REPORTED
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% DATE OF RESERVE: January 20, 2010
DATE OF DECISION: April 30, 2010
+ RFA No.108/2009
M/S. INTERNATIONAL PRINT-O-PAC LIMITED ..... Appellant
Through: Mr.J. S. Bakshi with Mr. Amitesh
S. Bakshi, Advocates.
versus
M/S MAA COMMUNICATION BOZELL (P) LTD .... Respondent
Through: Mr. Shyam Moorjani with
Ms. Anuradha Anand, Advocates.
CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL
1. Whether reporters of local papers may be allowed
to see the judgment? NO
2. To be referred to the Reporter or not? YES
3. Whether judgment should be reported in Digest? YES
: REVA KHETRAPAL, J.
1. This appeal is directed against the order dated 7 th November, 2008
whereby the suit filed by the plaintiff for recovery of Rs.3,23,175/- was
dismissed.
2. The case of the plaintiff-Company (the appellant herein), as it
emerges from the plaint, is that it is engaged in the business of printers
and photolithographers amongst other business and has been carrying
out the printing jobs as per the orders and specifications of the defendant
RFA No. 108/2009 Page 1 of 17
(the respondent herein), for which bills were regularly raised against the
defendant. It is alleged that the defendant-company was making
payment “on account” and, as such there was a running account
between the parties and that as per the books of accounts of the plaintiff-
company, duly maintained and audited in the ordinary course of
business, the defendant-company has not cleared the dues of the
plaintiff-company to the extent of Rs.2,27,588.81. It is further alleged
that the defendant has not cleared the aforesaid dues inspite of repeated
requests, reminders and due service of a legal notice and as such it is
liable to pay the aforesaid dues along with interest @ 21% per annum
w.e.f. the date of each default, but for the sake of convenience, the
plaintiff is claiming interest w.e.f. 12th July, 2001 till realization and
accordingly, the amount of Rs.3,23,175.75 is due, which includes the
principal amount of Rs.2,27,588.81 as well as the interest calculated
from the said date till the date of the filing of the suit, in the sum of
Rs.95,586.91.
3. The defendant in its written statement has taken a preliminary
objection that the suit of the plaintiff is without any cause of action,
inasmuch as the plaintiff in its alleged statement of accounts has
depicted 41 bills for a total sum of Rs.7,69,737.22 against which the
defendant has been shown to have made payment of Rs.5,42,148.70,
leaving a balance of Rs.2,27,588.52 as still due and payable by the
defendant, but no amount is due and payable against the aforesaid bills
RFA No. 108/2009 Page 2 of 17
shown in the statement of account of the plaintiff and only a sum of
Rs.4,478.60 is outstanding against the defendant, which amount is also
not recoverable, being barred by limitation. It is submitted that there
was no running account between the parties as alleged by the plaintiff
and the payment was being made against each bill for the amount for
which each bill was passed.
4. It is further submitted by the defendant that the defendant used to
place orders on the plaintiff sometimes orally and sometimes otherwise,
for doing certain printing jobs on behalf of the customers of the
defendant. Thereafter, the plaintiff used to send the bill and after
verification of the bill, the defendant used to realize the payment only for
the actual job done by the plaintiff, after deducting the necessary amount
against the rejection etc. from the said bills. Many a times, when the
work carried out by the plaintiff was not as per the specifications and to
the satisfaction of the customers of the defendant, on whose behalf the
said orders were placed, the defendant used to reject the said bills or
make deductions therefrom, and the plaintiff was informed accordingly.
Further, out of the 41 bills submitted by the plaintiff, 5 bills totalling
Rs.2,23,190.87 were rejected by the defendant as the job done was not as
per the specifications and against the remaining 36 bills amounting to
Rs.5,46,627.25, the payment of Rs.5,42,148.70 was made to the plaintiff
by the defendant. As such the amount claimed in the suit was not at all
payable.
RFA No. 108/2009 Page 3 of 17
5. Another preliminary objection taken by the counsel for the
defendant in its written statement is that the suit of the plaintiff is barred
by limitation, even against the 5 bills bearing Nos. 151, 154, 683, 252
and 263 totalling to Rs. 2,23,109.87, which were rejected by the
defendant as the job carried out by the plaintiff was not as per the
specifications. In any event, if the plaintiff had any grievance against
the non-payment of the said bills, the suit should have been filed within
three years of the date of the aforesaid bills. The plaintiffs not having
filed the suit within the aforesaid period, the suit was barred by
limitation.
6. Finally, it was submitted that as there was no running account
between the parties and each and every bill gave rise to a separate cause
of action, the suit was liable to be dismissed on account of misjoinder of
the causes of action.
7. In the replication filed by the plaintiff, the said preliminary
objections were denied by the plaintiff as also the averments made in the
written statement and those made in the plaint were reiterated. On the
pleadings of the parties, the following issues were framed for
adjudication: –
(i) Whether the suit is within limitation? (OPP)
(ii) Whether the defendant rejected five bills
totalling Rs.2,23,190.87 paise as mentioned in
preliminary objection no.1? (OPD)
(iii) Whether the suit is bad for misjoinder of
cause of action? (OPD)RFA No. 108/2009 Page 4 of 17
(iv) Whether the suit has been signed, verified
and filed by competent person? (OPP)
(v) Whether the plaintiff is entitled to interest, if
so at what rate? (OPP)
(vi) Relief.
8. It is necessary to note at this juncture that the dismissal of the suit
by the learned Trial Court is based entirely on issue no.1 and the
remaining issues have not been adjudicated upon. It is also necessary to
note that almost all the documents relied upon by the plaintiff to prove
its case are not in dispute. The said documents include the duly
receipted office copies of the invoices – Ex.PW1/4 to PW1/100, the
office copies of the letters dated 2nd June, 1999 and 6th March, 2001
issued by the plaintiff to the defendant as Ex.PW1/101 and Ex.PW1/102,
the office copy of the demand letter dated 18 th January, 2003 sent to the
defendant as Ex.PW1/103, proof of despatch and receipt thereof as
Ex.PW1/104, office copy of the legal notice sent to the defendant as
Ex.PW1/105 and its postal receipt, A.D. Card and UPC as Ex.PW1/106
to Ex.PW1/108 respectively.
9. The plaintiff, in order to prove its case, produced the Manager
(Accounts) of the plaintiff-company as PW1 while the defendant
produced its authorised representative as DW1 in the witness-box. PW1,
Mr. Ramesh Goyal, in the course of his cross-examination, admitted the
documents produced by the defendant, Ex.PW1/D1 and PW1/D2. DW1
RFA No. 108/2009 Page 5 of 17
in his evidence proved the document Ex.DW1/1, which was already
exhibited as Ex.PW1/D2 in the cross-examination of the plaintiff.
10. Thus, both the plaintiff and the defendant admitted the document
Ex.PW1/D2. As a matter of fact, the plaintiff, in his cross-examination
before the Trial Court unequivocally admitted as correct that the entire
case of the plaintiff-company is based on Ex.PW1/D1 and that the
payments made by the defendant have been reflected in the document
Ex.PW1/D2 from point A to point B. He, however, denied the
suggestion that the bills shown from point C to point D in Ex.PW1/D2
were correctly rejected by the defendant as also the suggestion that
Ex.PW1/3 was a manufactured document.
11. On the other hand, DW1, Mohd. Faruk Hossain, Senior Executive
Accounts with the defendant-Company, in the course of his cross-
examination, admitted that the defendant has no written document
signifying the alleged rejection of the 5 bills, but he denied the
suggestion that the payment was “on account” or that there was a
running account between the parties. Significantly, however, he
admitted that in the document Ex. PW1/D2, in certain entries, the
complete payment has not been made bill-wise even in respect of the
amount which was stated to have been passed by the defendant-company
against a particular bill.
12. With this evidence on record, the learned Trial Court concluded
that:
RFA No. 108/2009 Page 6 of 17
“There was no running account between the parties
so as to say that the period of limitation did not
expire and the liability was continuing and from
this point of view, each bill was a separate cause of
action and such claims of the plaintiff against the
41 bills, on the date of the suit, was barred by
time.”
Having held so, the learned Trial Court, as stated above,
dismissed the suit.
13. The learned counsel for the appellant, Mr. J.S., Bakshi contended
that Ex.PW1/D1 shows the 41 bills which were totalling
Rs.7,69,737.22p for the duration 15.05.1998 to 15.03.1999 and against
the said outstanding amount, an amount of Rs.5,42,148.70 was received
“on account” by way of six cheques on 16.02.1999, 23.02.2000,
20.04.2000, 04.07.2000, 08.01.2001 and 12.07.2001. He further
contended that as per law, the original limitation was three years from
the date of the last bill i.e. 15.03.1999 but due to the part payments being
made within the period of 3 years thereof, the last payment being on
12.07.2001, the limitation period stood extended to three years beyond
12.07.2001 i.e. till 11.07.2004 and the suit was filed on 18.07.2003. In
this regard reliance was placed by the counsel for the appellant on the
decisions rendered in the cases reported as F.C.C. Projects Pvt. Ltd. Vs.
Ashish Bhardwaj 145 (2007) DLT 457 (DB); Rajesh Kumari vs. Prem
Chand Jain 67 (1997) DLT 502; Technofab Engineering Ltd. Vs.
Nuchem Weir India Ltd. 136 (2007) DLT 223; Bharat Electronics Ltd.
Vs. Stejac Enterprises (P) Ltd. 82 (1999) DLT 78; J.K. Lakshmi
RFA No. 108/2009 Page 7 of 17
Cement Ltd. Vs. Namit Plastic (P) Ltd. & Ors. 160 (2009) DLT 340
and The Motor & General Finance Ltd. Vs. T.K. George & Anr. 95
(2002) DLT 350.
14. Mr. Bakshi further contended that the defendant no.1 filed
Ex.PW1/D2 admitting the bills, but stating that the 5 bills bearing no.
151, 154, 683, 252 and 263 were rejected. Neither any evidence of the
alleged rejection nor any particulars in this regard were given, whereas,
as per the invoices the said rejection was to be made within three days.
For the aforesaid purpose, Mr. Bakshi, referred to the invoices being
Ex.PW1/4 to Ex.PW1/100 wherein it was inter alia stated as under: –
“Certified that the goods are in order & rates
agreed. Any discrepancy in this invoice should be
brought to our notice within 3 days. Otherwise we
would not be responsible for the same.”
15. In support of his contention that there was a running account
between the parties, the learned counsel for the appellant relied upon the
alleged bill-wise payment of the six cheques, as set out by the
respondent in Ex.PW1/D2, a bare glance at which, he stated, amply
demonstrated that no cheque matched any particular invoice and the
payments were “on account”. The details of the same are as under:
(i) Cheque no. 955369 dated 16.02.1999 for Rs.1,00,000/- shows
payment for 3 bills for Rs.20,464; 23,692 and 55,675 which
totals to Rs.99,831 and another amount of Rs.169 is shown
paid towards bill no.355 dated 30.11.1998 passed for Rs.5100.
RFA No. 108/2009 Page 8 of 17
But only a sum of Rs.452.40p is paid vide cheque no. 770332dated 12.07.2001, what happened to the balance amount has
not been explained.
(ii) Cheque No. 375087 dated 20.04.2000 for Rs. 1,11,301.70
shows payment of four bills for Rs. 10411.42; Rs.4050.49;
7151.79; 80,750/- and part payment of two bills 258 and 251
passed for Rs. 5525/- and 18700/- by making part payment for
Rs.890.28 and Rs. 8047.72/- and part payment of the said two
bills of Rs.4634.72 and 10652.28 is stated to be made out of
cheque no. 770332 dated 12.07.2001. So two bills dated
30.10.1998 passed in 1998 have been paid by two cheques one
dated 20.04.2000 and one dated 12.07.2001, which is
unbelievable.
(iii) Similar is the stand with respect to cheque no. 684683 dated
04.07.2000 for Rs.1,03,657; no. 759513 dated 08.01.2001 for
Rs. 1,00,000/- and 770332 dated 12.07.2001 for Rs.52,190/-.
16. It is also contended by the learned counsel that an attempt had
been made to match the value of 5 invoices to total these to Rs.75,000/-
in respect of cheque 375053 dated 23.02.2000 for Rs.75,000/- but it has
not been explained as to how against bill no.126 dated 16.02.1999 for
Rs. 3046.40 (Ex.PW1/98), Rs.159.65 only was paid by Cheque No.
375053.
RFA No. 108/2009 Page 9 of 17
17. Mr. Bakshi, learned counsel for the appellant further contended
that there was no denial of the receipt of letters of demand as well as to
the receipt of the legal notice in the written statement and thus, the
documents Ex.PW1/101 to Ex.PW1/108 stood proved. It is also not in
dispute that no response was sent by the respondent to the appellant’s
aforesaid letters of demand and the legal notice. Thus, the learned
counsel for the appellant contended that adverse inference ought to be
drawn against the respondent. He further contended that adverse
inference deserves to be drawn against the respondent also for the reason
that inspite of the appellant’s notice to produce the documents
mentioned therein, Ex.PW1/B, including the books of accounts, the
respondent chose not to produce the books of account, which were in its
power and possession.
18. The learned counsel for the respondent, Mr. Shyam Moorjani, on
the other hand, fully supported the judgment rendered by the learned
Trial Court. He contended that the fact that in Ex.PW1/D1 the words
used were “Pending bills” fully demonstrated that there was no running
account between the parties. Each and every bill thus gave rise to a
separate cause of action and the suit was, therefore, bad for misjoinder of
causes of action, apart from being barred by limitation.
19. Having heard the learned counsel for the parties and gone through
the records, I am of the considered opinion that the judgment of the
learned Trial Court cannot be sustained. It is not in dispute and indeed it
RFA No. 108/2009 Page 10 of 17
is the admitted position that the last payment was made by the defendant
to the plaintiff by cheque no.770332 dated 12.7.2001. This is also borne
out by the document Ex.PW1/D2 and, at the risk of repetition, it is stated
that the said document was produced by the respondent itself and
enclosed as Annexure “A” to the written statement. This being so, the
answer to the question whether the suit is barred by limitation or is
within limitation, has to be found in Section 19 of the Limitation Act,
1963 which is not even adverted to by the learned Trial Court. The
relevant part of Section 19 of the Limitation Act, 1963 reads as follow: –
“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…..”
20. This court in the case of Rajesh Kumari (supra) held that “a
payment by cheque satisfies the requirement of Section 19, in as much as
the acknowledgment of payment appears in the handwriting of or in a
writing signed by the person making the payment in the form of a
cheque.” In the said case, it was further clarified that on the language of
Section 19 itself, it is clear that the payment may be made either against
the principal or on account of the interest. In either case, the payment
will be on account of the debt, which is all that the provision requires.
Once “payment by cheque” is accepted by the plaintiff, the plaintiff will
RFA No. 108/2009 Page 11 of 17
be entitled to the extended period of limitation under Section 19 of the
Limitation Act, 1963 and the said advantage cannot be wiped off or
undone by the tortuous act of the defendant withholding the payment of
the cheque. It was also observed that it is settled that “this provison is to
be interpreted liberally so as to save the suits from being barred by
limitation so long as its benefits can reasonably be extended to assist a
claim, otherwise legal and sustainable.
21. In the case of Technofab Engineering Ltd. (supra), a learned
Single Judge of this Court, relying upon the earlier judgment of this
Court in Rajesh Kumari’s case held that when payment on account of
debt or of interest on a legacy is made before expiration of the prescribed
period by the person liable to pay the debt or by an agent duly authorised
on his behalf, a fresh period of limitation shall be computed from the
time when the payment is made.
22. In the case reported as J.K. Lakshmi Cement Ltd. (supra) it was
held that the period of limitation shall be computed from the date of
invoices by which goods were sold and delivered by the plaintiff to the
defendant, but where there is an acknowledgment in writing of the
amount due to the plaintiff by the defendant or on account of part
payment of the amount due from the defendants to the plaintiff, the
period of limitation shall stand extended for filing the suit in accordance
with the provisions of the Limitation Act, 1963.
RFA No. 108/2009 Page 12 of 17
23. Likewise, in the decisions rendered in the cases of Bharat
Electronics Ltd.; The Motor & General Finance Ltd. and F.C.C.
Projects Pvt. Ltd. (supra), this Court held that a part payment made by
the debtor to the creditor would tantamount to the acknowledgement of
the amount and a fresh period of limitation shall be computed from the
date when the last payment is stated to have been made.
24. In view of the aforesaid, it must be held that a fresh period of
limitation would commence from the date the cheque was issued in part-
payment of the dues of the plaintiff i.e. on 12.07.2001, in view of the
provisions of Section 19 of the Limitation Act, 1963. The learned Trial
Court has not considered the said provision and thus, its findings
recorded on the issue no.1 are wholly unsustainable and are accordingly
set aside.
Issue No.2
25. The learned counsel for the appellant contended that there is not
an iota of evidence on record to show that the respondent had rejected
the five bills amounting to Rs.2,23,190.87, as mentioned in Preliminary
Objection no.1. The onus of proving this issue was placed upon the
respondent which the respondent has miserably failed to discharge. No
evidence of the alleged rejection nor any particulars in that regard have
been furnished. It is not even stated as to when the said bills were
rejected. No proof of the reason for such a rejection is forthcoming on
RFA No. 108/2009 Page 13 of 17
the record and in his cross-examination DW1 has admitted that there is
nothing on record to show such a rejection.
26. The learned counsel for the appellant also pointed out that
according to the convenant between the parties, the bills were to be
rejected latest within three days of the supply of the goods. Reference in
this regard was made by the learned counsel to the following condition
in each and every one of the invoices exhibited as Ex.PW1/4 to
Ex.PW1/100:
“Certified that the goods are in order and rates
agreed. Any discrepancy in this invoice should be
brought to our notice within three days. Otherwise,
we would not be responsible for the same.”
27. Clearly, in my opinion, the respondent has not even cared to state
when the bills were rejected and whether the said rejection was
communicated to the appellant. DW1, Mohd. Faruk Hossain, during his
cross-examination has conceded that the respondent-Company has no
written document signifying the alleged rejection. The assertion that five
of the bills were rejected was made for the first time by the respondent in
their written statement filed on 2nd July, 2004, stating therein that the
five bills totalling to Rs.2,23,190/87 were rejected as the job done was
not as per specifications. It has not even been elaborated as how the job
done was not as per specifications and whether the goods in question
were retained by the respondent or returned back to the appellant. Thus,
the bald assertion made by the respondent that five bills were rejected as
RFA No. 108/2009 Page 14 of 17
the job done was not according to the specifications cannot be given any
credence.
28. Issue no.2 is accordingly decided in favour of the appellant and
against the respondent.
Issue No. 3
29. The onus of proving this issue was on the respondent which also
the respondent has failed to discharge. It was for the respondent to
produce its books of account to show that there was a misjoinder of the
causes of action, but inspite of the notice under Order XXII Rule 8 CPC,
exhibited as Ex.PW1/B, having been served on the respondents to
produce all their books of account, the respondent did not care to
produce them. Even in the course of the arguments, the learned counsel
for the respondent was not able to substantiate the contention of the
respondent-company that there was any misjoinder of the causes of
action.
30. Issue no.3 is accordingly decided in favour of the appellant and
against the respondent.
Issue No.4
31. As regards the issue no.4, PW1 Ramesh Goyal, in his affidavit by
way of evidence, (Ex.PW1/A), stated that he is the Manager (Accounts)
and as such an authorised signatory of the appellant-Company. It is
further deposed by him that the appellant-Company is a public limited
company duly incorporated under the Companies Act, having its
RFA No. 108/2009 Page 15 of 17
registered office at B-204-205, Okhla Industrial Area, Phase-I, New
Delhi-110020, and that true copies of the Certificate of Incorporation are
exhibited as Ex.PW1/1 (collectively). PW1 Sh. Ramesh Goyal further
deposed that he is one of the principal officers of the company and as
such fully competent, authorised and empowered to act on behalf of the
company, institute suits, sign, verify and prosecute all complaints,
plaints, pleadings etc. on behalf of the appellant-company as also to
engage lawyers for the said purpose and to do all acts necessary for the
effective prosecution of the case. A true copy of the extract of the
meeting of the Board of Directors of the appellant-company dated 20th
May, 2002 authorising him to act on behalf of the company has been
proved on record by him as Ex.PW1/2. In the course of the arguments, a
somewhat feeble and half-hearted attempt was made by the learned
counsel for the respondent to contend that the suit had not been signed,
verified and filed by a competent person on behalf of the appellant-
company, but no cogent reason for the same was put forth. Accordingly,
this issue is also decided in favour of the appellant and against the
respondent.
Issue Nos. 5 and 6
32. In view of my findings on issues no.1 to 4, the appellant must be
held entitled to recover the sum of Rs.2,27,588.81, which was due and
outstanding against the respondent as on 12th July, 2001. The document
mentioned as Ex.DW1/1 has been proved in evidence by the sole
RFA No. 108/2009 Page 16 of 17
witness of the respondent i.e. DW1- Mohd. Faruk Hossain and was also
exhibited in the course of cross-examination of PW1 as Ex.PW1/D2.
The said document, in my considered opinion, clinches the matter being
a statement of accounts filed by the respondent itself, showing the
amount due to the appellant. The portion C to D of the said document
which appears at the bottom of the document and shows the bills
rejected and not passed for payment, as stated above, cannot be believed.
Accordingly, the appellant is held entitled to recover the sum of
Rs.2,27,588.81 being the principal amount of the unpaid bills.
33. As regards the award of interest, though the invoices set out that
interest @ 21 % per annum will be charged if the bill is not paid on the
due date, keeping in view the prevalent rate of interest, the appellant is
awarded interest @ 12% per annum with effect from 12.07.2001 till the
date of realisation.
34. The appeal stands allowed. The impugned order is set aside.
There will be no order as to costs.
REVA KHETRAPAL
(JUDGE)
April 30, 2010
sk
RFA No. 108/2009 Page 17 of 17