Karnataka HC Upholds ₹8.16 Lakh Decree To Steel Trader, Citing Alloy Firm Director’s Admission Of ₹1.8 Crore Advances

The plaintiff, a steel and building-materials trader, alleged that he made advance payments to the defendants for steel supplies and that ₹8,16,363 remained unadjusted or unpaid.

He sued for recovery; the suit was decreed for ₹8,16,284, with interest and costs.

The defendants appealed, contending, among other things, that the company had not been properly impleaded, its directors could not be held personally liable, the plaintiff had not pleaded the subsequent advances relied on by the Commercial Court, and the suit was barred by limitation.

The Court applied the principle that a party ordinarily cannot travel beyond its pleadings and that evidence cannot establish an unpleaded case.

It also considered the evidentiary significance of admissions and the drawing of an adverse inference where a party with access to relevant business records fails to produce them.

The Court considered Article 26 of the Limitation Act, 1963, as applied by the Commercial Court to the account claim.

The Court considered provisions of the Code of Civil Procedure concerning amendment of pleadings and joinder of parties, including Order VI Rule 17 and Order I Rule 10.

The appeal was brought under Section 13(1A) of the Commercial Courts Act, 2015.

The Court accepted that the original plaint did not specifically plead all nine advances, but held that the deficiency did not displace the combined evidentiary record: the plaintiff’s bank statement showed payments totalling ₹1,80,00,000, and the defendants’ witness admitted the business relationship, receipt of the pleaded advance, maintenance of accounts, and the total receipts disclosed in the company’s audit report.

Because the defendants did not produce their accounts to show that the advances had been fully adjusted, the Commercial Court was justified in drawing an adverse inference.

The Court also noted the supplies, repayments and resulting accounting that supported the balance decreed.

The Court upheld the limitation finding based on the admitted continuation of transactions until 23 September 2013 and the suit’s filing on 12 April 2016, and found no basis to disturb the rulings on jurisdiction or the company’s joinder.

It dismissed the appeal and affirmed the decree for ₹8,16,284, with interest at 12% per annum from 3 December 2015 to the date of suit and 6% per annum thereafter until realisation; pending applications were disposed of, with no order as to costs.