The main legal point established in the judgment is that inconsistent stands in accounting practices and attempts to defraud taxation authorities are not permissible. The court emphasized the importance of consistent accounting practices and held that attempts to defraud taxation authorities cannot be permitted.

C.S.(COMM) No. 28/2015

1. The plaintiff company has instituted the present suit for recovery of principal amount of Rs. 1.48 crores together with interest at 18% per annum for the period prior to the institution of the suit i.e. for total sum of Rs. 1,89,07,000/-, together with future interest at the rate of 18% per annum pleading (i) that the plaintiff company in response to the demand of the defendant for advance/loan , vide its cheque dated 19th May, 2010 advanced a sum of Rs. 48,00,000/- to the defendant; similarly, another advance of Rs. 1 crore was given vide cheque dated 6th September, 2010; (ii) that the Directors of the plaintiff company and the defendant company are related parties; (iii) that in the running account maintained between the parties, the said amounts were duly credited and debited to each other’s account and as per the said account the sum of Rs. 1.48 crores is due from the defendant to the plaintiff; (iv) that the defendant has failed to pay the said amount despite demands; (v) that the duly audited balance sheet of the defendant admits and acknowledges the aforesaid amount to have been received by the defendant and re-payable to the plaintiff; and (vi) that the transaction being a commercial one, the plaintiff is entitled to interest at 18% per annum.

2. The suit was entertained and the defendant has contested the same by filing a written statement on the grounds; (i) that the plaintiff and the defendant are family owned and controlled companies in the nature of quasi partnerships; (ii) that prior to the demise of Shri Sudhir Sareen, till about the year 2010, the plaintiff was being primarily run and managed by Shri Sudhir Sareen who was the majority share holder of the plaintiff as well as the defendant companies; (iii) Shri Sudhir Sareen on 6th November, 2009 gifted more than 95% shares of the defendant company to his daughter Ms. Parul Gupta; (iv) Shri Sudhir Sareen was the alter ego and directing will and mind of both the plaintiff and the defendant; (v) that the present suit has been filed by the plaintiff at the instance of Mr. Siddharth Sareen who is now the majority share holder of the plaintiff company and a Director therein; (vi) Mr. Siddharth Sareen was served legal notice dated 4th June, 2015 by the defendant company for having committed various offences, thereby making him liable to prosecution; (vii) the present suit is a counterblast to the said legal notice got issued by the defendant company which is now primarily owned by Ms. Parul Gupta who is the sister of Mr. Siddharth Sareen and because Ms. Parul Gupta challenged the Will set-up by Shri Siddharth Sareen of Shri Sudhir Sareen in his favour; (viii) though Shri Sudhir Sareen as aforesaid had gifted 95% shares of the defendant Company to Ms. Parul Gupta but the defendant Company continued to be managed and run by Shri Sudhir Sareen; after he fell ill, the defendant company was managed by Mr. Siddharth Sareen who was also the Director of the defendant company till 3rd December, 2014; Ms. Parul Gupta did not interfere as she trusted Mr. Siddharth Sareen as her brother; (ix) that Ms. Parul Gupta, after the demise of Shri Sudhir Sareen (the counsel informs, on 21st November, 2013), in the year 2015 discovered that Mr. Siddharth Sareen who was in charge of the defendant company had sold properties of the defendant company and withdrawn monies from the defendant company; (x) that the defendant company has never admitted the alleged loan/advance liability of the plaintiff at any time; (xi) that the suit has not been filed and signed by a duly authorised person on behalf of the plaintiff; (xii) that the defendant company had never approached the plaintiff for any loan; (xiii) Shri Sudhir Sareen, father of Ms. Parul Gupta, was the majority shareholder of the plaintiff and had suo motu made monetary contributions to the defendant company, 95% shares whereof had been gifted to Ms. Parul Gupta; (xiv) the monies advanced by the plaintif