Karnataka High Court
M/S. Saikripa Insulations Private ... vs M/S. Shree Balaji Enterprise on 3 December, 2025
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COMAP No. 217 of 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 03rd DAY OF DECEMBER, 2025
PRESENT
THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
COMMERCIAL APPEAL NO. 217 OF 2025
BETWEEN:
1. M/S. SAIKRIPA INSULATIONS
PRIVATE LIMITED
A PRIVATE LIMITED COMPANY
INCORPORATED UNDER THE
COMPANIES ACT, 1956,
REGISTERED OFFICE AT SHED
NO.1/B, YERAPPA
INDUSTRIAL ESTATE,
MAGADI ROAD,
CHANNENAHALLI,
BENGALURU-562 130.
REPRESENTED BY ITS DIRECTORS.
Digitally 2. MR.MANOHAR SHIVARAM SHETTY,
signed by
NIRMALA S/O SRI.SHIVARAM SHETTY,
DEVI AGED ABOUT 65 YEARS,
Location: R/AT FLAT NO.014, SUKRITI,
HIGH
COURT OF THE AUSPICIOUS APARTMENT,
KARNATAKA 9/10, OFF 4TH CROSS ROAD,
MAHALAXMI LAYOUT,
BANGALORE-560 086.
3. MRS. PRAMILA MANOHAR SHETTY,
W/O MR.MANOHAR SHIVARAM SHETTY,
AGED ABOUT 60 YEARS,
R/AT FLAT NO.014, SUKRITI,
THE AUSPICIOUS APARTMENT,
9/10, OFF 4TH CROSS ROAD,
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COMAP No. 217 of 2025
MAHALAXMI LAYOUT,
BANGALORE-560 086.
...APPELLANTS
(BY SRI. RAJESH SHETTY, ADVOCATE)
AND:
M/S. SHREE BALAJI ENTERPRISE
REPRESENTED BY SOLE PROPRIETOR,
MR.KAMLESH SHAH,
S/O LATE HIMATLAL H.SHAH,
AGED ABOUT 68 YEARS,
OFFICE AT NO.122/1,
RAILWAY COLONY ROAD,
YESHWANTPUR,
BENGALURU-560 022,
KARNATAKA.
...RESPONDENT
(BY SRI. ANISH P BHOJANI, ADVOCATE)
THIS COMAP IS FILED UNDER SECTION 13 (1-A) OF THE
COMMERCIAL COURTS ACT 2015, PRAYING TO SECURE THE
RECORDS IN COM.OS.NO.762/2023, ON THE FILE OF THE
LXXXII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE,
BENGALURU (CCH-83) COMMERCIAL COURT AND ETC.
THIS APPEAL HAVING BEEN HEARD AND RESERVED
FOR JUDGMENT, COMING ON FOR PRONOUNCEMENT THIS
DAY, JUDGMENT WAS PRONOUNCED AS UNDER:
CORAM: HON'BLE MR. VIBHU BAKHRU ,CHIEF JUSTICE
and
HON'BLE MR. JUSTICE C.M. POONACHA
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COMAP No. 217 of 2025
CAV JUDGMENT
(PER: HON'BLE MR. JUSTICE C.M. POONACHA)
1. The present appeal is filed under Section 13(1-A) of the Commercial Courts Act, 2015 ('2015 Act') by the defendants, assailing the judgment and decree dated 30.1.2025 passed in Com.O.S.No.762/2023 by the LXXXII Additional City Civil and Sessions Judge, Bengaluru (CCH-83) ('Trial Court'), whereunder the suit for recovery of money filed by the respondent/plaintiff against the appellants/defendants has been decreed directing the defendants to pay a total sum of Rs.42,54,223/- together with a sum of Rs.21,69,653/- being the interest from 1.9.2020 till filing of the suit and further interest at 18% per annum from the date of the suit till realization.
2. The parties will be referred to as per their rank before the Trial Court for the sake of convenience.
3. It is the case of the plaintiff [a proprietorship concern] that it was engaged in the business of manufacture and supply of packaging materials and trading in Kraft papers. That defendant No.1 was engaged in the manufacture, import and supply of packaging material. Defendant No.2 and defendant No.3 were its directors. -4- COMAP No. 217 of 2025 The plaintiff and the defendants had a business relationship with each other for the past thirty years. The plaintiff had supplied goods on credit as and when requested by the defendants and the parties were having continuous and running transactions. 3.1. It is the further case of the plaintiff that it used to raise invoices in respect of the goods supplied to the defendants and the defendants acknowledged receipt of the goods on the said invoices. That the plaintiff raised invoices amounting to Rs.98,32,927/- for the period from April 2017 to March 2020 towards the material supplied to the defendants. That defendant No.2 had sought a hand loan of a sum of Rs.3.00 lakhs, which was paid by the plaintiff. Hence, the total amount payable under the invoices and the hand loan is a sum of Rs.1,01,32,927/-. That the defendants had supplied certain materials to the plaintiff and raised invoices for Rs.19,298/- on 27.11.2018 and 13.02.2019. That the defendants had made a total payment of Rs.58,59,407/- towards the dues payable to the plaintiff. Hence, after adjusting the amounts received from the defendants, they were due and payable to the plaintiff in a total sum of Rs.42,54,223.28. It was further averred by the plaintiff that it had paid statutory GST returns (GSRT-1) on the invoices raised and that the defendants were -5- COMAP No. 217 of 2025 eligible to claim input credit on the same. That the claim of input credit is reflected in the GST portal (GSTR-2A & 2B), which can be accessed only by the defendants. Hence, the plaintiff filed the suit claiming the following amounts:
SUMMARY OF CALCULATION
---------------------------------------------------------------------------------------------
PARTICULARS AMOUNT (IN Rs.)
----------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT 42,54,223.28 (Closing Balance as per Ledger)
--------------------------------------------------------------------------------------------- Interest at the rate of @ 18% on principal 4,46,693 Amount from 1st September 2020 to 31st March 2021.
--------------------------------------------------------------------------------------------- Interest at the rate of @ 18% on principal 15,31,520.38 Amount from 1st April 2021 to 31st March 2023.
--------------------------------------------------------------------------------------------- Interest at the rate of @ 18% on principal Amount 1,91,440 from 1st April 2023 to 30th June 2023.
--------------------------------------------------------------------------------------------- TOTAL (PRINCIPAL + INTEREST) 64,23,876.87
---------------------------------------------------------------------------------------------
4. The defendants entered appearance and filed their written statement, whereunder the defendants have admitted that they were doing business along with the plaintiff for many years. However, the defendants have specifically contended that the suit is barred by limitation, inasmuch as, the suit claim was with respect of invoices for the period from 18.9.2017 to 21.3.2020, while the suit was filed on 30.6.2023.
-6-COMAP No. 217 of 2025 4.1. The defendants have further denied that they are liable to pay the plaintiff the suit claim amount. It was further contended that the plaintiff supplied Kraft papers and insisted on issue of post dated cheques bill-wise. Defendant No.2 used to have the system of keeping signed cheques with the office staff of defendant No.1 - company for emergency use and that the plaintiff managed to get the said cheques from the staff of defendant No.1 - company for the supplies made, without the dates being written on the cheques. When the plaintiff was confronted regarding the same, it was stated that the said cheques were for security purposes only and would not be misused. That between December 2017 and March 2018, the plaintiff has taken ten cheques and misused the same in 2020. 4.2. It is further specifically averred by the defendants that in March 2018 defendant No.2 requested the plaintiff to arrange for working capital finance of Rs.10.00 lakhs and the plaintiff took two undated cheques for Rs.5.00 lakhs each bearing Nos.825223 and 825224. However, the plaintiff neither arranged for the loan nor returned the two cheques. It was further contended that defendant No.1 - company had transacted with the two other entities owned by the plaintiff and that the plaintiff is liable to pay defendant No.1 in a sum of Rs.5,58,547/- in respect of two transactions. That the -7- COMAP No. 217 of 2025 plaintiff agreed to settle/adjust the said amount of Rs.5,58,547/- from the amount due and payable by the defendants to the plaintiff and also promised to return the undated cheques. That despite receiving payments online, the plaintiff did not return the undated cheques and misused the same.
4.3. It is further averred that the plaintiff did not comply with GST Rule 46, wherein the supplies were required to be accompanied by two copies of tax invoices and the defendants received only one copy, which issue the plaintiff failed to resolve. That in the absence of the plaintiff complying with GST Rule 46, the input tax credit of the defendants would be reversed and the defendants would be penalized with interest. That the input tax credit that was liable to be reversed was a sum of Rs.12.00 lakhs and that the defendants would also be liable to pay interest/penalty of Rs.10.00 to Rs.12.00 lakhs.
4.4. That the defendants had paid a sum of Rs.15,31,280/- against bill Nos.13, 24, 26 and 34 and Rs.14,27,869/- towards payment of bill Nos.20, 22 and 23, despite which the plaintiff did not return the undated cheques. The plaintiff has presented the said cheques and since they were not honoured on presentation, the plaintiff filed four complaints under Section 138 of the -8- COMAP No. 217 of 2025 Negotiable Instruments Act, 1881 ('NI Act'), which are pending before the jurisdictional Court. The defendants had offered to amicably settle the matter with the plaintiff, which was not positively responded to by the plaintiff. The defendants had also specifically denied the case of the plaintiff that it had advanced a hand loan of Rs.3.00 lakhs. Hence, the defendants sought for dismissal of the suit.
5. Consequent to the pleadings of the parties, the Trial Court framed the following issues:
1. Whether the plaintiff proves that, the defendant placed the purchase order and the plaintiff have supplied the materials to the defendants on credit and issued invoice as per the rule 46 of GST?
2. Whether the Plaintiff proves that defendant is liable to pay the interest of Rs.21,69,653/- at the rate of 18% pa.
from 01.09.2020 to till filing of suit and further whether defendant is liable to pay future interest @18% p.a. from the date suit till the date of realization?
3. Whether suit is barred by limitation?
4. Whether the defendant proves that, they have issued two cheques as a security for loan promised by Sri.Kamlesh Shah ?
5. Whether the plaintiff proves that defendant is liable to pay for a sum of Rs.42,54,223/-?
6. Whether the plaintiff is entitled for relief as prayed for?
7. What Decree or Order?
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6. The plaintiff examined himself as PW.1 and marked Exs.P1 to P77. Defendant No.2 was examined as DW.1. Exs.D1 to D13 were marked. The Trial Court vide judgment and decree dated 30.1.2025 decreed the suit as noticed above. Being aggrieved, the present appeal is filed.
7. Learned counsel for the appellants/defendants assailing the judgment and decree passed by the Trial Court contended:
(i) That the suit is barred by limitation as the same is filed three years after the dates of invoices, which was the basis of the suit claim amount. It is further contended that Section 19 of the Limitation Act is not applicable to the present case;
(ii) That the plaintiff has not averred/disclosed regarding the proceedings initiated against the defendants before the National Company Law Tribunal (NCLT);
(iii) That due to the plaintiff not maintaining its records in compliance with the GST norms, the input tax credit of Rs.12.00 lakhs could not be availed by the defendants;
(iv) No documents have been produced by the plaintiff regarding the hand loan of Rs.3.00 lakhs allegedly advanced to the defendants;
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COMAP No. 217 of 2025
(v) The defendants were entitled to set off of various amounts due to them from various other entities to which the plaintiff was a part of and that various payments made by the defendants as averred in para 15 of the written statement were not accounted for;
(vi) That there is no agreement for payment of interest and the interest awarded at 18% by the Trial Court is erroneous;
(vii) That the defendants have been acquitted in the proceedings initiated by the plaintiff under Section 138 of the NI Act.
7.1. Hence, the learned counsel for the appellant seeks for allowing of the appeal and setting aside the judgment and decree passed by the Trial Court.
8. Per contra, learned counsel for the respondent/plaintiff justifies the judgment and decree passed by the Trial Court and contends:
(i) The Trial Court has rightly recorded a finding that the suit is within limitation since the business transaction between the plaintiff and the defendants was an
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ongoing one, in respect of which, the plaintiff was maintaining a running account;
(ii) The last transaction in the running account was payment of Rs.1,89,060/- by the defendants to the plaintiff on 1.9.2020 and the suit was filed on 30.6.2023. Hence, the suit was within time;
(iii) DW.1 in his cross-examination had specifically admitted that he has received input tax credit from the GST authorities in respect of the invoices, on the basis of which goods were supplied by the plaintiff (Ex.P3 to P67);
(iv) In the course of business transactions as per the request made by the defendants, the plaintiff had advanced a hand loan of Rs.3.00 lakhs and that was mentioned in the running account maintained by the plaintiff;
(v) In the invoices (Exs.P3 to P67) there is a specific stipulation that interest payable on overdue amounts, was 18%;
(vi) Regarding the loan of Rs.10.00 lakhs, DW.1 in his cross-examination had specifically admitted that there
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COMAP No. 217 of 2025was no agreement between the parties regarding the plaintiff lending a loan of Rs.10.00 lakhs;
(vii) The plaintiff was the proprietor of the other entity i.e., G.K.Enterprises, from whom various amounts were allegedly due and payable to the defendants;
(viii) That the defendants had admitted the debt at para 23 of the written statement;
8.1. Hence, it is contended that the Trial Court having adequately appreciated the oral and documentary evidence available on record, the judgment and decree passed decreeing the suit ought not to be interfered with by this Court in the present appeal.
9. The submissions of both the learned counsels have been considered and the material on record has been perused. The points that arise for consideration are:
(i) Whether the trial Court was justified in recording a finding that the suit is within time?
(ii) Whether the trial Court was justified in holding that the defendants are liable to pay the plaintiff the amount due under the various invoices raised by the plaintiff?
(iii) Whether the trial Court was justified in recording a finding that the defendants are
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liable to pay a sum of Rs.3 lakhs allegedly advance as hand loan by the plaintiff?
(iv) Whether the defendants are liable for set-off of various amounts as claimed?
(v) Whether the trial Court was justified in awarding interest @ 18% per annum?
(vi) Whether the judgment and decree passed by the trial Court warrants interference in the present appeal?
Re: question No.(i):
10. The trial Court had framed issue No.3 as to whether the suit was barred by limitation. The trial Court noticed that the invoices [Exs.P3 to P67] were raised between 18.09.2017 to 21.03.2020. That it was an admitted fact that the parties had business relationship for 30 years and that plaintiff had supplied goods to the defendants on credit. The ledger account [Ex.P68] has been noticed wherein it reflects that from 06.12.2017 to 01.03.2018, the defendants had paid a sum of Rs.23,97,466/-; from 01.04.2018 to 13.02.2019, the defendants had paid a sum of Rs.15,79,720; from 01.04.2019 to 21.03.2020 an amount of Rs.6,47,792/- was paid; and Rs.14,27,869/- was paid from 1.4.2020 to 1.9.2020. The last payment made by the defendants was on 01.09.2020 of Rs.1,89,060 and the closing balance was Rs.45,54,223/-. The Trial Court has also noticed Section 19 of the Limitation Act, 1963
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COMAP No. 217 of 2025(hereafter Limitation Act) as also the admission of DW.1 in the cross examination that he has made online payment of Rs.1,89,073/- on 01.09.2020 and 02.09.2020 to the plaintiff towards the amounts due from the purchase of the goods. The suit was filed on 30.06.2023 within three years from the last date of payment. Hence, the trial Court held that the suit is within time.
11. The plaintiff has specifically averred regarding supply of goods to the defendants periodically as per the request made by the defendants. The invoices under which the goods supplied were marked as Exs.P3 to P67. The defendants had acknowledged the receipt of the goods under the respective invoices, wherein the date and time as well as the vehicle number is mentioned. The ledger account extract (Ex.P68) clearly discloses that lumpsum amounts were paid periodically and the balance amount due [after deducting the amounts paid from the cumulative value of the goods supplied] were carried forward to the next financial year. The payments were not made as per specific invoices. The defendants in the written statement had also specifically detailed as to various payments made by them. Hence, it is clear that the plaintiff had maintained a running account in respect of its transactions with the defendants. As noticed in the said running account (Ex.P68) the
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COMAP No. 217 of 2025last transaction was a payment of Rs.1,89,060/- on 01.09.2020, admittedly made by the defendants to the plaintiff. Hence, the suit was filed on 30.06.2023, within 3 years of the last transaction.
12. A learned Single Judge of the Delhi High Court in Ashok Parshad v. M/s. Mahalaxmi Sugar Mills Co.Ltd., [2013 SCC OnLine Del 3629] while considering a similar fact situation regarding the period of limitation with respect to a running account, after noticing Article 14 as well as Section 19 of the Limitation Act, 1963, held as under:
20. Now, reverting back to the facts, it is seen that except two specific payments of small amounts all other on account payments were made by the defendant from time to time. All these payments were made by the defendant not with the delivery of the goods vide specific bills, but, as per its own convenience. Though, the payments were required to be made by the defendant within seven days of delivery as per the terms stipulated in the bills, but, the same having not been adhered to by the defendant and there being no other agreement of fixed period of credit, the part payments were made by the defendants towards the unpaid amounts. These by any means, cannot make the account mutual or reciprocal. The dealings between the parties continued and did not terminate with one supply and thus, the deliveries got united with one another and formed one continuous demand which kept on being carried forward from year to year till the last supply was made. Thus, it all formed one cause of action and could not be divided. The nature of transactions as well as the payments made and the conduct of the defendant would evidence that the payments were made on account of outstanding amounts of deliveries and if that was so, the last payment was to be taken as the date for calculation of limitation as per Article 14 read with Section 19 of the Limitation Act. In this view of the matter the conclusion comes out to be that the period of limitation commenced from 11th July, 1996 when the last payment of Rs. 50,000/-
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COMAP No. 217 of 2025was made, and it expired on 10.07.1999. The suit having been filed in December, 1997, was well within time of limitation. The issue is decided accordingly.
(emphasis supplied)
13. Having regard to the aforementioned, we concur with the finding of the trial Court regarding the limitation. Accordingly, question No.(i) framed for consideration is answered in the affirmative.
Reg: Question Nos.(ii) to (vi):
14. As already noticed at para 11 hereinabove, the plaintiff was maintaining a running account (Ex.P68) in respect of its transactions with the defendants.
15. It is forthcoming from the ledger extract (Ex.P68) that, after deducting the amounts paid by the defendants from the value of the goods supplied by the plaintiff, the defendants were due to the plaintiffs in a sum of Rs.42,54,223.28 as on 1.9.2020. The said amount is the principal amount claimed by the plaintiff in the suit.
16. With regard to the case of the plaintiff that it had advanced a hand loan of Rs.3.00 lakhs, neither in the plaint nor in the examination-in-chief of PW.1 has the plaintiff specified the date of
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COMAP No. 217 of 2025advancing the said hand loan of Rs.3.00 lakhs. The defendants had specifically denied at para 26 of the written statement that the plaintiff had given a hand loan of Rs.3.00 lakhs. In the cross- examination of PW.1 at para 18, he specifically states that he has paid the said loan of Rs.3.00 lakhs by way of cheque. However, the bank account statement of the plaintiff has not been produced. No other documents have been produced by the plaintiff with regard to the said hand loan of Rs.3.00 lakhs. The Trial Court without specifically noticing the said aspect of the matter has decreed the suit by including the said amount of Rs.3.00 lakhs. The said finding of the Trial Court, decreeing the suit in respect of the hand loan of Rs.3.00 lakhs, is erroneous and liable to be interfered with.
17. The defendants had claimed that they have issued various cheques to the plaintiff. However, the plaintiff has not received any monies by virtue of the cheques issued. Apart from the amounts paid by the defendants as reflected in Ex.P68, the defendants have not produced any material to demonstrate that they have made other payments to the plaintiff.
18. Although the defendants have raised a specific plea with regard to not having availed input tax credit with respect to GST
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COMAP No. 217 of 2025returns, it is pertinent to note that the contention regarding the said input tax credit has been made in the written statement on the premise that the GST Authorities had indicated to the defendants that they will have to reverse the input tax credit for all the invoices and that the defendants will be called upon to pay the said GST amount together with interest/penalty. However, DW1 in his cross- examination at para 29 has specifically admitted that he has received the input tax credit in respect of the invoices - Exs.P3 to P67. Further, the defendants have not produced any material to demonstrate that the input tax credit has been reversed by the GST authorities. Hence, the said contention put forth on behalf of the defendants is without merit.
19. In respect of the contention of the defendants regarding the loan of Rs.10.00 lakhs, DW.1 at para 26 of his cross-examination has admitted that there is no agreement between him and the plaintiff with regard to the said loan of Rs.10.00 lakhs.
20. As regards the claim of the defendants of set off, the defendants have not sought for any relief in the written statement with regard to the alleged claim of set off. No other material is produced by the defendants to demonstrate its claim of set off as is contended in the written statement.
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COMAP No. 217 of 2025
21. Regarding the contention of the appellants-defendants that the respondents-plaintiffs had instituted proceedings before the NCLT, it is pertinent to note that the trial Court had recorded a finding that since no order under Section 14 of the Insolvency and Bankruptcy, 2016 (hereafter IBC) declaring a moratorium had been passed, the question of staying the further proceedings in the suit did not arise. Further, the respondents-plaintiffs had stated that proceedings before the NCLT had been initiated and the same were at a preliminary stage. The said proceedings were not listed before the NCLT and no orders were passed in the same. The appellants have also not produced any material as to the stage of the proceedings before the NCLT as also as to whether any orders have been passed in the said proceedings. Hence, no ground is made out by the appellants to interfere with the impugned judgment and decree on the said ground.
22. As regards the contention of the defendants that there was no agreement to pay interest at 18% and that the Trial Court ought not to have awarded interest at 18%, it is pertinent to note that in the invoices (Exs.P3 to P67) it is specifically mentioned that interest will be charged at 18% if the amount under the invocies is not paid within 30 days. Further, the transaction between the
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COMAP No. 217 of 2025parties being a commercial one, the decision of the Trial Court awarding interest at 18% per annum cannot be faulted.
23. The Trial Court while decreeing the suit has awarded the principal sum of Rs.42,54,223/- as claimed by the plaintiff. However, in view of the finding recorded hereinabove with regard to the plaintiff not having adequately proved the hand loan of Rs.3.00 lakhs, the plaintiff is not entitled to the said amount. To the said extent, the judgment and decree passed by the Trial Court is required to be interfered with/modified. The judgment and decree passed by the Trial Court in all other respects is required to be affirmed. Question Nos.(ii) to (vi) framed for consideration are answered accordingly.
24. In view of the aforementioned discussion, the following:
ORDER
(i) The above appeal is partly allowed with proportionate costs;
(ii) The judgment and decree dated 30.1.2025 passed in Com.O.S.No.762/2023 by the LXXXII Additional city civil and Sessions Judge, Bengaluru (CCH-83), is modified by directing that the appellants/defendants pay the respondent/plaintiff the principal amount of
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Rs.39,54,223/- together with interest at 18% per annum from 1.9.2020 up to date of payment with costs;
(iii) Modified decree to be drawn accordingly.
Sd/-
(VIBHU BAKHRU) CHIEF JUSTICE Sd/-
(C.M. POONACHA) JUDGE BS/ND