RFA 776/2023 Page 1 of 24

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Reserved on: 4

th

February, 2026

Pronounced on: 29

th

May 2026

+ RFA No.776/2023, CM APPL. 48929/2023 (stay), CM

APPL.48930/2023 (for additional documents)

JOHNSON ENGINEERS

Through its Proprietor Mr. Christopher Pacheco

Having its office at:

At 206, Bhanot Corner, Pamposh Enclave, Greater Kailash-I,

New Delhi-110048

Through: Mr. Ankur Singhal, Advocate.

versus

INDIATECH

A Partnership Firm

Having its office at:

74-B, Sector 31, Faridabad-121003 (Haryana)

Through: Mr. Rajnish Gaind, Mr.

Hemant Kaushik, Mr. Devansh

Bhargava and Mr. Himanshu

Gupta, Advocates.

.

CORAM:

HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA

J U D G M E N T

NEENA BANSAL KRISHNA, J.

1. The present Regular First Appeal under Section 96 read with Order

XLI and Section 151 of the Code of Civil Procedure, 1908 (hereinafter

referred to as „CPC’), has been filed on behalf of the Appellant/Defendant,

against the Judgment and decree dated 18.05.2023, whereby the Suit of the

RFA 776/2023 Page 2 of 24

Plaintiff/Respondent, has been decreed for a sum of Rs.10,89,733/- along

with interest @10% p.a.

2. The Plaintiff had filed CS DJ No. 7509/2016 for recovery of

Rs.14,96,069/- including the interest @18% p.a.

3. The facts, in brief, are that the Plaintiff was a partnership firm, duly

registered with the Registrar of Firms. It was engaged in the business of

manufacturing electrical control panels under the name and style of M/s

Indiatech, having its registered Office at 74-B, HSIIDC, Sector-31,

Faridabad, Haryana. The Defendant is the sole proprietorship firm of Mr.

Christophar Pacheco, who is an Electrical Contractor.

4. During the period from May 2008 to December 2009, the Defendant

had placed various Purchase Orders upon the Plaintiff firm, for the supply of

electrical panels to various places. The goods were supplied to the

Defendant vide various Invoices at different places, as per the Orders of the

Defendant.

5. The Plaintiff claimed that electrical panels amounting to a total value

of Rs.23,25,044/- had been supplied by the Plaintiff to the Defendant

between May 2008 and December 2009, against which the Defendant had

made payments aggregating to Rs.12,25,363/-, thereby leaving an

outstanding balance of Rs.10,99,681/-.

6. The parties were maintaining a mutual, open, running and current

account, in which entries were made of the Invoices raised by the Plaintiff

upon the Defendant from time to time, as well as the various payments made

by the Defendant to the Plaintiff. The Account had neither been closed nor

settled till date. The last entry in the Account pertained to a payment of

Rs.2,97,628/-, made on 09.03.2010 by the Defendant. However, an amount

RFA 776/2023 Page 3 of 24

of Rs.10,99,681/- still remained unpaid and outstanding against the

Defendant.

7. The Plaintiff made repeated requests to the Defendant for clearance of

the outstanding dues and eventually served a Legal Notice dated 03.09.2011,

despite which the payment was not made.

8. Hence, the Plaintiff filed the Suit for recovery of Rs.14,96,069/-,

(compromising the principal amount of Rs.10,99,681/- with interest

amounting to Rs.3,96,388/- calculated @18% p.a.) along with the pendente

lite and future interest.

9. The Defendant/Appellant, in his Written Statement, asserted that

Plaintiff, against the Purchase Order dated 08.11.2008, had raised Invoice

dated 09.12.2008 for a sum of Rs.2,79,537/-; Invoice dated 11.12.2008 for a

sum of Rs.64,631/-; and Invoice dated 15.12.2008 for a sum of

Rs.5,65,724/-, aggregating to a total amount of Rs.9,09,622/-. The goods

were supplied by the Plaintiff to the Defendant at one of its sites, i.e.,

Rockmans Beer Garden, 4

th

Floor, Ambiance Mall, Gurgaon.

10. The Defendant claimed that the goods were supplied after

considerable delay, against the stipulated delivery period of 10 days from

the date of Purchase Order, as mentioned therein, and, therefore, were not

accepted. This led to delay in completion of certain works entrusted to the

Defendant by M/s Rockman Breweries Ltd. for its site at Ambience Mall,

Gurgaon, Haryana.

11. Consequently, M/s Rockman Breweries Ltd. refused to release certain

payments to the Defendant, on account of which the Defendant claimed to

have suffered substantial losses and damages, attributable to the delayed

supply of goods by the Plaintiff. Subsequently, the Defendant was left with

RFA 776/2023 Page 4 of 24

no option, but to file a Suit for Recovery against M/s Rockman Breweries

Ltd., in this Court and had claimed certain amount, which were due to the

Defendant from them.

12. The Defendant further asserted that the claim in respect of the

aforesaid three Invoices, raised against the Purchase Order dated

08.11.2008, was barred by limitation, having been filed beyond the

prescribed period of three years. It was further claimed that the Defendant

had already paid the Plaintiff the entire amount against the other Purchase

Orders, even though the deliveries thereunder, were also delayed.

13. The Ledger Account of the Plaintiff, as maintained by the Defendant,

reflected a debit balance of Rs.19,888/-, which according to the Defendant,

had been paid in excess, to the Plaintiff. The Defendant further claimed that

the amounts against the Purchase Orders dated 26.10.2009, 16.10.2009 and

22.12.2009, already stood paid and that no amount remained due thereunder.

The other Purchase Orders pertained to the other sites of the Defendant, and

not to the site of Rockman Breweries Ltd.

14. The Defendant further asserted that all the dealings between the

Plaintiff and the Defendant, were on the basis of separate Purchase Orders,

for which separate invoices were raised, and separate deliveries were

effected. It was thus, claimed that there existed no mutual, open or running

account between the parties, as alleged by the Plaintiff. According to the

Defendant, payments were made against respective Purchase Orders and not

on a running account basis.

15. The Defendant thus, asserted that no amount was recoverable from

him.

RFA 776/2023 Page 5 of 24

16. On merits, all averments made in the Plaint were denied, except the

fact that the Plaintiff and the Defendant had certain dealings with each other

during the period 2007-2009.

17. On the basis of the pleadings of the parties, the following Issues were

framed on 08.04.2013:-

1. Whether the plaintiff is entitled for a decree of

recovery of Rs.14,96,069/- along with pendente lite and

future interest @18% per annum as claimed in the plaint?

OPP

2. Whether the plaintiff has no cause of action to file

the present suit, if so, to what effect? OPD

3. Whether the suit is barred by limitation? OPD

4. Whether the plaint has not been signed, verified or

filed by a properly authorized person as claimed in the

written statement? OPD

5. Whether the plaintiff has not approached this

Court with clean hands and has concealed the material

facts, if so, to what effect? OPD

6. Relief.

18. The Plaintiff examined PW-1, Mr. Rajeev Kakkar, who tendered his

evidence as Ex-PW-1/A and proved the online Purchase Orders, Invoices

and Statement of Account as Ex.PW-1/1 to Ex.PW-1/6, respectively.

19. PW-2, Mr. Umesh Dhiman, the Accountant of the Plaintiff firm,

deposed about the account maintained with the Plaintiff firm.

20. The Defendant, namely, Mr. Christopher Pacheco examined

himself as DW-1 and deposed in support of his case.

21. The Ld. Trial Court, while deciding the issue pertaining to

maintainability of the Suit and the authority of Mr. Rajiv Kakkar to institute

the proceedings on behalf of the Plaintiff firm, relied upon the registration

documents of the Plaintiff firm i.e. Form A and Form C Ex.PW1/1 (colly),

RFA 776/2023 Page 6 of 24

which reflected that the Plaintiff was a duly registered partnership firm and

that Mr. Rajiv Kakkar was one of its partners. Reliance was further placed

upon Sections 18 and 19 of the Indian Partnership Act, 1932, Order III Rule

1 and Order XXX Rule 1 CPC, as well as the judgment of the Hon’ble

Supreme Court in Purushottam Umedbhai & Co. v. Manilal & Sons AIR

1961 SC 325 to hold that a partner, being an agent of the firm, is competent

to institute proceedings on behalf of the partnership firm.

22. While deciding limitation, the Ld. Trial Court examined whether the

accounts between the parties constituted a "mutual, open and current

account" within the meaning of Article 1 of the Limitation Act, 1963.

Reliance was placed upon the judgments in Era Constructions (India) Ltd. v.

D.K. Sharma 2008 (100) DRJ 712, Bharat Skins Corporation v. Taneja

Skins Company Pvt. Ltd. 2011 SCC OnLine Del 5517, Kesharichand

Jaisukhlal v. The Shillong Banking Corporation Ltd. AIR 1965 SC 1711 and

Manish Garg v. East India Udyog Ltd. 2001 III AD DELHI 493 to hold that

although there were no reciprocal demands so as to constitute a "mutual

account", the dealings between the parties reflected a running and current

non-mutual account between buyer and seller. The statements of account

Ex.PW1/4 and Ex.DW1/1 (colly) reflected that the payments had been made

on different dates and not as per Invoice.

23. The Ld. Trial Court also relied upon the Defendant’s own ledger

account Ex.DW1/1 (colly), wherein entries dated 12.05.2011 were made

debiting an amount of Rs.9,09,622/- on account of alleged rejection of goods

supplied under Invoice nos.113, 114 and 116 dated 09.12.2008, 11.12.2008

and 15.12.2008 respectively. According to the Ld. Trial Court, had the

goods actually been rejected in December 2008 itself, corresponding entries

RFA 776/2023 Page 7 of 24

would have been contemporaneously reflected in the accounts for the

financial year 2008-09.

24. On the aforesaid basis, relying upon Bharat Skins Corporation

(supra), the Ld. Trial Court held that the claim was governed by Article 113

of the Limitation Act and that limitation would commence from the legal

notice dated 03.09.2011. Accordingly, the Suit filed on 20.12.2011 was

held to be within limitation.

25. Regarding entitlement of recovery, the Ld. Trial Court rejected the

defence of the Defendant that the goods covered under Invoice nos.113, 114

and 116 corresponding to Purchase Order dated 08.11.2008, had been

rejected on account of delayed supply. The Ld. Trial Court relied upon the

admissions made by DW1 during cross-examination that the Defendant had

placed the Orders, the goods had been supplied by the Plaintiff, the original

Invoices and road permits/challans were in possession of the Defendant and

that the goods had been accepted at site. He further stated that no written

communication regarding rejection of goods, had ever been issued by the

Defendant to the Plaintiff. Relying upon Sections 41 and 42 of the Sale of

Goods Act, 1930 and the judgment in Lohmann Rauscher Gmbh v.

Medisphere Marketing Pvt. Ltd., the Ld. Trial Court held that the goods

stood deemed to have been accepted by the Defendant.

26. The Ld. Trial Court further relied upon the plaint filed by the

Defendant in the Suit against M/s Rockman Breweries Ltd., wherein the

Defendant had pleaded that the contracted work had been duly executed and

commissioned, and held that the Defendant was estopped from contending

that the work had been delayed on account of delayed supply by the

Plaintiff.

RFA 776/2023 Page 8 of 24

27. The Ld. Trial Court further rejected the Defendant's plea regarding

alleged cash payment of Rs.2,00,000/- by observing that no receipt or

documentary proof had been produced in support thereof except for a self-

serving ledger entry. However, the Ld. Trial Court accepted the Defendant's

objection qua Invoice no.144 to the limited extent of Rs.9,948/- in view of

the admission made by PW1, during cross-examination regarding

calculation error in the said Invoice.

28. Consequently, after deducting the said amount from the principal

claim of Rs.10,99,681/-, the Ld. Trial Court vide Judgment and Decree dated

18.05.2023, decreed the Suit of the Plaintiff, for a sum of Rs.10,89,733/-

along with the interest @10% p.a. from the date of legal Notice dated

03.09.2011 till the date of realisation of the amount.

29. Aggrieved by the said Judgment and decree, the Defendant/Appellant

filed the present Appeal.

30. The grounds of challenge are that it has not been appreciated that

though the Plaint was signed by Mr. Rajiv Kakkar, but he admittedly

possessed no authority letter or Power of Attorney from the other partner(s)

of the Respondent firm, authorizing institution of the Suit. Though Mr. Rajiv

Kakkar alleged in his examination-in-chief that he was conversant with the

facts and circumstances of the case, he admitted during cross-examination

that he was not aware of the Accounts, Consent Letter and Certificate of

Registration.

31. It has not been appreciated that the Appellant used to issue separate

Purchase Orders depending upon the requirements of its clients. Each

Purchase Order contained independent terms and conditions, thereby

constituting separate and independent contracts between the parties.

RFA 776/2023 Page 9 of 24

Pursuant thereto, the Respondent used to manufacture the electrical control

panels and supply the same, in accordance with the terms and conditions

contained in the respective Purchase Orders.

32. Out of the five Purchase Orders relied upon by the Respondent, one

Purchase Order dated 08.11.2008 for a value of Rs.9,09,622/- pertained to

Rockman Beer Garden, Gurgaon. However, as per the terms and conditions

of the said Purchase Order, neither was any advance payment made by the

Appellant, nor were the deliveries effected immediately, in terms thereof.

33. It has not been appreciated that the Respondent had failed to supply

the panels within the stipulated delivery schedule. FORM VAT D3 was

merely a dispatch form and did not constitute any acknowledgment of

delivery or acceptance by the Appellant.

34. It is further claimed that the Respondent also failed to submit the

requisite forms/intimate the tax authorities regarding the concerned Tax

Invoices.

35. Moreover, it was the specific case of the Appellant that FORM VAT

D3 was a false and manipulated document, inasmuch as the date therein had

been repeatedly mentioned as 09.11.2008, whereas the corresponding Tax

Invoices bear the date 09.12.2008. The tax Invoices of the declined

Transaction contained the Value Added Tax “VAT in Short” component and

as per the VAT law, the supplier ought to furnish the details specifying the

said Tax Invoices, having been reported before the tax authorities.

36. It has further been contended that due to non-delivery/delayed

delivery of the panels within the stipulated time, the work assigned to the

Appellant by M/s Rockman Breweries Ltd. for its Rockman Beer Garden

RFA 776/2023 Page 10 of 24

site got delayed, on account of which M/s Rockman Breweries Ltd. refused

to accept the panels.

37. It has also been claimed that because of non-payment of the dues by

M/s Rockman Breweries Limited, the Appellant was compelled to file

CS(OS) 1577/2010 against M/s Rockman Breweries Limited, for Recovery

of money.

38. The Winding up Petition No. CO. PET. No.159/2010 was filed under

Section 433 (e) read with Section 434 of the Companies Act, 1956, against

M/s Rockman Breweries Ltd. and this Court vide Order dated 02.05.2013

appointed the Provisional Liquidator.

39. The Appellant further claimed that there were wrong calculations in

the Tax Invoice No. 144 dated 27.11.2019. At Serial No. 2, the Respondent

had mentioned the rate as Rs.4,974/- and the quantity is 2, but the amount is

shown as Rs.19,986/- when it should have been Rs.9,948/-. The calculation

of amount has thus, been wrongly made in Tax Invoice No. 144.

40. It has further been contended that the learned Trial Court erred in

treating the Account between the parties as a “mutual, open and current

account” within the meaning of Article 1 of the Limitation Act, 1963. It is

submitted that for applicability of Article 1, two essential conditions were

required to be satisfied, namely: (i) existence of a mutual, open and current

account; and (ii) reciprocity of demands between the parties. According to

the Appellant, neither of the said conditions stood satisfied, in the facts of

the present case. Reliance in this regard, has been placed upon the judgment

of the Hon’ble Supreme Court in Kesharichand Jaisukhlal v. Shillong

Banking Corporation Ltd.

RFA 776/2023 Page 11 of 24

41. Furthermore, the Suit of the Respondent could not have been brought

within the ambit of Article 1 of the Limitation Act, 1963 on the basis of an

alleged mutual, open and current account, inasmuch as the alleged claim was

founded primarily upon Invoices pertaining to the Rockman Beer Garden,

Gurgaon.

42. It is submitted that the Tax Invoices in respect of Rockman Beer

Garden was prepared on 09.12.2008, 11.12.2008 and 15.12.2008

respectively, whereas respondent filed/instituted the suit on 20 .12.2011.

Hence, claim of the respondent is barred by limitation as it is beyond years

even from the date of last Tax Invoice i.e., 15.12.2008.

43. Moreover, this Court had no territorial jurisdiction as admittedly, the

goods were manufactured at the factory of the Respondent at Faridabad and

the goods were delivered at Gurgaon.

44. It is claimed that the evidence of the witnesses, has not been rightly

appreciated and the Suit and decree of the Plaintiff, is liable to be set-aside.

45. Written Synopsis have been filed on behalf of the Respondent

wherein they have reiterated their assertions as made in the Plaint and has

stated that the learned District Judge has rightly appreciated the evidence

and there is no merit in the Appeal.

Submissions heard and the record perused.

46. Essentially, the controversy in the present Appeal pertains to the

following aspects:

I. Whether the Suit had been validly instituted on behalf of the

Respondent firm by a competent and authorized person;

RFA 776/2023 Page 12 of 24

II. Whether the claim of the Respondent/Plaintiff was within

limitation and whether the dealings between the parties constituted a

running and current account;

III. Whether the Appellant had established delayed supply and

rejection of goods supplied under invoice nos.113, 114 and 116

pertaining to the Rockman Beer Garden transaction;

IV. Whether the oral and documentary evidence had been correctly

appreciated by the Ld. Trial Court; and lastly

V. Whether the Ld. Trial Court lacked territorial jurisdiction to

entertain the Suit.

I. Whether the Suit had been validly instituted by a competent and

authorized person on behalf of the Respondent Firm:

47. The first ground of challenge raised on behalf of the Appellant is that

the Suit had not been validly instituted on behalf of the Respondent Firm

inasmuch as no Authority Letter or Power of Attorney had been executed by

the other partner(s) in favour of Mr. Rajiv Kakkar, authorizing him for

institution of the Suit.

48. Order XXX Rule 1 CPC provides who can file a Suit on behalf of

Partnership Firm. Its relevant part reads as under:

“1. Suing of partners in name of firm.—(1) Any two or more persons

claiming or being liable as partners and carrying on business in,

[India] may sue or be sued in the name of the firm (if any) of which

such persons were partners at the time of the accruing of the cause of

action, and any party to a suit may in such case apply to the Court for

a statement of the names and addresses of the persons who were, at

the time of the accruing of the cause of action, partners in such firm,

to be furnished and verified in such manner as the Court may direct.

RFA 776/2023 Page 13 of 24

(2) Where persons sue or are sued partners in the name of their

firm under sub-rule (1), it shall, in the case of any pleading or other

document required by or under this Code to be signed, verified or

certified by the plaintiff of the defendant, suffice such pleading or

other document is signed, verified or certified by any one of such

persons.”

49. A plain reading of the aforesaid provision shows that where a Suit is

instituted in the name of a Partnership Firm, it is sufficient if the pleadings

or documents are signed, verified or certified by any one of the partners.

Thus, the institution of a Suit by a partner on behalf of the Firm does not

require a separate Authority Letter or Power of Attorney from the remaining

partners.

50. In the present case, the Plaintiff/Respondent had placed on record

Form A and Form C issued by the Registrar of Firms, Ex.PW1/1 (colly).

The said documents reflected that the Respondent was a duly registered

partnership firm and that Mr. Rajiv Kakkar was one of its partners. The Suit

has been duly instituted by one of the partners of a registered partnership

firm, acting on behalf of the firm.

51. Merely because PW1, during cross-examination, expressed lack of

knowledge regarding certain accounting or registration details, is not

material, in the light of the Certificate of Registration of the Partnership

Firm.

52. Therefore, the institution of the Suit by Mr. Rajiv Kakkar on behalf

of the Respondent Firm is in conformity with Order XXX Rule 1 CPC. The

challenge laid by the Appellant to the maintainability of the Suit on the

ground of lack of authorization is therefore, devoid of merit.

RFA 776/2023 Page 14 of 24

II. Whether the claim of the Respondent/Plaintiff was within limitation:

53. The principal controversy in the present case pertains to limitation.

The determination of the said issue would essentially depend upon three

things, firstly, the nature of the account maintained between the parties;

secondly, whether Article 1, Article 14, or Article 113 of the Limitation

Act, 1963 would apply; and thirdly, the actual computation of limitation, in

the facts and circumstances of the present case.

54. The Appellant has contended that each Purchase Order constituted an

independent contract and limitation was therefore, required to be computed

Invoice-wise, from the respective dates of supply. According to the

Appellant, the Invoices dated 09.12.2008, 11.12.2008 and 15.12.2008

having formed the basis of the present claim, was barred by limitation, as the

Suit instituted on 20.12.2011.

55. Per contra, the Respondent has contended that the parties were

maintaining a running and current account in the ordinary course of

business, in which supplies made and payments released from time to time,

as were regularly reflected and the Account had never been settled or closed;

thus Article 1 of Schedule to the Limitation Act would be attracted.

56. Article 1 of the Schedule to the Limitation Act applies to suits relating

to “mutual, open and current accounts” where there are reciprocal

demands between the parties. The same is reproduced as under:

1. For the balance due on a

mutual, open and

current account, where

there have been

reciprocal demands

between the parties.

Three years. The close of the year in

which the last item admitted

or proved is entered in the

account; such year to be

computed as in the account.

RFA 776/2023 Page 15 of 24

57. The law relating to “mutual, open and current account” is well

settled. In Kesharichand Jaisukhlal v. Shillong Banking Corporation Ltd.,

AIR 1965 SC 1711 the Supreme Court explained that for an account to

qualify as a “mutual account”, there must be reciprocal demands between

the parties, meaning thereby that both parties must independently stand in

the position of debtor and creditor against each other, at different points of

time. Mere supply of goods by one party and payments made by the other,

would not by itself constitute a mutual account.

58. Similar principles were reiterated in Hindustan Forest Company v.

Lal Chand AIR 1959 SC 1349 and followed in Era Constructions (India)

Ltd. v. D.K. Sharma 2008 (100) DRJ 712 and Bharat Skins Corporation v.

Taneja Skins Company Pvt. Ltd. 2011 SCC OnLine Del 5527.

59. In the present case, it is undisputed that the Plaintiff/ Respondent used

to supply goods/ Electrical Control Panels, as per Invoices and payments

were made from time to time, towards the outstanding dues by the

Defendant/ Appellant. There was no mutuality as there existed no reciprocal

cross-demands between the parties, as explained in the case of Kesharichand

Jaisukhlal (supra).

60. The perusal of Ledger Account Ex.PW1/4 and ex. DW1/1, further

reflects that the payments were not being made against each Invoice, but

was made on account, towards the running outstanding balance, to be

adjusted and accounted subsequently, making it an “Open, Current and

Running Account”.

61. The account between the parties, therefore, though running and

current in nature, but cannot be construed as a “mutual account”, within

the meaning of Article 1 of the Schedule to the Limitation Act.

RFA 776/2023 Page 16 of 24

62. The question then is whether such running and current, but non-

mutual, account would be governed by Article 14 or by the residuary Article

113 of the Limitation Act.

63. Article 14 and Article 113 of the Schedule to the Limitation Act read

as under:

14. For the price of goods sold

and delivered where no fixed

period of credit is agreed

upon.

Three years. The date of the

delivery of the goods.

113. Any suit for which no period

of limitation is provided

elsewhere in this Schedule.

Three years. When the right to sue

accrues.

64. In Bharath Skins Corporation v. Taneja Skins Company Pvt. Ltd.,

2011 SCC OnLine Del 5523, the Division Bench of this Court, after

considering the law laid down in Kesharichand Jaisukhlal (supra) and

Hindustan Forest Company (supra), held that in cases of running and

current but non-mutual accounts between buyer and seller, Article 1 of the

Limitation Act would not apply, for want of mutuality. It was further held

that such claims are not governed by Article 14 relating to price of goods

sold and delivered, since the claim is essentially for recovery of the balance

due at the foot of a running Account. Consequently, such claims would fall

within the ambit of the residuary Article 113 of the Limitation Act.

65. The question of how limitation may be computed in the present case,

also stands answered in Bharath Skins (supra), wherein, it was observed that

there being no Article in the Schedule to the Limitation Act, dealing with

suits for recovery of money due on running and current but non-mutual

RFA 776/2023 Page 17 of 24

accounts, the residual Article 113, would be attracted. Paragraphs 24 and 25

of the decision stand reproduced, thus:

“24. There being no Article in the Schedule to the Limitation Act,

1963 dealing with suits for recovery of money due on running and

current but non-mutual accounts, in such circumstances, the residual

article viz. Article 113 applies to such suits.

25. Under Article 113, the period for limitation for filing a suit is

three years and the same begins to run when the right to sue would

accrue when claim was denied in response to the legal notice dated

26.06.1985 on 13.07.1985 but since Rs. 7,000/- was paid on

13.07.1985 and 24.07.1985 (Rs. 2,000/- on the former date and Rs.

5,000/- on the latter date), limitation would commence from

24.07.1985. The suit being filed on 02.09.1985, governed for

purposes of limitation by Article 113 the suit would be within

limitation.”

66. Coming to the invoices principally disputed by the Appellant are

Invoice No.113 dated 09.12.2008 for Rs.2,79,537/-; Invoice No.114 dated

11.12.2008 for Rs.64,631/- and Invoice No.116 dated 15.12.2008 for

Rs.5,65,724/-, aggregating to Rs.9,09,622. However, the Defendant’s own

Ledger Account Ex.DW1/1 (colly) reflects entry dated 12.05.2011, whereby

the amount of Rs.9,09,622/- corresponding to Invoice nos.113, 114 and 116

was debited, on account of alleged rejection of goods.

67. The record further reflects that payments continued to be made by the

Appellant even subsequent thereto, and the last payment of Rs.2,97,628/-

was admittedly made on 08.03.2010, towards the running account

maintained between the parties. The aforesaid entries clearly demonstrate

that the Account between the parties continued to remain subsisting and

under reconciliation, even subsequent to December 2008, and had not

attained final settlement.

RFA 776/2023 Page 18 of 24

68. The subsequent Legal Notice dated 03.09.2011 issued by the

Respondent demanding clearance of outstanding dues, further demonstrates

that the account had not attained final settlement.

69. In view of the continuous running transactions, subsequent payments,

subsisting ledger entries and unsettled state of accounts between the parties,

the cause of action cannot be artificially truncated to December, 2008

alone, as sought to be contended by the Appellant. It has to be calculated

from the date when last payment was made on 08.03.2010 and when Legal

Notice dated 03.09.2011 was issued, as held in the case of Bharath Skins

(supra).

70. The learned District judge, therefore, rightly held that the Suit

instituted on 20.12.2011, was within limitation.

III. Whether the Appellant had established delayed supply and rejection of

goods supplied under Invoice nos.113, 114 and 116 pertaining to the

Rockman Beer Garden transaction:

71. The Appellant has contended that the goods supplied under Invoices

No.113 dated 09.12.2008, 114 dated 11.12.2008, and 116 dated 15.12.2008,

pertaining to the Rockman Beer Garden site, were not supplied within the

stipulated period and consequently stood rejected.

72. It is contended that as per the terms of the Purchase Order dated

08.11.2008, the supplies were required to be effected within 10 days.

However, the Respondent allegedly failed to adhere to the delivery schedule,

on account of which the work entrusted to the Appellant by M/s Rockman

Breweries Ltd. got delayed and the Panels/Goods were ultimately not

accepted.

RFA 776/2023 Page 19 of 24

73. The Appellant, DW1, during cross-examination, admitted that the

Purchase Orders had been placed upon the Respondent and that the goods

covered under the disputed invoices, had been supplied. It was further

admitted that the original Invoices and road permits/challans, were in

possession of the Appellant and that no written communication rejecting the

goods, had ever been issued to the Respondent. The relevant portion is

reproduced as under:

“Q. Whether the goods were left by the plaintiff at the site even though

the defendant did not accept the same?

Ans. Yes. The goods are still lying there since the plaintiff did not

take them back. Again said I am not sure whether the goods are still

lying there since the place is locked.

….

Q. Since you are in possession of the original challans/road permit, is

it correct to say that you accepted the goods at the site alongwith the

road permit since the goods could not have been delivered without the

road permit/challan being handed over to you (defendant)?

Ans. Yes. The goods were accepted at the site along with the road

permit. It is wrong to suggest that the goods delivered by the plaintiff

were not only delivered at the site but also installed on the 4th floor of

Ambience MaII (site).No written notice was sent to the plaintiff

informing that their goods have been rejected. However, they were

verbally informed, It is wrong to suggest that the plaintiff was never

informed verbally about the rejection of the goods”

74. Sections 41 and 42 of the Sale of Goods Act, 1930, being relevant, are

reproduced as under:

RFA 776/2023 Page 20 of 24

“41. Buyer’s right of examining the goods.—(1) Where goods are

delivered to the buyer which he has not previously examined, he is not

deemed to have accepted them unless and until he has had a

reasonable opportunity of examining them for the purpose of

ascertaining whether they are in conformity with the contract.

(2) Unless otherwise agreed, when the seller tenders delivery of goods

to the buyer, he is bound, on request, to afford the buyer a reasonable

opportunity of examining the goods for the purpose of ascertaining

whether they are in conformity with the contract.

42. Acceptance.—The buyer is deemed to have accepted the goods

when he intimates to the seller that he has accepted them, or when the

goods have been delivered to him and he does any act in relation to

them which is inconsistent with the ownership of the seller, or when,

after the lapse of a reasonable time, he retains the goods without

intimating to the seller that he has rejected them.”

75. A conjoint reading of the aforesaid Sections makes it evident that a

buyer is not deemed to have accepted the goods merely upon their delivery,

but must be afforded a reasonable opportunity to examine them for

ascertaining whether they are in conformity with the contract. However, the

goods are deemed to have been accepted ,when the buyer either intimates

the seller that he has accepted them or does any act in relation to the goods

which is inconsistent with the ownership of the seller, or retains the goods

for a reasonable period without intimating to the seller that he has rejected

them.

76. Applying the aforesaid principles to the facts of the present case, it is

established from the evidence on record, that the goods covered under the

Invoices, were duly delivered to and received by the Appellant. Despite

having sufficient opportunity to inspect the goods, the Appellant (buyer)

RFA 776/2023 Page 21 of 24

neither rejected the goods nor gave any Notice or intimation of rejection to

the Respondent.

77. It is an admitted fact that the goods were received at site; the original

challans and road permits remained in the possession of the Appellant; no

written communication rejecting the goods was ever issued and the goods

were never returned to the Respondent. The conduct of the Appellant in

retaining the goods and the accompanying documents, is wholly inconsistent

with that of a person who has rejected the goods, on account of delayed

supply.

78. Moreover, the alleged debit entries regarding rejection of goods, were

made only on 12.05.2011 and not contemporaneously in December, 2008.

Had the goods actually been rejected in December 2008, the corresponding

entries would have found reflection in the Accounts maintained during the

financial year 2008-09 and not for the first time in May, 2011.

79. Significantly, no documentary evidence has been placed on record, to

establish that the goods were either rejected at site or returned to the

Respondent. In the absence of any contemporaneous act evidencing rejection

and the continued retention of the goods, the conduct of the Appellant

clearly constitutes acceptance of the goods within the meaning of Section 42

of the Sale of Goods Act, 1930.

80. Furthermore, in the proceedings instituted by the Appellant against

M/s Rockman Breweries Ltd., the Appellant had itself pleaded that the

contracted work, had been executed and commissioned. These admissions

clearly defy the assertions of goods being defective or their rejection by the

Appellant. It also weakens the defence that the Project suffered, on account

of delayed supply by the Respondent.

RFA 776/2023 Page 22 of 24

81. The plea regarding FORM VAT D3 being manipulated or not

constituting acknowledgment of delivery, also does not materially advance

the case of the Appellant, once supply and receipt of goods stood

substantially admitted, during evidence.

82. There is thus, no infirmity in the finding of the Ld. Trial Court that the

Appellant had failed to establish either valid rejection of goods or such

delayed supply, as would disentitle the Respondent from recovery of the

Suit amount.

IV. Whether the oral and documentary evidence had been correctly

appreciated by the Ld. Trial Court:

83. The Appellant has further contended that the oral and documentary

evidence led by the parties had not been correctly appreciated by the Ld.

Trial Court.

84. However, the record reflects that the findings returned by the Ld.

Trial Court are based upon a proper appreciation of the evidence led by both

parties. The admissions made by DW1 during cross-examination, the

invoices, statements of account and ledger entries collectively established

the continuous commercial dealings between the parties and the outstanding

liability of the Appellant.

85. Insofar as the alleged cash payment of Rs.2,00,000/- is concerned, no

receipt, acknowledgment or independent documentary material was

produced by the Appellant in support thereof, except for self-serving ledger

entries. The Ld. Trial Court therefore, rightly declined to accept the said

plea.

RFA 776/2023 Page 23 of 24

86. At the same time, the Ld. Trial Court also correctly noticed the

calculation error in Invoice no.144 dated 27.11.2009, which stood admitted

by PW1 during cross-examination, and accordingly granted deduction of

Rs.9,948/- from the principal claim amount.

87. The appreciation of evidence by the Ld. Trial Court thus, cannot be

said to suffer from perversity, illegality or misreading of record, warranting

interference in the present Appeal.

V. Whether the Ld. Trial Court lacked territorial jurisdiction to entertain

the Suit.

88. The Appellant has lastly contended that the learned Trial Court lacked

territorial jurisdiction to entertain the present Suit inasmuch as the goods

were manufactured at Faridabad and were supplied at Gurgaon and,

therefore, no part of the cause of action arose within Delhi.

89. This objection of territorial jurisdiction was not taken in the pleadings

and there was no specific issue framed in this regard, but this contention was

raised for the first time, during the course of final arguments.

90. The territorial jurisdiction in a Suit for Recovery is governed by

Section 20 CPC, which provides that a Suit may be instituted within the

local limits of whose jurisdiction the Defendant resides, carries on business

or personally works for gain.

91. In the present case, the documents placed on record clearly reflect that

the Appellant/Defendant was operating from its Office in GK-1, Pamposh

Enclave, New Delhi. The Legal Notice dated 03.09.2011 had been sent by

the Plaintiff/Respondent from its Faridabad Office, to the Defendant at GK-

1, Pamposh Enclave, New Delhi. The Appellant/defendant is admittedly

RFA 776/2023 Page 24 of 24

carrying on business and working for gain, within the territorial jurisdiction

of Delhi Courts.

92. The documents relied upon by the parties clearly establish that the

Defendant/Appellant was residing within the territorial jurisdiction of Delhi.

Although the Plaintiff may have been operating from Faridabad and the

Invoices may have been generated from its Faridabad office for supply of

goods to various locations, but the Purchase Orders reflect that they had

been issued by the Appellant, from its Office situated in G.K., Delhi.

93. The suit for recovery of money, in terms of S. 20 CPC, is

maintainable in Delhi as the Defendant carries on business, in Delhi.

94. Therefore, there is no merit in the contention of the Appellant that the

Delhi Courts had no territorial jurisdiction, as has been rightly held by the

learned District Judge.

Conclusion:

95. In view of the foregoing discussion, there is no merit in the Appeal,

which is hereby dismissed.

96. Pending Applications, if any, also stand disposed of, accordingly.

(NEENA BANSAL KRISHNA)

JUDGE

MAY 29, 2026/RS