Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Del) 496

IN THE HIGH COURT OF DELHI AT NEW DELHI
NEENA BANSAL KRISHNA, J.
M/S Amber Electrotech Ltd. - Appellant
Versus
M/S Dollar Security & Support Services - Respondent
RFA No. 242 of 2020, CM APPL. 25169 of 2020 & CM APPL. 28465 of 2020
Decided On : 03-06-2026

Advocates Appeared:
For the Appellant : Mr. Sheikh Imran Alam, Mr. Rahul Kumar Jain and Mr. Arshad Jawed.
For the Respondent: Mr. Nagendra Kasana, Mr. Sachin Bhati, Ms. Anjana Kasana and Ms. Neeta Kasana.

A suit for recovery brought by a business representative is maintainable if authority is verified through conduct and documentation, regardless of business entity succession. Active participation in trial proceedings constitutes a waiver of the right to invoke an arbitration clause, establishing the court's jurisdiction over the matter.

Headnote:(A) Civil Procedure Code, 1908 - Order XLI Rule 1, Section 96 - Suit for recovery - Maintainability and Authorized Representation - A suit filed by a sole proprietorship is maintainable when the person initiating the proceedings for the firm has been actively managing the business and has documentation conferring authority, even if the firm’s name has undergone a change due to business succession. (Paras 47-54)

(B) Arbitration and Conciliation Act, 1996 - Section 8 - Arbitration Clause - Waiver of Right - Where a party files a written statement and actively participates in the trial proceedings without seeking referral of the dispute to arbitration, such conduct constitutes a waiver of the right to mandate arbitration under the contract. (Paras 23, 56)

(C) Law of Contract - Privity of Contract - Succession of Business - Where a successor entity continues the commercial activities of a predecessor, the rights and liabilities under existing contracts are effectively transposed, provided there is acknowledgement in the conduct and correspondence between the parties. (Paras 49-55)

Facts of the case:
The respondent filed a lawsuit to recover outstanding payments for security services provided. The appellant contested the maintainability of the suit, arguing that it was filed by an unauthorized individual, the firm lacked legal status, there was no privity of contract with the current firm name, and that an arbitration clause existed. Additionally, the appellant alleged negligence by the respondent leading to loss of goods, claiming set-off.

Findings of Court:
The court held that the authorization was valid based on conduct and evidence provided. It determined that the appellant waived the objection to arbitration by participating in the trial. It also concluded that the successor firm established privity of contract through continuous performance and acceptance by the appellant.

Issues: Whether the suit was instituted by a duly authorized person; whether the arbitration clause precluded the court's jurisdiction; whether there was privity of contract; and whether the plaintiff was entitled to the recovery of dues despite the alleged losses.

Ratio Decidendi: Authority to represent a business entity is established through documented authorization and the continuous conduct of the representative. Active participation without objection effectively waives the right to compel arbitration. A successor entity assumes the contractual rights and duties of its predecessor when business operations remain consistent throughout the contractual relationship.

Result: Appeal dismissed.

Table of Content
1. factual history of the recovery suit and agreement. (Para 1 , 2 , 3 , 4 , 5)
2. defendant's preliminary objections regarding authorization and privity of contract. (Para 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17)
3. summary of trial court findings and initial decree. (Para 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27)
4. appellant's grounds challenging suit maintainability and lack of authorization. (Para 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44)
5. appellate analysis confirming authorization and continuous commercial relationship. (Para 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55)
6. assessment of outstanding dues versus theft-related liability claims. (Para 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64)
7. final order dismissing the appeal and upholding the decree. (Para 65 , 66)

JUDGMENT :

NEENA BANSAL KRISHNA, J.

1. Regular First Appeal under Section 96 read with Order XLI Rule 1 of the Code of Civil Procedure, 1908 (hereinafter referred to as ‘CPC’) read with Section 10 of the DELHI HIGH COURT RULES , 1996, has been filed on behalf of the Appellants against the Judgment dated 26.06.2020, whereby the Suit of the Plaintiff/Respondent for Recovery of Rs.2,91,031/- along with the pendente lite and future interest @12% p.a., has been decreed.

2. The Plaintiff/Respondent had filed a Civil Suit bearing CS DJ No. 207727/2016 for Recovery of Rs.4,02,808/- along with pendente lite and future interest.

3. The facts in brief are that the Plaintiff, a sole-proprietorship concern, was engaged in the business of providing security guards. On the request of the Defendants for providing the security services, they entered into an Agreement dated 30.10.2009 and the security guards were provided at the various establishments of the Defendants.

4. The Plaintiff claimed that the Defendants failed to make payment against certain Invoices and bills to the tune of Rs.3,91,031/-. A cheque of Rs.2,09,267/- was given on behalf of the Defendants though, on presentation, it was dishonoured for the reason ‘payment stopped by drawer’.

5. On the request of the Defendants, Plaintiff returned the dishonoured cheque on the assurance of the Defendants that he would make the payment. However, despite repeated requests and service of Legal Notice dated 19.10.2013, the Defendants failed to make the payment. Hence, a Suit was filed for Recovery of Rs.4,02,808/- along with the interest @12% p.a.

6. The Defendants in their Written Statement, took the preliminary objection that the Plaintiff has concealed material facts. It was further claimed that the Plaintiff had no locus standi to file the Suit or to claim the amount.

7. It was stated in the plaint that M/s Dollar Security & Support Services (Plaintiff) is the sole proprietorship concern of Mr. Deepak Dagar while the Suit has been filed under the signatures of Mr. Raj Kumar Dagar by asserting that he is the authorised representative of Plaintiff. However, no Power of Attorney has been filed in favour of Mr. Raj Kumar Dagar. The Suit is, therefore, not been signed and filed by authorised person and is liable to be rejected.

8. It is further submitted that the Suit has been filed in the name of M/s Dollar Security & Support Services, which is not a legal entity as per law. It is a proprietorship firm; Suit in the name of the proprietorship firm is not maintainable.

9. It is further submitted that there is no privity of contract between the Plaintiff and the Defendant. As per the agreement dated 30.10.2009 annexed with the plaint, it reflects that it was executed between the Plaintiff and the Defendant for providing security services. Bare perusal of the Agreement reflects that it has not been executed between the Plaintiff and the Defendant and it has neither been signed by the Plaintiff nor is he is a party to the same. The Agreement is purportedly executed by one Shiva Associates and the Plaintiff is neither a party nor signatory to the alleged

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Judicial Analysis

2026 Supreme(Del) 496

IN THE HIGH COURT OF DELHI AT NEW DELHINEENA BANSAL KRISHNA, J.M/S Amber Electrotech Ltd. - AppellantVersusM/S Dollar Security & Support Services - RespondentRFA No. 242 of 2020, CM APPL. 25169 of 2020 & CM APPL. 28465 of 2020Decided On : 03-06-2026

Cases Referred (2)

Judicial Analysis

IN THE HIGH COURT OF DELHI AT NEW DELHI
NEENA BANSAL KRISHNA, J.
M/S Amber Electrotech Ltd. - Appellant
Versus
M/S Dollar Security & Support Services - Respondent
RFA No. 242 of 2020, CM APPL. 25169 of 2020 & CM APPL. 28465 of 2020
Decided On : 03-06-2026