Final Order 1

Order Details: Copy of Judgment
Pdf Text: SJ 59/19 SUM.SUIT 1355/18 1
IN THE CITY CIVIL COURT AT MUMBAI
SUMMONS FOR JUDGMENT 59 OF 2019
IN
SUMMARY SUIT NO. 1355 OF 2018
(UNDER ORDER XXXVII THE CODE OF CIVIL PROCEDURE 1908)
(CNR NO.: MHCC010019112019)
Mr.Sanjay Hasmukhbhai Shah,
Age: 46 years,
A Sole Proprietor of Hitesh Steel
Syndicate, having his registered
office at 8 K.M.Mehta, 32/38
Ahmedabad Street, Iron Maret,
Carmac Bunder, Mumbai-400 009. ...Plaintiff
Versus
M/s.Satra Property Development Pvt.Ltd... Substituted as per order dt.30/09/2019
MO Development Pvt.Ltd.
A company incorporated under the
provisions of the companies Act 1956,
having its registered office at F89, Prime
Mall, Irla Society Road, Vile Parle(West),
Mumbai-400056. ...Defendant
Appearances:
Advocate Mr.Tavaria for the Plaintiff.
Advocate Mr.Zaveri h/f.Advocate Tara for the Defendant.
CORAM : HIS HONOUR JUDGE
DEEPAK L. BHAGWAT
(C.R.NO.28)
DATE : 3rd FEBRUARY 2020
J U D G M E N T
1. This is Summons for Judgment for recovery of Rs.27,64,585/
with pendente lite and future interest @ 24% p.a.
2. According to the plaintiff, he is sole proprietor and carrying on
business in the name and style of 'Hitesh Steel Syndicate'. The
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defendant is a registered company. Pursuant to the purchase order
dated 22/12/2010 placed by the defendant, the plaintiff sold, supplied
and dispatched TMT bars to the defendant. The same goods were
received by the defendant. The plaintiff also raised invoice bearing
No.538/1011 dated 25/12/2010 for Rs.9,75,780/. The defendant was
bound to pay the amount of the invoice within 60 days from the date of
the invoice, falling which the defendant is liable to pay interest @ 24%
p.a.. However, inspite of several promises the defendant failed and
neglected to pay said amount. The defendant however made payments
to the income tax department towards the TDS regarding yearly interest
payable by the defendant till financial year 20142015. The defendant
also issued statements of confirmation of account in respect of each
financial year from 01/04/2011 to 31/03/2015. The plaintiff vide
demand notice dated 08/10/2018 called upon the defendant to pay the
outstanding dues, however the defendant did not comply with it. The
total amount including interest due and payable by the defendant at the
institution of the suit is Rs.27,64,585/. Therefore, the plaintiff claimed
recovery of said amount with interest.
3. The defendant resisted the summons for judgment by filing reply.
The defendant contended that the statements of confirmation of
accounts filed by the plaintiff are fabricated and manufactured. The suit
is not within limitation. The defendant does not dispute that, pursuant
to the orders placed by it, the plaintiff sold and delivered the goods to
it. However, according to the defendant, the plaintiff in addition to the
rate of goods separately charged 4% of vat which was contrary to
agreed rate. The tax invoices are silent regarding the rate of interest.
The payment towards TDS does not amount to acknowledgement of
liability. The defendant came with contentions that he was ready and
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willing to make the payment of Rs.9,75,780/ against the invoice dated
25/12/2010. However, the plaintiff had requested him to allot
residential premises in any of the project of the defendant or any other
company under it's control. The defendant informed the plaintiff about
its project known as “Satra Park” in Borivali which was being developed
by defendant's sister concern company. It was agreed between plaintiff
and defendant that the defendant would cause to sell one residential
premises in said project in favour of the plaintiff at market rate after
deducting the due amount payable by the defendant under the invoice
dated 25/12/2010. Accordingly, the residential flat bearing No.1705 in
AWing of the said project was reserved for the plaintiff. However, the
plaintiff delayed execution of agreement and making the balance
payment. After waiting for 5 years, in February 2016 the plaintiff
informed the defendant that due to financial difficulties he is not
interested to purchase the said premises and requested to cancel the
reservation. As the premises was reserved for the plaintiff, it could not
be sold to any other person and therefore, more funds could not be
generated which caused financial loss of Rs.31,00,000/. In this
background, the plaintiff and the defendant orally agreed that amount
due and payable by the defendant under the subject invoice with
interest thereon stands adjusted against the amount due and receivable
for the financial loss due to reservation of the premises for the plaintiff.
In full and final settlement, thus, it was agreed that no party should
have any claim of whatsoever nature against each other. Thus, after
February 2016, no amount was due and payable by the defendant to
the plaintiff. On all these grounds, the defendant requested to grant
unconditional leave to defend.
4. Considering the material on record and submissions made on
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behalf of the parties including written notes of arguments, points arise
for determination along with my findings thereon for the reasons
recorded are as under:
POINTS FINDINGS
1. Whether the plaintiff is entitled
to summons for judgment?
In the Negative
2. Whether the defendant is
entitled to leave to defend? if yes
whether conditional or
unconditional?
Unconditional leave to defend
3. What order? As per final order
REASONS
As to points No.1 to 3:
5. The Ld advocate on behalf of the plaintiff argued that there is no
dispute that the goods were sold and delivered to the defendant. The
defence raised is regarding limitation but the statements of account
confirmation executed from time to time within the period of limitation,
extended further period of limitation. From the last statement of
confirmation of account executed on 15.12.2015, the suit is filed within
3 yrs. Therefore, it is within limitation. Further, though the statements
of confirmation of accounts as filed on behalf of the plaintiff are
disputed by the defendant, the statements of confirmation of accounts
filed on behalf of the defendant show that the defendant made payment
towards TDS. Same payment also extended period of limitation. No
documentary evidence is placed on behalf of the defendant regarding
the mutual understanding about the adjustment of the amount. Thus,
the defendant has no defence. Therefore, he requested to allow the
summons for judgment. He relied on R.Kumar V/s Chemicals
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unlimited, AIR 2001 Bombay 116.
6. On the other hand, Ld advocate on behalf of the defendant
argued that, the suit has not been filed within limitation. The
statements of confirmation of accounts have been challenged by the
defendant contending the same to be forged documents and therefore,
the same cannot be treated as acknowledgements at this stage. There
was mutual agreement between the parties regarding the adjustment of
the amount. Thus, the defendant has substantial defence. Therefore, he
requested to reject the summons for judgment and grant unconditional
leave to defend. He relied on 1. Jashbhai Motibhai Patel V/s
Hasmukhbhai Ravjibhai Patel, AIR 1992 Gujrat 115, 2. M/s.
S.P.Brothers V/s Biren, 2008(4) ALL M.R.379.
7. There has been no dispute that the plaintiff supplied the goods to
the defendant. However, the defences raised on behalf of the defendant
are mainly two fold, 1. That the suit is not within limitation and 2. By
mutual agreement the amounts payable to each other have been
adjusted. Regarding the limitation, the goods were sold to the
defendant on 25.12.2010. The invoice dtd.25.12.2010 gives credit
period for 60 days. The due date of payment is shown to be 28.02.2011.
Thus, the period of limitation started to run from 01.03.2011. The suit
has been filed on 16.10.2018. Thus, the suit is not within 3 yrs from
01.03.2011. The plaintiff taken a stand that the defendant executed
confirmation of accounts dtd.01.04.2011, 01.04.2012, 01.04.2013,
01.04.2014 and 15.12.2015, thereby on date of these statements of
confirmation fresh period of limitation started by virtue of section 18 of
the Limitation Act. However, this court must note that these statements
of confirmation of accounts have been disputed by the defendant. The
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defendant does not admit that the confirmation of accounts as filed on
behalf of the plaintiff bear its seal and signature. The defendant's
version is that he has issued statements of confirmation of accounts as
per the copies enclosed with the reply and all those were issued on
15.12.2015, thus, the same were issued after the period of limitation,
therefore, section 18 will not apply. This court must note that there is
no dispute that in order to attract section 18 of the Limitation Act, the
acknowledgement should be within the period of limitation. The copies
of confirmation of accounts as furnished on behalf of the defendants
with the reply show that the same were issued on 15.12.2018 i.e. not
within the period of limitation of 3 yrs from the actual transaction.
Therefore, same cannot be made basis to start fresh period of limitation
treating the same as acknowledgement within the meaning of section
18 of the Limitation Act. As already noted, the statements of
confirmation of accounts as filed on behalf of the plaintiff have been
disputed by the defendant denying execution thereof. Therefore,
whether the confirmation of accounts as filed on behalf of the plaintiff
were executed by the defendant is a triable issue and no definite
conclusion can be formed regarding same at this stage.
8. Regarding the defence of mutual agreement of adjustment of
amount payable to each other, the specific contention of the defendant
is that on the request of the plaintiff some premises was reserved in one
of the defendant's project, however, later the plaintiff refused to
purchase the premises. As the premises was kept reserved the defendant
suffered loss. Therefore, as mutual adjustment, the parties agreed that
no amount shall be payable to each other. Now, whether there was such
an agreement and whether the amount payable to each other was
accordingly adjusted is a triable issue and the matter of evidence. True
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that no documents have been produced to show that there was such
mutual adjustment. But the basic contention of the defendant is that it
was oral agreement. If it was oral agreement there is no question of
production of documentary evidence about the agreement. One
circumstance may be noted that although the goods were sold in
December 2010 and the amount was due from March 2011, the plaintiff
waited to claim the recovery of amount till 2018. The pre suit notice
was issued on 08.10.2018. At this stage, the conduct of silence of the
plaintiff, in not prosecuting the defendant for recovery of the amount
for such long period, creates a circumstance to say that the defence
raised is probable and with substance.
9. Regarding the limitation, about the contentions on behalf of the
parties as to whether payment towards TDS amounts to
acknowledgment, the Hon'ble Bombay High Court in the case of
'R.Kumar' relied on decision in one of the cases decided by it vide
summons for judgment No.278 of 1995 and summary suit No.797 of
1995 wherein it was observed as “ I do not find any merit in the above
defences. The above entries are reflected in the books maintained by the
defendants themselves. The defendants have credited TDS and they also
credited interest in the account of the plaintiffs for tax purposes. In the
above circumstance, I do not find any merit in the above defences put up
by the defendants”. However, having gone through the whole para 13 of
the Judgment in the case of 'R. Kumar' it is clear that the said
observations in the summons for judgment 278 of 1995 are regarding a
question as to whether the books of account were accurate and whether
summary suit would lie on it or suit on accounts would lie. Thus, the
observations were not in respect of the question as to whether payment
towards TDS can be treated as part payment towards the loan amount
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so as to extend the period of limitation by virtue of section 19 of the
Limitation Act.
10. In the case of 'M/s.S.P.Brothers' the Hon'ble Bombay High Court,
referring to the decision in the case of Jyotsna V/s T.S.Parekh 2007(4)
All M.R.718, held that issuance of TDS certificate does not amount to
an acknowledgement of defendant. It is also observed that the TDS
certificate is primarily to acknowledge the deduction of tax at source.
The certificate does not refer to any amount of loan or even the rate of
interest which is payable on the principal amount. However, the
question in the case of 'S.P.Brothers' was whether summary suit would
lie on the basis of TDS certificates as an admission of liability. In that
background, the Hon'ble Bombay High Court held that TDS certificate
does not amount to acknowledgement. Thus, the question was
regarding maintainability of summary suit on the basis of TDS
certificate. In both the given cases namely 'R.Kumar' and
'M/s.S.P.Brothers' it was not the question as to whether payment
towards TDS can be treated as a partpayment towards the loan so as to
start fresh period of limitation by virtue of section 19 of the Limitation
Act. Thus, the decisions in the cases relied on behalf of both the parties
in this regard are not directly to the question before this court. This
court has to observe that the TDS is an amount of payment of tax at the
source. Considering the nature of payment, it is not towards the actual
loan but it is towards the tax liability, apparently, it cannot be treated as
partpayment within the meaning of section 19 of the Limitation Act. In
any case, regarding the oral agreement as to adjustment of amount
payable to each other, the defendant has substantial defence and
brought triable issues. Resultantly, the plaintiff is not entitled to
summons for judgment whereas the defendant is entitled to
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unconditional leave to defend. Hence, point No.1 is answered in the
Negative and point No.2 is answered as the defendant is entitled to
unconditional leave to defend. In answer to point No.3 order as follows
is passed:
ORDER
1. The summons for judgment 59 of 2019 is rejected.
2. Unconditional leave to defend is granted to the defendant.
3. The defendant shall file written statement on or before 16th
March 2020.
4. The registrar shall cause the conversion of the suit to appropriate
category.
5. Summons for Judgment 59 of 2019 is disposed.
(Deepak L. Bhagwat)
AdHoc Judge,
Date: 03/02/2020 City Civil Court, Gr. Mumbai
Dictated on : 03/02/2020
Transcribed on : 05/02/2020
Signed on : 05/02/2020
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CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL SIGNED
JUDGMENT/ORDER.”
12/02/2020 at 5.45p.m. Mrs.J.V.Pawar
UPLOAD DATE AND TIME NAME OF STENOGRAPHER
Name of the Judge (With Court Room No.) HHJ Shri.D.L.Bhagwat
(C.R.NO.28)
Date of pronouncement of Judgment/Order 03/02/2020
Judgment/Order signed by P.O. on 05/02/2020
Judgment/Order uploaded on 12/02/2020
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