Liability can only be acknowledged based on documentary evidence; mere assertions in balance sheets are insufficient to extend the limitation period under the Limitation Act.

JUDGMENT

Navin Chawla, J. (Oral)

CM 42323/2021(exemption)

Allowed, subject to all just exceptions.

RFA(COMM) 22/2021

1. This appeal has been filed by the appellants challenging the order dated 06.09.2021 passed by the learned District Judge (Commercial Court)-02, District West, Tis Hazari Courts, Delhi in Suit being CS(COMM) No.260/2021, dismissing the suit filed by the appellant as being barred by limitation and accordingly, rejecting the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908.

2. The above suit was filed by the appellants seeking a recovery of 7,00,121/- (Rupees Seven Lakhs One Hundred Twenty One only) along with interest from the respondents, alleging therein that the respondent no.1 is the nephew of the appellant no.2 and the proprietor of respondent no.2.

3. The plaint further alleges that the respondents had purchased old iron Rails unserviceable items from the appellants and also got an amount of 1,00,000/- (Rupees One Lakh only) through cheque dated 18.04.2015. The respondent no.1 had agreed to pay interest at the rate of 18% per annum of due amount. The appellants claimed that the respondents were liable to pay a sum of 3,36,597/- (Rupees Three Lakhs Thirty Six Thousand Five Hundred Ninety Seven only) and also interest at an agreed rate of 18% per annum amounting to 3,63,524/- (Rupees Three Lakhs Sixty Three Thousand Five Hundred Twenty Four only) from 01.04.2015 to 31.03.2021, thereby totaling of an amount of 7,00,121/-. It was averred that as the respondents failed to pay the said amount, the appellants claimed the same by way of a legal notice dated 13.10.2020. The respondents, however, by reply dated 26.10.2020 denied the liability. The appellants thereafter issued a rejoinder notice dated 08.11.2020, however, as the amount was still not paid nor the respondents appeared before the New Delhi District Legal Services Authority for pre-litigation mediation, the appellants filed the above suit seeking recovery of the amount due.

4. To bring the suit within the period of limitation, the appellants pleaded as under:

"10. That Defendants are liable to pay above said amount jointly and severally. Defendants have not paid the above said amount to Plaintiffs in spite of the demand by the Plaintiffs. Defendants have also not appeared before New Delhi District Legal Services Authority for pre-litigation mediation. Hence, this suit. Defendants have admitted that they were liable to pay an amount of Rs. 3,36,597/- but falsely stated in reply to notice that Defendants have paid the said amount to Plaintiffs. Defendants have admitted their liability to pay the suit amount to Plaintiffs in their balance sheets which they have submitted before Income Tax Authorities for the financial years 2014-15, 2015-16, 2016-17, 2017-18, 2018-19 and 2019-20.

11. That cause of action arose to Plaintiffs against the Defendants on different dates when Plaintiffs supplied the goods to Defendants. Cause of action also arose to Plaintiffs against Defendants on 13/10/2020 when Plaintiffs sent a legal notice to the Defendants. It also arose on 08/11/2020 when Plaintiffs sent a Re-joinder to Defendants. Cause of action further arose to Plaintiffs against Defendants on 05/12/2020 when Plaintiffs filed application for Pre-Litigation Mediation before West District Legal Services Authority, Tis Hazari Courts, Delhi. Cause of action further arose to Plaintiffs against Defendants on 08/01/2021 when WDLSA supplied Non-Starter Report to Plaintiffs. That cause of action is continuing one. As per section 12(A)(3), period during which parties remained occupied with pre-institution mediation, such period shall not be computed