TaxTMI 
TaxTMI 
2026 (4) TMI 1068
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....nts in respect thereof were being made initially within 30 days from the date of receipt of goods. Over time, it is stated that the defendant slackened and made payments after nearly 300 days. According to the plaintiff, from financial year 2019-20 onwards, there was unexplained delay on the part of the defendant in making supply related payments to the plaintiff. With regard to invoices issued from 06.02.2023 until November, 2023, it is stated that 102 invoices remain unpaid for an aggregate sum of Rs. 2,55,63,034/-. 3. The plaintiff asserts that it is a matter of fact and record that the transportation of materials by the plaintiff to the defendant was under Government certified e-way bills. The plaintiff also states that the monthly stock ledger maintained by the defendant at its factory would establish that the stock cleared the quality check of the defendant. The plaintiff referred to lawyer's notices dated 20.12.2023 and 02.01.2024 demanding payment of a sum of Rs. 2,55,63,034/- and to reply dated 02.01.2024 denying the claim made. After adverting to the reply of the defendant that supply was made at the instance of the plaintiff's relative, Mr. Praveen, who was the Chief ....
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....nts by stating that the plaintiff was registered with the Ministry in-charge of micro, small and medium enterprises. The plaintiff supplied recycled raw material to the defendant for use in the manufacture of refractory, i.e. lining material. After submitting that the suit claim relates to outstanding bills of the value of Rs. 2,19,73,721/-, he submitted that the aggregate suit claim was arrived at after reckoning goods and services tax (GST) and TDS. He contended that the outstanding invoices were exhibited as Ex. P4 series consisting of 37 invoices; Ex. P7 series consisting of 44 invoices; Ex. P10 series consisting of 19 invoices; and Ex. P13 series consisting of two invoices. He also submitted that the corresponding e-way bills and test reports were filed with the invoices. In addition, as evidence of supply, he contended that relevant GST returns were filed as Exs. P5, P6, P8, P9, P11, P12, P15 and P19. 9. In response to the contention in the written arguments of the defendant that the suit is barred under Section 69(2) of the Partnership Act, 1932 (the Partnership Act), he contended that the said provision only bars a suit to enforce a contract. In support of this contentio....
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....rt in Vaishno Enterprises v. Hamilton Medical AG and Another, (2024) 12 SCC 214. 12. The third contention was that the supplies were not bona fide, stocks were dumped on the defendant and that the plaintiff indulged in over-invoicing. The last contention of learned counsel was that the suit is barred under Section 69(2) of the Partnership Act because it has been instituted by an unregistered partnership firm. In support of this contention, reliance was placed on the following judgments: (i) Raptakos Brett & Co. Ltd. v. Ganesh Property, (1998) 7 SCC 184 (Raptakos Brett); (ii) Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd, AIR 1964 SC 1882; (iii) Ess Vee Traders and Ors. v. Anbuja Cement Rajasthan Limited, MANU/DE/2559/2006; and (iv) M.Muthukumaraswami v. Kumar Textiles, AIR 1996 Madras 433. Issues, discussion, analysis and conclusions 13. Although issues were not framed earlier on account of the defendant not filing a written statement, taking note of contentions, it is necessary to consider and deal with the following issues: 1. Whether the suit is liable to be rejected in view of the preliminary objections regarding non-....
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.... aforesaid. As can be seen from the portion of Rule 1 emphasised in bold font above, even if a suit falls within any of the above classes, the plaintiff has the option of filing an ordinary suit instead of a summary suit. The suit claim clearly does not arise out a negotiable instrument, bond or guarantee. All that needs to be examined is whether the suit is for recovery of a debt or liquidated demand or arises out of a contract for payment of a liquidated amount of money. From the endorsement on the plaint, it appears that the plaintiff filed the suit as a summary suit on the basis that it arises out of a written contract, although a plea to that effect is not there in the plaint. It is appropriate to deal with and enter findings on this aspect while dealing with the merits and issues relating thereto. 16. If the defendant fails to obtain leave to defend in a summary suit, Rule 5 of Order VII provides that the allegations in the plaint shall be deemed to be admitted and that the plaintiff shall be entitled to the sum claimed in the plaint. It was recorded in course of the narration that the defendant did not apply for leave to defend. Consequently, the option of issuing a de....
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....en a partner in the firm unless the firm is registered and the person suing is or has been shown in the Register of Firms as a partner in the firm. (2) No suit to enforce a right arising from a contract shall be instituted in any Court by or on behalf of a firm against any third party unless the firm is registered and the persons suing are or have been shown in the Register of Firms as partners in the firm." (emphasis added) Sub-section (1) applies to a suit filed by or on behalf of a person suing as a partner in a firm against the firm. The present suit has not been instituted against the partnership firm. Therefore, sub-section (1) is inapplicable. Sub-section (2) pertains to a suit to enforce a right arising from a contract and filed by or on behalf of a firm against a third party. The present suit has been instituted by Sri Vasan Minerals, which is an unregistered partnership firm, against a third party, i.e. a private limited company. Consequently, sub-section (2) would be attracted if the suit is for enforcement of a right arising from a contract. This leads to the question whether the suit claim arises from a contract. 19. In the plaint, there is no positiv....
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....n Ex. P4 and P7 series. Ex. P10 series consists of invoices issued between July 2023 and September 2023. Ex.P13 consists of invoices issued between October and November 2023. Conspicuous by its absence in all these documents is any indication that the specification, quantity or rate mentioned in the invoices were accepted by the defendant. 22. The plaintiff also exhibited communications between the parties. Therefore, it is necessary to examine whether there is evidence of acceptance of the supply, including the quantity and rates in such communications. Ex. P14 is an email of 01.12.2023 from one Mrs. S. Sumitha of the defendant to the plaintiff. In relevant part, it is recorded as under in the said communication:- "1. We have found that the billing to us by Sri Vasan is not 5% or even 10% margin over the purchase price but 30-40% and in some case billed even more than double over the purchase price. This has resulted in huge impact in our product cost thereby our competitiveness in the market has been lost and we are not able to compete with our counter parts. 2. To our surprise Mr. Praveen has booked invoices as if materials were supplied. However no material....
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.... Q8: Is there any price mechanism or credit period? A: There is nothing discussed regarding above mentioned matter with the defendant. But we were in understanding that we will be paid in 30 to 45 days initially. Q9: Is there any price mechanism for supply of raw materials that is percentage of margin? A: As the managing partner I have not negotiated any price margin with the defendant company." The above answers lead to the inference that there was no agreement on price, margin, credit period or other material terms of supply. It, therefore, supports the conclusion that the supply was not based on an oral or written contract. 24. In Raptakos Brett, the Supreme Court considered whether a composite suit filed by an unregistered firm and founded on both breach of contract and breach of a statutory obligation under Section 108 (q) read with Section 111(a) of the Transfer of Property Act, 1882, would be barred by Section 69(2) of the Partnership Act. In relevant part, it was held as under in paragraph 23: "....The net result of this discussion is that the present suit can be said to be partly barred by Section 69 subsection (2) so f....
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....for compensation under Section 70 of the Contract Act. Section 70 of the Contract Act is as under: "70. Obligation of person enjoying benefit of non-gratuitous act.- Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered." 28. From the language of Section 70, the requirements for the applicability of Section 70 are the following: (i) A person should do something for another or deliver something to another; (ii) such act of delivery should not be intended to be gratuitous; and (iii) the recipient should enjoy the benefit thereof. These requirements are evidently cumulative as is evident from the use of the conjunction "and" before the third requirement and, therefore, upon satisfaction of all the requirements, the recipient is liable to either compensate the provider or restore what was delivered. Before drawing definitive conclusions on whether the plaintiff qualifies for compensation on the principle of quant....
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....discussed earlier, each invoice is accompanied by an e-way bill. Each e-way bill draws reference to the corresponding invoice. It mentions the GST IN of both supplier and recipient, the place of despatch and the place of delivery. It also provides particulars of the transporter, including mode of transport and vehicle number. 32. In the light of such evidence, delivery to the defendant also stands established. It is not the defendant's case that goods supplied by the plaintiff were returned or restored to the plaintiff because such goods were not required. The endorsement on the plaint by counsel that the suit claim is founded on a contract does not defeat a claim under Section 70 because of the finding that there was no written or oral contract coupled with the principles formulated in B.K. Mondal, where the alternative plea on the basis of quantum meruit found favour. In the ultimate analysis, the rationale underlying Section 70 is that there should be no unjust enrichment. Therefore, I conclude that all three requirements to sustain a claim for compensation under Section 70 of the Contract Act stand established. Because of this conclusion, this suit also does not fall within ....
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....72 crores were dumped. The annexure pertaining thereto is, however, vague and bereft of particulars, including the dates of supply, nature and quantity of goods, invoices under which supplies were made and the like. On carefully weighing the evidence on a balance of probability, I find no reason to conclude that the amounts claimed by the plaintiff are not reasonable. Therefore, the plaintiff is entitled to the principal suit claim. Issue No.4 is disposed of on these terms. Issue No.5 35. Issue No.5 pertains to the claim for interest at 24% per annum to be compounded with monthly rests. This claim has been made by invoking the provisions of the MSMED Act. The MSMED Act stipulates that the buyer of goods from a supplier, as defined in the said statute, is liable to make payment within a period not exceeding 45 days from the date of acceptance or deemed acceptance, unless agreed otherwise as regards the time for payment. 'Supplier' is defined under Section 2(n) of the MSMED Act as under: "supplier" means a micro or small enterprise, which has filed a memorandum with the authority referred to in sub-section (1) of section 8." The plaintiff has produced the UDYAM regi....