Greatech Fashions vs. S K Industries
Original PDF →Facts
The appellant, Greatech Fashions, filed a suit seeking recovery of Rs. 5,44,961/- from the respondent, S.K. Industries, for engineering plastic goods supplied via an invoice dated 20.09.2018. The total sale amount was Rs. 5,78,719/-, and payments received totaled Rs. 3,00,000/-, leaving an outstanding amount of Rs. 2,78,719/-. The appellant claimed that due to the COVID-19 pandemic, legal action was delayed and sought exclusion of the period between 15.03.2020 and 28.02.2022 for limitation calculation, citing a Supreme Court order. A legal notice was issued on 24.06.2022. The Commercial Court rejected the plaint as barred by limitation. The appellant appealed this order.
Held
The High Court held that the suit was indeed barred by limitation. It disagreed with the appellant's submission that the period of limitation commences only upon the breakdown of settlement talks and issuance of a legal notice. The Court found that the last payment received by the appellant was on 03.08.2019, which was before the COVID-19 pandemic and the Supreme Court's order extending the limitation period. The Court stated that settlement talks, without proof and in the absence of a written acknowledgment of debt or part payment within the limitation period, do not extend the time for filing a suit under the Limitation Act, 1963. The issuance of a legal notice also does not commence a fresh period of limitation. The Court distinguished the present case from Fortune Builders (P) Ltd. v. Blue Star Ltd., noting that in that case, the work was still pending and parties had raised competing claims, which is not the situation here. Therefore, the plaint was rightly rejected by the learned District Judge.
Key Issues
1. Whether the suit filed by the appellant is barred by limitation, considering the last payment received on 03.08.2019 and the exclusion period claimed due to COVID-19, as per Section 3 of the Limitation Act, 1963. 2. Whether the appellant's reliance on the judgment in Fortune Builders (P) Ltd. v. Blue Star Ltd. is applicable to extend the period of limitation, given the nature of the dispute and the issuance of a legal notice. Petitioner's Arguments: The appellant argued that the period of limitation should commence only when settlement talks break down and a legal notice is issued, citing Fortune Builders (P) Ltd. v. Blue Star Ltd. They contended that the suit was filed within the period of limitation, especially with the exclusion of the COVID-19 period as per the Supreme Court's order dated 10.01.2022. Revenue's Arguments: The judgment does not record specific arguments from the revenue/respondent. However, the Commercial Court's reasoning, which the High Court agreed with, implies that the respondent contended the suit was time-barred. The High Court noted that the last payment was made prior to the pandemic and that settlement talks, even if they occurred, do not extend limitation unless there is a written acknowledgment or part payment.
Sections Cited
Section 3, Limitation Act, 1963
AI-generated summary — verify with the full judgment below
$~66 * IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 27.05.2025
+ GREATECH FASHIONS
.....Appellant
Through: Mr. Navdeep Singh, Adv.
versus
S K INDUSTRIES
.....Respondent
Through: None.
CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
HON'BLE MS. JUSTICE RENU BHATNAGAR
NAVIN CHAWLA, J. (ORAL) CM APPL. 33430/2025
Allowed, subject to all just exceptions.
This appeal has been filed challenging the Order dated 08.05.2025, passed by the learned District Judge, Commercial Court- 05, South District, Saket Courts, New Delhi, in CS (COMM) No. 206/2025, titled Greatech Fashions v. S.K. Industries, rejecting the plaint of the suit filed by the appellant as being barred by limitation.
The above suit was filed by the appellant seeking recovery of the amount of Rs. 5,44,961/-, along with pendente lite and future interest at the rate of 18% per annum from the respondent herein. It is the case of the appellant that the appellant is a distributor of RFA(COMM) 323/2025
engineering plastic. The respondent had approached the appellant for the purchase of the said goods, whereafter the appellant supplied the same to the respondent vide invoice dated 20.09.2018. The summary of the transactions is given by the appellant as below: “ S.NO. Tax invoice No. Date Amount (Rs.)
Opening Balance
0440 20.09.2018 11,25,130
Credit Note 17.11.2018 5,46,411
Total Sale Amount (A)
5,78,719 PAYMENT RECEIVED S.No. Date Amount (Rs.) 1. 03.12.2018-Chq. No. 502200 dt. 30.11.2018 5,62,790 2. 03.12.2018-Chq. No. 502200 dt. 30.11.2018-REJECTED 5,62,790 3. 15.02.2019 1,00,000 4. 30.04.2019 1,00,000 5. 30.04.2019 1,00,000 6. 16.05.2019 1,00,000 7. 03.08.2019 1,00,000 Total (B) 3,00,000 Outstanding Amount (A-B) 2,78,719
”
The appellant further claimed that due to the outbreak of the COVID-19 pandemic, the appellant could not initiate any legal action against the respondent and, therefore, sought exclusion of the period between 15.03.2020 to 28.02.2022 for the purposes of calculating the limitation period.
It was claimed that the appellant issued a legal notice dated 24.06.2022 to the respondent.
In the said suit, the appellant pleaded the cause of action for filing the suit as under: RFA(COMM) 323/2025
“4. That the cause of action arose in favor of the Plaintiff against the Defendant for the first time on 20.09.2018 when the tax invoice bearing no. GST/2018-19/440 for payment of the amount of Rs.11,25,130.00 was raised against the delivery of the goods to the Defendant and the liability of Defendant was duly acknowledged by it upon the said tax invoice. That the cause of action further arose on each and every following occasion when the goods against the orders placed by the Defendant were delivered and the tax invoices were raised by the Plaintiff to Defendant and the Defendant has made the part payment as mentioned in para 3(IV) above. The cause of action further arose during Covid-19 period when due to COVID-19 the Plaintiff could not initiate any legal action against the Defendant and the Hon'ble Supreme Court of India vide order dated 10.01.2022 excluded the time period between 15.03.2020 to 28.02.2022 and extended the limitation period. That the cause of action also arose on each and every occasion when the Plaintiff requested the Defendant through telephonic communications/e-mails and in person meeting(s) to clear his outstanding dues and the Defendant kept avoiding the payment on one pretext or the other. That the cause of action further arose on 24.06.2022 when the plaintiff issued a legal notice to the Defendant through his advocate for clearing the dues outstanding towards plaintiff. That the cause of action further arose on 24.06.2022 when the plaintiff issued a legal notice to the Defendant through his advocate for clearing the dues outstanding towards the Plaintiff. That the cause of action further arose on 24.06.2022 when the Plaintiff issued a legal notice to the Defendant through his advocate for clearing the dues outstanding towards the Plaintiff. The cause of action further arose when the Plaintiff has filed application for Pre Institution Mediation dated 11.02.2025. Further, the cause of action arose on the date RFA(COMM) 323/2025
for appearance of the Defendant for Pre Institution Mediation was scheduled for 05.03.2025, however the Defendant has not appeared for the Pre-Institution Mediation on 05.03.2025 as on serving the notice to the Defendant. Further, the cause of action arose on 05.04.2025 when the Defendant did not appear again for pre mediation. Further Cause of action arose when Non-starter report dated 05.04.2025 was received by the Plaintiff on 16.04.2025. That cause of continues as on date as the admitted outstanding amount as stated herein above is still due to the Plaintiff against the Defendant and the Plaintiff is within the prescribed period of 3 years by excluding the time period between 15.03.2020 to 28.02.2022 (covid period excluded in terms of the Supreme Court's order dated 10.01.2022 on limitation)”
As noted hereinabove, the learned District Judge has rejected the plaint as being barred by limitation. The learned District Judge observed that in the legal notice, there is no mention by the appellant of any previous settlement talks going on between the parties and, therefore, the limitation for filing the suit would not be extended.
The learned counsel for the appellant, placing reliance on the judgment of this Court in Fortune Builders (P) Ltd. v. Blue Star Ltd., 2022 SCC OnLine Del 975, passed by a learned Single Judge of this Court, submits that it is only when the talks of settlement break and a legal notice is issued for the recovery of the amount, that the period of limitation would commence. He submits that the suit was, therefore, filed within the period of limitation.
We are unable to agree with the said submission made by the learned counsel for the appellant. Admittedly, the last payment made RFA(COMM) 323/2025
by the respondent against the supply was on 03.08.2019, that is, prior to the outbreak of the COVID-19 pandemic and the order passed by the Supreme Court granting extension of the period of limitation.
Thereafter, though in the plaint it is stated that there were certain talks of settlement between the parties, apart from the fact that there is no proof thereof filed with the plaint, in any case, such talks cannot extend the period of limitation. The period of limitation can be extended only under certain circumstances as mentioned in the Limitation Act, 1963, one of them being a written acknowledgment of the debt or a part payment made within the period of limitation. None of those circumstances are made out by the appellant in the present case. Equally, the issuance of a legal notice does not lead to the commencement of a fresh period of limitation.
Accordingly, the suit, which had been filed on or about 22.05.2025, even after excluding the period by which limitation stood extended under orders of the Supreme Court, was clearly barred by limitation and the plaint has been rightly rejected by the learned District Judge.
Reliance on the judgment of this Court in Fortune Builders (supra) is also ill-founded, inasmuch as, in the said case, as duly noted by the learned Single Judge of this Court, the work from which the transaction/dispute arose was still pending and the parties therein had raised competing claims vide the legal notices and their respective replies. It was in those facts that the learned Single Judge had held that the final disputes between the parties therein ultimately crystallised and came to be raised by the respondent therein in its legal notice. The RFA(COMM) 323/2025
same is not the situation in the present case.
In view of the above, we find not merit in the present appeal. The same is accordingly dismissed.
NAVIN CHAWLA, J
RENU BHATNAGAR, J MAY 27, 2025/rv/VS
Click here to check corrigendum, if any
Reproduced from the public record of the Delhi High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.