TaxTMI 
TaxTMI 
2025 (12) TMI 551
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....at 18% per annum from the date of the suit till realization. 2. The parties will be referred to as per their rank before the Trial Court for the sake of convenience. 3. It is the case of the plaintiff [a proprietorship concern] that it was engaged in the business of manufacture and supply of packaging materials and trading in Kraft papers. That defendant No. 1 was engaged in the manufacture, import and supply of packaging material. Defendant No. 2 and defendant No. 3 were its directors. The plaintiff and the defendants had a business relationship with each other for the past thirty years. The plaintiff had supplied goods on credit as and when requested by the defendants and the parties were having continuous and running transactions. 3.1. It is the further case of the plaintiff that it used to raise invoices in respect of the goods supplied to the defendants and the defendants acknowledged receipt of the goods on the said invoices. That the plaintiff raised invoices amounting to Rs. 98,32,927/- for the period from April 2017 to March 2020 towards the material supplied to the defendants. That defendant No. 2 had sought a hand loan of a sum of Rs. 3.00 lakhs, which was paid ....
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....t the said cheques were for security purposes only and would not be misused. That between December 2017 and March 2018, the plaintiff has taken ten cheques and misused the same in 2020. 4.2. It is further specifically averred by the defendants that in March 2018 defendant No. 2 requested the plaintiff to arrange for working capital finance of Rs. 10.00 lakhs and the plaintiff took two undated cheques for Rs. 5.00 lakhs each bearing Nos.825223 and 825224. However, the plaintiff neither arranged for the loan nor returned the two cheques. It was further contended that defendant No. 1 - company had transacted with the two other entities owned by the plaintiff and that the plaintiff is liable to pay defendant No. 1 in a sum of Rs. 5,58,547/- in respect of two transactions. That the plaintiff agreed to settle/adjust the said amount of Rs. 5,58,547/- from the amount due and payable by the defendants to the plaintiff and also promised to return the undated cheques. That despite receiving payments online, the plaintiff did not return the undated cheques and misused the same. 4.3. It is further averred that the plaintiff did not comply with GST Rule 46, wherein the supplies were requir....
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....rked. The Trial Court vide judgment and decree dated 30.1.2025 decreed the suit as noticed above. Being aggrieved, the present appeal is filed. 7. Learned counsel for the appellants/defendants assailing the judgment and decree passed by the Trial Court contended: (i) That the suit is barred by limitation as the same is filed three years after the dates of invoices, which was the basis of the suit claim amount. It is further contended that Section 19 of the Limitation Act is not applicable to the present case; (ii) That the plaintiff has not averred/disclosed regarding the proceedings initiated against the defendants before the National Company Law Tribunal (NCLT); (iii) That due to the plaintiff not maintaining its records in compliance with the GST norms, the input tax credit of Rs.12.00 lakhs could not be availed by the defendants; (iv) No documents have been produced by the plaintiff regarding the hand loan of Rs. 3.00 lakhs allegedly advanced to the defendants; (v) The defendants were entitled to set off of various amounts due to them from various other entities to which the plaintiff was a part of and that various payments made b....
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....is Court in the present appeal. 9. The submissions of both the learned counsels have been considered and the material on record has been perused. The points that arise for consideration are: (i) Whether the trial Court was justified in recording a finding that the suit is within time? (ii) Whether the trial Court was justified in holding that the defendants are liable to pay the plaintiff the amount due under the various invoices raised by the plaintiff? (iii) Whether the trial Court was justified in recording a finding that the defendants are liable to pay a sum of Rs.3 lakhs allegedly advance as hand loan by the plaintiff? (iv) Whether the defendants are liable for set-off of various amounts as claimed? (v) Whether the trial Court was justified in awarding interest @ 18% per annum? (vi) Whether the judgment and decree passed by the trial Court warrants interference in the present appeal? Re: question No.(i): 10. The trial Court had framed issue No. 3 as to whether the suit was barred by limitation. The trial Court noticed that the invoices [Exs.P3 to P67] were raised between 18.09.2017 to 21.03.2020. That it was an ad....
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....on regarding the period of limitation with respect to a running account, after noticing Article 14 as well as Section 19 of the Limitation Act, 1963, held as under: 20. Now, reverting back to the facts, it is seen that except two specific payments of small amounts all other on account payments were made by the defendant from time to time. All these payments were made by the defendant not with the delivery of the goods vide specific bills, but, as per its own convenience. Though, the payments were required to be made by the defendant within seven days of delivery as per the terms stipulated in the bills, but, the same having not been adhered to by the defendant and there being no other agreement of fixed period of credit, the part payments were made by the defendants towards the unpaid amounts. These by any means, cannot make the account mutual or reciprocal. The dealings between the parties continued and did not terminate with one supply and thus, the deliveries got united with one another and formed one continuous demand which kept on being carried forward from year to year till the last supply was made. Thus, it all formed one cause of action and could not be divided. Th....
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.... with. 17. The defendants had claimed that they have issued various cheques to the plaintiff. However, the plaintiff has not received any monies by virtue of the cheques issued. Apart from the amounts paid by the defendants as reflected in Ex.P68, the defendants have not produced any material to demonstrate that they have made other payments to the plaintiff. 18. Although the defendants have raised a specific plea with regard to not having availed input tax credit with respect to GST returns, it is pertinent to note that the contention regarding the said input tax credit has been made in the written statement on the premise that the GST Authorities had indicated to the defendants that they will have to reverse the input tax credit for all the invoices and that the defendants will be called upon to pay the said GST amount together with interest/penalty. However, DW1 in his cross-examination at para 29 has specifically admitted that he has received the input tax credit in respect of the invoices - Exs.P3 to P67. Further, the defendants have not produced any material to demonstrate that the input tax credit has been reversed by the GST authorities. Hence, the said contention put....