Criticalog INDIA Private LTD vs. Delta Freight System & Anr.

Held

The Court held that the suit was maintainable under Order XXXVII CPC as the invoices raised by the Plaintiff were acted upon and accepted by the Defendants. The Court found that the Defendants had failed to substantiate their claims of unilateral adjustments towards GST, rate difference, prospective loss, or payments to third parties with any supporting evidence. The Court noted that the Defendants had admitted a liability of ₹50,23,902/- which remained unpaid, despite court orders and issuance of bailable warrants against Defendant No. 2. Relying on the Supreme Court's decision in IDBI Trusteeship Services Ltd. v. Hubtown Ltd., the Court held that where a defendant raises no substantial defence, fails to disclose genuine triable issues, or presents a frivolous defence, leave to defend should be refused. The Court concluded that the Defendants had failed to raise any bona fide or substantial defence warranting a trial, and their defences were mere afterthoughts devoid of merit. Consequently, leave to defend was dismissed, and the suit was decreed for the principal sum of ₹1,96,97,325/- along with pre-suit interest of ₹38,29,859/-, and pendente lite and future interest.

Facts

The Plaintiff, Criticalog India Private Ltd, filed a suit under Order XXXVII CPC against Delta Freight System and its proprietor for recovery of ₹1,96,97,325/- principal amount and ₹38,29,859/- interest. The Plaintiff provided logistics services between July and October 2022, raising invoices totaling ₹3,33,97,325/-. The Defendants made part payments of ₹1,35,50,500/-, leaving an outstanding balance. The Defendants acknowledged their liability via emails on October 11 and 17, 2022, but later issued a legal notice on November 19, 2022, containing allegations while admitting some liability. The Defendants sought leave to defend, claiming the suit was not maintainable as it involved triable issues, disputed GST calculation, and alleged fabricated accounts. They claimed to have paid ₹1,40,55,000/- in total and were willing to pay ₹50,23,902/-.

Key Issues

1. Whether the suit filed under Order XXXVII CPC is maintainable given the Defendants' contention that there is no written agreement or admitted liability amounting to a liquidated demand, and that the claim is based on accounts and invoices requiring evidence under Section 34 of The Indian Evidence Act, 1872? 2. Whether the Defendants have raised genuine triable issues regarding fabricated ledger, inflated rates, wrongly computed GST, and exorbitant demands, thereby entitling them to leave to defend? Petitioner's Arguments: The Plaintiff argued that the Defendants never disputed shipment rates, GST, or payment timelines until the leave to defend application. They relied on emails dated October 11 and 17, 2022, where Defendants acknowledged liability and assured payment. The Plaintiff contended that the Defendants' legal notice, while containing allegations, admitted liability in paragraph 7. The Plaintiff also argued that the Defendants' ledger showed acknowledgment of total invoicing, but their claimed payments and adjustments for 'prospective loss' and 'rate and GST difference' were unilateral, without contractual or legal basis, and unsupported by contemporaneous records. The Plaintiff asserted that the suit was maintainable under Order XXXVII CPC as invoices were acted upon and accepted. Revenue/State's Arguments: None recorded.