* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on : 14.08.2023

Judgment pronounced on : 01.09.2023

+ RFA (COMM) 2/2021 and CM APPL.5873/2021

M/S A V INDUSTRIES ..... Petitioner

Versus

M/S NEO NEON ELECTRICAL PVT LTD ..... Respondent

Advocates who appeared in this case:

For the Petitioner: Mr. Deepak Bashta, Advocate.

For the Respondent: Mr. Gaurav Puri, Advocate.

CORAM:

HON'BLE MR. JUSTICE YASHWANT VARMA

HON'BLE MR. JUSTICE TUSHAR RAO GEDELA
JUDGMENT
TUSHAR RAO GEDELA, J.

[ The proceeding has been conducted through Hybrid mode ]

1. This is a Regular First Appeal under Section 96 read with Order

XLI Rule 1 of the Code of Civil Procedure, 1908 (hereinafter referred
to as “CPC”) and Section 13 of the Commercial Courts Act, 2015
(hereinafter referred to “CC Act”) by the appellant/defendant
challenging the impugned judgement and decree dated 21.09.2020
passed by District Judge (Commercial Court) - 01, South-East

Signature Not Verified

Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 1 of 16
Signing Date:01.09.2023
16:32:16
 District, Saket Courts, Delhi in CS (Comm.) No. 253/2019 titled “M/s
Neo Neon Electrical Pvt Ltd V M/s A.V.Industries”.

2. The facts in brief, germane to the present lis and as culled out
from the impugned judgement are as under:-

2.1 Respondent/plaintiff contends that it is a private company and

running its business for the last 20 years involved in manufacturing
and trading of LED light etc., since January 2018.

2.2 The appellant/defendant approached the respondent/plaintiff at

his registered office stating that he was involved in making LED bulbs
and other accessories and on his representation and assurance of
timely deliverance, the respondent/plaintiff provided the
appellant/defendant the job work for making LED bulbs and paid Rs
6,00,000/- by way of cheque and started maintaining its running
account with the appellant/defendant.

2.3 In the month of February 2018, the appellant/defendant

purchased the material/flood lights on credit basis from the
respondent/plaintiff of Rs.26,992/- against the invoice no. NN/17-
18/244 dated 07.02.2018.

2.4 That due to the utter default on the part of the

Appellant/Defendant in completion of the job work given, the
respondent/plaintiff asked for the refund of advance paid for the said
job work and despite repeated demands, the appellant/defendant paid
only Rs. 2,00,000/- to the respondent/plaintiff through cheque dated
09.03.2018 and failed to pay the remaining balance amount of
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 2 of 16
Signing Date:01.09.2023
16:32:16
 Rs.4,26,992/- which is outstanding as per the statement of account
maintained by the Respondent/Plaintiff.

2.5 Thereafter, the suit for recovery was filed under the provisions
of CC Act by the Respondent/Plaintiff for an amount of Rs. 4,26,992/-
alongwith interest @ 24% per annum seeking the following reliefs:

a. Pass a decree for Rs. 4,26,992/- (Rupees Four

Lakhs Twenty Six Thousand Nine Hundred and Nine
Two Only) against the defendant and in favour of
the plaintiff and
b. Pass Order and decree for payment of interest at the
rate of 24% on Rs.4,26,992/- (Rupees Four Lakhs
Twenty Six Thousand Nine Hundred and Nine Two
Only) calculated from the date of institution of the
Suit till the actual institution of the Suit till the
actual realization, of the decreetal amount, against
the Defendant and in favour of the Plaintiff, and
c. Pass a decree for the cost of the Suit and litigation
charges may also pass against the defendant and in
favour of the Plaintiff.

2.6 The summons of the said suit was served on the

appellant/defendant through registered post on 23.09.2019 as also
through WhatsApp on 20.09.2019 respectively. However, the
appellant/defendant was proceeded ex-parte on 09.10.2019 due to his
non appearance.

2.7 Thereafter, the respondent/plaintiff has lead ex-parte evidence

by examining PW1, Director of the company by way of affidavit (Ex.
PW1/1) and PW2, Branch Manager of Kotak Mahindra Bank was also
examined to prove the statement of account (Ex. PW2/1) in order to
prove the payment of Rs.6,00,000/- had been made to the

Signature Not Verified

appellant/defendant through cheque (Ex. PW1/F).
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 3 of 16
Signing Date:01.09.2023
16:32:16
 2.8 Finally, the learned Trial Court on the basis of the evidence on
record held that the respondent/plaintiff is entitled to the recovery of
Rs.4,26,992/- @ 12% interest per annum from the date of filing of the
suit till the realization of the decreetal amount.

ARGUMENTS ON BEHALF OF THE APPELLANT/

DEFENDANT

3. Mr. Deepak Bashta, learned counsel appearing for the

appellant/defendant, at the very outset being conscious of the fact that
the appellant/defendant was proceeded ex-parte, contends that the
arguments on behalf of the appellant/defendant would squarely be
concerning the legal issues only and not the factual matrix revolving
around the transactions in questions.

4. With such prologue, Mr. Bashta, learned counsel appearing for

the appellant/defendant, challenges the impugned judgement and had
basically raised three fold arguments on the basis of the legal
infirmities with which impugned judgement suffers from and
accordingly put forth his submissions. In that, Learned Counsel for the
appellant/defendant majorly argues that the learned Trial Court had
gravely erred in entertaining and deciding the suit without having the
competent territorial jurisdiction to try the plaint in the first place
itself. Learned counsel further submits that, that apart, the plaint so
filed is itself lacking from conforming to the mandatory compliances
as laid down by the CC Act. Lastly, learned counsel further contends
that the documents supporting the pleadings are in itself dehors of any
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 4 of 16
Signing Date:01.09.2023
16:32:16
 shred of evidence which forms the basis of cause of action of the grant
of job work and payments made thereto, premised on which the suit
was filed.

5. Learned counsel appearing for the appellant/defendant, in

furtherance of the said submissions, laid emphasis, firstly, on the
aspect of Court of competent territorial jurisdiction to try the suit in
question. In that, learned counsel submits that the learned trial court is
bereft of the territorial jurisdiction, on the basis that the statement
made by the respondent/plaintiff is false. Learned Counsel submits
that the documents filed alongwith the plaint before the learned Trial
Court clearly demonstrate that the entire transaction took place
between the appellant/defendant and the respondent/plaintiff at Noida
and not at Delhi. Learned counsel invites attention of this Court to the
Authorization Letter dated 19.02.2019 wherein the address of the
respondent/plaintiff is shown as A-151, Sector-83, Phase II, Noida.
He further points out to invoices, bank account statement of the
respondent/plaintiff to show that documents attached with plaint are
clearly without any doubt, evidenced that the respondent/plaintiff
operates from Noida, Uttar Pradesh and being conscious of the same
had deliberately and intentionally tried to invoke the jurisdiction of
the Court at Delhi on the basis of false and patently incoherent
pleadings, which led the learned Trial Court to erred gravely while
assuming the jurisdiction to entertain the present suit in question.

6. Secondly, learned counsel appearing for the appellant/defendant

laid emphasis on the fact that the respondent/plaintiff has not
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 5 of 16
Signing Date:01.09.2023
16:32:16
 exhausted the remedy of pre-institution mediation in terms of Section
12A of the CC Act, which is a mandatory compliance to conform to
while filing the commercial suit. Learned counsel further submits that
such default in compliance of a mandatory provision would make the
suit non est since its inception.

7. Learned counsel further submits that the respondent/plaintiff

did not file the Statement of Truth as per Order VI Rule 15A of CPC
as amended by the CC Act and the learned Trial Court ought to have
struck off the pleadings which have not been verified by a Statement
of Truth in accordance with Order VI Rule 15A (5) of CPC as
amended by the CC Act. He also submits that according to the
provisions of the CC Act, pleadings, particularly the plaint, if not
supported with the Statement of Truth, cannot be read in evidence and
can be struck off too. Thus, he submits that there being no plaint laid
in accordance with law, decree as passed is nullity in law.

8. Thirdly and lastly, learned counsel further contends that the

cause of action for filing the present suit stems from the fact of
payment made for job work of manufacturing of LED Lights and non-
completion/default thereof, raised the grievance for refund of the said
amount paid to the appellant/defendant by the respondent/plaintiff.
Learned counsel without going into the merits of the case, submits
that no document worth the name in the nature of job work order has
at all been filed by the respondent/plaintiff alongwith the plaint or
anytime later. In that, he further submits that there is no way of
ascertaining the nature, conditions and specifications of the job work
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 6 of 16
Signing Date:01.09.2023
16:32:16
 being granted which could atleast, prima facie, show the basis of
cause of action. He submits that in absence of the same, the grounds
so raised are utterly flimsy and imaginative and the learned trial court
should have been cautious while decreeing the suit as to how the
respondent/plaintiff has assumed that the courts at Delhi have the
territorial jurisdiction to adjudicate the dispute.

9. Learned counsel also submits that there is no document worth

its salt to even remotely indicate that the courts at Delhi have any
territorial jurisdiction at all. Thus, according to learned counsel, the
learned trial court could not have entertained the suit of the
respondent/plaintiff and the decree as such is yet again susceptible to
be declared non est.

ARGUMENTS ON BEHALF OF THE RESPONDENT/

PLAINTIFF
10. Per contra, Mr. Puri, the learned counsel appearing for the
respondent/plaintiff at the very outset submits that vide order dated
07.01.2020 though being at that point of time the appellant/defendant
has already proceeded ex-parte on 09.10.2019, appellant/defendant
has appeared before the learned Trial Court and the learned Trial
Court has given an opportunity to file an appropriate application, but
the appellant/defendant choose not to file any application before the
learned Trial Court and choose to file the present appeal. Learned
counsel has argued having chosen not to appear before the learned
trial court, the appellant/defendant is now precluded from raising the
aforesaid contentions.
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 7 of 16
Signing Date:01.09.2023
16:32:16
 11. On that basis, the learned counsel requests that considering the
nature and facts as presently available, the present appeal is liable to
be dismissed.

12. Learned counsel for the respondent/plaintiff, so far as the legal

objections raised by the appellant/defendant is concerned, further
submits that the respondent/plaintiff had duly annexed the Board
Resolution dated 19.02.2019 in which it was clearly stated the
meeting was held at Delhi alongwith the Certificate of Incorporation
of respondent/plaintiff having registered office at Delhi and submits
that since the its inception of the Respondent/Plaintiff company has
been operating from the Delhi address only.

13. Learned counsel for the respondent/plaintiff further submits that

since the said job work was initiated from Delhi address only, in the
form of board resolution meeting and subsequently by the issuance of
payment through the cheque from Delhi, the territorial jurisdiction
rests with the competent courts at Delhi and therefore, the learned
Trial Court was very much in its power and has the jurisdiction to try
and deal with the present matter and had even rightly done so.

14. Learned counsel while inviting attention of this Court to page

93 of the paper book had directly targeted the argument of non-
compliance of Section 12A of the Act, and submits that the
appellant/defendant itself in the appeal has filed the Non-Starter
Report issued by District Legal Services Authority, South-West
District, Saket Courts as per Section 12A of CC Act, and therefore the
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 8 of 16
Signing Date:01.09.2023
16:32:16
 respondent/plaintiff had duly complied with the mandatory provision
of Section 12A of CC Act.

15. Learned counsel further submitted that the respondent/plaintiff

filed the suit for recovery of money and the same was filed in the
Court of competent ordinary civil jurisdiction, due to non
establishment of the Commercial Courts as per CC Act, in the Saket
Court Complex and it was only later in the time, that the Commercial
Courts were established and the matter was transferred to the
concerned District Judge (Commercial Courts) vide order/notification
No. 316 dated 07.12.2019 and by that point of time the
appellant/defendant was already proceeded ex-parte on 09.10.2019.

16. Learned counsel had very vehemently put forth his submission
in this regard that even learned Trial Court did not direct the
respondent/plaintiff to file the Statement of Truth after such transfer to
the designated Commercial Court from the ordinary civil court.
Learned counsel thus submits that respondent/plaintiff cannot be held
at fault for non-compliance even when the concerned commercial
courts as per the CC Act was itself not established in the concerned
territorial jurisdiction. Learned counsel further argues that filing of
statement of truth is a procedural irregularity and a curable defect and
arguments so raised at the stage of appeal cannot render the decree
passed a nullity when the appellant/defendant though proceeded ex-
parte had appeared and was duly provided with the opportunity for
filing an appropriate application. Learned counsel thus finally argued,
failure of taking such procedural objections at the stage of trial and
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 9 of 16
Signing Date:01.09.2023
16:32:16
 now raising the same, should not be considered at this stage as neither
the same could render the decree a nullity nor they are in the interests
of justice and equity.

ANALYSIS OF THE COURT

17. We have considered the submissions of the counsel for the

parties as also the pleadings of the learned Trial Court and render our
findings and conclusions as under.

18. Some undisputed facts that may be noted are:

a. That the respondent/plaintiff filed a Commercial Suit for

recovery of Rs. 4,26,992/- from the appellant/defendant
before the District Courts at Saket under the CC Act.
Though, the suit was indeed filed under the provisions of
CC Act, yet no Statement of Truth as stipulated
thereunder was filed alongwith the plaint, or anytime
later till the ex-parte judgement and decree was passed.

b. From the perusal of the certified copy of the order sheet

dated 07.01.2020 annexed at page 74 of the present
petition, it can be seen one of the partner of the
appellant/defendant had appeared before the learned trial
court and was duly apprised of the proceedings. Even
thereafter, the appellant/defendant had not taken any
steps to pursue the suit, whence he was already
proceeded ex-parte much prior in time, vide the Order
dated 09.10.2019. Be that as it may, an ex-parte
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 10 of 16
Signing Date:01.09.2023
16:32:16
 judgement and decree dated 21.09.2020 was passed by
the learned Trial Court allowing the reliefs sought for in
the suit of the respondent/plaintiff which is assailed in the
present appeal.

19. At the outset we had indicated to the learned counsel for the
appellant/defendant that since no written statement or any other
pleading on behalf of it was filed before the learned Trial Court, we
would permit the counsel to raise only pure questions of law.

20. The learned counsel for the appellant/defendant argues

precisely the following issues:

a. That the learned Trial Court had no territorial jurisdiction

to try and adjudicate the suit and therefore the judgement
and decree are a nullity in law and not enforceable.

b. That no Statement of Truth, as envisaged under Order VI

Rule 15 (4) & (5) of CPC as amended by the CC Act,
was filed with the suit plaint, thus the said plaint was no
plaint in the eyes of law and consequently, the impugned
ex-parte judgement and decree could not have been
validly passed.

21. That in respect of the first issue, learned counsel painstakingly

took us through the pleadings and the documents filed therewith.
According to the learned counsel, it is not disputed that the
appellant/defendant is not situated within the territorial jurisdiction of
the local limits of Delhi and is admittedly at Ghaziabad, Uttar
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 11 of 16
Signing Date:01.09.2023
16:32:16
 Pradesh. That apart, according to the learned counsel, the
respondent/plaintiff itself is located at Noida and not Delhi and thus
could not have maintained the suit at Delhi.

22. We have given our thoughtful consideration to the said

submission and find force in the same. This is for the reason that the
documents placed before the learned Trial Court by the
respondent/plaintiff, like the Certificate of Incorporation apparently
establish that it was incorporated at Noida, Uttar Pradesh and not
Delhi. A contrary submission to this was made by the learned Counsel
for the respondent/plaintiff that the said certificate also referred to its
office at Delhi. The same ought to be rejected for the reason that the
address at Delhi is referred to as the address for correspondence. By
no stretch of imagination can the address of correspondence confer
jurisdiction upon a particular Court when the actual place of its
incorporation is distinct.

23. That apart, we also considered the statement of account of the

Bank of the respondent/plaintiff, relied upon by the learned counsel
for the respondent/plaintiff to attempt to show that the money was
transferred to its account at Delhi. However, on a closer scrutiny, it is
clear that the said statement of account is of the Bank located at Noida
too. Learned counsel for the respondent/plaintiff had insisted that the
suit was filed on the basis of sub section (c) of section 20 of CPC on
the premise that part cause of action had arisen within the local limits
of the territorial jurisdiction of the Delhi Courts and not the location
of the appellant/defendant.
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 12 of 16
Signing Date:01.09.2023
16:32:16
 24. That apart, learned counsel for the respondent/plaintiff also
submitted that the claim in the suit was based on the job work issued
by the respondent/plaintiff to the appellant/defendant and laid stress
that the said order of job work was issued at Delhi. However, learned
counsel was unable to show even a single document in the nature of
order for job work on record. Even the pleadings on this aspect were
vague, lacking in material particulars. The absence of any
documentary evidence also does not lend credence to the version of
the respondent/plaintiff regarding part cause of action having arisen in
Delhi, resulting in our holding that the Delhi Courts had no territorial
jurisdiction to adjudicate upon the lis.

25. Thus, the issue of part cause of action having arisen is wholly
untenable for the reason that the learned counsel for the
respondent/plaintiff was unable to show even one instance of any
cause of action having arisen at Delhi at all.

26. That so far as the second issue regarding the non filing of the
Statement of Truth alongwith the suit plaint is concerned, the learned
counsel for the respondent/plaintiff unequivocally admitted that no
Statement of Truth was at all filed along with the plaint. Having
regard to this admission, this Court needs to examine whether the
judgement and decree could at all have been passed, and if so,
whether the judgement and decree is at all valid and not a nullity.

27. For appreciating this argument, we need to consider the

provisions of both, Order VI Rule 15 (4) & (5) of CPC as amended by
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 13 of 16
Signing Date:01.09.2023
16:32:16
 the CC Act, whereby filing of the Statement of Truth is mandatory.
The said provisions are extracted hereunder:

“Order 6 Rule 15-A. Verification of pleadings in a

Commercial Dispute
15-A. Verification of pleadings in a Commercial Dispute. —
(4) Where a pleading is not verified in the manner provided under sub-
rule (1), the party shall not be permitted to rely on such pleading as
evidence or any of the matters set out therein
(5) The court may strike out a pleading which is not verified by a
Statement of Truth, namely, the affidavit set out in the Appendix to this
Schedule.”
28. A perusal of the aforesaid provisions, particularly Order VI
Rule 15A of CPC as amended by CC Act, would bring to fore that the
Legislature had, in its wisdom, intentionally laid great stress on the
filing of the Statement of Truth along with the plaint, in support
thereof, to reduce the time spent in the litigation by parties. The delay
in filing of the same may be considered as a procedural irregularity,
however, the filing of the same, in our view, would be mandatory.
Moreover, the filing of the Statement of Truth and the limitation
thereafter provided for filing of the same, in our view is restrictive in
nature and cannot be extended endlessly nor can the plaint and the
documents annexed thereto be read in evidence. This has great
significance since sub rule (4) and (5) of Rule 15A of Order VI of
CPC as amended by CC Act mandate the filing of the Statement of
Truth and also prescribe the effect of such non filing. It is clear that
the parties are not permitted to rely upon the said pleadings by virtue
of sub rule (4) and simultaneously the Court is empowered to strike
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 14 of 16
Signing Date:01.09.2023
16:32:16
 out a pleading which is not supported by the statement of truth,
prescribed by sub rule (5) of Rule 15A of Order VI of CPC as
amended by CC Act. Our endeavour in the present case is only to
consider the effect of non filing of the Statement of Truth, since the
facts obtaining in the present case do not give rise to any other
question and thus, our views are restricted only to the said issue.

29. In the present case, it is admitted by the learned counsel for the
respondent/plaintiff that the Statement of Truth indeed, was never
filed either with the plaint or any time later at all. Keeping this fact in
view, we are of the opinion that the same would fall within the
purview of issue of law and hold that the plaint itself is non est and
could not have been read in evidence either.

30. The arguments of the learned counsel for the

respondent/plaintiff based on the Non Starter Report, issued by the
DLSA South East, in respect of the suit in question, is concerned, the
same does not discharge the respondent/plaintiff of the legal
obligation to file the Statement of Truth. Moreover, the
respondent/plaintiff cannot feign ignorance of the fact that the suit,
even though originally proceeded with by the learned ADJ dealing
with ordinary suits, was subsequently registered under the CC Act and
numbered as such. Thus, the respondent/plaintiff was under a legal
obligation to file the Statement of Truth in accordance with Order VI
sub-rule (4) and (5) of Rule 15 A CPC as amended by the CC Act
while conforming to the mandatory procedural formalities contained
therein. Therefore, the respondent/plaintiff now cannot be permitted to
Signature Not Verified
Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 15 of 16
Signing Date:01.09.2023
16:32:16
 contend that no such directions were issued for filing the Statement of
truth after the transfer of suit from ordinary court to designated
commercial court. Thus even this argument of the respondent/plaintiff
fails.

31. Resultantly, we allow the appeal and set aside the judgement
and decree dated 21.09.2020 passed by the District Judge
(Commercial Court) - 01, South-East, Saket Courts, Delhi in CS
(Comm.) No. 253/2019, however, with no orders as to costs.

32. Pending application also stands disposed of.

TUSHAR RAO GEDELA, J.

YASHWANT VARMA, J.
SEPEMBER 01, 2023
rl

Signature Not Verified

Digitally Signed
By:VINOD KUMAR RFA (COMM) 2/2021 Page 16 of 16
Signing Date:01.09.2023
16:32:16