1

2026:CGHC:15712-DB

The date when

the judgment

is reserved

The date when

the judgment is

pronounced

The date when the

judgment is uploaded on

the website

Operative Full

18.02.2026 07.04.2026 -- 07.04.2026

NAFR

HIGH COURT OF CHHATTISGARH AT BILASPUR

Judgment reserved on: 18.02.2026

Judgment delivered on: 07.04.2026

FAM No. 35 of 2024

1 - Rajat Ispat Pvt. Ltd. Marshal House, 33/1 N.S. Road, Room No. 234,

2nd Floor Kolkata 700001, Through its Director Shankar Lal Agrawal

S/o Shri Kundan Lal Agrawal Aged About 52 Years R/o House No. 61,-

62, Park Avenue Colony Dhimrapur Raigarh District - Raigarh (C.G.)

2 - Shankar Lal Agrawal S/o Shri Kundan Lal Agrawal Aged About 52

Years R/o House No. 61, 62 Park Avenue Colony Dhimrapur P.O.

Raigarh Chhattisgarh

3 - Dayanand Agrawal S/o Shri Kundan Lal Agrawal Aged About 48

Years R/o House No. 61, 62, Park Avenue Colony Dhimrapur P.O.

Raigarh Chhattisgarh

... Appellants

2

versus

1 - Champion Ceramics Pvt. Ltd. Industrial Area Korba Road Post Office

Champa District - Janjgir - Champa Chhattisgarh (Respondent/ Plaintiff)

2 - Subhash Agrawal S/o Gulab Chand Agrawal R/o 40/424 Kotra Road

Post Office Raigarh District - Raigarh (C.G.) (Respondent / Defendant

No. 2)

3 - Rekha Agrawal W/o Subhash Agrawal R/o 40/424 Kotra Road Post

Office Raigarh District - Raigarh (C.G.) (Respondent/ Defendant No.3)

4 - Bhushan Power and Steel Limited Village Thelkoloi Post Office

Lapanga Tehsil Rangali District - Sambalpur (Orissa) ( Respondent /

Defendant No. 6)

... Respondents

For Appellants : Mr. B.P. Sharma along with Mr.

Vivek Chopda and Ms. Mitisha

Kotecha, Advocate

For Respondent No.1 :Mr. Kshitij Sharma, Advocate

For Respondents No.2 & 3 :Mr. Shobhit Mishra, Advocate

For Respondent No.4 :Mr. Ankit Singal, Mr. Amartya Bajpai

and Mr. Varun Vats, Advocate

Hon'ble Smt. Justice Rajani Dubey

Hon’ble Shri Justice Radhakishan Agrawal

C A V Judgment

Per Rajani Dubey, Judge

1.The appellants have preferred the present appeal against the

judgment and decree dated 26.09.2024 passed by the

Commercial Court (District Judge Level), Nava Raipur Atal Nagar,

District Raipur (C.G.) in Commercial Suit No. 04B/2019, whereby

the suit filed by the plaintiff/respondent No. 1 has been decreed

3

and defendants No. 1 to 5 have been held jointly and severally

liable to pay a sum of Rs. 99 lakhs along with interest. The parties

to this appeal shall be referred herein as per their description

before the learned Family Court.

2.Pleadings of the plaintiff are that the plaintiff is a small-scale

industry registered with MSME, Govt. of India, which, among

other things, is engaged in the business of manufacturing of basic

refractory products. The defendant no. 1 is a company engaged in

the business of manufacture of basic iron and steel. The

defendant nos. 2 & 3 are former Directors of the defendant no. 1.

The defendant no. 4 & 5 are current Directors of the defendant

no.1. The defendant no.6 is also a company engaged in the

business of manufacture of steel.

The plaintiff has pleaded that it has been supplying

refractory materials to the defendant no. 6 since last several

years. In line with the plaintiff's verbal agreement with the

defendant no 6, the defendant no. 6 makes the payment for

receiving the refractory material to the plaintiff within 3 months.

However, in the year 2016, the defendant no. 6 communicated its

inability to make payment against supply of refractory material and

in lieu thereof offered DRI Lumps (Pellet) (hereinafter referred to

as "the material") worth Rs. 1,04,45,591/- (Rupees One Crore,

Four Lakhs, Forty-Five Thousand, Five Hundred, Ninety-One

Only) in exchange in order to clear its debt. Owing to the fact that

4

the plaintiff did not need the said material offered by defendant no.

6, it approached the defendant no. 1 company through one of its

directors, defendant no. 2 on 17/09/2016 requesting to lift the said

material from defendant no. 6 and pay the amount on account

thereof to the plaintiff. The defendant no 1 agreed to lift the

material from the defendant no. 6 and to pay the amount in

respect thereof to the plaintiff within 1 month of lifting. The

defendant no. 6 also agreed to permit the defendant no. 1 to lift

the material on behalf of the plaintiff in order to clear its debts

owed to the plaintiff.

Subsequently, the plaintiff placed a formal order dated

17/09/2016 on the defendant no. 6 requesting it to supply 700 MT

of the material to the defendant no. 1 at Rs. 13,000/- per Metric

Ton (exclusive of Excise, CST & Freight). The defendant no. 6

confirmed the receipt of said order from the plaintiff vide its letter

dated 19/09/2016 and agreed to supply the material amounting to

a total of Rs. 1,04,45,591/- (Rupees One Crore, Four Lakhs,

Forty-Five Thousand, Five Hundred, Ninety-One Only) to the

defendant no. 1.

It is further pleaded that the defendant no. 1 started lifting

the material from the defendant no. 6 and thus lifted a total

quantity of 699.780 MT of the same from defendant no. 6 starting

vide bills dated 20.09.2016 to 18.10.2016 amounting to a total of

Rs. 1,04,38,970/- (Rupees One Crore, Four Lakhs, Thirty-Eight

5

Thousand, Nine Hundred, Seventy Only). As per the agreement,

the defendant no. 1 was supposed to pay the said amount to the

plaintiff within 1 month from 18/10/2016 i.e. within 18/11/2016.

However, the defendant no. 1 paid only a sum of Rs. 5,00,000/-

(Rupees Five Lakhs) to the plaintiff on account of lifting of material

worth Rs. 1,04,38,970/- (Rupees One Crore, Four Lakhs, Thirty-

Eight Thousand, Nine Hundred, Seventy). The plaintiff repeatedly

requested the defendant no. 1 to pay the balance amount of Rs.

99,45,591/- to the plaintiff, however, defendant no. 1 kept dilly

dallying the same on one pretext or the other. Since the defendant

no. 1 had lifted material worth Rs. 1,04,38,970/- from the

defendant no. 6, the balance amount of Rs. 6,621/- was paid by

the defendant no. 6 to the plaintiff on 12/05/2017 and as such the

defendant no. 6's debt to the plaintiff stood clear. Further the

defendant no. 1 paid an amount of Rs. 38,970/- to the plaintiff on

16/06/2017 and thus a balance of Rs. 99,00,000/- still remains to

be paid by the defendant no. 1 to the plaintiff on account of

material lifted from defendant no. 6.

It is further pleaded that the defendant no. 1 has specifically

admitted its liability to the plaintiff to pay a sum of Rs. 99,00,000/-

as on 13/06/2017 by executing a mortgage deed dated

25/07/2017 mortgaging property worth Rs. 1,65,00,000/- The

defendant no. 2 the then Director of defendant no. 1 had executed

the said mortgage deed on behalf of the defendant no. 1. On

31/12/2017 the defendant no. 2 and 3 resigned from Directorship

6

of the defendant no. 1 company and defendant no. 4 and 5

became the new Directors of the defendant no. 1 company. Apart

from the said mortgage, the defendant no. 1 had issued 20 post-

dated cheques in total of Rs. 99,00,000/- in favour of the plaintiff

in discharge of its liability. The cheques were signed by the

defendant no. 2 on behalf of defendant no. 1 company. Upon

presentation of a few cheques the plaintiff came to know that the

defendant no. 1 was not maintaining sufficient balance in its

account for payment of its debts. In this regard, the plaintiff has

already initiated appropriate criminal proceedings against the

defendant no. 1.

It is further case of plaintiff that defendant no. 1 has illegally,

malafidely, arbitrarily and unreasonably refused to pay its admitted

liability of Rs. 90,00,000/- to the plaintiff against the cost of

material lifted from the defendant no. 6. When a legal notice dated

24/04/2019 was sent to defendant no. 1 raising the demand of Rs.

90,00,000/-, the defendant no. 5 responded to the same vide letter

dated 05/05/2019 denying the liability of defendant no. 1 company

stating that after reorganization of management of the defendant

no. 1 company, there remains no liability upon the defendant nos.

4 & 5 to pay the dues of the defendant no. 1 company Defendant

nos. 4 & 5 have instructed defendant no. 1's bank to not honour

any cheques drawn by the defendant no. 2 and therefore some

post-dated cheques drawn by the defendant no. 1 through

defendant no. 2 are now being dishonored for the reason of

7

difference in signature. Thus, defendant nos. 4 & 5 are acting in

collusion with the defendant no. 2 & 3 in order to defraud the

plaintiff.

In the aforestated backdrop, it is the case of plaintiff that its

claim of Rs. 99,00,000/- is genuine and it is entitled to get the

same with simple interest @ 12% per annum from the date the

amount became due i.e. 13/06/2017 till actual realization of the

amount.

3.In their written statement, the defendant Nos. 1, 4 & 5 have

admitted the fact that defendant Nos. 2 & 3 are former Directors of

defendant No. 1 company and defendant nos. 4 & 5 are current

Directors thereof. It has been denied that the defendant No.1, or

in alternative, defendant Nos. 1 to 5, jointly and severally, are to

pay an amount of Rs. 99,00,000/- to the plaintiff. It is pleaded that

699.78 MT of DRI Lumps (Pellet) was procured by defendant Nos.

2 & 3 in their personal capacity and not on behalf of defendant

No. 1 company. The defendant No. 2 has accepted his liability in

his personal capacity and as things stand now the defendant Nos.

4 & 5 have become Directors of defendant No.1 company on

10/07/2017 and thus if any transactions were made by the

defendant Nos. 1, 2 and 3 therefore, the same has nothing to do

with defendant Nos. 4 & 5.

It is further pleaded that the defendant No.2 and plaintiff,

who are close relatives, have conspired against the defendant

8

Nos. 4 & 5 with an intent to harm them. The pleadings of plaintiff

are fabricated. The mortgage deed was executed by defendant

No. 2 when he was no longer the Director of defendant No. 1

company. The execution of the mortgage given effect to by

defendant No. 2 is in respect of his personal property and not of

defendant No. 1 company. It is pleaded that since no transaction

has taken place between the plaintiff and defendant Nos. 1, 4 & 5,

the present suit is not maintainable.

In their written statement, the defendant Nos. 2 & 3 have

admitted that they were Directors of defendant No. 1 company

and have resigned from Directorship of the same and subsequent

thereto the defendant Nos. 4 & 5 have become new Directors of

defendant No. 1 company. All works related to the running of the

company are now being done by the new Directors. It is pleaded

that defendant Nos. 2 & 3 having resigned from Directorship of

defendant No. 1 company, are not liable to pay dues of defendant

No. 1 company. Pertinently, the defendant Nos. 2 & 3 have not

specifically, either expressly or by necessary implication, denied

the assertions of the plaint.

4.In its written statement, the defendant No. 6 has admitted the fact

that in the year 2016 it was unable to make payments against

supply of some of the refractory material it had received from the

plaintiff and therefore in exchange it offered to supply DRI Lumps

(Pellet) worth Rs. 1,04,45,591/- to the plaintiff. Subsequent

9

thereto, the plaintiff had approached the defendant No. 6 to permit

the defendant No. 1 to lift the material on behalf of the plaintiff in

discharge of the liability of defendant No. 6 and the same was

agreed upon by the defendant No. 6. As per defendant No. 6, vide

various bills dated 20/09/2016 to 18/10/2016 the defendant No. 1

lifted a total quantity of 699.780 MT of said material worth Rs.

1,04,38,970/- from defendant No. 6's facility and thus a balance

amount Rs. 6,621/- was required to be paid to the plaintiff by the

defendant No. 6. The defendant No. 6 made the said payment of

Rs. 6,621 to the plaintiff on Rs. 6,621/- in discharge of its debt.

5.On the basis of pleadings made by the parties, learned

Commercial Court framed the issues and after appreciating oral

and documentary evidence, by its judgment and decree dated

26.09.2024 allowed the suit filed by the plaintiff/respondent No.1.

Hence, this appeal.

6.Learned counsel for the appellants submits that the impugned

judgment and decree passed by the learned Trial Court are wholly

illegal, erroneous and contrary to the settled principles of law and

evidence. It is contended that Defendant No. 2 had ceased to be

a Director of Defendant No. 1–Company prior to the execution of

the alleged mortgage deed; hence, any purported admission of

liability by him, in his personal capacity, cannot bind or fasten

liability upon the Company. It is further argued that Defendant No.

2 in collusion with the plaintiff, who is his relative, has fabricated a

10

false and inflated claim against Defendant No. 1–Company. It is

further submitted that the plaintiff has failed to discharge the

burden of proof, as no reliable or cogent documentary evidence

has been produced to establish the actual transportation or

delivery of the alleged materials. Apart from the invoices (Exhibit

P/2), no independent evidence has been adduced. It is also

contended that the ledger accounts (Ex. P/3 and P/4) have not

been proved in accordance with the provisions of the Indian

Evidence Act, as no competent witness, such as a Chartered

Accountant or the author of the accounts, was examined to

substantiate the same. Mere issuance of cheques by Defendant

No. 2 cannot be construed as an admission of liability on behalf of

Defendant No. 1–Company.

7.Learned counsel for the appellants strongly objected that the suit

has been instituted by the plaintiff company through Mr. Sajjan

Agrawal without a valid and proved Board Resolution. This is a

fundamental defect. As per guidelines of Hon’ble Apex Court in

Kingston Computers case that a company, being a juristic person,

must prove the authority of the individual representing it through a

formal Board Resolution and in the present case, the Plaintiff

(Respondent No. 1) is a private limited company. The cause title

and Paragraph 1 of the plaint merely state that the company is

being represented by Mr. Sajjan Agrawal in his capacity as a

Director. However, there is a total absence of any specific Board

Resolution being pleaded or produced alongside the plaint to

11

establish that Mr. Sajjan Agrawal was specifically empowered by

the Board of Directors to institute this specific legal proceeding,

sign the pleadings, or verify the contents of the suit. Further, the

written statement of Defendant No. 6, who was proceeded ex

parte, cannot be treated as substantive evidence to establish the

alleged supply of materials. It is also submitted that Defendant

Nos. 4 and 5, being the present Directors, cannot be held

vicariously liable for the alleged acts or omissions of Defendant

No. 2 or any erstwhile Directors of the Company. The appellants

additionally contend that in the absence of any credible

documentary proof supporting the alleged supply of materials

worth Rs. 1,04,45,591/-, no liability could have been imposed

upon Defendant No. 1–Company. The suit is further stated to be

not maintainable for non-compliance with the mandatory

provisions of Section 12A of the Commercial Courts Act, 2015 and

is also barred by limitation. It is thus urged that the learned Trial

Court has recorded perverse findings on Issues No. 1, 2, 3, and 6

by misappreciating both oral and documentary evidence,

rendering the impugned judgment and decree unsustainable in

law and liable to be set aside.

8.Along with the present appeal, the appellants have preferred I.A.

No. 04/2025 under Order VI Rule 17 of the Code of Civil

Procedure seeking amendment of the written statement. It is

submitted that the proposed amendment is necessary to bring on

record material facts pertaining to the nature of the transaction

12

between the parties. The appellants contend that the plaintiff had

initially dealt with Defendant No. 6, who offered material in lieu of

payment, which was declined. Thereafter, Defendant No. 1–

Company, through its then Director (Defendant No. 2), allegedly

purchased the goods pursuant to a purchase order issued by the

plaintiff upon Defendant No. 6, wherein the materials were to be

lifted by Defendant No. 1 and payment was to be made by it to the

plaintiff. In terms of this arrangement, Defendant No. 1 is stated to

have taken over the liability of Defendant No. 6. It is further

submitted that subsequently, control and majority shareholding of

Defendant No. 1–Company were transferred by Defendant No. 2

to Defendant Nos. 4 and 5 vide agreement dated 08.05.2017. The

proposed amendment seeks to clarify that the primary liability, if

any, lies upon Defendant Nos. 2 and 3 and not upon Defendant

Nos. 1, 4, and 5, who stand discharged. The amendment also

addresses the admissibility of the mortgage deed and the change

in directorship. It is contended that the proposed amendment

does not alter the nature of the defence, is bona fide, and is

necessary for effective adjudication of the dispute and to avoid

miscarriage of justice. Accordingly, it is prayed that the application

for amendment be allowed, and if necessary, the matter be

remanded to the learned Trial Court for proper adjudication.

9.The appellants have also filed I.A. No. 05/2025 under Order XLI

Rule 27 of the Code of Civil Procedure seeking permission to

place additional documents on record. It is submitted that certain

13

subsequent developments came to the knowledge of the

appellants only at the stage of filing the present appeal, and the

certified copies of the relevant documents were obtained on

06.08.2025. It is contended that during the pendency of the suit

and the present appeal, Defendant Nos. 2 and 3, in collusion,

unlawfully sold properties belonging to Defendant No. 1–

Company, despite having no authority to do so. It is submitted that

pursuant to the agreement dated 08.05.2017, Defendant Nos. 2

and 3 had already transferred their entire shareholding in

Defendant No. 1–Company and, therefore, ceased to have any

right, title, or interest in its assets. However, in violation of the said

agreement, Defendant Nos. 2 and 3 allegedly executed sale

transactions in respect of immovable property situated at Village

Punjipathra (approximately 10 acres), formerly held in the name of

Mahindra Ispat (erstwhile name of Defendant No. 1), in favour of

M/s Raigarh Ispat and Power Private Limited through its Directors.

It is submitted that the said acts of misfeasance are directly

relevant for adjudication of the dispute, particularly in light of the

counterclaim already filed by the appellants against Defendant

Nos. 2 and 3. The additional documents, including certified copies

of the sale deeds, are necessary for proper and effective

adjudication and to avoid multiplicity of proceedings. Accordingly,

it is prayed that the application be allowed and the additional

documents be taken on record.

Reliance has been placed upon the decisions of the Hon’ble

14

Supreme Court in Yamini Manohar vs. T.K.D. Keerthi, (2024) 5

SCC 815; Patil Automation Private Limited & Ors. vs. Rakheja

Engineers Private Limited, (2022) 10 SCC 1; State Bank of

Travancore vs. Kingstone Computers India Private Limited,

(2011) 11 SCC 524; Rajul Manoj Shah @ Rajeshwari Rasiklal

Sheth vs. Kiranbhai Shakrabhai Patel & Anr., 2025 LiveLaw

(SC) 912 and G.M. Shahul Hameed vs. Jayanthi R. Hegde ,

(2024) 7 SCC 719. Reliance is further placed upon the recent

judgment dated 06.02.2026 passed in Tharammel

Peethambaran & Anr. vs. T. Ushakrishnan & Anr. in Civil

Appeal arising out of SLP (C) No. 11868 of 2024 as well as the

judgment of this Court dated 23.01.2026 passed in FA No.

201/2019 (Chhedan Prasad Sharma vs. Vinod Agrawal & Anr.).

10.Learned counsel for Respondent No. 1 vehemently opposes the

submissions advanced on behalf of the appellants and submits

that the issue sought to be raised has already been adjudicated

by the learned Trial Court while dismissing the appellants’

application under Order VII Rule 11 CPC vide order dated

21.02.2022. It is further contended that the appellants’ reliance on

Patil Automation Pvt. Ltd. vs. Raheja Engineers Pvt. Ltd.,

(2022) 10 SCC 1, is misconceived, as the Hon’ble Supreme Court

has categorically held that the requirement of mandatory pre-

institution mediation under Section 12A of the Commercial Courts

Act, 2015 shall operate prospectively with effect from 20.08.2022.

It is submitted that the learned Trial Court has duly considered this

15

aspect and taken note of the said judgment in its order dated

12.12.2022. Since the application seeking exemption from pre-

institution mediation had already been allowed on 09.07.2019,

and the application under Order VII Rule 11 CPC was rejected on

21.02.2022, i.e., prior to 20.08.2022, the said judgment has no

applicability to the present case. Accordingly, it is urged that the

objection raised by the appellants is misconceived, untenable,

and devoid of merit.

Learned counsel for Respondent No. 1 submits that the

application under Order XLI Rule 27 CPC (I.A. No. 05/2025) is

misconceived, as the additional documents sought to be produced

are beyond the scope of the original pleadings of Defendant Nos.

1, 4, and 5. It is contended that the said application has been filed

only to support the proposed counterclaim sought to be introduced

by way of amendment. Hence, both applications deserve

rejection, as the present recovery suit cannot be converted into

adjudication of inter se disputes among the defendants.

With regard to the application under Order VI Rule 17 CPC

(I.A. No. 04/2025), it is submitted that the same is belated and

devoid of merit. The proposed amendment is essentially an

attempt to introduce a counterclaim at the appellate stage without

any justification for not raising it before the Trial Court. It is argued

that such an amendment is impermissible in law, particularly at a

belated stage. A perusal of the proposed amendment indicates

16

that the claim is substantially directed against Defendant Nos. 2

and 3, and the relief against the plaintiff is merely illusory and

intended to circumvent the legal bar against maintaining a

counterclaim solely against co-defendants. It is further contended

that by filing the aforesaid applications, the appellants have, in

effect, admitted the liability of Defendant No. 1–Company towards

the plaintiff, and are now only attempting to shift the liability onto

Defendant Nos. 2 and 3, while seeking to absolve Defendant Nos.

4 and 5 of personal liability.

Learned counsel for Respondent No. 1 submits that the

objection regarding non-filing of a Board Resolution is untenable

and cannot be entertained at this belated stage, as no such plea

was raised in the written statement before the learned

Commercial Court. It is contended that under Order XXIX Rule 1

CPC, a suit on behalf of a company can validly be instituted and

verified by its Director or principal officer competent to depose to

the facts. In the present case, the plaint has been duly verified by

a Director of the Company and bears the company seal, thus

satisfying the legal requirement. It is further submitted that the

learned Trial Court has rightly held the defendants jointly and

severally liable, in consonance with the principles laid down by the

Hon’ble Supreme Court in Balwant Rai Saluja vs. Air India Ltd.,

(2014) 9 SCC 407. It is argued that the impugned judgment is

well-reasoned, based on proper appreciation of oral and

documentary evidence, and does not suffer from any illegality,

17

infirmity, or perversity. Accordingly, the appeal, as well as the

applications filed by the appellants, being devoid of merit, deserve

to be dismissed.

Reliance has been placed on the decisions of Hon’ble

Supreme Court in the matter of Iqbal Ahmed (Dead) by LRs vs.

Abdul Shukoor; 2025 SCC OnLine SC 1787, Ashok Kumar

Kalra v/s Wing CDR Surendra Agnihoti & Ors. (2020) 2 SCC

394, Rajul Manoj Shah @ Rajeshwari v/s Kiranbhai

Shakrabhai Patel & Ors 2025 SCC OnLine SC 1958, United

Bank of India v/s Naresh Kumar & Ors.; (1996) 6 SCC 660 and

Kuldeep Kumar Dubey And Ors v/s Ramesh Chandra Goyal.

(2015) 3 SCC 525.

11.Learned counsel for respondents No. 2 and 3 submits that the

present appeal challenges the judgment and decree dated

24.09.2024 passed by the learned Commercial Court, Raipur,

whereby all defendants were held jointly and severally liable for

Rs.99,00,000/- with interest, without determining individual

liability. It is contended that respondents No. 2 and 3, being

former directors of Defendant No. 1 company, cannot be held

personally liable, as the company is a separate legal entity under

the Companies Act and no personal guarantee was given by

them. The alleged transactions were conducted in their official

capacity and not personally. Further, the suit is based on an

unenforceable and illegal arrangement, lacking any valid written

18

tripartite agreement and relies upon an unregistered mortgage

deed, which is inadmissible in evidence. The claim is thus not

maintainable and is hit by provisions of law. Accordingly, it is

prayed that the suit/appeal may be dismissed against

respondents No. 2 and 3.

12.Learned counsel appearing for respondent No. 4 has supported

the submissions advanced on behalf of respondent No. 1 and

contended that the learned Trial Court has duly and meticulously

appreciated the oral as well as documentary evidence on record,

and has rightly fastened joint and several liability upon defendants

No. 1 to 5.

13.Heard counsel for the parties and perused the material available

on record.

14.First, it is appropriate to decide I.A. No. 4/2025 filed under Order

VI Rule 17 CPC for amendment of the written statement and I.A.

No. 5/2025 filed under Order XLI Rule 27 CPC for taking

additional evidence on record.

15.The appellants have filed I.A. No. 4/2025 under Order VI Rule 17

CPC seeking amendment of the written statement and have also

proposed to add a new paragraph 28.2 as a counterclaim.

16.Order VIII Rule 6A of CPC provides as under:-

“6A. Counter-claim by defendant.-(1) A defendant in a suit may, in

addition his right of pleading a set-off under rule 6, set up, by way of

counter-claim against claim of the plaintiff, any right or claim in

19

respect of a cause of action accruing to the defendant against the

plaintiff either before or after the filing of the suit but before the

defendant has delivered his defence or before the time limited for

delivering his defence has expired, whether such counter-claim is in

the nature of a claim for damages or not:

Provided that such counter-claim shall not exceed the pecuniary

limits of the jurisdiction of the Court.

(2) Such counter-claim shall have the same effect as a cross-suit so

as to enable the Court to pronounce a final judgment in the same

suit, both on the original claim and on the counter-claim.

(3) The plaintiff shall be at liberty to file a written statement in

answer to the counter-claim of the defendant within such period as

may be fixed by the Court.

(4) The counter-claim shall be treated as a plaint and governed by

the rules applicable to plaints.”

17.It is clear from the aforesaid provision that a defendant is entitled

to file a counterclaim against the plaintiff. Rule 6A(1) specifically

provides that such counterclaim may be filed either before or after

the institution of the suit, but it must be filed before the defendant

has delivered his defence or before the time prescribed for

delivering the defence has expired. In the present case, the

plaintiff instituted the suit on 05.07.2019 against the

defendants/appellants and the defendants first appeared before

the learned Trial Court through their counsel on 27.08.2019.

Defendants No. 1, 4 and 5 filed their written statements on

20

02.01.2020. Thereafter, they filed an application for amendment,

which was allowed, and the amended written statement was filed

on 17.03.2022. The learned Trial Court passed the impugned

judgment on 26.09.2024. Subsequently, the

appellants/defendants No. 1, 4 and 5 have filed the present

application on 29.08.2025, whereby they have sought to introduce

a counterclaim by way of amendment. The reliefs sought in the

proposed counterclaim are as follows:-

“i.

यहकीप्रतिवादीक्र

. 1,4 & 5

केपक्षमेंतथावादीकेविरुद्ध इस आशयकी

उ‌द्घोषणात्मकडिक्रीपारितकीजाएकीअनुबंधकेपक्षकारगण

,

दस्तावेजदिनांक

25.07.2017

कामूलपंजीयकरायगढ़केसमक्ष प्रस्तुतकरेंएवंइसकाविधिवत

पंजीयनकराये।

ii.

यहकीइस आशयसेआशापकआदेश प्रतिवादीक्र

. 2

केविरुद्धजारीकियाजाएकी

वह अनुबंधदिनांक

25.07.2017

केपरिपालनमेंअपनेदायित्वकीपूर्तिकरें

, चुं

कि

वादीसदैवअपनेदायित्वकीपूर्तिहेतुतत्पररहेहैएवंइसमेंपंजीयनकीकार्यवाहीपूर्ण

करेंअन्यथामाननीय न्यायायलयविधि

-

अनुरूपदस्तावेजनिष्पादनएवंपंजीयनउभय

पक्षकारोंकेअधिकारएवंकरकानिर्धारणकियाजावे।

iii.

इस प्रतिवादीक्र

. 1,4,

एवं

5

केविरुद्धवादीकिसीप्रकारकेअनुतोषप्राप्तकरनेमें

अधिकारीनहींहै।

iv.

यहकीप्रकरणकेदृष्टिकोणमेंमाननीय न्यायलयजोउचितसमझेइस प्रतिवादीक्र

.

1,4

एवं

5

केपक्षमेंअनुतोष प्रदानकीजावे।

V.

यहकीवादीसेइस प्रतिवादीक्र

. 1,4

एवं

5

कोवादव्ययदिलायाजावे

|”

18.It is evident from the application itself that the proposed

counterclaim has been filed by the appellants seeking execution

21

of the agreement dated 25.07.2017. Thus, after a lapse of about

eight years from the date of the agreement, the appellants have

sought its enforcement. It is further clear that no counterclaim was

filed at the time of submission of the written statement, nor at any

stage during the pendency of the suit. After the passing of the

decree by the learned Trial Court, the appellants have now filed

the present amendment application seeking to introduce the

counterclaim not only against the plaintiff but also against

defendant No. 2. By way of the proposed counterclaim, they seek

a decree directing defendant No. 2 to perform his obligations in

terms of the agreement dated 25.07.2017, asserting their

readiness and willingness to perform their part of the contract and

to complete the registration process. In the alternative, the

appellants have prayed that the Court may itself execute and

register the document in accordance with law and determine the

respective rights and liabilities, including taxes of the parties.

19.It is a well-settled principle of law that a counterclaim can be filed

by a defendant only against the plaintiff and not against co-

defendants. It is further well settled that a counterclaim must be

filed along with the written statement or within the time prescribed

for filing the defence.

20.In the mater of Ashok Kumar Kalra (supra), Hon’ble Apex Court

held in paras 18 and 57 as under:-

“18. As discussed by us in the preceding paragraphs, the

22

whole purpose of the procedural law is to ensure that the legal

process is made more effective in the process of delivering

substantial justice. Particularly, the purpose of introducing Rule

6-A in Order 8 CPC is to avoid multiplicity of proceedings by

driving the parties to file separate suit and see that the dispute

between the parties is decided finally. If the provision is

interpreted in such a way, to allow delayed filing of the

counterclaim, the provision itself becomes redundant and f the

purpose for which the amendment is made will be defeated

and ultimately it leads to flagrant miscarriage of justice. At the

same time, there cannot be a rigid and hyper-technical

approach that the provision stipulates that the counterclaim

has to be filed along with the written statement and beyond

that, the court has no power. The courts, taking into

consideration the reasons stated in support of the

counterclaim, should adopt a balanced approach keeping in

mind the object behind the amendment and to subserve the

ends of justice. There cannot be any hard and fast rule to say

that in a particular time the counterclaim has to be filed, by

curtailing the discretion conferred on the courts. The trial court

that to exercise the discretion judiciously and come to a

definite conclusion process is not unduly delayed and the

same is in the best interest of justice and that by allowing the

counterclaim, no prejudice is caused to the opposite party, as

per the objects sought to be achieved through the amendment.

But however, we are of the considered opinion that the

23

defendant cannot be permitted to file counterclaim after the

issues are framed and after the suit has proceeded

substantially. It would defeat the cause of justice and be

detrimental to the principle of speedy justice as enshrined in

the objects and reasons for the particular amendment to CPC.

57. At the same time, in exceptional circumstances, to prevent

multiplicity a of proceedings and a situation of effective re-trial,

the court may entertain a counterclaim even after the framing

of issues, so long as the court has not started recording the

evidence. This is because there is no significant development

in the legal proceedings during the intervening period between

framing of issues and commencement of recording of

evidence. If a counterclaim is brought during such period, a

new issue can still be framed by the court, if needed, and

evidence can be recorded accordingly, without seriously

prejudicing the rights of either party to the suit.”

21.In the matter of Rajul Manoj Shah Alias Rajeshwari Rasiklal

Sheth (supra), Hon’ble Apex Court held in paras 20 to 25 as

under:-

“20. Rule 6A provides that counter-claim shall be against the

claim of the plaintiff and such right or claim shall be in respect

of cause of action accruing to defendant against the plaintiff.

This Court in Rohit Singh (supra) held;

“21. Normally, a counterclaim, though based on a different

cause of action than the one put in suit by the plaintiff could

24

be made. But, it appears to us that a counterclaim has

necessarily to be directed against the plaintiff in the suit,

though incidentally or along with it, it may also claim relief

against the codefendants in the suit. But a counterclaim

directed solely against the co-defendants cannot be

maintained. By filing a counterclaim the litigation cannot be

converted into some sort of an interpleader suit.…”

21. The above observations have been reiterated with approval

in subsequent pronouncement in Damodhar Narayan Sawale v.

Tejrao Bajirao Mhaske, by observing as under;

“39. The decision of this Court in Rohit Singh v. State of

Bihar also assumes relevance in the above context. This

Court held that a defendant could not be permitted to raise

counterclaim against co-defendant because by virtue of

Order 8 Rule 6-A CPC, it could be raised by the defendant

against the claim of the plaintiff."

22. In the present case, defendant no. 2 sought to raise a

counter-claim primarily for the relief of specific performance of

agreement dated 21.10.2011 executed in his favour by

deceased original defendant no. 1 with respect to her undivided

share in the suit property, by a direction to the Nazir, the

substituted representative of defendant no. 1 to execute a sale

deed in pursuance of the agreement to sell. The relief of

specific performance as sought to be raised by defendant no. 2

25

cannot be set up by way of a counter-claim since the same is

not directed against the appellant/plaintiff, but is instead

directed solely against the co-defendant. In view of this,

defendant no. 2 is held to be disentitled to raise prayer of

specific performance by way of counter-claim. This is simply not

permissible, and this position is no more res-integra in view of

the decision of this Court in Rohit Singh (supra).

23. Defendant no. 2 however submits that he has not only

claimed the relief of specific performance, but has also sought

partition of suit property to separate the share he is entitled to

under the agreement. Defendant must first establish a right of

claim over the property, which is absent till he succeeds against

the estate of defendant no. 1 and only thereafter that the

question of setting up a counter claim against plaintiff may

arise. Thus, the submission that there is also a claim for

partition must fail for the same reason.

24. Re: Defendant no. 2 filed the counter-claim after issues

were framed: It is true that issues were framed on 12.02.2019

and the application for counter claim was filed almost two years

thereafter i.e., on 26.07.2021. For our purpose, it is sufficient to

refer to the guiding principle for determining the time-frame for

filing a counter claim, succinctly articulated in the judgment of

this Court in Ashok Kumar Kalra (supra). The relevant portion of

the decision is as under;

26

17. x x x

18. x x x

19. x x x

20. x x x

21. We sum up our findings, that Order 8 Rule 6-A CPC does not

put an embargo on filing the counterclaim after filing the written

statement, rather the restriction is only with respect to the accrual

of the cause of action. Having said so, this does not give

absolute right to the defendant to file the counterclaim with

substantive delay, even if the limitation period prescribed has not

elapsed. The court has to take into consideration the outer limit

for filing the counterclaim, which is pegged till the issues are

framed. The court in such cases have the discretion to entertain

filing of the counterclaim, after taking into consideration and

evaluating inclusive factors provided below which are only

illustrative, though not exhaustive:

(i) Period of delay

(ii) Prescribed limitation period for the cause of action pleaded.

(iii) Reason for the delay.

(iv) Defendant's assertion of his right.

(v) Similarity of cause of action between the main suit and the

counterclaim.

(vi) Cost of fresh litigation.

(vii) Injustice and abuse of process.

27

(vii) Prejudice to the opposite party.

(ix) And facts and circumstances of each case.

(x) In any case, not after framing of the issues."

25. It is also important to note that defendant no. 2 is seeking

specific performance of an agreement dated 21.10.2011, which

provided execution of the sale deed within twelve months.

Defendant no. 2 did not take any action. In any event, the next

course of action to seek execution of the sale deed arose

immediately after January 2012 when the appellant/plaintiff

instituted a suit seeking annulment of so-called agreement to

sell. The defendant no. 2 did nothing. Only after the death of his

vendor in October 2013 and after framing of the issues in

February 2019 that the defendant no. 2 decided to file the

application- only after nine years of the filing of the suit, which is

again two years after framing of the issues.”

22.It is evident that the appellant, by way of the proposed

counterclaim, is seeking specific performance of the agreement

dated 08.05.2017. The relief has been claimed not only against

the plaintiff but also against a co-defendant. The said

counterclaim has been sought to be introduced by way of

amendment on 29.08.2025, i.e., after a lapse of about eight years

from the date of execution of the agreement.

In view of the above, the proposed counterclaim is clearly

barred by limitation and is also not maintainable insofar as it is

28

directed against a co-defendant.

23.The appellants have also filed an application under Order XLI

Rule 27 CPC for taking additional documents on record. In the

said application, it is submitted that the documents are relevant

and necessary for proper adjudication of the present appeal and

that the appellants had no knowledge of the said transactions and

developments during the pendency of the suit before the learned

Commercial Court. Along with the application, the appellants have

filed a sale deed dated 08.08.2025 executed between Mahindra

Ispat Pvt. Ltd. (through its proprietor Subhash Chandra Agrawal)

and Brijmohan Agrawal, along with certain other documents.

However, it is evident that the other documents pertain to the

agreement dated 08.05.2017, whereas the said sale deed has

been executed subsequently in the year 2025.

24.Order XLI Rule 27 provides as under:-

“27. Production of additional evidence in Appellate Court.-

(1) The parties to an appeal shall not be entitled to produce

additional evidence, whether oral or documentary, in the

Appellate Court. But if-

(a) the Court from whose decree the appeal is preferred has

refused to admit evidence which ought to have been

admitted, or

2

[(aa) the party seeking to produce additional

evidence, establishes that notwithstanding the exercise of

due diligence, such evidence was not within his knowledge

or could not, after the exercise of due diligence, be produced

by him at the time when the decree appealed against was

29

passed, or]

(b) the Appellate Court requires any document to be

produced or any witness to be examined to enable it to

pronounce judgment, or for any other substantial cause,

the Appellate Court may allow such evidence or document to be

produced, or witness to be examined.

(2) Wherever additional evidence is allowed to be produced by an

Appellate Court, the Court shall record the reason for its admission.”

25.In Iqbal Ahmed (Dead) by LRs (supra), Hon’ble Apex Court held

in paras 8, 9 and 10 as under:-

“8. In our opinion, before undertaking the exercise of

considering whether a party is entitled to lead additional

evidence under Order XLI Rule 27(1) of the Code, It would

be first necessary to examine the pleadings of such party to

gather if the case sought to be set up is pleaded so as to

support the additional evidence that is proposed to be

brought on record. In absence of necessary pleadings in that

regard, permitting a party to lead additional evidence would

result in an unnecessary exercise and such evidence, if led,

would be of no consequence as it may not be permissible to

take such evidence into consideration. Useful reference in

this regard can be made to the decisions in Bachhaj Nahar v.

Nilima Mandal, (2008) 17 SCC 491: AIR 2009 SC 1103 and

Union of India v. Ibrahim Uddin, (2012) 8 SCC 148. Thus,

besides the requirements prescribed by Order XLI Rule

30

27(1) of the Code being fulfilled. It would also be necessary

for the Appellate Court to consider the pleadings of the party

seeking to lead such additional evidence. It is only thereafter

on being satisfied that a case as contemplated by the

provisions of Order XLI Rule 27(1) of the Code has been

made out that such permission can be granted. In absence

of such exercise being undertaken by the High Court in the

present case, we are of the view that it committed an error in

allowing the application moved by the defendant for leading

additional evidence.

9. As we have found that the application for leading

additional evidence has been considered by the Appellate

Court without examining the aspect as to whether the

additional evidence proposed to be led was in consonance

with the pleadings of the defendant and whether such case

had been set up by him coupled with the fact that the

additional evidence taken on record has weighed with it

while reversing the decree, the matter requires

reconsideration by the High Court. Since we find that the

matter requires re-consideration at the hands of the High

Court afresh, we have not gone into the aspect of delay in

deciding the appeal by the High Court as was urged on

behalf of the appellants.

10. For the aforesaid reasons, we find the Judgment under

31

challenge to be unsustainable in law. The appeal requires to

be re-considered along with the application filed by the

defendant under provisions of Order XLI Rule 27(1) of the

Code afresh. Accordingly, the Judgment and order dated

30.12.2008 passed In RFA No. 440 of 2000 is set aside. The

proceedings are remanded to the High Court to reconsider

the same afresh In accordance with law. Since the suit was

flied In 1997, we request the High Court to expedite the

consideration of RFA No. 440 of 2000. It is clarified that we

have not expressed any opinion on the merits of the matter.”

26.It is evident that during the pendency of the suit, the defendants

never filed any counterclaim. The agreements in question pertain

to the year 2017 and were within the knowledge of the

defendants. The appellants have produced these documents only

after the decree was passed against them, and the same do not

fall within the scope of Order XLI Rule 27 CPC.

27.In view of the principles laid down by the Hon’ble Supreme Court

and the provisions of the Code of Civil Procedure, both the

applications i.e. I.A. No. 4/2025 under Order VI Rule 17 CPC and

I.A. No. 5/2025 under Order XLI Rule 27 CPC, filed by the

appellants, are not maintainable. Accordingly, this Court is not

inclined to allow the said applications at this stage.

28.As regards the other grounds of appeal, it is observed that the

plaintiff instituted the suit on 05.07.2019 along with an application

32

seeking exemption from pre-institution mediation and settlement.

The learned Trial Court, after hearing the plaintiff, passed an order

dated 09.07.2019. The relevant portion of the said order is

reproduced hereinbelow:-

“………………...Along with the suit the plaintiff has filed an

application under Order 38 Rule 5 of the Code of Civil Procedure,

1908 for furnishing security for production of property.

Documents as per list. Vakalatnama, registered address of

plaintiff is also filed.

The plaintiff has also filed an application for exemption from

undergoing pre-institution mediation and settlement submitting that

the application under Order 38 Rule 5 of the Code of Civil

Procedure, 1908 for furnishing security for production of property

filed with the suit is urgent nature, therefore, exemption from

undergoing pre-institution mediation and settlement may be given.

Looking into the prima facie urgent nature of case, the

application for exemption from undergoing pre-institition mediation

and settlement is allowed at this stage.

Prima Facie the suit appears to be within the jurisdiction of this

Court, of above the specified value of Rs. 1 crore, filed within

limitation and with proper e-court fees.

Case be registered as 'B' class suit.

Notice be issued to the defendants by registered post, along-

with copy of plaint and all the documents filed by the plaintiff, for

33

their appearance and filing of written statement.

The case is fixed for appearance and filing of written statement

by defendants, on 02.08.2019.”

29.Defendants No. 1, 4 and 5 filed an application under Order I Rule

10(2) of the Code of Civil Procedure before the learned Trial Court

on 16.03.2020. The learned Trial Court, after hearing both the

parties, dismissed the said application. The defendants also filed

an application under Order VII Rule 11 CPC.

30. In the matter of Kuldeep Kumar Dubey (supra), Hon’ble Apex

Court held in paras 9 and 10 as under:-

“9. The learned counsel for the appellants submitted that it is

undisputed that Appellants 1 and 2 are the sole owners of the

property in question. It is not disputed that they were

substituted as plaintiffs on the death of Shiv Kumar before the

trial court itself. It is also not disputed that they could maintain

the suit for eviction. Thus on admitted facts, only defect

pointed out is of formal nature in description without, in any

manner, affecting the merits or the jurisdiction of the court.

Such irregularity could have been corrected by the court under

Order 1 Rule 10 and can be corrected even at this stage

unless the defendant is in any manner prejudiced. No principle

or authority has been brought to our notice which could affect

the maintainability of the suit merely on account of wrong

description which did not in any manner cause prejudice to the

defendant, particularly when no such objection is shown to

34

have been raised before the trial court.

10. In our view, the District Judge is, thus, not justified in

reversing the decree of the trial court on such a technicality

which did not in any manner affect the merits of the case.

Section 99 of the Code of Civil Procedure, 1908 provides as

under:

“99. No decree to be reversed or modified for error or

irregularity not affecting merits or jurisdiction - No

decree shall be reversed or substantially varied, nor shall

any case be remanded, in appeal on account of any

misjoinder or non-joinder of parties or causes of action or

any error, defect or irregularity in any proceedings in the

suit, not affecting the merits of the case or the jurisdiction

of the court:

Provided that nothing in this section shall apply to non-

joinder of a necessary party."

31.Section 12A of The Commercial Courts Act, 2015 provides as

under:-

“12A. Pre-litigation Mediation and Settlement.- (1) A suit,

which does not contemplate any urgent interim relief under this

Act, shall not be instituted unless the plaintiff exhausts the

remedy of pre-litigation mediation in accordance with such

manner and procedure as may be prescribed by rules made by

the Central Government.

(2) For the purposes of pre-litigation mediation, the Central

Government may, by notification, authorise-

35

(i) the Authority, constituted under the Legal Services

Authorities Act, 1987 (39 of 1987); or

(ii) a mediation service provider as defined under clause

(m) of section 3 of the Mediation Act, 2023.

(3) Notwithstanding anything contained in the Legal Services

Authorities Act, 1987 (39 of 1987), the Authority or mediation service

provider authorised by the Central Government under sub-section

(2) shall complete the process of mediation within a period of one

hundred and twenty days from the date of application made by the

plaintiff under sub-section (1):

Provided that the period of mediation may be extended for a further

period of sixty days with the consent of the parties:

Provided further that, the period during which the parties spent for

pre-litigation mediation shall not be computed for the purposes of

limitation under the Limitation Act, 1963 (36 of 1963).

(4) If the parties to the commercial dispute arrive at a settlement, the

same shall be reduced into writing and shall be signed by the parties

and the mediator.

(5) The mediated settlement agreement arrived at under this section

shall be dealt with in accordance with the provisions of sections 27

and 28 of the Mediation Act, 2023.]”

32.In Patil Automation (supra), the Hon’ble Supreme Court held that

the declaration shall operate prospectively with effect from

20.08.2022. In the present case, the learned Trial Court allowed

the application seeking exemption from pre-institution mediation

36

on 09.07.2019 and the application under Order VII Rule 11 CPC

was rejected on 21.02.2020, i.e., prior to 20.08.2022. Therefore,

the rigour of the said judgment is not applicable to the present

case.

33.It is evident from the written statement that no objection in this

regard was raised by the defendants before the learned

Commercial Court. Even in the memorandum of appeal, no such

ground has been taken by the appellants.

34.Order XXIX Rule 1 of CPC provides as under:-

“1. Subscription and verification of pleading.- In suits by or

against a corporation, any pleading may be signed and verified on

behalf of the corporation by the secretary or by any director or

other principal officer of the corporation who is able to depose to

the facts of the case.”

35.In the matter of United Bank of India (supra), Hon’ble Apex Court

held in paras 10, 11, 12 and 13 as under:-

“10. It cannot be disputed that a company like the appellant

can sue and be sued in its own name. Under Order 6 Rule 14

of the Code of Civil Procedure a pleading is required to be

signed by the party and its pleader, if any. As a company is a

juristic entity it is obvious that some person has to sign the

pleadings on behalf of the company. Order 29 Rule 1 of the

Code of Civil Procedure, therefore, provides that in a suit by or

against a corporation the Secretary or any Director or other

37

Principal Officer of the corporation who is able to depose to the

facts of the case might sign and verify on behalf of the

company. Reading Order 6 Rule 14 together with Order 29

Rule 1 of the Code of Civil Procedure it would appear that

even in the absence of any formal letter of authority or power

of attorney having been executed a person referred to in Rule

1 of Order 29 can, by virtue of the office which he holds, sign

and verify the pleadings on behalf of the corporation. In

addition thereto and dehors Order 29 Rule 1 of the Code of

Civil Procedure, as a company is a juristic entity, it can duly

authorise any person to sign the plaint or the written statement

on its behalf and this would be regarded as sufficient

compliance with the provisions of Order 6 Rule 14 of the Code

of Civil Procedure. A person may be expressly authorised to

sign the pleadings on behalf of the company, for example by

the Board of Directors passing a resolution to that effect or by

a power of attorney being executed in favour of any individual.

In absence thereof and in cases where pleadings have been

signed by one of its officers a corporation can ratify the said

action of its officer in signing the pleadings. Such ratification

can be express or implied. The court can, on the basis of the

evidence on record, and after taking all the circumstances of

the case, specially with regard to the conduct of the trial, come

to the conclusion that the corporation had ratified the act of

signing of the pleading by its officer.

11. The courts below could have held that Shri L.K. Rohatgi

38

must have been empowered to sign the plaint on behalf of the

appellant. In the alternative it would have been legitimate to

hold that the manner in which the suit was conducted showed

that the appellant-Bank must have ratified the action of Shri

L.K. Rohatgi in signing the plaint. If, for any reason

whatsoever, the courts below were still unable to come to this

conclusion, then either of the appellate courts ought to have

exercised their jurisdiction under Order 41 Rule 27(1)(b) of the

Code of Civil Procedure and should have directed a proper

power of attorney to be produced or they could have e ordered

Shri L.K. Rohatgi or any other competent person to be

examined as a witness in order to prove ratification or the

authority of Shri L.K. Rohatgi to sign the plaint. Such a power

should be exercised by a court in order to ensure that injustice

is not done by rejection of a genuine claim.

12. The courts below having come to a conclusion that money

had been taken by Respondent 1 and that Respondent 2 and

the husband of Respondent 3 had stood as guarantors and

that the claim of the appellant was justified it will be a travesty

of justice if the appellant is to be non-suited for a technical

reason which does not go to the root of the matter. The suit did

not suffer from any jurisdictional infirmity and the only defect

which was alleged on behalf of the respondents was one which

was curable.

13. The court had to be satisfied that Shri L.K. Rohatgi could

39

sign the plaint on behalf of the appellant. The suit had been

filed in the name of the appellant company, full amount of court

fee had been paid by the appellant-Bank, documentary as well

as oral evidence had been led on behalf of the appellant and

the trial of the suit before the Sub-Judge, Ambala, had

continued for about two years. It is difficult, in these

circumstances, even to presume that the suit had been filed

and tried without the appellant having authorised the institution

of the same. The only reasonable conclusion which we can

come to is that Shri L.K. Rohatgi must have been authorised to

sign the plaint and, in any case, it must be held that the

appellant had ratified the action of Shri L.K. Rohatgi in signing

the plaint and thereafter it continued with the suit.”

36.The appellants have vehemently contended that the learned Trial

Court has failed to properly appreciate the oral and documentary

evidence on record. It is submitted that the ledger accounts (Ex.

P/3 and Ex. P/4) were not proved in accordance with the

provisions of the Indian Evidence Act and the learned Trial Court

has erroneously decreed the suit merely on the basis of issuance

of cheques by defendant No. 2.

37.We have perused the statements of the witnesses and the

documents available on record before the learned Trial Court. It is

noted that Shankar Lal Agrawal (defendant No. 4/appellant No. 2)

filed an affidavit dated 06.03.2020, which contains a list indicating

acceptance and denial of documents. For ready reference, the

40

same is reproduced hereinbelow:-

क्र.वि

वरण

पृ

ष्ठ स

. स्

वीकृति

/ अस्

वीकृति

1.

फा

र्म न

. डी.आई.आ

र

. 12 प्रस्

तुत द्वारा वादी

28

आं

शिक रूप से स्वीकृत

2.

फा

र्म न

. डी.आई.आ

र

. 12 प्रस्

तुत द्वारा वादी

34

स्

वीकृत

3.

मा

स्टर डाटा प्रस्तुत द्वारा वादी

40

स्

वीकृत

4.

पत्रदिनांक

17.09.2016 प्रस्

तुत

प्रतिवादीक्र

. 6

द्वारावादीकोलिखा

ग

या।

41

अस्

वीकृत

5. ई-

मेलदिनांक

17.09.2016 वा

दी

द्वाराप्रतिवादीक्र

. 6, 1

एवं

2

42

अस्

वीकृत

6.

टैक्सकमएक्साईजइनवाईस

प्रतिवादीक्र

. 2

द्वाराप्रतिवादीक्र

. 6

कोलिखागयापत्रदिनांक

17.09.2016

43

अस्

वीकृत

7.

टैक्सकमएक्साईजइनवाईस

जारीकर्ताप्रतिवादीक्र

. 6

केद्वारा

प्रतिवादीक्र

. 1

46-65

अस्

वीकृत

8.

खातावादीद्वारासंधारणकियागया

है

।

66

अस्

वीकृत

9.

पत्रदिनांक

12.05.2017 जो 67

अस्

वीकृत

41

प्रतिवादीक्र

. 2

द्वाराप्रतिवादीक्र

. 6

कोभेजागया।

10.

पत्रदिनांक

19.09.2016 प्र

तिवादी

क्र. 6

द्वारालिखित

68

अस्

वीकृत

11.

खातावादीद्वारासंधारित

69

अस्

वीकृत

12.

अनुबंध पत्रदिनांक

25.07.2017

जोवादी

एवंप्रतिवादीक्र

. 2

सेसबंधितहै।

71

स्

वीकृत

13.

अधिवक्तानोटिसदिनांक

24.04.2019

वादीद्वाराप्रतिवादी

क्र. 1,4

व

5

कोप्रेषित।

92

स्

वीकृत

14.

प्रतिवादीक्र

. 1, 4

व

5

द्वाराप्रेषितजवाब

93

स्

वीकृत

15.

खा

ता वादी का प्रतिवादी क्र

. 6 से

लेनदेन

सम्

बन्धी

94-113

अस्

वीकृत

/ अ

संबंधित

38.It is evident from the said affidavit that the documents relied upon

by the plaintiff were admitted by defendant No. 4/appellant No. 2,

and the plaintiff has duly proved the same. The learned Trial Court

has meticulously appreciated the oral as well as documentary

evidence on record and, from paragraph 36 onwards, has held

that Ex. P/22, P/23 and P/24 are admitted documents. The

learned Trial Court further held that the issuance of post-dated

cheques, i.e., Ex. P/6 to P/17 and Ex. P/28 to P/35, amounting in

total to Rs. 99,00,000/-, clearly establishes the liability of

42

defendant No. 1 towards the plaintiff. It has also been found that

all these cheques were issued by defendant No. 2 in his capacity

as Director of defendant No. 1 Company. The learned Trial Court

has rightly observed that the said cheques were admitted by

defendant No. 2 in his affidavit of admission and denial. Moreover,

during the cross-examination of the plaintiff’s witness, Sajjan

Agrawal (P.W.1), suggestions were put on behalf of defendant No.

2 as well as other defendants admitting that the cheques were

issued to the plaintiff by defendant No. 2 while acting as Director

of defendant No. 1 Company.

39.The learned Trial Court has rightly fastened joint and several

liability upon the defendants in accordance with the principles laid

down by the Hon’ble Supreme Court in Balwant Rai Saluja

(supra). In the said judgment, the Hon’ble Supreme Court has

held in paragraphs 70, 71 and 74 as under:-

“70. The doctrine of "piercing the corporate veil" stands as an

exception to the principle that a company is a legal entity

separate and distinct from its shareholders with its own legal

rights and obligations. It seeks to disregard the separate

personality of the company and attribute the acts of the company

to those who are allegedly in direct control of its operation. The

starting point of this doctrine was discussed in the celebrated

case of Salomon v. Salomon & Co. Ltd. Lord Halsbury LC,

negating the applicability of this doctrine to the facts of the case,

stated that: (AC pp. 30 & 31)

43

"[a company] must be treated like any other

independent person with its rights and liabilities [legally]

appropriate to itself... whatever may have been the ideas or

schemes of those who brought it into existence."

Most of the cases subsequent to Salomon case, attributed the

doctrine of piercing the veil to the fact that the company was a

"sham" or a "façade" However, there was yet to be any clarity on

applicability of the said doctrine.

71. In recent times, the law has been crystallised around the six

principles formulated by Munby, J. in Ben Hashem v. Ali Shayif.

The six principles, as found at paras 159-64 of the case are as

follows:

(i) Ownership and control of a company were not enough to

justify piercing the corporate veil;

(ii) The court cannot pierce the corporate veil, even in the

absence of third-party interests in the company, merely because

it is thought to be necessary in the interests of justice;

(iii) The corporate veil can be pierced only if there is some

impropriety;

(iv) The impropriety in question must be linked to the use of the

company structure to avoid or conceal liability:

(v) To justify piercing the corporate veil, there must be both

control of the company by the wrongdoer(s) and impropriety, that

is use or misuse of the company by them as a device or facade

to conceal their wrongdoing; and

44

(vi) The company may be a "façade" even though it was not

originally incorporated with any deceptive intent, provided that it

is being used for the purpose of deception at the time of the

relevant transactions. The court would, however, pierce the

corporate veil only so far as it was c necessary in order to

provide a remedy for the particular wrong which those controlling

the company had done.

74. Thus, on relying upon the aforesaid decisions, the doctrine of

piercing the veil allows the court to disregard the separate legal

personality of a company and impose liability upon the persons

exercising real control over the said company. However, this

principle has been and should be applied in a restrictive manner,

that is, only in scenarios wherein it is evident that the company

was a mere camouflage or sham deliberately created by the

persons exercising control over the said company for the

purpose of avoiding liability. The intent of piercing the veil must

be such that would seek to remedy a wrong done by the persons

controlling the company. The application would thus depend

upon the peculiar facts and circumstances of each case.”

40.While dealing with Issue No. 7(A) in paragraphs 59 and 60, the

learned Trial Court has duly appreciated the matter and rightly

held that no document was filed by defendants No. 1, 4 and 5

regarding any prior proceedings before the National Company

Law Tribunal. The learned Trial Court also rejected a similar

contention by order dated 21.02.2022, holding that the insolvency

petition disposed of by the NCLT, Kolkata vide order dated

45

04.01.2022 does not constitute a “suit” and, therefore, has no

bearing on the present proceedings. It was further rightly held that

the suit was filed within the prescribed period of limitation, i.e.,

within three years from the date of accrual of the first cause of

action on 18.11.2016.

41.It is evident from the impugned judgment that the learned Trial

Court has meticulously appreciated the oral as well as

documentary evidence led by both the parties and has recorded

findings on each issue. In view of the same, no sufficient ground

is made out to interfere with the well-reasoned judgment passed

by the learned Trial Court.

42.In view of the foregoing discussion, both the applications i.e. I.A.

No. 04/2025 and I.A. No. 05/2025 as well as the present appeal,

are devoid of merit. Accordingly, the said applications and the

appeal are hereby dismissed.

43.Let a decree be drawn up accordingly.

Sd/- Sd/-

(Rajani Dubey) (Radhakishan Agrawal)

JUDGE JUDGE

Ruchi