MR. (NAGARAJ) SARAVANA vs MR. G.V. NAGASHANKARA
- Court
- Karnataka High Court
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 30 DAY OF SEPTEMBER, 2026
PRESENT
THE HON'BLE MR. JUSTICE D K SINGH
AND
THE HON'BLE MR. JUSTICE H.SHANTHI BHUSHAN
COMMERCIAL APPEAL NO. 338 OF 2026
BETWEEN:
1. MR. (NAGARAJ) SARAVANA
PROPRIETOR
AGED ABOUT 54 YEARS
THE SARAVANA ALLOY STEEL PVT. LTD.,
ND
NO.21/D AND 22, INDUSTRIAL 2 STAGE,
YASHAVANTHAPURA, TUMKUR ROAD,
BANGALORE 560 022.
BUT SHOWN INCORRECTLY IN THE
IMPUGNED JUDGMENT AND DECREE AS
THE SARAVANA ALLONY STEEL PVT. LTD.
2. MR. NAGARAJI, SARAVANA
AGED ABOUT 54 YEARS
Digitally
signed by
MALA K N
Location:
HIGH COURT
OF
KARNATAKA
3. MR. SHASHIKUMAR NAGARAJI
AGED ABOUT 54 YEARS
4. MR. SANJAY KUMAR NAGARAJI
AGED ABOUT 44 YEARS
5. MR. SWAMINATHAN NAGARAJI
AGED ABOUT 79 YEARS,
ALL LOCATED AT
SARAVANA ALLOY STEEL PVT. LTD.,
NO.21/D AND 22,
ND
INDUSTRIAL SUBURB 2 STAGE,
TUMKUR ROAD, YASHWANTHAPURA,
BANGALORE 560 022.
…APPELLANTS
(BY SRI. SURAJ.S.,ADVOCATE)
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AND:
MR. G.V. NAGASHANKARA
S/O MR. G.V. VENKATESHA SHETTY,
AGED ABOUT 63 YEARS,
PROPRIETOR OF SHILPA METAL SECTION,
HOSLINE ROAD, HASSAN – 573 201.
…RESPONDENT
THIS COMAP / COMMERCIAL APPEAL UNDER SECTION 13 (1A)
OF THE COMMERCIAL COURTS ACT, 2015 PRAYING TO SET ASIDE
THE JUDGMENT AND DECREE DATED.26.02.2026 (ANNEXURE-A)
PASSED IN COMM.O.S.NO.2/2022 ON THE FILE OF THE HON’BLE
PRINCIPAL DISTRICT AND SESSIONS JUDGE, HASSAN, ALLOW THE
ABOVE APPEAL AND CONSEQUENTLY DISMISS THE SUIT BEARING
COMM.O.S.NO.2/2022 ON THE FILE OF THE HON’BLE PRINCIPAL
DISTRICT AND SESSIONS JUDGE, HASSAN.
THIS APPEAL, COMING ON FOR ORDERS, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
CORAM: HON'BLE MR. JUSTICE D K SINGH
AND
HON'BLE MR. JUSTICE H.SHANTHI BHUSHAN
ORAL JUDGMENT
(PER: HON'BLE MR. JUSTICE H.SHANTHI BHUSHAN)
This Commercial Appeal is filed by the defendants
challenging the Judgment and Decree dated 26.02.2026 passed
by the Principal District and Sessions Judge, Hassan
( ‘Commercial Court’ ) in Comm.O.S.No.2/2022, whereby the
suit filed by the plaintiff came to be decreed with costs for a
sum of Rs.8,16,284/-, together with interest at 12% per annum
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from 03.12.2015 till the date of the suit and at 6% per annum
from the date of the suit till realisation.
2. For the sake of convenience, the parties shall be
referred to by their respective ranks before the Commercial
Court.
1. Facts of the plaintiff:
3. The case of the plaintiff is that he has been carrying
on business in steel and building materials at Hassan for about
20 years under the name and style of Shilpa Metal Section.
According to him, during January 2013, the defendants
approached him for supply of T.M.T. iron bars of different
measurements, namely, 16 mm, 12 mm, 10 mm and 18 mm.
In connection with the said transaction, the plaintiff claims to
have paid an advance of Rs.20,00,000/- on 19.01.2013
through RTGS from his account maintained with IDBI Bank.
Pursuant to the said payment, the defendants are stated to
have supplied steel materials under four invoices, namely,
Invoice No.5538 dated 22.01.2013 for Rs.4,32,771/-, Invoice
No.5665 dated 29.01.2013 for Rs.5,14,474/-, Invoice No.5787
dated 04.02.2013 for Rs.5,12,778/- and Invoice No.5841 dated
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06.02.2013 for Rs.5,14,412/-. The plaintiff maintains that the
business transactions between the parties continued from
19.01.2013 to 23.09.2013.
4. It is further the case of the plaintiff that,
notwithstanding the earlier supplies, the defendants suddenly
stopped supplying the iron materials, though a substantial
portion of the advance amount remained with them. He claims
that he requested the defendants on 09.09.2014 to supply
materials against the unadjusted advance, which, according to
his calculation, stood at Rs.8,16,363/-. Since the defendants
neither supplied the balance materials nor returned the
amount, the plaintiff issued a legal notice dated 01.12.2015
and thereafter instituted O.S.No.48/2016 on 12.04.2016 before
the Additional Senior Civil Judge and JMFC, Hassan, seeking
recovery of Rs.10,40,591/- with interest. The suit was
subsequently transferred to the Commercial Court and
registered as Comm. O.S. No.2/2022.
2. Defence of the defendants:
5. The defendants disputed the claim in its entirety.
Their specific contention was that the description of the
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defendant No.1 in the original plaint was itself incorrect, since
M/s. Saravana Alloy Steel Pvt. Ltd. was a company
incorporated under law and not a proprietary concern of
defendant No.1. It was contended that the defendant No.1 was
only one of its Directors and that the company, which was
alleged to have entered into the transactions with the plaintiff,
had not been properly impleaded. The defendants also disputed
the manner in which the plaintiff had presented the
transactions and contended that the plaint did not disclose the
particulars of the alleged dealings or establish how the amount
claimed remained due. According to them, the materials
covered by the invoices had already been supplied and there
was no outstanding amount payable to the plaintiff.
6. The defendants further contended that the Directors
could not be made personally liable for the alleged dues of the
company, particularly when there were no specific pleadings
alleging fraud or any other circumstance warranting lifting of
the corporate veil. The impleading of defendant Nos.2 to 5 was
therefore opposed. The defendants also raised objections
regarding limitation, territorial jurisdiction and the manner in
which the plaint was amended on 31.10.2017 and again on
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25.03.2019. By their additional written statement dated
16.04.2019, defendant Nos.2 to 5 questioned the alteration of
the description of defendant No.1 beyond the amendment
permitted by the Court. Defendant No.1, in his additional
written statement dated 01.06.2023, also raised an objection
regarding non-filing of the Statement of Truth as contemplated
under Order VI Rule 15A of the Code of Civil Procedure, 1908
( ‘CPC’ ), as applicable to commercial disputes. On these
grounds, the defendants sought dismissal of the suit.
3. Issues framed:
7. On 28.05.2019, the Additional Senior Civil Judge,
Hassan, framed the following issues for consideration, which
were subsequently adopted by the Commercial Court:
i. Whether the plaintiff bank proves that he had paid
Rs.20,00,000/- to the defendants on 19.01.2013 for
supply of steel materials?
ii. Whether the plaintiff further proves that a sum of
Rs.8,16,363/- was with the defendants as on 09.09.2014
for supply of materials to him and have not supplied the
materials?
iii. Whether the plaintiff is entitled for the suit claim along
with interest as prayed for?
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iv. Whether the suit of the plaintiff is bad for not making the
company as a party?
v. Whether the suit of the plaintiff is barred by law of
limitation?
vi. Whether this court has jurisdiction to entertain the suit?
vii. What order or decree?
4. Judgment of the Commercial Court:
8. The Commercial Court, after considering the
pleadings and the evidence adduced by both sides, answered
Issues Nos.(i) to (iii) in the affirmative and Issue Nos.(iv) and
(v) in the negative. Issue No.(vi) was held not to survive for
consideration. While considering the objection regarding non-
impleadment of the company, the Commercial Court noticed
that the plaintiff had initially described the defendant No.1 as
the proprietor of Saravana Alloy Steel Pvt. Ltd. However, after
defendant No.1 specifically contended in the written statement
dated 21.11.2016 that the concern was a private limited
company and not a proprietary concern, the plaintiff filed an
application under Order I Rule 10 CPC to implead the other
Directors. The application came to be allowed. The Commercial
Court held that the subsequent amendment, by which the
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company was shown as defendant No.1 and the other
defendants as its Directors, had cured the defect. On limitation,
the Court proceeded on the basis that the business transactions
between the parties continued till 23.09.2013. Since the suit
was instituted on 12.04.2016, it was held to be within the
period of three years, applying Article 26 of the Limitation Act,
1963. The issue regarding jurisdiction was not examined on
merits, as the issue had ceased to survive for consideration
upon transfer of the proceedings to the Commercial Court.
9. Insofar as the monetary claim is concerned, the
Commercial Court considered the testimony of P.W.1, the
evidence of D.W.1 and the invoices and delivery challans
marked as Exs.P1 to P42. It was noticed that Exs.P1 to P4
related to the four transactions specifically referred to in the
plaint, whereas Exs.P5 to P37 evidenced subsequent supplies.
The Court also took note of the admissions of DW.1 regarding
the advances received from the plaintiff, aggregating to
Rs.1,80,00,000/- between 19.01.2013 and 23.09.2013, and the
corresponding supplies made by the defendants.
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10. It further relied upon the bank statement at Ex.P38
and the failure of DW.1 to produce the business records
maintained by him, drawing an adverse inference against the
defendants.
11. Though the defendants contended that evidence
beyond the pleadings could not be relied upon, the Commercial
Court held that the documentary evidence and admissions
elicited in cross-examination established that materials worth
Rs.1,66,33,716/- had been supplied against the advances
received. After accounting for repayments aggregating to
Rs.5,50,000/-, the Court found that Rs.8,16,284/- remained
due. Consequently, by judgment and decree dated 26.02.2026,
the suit was decreed with costs for Rs.8,16,284/-, with interest
at 12% per annum from 03.12.2015 till the date of suit and at
6% per annum thereafter till realisation. The Commercial Court
further held that the plaintiff was entitled to recover the
amount from the defendants in their capacity as Directors of
the company.
5. Appeal preferred by defendant Nos.1 to 5:
12. Aggrieved by the judgment and decree dated
26.02.2026 passed by the Commercial Court in
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Comm.O.S.No.2/2022, defendant Nos.1 to 5 have preferred the
present appeal under Section 13(1A) of the Commercial Courts
Act, 2015, read with Order XLI Rule 1 of the CPC, seeking to
set aside the judgment and decree and consequently dismiss
the suit.
6. Grounds urged in the appeal:
13. The principal grounds urged by the defendants are
that the Commercial Court failed to notice that M/s. Saravana
Alloy Steel Pvt. Ltd., the Company with which the alleged
transactions were entered into, was not properly arrayed as a
defendant in the original plaint and that the subsequent
alteration of the description of defendant No.1 was beyond the
amendment permitted by the Court. It is contended that the
Directors could not have been fastened with personal liability
for the alleged dues of the company in the absence of specific
pleadings of fraud or other grounds warranting such liability.
The appellants further question the finding on limitation, the
territorial jurisdiction of the Commercial Court and the failure to
consider their objection regarding the mandatory Statement of
Truth under Order VI Rule 15A of the CPC. According to them,
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the plaintiff had pleaded payment of only Rs.20,00,000/- on
19.01.2013 and had not pleaded any further advance payments
between 19.01.2013 and 23.09.2013. The subsequent invoices,
which themselves acknowledge receipt of the materials, could
not have been treated as proof of any outstanding advance
amount without the necessary pleadings.
14. It is also urged that the Commercial Court
proceeded on the evidence recorded before transfer of the suit
without conducting a de novo trial and failed to appreciate that
the materials covered by the invoices had already been
supplied. On these grounds, the appellants seek interference
with the impugned judgment and decree.
15. We have heard Sri.Suraj S., learned counsel
appearing for the defendants-appellants. Upon consideration of
the pleadings, the records placed before this Court and the
submissions advanced on behalf of the defendants, the
following point arises for our consideration:
Whether the appellants/defendants have made out
any ground warranting interference with the
judgment and decree dated 26.02.2026 passed by
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the learned Commercial Court in
Comm.O.S.No.2/2022?
7. Reasons and conclusion:
16. The principal contention urged on behalf of the
appellants is that the plaintiff had pleaded payment of only
Rs.20,00,000/- on 19.01.2013 and had not pleaded the
subsequent payments allegedly made between 19.01.2013 and
23.09.2013. It is therefore contended that the Commercial
Court could not have relied upon the subsequent transactions,
much less the documents produced in that regard, to decree
the suit. There is no quarrel with the settled proposition that a
party cannot be permitted to travel beyond its pleadings and
that evidence, however elaborate, cannot ordinarily be received
to establish a case which has never been pleaded. But the
question in the present appeal cannot be examined by stopping
at that proposition alone. The pleadings, the documents
produced and, more importantly, the admissions elicited from
D.W.1 in cross-examination have to be considered together.
17. Admittedly, the plaintiff had pleaded payment of
Rs.20,00,000/- to the defendant company on 19.01.2013
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towards supply of T.M.T. iron bars. The said payment was not
merely asserted by the plaintiff. D.W.1, in his cross-
examination, admitted that the parties had business
transactions from 19.01.2013 to 23.09.2013, that the company
used to supply materials after receiving advance payments and
that the plaintiff had paid Rs.20,00,000/- through RTGS on
19.01.2013. This admission assumes considerable significance.
The appellants cannot, on the one hand, dispute the
outstanding liability and, on the other, avoid the effect of their
own witness admitting the business relationship, the mode of
payment and the receipt of the advance amount. The very
foundation of the transaction pleaded by the plaintiff thus
stands established through the evidence of the defendants
themselves.
18. There is another aspect which cannot be
overlooked. The plaintiff produced Ex.P38, the statement of
account maintained with IDBI Bank, reflecting payments of
Rs.20,00,000/- each made to Saravana Alloy Steel Pvt. Ltd. on
19.01.2013, 08.02.2013, 14.03.2013, 09.04.2013, 07.05.2013,
10.06.2013, 11.07.2013, 13.08.2013 and 23.09.2013. The
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total comes to Rs.1,80,00,000/-. These entries were not
effectively disputed during cross-examination of P.W.1. Nor did
the defendants produce any contrary bank statement or
account to demonstrate that the amounts had not been
received by the company. The invoices and delivery challans
marked as Exs.P5 to P37 and Ex.P42 also relate to the supplies
made during the relevant period. The evidence, therefore, is
not confined to the oral assertion of the plaintiff. There is
contemporaneous documentary material supporting the
payments and the business transactions between the parties.
19. The admissions of D.W.1 go further. In his cross-
examination, he admitted that he was maintaining sales
registers, payment registers and delivery notes in the ordinary
course of business and that the accounts relating to the
transactions with the plaintiff were also maintained by him. He
further admitted that the company was filing income tax
returns and that the audit report for the year 2013-14 disclosed
receipt of Rs.1,80,00,000/- from the plaintiff. He expressed his
inability to produce the accounts on the ground that the
transactions were about ten years old. The learned Commercial
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Court has rightly noticed that the suit was instituted in 2016 in
respect of transactions of 2013. The relevant accounts were
therefore expected to be available with the company when the
proceedings commenced.
20. The defendants, having admitted maintenance of
such accounts and having stated that there was no impediment
to producing them, cannot seek to explain their non-production
merely by referring to the passage of time. In these
circumstances, the Commercial Court was justified in drawing
an adverse inference against the defendants. The burden was
not on the plaintiff to produce the internal books of account of
the defendant company when the person who maintained those
accounts was himself before the Court as D.W.1.
21. It is true that the plaintiff did not specifically plead
all the nine advance payments, each of Rs.20,00,000/-, in the
original plaint. The learned Commercial Court has also noticed
this deficiency. The plaintiff attempted to introduce the further
particulars by filing I.A.No.5 under Order VI Rule 17 CPC on
24.01.2024, which came to be rejected on 01.04.2024. The
challenge to the said order in W.P. No.12042/2024 was
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disposed of on 16.07.2025, with an observation that the
concerned Court could consider the amplified submissions with
reference to the documents already marked and the admissions
elicited in cross-examination.
22. Therefore, the evidence was not considered in
isolation or without reference to the proceedings before this
Court. The Commercial Court examined the very objection
raised by the defendants and thereafter proceeded to
appreciate the admissions of D.W.1 along with Ex.P38 and the
invoices and delivery challans. The principle that evidence
cannot travel beyond pleadings is well recognised. However, in
the facts of the present case, the evidence was considered to
ascertain the actual transactions between the parties and to
test the correctness of the pleaded claim of outstanding money.
The defendants cannot disregard their own admissions merely
because the subsequent payments were not separately
narrated in the original plaint.
23. A further circumstance supporting the finding of the
Commercial Court is the admission regarding the amounts
returned by the defendant company. The evidence and the
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bank entries disclosed repayment of amounts after the
transactions. The Commercial Court noticed the repayment of
Rs.5,00,000/- on 19.11.2013 and the subsequent repayment
entries, and also took note of the fact that the defendants had
not satisfactorily explained why such amounts were returned to
the plaintiff if no amount was due.
24. On the basis of the total advance of
Rs.1,80,00,000/- and the value of the materials supplied, the
Commercial Court determined the value of the supplies at
Rs.1,66,33,716/- and arrived at an outstanding amount of
Rs.13,66,284/-. After giving credit to the repayments, the
balance was worked out at Rs.8,16,284/-. The decree is,
therefore, not for the entire amount of Rs.8,16,363/- claimed in
the plaint, but for the amount which the Court found
established after giving credit to the payments received back
by the plaintiff. This exercise of accounting is also indicative of
the fact that the learned Judge did not mechanically accept the
claim made in the plaint.
25. We are also unable to accept the contention that
the Commercial Court proceeded merely on the weakness of
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the defence. The plaintiff produced the bank statement,
invoices and delivery challans. P.W.1 spoke to the transactions,
and D.W.1, instead of displacing the documentary evidence,
admitted the material particulars relating to the business
dealings and receipt of the advance amounts. The defendants
were in possession of their own books of account, yet did not
produce them to show that the payments had been fully
adjusted against the supplies. The admission of a party's own
witness is a relevant piece of evidence and cannot be brushed
aside on the ground that the opposing party had not pleaded
every detail of the transaction. In the present case, the
documentary evidence and the oral admissions reinforce each
other. It is this cumulative effect which lends support to the
conclusion reached by the Commercial Court.
26. Insofar as limitation is concerned, D.W.1 admitted
that the transactions between the parties continued up to
23.09.2013. The suit was instituted on 12.04.2016, within
three years from the admitted last date of the transaction. The
learned Commercial Court has considered this aspect while
answering Issue No.5 against the defendants. We find no
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sufficient ground, on the material placed before us, to disturb
that finding. The objection regarding territorial jurisdiction also
does not advance the appellants' case, particularly when the
suit was originally instituted before the competent Civil Court at
Hassan and was thereafter transferred to the Commercial Court
upon being treated as a commercial dispute.
27. The Commercial Court has also considered the
objection regarding the company being a necessary party. The
plaintiff initially described defendant No.1 as the proprietor of
Saravana Alloy Steel Pvt. Ltd. Upon the objection raised by the
defendants that the concern was a private limited company, the
plaintiff took steps under Order I Rule 10 CPC to implead the
other Directors, and the application came to be allowed. The
amendment was thereafter carried out. In the circumstances,
the objection as to non-joinder of the company was considered
and rejected. The appellants have not demonstrated how that
finding, by itself, would displace the documentary evidence
establishing receipt of the amounts by the company and the
balance found payable.
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28. On an overall consideration of the evidence, we find
that the judgment dated 26.02.2026 in Comm. O.S. No.2/2022
is founded upon the bank entries, invoices, delivery challans
and, above all, the admissions made by D.W.1. The appellants
have not produced their own accounts to contradict the
plaintiff's statement of account, though their witness admitted
that such accounts were maintained. The mere repetition of the
objection that there were no specific pleadings regarding each
payment would not be sufficient to dislodge the findings
recorded by the Commercial Court in the peculiar facts of this
case. We do not find any perversity in the appreciation of
evidence warranting interference in this appeal.
29. The award of Rs.8,16,284/- with interest at 12%
per annum from 03.12.2015 till the date of suit and at 6% per
annum thereafter till realisation is also supported by the
reasons recorded by the Commercial Court.
30. For the foregoing reasons, we find no grounds
warranting interference with the judgment and decree dated
26.02.2026 passed by the Commercial Court in Comm. O.S.
No.2/2022. Accordingly, we pass the following;
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ORDER
(i) The appeal is dismissed;
(ii) The judgment and decree dated 26.02.2026 passed by the
Principal District and Sessions Judge, Hassan, in
Comm.O.S.No.2/2022 are affirmed;
(iii) All pending applications, if any, stand disposed of.
(iv) No order as to costs.
Sd/-
(D K SINGH)
JUDGE
Sd/-
(H.SHANTHI BHUSHAN)
JUDGE
KNM
List No.: 1 Sl No.: 2