M/S Brakewel Automotive ... vs M/S Karpagga Brakewel & Ors.
2011 Latest Caselaw 430 Del

         THE HIGH COURT OF DELHI AT NEW DELHI

%                     Judgment Pronounced on: 25.01.2011

+           CS(OS) No. 1689/2010

M/S BRAKEWEL AUTOMOTIVE COMPONENTS (INDIA)
PVT. LTD                        .....Plaintiff

                            - versus -

M/S KARPAGGA BRAKEWEL & ORS.                   .....Defendant

Advocates who appeared in this case:
For the Plaintiff: Mr. J.S. Bakshi
For the Defendant: None.

CORAM:-
HON'BLE MR JUSTICE V.K. JAIN

1. Whether Reporters of local papers may                  No.
   be allowed to see the judgment?

2. To be referred to the Reporter or not?                  No.

3. Whether the judgment should be reported                 No.
   in Digest?

V.K. JAIN, J. (ORAL)

1. This is a suit filed under Order 37 of the Code of

Civil Procedure for recovery of Rs.35,81,952.12p. The case

of the plaintiff is that it supplied auto components and parts

to the defendant from time to time and raised bills for the

price of those goods. A sum of Rs.25,49,432.12p was

alleged to be due from the defendants as principal sum as

on 31st March, 2008. It is further alleged that the aforesaid

dues were admitted by defendant No.3 as a partner of

defendant No.1 on the statement of accounts for the period

ending 31st March, 2008. The plaintiff has claimed the

aforesaid amount of Rs.25,49,432.12p along with interest

thereon with effect from 1st April, 2008 at the rate of 18%

per annum, as per market rate, practice, usage, custom and

contractual rate of interest between the parties. The

amount of interest claimed by the plaintiff comes to

Rs.10,32,520/-.

2. Summons were served on the defendants on 11 th

October, 2010. There was appearance on behalf of the

defendants on 28th October, 2010 where it was noted that

defendants had been served and their counsel, who had

been engaged recently intended to file appearance along

with an application for condonation of delay.

3. Order 37 Rule 2(3) of the Code of Civil Procedure

provides that the defendant shall not defend the suit to

which Order XXXVII applies, unless he enters appearance.

It further provides that in default of his entering

appearance, the allegations in the plaint shall be deemed to

be admitted and the plaintiff shall be entitled to a decree for

any sum, not exceeding the sum mentioned in the

summons, together with interest at the rate specified, if any,

up to the date of the decree. Rule 3 of Order XXXVII

provides that in a suit to which this Order applies, the

plaintiff shall, together with the summons serve on the

defendant a copy of the plaint and annexures thereto and

the defendant within 10 days of such service enter an

appearance either in person or by pleader and in either case

he shall file in Court an address for service of notices on

him. It further provides that all orders, summons, notices

etc. shall be deemed to have been duly served on the

defendant if they are left the address given by him for such

service. Sub-rule (7) of Rule 3 provides that the Court may

for sufficient cause shown by the defendant, excuse the

delay of the defendant in entering an appearance.

4. A perusal of the record shows that vakalatnama

only on behalf of defendant Nos. 1 and 2 has been filed. No

vakalatnama on behalf of defendant No.3 has, however,

been filed. The Vakalatnama on behalf of defendants No.1

and 2 has been filed on 28th October 2010 though the

defendants were served on 11th October 2010. No

application for condonation of delay in filing the appearance

has been filed. Since the appearance was not filed within

the prescribed period of ten days and no application for

condonation of delay in filing appearance has been filed, the

plaintiff, in view of the provisions contained in Rule 2(3) of

Order XXXVII of the Code of Civil Procedure has become

entitled to judgment forthwith.

5. The suit is based on balance confirmation

purporting to be signed by defendant No.3, who is a partner

of defendant No.1. The balance confirmation contains not

only an acknowledgment of the debt but, also implicit

promise to pay the amount acknowledged therein.

6. In Daya Chand Uttam Prakash Jain & Anr. v.

Santosh Devi Sharma, 67 (1997) DLT 13, in a suit under

Order 37 of the Code of Civil Procedure, the plaintiff relied

upon Statements of Account which contained

acknowledgement of a balance, payable to the plaintiff. It

was held by this Court that a suit on the basis of a written

acknowledgement of a pre-existing debt being a written

contract could form a basis for recovery of an existing debt

based on the said written contract in the shape of a written

acknowledgement. This Court was also of the view that the

acknowledgement was a promise to pay and contains all the

essentials for formation of a written contract.

7. In Food Corporation of India v. Bal Krishan

Garg, 21(1982) DLT 167, a Division Bench of this Court

concurred with the view taken by Madras High Court in

Commissioner of Wealth Tax vs. Pierce Leslie and Co.

Ltd. AIR 1963 Madras 356 that Commissioner of Wealth

Tax that the essential requisites of a debt are (1) an

ascertained or readily calculable amount; (2) an absolute

unqualified and present liability in regard to that amount

with the obligation to pay forthwith or in future within a

time certain; (3) the obligation must have accrued and be

subsisting and should not be that which is merely accruing.

8. In S.C. Gupta v. Allied Beverages Co. Pvt. Ltd.

in I.A. No.7987/2004 fin Suit No.542/2004 decided on 30 th

April, 2007, this Court upheld a suit based on

acknowledgement by the defendant in their Books of

Account, Balance Sheets and Profit & Loss Accounts, filed

under Order 37 of CPC. Hence, the balance confirmation

amounts to a written contract within the meaning of Order

37 Rules 1 and 2 of the Code of Civil Procedure.

9. The principal amount confirmed by defendant No.3

as partner of defendant No.1 comes to Rs.25,49,432.12.

The balance confirmation being dated 31st March 2008, the

suit is well within the prescribed period of limitation. A

perusal of the balance confirmation would also show that

payments in writing were made by the defendants to the

plaintiff from time to time. The last payment of Rs.40,000/-

was made on 10th February 2008 vide cheque No.664734

dated 24th January 2008. In view of the provisions

contained in Section 19 of the Limitation Act, a fresh period

of limitation commenced from 10th February, 2008 when

payment of Rs.40,000/- was made in writing vide cheque

dated 24th January, 2008. The suit, therefore, has been

filed within the prescribed period of limitation.

10. The plaintiff has claimed interest at the rate of 18%

per annum. The plaintiff has claimed interest on the basis

of practice, usage, custom as well as contractual obligation

of the defendant. In any case, since this is a suit for price of

goods sold and delivered, interest can also be awarded to

the plaintiff under Section 61 of Sale of Goods Act.

Considering the nature of transaction between the parties, I

am of the view that interest should be awarded at the rate of

12% per annum. Amount of interest at the rate of 12% per

annum comes to Rs.6,88,346/-. Thus, the total amount,

which the plaintiff can recover from the defendants comes to

Rs.32,37,782.12p.

11. For the reasons given in the preceding paragraphs,

a decree for recovery of Rs. 32,37,778.12p. with

proportionate cost and pendente lite and future interest at

the rate of 12% per annum is thereby passed against the

defendants and in favour of the plaintiff. The Memo of

Costs can be filed today in the Registry.

12. The decree sheet be prepared accordingly.

(V.K. JAIN) JUDGE JANUARY 25, 2011 Ag/vk