Madras High Court
Mr.Jigar Mahendra Sheth vs Sucram Pharmaceuticals Pvt. Ltd on 17 February, 2025
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
2025:MHC:433
C.S.(Comm.Div.) No.110 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 17.02.2025
CORAM
THE HONOURABLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
C.S.(Comm.Div.) No.110 of 2022
Mr.Jigar Mahendra Sheth
Sole Proprietor of M/s.Pyara Intermediate and
Chemical Co.,
having office at No.122/B, Kika Street, Gulal Wadi,
Mahavir Mansion, 4th Floor, Room No.68,
Mumbai-400 004.
Authorized Mr.G.Padham Chand
S/o.Late K.Gowtham Chand, Aged 41 years,
Residing at No.7/13a Kamaraj Street,
2nd Floor, Bharathipuram,
Chrompet, Chennai-600 044,
to Represent the above suit, vide Power of Attorney
dated 29.12.2021
(Amended as per order dt.1511.2022 in
Appln No.5074/2022) ... Plaintiff
-vs-
1.Sucram Pharmaceuticals Pvt. Ltd.
Represented by its Managing Director
Mr. Thangavel Pravinkumar,
Registered Office at No.H-37 J,
2nd Floor Manthoppu Colony,
Ashok Nagar, Chennai-600 083.
1/23
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C.S.(Comm.Div.) No.110 of 2022
2. Mr.Thangavel Pravinkumar,
Managing Director of Sucram Pharmaceuticals Pvt. Ltd.
Registered Office at No.H-37 J,
2nd Floor Manthoppu Colony,
Ashok Nagar,
Chennai-600 083. ... Defendants
PRAYER: Civil Suit filed under Order VII Rule 1 of O.S.Rules 1956
r/w. Order VII Rule 1 & 2 of the Code of Civil Procedure 1908 r/w.
The Commercial Courts Act, 2015, praying to grant a judgment and
decree on the following terms:-
(a) Directing the Defendants to pay a sum of Rs.1,43,09,216/-
(Rupees One Crore Forty Three Lakhs Nine Thousand Two Hundred
and Sixteen Only) along with future interest @ 18% per annum on the
principal amount of Rs.80,05,166/- (Rupees Eighty Lakhs Five
Thousand One Hundred and Sixty Six only) till the date of
realization; and
(b) Pay cost of this suit to the Plaintiff.
For Plaintiff : Mr.N.Balaji
For Defendants : MrE.Senthilkumar .
for M/s.Sampathkumar & Associates
**********
2/23
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C.S.(Comm.Div.) No.110 of 2022
JUDGMENT
The suit was filed for recovery of a sum of Rs.1,43,09,216/-
from both the defendants along with future interest at 18% per
annum on the principal sum of Rs.80,05,166/- till the date of
realization. In addition, the plaintiff prayed for costs of the suit.
Pleadings and Issues
2. In the plaint, it is stated that the second defendant had
approached the plaintiff for supply of raw materials for its
pharmaceutical unit. Pursuant to the issuance of the purchase order,
it is stated that goods were supplied by the plaintiff to the first
defendant. The plaintiff states that the last supply was made on
21.01.2017. After giving credit to a sum of Rs.2,50,000/-, which is said
to have been received on 02.08.2017, it is stated that the total
outstanding is the sum of Rs.80,05,166/-. The plaintiff asserts that
confirmation statements were signed by the defendants on
22.03.2018, 31.03.2018 and 29.07.2021. The plaintiff asserts that
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C.S.(Comm.Div.) No.110 of 2022
interest is payable at the rate of 21% per annum on the amounts due
and payable by the defendants.
3. The defendants filed a written statement dated 06.07.2022. In
the written statement, it is stated that the suit is barred by limitation.
The supply made on 21.01.2017 is denied. The defendants also assert
that the suit is not maintainable against the second defendant
because the Managing Director of the first defendant cannot be made
liable for supplies made to a private limited company. The claim for
interest at 21% per annum is also denied.
4. Upon examining the pleadings, the Court framed the
following issues on 14.12.2022:
“i. Whether, the Plaintiff is entitled to a decree
for recovery of the sum of Rs.1,43,09,216/-
(Rupees One Crore Forty-Three Lakhs Nine
Thousand Two Hundred and Sixteen Only)
from the defendants?
ii. Whether the suit is represented by a power
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C.S.(Comm.Div.) No.110 of 2022
agent on behalf of the plaintiff concern is
maintainable? or
iii. Whether the suit is maintainable against the
2nd Defendant, as the supplies were made
only against the private limited company
viz., the 1st Defendant? or
iv. Whether, the 2nd Defendant, being a Managing
Director of the 1st Defendant, is also jointly and
severally liable for the Suit Claim?
v. Whether, the Plaintiff is entitled for interest @
21% p.a. for payments due and payable by the
Defendants?
vi. Whether the acceptance by the 1st Defendant in
the Account Statement Confirmation, which
was obtained for the purpose of Income Tax
alone that too after the limitation period of 3
years from the date of last supply dated
21.07.2017 is an admission of liability by the 1st
Defendant?
vii. Whether, the suit is barred by Law of
Limitation?
Viii. To What other reliefs the Plaintiff is entitled?”
5. Mr.G.Padham Chand was examined by the plaintiff as PW1
and Exs.P1-P20 were exhibited. PW1 was cross-examined by learned
counsel for the defendants. The defendants did not adduce evidence.
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Counsel and their contentions
6. Oral arguments on behalf of the plaintiff were advanced by
Mr.N.Balaji and on behalf of the defendants by Mr.E.Senthilkumar.
Written arguments were also filed by both the plaintiff and the
defendants.
7. The first submission of learned counsel for the plaintiff was
that the plaintiff initiated pre-institution mediation, as per Section
12A of the Commercial Courts Act, 2015, on 22.09.2021. After a non-
starter report was issued on 29.12.2021, he submitted that the suit
was filed on 03.01.2022. He points out that the first sale of raw
materials was made by the plaintiff to the defendants on 04.04.2015
and that the last sale was made on 21.01.2017. He also pointed out
that that confirmation statements were signed by the defendants on
22.03.2018, 31.03.2018 and 29.07.2021.
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C.S.(Comm.Div.) No.110 of 2022
8. By referring to the affidavit of admission/denial of the
defendants, learned counsel submitted that the invoices, lorry
receipts and account statement confirmations dated 22.03.2018 and
31.03.2018 were admitted therein. In view thereof, he submits that
the limitation period stood extended by a period of three years from
the date of acknowledgment. Such date would therefore stand
extended up to March 2021. By submitting that the Hon'ble Supreme
Court held that the entire COVID period running from 15.03.2020 to
28.02.2022 stood excluded for purposes of limitation, he submitted
that the present suit was filed within the period of limitation.
9. By adveting to the proof affidavit of PW1 and the exhibits
marked through PW1, learned counsel submits that the suit claim
stands proved, except for invoice dated 24.12.2015 for a sum of
Rs.2,21,340/-. As regards the second defendant, he submits that he
was the Managing Director of the first defendant and the person who
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C.S.(Comm.Div.) No.110 of 2022
represented the first Defendant in all transactions with the plaintiff.
Consequently, he submits that the second defendant is also liable for
the suit claim. With regard to interest, learned counsel submits that
interest has been claimed only from 01.04.2018 at the rate specified
in the invoices.
10. In response to these contentions, the first contention of
learned counsel for the defendants is that this Court does not have
jurisdiction. In order to substantiate his contention, he points out that
the first defendant's pharmaceutical unit in Himachal Pradesh
received supplies from the plaintiff. He also points out that the
plaintiff carries on business in Mumbai. The next contention of
learned counsel for the defendants is that the suit is barred by
limitation. In support of this contention, learned counsel referred to
and relied upon the judgment of the Andhra Pradesh High Court in
M.S.N. Charities v. Pilla Ramarao and Others, (2009) 03 AP CK 0033,
and submitted that there is a material difference between
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C.S.(Comm.Div.) No.110 of 2022
acknowledgment of liability for purposes of Section 18 of the
Limitation Act, 1963 (the Limitation Act) and a promise to pay under
Section 25(3) of the Indian Contract Act, 1872 (the Contract Act). If
the aknowledgement is made beyond the period of limitation,
learned counsel submits that the suit is not sustainable unless such
acknowledgment qualifies as an express promise to pay a time
barred debt. For the same proposition, learned counsel relies upon
the judgment of a Division Bench of this Court in N.Ethirajulu Naidu
v. K.R.Chinnikrishnan Chettiar, AIR 1975 Mad 333. The last contention
was that the first defendant is a distinct juristic entity and, therefore,
the second defendant is not liable for the suit claim.
Discussion, analysis and conclusions
11. Out of the issues framed by this Court, some of the issues
are preliminary issues, which are required to be considered first. I
propose to deal with Issue No.2 first.
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C.S.(Comm.Div.) No.110 of 2022
Issue No.2
12. This issue relates to whether the suit is maintainable at the
instance of an agent of Mr.Jigar Mahendra Sheth, sole proprietor of
Pyara Intermediate and Chemical Co. In the plaint, the plaintiff avers
that he has authorized Mr.G.Padham Chand under notarized power
of attorney dated 29.12.2021. It is also asserted that the power of
attorney is in force and has not been revoked by the principal. A
photocopy of the general power of attorney was exhibited through
PW1 as Ex.P1. The Contract Act enables a party to undertake all
actions that such person can undertake personally and lawfully
through a duly authorized agent. On perusal of Ex.P1, it is clear that
the agent has been duly authorized to represent the principal in all
proceedings filed by or against Pyara Intermediate and Chemical Co.
in Tamil Nadu. Therefore, Issue No.2 is decided in favour of the
plaintiff and against the defendants.
Issue Nos.6 and 7:
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13. Both these issues relate to limitation. As stated earlier, in the
written statement, the defendants have pleaded that the suit is barred
by limitation. Even otherwise, an obligation is cast on the Court
under the Limitation Act to examine whether the suit is barred by
limitation. The plaint was presented on 03.01.2022. The plaintiff has
exhibited three Accounts Statement Confirmations dated 22.03.2018,
31.03.2018 and 29.07.2021 as Exs.P3 to P5, respectively. In the
affidavit of admission and denial of the defendants, the account
statement confirmations dated 22.03.2018 and 31.03.2018 have been
admitted.
14. The account statement confirmation dated 22.03.2018
[Ex.P3] relates to invoices issued by the plaintiff between 12.01.2017
and 21.01.2017. The period of limitation for filing a suit for recovery
of amounts due (after expiry of an agreed credit period) towards
supply of goods is a period of three years from the date when the
credit period under the relevant invoices expires. This is stipulated
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C.S.(Comm.Div.) No.110 of 2022
in Article 15 of the Schedule to the Limitation Act. The invoices on
record mention a credit period of 75 days. Therefore, if the period of
limitation were to be computed from the expiry of the credit period
for the invoices referred to in Ex.P3, the period of limitation would
expire some time in the year 2020. In fact, it would be beyond
15.03.2020, which is the commencement date for COVID related
exclusion of time. The account confirmation letter bears the signature
of the Managing Director of the first defendant, who is the second
defendant herein.
15. The account confirmation letter dated 31.03.2018 (Ex.P4)
does not contain details of any invoices. It is the account confirmation
letter for the period running from 01.04.2017 to 31.03.2018. It records
the carried forward balance of Rs.82,55,166/- and gives credit to the
sum of Rs.2,50,000/-, which was received from the first defendant on
02.08.2017. After giving credit to the said sum, it records that the
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C.S.(Comm.Div.) No.110 of 2022
amount due and payable as Rs.80,05,166/-. Since this statement has
been drawn as on 31.03.2018, the period of limitation would run
from 01.04.2018 to end March 2021 on the basis of Ex.P4. Upon
excluding the Covid impacted period, as per order dated 10.01.2022
of the Supreme Court In re Cognizance for Extension of Limitation,
Suo Motu Writ Petition (C) No.3 of 2020 the suit is within time.
16. Although learned counsel for the defendants contended that
these account confirmation letters were not issued during the period
of limitation, the evidence on record points in the opposite direction.
Since these confirmation letters were issued while the period of
limitation subsisted, these exhibits qualify as acknowledgments for
purposes of Section 18 of the Limitation Act. The only
acknowledgment beyond the period of limitation would be the
Account Confirmation letter dated 29.07.2021 (Ex.P5), which is not
material for reasons set out in the previous paragraph. The
judgments relied upon by learned counsel for the defendants are
distinguishable inasmuch as they pertain to acknowledgments made
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C.S.(Comm.Div.) No.110 of 2022
after expiry of the period of limitation. Acknowledgments after
expiry of the period of limitation would not fall within the scope of
Section 18 of the Limitation Act, and the only recourse for a party in
such situation would be to set up a plea on the basis of a promise to
pay under sub-section 3 of Section 25 of the Contract Act. For reasons
discussed above, Issue Nos.6 and 7 are held in favour of the plaintiff
and against the defendants.
17. Both these issues relate to the liability of the second
defendant. It is common ground that the supply was made to a
private limited company, being the first defendant. The second
defendant is described as the Managing Director of the first
defendant. As a juristic entity, the first defendant is capable of suing
and being sued against. Except in cases where it is alleged and
established that the corporate veil was used as a device to defraud
the plaintiff, the corporate veil cannot be pierced so as to impose
liability on the second defendant. On perusal of the plaint, it appears
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C.S.(Comm.Div.) No.110 of 2022
that the plaintiff has asserted that the first defendant acted through
the second defendant for purposes of placing the order on the
plaintiff and in communications with the plaintiff. These averments
are clearly insufficient to sustain the claim against the second
defendant by piercing the corporate veil. Therefore, the suit claim
cannot be sustained against the second defendant. Issue Nos.3 and 4
are, therefore, decided in favour of the second defendant and against
the plaintiff.
Issue Nos.1, 5 & 8:
18. Issue No.1 relates to the monetary claim of Rs.1,43,09,216/-.
This claim consists of the principal sum of Rs.80,05,166/- with
interest thereon up to the date of plaint. While a jurisdictional
argument was raised, since it pertains to territorial and not subject
matter jurisdiction, the contention is rejected as untenable both on the
ground that it was not raised in the written statement and, more
importantly, because both the defendants carry on business within
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C.S.(Comm.Div.) No.110 of 2022
the jurisdiction of this Court. In order to establish this claim, the
plaintiff has exhibited invoices as Exs.P2, P10, P11, P12, P13 and P15.
Exs.P10, P11, P12, P13 and P15 also include lorry receipts. In the
affidavit of admission/denial of the defendants, except invoice dated
24.12.2015 and the corresponding lorry receipts, all invoices and lorry
receipts have been admitted. Invoice dated 24.12.2015 is for a sum of
Rs.2,21,340/-. Although this invoice was disputed by the defendants,
the plaintiff has not otherwise proved that the amount claimed under
this invoice is payable. Consequently, from the principal claim of
Rs.80,05,166/-, the sum of Rs.2,21,340/-, is liable to be deducted.
Therefore, a sum of Rs.77,83,826/- has been established by the
plaintiff as due and payable by the first defendant.
19. With regard to interest, the respective invoices specify
interest at 21% per annum. The invoices, however, do not bear the
signature or acknowledgment of the first defendant. In fact, there is
no document on record bearing the signature of the first defendant
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C.S.(Comm.Div.) No.110 of 2022
and accepting the levy of interest at 21% per annum. At the same
time, it should be noticed that this is a commercial transaction
between the parties and, therefore, the plaintiff is entitled to interest
at commercial rates. By taking into account the interest rate
prevailing during the relevant period, the first defendant is directed
to pay interest at the rate of 12% per annum on the principal sum
from 01.04.2018, as claimed, until realisation. Issue Nos.1 and 5 are
therefore decided as above in favour of the plaintiff and against the
first defendant.
20. Since costs follow the event, as the successful party, the
plaintiff is entitled to costs. The plaintiff has paid a sum of
Rs.4,29,295/- as court fees. The plaintiff is entitled to this sum along
with reasonable lawyer's fees and other expenses. In the aggregate,
the first defendant is directed to pay the plaintiff a sum of
Rs.7,00,000/- as costs.
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C.S.(Comm.Div.) No.110 of 2022
21. In the result, the suit is decreed by directing the first
defendant to pay the plaintiff a sum of Rs.77,83,826/- along with
interest thereon at 12% per annum from 01.04.2018 till the date of
realization. The first defendant is also directed to pay a sum of
Rs.7,00,000/- as costs to the plaintiff.
17.02.2025
Index : Yes/No
Internet : Yes/No
Neutral
Citation : Yes/No
kal
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C.S.(Comm.Div.) No.110 of 2022
Plaintiff's witness:
P.W.1 – Mr.G.Padham Chand
Documents exhibited by the Plaintiff:
Exhibits Documents
Ex.P1 The photocopy of the General Power of Attorney executed
by the plaintiff in favour of his agent dated 29.12.2021.
(The counsel for the defendant has agreed to mark this
document.)
Ex.P2 The true copy of the invoice between the plaintiff and the
defendant dated 21.01.2017.
Ex.P3 The printout of the account statement confirmation dated
22.03.2018.
Ex.P4 The printout of the account statement confirmation dated
31.03.2018.
Ex.P5 The printout of the account statement confirmation dated
29.07.2021.
Ex.P6 The certificate under Section 65B of the Indian Evidence
Act, 1872 is filed for Ex.P3, Ex.P4 and Ex.P5.
Ex.P7 The true copy of the extract of ledger account. (The
counsel for the defendant has agreed to mark, subject to
objection.)
Ex.P8 The original application to legal services authority for pre-
institution mediation dated 19.09.2021.
Ex.P9 The original Non-starter Report given by the legal services
authority.
Ex.P10 The photocopy of the invoices for the transaction of the
months April & May 2015 and the Lorry receipts for
respective delivery of goods in connection with the above
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Exhibits Documents
invoices. (The counsel for the defendant has objected to
mark on the ground that all the lorry receipts attached
with the invoices are only xerox copies and the plaintiff is
the custodian of original lorry receipts since they only
booked the said consignment to Startrek Logistics Pvt.
Ltd. The tax invoices are also not an office copy and only
xerox copies and not attested by any authorized signatory
of the plaintiff) (Marked subject to objection.)
Ex.P11 The photocopy of the invoices for the transaction of the
months June & July 2015 and the Lorry receipts for
respective delivery of goods in connection with the above
invoices. (The counsel for the defendant has objected to
mark on the ground that all the lorry receipts attached
with the invoices are only xerox copies and the plaintiff is
the custodian of original lorry receipts since they only
booked the said consignment to Startrek Logistics Pvt.
Ltd. The tax invoices are also not an office copy and only
xerox copies and not attested by any authorized signatory
of the plaintiff) (Marked subject to objection.)
Ex.P12 The photocopy of the invoices for the transaction of the
months August & September 2015 and the Lorry receipts
for respective delivery of goods in connection with the
above invoices. (The counsel for the defendant has
objected to mark on the ground that all the lorry receipts
attached with the invoices are only xerox copies and the
plaintiff is the custodian of original lorry receipts since
they only booked the said consignment to Startrek
Logistics Pvt. Ltd. The tax invoices are also not an office
copy and only xerox copies and not attested by any aut
signatory of the plaintiff) (Marked subject to objection)
Ex.P13 The photocopy of the invoices for the transaction of the
months October, November & December 2015 and the
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C.S.(Comm.Div.) No.110 of 2022
Exhibits Documents
Lorry receipts for respective delivery of goods in
connection with the above invoices. (The counsel for the
defendant has objected to mark on the ground that all the
lorry receipts attached with the invoices are only xerox
copies and the plaintiff is the custodian of original lorry
receipts since they only booked the said consignment to
Startrek Logistics Pvt. Ltd. The tax invoices are also not an
office copy and only xerox copies and not attested by any
authorized signatory of the plaintiff. Among the invoices,
it is specifically denied the invoices of December 2015.)
(Marked subject to objection.)
Ex.P14 The printout of the extract of Account Ledger for the
period of 01.04.2015 to 31.03.2016 and same extract drawn
on 31.07.2023 duly attested by the PW1 dated 31.07.2023.
(The counsel for the Defendant ha objected to mark the
document on the ground that it is already been denied in
the affidavit of admissions and denial by the defendant
since it is the mail send by Marcus Pharma who is not at
all a party to this suit.) (Subject to objection, marked.)
Ex.P15 The photocopy of the invoices for the transaction of the
year 2017 and the Lorry receipts for respective delivery of
goods in connection with the above invoices. (the counsel
for the defendant has objected to mark on the ground that
all the lorry receipts attached with the invoices are only
xerox copies and the plaintiff is the custodian of original
lorry receipts since they only booked the said
consignment to Startrek Logistics Pvt. Ltd. The tax
invoices are also not an office copy and only xerox copies
and not attested by any authorized signatory of the
plaintiff) (marked subject to objection.)
Ex.P16 The printout of the corresponding emails and attachments
namely the account confirmation statement dated
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Exhibits Documents
27.03.2018. (The counsel for the defendant has objected to
mark the document on the ground that it is already been
denied in the affidavit of admissions and denial by the
defendant since it is the mail send by Marcus pharma who
is not at all a party to this suit.) (Subject to objection,
marked.)
Ex.P17 The printout of the corresponding emails and attachments
namely the account confirmation statement dated
03.08.2021. (The counsel for the defendant has objected to
mark the document on the ground that it is already been
denied in the affidavit of admissions and denial by the
defendant since it is the mail send by Marcus pharma who
is not at all a party to this suit.) (Subject to objection,
marked.)
Ex.P18 The true copy of the extract of accounts ledger for the
period of 01.04.2016 to 31.03.2017 and same extract drawn
on 31.07.2023 duly attested by the PW1. The counsel for
the defendant has objected to mark the document on the
ground that it is already been denied in the affidavit of
admissions and denial by the defendant and it is attested
by the Power
Ex.P19 The certificate under section 65B of the Indian Evidence
Act, 1872 is filed for Ex.P16 and Ex.P17.
Ex.P20 The certificate under section 65B of the Indian Evidence
Act, 1872 is filed for Ex.P14 and Ex.P18.
SKRJ
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SENTHILKUMAR RAMAMOORTHY,J
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C.S.(Comm.Div.) No.110 of 2022
17.02.2025
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