[Cites 7, Cited by 0]
Karnataka High Court
M/S. Saikripa Insulations Private ... vs M/S. Shree Balaji Enterprise on 3 December, 2025
-1-
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,
-2-
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
-3-
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.
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
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.
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
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
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?
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;
- 10 -
(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
- 11 -
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
- 12 -
was 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
- 13 -
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
- 14 -
(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
- 15 -
last 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/-
- 16 -
was 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
- 17 -
advancing 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
- 18 -
returns, 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.
- 19 -
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
- 20 -
parties 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
- 21 -
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
