M/S D.P. BAGS (P) LTD vs M/S NAV BHARAT INTERNATIONAL LTD

$~6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision:- 30th January, 2024.
+ CS(COMM) 631/2019
M/S D.P. BAGS (P) LTD ….. Plaintiff
Through: Ms. Kirti Mewar and Ms. Eesha Shonak, Advs. (M. 7204073750)
versus

M/S NAV BHARAT INTERNATIONAL LTD ….. Defendant
Through: None.
CORAM:
JUSTICE PRATHIBA M. SINGH

Prathiba M. Singh, J. (Oral)

1. This hearing has been done through hybrid mode.
2. The present suit for recovery has been filed by the Plaintiff-M/s. D.P. Bags (P) Ltd. against the Defendant-M/s. Nav Bharat International Ltd., seeking recovery of a sum of Rs. 1,08,43,173/- together with interest pendente lite and future interest at the rate of 15% p.a. from the date of suit till realisation.
3. The Plaintiff’s case is that it is engaged in the sale of Jute Hessian fabric/cloth, which is used for packaging rice. The Defendant is involved in the manufacture and sale of rice under various well-known brands. The Plaintiff had been supplying substantial quantities of its product to the Defendant for the purpose of rice packaging. According to the Plaintiff, an open mutual running account was maintained between the parties. 
4. According to the Defendant, for the year 2011-2012, a substantial sum of more than Rs.73 lakhs was outstanding. Despite acknowledging the said amount in its ledger account,  the Defendant failed to make the payment. In view thereof, the present suit has been filed, seeking the recovery of a sum of Rs.73,83,120.50/-, along with interest at the rate of 15% totaling to a sum of Rs.1,08,43,173/-. The Plaintiff also prays for pendente lite interest and costs. The prayer in the suit is as under:-
“a) Pass a decree of recovery of a sum of Rs. 1,08,43,173/- in favour of the plaintiff against the defendant, together with pendente lite and future interest at the rate of 15% p.a. from the date of the suit till realization;”

5. The written statement was filed in this matter, and the first objection being that the Defendant-Company was under the Board of Industrial and Financial Reconstruction (hereinafter ‘BIFR’) and in view of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter, ‘SICA’), it was urged that no order ought to be passed. Dismissal of the suit was sought.
6. Written statement on the merits, contains merely bare denials without any basis being set out. The para-wise reply throughout the written statement merely repeats the denial of the contents of the respective paragraphs of the plaint. No other defense is raised in the written statement. Along with the written statement, a copy of the order dated 21st August, 2012 passed under SICA and order dated 10th October, 2012 passed by the BIFR are placed on record. 
7. The Defendant had also moved an application under Section 22(1) of the SICA being I.A. 5392/2015 wherein vide order dated 27th October, 2016 the Court held that nothing was shown by the Defendant that the Plaintiff’s claim would be covered by any Scheme passed by the BIFR. The relevant observations of the Court are set out below :-

“11. While holding that the protection of Section 22 of the SICA would automatically have to be implemented as soon as a claim stands admitted, either because it had been reflected in the scheme presented before the BIFR or because it stands favourably adjudicated in the court of law, the court in Saketh India Ltd. (supra) referred, with approval, the view taken by a learned single judge of this court in Sirmor Sudburg Auto Ltd. vs. Kuldip Singh Lamba, (1998) 91 Comp. Gas 727 to the effect that ”mere pendency of the enquiry would not suffice; the claimed dues must be reckoned or included in the sanctioned scheme.”
12. The views taken in Ghanshyam Sarda (supra) and KSL and Industries Ltd. (supra) do not assist the defendant as the observations in those decisions were in different context.
13. In the present case, difficulties for the defendant in pressing home the application at hand are not only that the claim of the plaintiff has been disputed but also that there is nothing shown to the court that claim of the plaintiff in the suit would be covered by any scheme formulated or presented to the BIFR for its approval.
14. Thus, the application under Section 22(1) of the SICA is found devoid of merits and is dismissed.”

8. The suit then proceeded further. Vide order dated 15th September, 2017, this Court recorded that the admission/denial of documents was concluded. Thereafter, the issues were framed on the same date, which read:-
“1. Whether the suit is barred by limitation, as alleged? OPD
2. Whether the plaint does not cause any cause of action, as alleged? OPD
3. Whether the plaintiff is entitle to recovery of an amount of Rs. 1,08,43,173/-? OPP
4. Whether the plaintiff is entitle to interest @ 15% on the suit amount? OPP
5. Relief, if any.”

9. Subsequently, the Plaintiff presented evidence in the matter. PW-1, Mr. Moti Lal, is the main witness who provided evidence. The following documents were exhibited: –
1. Ledger account showing balance of 73,83,120.50/-
Ex. PW-1/2 
2. Certificate issued under Section 65B of the Indian Evidence Act, 1872
Ex. PW-1/3
3. Copy of the legal notice dated 27th May, 2013
Ex. PW-1/4
4. Copy of the postal receipts along with the A.D. Card received
Ex. PW-1/5
5. Invoices raised by the Plaintiff upon the Defendant after supply of the project
Ex. PW-1/6 till Ex. PW-1/23

10. The said witness was also cross-examined by the ld. Counsel for the Defendant. During the cross-examination, the witness confirmed that the orders were not placed in writing by the Defendant. He stated that prior to the disputes arising between the parties, regular payments were being made by the Defendant. It was only in 2010-2011 that the Defendant stopped making payments, which led to the disputes.
11. The witness has specifically identified PW1/2, a ledger account, which the Defendant duly acknowledged. He stated that the parties had sat together, reconciled the account, and both signed it. He identified the director of the Defendant who signed the said statement as Mr. Parvesh Kumar. The witness also mentioned that he made repeated visits to the Defendant seeking payment and confirmed the exhibit PW1/2. The cross examination of PW1 is relevant and is set out below:-
“I am the director of the plaintiff company since its inception. I do not remember the date when the company was incorporated. I can tell it after seeing the record. Apart from me, there is another Director namely Mr. Shankar Lal. Company is dealing in the business of packing. Our company is dealing with the defendant company for last about 15 years. The affidavit was prepared by my counsel at my instance. I got my affidavit notarised from the Notary, at Delhi High Court. The defendant used to place orders sometimes telephonically and some times by calling us to their office in person. The orders were never placed by the defendant to the plaintiff in writing. Before dispute in question arose, defendants were making regular payments. The dispute started in the financial year 2010-2011 when the defendant stopped making payment to the plaintiff. Defendant might have paid some cheques after this period. I have placed all the documents i.e. ledger account on record in support of my contention. Vol. There is also one balance confirmation account. At this stage, witness has identified Ex. PW-1/2 (page 40 to 43).
Q. On which date, the defendant has confirmed the balance of the ledger account?
A. I do not remember the date when the balance was confirmed by the defendant. Vol. The parties sat together, tallied the account, and had put the signatures on the same.
The said meeting was with Mr. Parvesh Kumar i.e. Director of defendant company. No written communication was given before any meeting. Vol. We used to sit together for the preparation of the accounts.
The outstanding against the defendant pertains to the period i. e. FY 2010-2011 ,2011-2012,2012-2013 and 2013-2014.
I have requested various times to the defendant to make the payment and even I personally visited the defendant to make the payment. Vol. Some payments were made by the defendant.
Q. For which period, the balance is confirmed by the defendant?
A. The confirmation with respect to the outstanding balance with signatures is there for FY 2010-11 & 2011-12. Vol. Thereafter, we provided them with the copy of the ledger account. However, the same was not received back with the signatures.
I do not have any proof in this regard.
It is correct that EX.PW-1/2 is the statement of account generated by the plaintiff company.
It is correct that I do not have any document to show confirmation of balance by receiving except Ex. PW-1/2 (page nos. 40 & 41).
Further cross-examination is deferred at the joint request.”

12. After the closing of the Plaintiff’s evidence, the Defendant has not led any evidence in the matter and the Defendant also stopped appearing in the matter. The Defendant has continued to seek adjournments, and thus vide order dated 9th December, 2022, the Court imposed costs of Rs. 5,000/- on the Defendant for this delay. Following this, the Defendant ceased to appear before the Court, leading to the closure of their right to cross-examine PW-1 vide order dated 18th April, 2023. Further, as the Defendant neither appeared in Court nor filed the evidence affidavit, the Court, on 11th August, 2023, granted them a final opportunity to file the evidence by way of affidavit, subject to costs of Rs. 10,000/-. Vide order dated 18th October, 2023, the Defendant’s right to lead evidence was closed, and the matter was set for arguments before the Court.
13. The Court directed on 15th January, 2024, that the Plaintiff should verify the status of the Defendant-Company. The ld. Counsel for the Plaintiff has done so, and as recorded in the previous order dated 19th January, 2024, the Ministry of Corporate Affairs website indicates that the Defendant-Company is active. The ld. Counsel for the Plaintiff was also queried about the pecuniary jurisdiction since the claim in the prayer clause of the suit was below Rs. 2 crores. She then referred to the order dated 8th November, 2019. In the said order, the Court referred to a circular dated 30th January, 2019 specifies that any commercial suit which is valued less than Rs.2 crores and was filed prior to 3rd May, 2018 would continue to remain before this Court. 
14. Ld. Counsel Ms. Kirti Mewar made her submissions today. She has taken the Court through the invoices and the ledger accounts. Upon examining the ledger account (Ex. PW-1/2), it is evident that the said exhibit has been duly countersigned by the Defendant, and even the seal of the Defendant company has been affixed. Under such circumstances, the Defendant cannot challenge the validity of the said ledger account. The extract of the said ledger accounts is set out below:

15. The Court has also perused the written statement, which reveals that apart from bare denials, there is no denial on merits and no substantive defence has been put forward by the Defendant. 
16. Rules 3, 4, and 5 of Order VIII CPC form an integrated code dealing with the manner in which allegations of fact in the plaint should be denied and the legal consequences following its non-compliance. Order VIII Rule 5(1) CPC establishes that any allegation relating to facts in the plaint must be specifically denied, denied by necessary implication, or stated as not admitted in the Defendant’s pleadings; otherwise, it is considered admitted, except in cases involving a person under disability. Additionally, Order VIII Rule 3 CPC mandates that the Defendant must specifically address each allegation of fact in the plaint that he does not acknowledge as true.
17. In Lohia Properties (P) Ltd vs Atmaram Kumar, (1993) 4 SCC 6, the Supreme Court has held that any allegation relating to facts in the plaint that is not contested in the written statement is deemed to be accepted by the Defendant. For an allegation of fact to be disputed, it must either be explicitly denied, denied through necessary implication, or at least declared as not admitted. Failure to respond in such a manner results in the allegation being considered as admitted by the Defendant.
18. In commercial suits, when the Defendant fails to appear, the Courts ought to pronounce judgment, bearing in mind the primary objective of the Commercial Courts Act, 2015, which is the expeditious disposal of commercial suits. The Commercial Courts Act, 2015 encourages the Courts to adopt a proactive approach in rendering judgments in the absence of the Defendant. By choosing to stay away from these proceedings, the Defendant cannot be allowed to gain any advantage from its conduct.
19. Even on merits, the court is convinced that the ledger accounts and evidence given by the Plaintiff is satisfactory and proves that the Plaintiff is entitled to recovery. Under such circumstances the suit is decreed for a sum of Rs.73,83,120.50/- along with interest @ 7% from the date of issuance of legal notice dated 27th May, 2013 till date. If the entire decretal sum is paid by the Defendant within a period of two months, no further interest would accrue. If not, w.e.f. 1st April, 2024, simple interest @9% would be liable to be paid on the decretal amount.
20. In addition, the suit having been filed in 2014 and the Plaintiff having been forced to litigate for 10 years before this Court and Defendant having now chosen stopped appearing in the matter and to not lead any evidence, the Plaintiff is entitled to actual costs following the judgment of the Supreme Court in Uflex Ltd. v. Government of Tamil Nadu [Civil Appeal Nos.4862-4863 of 2021, decided on 17th September, 2021]. Let the bill of actual costs in terms of the Rule 5 of Chapter XXIII of the Delhi High Court (Original Side) Rules, 2018 be filed with the Registry. The decree shall include the said amount of costs.
21. In addition, the Plaintiff is permitted to recover the costs of Rs.5,000/- as imposed on 18th April, 2023 and costs of Rs.10,000/- imposed vide order dated 11th August, 2023. These two amounts shall also be added to the decretal sum insofar as costs is concerned.
22. Let the decree sheet be drawn up in the above terms. 

23. The present suit, along with all pending applications is disposed of in the above terms.

PRATHIBA M. SINGH
JUDGE
JANUARY 30, 2024
mr/dn

CS(COMM) 631/2019 Page 2 of 2