Mr. Sanjeev Chopra vs All Wear Clothing (India) P. Ltd. ...
2012 Latest Caselaw 716 Del

*IN THE HIGH COURT OF DELHI AT NEW DELHI

+      CS(OS) 1008/1998
                            Judgment reserved on 17th January, 2012
                            Judgment decided on 2nd February, 2012

       MR. SANJEEV CHOPRA                                  ..... Plaintiff

                           Through:     Ms. Ekta Kalra, Adv. &
                                        Ms.Neha Bhatnagar, Adv.

                           Versus

       ALL WEAR CLOTHING (INDIA)
       P. LTD. AND ANR.                                ..... Defendants

                           Through:     Mr. Balaji Srinivasan, Adv.

       Coram:
       HON'BLE MR. JUSTICE A.K. PATHAK

A.K. PATHAK, J.

1. Plaintiff has filed this suit against the defendants for recovery

of `21,34,126/- (Rupees Twenty One Lacs Thirty Four Thousand

One Hundred Twenty Six Only) together with pendente lite and

future interest @ 24% per annum and costs.

2. As per the plaint, plaintiff was engaged in the business of sale

and purchase of "quotas" for exporting readymade garments from

India to Europe and U.S.A., in the name and style of "M/s. Reliable

Commitment". At the time of sale, plaintiff used to get the

"quotas" transferred in the name of prospective purchasers in the

relevant records of Apparel Exports Promotion Council ("AEPC",

for short). Trading of such "quotas" was permissible in the open

market. In the month of January, 1994, defendant no.1, being a new

exporter, approached the plaintiff through defendant no. 2 for

purchase of export "quotas" under different categories, in respect of

the readymade garments, at mutually agreed rates. Thereafter,

defendants placed orders on the plaintiff from time to time.

Depending upon the orders so placed, plaintiff purchased "quotas"

from the market, got it transferred in the name of defendant no. 1

and supplied the same to the defendants at their Delhi office.

Defendants used to make on account payments from time to time to

the plaintiff through cheques issued and delivered by their Delhi

office. Defendants successfully made and/or affected exports on

the basis of these "quotas".

3. During the above said dealings, sometime in the month of

March, 1995, defendants placed order on the plaintiff for the

purchase of two different categories of "quotas", details whereof are

as under:-

(a) Category 341 25000 @17.50 4,37,500/-

(b)Category 641 16405 @12.00 1,96,860/-

4. Plaintiff purchased aforesaid "quotas" from the market, got

the same transferred in the name of defendant no. 1 and handed

over the relevant certificates at their Delhi office. However,

defendants, without any justifiable reasons, returned the "quota"

under Category 641 valued at `1,96,860/- to the plaintiff. In order

to continue the business relations, plaintiff accepted the return of

certificate, even though said "quota" had become useless as the

same could not have been utilized by anybody else as per the export

policy of the Government of India and AEPC, thus, plaintiff was

entitled to recover this amount from the defendants.

5. Plaintiff was maintaining a running account with regard to

the business dealings with the defendants, as also the payments

received, in its books of accounts. On account payments made by

the defendant no.1, were duly credited in the ledger. Lastly,

defendants made part payment to the tune of `8,20,500/- (Rupees

Eight Lacs Twenty Thousand Five Hundred Only) by issuing two

cheques, that is, cheque bearing no. 665987 dated 31st July, 1995

for `5 lacs (Rupees Five Lacs Only) and cheque bearing no. 665988

dated 10th August, 1995 for `3,20,500/- (Rupees Three Lacs

Twenty Thousand Five Hundred Only). However, on presentation,

cheque for `5 lacs was returned dishonored on the ground

"insufficient funds". As regards cheque for `3,20,500/- (Rupees

Three Lacs Twenty Thousand Five Hundred Only), defendants

issued "stop payment" instructions to their banker. As on 4th

August, 1995, a sum of `12,26,509/- (Rupees Twelve Lacs Twenty

Six Thousand Five Hundred Nine Only) was due and outstanding

against the defendants, which amount defendants have failed to pay

despite demands. Defendants were liable to pay the said amount to

plaintiff along with interest @24% per annum since the transactions

between the parties were commercial in nature.

6. In the written statement defendants have taken certain

preliminary objections. It was alleged that the plaint was not

maintainable either under law or on facts and was liable to be

dismissed; suit was vexatious and had been filed with the intention

to harass the defendants. On merits it was not denied that

defendants were having business dealings with the plaintiff and that

they had purchased "quotas" for exporting readymade garments

from the plaintiff from time to time. It was denied that defendants

had approached the plaintiff for purchasing "quotas". It was alleged

that it was the plaintiff, who had approached the defendants and

offered his services to procure "quotas" from the market for and on

behalf of defendants. It was admitted that dealings between the

plaintiff and the defendants commenced from January, 1994 and the

plaintiff purchased "quotas" for and on behalf of the defendants and

that payments were made for the same by the Delhi office of

defendants. However, it was alleged that Delhi office of the

defendants was shut down in the year 1997, that is, prior to the

filing of present suit. As per the defendants, payments were made

regularly and promptly. Defendants admitted that "quotas" under

Category 341 and Category 641 were supplied by the plaintiff to the

defendants in the month of March, 1995. However, it was denied

that defendants had returned the "quota" under Category 641

valuing `1, 96,860/- without any justifiable reason. Defendants

have alleged that as per the normal practice, "quotas" had to be

delivered within four working days of placing of the order; "Quota"

under Category 641 was supplied beyond four days of placing of

the order. Order was placed on the plaintiff for supply of this

"quota" on 6th March, 1995, however, it was delivered in batches

on 22nd March, 1995, 23rd March, 1995 and 24th March, 1995.

Since certificates were supplied beyond four days, "quota" under

Category 641 was returned to plaintiff on 27th March, 1995 and

plaintiff accepted the same without demur. AEPC served a show

cause notice dated 21st October, 1994 on the defendant no.1 stating

therein that the "quota" of M/s Vinky Impex Pvt. Ltd. for 199

pieces of garments was forged and threatened to debar defendant

no.1 from participating in the Garment Export Entitlement

Distribution Scheme. Plaintiff assured that steps would be taken to

ensure that defendant no.1 is not de-registered. However,

defendants received notice from AEPC for personal hearing on 8 th

August,1995, thus, payment of two cheques was stopped as

defendants suffered business losses and loss of reputation on

account of acts of plaintiff. Defendants admitted that plaintiff

had been maintaining a running account of the business dealings.

However, correctness of the Statement of Account has been

disputed.

7. In the replication, plaintiff has denied the contents of the

written statement and has reiterated and reaffirmed the averments

made in the plaint. Plaintiff further contended that "quotas" for both

Category 341 and Category 641 were purchased and delivered

together, however, only "quota" under Category 641 was returned,

thus, the allegations of delay have been made merely to wriggle out

from the liability of payment of plaintiff‟s dues. Plaintiff had

accepted the "quota" only to maintain the business relations,

however the claimed amount was not waived off, which has duly

been reflected in the Statement of Account. Plaintiff has also

alleged that the "quota" pertaining to M/s Vinky Impex Pvt. Ltd.

was worth only ` 2000/-. Even the letter of "stop payment" was sent

to the plaintiff only on 8th August, 1995, whereas the 1st cheque had

been presented on 4th August 1995 itself, thus, the contention of the

defendants that payments were stopped due to the notice of AEPC,

was just an afterthought. As regards the plea of damages suffered

by the defendants due to the lapses on the part of plaintiff, no claim

had ever been raised.

8. Vide order dated order dated 25th August 2000, following

issues were framed:

"1. Whether the suit is within time?

2. Whether the certificate regarding Category No.641 was returned to the plaintiff? If so, to what effect?

3. What is the effect of the issue of show cause notice by the Apparel Export Promotion Council to defendant No.1 in respect of the quota which had been given by the plaintiff to the said defendant?

4. To what amount, if any, is the plaintiff entitled?

5. Whether the plaintiff is entitled to interest? If so, at what rate and for what period?

              6.     Whether this Court            has      no
              jurisdiction to try this suit?

              7.        Relief."

9. Plaintiff has examined himself as PW-1. Ms.Preeti Chopra,

wife of the plaintiff, has been examined as PW-2. Mr.R.K.Saboo,

Assistant with AEPC, has been examined as PW-3. Mr.Narender

Kumar, CCT, AEPC has been examined as PW-4. Mr.K.Raju, Joint

Director, AEPC has been examined as PW-5. Mr.R.K.Sharma,

Joint Director, AEPC has been examined as PW-6. Mr.Ashok

Nagpal, official of Allahabad Bank has been examined as PW-7.

Mr.P.C.Mehta, Assistant-AEPC, has been examined as PW-8.

Statement of Account has been proved as Ex.PW-1/1. Challans

showing transactions between the plaintiff and defendants from 28th

January, 1994 till 24th March, 1995 have been collectively proved

as Ex.PW-1/2. Cheque dated 31st July, 1995 for ` 5 lacs has been

exhibited as PW-1/3. Cheque dated 10th August, 1995 for

`3,20,500/- has been exhibited as PW-1/4. Cheque Return memos

have been exhibited as Ex.PW-1/5 and PW-1/6 respectively.

Photocopy of Fax letter dated 8th August, 1995 sent by defendant

no.1 has been exhibited as Ex. PW1/9. Quota certificates for

Category 641 have been proved as Ex.PW-1/10- Ex.PW-1/15.

Legal notice dated 26th March, 1997 has been exhibited as Ex.PW-

1/19. Reply dated 21st April, 1997 of the defendant to the plaintiff‟s

legal notice dated 26th March, 1997 has been exhibited as Ex.PW-

1/23.

10. Defendants have not lead any evidence despite opportunities

granted to them, consequently, vide order dated 7th February, 2006,

defendants‟ evidence was closed.

11. I have heard learned counsel for the parties and perused the

entire material placed on record and my issue wise findings are as

under:-

12. It is an admitted case of the parties that certificates regarding

quota under Category 641 were returned by the defendants to the

plaintiff. However, as per the plaintiff "quota" was returned

without any justifiable reason, thus, defendants were liable to pay

the amount of `1,96,860/-. In para 9 of the plaint, it has been

averred that defendants, without any justifiable reason, returned the

"quota" under the Category 641 valued at `1,96,860/- to the

plaintiff. Upon being enquired by the plaintiff about the reason for

return of said "quota", defendant no. 2 gave a lame excuse that he

has changed his mind. Defendant no. 2 had placed the order for the

said "quota" for and on behalf of defendant no. 1, inasmuch as, the

certificates were duly transferred in the name of defendant no. 1,

thus, defendants were liable to pay the amount involved therein,

that is, `1,96,860/-. PW1 in his affidavit has supported this version.

He has deposed that in the month of March, 1995, defendants

placed an order on the plaintiff regarding purchase of "quota" under

the Category 641 valuing at `1,96,860/-. Certificates under this

"quota" were even transferred in the name of defendant no. 1 and

handed over to defendant no. 1 at its Delhi office. Defendants

without any justifiable reason returned the "quota". On enquiry,

defendant no. 2 gave a lame excuse that he had changed his mind.

Since "quota" was specifically purchased on the asking of

defendants and was even got transferred in the name of defendant

no.1, plaintiff could not have sold this "quota" to anybody else and

the same had become useless for the plaintiff, thus, defendants were

liable to pay `1,96,860/-.

13. The case of defendants, as set up in the written statement, is

that as per the normal practice "quota" had to be delivered within

four working days of placing of the order. Certificates regarding

"quota" under Category 641 were not supplied within four working

days. Order was placed on 6th March, 1995; whereas certificates

were delivered in batches on 22nd March, 1995, 23rd March, 1995

and 24th March, 1995. Since certificates under this "quota" were

delivered beyond the time prescribed for delivery, defendants

returned the certificates to plaintiff on 27th March, 1995. It was

further stated that certificates were accepted by the plaintiff without

any demur, thus, plaintiff was not entitled to `1,96,860/-.

However, the fact remains that defendants have not led any

evidence to show that as per the agreed practice, plaintiff was to

supply certificates under each "quota" within four days from the

date of placing of the order. No evidence has been led by the

defendants to prove the defence taken by them. In absence of any

evidence led by the defendants, the plea of the plaintiff that

certificates were returned without any justifiable reason, has to be

accepted.

14. From the evidence adduced by the plaintiff it is proved that

the "quota" under Category 641 valuing `1,96,860/- was purchased

by the plaintiff from the open market for and on behalf of

defendants pursuant to the order placed by them, inasmuch as,

certificates were duly transferred in the name of defendant no.1

(Refer to Ex. PW1/10 to Ex. PW1/16) by the AEPC. Thus, in my

view, plaintiff is entitled to recover the amount involved under this

"quota" valuing `1,96,860/-. Accordingly, issue no. 2 is decided in

favour of the plaintiff and against the defendants.

15. This issue has been framed on the plea taken by the

defendants in their written statement and onus to prove this issue

was on the defendants. However, no evidence has been led by the

defendants to prove this issue. Defendants have not led any

evidence to show that they had suffered losses pursuant to the show

cause notice issued by the AEPC to defendant no. 1. PW1 has

categorically deposed that action was taken by AEPC against the

plaintiff as well as defendant no. 1 on the complaint of M/s. Vinky

Impex Pvt. Ltd. However, M/s Vinky Impex Pvt. Ltd. withdrew its

complaint; consequently, proceedings against the plaintiff were

dropped. As regards defendant no. 1, it did not participate in the

proceedings nor filed any appeal against its alleged debarment.

Accordingly, in view of the above discussion, this issue is decided

in favour of plaintiff and against the defendants.

Issue nos. 1, 4 and 5

16. All the three issues require common discussions, thus, are

being decided together. It is not in dispute that the plaintiff had

been purchasing "quotas" for and on behalf of defendants from the

open market; getting the said "quotas" transferred in the name of

defendant no. 1 from AEPC and supplying the certificates duly

transferred in the name of defendant no. 1 to the defendants, from

time to time. PW1 has categorically deposed that defendant no. 1,

being a new exporter, approached the plaintiff with a request to

purchase "quotas" under different categories from the open market,

get the same transferred in the name of defendant no. 1 and supply

the same to defendants, so as to enable defendant no. 1 to export

readymade garments from India to Europe and USA. Defendant

no. 2, for and on behalf of defendant no. 1, placed purchase orders

with the plaintiff from time to time. Pursuant to such orders,

plaintiff purchased "quotas" from the open market, got it transferred

in the name of defendant no. 1 and handed over the certificates to

defendant no. 2 or to the other employees of defendant no. 1 at their

Delhi office. Pursuant to these "quotas" defendant no. 1 has made

exports. Plaintiff was maintaining a running account of business

dealings with the defendants. Payments made by the defendants

were duly credited in the said account. Statement of Account was

maintained by the plaintiff in his regular course of business.

Relevant folios of the ledger have been proved as PW1/1. PW1 has

deposed that the same was true and correct. Photocopies of the

challans showing the transactions between the plaintiff and

defendants from 28th January, 1994 till 24th March, 1995 have been

proved as PW1/2 (collectively). PW2 Ms. Preeti Chopra has

deposed that accounts were prepared under her supervision and

were correct. After the challans were prepared, the corresponding

entries were made in the ledger. Payments received were also

entered in the ledger. She has deposed that Ex. PW1/1 was

prepared by the Accountant under her control and supervision and

the same was correct.

17. In their written statement defendants have not disputed that

they had been purchasing "quotas" from the plaintiff from time to

time. It was admitted that dealings between the plaintiff and

defendants commenced in the month of January, 1994. It was also

admitted that the plaintiff had been maintaining a running account

of business dealings, though correctness thereof has not been

admitted. In para 12 of the written statement defendants have stated

as under:

"With reference to the contents of para 11 it is submitted that it is true that the Plaintiff had been maintaining a running account of the business dealings and that the Defendant used to make payments from time to time. Without admitting the correctness of the contents of Annexure A, it is submitted that a mere perusal of Annexure A clearly indicates that the Defendant would not only make payments in round figures but also on actuals. It is however clarified and reiterated that the said Annexure A is denied by the Defendants."

18. Defendants have denied correctness of the Statement of

Account Ex. PW1/1 without pointing out any incorrect entry

therein. Defendants have failed to point out any incorrect debit or

credit entry as contained in Ex. PW1/1. Burden of proof was upon

the defendants to point out incorrect entries in Ex. PW1/1, more so,

when it was admitted that plaintiff had been maintaining a running

account with regard to the business dealings as well as the payments

made by the defendant no. 1. Debit entries with regard to each

challan have been categorically mentioned in Ex. PW1/1. It is true

that value of the "quota" involved in the challan has not been

mentioned in each of the challans (Ex. PW1/2 collectively); but the

fact remains that defendants have not disputed the value of the

"quota" involved in the said challans. It is not stated that the

challans involved in this case and/or as reflected in Ex. PW1/1 were

not purchased by the defendants for the amounts shown to have

been debited against each challan. It is also not the case of the

defendants that any of the amount paid by defendant no. 1 was not

given due credit to, inasmuch as no evidence has been led by the

defendants in this regard to rebut the correctness of Statement of

Account.

19. As against this, PW1 and PW2 have categorically deposed

that entries made in Ex. PW1/1 were true and correct. PW1 has

categorically deposed that he was maintaining a running account of

business dealings with the defendants. Defendants used to make

part payments, mostly in round figures, against the outstanding

and/or dues and the same were credited into this account from time

to time. Statement of Account was maintained by his office in the

regular course of business and was correct. As per Ex.PW1/1, a

sum of `12,26,509/- besides interest was due from the defendants to

the plaintiff. His this testimony has remained unshattered in his

cross-examination, inasmuch as no suggestion was put to him that

Ex. PW1/1 contained incorrect entries or that `12,26,509/- was not

due or outstanding as per the running account maintained by the

plaintiff in respect of business dealings between the plaintiff and

defendants. PW2 Ms. Preeti Chopra has categorically deposed that

she had done M.Com. and was conversant with the accounting and

its procedure. Accounts were prepared under her supervision and

were correct. Ex. PW1/1 was correct having been prepared by the

Accountant under her control and supervision. Her this testimony

has remained unshattered in her cross-examination. In her cross-

examination, PW2 has categorically deposed that the entries were

made by one Mr. Chauhan, who had been working with the plaintiff

as part time Accountant. She has further deposed that she had

personally checked the entries. She has denied that she has

fabricated Ex. PW1/1. In my view, plaintiff has succeeded in

proving correctness of Ex. PW1/1 from the testimonies of PW1 and

PW2 and in absence of any evidence led by the defendants to the

contrary and the same has to be taken as correct.

20. In Kulamani Mohanty vs. Industrial Development

Corporation of Orissa Ltd. AIR 2002 Orissa 38, a money decree

in a suit for recovery was passed against appellant Kulamani,

employee of the respondent Company who had allegedly embezzled

some monies of the respondent. In appeal, genuineness of books of

accounts was challenged, which plea was dismissed and it was held

that if the books of account are produced as the primary evidence

and oral evidence is led to corroborate the entries in the books of

accounts maintained in the regular course of business, unless the

contrary is proved or any doubt is raised regarding genuineness of

such books of accounts, the same shall be regarded as proved. In

Kalipada Sinha vs. Mahaluxmi Bank Ltd. AIR 1961 Calcutta

191, trial court had passed a money decree against the appellant. In

Appeal, appellant had contended that entries in the certified copy of

the Statement of Account were not sufficient to fasten the liability

under Section 34 of the Indian Evidence Act. While dismissing the

appeal, the Court found oral deposition corroborating the entries

made in the Statement of Account to be sufficient enough to prove

the respondent‟s case. The entries made in the Statement of

Account coupled with the oral deposition were found sufficient to

prove the case of respondent. In R.V.E. Venkatachala Gounder

vs. Arulmigu Viswesaraswami and V.P.Temple and Anr. AIR

2003 SC 4548, dispute was between the appellant and respondent-

temple about the title of the property. Ledger books showing entries

of receipt of rent from the tenants were produced in the court. High

Court had reversed the findings of the courts below that the

property belonged to the appellant and held that it belonged to the

temple. Supreme Court allowed the appeal and rejected the finding

of the High Court that ledger accounts cannot be considered, as

books supporting ledger entries were not produced, thus, casting a

doubt whether the books were maintained regularly and properly as

even the maker of some of the entries had not stepped in the witness

box. Supreme Court observed that the books were maintained

regularly and properly; during cross examination, no question

regarding authenticity of the books or the entries made therein was

raised. The facts deposed by the appellant on oath were not even

challenged in the cross examination. The appellant was believed by

the trial court and his statement was enough to corroborate the

entries made by him.

21. In the case in hand I find no reason to disbelieve entries made

in the ledger book of the plaintiff. PW1 has deposed that he was

maintaining running account of the business dealings with the

defendants. The Statement of Account was maintained by his office

in the regular course of business and same was Ex. PW1/1 and that

the same was correct as per the records. PW2 has deposed that

accounts were prepared under her supervision and were correct.

She has also reiterated that Ex. PW1/1 was correct. Their testimony

has remained unshaken on this point. Defendant no. 1 is a company

incorporated under the Companies Act and must have been

maintaining books of account but no books of account have been

produced by the defendants, inasmuch as, no evidence has been led

to create suspicion about the genuineness of the Statement of

Account produced and proved by the plaintiff.

22. Ex. PW1/1 clearly indicates that a sum of `12,26,509/- was

due and outstanding as on 8th August, 1995. Interest component

has not been depicted in Ex. PW1/1. Neither any separate statement

has been filed with regard to the interest accrued on the outstanding

dues nor such calculation of interest has been depicted in the plaint.

In para 21 of the plaint, plaintiff has simply alleged that he is

entitled to interest @ 24% per annum on the withheld payments, as

per the prevailing market rate in respect of sale and purchase of

"quotas" as also in view of the agreed rate of interest. In para 24 of

the plaint, plaintiff has claimed a sum of `21,34,126/- inclusive of

interest till 30th April, 1998. However, it has not been mentioned as

to on what basis plaintiff has claimed interest amounting to

`9,07,617/- (`21,34,126/- - `12,26,509/-).

23. It has been admitted by PW1, in his cross-examination, that

no agreement was entered into between the plaintiff and defendant

no. 1 with regard to purchase and/or supply of export "quotas" nor

any written agreement with regard to the payments of interest has

been placed on record. PW1 in his cross-examination has admitted

that orders were orally placed by the defendants with regard to

purchase of "quotas". However, in view of the fact that present

transactions between the plaintiff and defendants were purely

commercial in nature, in my view, plaintiff is entitled to the interest

on the payments withheld by defendant no. 1 without any justifiable

reason. At the same time I find rate of interest, as claimed in the

plaint, to be on higher side. In my view, interest of justice would be

met in case interest is awarded @ 9% per annum with effect from

8th August, 1995 till realization of the outstanding dues of the

plaintiff, amounting to `12,26,509/-.

24. Perusal of Ex. PW1/1 shows that last debit entry with regard

to the supply of "quota" was made on 24th March, 1995. No order

appears to has been placed by the defendants after this date nor had

plaintiff purchased and/or supplied "quotas" to the defendants

thereafter. PW1 in his cross-examination has admitted that after

27th March, 1995 he had stopped the supply of "quotas" to the

defendants. Ex. PW1/1 shows that last transaction took place on

27th March, 1995. Present suit has been filed on 18th May, 1998,

which is beyond the period of three years, thus, according to the

defendants the suit is barred by time. As against this, case of the

plaintiff is that defendants had acknowledged the amounts due

and outstanding against them by making part payments vide cheque

bearing no. 665987 dated 31st July, 1995 for `5 lacs and cheque

bearing no. 665988 dated 10th August, 1995 for `3,20,500/-, both

drawn on State Bank of Mysore, Bangalore. Cheque for `5 lacs

dated 31st July, 1995 was handed over to the plaintiff on 28th July,

1995 and entry in this regard was made in Ex. PW1/1. Cheque for

`5 lacs was presented for encashment but the same was returned

dishonored by the bankers of the plaintiff on 9 th August, 1995 for

the reason "funds insufficient". As regards cheque for `3,20,500/-

is concerned, defendant no. 1 had issued instructions to its bankers

for "stop payment". In any event, by making payment through

these two cheques, defendants had accepted their liability to pay to

the plaintiff the amount due and outstanding as shown in Ex.

PW1/1, which is a „debt‟ within the meaning of Section 19 of the

Limitation Act, 1963 ("the Act", for short). Reliance has been

placed on International Print-O Pac Limited vs. MAA

Communication Bozell (P) Ltd. 2010 (118) DRJ 246.

25. Section 19 of the Act reads as under:-

"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 authorized in this behalf, a fresh period of limitation shall be

computed from the time when the payment was made: Provided that, save in the case of payment of interest made before the 1st day of January, 1928 , an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment. Explanation.- For the purposes of this section,-

(a) where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment;

(b) " debt" does not include money payable under a decree or order of a court."

26. A perusal of the aforesaid provision makes it clear that in

case a debtor makes on account payment of a debt or of interest

before the expiration of the prescribed period of limitation, fresh

period of limitation shall commence from the period when such

payment is made.

27. In International Print-O Pac Limited‟s case (supra), it has

been observed as under:-

"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.

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."

28. In this case, last transaction was made on 27th March, 1995

and a sum of `16,26,509/- was due and outstanding as on that date.

However, thereafter ` 4 lacs was paid on 19th April, 1995 leaving

behind balance of `12,26,509/-. Subsequently, cheque dated 31st

July, 1995 for `5 lacs was again issued towards part payment.

Lastly, cheque dated 10th August, 1995 was again issued. By virtue

of these part payments, the period of limitation stands extended for

another three years from the date of last cheque. Thus, the suit filed

in the month of May, 1998 shall be within the period of limitation.

29. In view of the above discussions, it is held that plaintiff is

entitled to recover `12,26,509/- together with interest @ 9 % per

annum with effect from 8th August, 1995 from the defendant no.1.

In my view, defendant no. 2 cannot be fastened with the liability to

pay the dues of the defendant no. 1 merely because he happens to

be its Managing Director. Defendant no. 1 being a juristic person

can sue and be sued in its name. Directors and/or Managing

Directors of a company are not personally liable to pay the debt of

the company unless they have personally guaranteed the due

repayment of such a „debt‟. No such personal guarantee has been

pleaded nor proved.

30. Accordingly, above three issues are decided in favour of the

plaintiff and against the defendants, in the above terms.

31. Onus to prove this issue was on the defendants. However, no

evidence has been led by the defendants to show that this Court has

no territorial jurisdiction to entertain and try this suit. Even

otherwise, sufficient evidence has been led by the plaintiff to show

that cause of action had arisen in Delhi, inasmuch as, Delhi office

of defendant no. 1 had actively participated in the business

transactions involved in this case. PW1 has categorically deposed

that the orders were placed by defendant no. 2 for and on behalf of

defendant no. 1 from Delhi; after getting the certificates transferred

in the name of defendant no. 1, same were delivered at Delhi office

of defendant no. 1, inasmuch as, defendant no. 1 used to make on

account payment from time to time through cheques issued and

delivered by its Delhi office. In their written statement, defendants

have neither denied that "quota" certificates were delivered at Delhi

office nor about the factum of payment being made through

cheques from the Delhi office. Though it is stated in the written

statement that Delhi office of defendant no. 1 was closed much

prior to filing of the present suit, but no evidence in this regard has

been led by the defendants. Accordingly, this issue is decided in

favour of the plaintiff and against the defendants.

32. In view of the findings returned on the aforesaid issues, a

decree is passed in favour of the plaintiff and against the defendant

no.1, in the sum of `12,26,509/- together with interest @ 9 % per

annum with effect from 8th August, 1995 till realization of decretal

amount together with costs. Decree sheet be drawn accordingly.

A.K. PATHAK, J.

February 02, 2012/rb