Mansha Active have taken place under his
supervision. He has admitted that all the decision pertaining to
Mansha Active were taken by him. He has voluntarily stated that
Mr. Piyush Kanti also used to take decisions on his behalf. This
witness has stated that he had authorized Mr. Piyush Kanti by way
of GPA (Ex. PW-1/2) on 21.09.2021 in writing. This witness has
stated that he had executed GPA (Ex. PW-1/2) prior to the filing
of the present suit. He has stated that Mr. Piyush Kanti had the
power to take all the decisions pertaining to defendant no. 1. He
has denied the suggestion that Mansha Active transferred the funds
to Narsing Decor on his instructions with respect to the return of
goods. He has voluntarily stated that He has no connection with
the Narsing Decor. He has stated that Mr. Piyush Kanti had
purchased the stamp paper for GPA on his instructions from
Janakpuri. This witness has stated that he had asked Mr. Piyush
Kanti to prepare the draft of the GPA and he had done the same on
his instructions. He has stated that Mr. Piyush Kanti had read over
and explained the draft to him in Hindi. This witness has stated
that he has executed GPA ( Ex. PW-1/2) for filing the case against
Mansha Active. He has stated that Mr. Piyush Kanti stays at
Janakpuri sometimes.
CS (Comm.) No. 163/2024 -16-
14. On the other hand, defendant no. 2 has examined himself
as DW-1. This witness has filed affidavit on the lines of written
statement. This witness has proved Board Resolution dated
01.05.2024 as Ex. DW-1/1, certificate u/s 65B running into two
pages as Ex. DW-1/2, ledger account of NKG Creations in the
books of Mansha Active Pvt. Limited for the period 01.04.2017 to
31.03.2019 running into 2 pages as Ex. DW-1/3, ledger account of
NKGC (Purchase Account) for the period 01.04.2018 to
31.03.2020 as Ex. DW-1/4, ledger account in the name of Narsing
Decor for the period 01.04.2019 to 31.03.2022 as Ex. DW-1/5,
bank statement of Bank of Baroda account no. 32200200000506
for the period 19.10.2020 to 25.10.2020, 01.02.2021 to 06.02.2021
and 15.08.2021 to 20.08.2021 running into 3 pages as Ex. DW-1/6
(colly) and certificate of CA Yogesh Bangia & Co. dated
02.09.2023 as Ex. DW-1/7 (colly).
This witness is duly cross examined by Ld. Counsel for
plaintiff. During cross examination, this witness has stated that he
is Director of Mansha Active Pvt. Limited and participates in the
day to day affairs of the business. This witness has stated that he
and Mr. Arun Dua are the Directors of defendant company. He has
stated that Ms. Vandana Dua is his wife. He has admitted that his
company received Rs. 1 crore from the plaintiff on account of
business dealings. He has admitted that his company supplied
“Sprandi” brand products/ stock to the plaintiff. He has admitted
that his company issued invoices to the plaintiff for the stock
supplied. This witness has admitted that he used to deal with the
plaintiff in his individual capacity. This witness has stated that he
cannot show any purchase order issued by the plaintiff from the
court record. This witness has admitted that he dealt with the
CS (Comm.) No. 163/2024 -17-
plaintiff under commercial/business terms. This witness has
denied to execute any agreement with the plaintiff. This witness
has stated that his company started business with the plaintiff in
around February 2018 and continued for about one year. This
witness has stated that he had made the demand of cheques
verbally. This witness has admitted that plaintiff company has
returned goods worth Rs. 1,08,25,183/- to him on 03.02.2019. He
has voluntarily stated that goods once sold are generally not
returnable but in good faith, the said return of goods was accepted.
This witness has stated that he does not know if defendant
company acknowledged the receipt of returned stock via email
dated 25.02.2019 which is Ex. PW-1/8 (colly). He has
voluntarily stated that it is not his personal email ID and is
managed by the accounts department. This witness has stated that
he does not remember if his company ever send any running ledger
to the plaintiff for the confirmation of acknowledging the receipt
of the return of stock. This witness has admitted that his company
has been auditing the financial statements and filed the audited
reports time to time since the day of incorporation. This witness
has stated that he does not know that after termination of the
dealing with the plaintiff defendant company sent any running
ledger for the confirmation regarding the payment and rendition of
accounts with the plaintiff showing the amount due. He has stated
that there is no document to show that he has sent request for
return of cheques. This witness has admitted that his company is
the domain owner and operates and used the domain
“@mansaactive.com” for business purposes. He has admitted that
the account @mansaactive.com, [email protected]
and [email protected] are his email accounts. This witness
CS (Comm.) No. 163/2024 -18-
has stated that he is not aware about
[email protected]. This witness has stated that he does
not know if email ID [email protected] is official
email of his company as shown in Ex. DW-1/PX-1 at point-A. He
has admitted that the domain account @mansaactive.com stands
deactivated. He has admitted that his company has not initiated
any legal action for dishonor of 15 cheques after receiving the
intimation about the same. This witness has admitted that he has
not signed the Board Resolution dated 01.05.2024. This witness
has admitted that his company has audited the financial statement
for the Financial Year 2018-19 by CA Yogesh Bangia. This
witness has admitted that defendant no. 1 company maintains
record, prepared and finalized the ledger of plaintiff under
director’s approval after duly verifying the same. He has admitted
that the defendant company maintained separate ledgers, one in
the name of NKG Creations and NKGC for the same plaintiff. He
has voluntarily stated two ledgers were created for the same
plaintiff by mistake, however, they were corrected later. This
witness has admitted that he has not sent the two ledgers to the
plaintiff before filing the present suit. This witness has stated that
he has hired accountants and professional auditors. He has
admitted that the CA certificate dated 02.09.2023 Ex. DW-1/7
does not confirm or reflect the CIN of his company. This witness
has stated that in the certificate dated 02.09.2023, he has admitted
that a sum of Rs. 13,13,131/- is payable by the defendant to the
plaintiff. This witness has admitted that he has shown the
outstanding balance of Rs. 6,89,857/- towards the plaintiff in this
written statement. He has admitted that tax audit report for the FY
2018-2019 to FY 2021-22 has not been filed.
CS (Comm.) No. 163/2024 -19-
15. Defendants have also examined CA Mr. Yogesh Bangia
Proprietor of M/s. Yogesh Bangia & Company as DW-2. This
witness has stated that he was appointed as auditor of Mansha
Active in the year 2018 and he has audited its accounts for four
years. He has stated that Mr. Manoj Dua had approached him with
his CA regarding some issues in the accounts of NKG Creations/
Naresh Kumar Goyal. This witness has stated that he had no role
other than for the audit purpose. He has stated that as per Mr. Dua,
different ledgers in name of different parties were created, and
therefore, certain inconsistencies and mistakes appear to be there
in the accounts, for which they requested him to rectify these
accounts as he had audited them.
This witness is duly cross examined by Ld. Counsel for
plaintiff. During cross examination, this witness has stated that he
is not aware about the litigation between Mansha Active and NKG
Creations. This witness has stated that he was not aware about the
litigation on 02.09.2023 when the certificate was issued. This
witness has stated that he had never issued a rectification or
modification certificate to other companies after such a long time.
This witness has stated that he would not issue certificate Ex.
DW-1/7, if he was aware about the pending litigation. This witness
has stated that he has not taken permission from any statutory
authority. This witness has stated that he checked copies of old
ledgers and new ledgers as given to him by the company
accountant. This witness has admitted that he did not check the
source document i.e. invoices, delivery challans, debit notes etc.
but he checked some vouchers. This witness has voluntarily stated
that he did not check all the entries and only sample entries. This
CS (Comm.) No. 163/2024 -20-
witness has stated that he has only checked the vouchers for the
year 2018-2019 and 2019-2020. He has admitted that at the time
of preparation of certificate in question, other sources like PAN
card, Registration, GST etc were not verified for Narsing Decor.
He has admitted that at the time of preparation of certificate in
question, other sources like Registration, GST etc. were not
verified for NKG Creations. However, he checked the PAN card
for the said entity. He has admitted that the PAN number and GST
number of NKG Creations and Narsing Decor are not same. He
has admitted that at the time of preparation of certificate in
question, other sources like Registration, GST etc. were not
verified for NKGC. However, he checked the PAN card for the
said entity. This witness has stated that as per his professional
working, it is not correct to merge ledgers of two entities with
different PAN number and GST numbers. He has admitted that
the third page with the certificate Ex. DW-1/7 pertains to the
ledger of NKG Creations maintained by Mansha Active Pvt.
Limited for the period 01.04.2018 to 19.08.2021 is the part of his
certificate. This witness has admitted that he has not prepared the
said document i.e. third page with the certificate Ex. DW-1/7
which pertains to the ledger of NKG Creations maintained by
Mansha Active Pvt. Limited for the period 01.04.2018 to
19.08.2021. He has admitted that opening will be reflected in the
said document i.e. third page with the certificate Ex. DW-1/7
which pertains to the ledger of NKG Creations maintained by
Mansha Active Pvt. Limited for the period 01.04.2018 to
19.08.2021 if there have been transactions prior to 01.04.2018.
This witness has stated that he did not check the accounts prior to
01.04.2018. He has admitted that as per the third page with the
CS (Comm.) No. 163/2024 -21-
certificate Ex. DW-1/7 pertains to the ledger of NKG Creations
maintained by Mansha Active Pvt. Limited for the period
01.04.2018 to 19.08.2021 (which is the merged letter of NKGC
and Narsing Decor), there is no mention of sale entry of Rs.
5,00,000/- from Narsing Decor. This witness has admitted that he
did not obtain permission from NKGC or Narsing Decor before
merging their accounts/ ledgers. He has admitted that as per
page no. 22 of the document Ex. PW-4/2, each entity so enlisted
in sundry creditors is a separate entity, more specifically, Narsing
Decor and NKGC are separate entities. He has admitted that in
the list of Sundry creditors, the amount of Rs. 5,00,000/- is due
towards Narsing Decor and Rs. 1,14,48,457/- is due towards
NKGC as on 31.03.2020.
16. Defendant have also examined Mr. Pradeep Kumar Goyal,
Proprietor of M/s. Narsing Decor as DW-3. This witness has
proved ledger account of M/s. Narsing Decor maintained with
respect to M/s. Mansha Active Pvt. Ltd. for the period between
01.04.2018 till 31.03.2025 as Ex. DW-3/1, bank statement of M/s.
Narsing Decor of account no. 052284600000021 maintained with
Yes Bank, Janakpuri C-3 Branch for the relevant period between
01.08.2018 til 31.03.2015, more specifically for the period
01.08.2018 to 31.08.2018, 01.02.2021 to 28.02.2021 and
01.08.2021 to 31.08.2021 as Ex. DW-3/2 (colly) and GST-1 and
GST-B2B form for the FY 2021-22, FY 2022-23, FY 2023-24 and
FY 2024-25 as Ex. DW-3/3 (colly). He has stated that there is no
business relation between M/s. Narsing Decor and M/s. Mansha
Active. He has stated that a sum of Rs. 5,00,000/- was given as a
loan to M/s. Mansha Active. He has stated that Mr. Manoj Dua
CS (Comm.) No. 163/2024 -22-
had demanded the said loan from him. This witness has stated that
he went to the office of his brother Mr. Naresh Kumar Goyal in
the year 2018, where Mr. Manoj Dua was also present.
This witness is duly cross examined by Ld. Counsel for
plaintiff. In cross examination, he has stated that plaintiff is his
real brother. He has stated that the plaintiff is the Proprietor of
NKG Creation. This witness has stated that he is having office at
C-18, Basement, Janakpuri, Delhi. He has stated that the plaintiff
is dealing in sports shoes and clothes. He is the Proprietor of M/s.
Narsing Decor. This witness has stated that he is dealing in
construction work and Alumunium fabrication. He has stated that
the firm of the plaintiff and his firm is not doing any business
together. This witness has stated that he had never given any
permission to the defendant to consolidate the ledger of his firm
and ledgers of the firm of the plaintiff. This witness has stated that
he has no knowledge if the ledgers of his firm were ever merged
with the ledgers of the plaintiff firm. This witness has admitted
that he is having some money transactions with the plaintiff in his
Yes bank account.
17. I have heard Ld. Counsels for both the parties at length and
perused the record carefully.
18. My issue-wise findings are as under:-
19. Issue No. 1 -Whether the present suit is filed by duly
authorized person (OPP)
Burden to prove this issue is on the plaintiff. To prove this
issue Ld. Counsel for the plaintiff has argued that the present suit
CS (Comm.) No. 163/2024 -23-
is filed by Sh. Piyush Kanti Dey who is duly authorized vide
General Power of Attorney dated 21.09.2021. On the other hand,
Ld. Counsel for the defendant has argued that the present suit is
not filed by a duly authorized person as GPA dated 21.09.2021 is
defective and therefore Sh. Piyush Kanti Dey had no power to give
statement being witness on behalf of the plaintiff. I have carefully
perused GPA dated 21.09.2021 marked as Ex. PW1/2. This
document is executed by the plaintiff in favour of Sh. Piyush Kanti
Dey and bears signature of the plaintiff and Sh. Piyush Kanti.
Clause 7 of this document states as under: –
“That to do generally all other acts and things for
the conduct of the said complaint/ suit/ claim as
Executants could have done the same if personally
present.”
From plain reading of the GPA dated 21.09.2021 it can be
said that Sh. Piyush Kanti Dey is duly competent to depose in the
present matter. Furthermore, in cross-examination PW-1 stated
that he is working as a manager with the plaintiff firm. He admitted
that he purchased the stamp paper Ex.PW1/2 on behalf of the
plaintiff and the residential address of the plaintiff is mentioned on
it. He further admitted that he had signed Ex.PW1/2 first and
thereafter the plaintiff had signed at the Notary Office. Moreover,
the plaintiff appeared as PW-8 to prove execution of Ex. PW-1/2
in favour of Sh. Prashant Dey. Plaintiff admitted that he had
authorized Mr. Piyush Kanti by way of GPA (Ex.PW1/2) on
21.09.2021 in writing. Plaintiff further stated that Sh. Piyush Kanti
was already verbally authorized to take decisions on his behalf
prior to the said GPA. During cross-examination Ld. Counsel for
the defendant asked the plaintiff whether he had read the draft of
CS (Comm.) No. 163/2024 -24-
GPA (Ex.PW1/2)? To which the plaintiff replied that Mr. Piyush
had read over and explained the draft to him in Hindi. Ld. Counsel
for the defendant again asked if the plaintiff could tell the time and
place of executing the GPA (Ex. PW1/2)? To which the plaintiff
replied that he and Sh. Piyush Kanti Dey had signed the draft at
the time and place where they had taken the print of Stamp Paper
in Janakpuri. From the deposition of the plaintiff, it is clear that he
had executed GPA (Ex. PW1/2) in favour of Sh. Piyush Kanti Dey.
Ld. Counsel of the defendant has relied upon Man Kaur (Dead) by
LRs. vs. Hartar Singh Sangha (2010) [10 SCC – 513] passed by
Hon’ble Supreme Court wherein it has been held that if any
attorney holder does not have personal knowledge and no specific
authority to depose, then such evidence has no evidentiary value.
However, in the present case PW-1 has valid power of attorney
to depose in the present matter and moreover, PW-8 in cross-
examination stated that PW-1 used to take decisions on his behalf.
Thus, Man Kaur (Dead) by LRs. (Supra) is not applicable to the
facts in hand. Therefore, the plaintiff is able to prove this issue in
his favour. This issue is decided in favour of the plaintiff and
against the defendants.
20. Issue No. 2 -Whether the suit of the plaintiff is within
limitation ? (OPP)
Burden to prove this issue is on the plaintiff. To prove this
issue Ld. Counsel for the plaintiff has argued that the present suit
has been filed on account of dishonoring of cheques and liabilities
owed by the defendants towards the plaintiff. It is argued that on
25.02.2019 the defendant acknowledged the receipt of returned
CS (Comm.) No. 163/2024 -25-
stock with the attachment “Summary of Return Goods” to the
plaintiff. Thereafter, on 23.10.2020, defendants themselves
transferred an amount of Rs. 11,00,000/- to the plaintiff’s personal
bank account. In furtherance of discharge of liability, the
defendant further issued 15 cheques in the month of July, 2021.
However, when the cheques were presented in the bank for
encashment, the same were dishonored on 16.08.2021. Thereafter,
plaintiff informed about dishonor of cheques to the defendant on
20.08.2021. The present suit has been filed on 14.02.2024 which
is within the period of limitation. On the other hand, Ld. Counsel
for the defendant has argued that the present suit is barred by
limitation as the present suit has been instituted after 3 years from
the date of issuance of last invoice that is 03.02.2019.
I have heard both the counsels and carefully perused
invoices Ex. PW1/6 and statement of account from the period
07.07.2020 to 31.08.2021 Ex. PW2/1. Plaintiff issued the last
invoice to the defendant on 03.02.2019 and the defendant made
the last payment to the plaintiff on 23.10.2020 as per the statement
of accounts. Moreover, in RE: COGNIZANCE FOR
EXTENSION OF LIMITATION (Suo Moto Writ Petition (C)
3/2022) passed by Hon’ble Supreme Court of India, it has been
held that “It is further clarified that the period from 15.03.2020 till
28.02.2022 shall also stand excluded in computing the periods
prescribed under Sections 23(4) and 29A of the Arbitration and
Conciliation Act, 1996, Section 12A 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 periods of limitation for instituting proceedings, outer
limits (within which the court or tribunal can condone delay) and
CS (Comm.) No. 163/2024 -26-
termination of proceedings”. The same observation is given by the
Hon’ble Supreme Court of India in judgment titled as “M/s. Arif
Azim Co. Ltd. Vs. M/s. Aptech Ltd.” Arbitration Petition No.
29/2023. Furthermore, time period utilised for pre-institution
mediation under Section 12A of Commercial Courts Act deserves
to be excluded. Plaintiff preferred application for pre-institution
mediation on 10.07.2023 and non-starter report (Ex. P4) was
issued on 21.08.2023 thereby utilising 43 days. Thus, if we
calculate the period of limitation from the last date of payment
made by the defendant i.e; 23.10.2020 the present suit is well
within limitation. Moreover, the present suit is on the basis of
cheques Ex. PW-1/9 (colly). All the cheques are from period
13.07.2021 to 10.08.2021. All these cheques were returned unpaid
vide return memos Ex. PW-1/10 (colly). These return memos
show date of return as 16.08.2021. If we count the period of
limitation from 16.08.2021, the present suit being filed on
15.02.2024 i.e. within the period of limitation. Accordingly, this
issue is decided in favour of the plaintiff and against the
defendants.
21. Issue No. 3-Whether the present suit is bad for mis-joinder
and non-joinder of necessary party ? (OPD)
The burden to prove this issue is on the defendants. To
prove this issue Ld. Counsel for the defendants has argued that
defendant no. 2 i.e. Director of defendant no. 1 never made himself
personally liable by execution of personal guarantees or
indemnities therefore he cannot be held personally liable.
CS (Comm.) No. 163/2024 -27-
Perusal of the file reveals that in para no. 12 of the plaint, the
plaintiff has mentioned that “defendant No.1 along with defendant
No.2 cheated, deceived, played a fraud with malafide intention,
and committed a breach of trust for their unlawful gain. The
conduct of the defendant No.2 is fraudulent, improper and
malicious along with defendant No.1. Defendant No.1 has given
the indemnity and guarantee towards the plaintiff. Defendant No.1
is under fiduciary obligation towards the plaintiff as defendant
No.1 has taken the personal guarantee while issuing and signing
the aforesaid fifteen cheques. Defendant No.2 has real control
over the charge of the company/defendant No.1. On the assurance
of defendant No.2, plaintiff has deposited the said cheques of
defendant No.1. Defendant No.2 has issued the cheques on behalf
of defendant No.1. Thus, both the defendants are jointly and
personally liable to pay the outstanding dues arising out of the
dishonour of the cheque of Rs. 01 Crore and have foreplay with
malafide and malicious intention to make their unlawful gain and
causes losses to the plaintiff”.
In para No. 14, the plaintiff has mentioned that “defendant
no. 2 issued aforesaid fifteen post-dated cheques; 001663, 001664,
001665, 001666, 001667, 001670, 001671, 001672, 001673,
001675, 001676, 001677, 001678, 001679, 001680 dated
13.07.2021, 15.07.2021, 17.07.2021, 19.07.2021, 21.07.2021,
23.07.2021, 26.07.2021, 28.07.2021, 30.07.2021, 03.08.2021,
03.08.2021, 06.08.2021, 07.08.2021, 10.08.2021, 10.08.2021
respectively of Rs. 10,00,000, Rs. 10,00,000, Rs.10,00,000, Rs.
10,00,000, Rs. 10,00,000, Rs. 5,00,000, Rs. 5,00,000,
Rs.5,00,000, Rs. 5,00,000, Rs. 5,00,000, Rs. 5,00,000, Rs.
CS (Comm.) No. 163/2024 -28-
5,00,000, Rs.5,00,000, Rs. 5,00,000 respectively total amounting
to Rs. 100,00,000/-(Rupees One Crore) (PDC’s) on behalf of
defendant no. 1 of ICICI Bank account no. 181805000342,
Mayapuri, Phase-I, New Delhi- 110064, on different dates with
the assurances & promises that the same would be encashed on
their presentation to the plaintiffs bank, on their due dates towards
the agreement; “Sprandi Exclusive Distribution Agreement” dated
25.01.2017″.
22. The plaintiff has proven Sprandi Exclusive Distribution
Agreement dated 25.01.2017 (Ex. PW1/4) executed between the
plaintiff and defendants. Defendant No.2 has signed this
agreement though during the arguments it is denied by counsel for
defendant No.2 that defendant No.2 has signed any agreement. It
is an admitted case that defendant No.2 also gave cheques to the
plaintiff.
23. Ld. Counsel for defendant No.2 has placed reliance on the
Judgment of Sanuj Bathia and Ors Vs Manu Maheshwari
MANU/DE/3911 of 2021 wherein it is held that “directors of the
company cannot be made personally liable for the outstanding
dues and liabilities of the Company, unless they have given a
guarantee, indemnity etc or there are other allegations of fraud
etc”
On the other hand counsel for the plaintiff has placed
reliance on the judgment of Mukesh Hans & Anr. Vs Smt. Uma
Bhasin & Ors RFA 14/2010 and CM No. 495/2010 decided on
16.08.2010 wherein Hon’ble High Court observed as under:-
CS (Comm.) No. 163/2024 -29-
“It is equally well settled that a Director of a Company
though he owes a fiduciary duty to the Company, he owes
no contractual duty qua third parties. There are, however,
two exceptions to this rule. The first is where the Director
or Directors make themselves personally liable, ie, by
execution of personal guarantees, indemnities, etc. The
second is where a Director induces a third party to act to his
detriment by advancing a loan or money to the Company.
On the third party proving such fraudulent
misrepresentation, a Director may be held personally
liable to the said third party. It is, however, well settled that
this liability would not flow from a contract, but would flow
in an action at tort, the tort being of misrepresentation and
of inducing the third party to act to his detriment and to part
with money.”
Ld. Counsel for plaintiff also placed reliance on the
Judgment of DDA Vs Skipper Construction Company (P) Ltd SC
1996 wherein it is held that:-
“The concept of corporate entity was evolved to encourage
and promote trade and commerce; but not to commit
illegalities or to defraud people. Where, therefore, the
corporate character is employed for the purpose of
committing illegality or for defrauding others, the court
would ignore the corporate character and will look at the
reality behind the corporate veil so as to enable it to pass
appropriate orders to do justice between the parties
concerned”.
Ld. Counsel for plaintiff also placed reliance on the
Judgments of N. Narayanan Vs Adjudicating Officer, Sebi, AIR
CS (Comm.) No. 163/2024 -30-
2013 Supreme Court 3191 and Lala Shanti Swarup Vs Munshi
Singh & Ors 1967 AIR 1315.
The plaintiff in para no.12 of the plaint has clearly
mentioned about the role played by defendant No.2. Judicial
assistant Ms. Kalpana (Ex. PW-7) attached with the Court of
JMFC (DC-08), Dwarka District Court (SW) proved CC No.
23080/2021 titled “Naresh Goyal vs. Mansha Active Pvt. Ltd.”
marked as Ex. PW7/1. Perusal of this file reveals that 15
dishonoured cheques are duly signed by defendant No.2.
Defendant no. 2 (DW-1) himself admitted that 15 cheques issued
to the plaintiff were security cheques during cross-examination.
DW-1 has also admitted that he used to deal with the plaintiff in
his individual capacity.
In view of my above discussion, defendant no.2 is not a
mis-joinder party to the present suit when he has executed the
agreement and has given cheques to the plaintiff. Thus, this issue
is decided in favour of the plaintiff and against the defendant.
24. Issue No. 4 -Whether the plaintiff is entitled for recovery
of Rs. 1,00,00,000/- from the defendants, as prayed ? (OPP)
25. At the very Outset, I may observe that the provisions of
Section 2 (1) (c)(xviii) of Commercial Courts Act, 2015 are very
clear which reads as under:-
(c) “commercial dispute” means a dispute arising out
of-
(i) ordinary transactions of merchants, bankers,
financiers and traders such as those relating toCS (Comm.) No. 163/2024 -31-
mercantile documents, including enforcement and
interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines,
aircraft equipments and helicopters, including sales,
leasing and financing of the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including
tenders;
(vii) agreements relating to immovable property used
exclusively in trade or commerce.
(viii) franchising agreements;
(ix) distribution and licensing agreements;
(x) management and consultancy agreements;
(xi) joint venture agreement;
(xii) shareholders agreements;
(xiii) subscription and investment agreements pertaining
to the services industry including outsourcing services
and financial services;
(xiv) mercantile agency and mercantile usage;
(xv)partnership agreements;
(xvi) technology development agreements;
(xvii) intellectual property rights relating to registered
and unregistered trademarks, copyright, patent, design,
domain names, geographical indications and
semiconductor integrated circuits;
(xviii) agreement for sale of goods or provision of
services;
(xix) exploitation of oil and gas reserves or other natural
resources including electromagnetic spectrum;
(xx) insurance and re-insurance;
(xxi) contracts of agency relating to any of the above;
and
(xxii) such other commercial disputes as may be notified
by the Central Government.
26. The provisions of Section 2 (1) (c) (xviii) of Commercial
Courts Act as above are very much clear. Sale of goods are
governed by Sale of Goods Act, they pertain to movable
properties, any dispute of sale or agreement to sale of goods of
CS (Comm.) No. 163/2024 -32-
specified value do come within the jurisdiction of Commercial
Courts Act. The clause also includes the services and guarantee
given for the goods sold. The service or guarantee may be oral or
written. Therefore, the facts which alleged in the plaint comes
under the Commercial disputes.
27. Secondly, now the question arises whether this Court has
the pecuniary jurisdiction to adjudicate the matter which is dispute.
In this regard, the provisions of Section 3 of Commercial Courts
Act, 2015 provides that:
Section 3 : Constitution of Commercial Courts:
(1) The State Government, may after consultation
with the concerned High Court, by notification,
constitute such number of Commercial Courts
at District level, as it may deem necessary for
the purpose of exercising the jurisdiction and
powers conferred on those Courts under this Act:
[Provided that with respect to the High Courts
having ordinary original civil jurisdiction, the
State Government may, after consultation with
the concerned High Court, by notification,
constitute Commercial Courts at the District
Judge level:
Provided further that with respect to a territory
over which the High Courts have ordinary
original civil jurisdiction, the State
Government may, by notification, specify such
pecuniary value which shall not be less than
three lakh rupees and not more than the
pecuniary jurisdiction exercisable by the District
Courts, as it may consider necessary. ]
3[1A) Notwithstanding anything contained in this
Act, the State Government may, after consultation
with the concerned High Court, by
notification, specify such pecuniary value which
shall not be less than three lakh rupees or
such higher value, for whole or part of the State,
as it may consider necessary.]CS (Comm.) No. 163/2024 -33-
28. Admittedly, the Commercial Court Act was amended on
03.05.2018 and by virtue of the amendment and by virtue of the
notification, the pecuniary value of the Commercial Courts Act
shall not be less than Rs. 3,00,000/-. In the present case, the claim
amount which is shown in the plaint is of Rs. 1,00,00,000/-. So,
commercial court has jurisdiction to try and entertain the present
suit.
29. The burden to prove this issue is upon the plaintiff. To prove
this issue Ld. Counsel for the plaintiff has argued that the present
suit has been instituted against the defendants on account of
dishonour of 15 cheques issued in connection with business
dealings arising out of return of stock of worth ₹1,08,25,183/-.
Plaintiff invested a sum of Rs. 1,00,00,000/- in the stocks of the
plaintiff as per clause 2 of the Sprandi Distribution Agreement
(Ex. PW-1/4). On 30.02.2019 plaintiff returned the stock worth
Rs. 1,08,25,183/- to the defendants supported by tax invoices (Ex.
PW 1/6 ) and e-way bills (Ex. PW 1/7). Defendants confirmed the
receipt of stock vide email dated 25.02.2019 (Ex. PW1/8). On
25.09.2020 plaintiff sent an email along with the running ledger
showing balance confirmation of Rs. 1,03,58,449/- to defendants.
However, the defendants chose not to reply to the same.
Accordingly, in July 2021 defendant no. 1 and 2 issued 15 cheques
towards discharge of their liability. Before presentation of the
aforementioned cheques plaintiff informed the defendant vide
email dated 11.08.2021 to ensure availability of sufficient funds in
the bank. On 16.08.2021 plaintiff deposited the cheques and the
same were dishonoured. Subsequently, plaintiff sent an intimation
CS (Comm.) No. 163/2024 -34-
of the same through email dated 20.08.2021 to the defendants.
However, the defendant failed to respond to this email. Plaintiff
sent legal notice dated 28.08.2021 and thereafter filed a complaint
case under Section 138 of the Negotiable Instrument Act,
1881. On the other hand Ld. Counsel for the defendant has denied
the existence of Sprandi Distribution Agreement (Ex. PW-1/4).
30. It is contended by Ld. Counsel for defendants that plaintiff
has forged and fabricated Ex. PW-1/4 and this agreement is not
proved as per law. It has been further argued that this agreement
has not been stamped, witnessed by any witnesses or properly
filled.
31. The photocopy of this agreement shows that it is signed by
defendant no. 2, Sh. Manoj Dua and plaintiff but no question
regarding agreement was asked by Ld. Counsel for defendants to
PW-1 during cross examination. DW-1 has signed this document
and the same signature has been appended on written statement
filed by him. As such, the agreement has been executed without
proper stamp. Ex. PW1/4 (Colly) was tendered in evidence
without any objection from the Ld. Counsel for defendants who
was present during tendering of evidence. The Hon’ble Supreme
Court in JAVER CHAND AND OTHERS vs. PUKHRAJ
SURANA (1961 AIR 1655) held that “That section is categorical
in its terms that when a document has once been admitted in
evidence, such admission cannot be called in question at any stage
of the suit or the proceeding on the ground that the instrument had
not been duly stamped. The only exception recognised by the
section is the class of cases contemplated by s. 61, which is not
CS (Comm.) No. 163/2024 -35-
material to the present controversy. Section 36 does not admit of
other exceptions. Where a question as to the admissibility of a
document is raised on the ground that it has not been stamped, or
has not been properly stamped, it has to be decided then and there
when the document is tendered in evidence. Once the Court,
rightly or wrongly, decides to admit the document in evidence,
so far as the parties are concerned, the matter is closed. Section 35
is in the nature of a penal provision and has far-reaching effects.
Parties to a litigation, where such a controversy is raised, have to
be circumspect and the party challenging the admissibility of the
document has to be alert to see that the document is not admitted
in evidence by the Court. The Court has to judicially determine the
matter as soon as the document is tendered in evidence and before
it is marked as an exhibit in the case. The record in this case
discloses the fact that the hundis were marked as Exs. P. 1 and P.
2 and bore the endorsement ‘admitted in evidence’ under the
signature of the Court. It is not, therefore, one of those cases where
a document has been inadvertently admitted, without the Court
applying its mind to the question of its admissibility. Once a
document has been marked as an exhibit in the case and the trial
has proceeded all along on the footing that the document was an
exhibit in the case and has been used by the parties in examination
and cross-examination of their witnesses, s. 36 of the Stamp Act
comes into operation. Once a document has been admitted in
evidence, as aforesaid, it is not open either to the Trial Court itself
or to a Court of Appeal or revision to go behind that order. Such
an order is not one of those judicial orders which are liable to be
reviewed or revised by the same Court or a Court of superior
jurisdiction”. In (2006) 11 SCC 331 – Shyamal Kumar Roy vs.
CS (Comm.) No. 163/2024 -36-
Sushil Kumar Agarwal, the Honourable Apex Court has held that
if a document is received subject to objection, it is only tentatively
marked and in such situation, Section 36 of the Indian Stamp Act
would not be attracted. It was held that the party objecting to the
admissibility of the document must raise an objection so as to
enable the trial Judge to determine the issue upon application of
his judicial mind, at the appropriate stage.
Lastly, ld. Counsel for the defendant has argued that
Ex.PW1/4 is not signed by witnesses. I am not inclined to accept
this contention of the ld. Counsel for the defendant. Ex. PW 1/4 is
a distributorship agreement and as such there is no mandate in law
that such an agreement needs to be mandatorily be signed by
witnesses. In Asudamal vs. Kisanrao and Ors. [2004(2)BomCR
361], the Bombay High Court while discussing the requirements
of witnesses under the provisions of the Contract Act held that,
“11. None of the provision of the Indian Contract Act state that
in order to prove an agreement it is necessary to examine the
attesting witnesses. Only under the provision of the Indian
Succession Act, for proving a Will, examination of attesting
witness is essential. Thus, only where there is a specific
provision made in the Act requiring that the document is to be
attested then in such cases the examination of the attesting
witnesses is necessary as laid down in Section 68 of the Indian
Evidence Act. The finding of the appellate Court that though one
of the attesting witness is alive, the original plaintiff was duty
bound to examine him to prove the execution of the isarchitthi
i.e. agreement of sale is, therefore, not correct.”
Thus, from the forgoing discussion it can be ascertained that Ex.
PW1/4 was executed between the plaintiff and the defendant.
CS (Comm.) No. 163/2024 -37-
32. Now, it is to be seen whether the plaintiff has given an
amount of Rs. 1 crore to the defendant no. 1 or not. The plaintiff
has pleaded in the plaint that as per the terms and conditions of
agreement dated 25.01.2017, the plaintiff made investment in
stock by the distributorship on different intervals i.e. Rs.
25,00,000/- on 30.01.2018, Rs. 25,00,000/- on 07.02.2018, Rs.
25,00,000/- on 17.02.2018, Rs. 10,00,000/- on 14.03.2018, Rs.
10,00,000/- 07.04.2018 and Rs. 5,00,000/- on 11.04.2018. Plaintiff
has also proved the statement of account as Ex. PW1/5 of Yes
Bank, Janakpuri Branch which shows that a payment of Rs.
25,00,000/- was made on 30.01.2018, payment of Rs. 25,00,000/-
was made on 07.02.2018, payment of Rs. 25,00,000/- was made
on 17.02.2018, payment of Rs. 10,00,000/- was made on
14.03.2018, payment of Rs. 10,00,000/- was made on 07.04.2018
and payment of Rs. 5,00,000/- was made on 11.04.2018.
Moreover, when the defendant no. 2 appeared in the witness
box as DW-1, he in clear terms admitted in answer to question no.
9 that his company received Rs. 1 crore from the plaintiff on
account of business dealings. He has voluntarily stated that the
amount came in part payments. Thus, in view of clear admission
of DW-1, it is proved that plaintiff has given a sum of Rs. 1 crore
to the defendants.
33. The second point is whether the plaintiff has returned the
stock goods amounting to Rs. 1,08,25,183/- to the defendants or
not as per clause 9.1 of Ex. PW1/4. Clause 9.1 of Ex. PW1/4 states
as under :-
CS (Comm.) No. 163/2024 -38-
“9.1 Material Breach : This Agreement may be terminated
by either party by giving written notice of 90 days in
advance, termination to the other party, such termination
being immediately effective upon the giving of such notice
of termination. Remaining stock in saleable condition from
distributor will be taken back by supplier after liquidating in
market and refund will be done by supplier in 30 days for
remaining returned stocks received by supplier The amount
aforementioned would be invested in the stock to be kept
with the distributor.”
The plaintiff has specifically averred that he has returned
back the goods amounting to Rs. 1,08,25,183/- to the defendants.
The defendants in para no. 9 (ii) of preliminary objections has
admitted that the plaintiff returned the stock/material worth Rs.
1,08,25,183/-. Defendants in para no. 2 of preliminary submissions
have also admitted that the unsold stock of worth Rs. 1,08,25,183/-
was returned back to the defendant no. 1. The defendants in para
no. 3 of preliminary submissions has stated that the plaintiff
returned the stock/material worth of Rs. 1,08,25,183. Even in para
no. 5 of preliminary submissions to the written statement,
defendants have admitted that sum of Rs. 1,08,25,183/- was unsold
stock which was returned by the plaintiff to the defendant.
Defendant no. 2 during cross examination has admitted in
answer to question no. 27 that the plaintiff returned goods worth
Rs. 1,08,25,183/- to him on 03.02.2019. DW-1 has voluntarily
stated that there was an outstanding amount due to be paid by the
plaintiff to the defendant. These goods were returned so that those
goods may be sold by the defendant to set off the outstanding dues.
CS (Comm.) No. 163/2024 -39-
In email dated 26.11.2018 (Ex. PW-1/20) Sh. Neeraj Dua
vide email address “[email protected]” wrote “I
Have asked Pooja to send a mail to NKG asking them to return the
summer stock with details in lieu of the same they need to raise
PO.” During cross-examination DW-1 stated that he is unaware of
email ID [email protected]. However, in the affidavit
of admission and denial (Ex. DW-1/PX-1) defendant recognises
his official email IDs as [email protected],
[email protected] and [email protected]
and states that the same have been deactivated by the service
provider from 10.09.2019. As such Ex. PW1/20 is an email sent
prior to 10.09.2019. Thus, the same have been duly sent by the
defendant to the plaintiff asking him to return the summer stocks.
Email dated 24.01.2019 was sent by the plaintiff to the
defendants. As per this email the plaintiff wrote “please find the
attached sheet”. This email includes 5 attachments namely
“Apparels.xlsx”, “Bag.xlsx”, “footwear.xlxs”, “staff
uniform.xlxs” and “socks.xlxs”. Following this defendants sent an
email to plaintiff writing “please find attached physical verified
stock sheet”. This email contains an attachment namely “summary
of return goods”. Ld. Counsel for the defendants has argued that
in this email the total amount is not mentioned. However, I am not
inclined to accept this contention of the Ld. Counsel for the
defendants as in written statement the defendant has duly admitted
the value of return goods to be 1,08,25,183/-. Thus, it is proven
from the foregoing discussion that the defendant accepted return
goods sent by the plaintiff after duly verifying the physical stock
amounting to Rs. 1,08,25,183/-.
CS (Comm.) No. 163/2024 -40-
34. Now, I am dealing with contentions raised by Ld. Counsel
for defendants one by one.
35. It is contended by Ld. Counsel for defendants that cheques
Ex. PW-1/9 (colly) were given as security cheques. The
defendants have admitted to issue the cheques but it is contention
of Ld. Counsel for defendants that cheques were given at the
time of execution of agreement dated 25.01.2017. It is contention
of Ld. Counsel for plaintiff that cheques were given in discharge
of liability. As per Sprandi agreement, plaintiff has invested
amount of Rs. 1 crore with the defendants and this amount was
returnable to the plaintiff at the time of termination of agreement.
Admittedly, agreement dated 25.01.2017 was terminated and both
the parties stopped doing business together.
The moot question which is to be decided by this Court as
to whether cheques were given in discharge of liability or not. It
is contended by Ld. Counsel for plaintiff that cheques were given
in discharge of liability and at no point of time defendants had
asked the plaintiff to return the cheques. I have perused the cross
examination of DW-1. DW-1 in reply to the question no. 44 has
stated that his company has not initiated any legal action for
challenging the dishonor of 15 cheques. Even this witness has
admitted that he has not sent reply to the legal notice sent to the
defendant towards dishonor of 15 cheques in question. So,
defendants at no point of time had demanded the cheques back
from the plaintiff nor had sent any communication to the plaintiff
to return the cheques. DW-1 has admitted that he has no document
to show that he had made request for return of cheques. Thus, from
the receipt of amount of Rs. 1 crore from the plaintiff, defendants
CS (Comm.) No. 163/2024 -41-
at no point of time asked the plaintiff to return back the cheques.
Moreover, plaintiff has placed on record email 20.08.2020 Ex.
PW-1/11 which is sent to the email ID [email protected], [email protected],
[email protected], [email protected],
[email protected], [email protected].
DW-1 in reply to the question no. 35 has duly admitted all these
email IDs except [email protected]. However, DW-1
has identified this email in affidavit of admission denial Ex.
DW1/PX1. Defendants have not sent reply to this email. It has
been argued by the ld. Counsel counsel for the defendant that the
domain name @manshaactive has been deactivated and no email
in this regard had been sent to them. I have perused email dated
20.08.2021 carefully. This email has bounced on email IDs
[email protected], [email protected],
[email protected], [email protected],
[email protected] but it was duly sent on
[email protected]. So defendants were duly intimated about
dishonor of cheques vide email dated 20.08.2020. This email
states as under :-
Dear sir,
As per our verbal discussion, we both agreed to discontinue our
business dealings. In compliance of the same, we were ready to
handed over the stock/goods lying with us, the same had been sent
to you amounting to Rs. 1,08,25,183/- and received by you on
03.02.2019 in good condition. After receiving the goods, you had
issued 15 Cheques for Rupees 1 Crore and further promised &
assured us that the same would be en-cashed on their presentation
on bank.
I would like to further inform you that as per our mutually agreed
terms & conditions, you were also liable to pay Rs.60.00.000/- per
CS (Comm.) No. 163/2024 -42-
year as guarantee minimum gross profit, out of which you made
only paid Rs. 11,00,000/- on 23.10.2021. You are still under due
of balance guarantee minimum payment.
It is further inform you that the aforesaid Cheques which you had
given to us for presentation have been dishonored.
So, you are requested to make the payment ASAP.
Thanks with Regards.
Naresh Kumar Goyal
For, NKG Creations
As per this email plaintiff duly communicated to the defendant that
cheques given by the defendant were in respect of 1 Crore that
would be enchased on its presentation. The defendant has duly
received this email on [email protected] and has chosen not
to reply to the same. The defendant has falsely denied receiving
this email. Thus, from the foregoing discussion it can be
ascertained that defendant issued 15 cheques in lieu of discharging
its liability of 1 Crore to the plaintiff in respect of returned goods
and not as security cheques.
36. It is the main contention of Ld. Counsel for defendants that
after adjustment of return of goods of Rs. 1,08,25,183/-, there was
balance of Rs. 85,35,326/- towards the defendant, there was
balance of Rs. 22,89,857/- towards the plaintiff and defendant has
made payment of Rs. 16,00,000/- through RTGS of Rs.
11,00,000/- on 23.10.2020, Rs. 3,00,000/- on 05.02.2021 & Rs.
2,00,000/- on 19.08.2021, there was balance of Rs. 6,89,857/- to
be paid by the defendant to the plaintiff.
Plaintiff has summoned Mr. Surender Kumar, Lower
Division Clerk, Ministry of Corporate Affairs as PW-4. This
CS (Comm.) No. 163/2024 -43-
witness has proved certificate of incorporation as Ex. PW-4/1
(colly). This witness has also proved AOC-4 Form alongwith
Auditor’s report, balance sheet, director’s report, MGT-7 Annual
return for the financial year 2019-2020 and the list of shareholders
as on 31.12.2020 running into 45 pages as Ex. PW-4/2 (colly).
This document shows that a sum of Rs. 1,14,48,457/- is shown as
due and outstanding towards NKGC i.e. the plaintiff. Moreover,
Mr. Yogesh Bangia, DW-2 Auditor/CA of the defendants in cross
examination has admitted that that as per page no. 22 of the
document Ex. PW-4/2, each entity so enlisted in sundry creditors
is a separate entity. This witness in reply to the question no. 14.3
has admitted that in the list of sundry creditors, the amount of Rs.
5,00,000/- is due towards Narsing Decor and Rs. 1,14,48,457/- is
due towards NKGC as on 31.03.2020. Thus, defendants himself
in Ex. DW-4/2 has mentioned that a sum of Rs. 1,14,48,457/- was
payable by the defendants to the plaintiff as on 31.03.2020.
37. It is the contention of Ld. Counsel for defendants that there
was merger of accounts by the defendants in the Narsing Decor
and NKGC and after calculating the amount only a sum of Rs.
6,89,857/- was due towards the plaintiff. It is also contended by
Ld. Counsel for defendants that DW-1 has filed revised report in
respect of defendant. DW-2 Mr. Yogesh Bangia, Auditor/ CA of
the defendant has admitted that Ex. DW-1/7 was given by him on
02.09.2023. Admittedly, revised report was filed on 02.09.2023
for the period 2019-2020 which comes after filing of complaint
case u/s 138 of NI Act by the plaintiff against the defendants.
DW-2 has admitted that Mr. Manoj Dua has approached him and
he requested him to rectify the accounts of different parties. This
CS (Comm.) No. 163/2024 -44-
witness has stated that he would not have issued certificate Ex.
DW-1/7, if he was aware about the pending litigation. This witness
has stated that he was not aware about the litigation on 02.09.2023
when the certificate was issued. This witness has stated that he had
never issued a rectification or modification certificate to other
companies after such a long time. This witness has stated that he
checked copy of old ledgers and new ledgers as given to him by
the company accountant. This witness has admitted that he did not
check the source documents i.e. invoices, delivery challans, debit
notes etc. but he checked some vouchers. This witness has
voluntarily stated that he did not check all the entries and checked
only sample entries. This witness has stated that he has only
checked the vouchers for the year 2018-2019 and 2019-2020. He
has admitted that at the time of preparation of certificate in
question, other sources like Registration, GST etc. were not
verified for NKGC i.e. plaintiff. He has admitted that the PAN
number and GST number of NKG Creations and Narsing Decor
are not same. This witness has stated that as per his professional
working, it is not correct to merge ledgers of two entities with
different PAN number and GST numbers. This witness has
admitted that he did not obtain permission from NKGC or Narsing
Decor before merging their accounts/ ledgers.
Moreover, defendants have himself produced Mr. Pradeep
Kumar Goyal, Proprietor of M/s. Narsing Decor as DW-3. This
witness has stated that he had never given any permission to the
defendant to consolidate the ledger of his firm and ledger of the
firm of the plaintiff. He has admitted that plaintiff is proprietor of
M/s. NKG Creations.
CS (Comm.) No. 163/2024 -45-
As defendant has not taken permission from NKGC for
alteration and rectification of account of the defendant, I am of the
view that DW-2 has given certificate Ex. DW-1/7 at the instance
of defendant no. 2, so no reliance can be given to the certificate
Ex. DW-1/7. Defendant cannot merge both the accounts of
Narshing Decor and NKGC and cannot file rectification of
account.
38. Ld. Counsel for plaintiff has drawn my attention towards
Section of 131 of Companies Act, 2013 which states as under :-
131. Voluntary revision of financial statements or Board’s report.–(1) If it appears
to the directors of a company that–
(a) the financial statement of the company; or
(b) the report of the Board,
do not comply with the provisions of section 129 or section 134 they may prepare
revised financial statement or a revised report in respect of any of the three preceding
financial years after obtaining approval of the Tribunal on an application made by
the company in such form and manner as may be prescribed and a copy of the order
passed by the Tribunal shall be filed with the Registrar:
Provided that the Tribunal shall give notice to the Central Government and the
Income-tax authorities and shall take into consideration the representations, if any,
made by that Government or the authorities before passing any order under this
section:
Provided further that such revised financial statement or report shall not be
prepared or filed more than once in a financial year:
Provided also that the detailed reasons for revision of such financial
statement or report shall also be disclosed in the Board’s report in the
relevant financial year in which such revision is being made.
(2) Where copies of the previous financial statement or report have been sent out to
members or delivered to the Registrar or laid before the company in general meeting,
the revisions must be confined to–
(a) the correction in respect of which the previous financial statement or
report do not comply with the provisions of section 129 or section 134; andCS (Comm.) No. 163/2024 -46-
(b) the making of any necessary consequential alternation.
(3) The Central Government may make rules as to the application of the provisions
of this Act in relation to revised financial statement or a revised director’s report and
such rules may, in particular–
(a) make different provisions according to which the previous financial
statement or report are replaced or are supplemented by a document
indicating the corrections to be made;
(b) make provisions with respect to the functions of the company’s auditor
in relation to the revised financial statement or report;
(c) require the directors to take such steps as may be prescribed.
Section 131 of the Companies Act, intend to correct
unintentional mistakes or non-compliance in previously files
statement. This revision can be done only with approval of the
National Company Law Tribunal (NCLT) for any of the three
preceding financial years. The supervision of Hon’ble NCLT is
necessary to ensure transparency, regulatory oversight and preventing
misuse. Reliance can be placed on GOCON INFRASTRUCTURE
AND PROJECTS PRIVATE LIMITED and REGISTRAR OF
COMPANIES [Company Petition No. 106/131/ND/ of 2021] passed
by National Company Law Appellate Tribunal, Court-V, New Delhi
wherein procedure of rectification of financial statement was
considered. Relevant paragraph of this judgment is as under:-
17. It is directed that a certified copy of the order be
filed by the petitioner with the Registrar of Companies
within 30 days after receipt of the same. A general meeting
may be called within two months and notice of such general
meeting along with reasons for the change in financial
statements may be published in newspapers in English and in
vernacular language. In the general meeting, the revised
financial statements, statement of directors and the statementCS (Comm.) No. 163/2024 -47-
of auditors may be put up for consideration before a decision
is taken on the adoption of the revised financial statements.
18. On approval of the general meeting, the revised
financial statements along with the statement of auditors
or revised report of the Board, as the case may be, shall be
filed with the Registrar of Companies within thirty days of
the date of approval by the general meeting.
39. As it is evident from the above, rectification of financial
statement cannot be carried out in a casual manner as done by the
defendant in the present case. Furthermore, DW-2 Sh. Yogesh Bangai
is a CA and as per his testimony he issued rectification certificate
DW1/7 without checking ledger, voucher, credit note or any other
document of the defendant company. It is also evident that he issued
the said certificate at the instance of DW-1 after filing of the present
case. Thus, DW1/7 cannot be relied upon to establish set off of dues
against the plaintiff company.
40. DW-2 has admitted in answer to question 14.2 during
cross examination that an amount of Rs. 1,14,48,457/- is due towards
NKGS on 31.03.2020 as per Ex. PW4/2. AOC-4 Form alongwith
Auditor’s report, balance sheet, director’s report, MGT-7 Annual
return for the financial year 2019-2020 and the list of shareholders as
on 31.12.2020 (Ex. PW-4/2 (colly) clearly show that an amount of Rs.
1,14,48,457/- is due towards NKGC. This alone constitutes as
admission of due towards the plaintiff by the defendant. Ld. counsel
fo the plaintiff has relied on MSTC Ltd. vs. Standard Chartered Bank
[Appeal No. 10/2023] passed by DRAT Mumbai. Relevant paragraph
of this judgment is as under :-
CS (Comm.) No. 163/2024 -48-
“14. The ld. Presiding Officer had relied upon the
decision of the Hon’ble Supreme Court in Uttam Singh
Duggal (supra) which was followed by the Hon’ble Bombay
High Court in Ultramatrix Systems (supra) to arrive at a
conclusion that admission of liability in a balance sheet of
the company can be the basis for passing a decree on
admission unless the defendant places subsequent balance
sheet showing that the discharge of liability shown in the
earlier balance sheet. The Bombay High Court had held that
the Rule does not require that the admission must be made
by the defendant in the pleadings before the Tribunal. Mr
Joshi has relied upon the decisions in Inteltech
Automation Pvt. Ltd. do Ors vs. IndusInd Bank Ltd. Anr.
………………………….in support of his arguments.”
15. In Inteltek (supra) the Hon’ble Bombay High
Court held that whilst a debt recovery Tribunal is allowed
to order a decree on admission under Rule 12
(5)……………………………………….. In that case, the Hon’ble
Supreme Court noted that the denial was evasive and that
the trial court was justified in holding that there was an
unequivocal admission of the contents of the documents.
Similarly, referring to the judgment in Ultramatix (Supra) it
is observed that the division bench while adverting to Rule
12 (5) held that a statement contained in the Balance Sheet
and Profit and Loss Account would be an admission o f
liability unless a subsequent balance sheet was filed to show
either that the amount has been paid or was not due and
payable and/or any other materials provided to hold
otherwise. It is observed that in that case, there was an
express admission of the amount due and payable in the
balance sheet.
……………………………………………………………
…………..”
Ld. counsel for the plaintiff has further placed reliance on
IL&FS Financial Services Limited vs. Adhunik Meghalaya Steels
Private Limited [Company Appeal (AT) (insolvency) No. 1379 of
CS (Comm.) No. 163/2024 -49-
2024] passed by National Company Law Appellate Tribunal,
Principal Bench, New Delhi. Relevant paragraph of this judgment is
as under:-
26. We are also guided by the judgment of Hon’ble
High Court of Andhra Pradesh in Vijaya Kumar Machinery &
Electrical Stores Versus Alaparthi Lakshmikanthamma 1968
SCC OnLine AP 219 wherein it has been held that that the date
on which the balance-sheet was signed is material to constitute
an acknowledgment. It may be useful to refer to relevant
portions of the said
judgment……………………………………………………….
The principle that follows is that the date on
which the balance-sheet was signed and presented is
also material and that the presentation of the balance-
sheet either to the general meeting of the company or to
the Income-Tax authorities would constitute an
acknowledgment of a subsisting liability as on the date
of the signature and presentation of the balance-sheet.
I am of the view that as the defendant has shown an
amount of Rs. 1,14,48,457/- as due towards the plaintiff in Ex.
PW-1/4. This is an admission on the part of the defendant no. 1 in
view of the judgments relied upon by the plaintiff.
41. It is contended by Ld. Counsel for defendants that goods
returned to the defendants were in damaged conditions.
The defendant has not sent any letter or communication to
the plaintiff that goods returned by the plaintiff were in damaged
conditions. The defendants have sent the calculation sheet
admitting the receipt of goods from the plaintiff. The defendant
has sent email dated 24.01.2019 Ex. PW-1/8 regarding receipt of
verified stock sheet. With this email, the defendant has annexed
CS (Comm.) No. 163/2024 -50-
receipt of verified stock sheet and in this email the defendant has
not mentioned that goods returned by the plaintiff were defective.
So, this contention of Ld. Counsel for defendants carries no
force.
42. Defendants have admitted to receive payment of Rs. 1 crore
from the plaintiff. Defendants have also admitted to receive
returned goods from the plaintiff. I have perused Ex. PW-1/4, it
states that the amount of Rs. 1 Crore was to be returned by the
defendants to the plaintiff after termination of agreement Ex.
PW-1/4. Para no. 3.4 & Para no. 9.1 of agreement Ex. PW-1/4
reads as under:-
“3.4: However, supplier will guarantee minimum gross
profit (GP) of Rs. 60 lacs (Rs. Sixty lacs only) in a year for
distributor by way of opening new stores or from repeat
orders from stores by supplier. The GP will be calculated
from the day of initial investment of Rs. 75 lacs (Seventy-
Five Lacs only) by distributor. In case, Minimum Gross
Profit of Rs. 60 lacs is not generated even with the help of
supplier, then Supplier will be liable to pay such un-
generated amount of Minimum Gross Profit of Rs. 60 lacs
to the distributor”.
9.1 Material Breach : This Agreement may be terminated
by either party by giving written notice of 90 days in
advance, termination to the other party, such termination
being immediately effective upon the giving of such notice
of termination. Remaining stock in saleable condition from
distributor will be taken back by supplier after liquidating in
CS (Comm.) No. 163/2024 -51-
market and refund will be done by supplier in 30 days for
remaining returned stocks received by supplier The amount
aforementioned would be invested in the stock to be kept
with the distributor.”
In view to discharge its liability of Rs. 1,00,00,000/- the
defendant had issued 15 post dated cheques. Ex. PW1/11 clearly
shows that the defendant were aware that the cheques in respect of
Rs. 1,00,00,000/- has been dishonoured but chose not to reply the
same. Defendant has also admitted in its balance sheet filed before
the Registrar of companies Ex. PW4/2 that a due of Rs.
1,14,48,457/- towards the plaintiff. Defendant has failed to take
appropriate steps to rectify its financial statement as per Section
131 of Companies Act to set off any legal dues pending against the
plaintiff. Additionally, in absence of any exercise being carried out
by the defendant to correct its financial statement as per law,
Balance sheet Ex. PW4/2 shall be treated as deemed
acknowledgment of due of Rs. 1,14,48,457/- towards the plaintiff.
DW-2 who is a expert witness also admitted that he issued DW1/7
at the instance of DW-1 and has not checked ledger, voucher,
credit note, debit note or any other document before issuing the
same. DW-2 also admitted that he is the writer of statement of
profit and loss for the year ending on 31.03.2020 of Ex. PW4/2.
Further, defendant failed to prove that any damaged goods were
supplied to it as per email Ex. PW-1/8. Thus, plaintiff is able to
prove that the he is entitled for recovery of Rs. 1 Crore from the
defendants. Accordingly, this issue is decided in favour of the
plaintiff and against the defendants.
CS (Comm.) No. 163/2024 -52-
43. Issue No. 5- Whether the plaintiff is entitled to the interest on
the amount of Rs. 1,00,00,000/-, if yes then at what rate and for
what period ? (OPP)
The burden to prove this issue is upon the plaintiff. It is
contended by Ld. Counsel for defendants that plaintiff is not
entitled to interest. The plaintiff has claimed interest @ 18% per
annum from the defendants. Admittedly, no agreement regarding
rate of interest was executed between the parties. Reliance can be
placed in this regard on the judgment of Central Bank of India
Vs Ravindra & Ors MANU/SC/0663/2001 passed by Hon’ble
Supreme Court of India. In this judgment it is held that according
to stroud’s Judicial dictionary of Words and Phrases interest
means, inter alia, compensation paid by the borrower to the lender
for deprivation of the use of his money. In Secretary, Irrigation
Department, Government of Orissa & Ors Vs G. C. Roy Manu/
SC/0297/1992 (1992) 2 SCC 508, it is held that the constitution
bench opined that a person deprived of the use of money to which
he is legitimately entitled has a right to be compensated for the
deprivation, call it by any name. It may be called interest,
compensation or damages. This is the principles of Section 34
CPC.
In this judgment, Judgment of Dr. shamlal Narula Vs CIT
Punjab MANU/ SC/0109/1964 (53) was also relied upon wherein
it is held that interest is paid for the deprivation of the use of the
money. In this judgment it is also held that in whatever category
“interest in a particular case may be put, it is a consideration paid
either for the use of money or for forbearance in demanding it,
after it has fallen due, and thus, it is charge for the use of
CS (Comm.) No. 163/2024 -53-
forbearance of money. In this sense, it is a compensation allowed
by law or fixed by parties, or permitted by customs or usage, for
use of money, belonging to another, or of the delay in paying
money after it has become payable.
Reliance can also be placed on the judgment of Aditya Mass
Communication (P) Ltd Vs APSRTC MANU/SC/0759/2003
wherein Hon’ble Supreme Court granted interest @ 12% p.a.
Reliance can also be placed on the judgment of “M/s IHT Network
Limited Vs. Sachin Bhardwaj” in RFA No. 835/2016 & CM
Appl.14617/2020 wherein the Hon’ble High Court of Delhi has
granted interest @12% per annum. I am of the view that interest
claimed by the plaintiff is every excessive and plaintiff is entitled
to interest @ 12% p.a. which is reasonable and usually prevailing
market rate of interest on the amount of Rs. 1,00,00,000/- from
28.08.2021 since when the legal notice was issued.
44. RELIEF:
In view of my above discussions, the suit of the plaintiff is
decreed and a decree of Rs. 1,00,00,000/- is passed in favour of
the plaintiff and against the defendants. The plaintiff is also
entitled to interest @ 12% per annum on the amount of Rs. Rs.
1,00,00,000/- from 28.08.2021 since when the legal notice was
issued till realization. Plaintiff is also entitled to the cost of the
suit. Decree sheet be prepared accordingly. File be consigned to
record room, after necessary compliance.
Announced in the (NARESH KUMAR MALHOTRA)
open court on 06.02.2026 District Judge, Comm. Court-06
Digitally signed West, Tis Hazari Courts
NARESH by NARESH
KUMAR Extension Block, Delhi/06.02.2026
KUMAR MALHOTRA
MALHOTRA Date: 2026.02.06
16:31:10 +0530
CS (Comm.) No. 163/2024 -54-
