Tarun Babbar vs. Asha Ram Sons PVT LTD

Facts

The respondent, Asha Ram & Sons Pvt Ltd, a distributor of food materials, filed a suit for recovery of ₹12,32,643/- from the appellant, Tarun Babbar. The respondent claimed that the appellant owed ₹7,10,324/- for goods supplied, as evidenced by six invoices dated between December 2017 and January 2018. The appellant had issued two cheques totaling ₹4,22,100/-, which were dishonoured. The respondent also claimed pre-suit interest of ₹5,22,319/-. The appellant contested the suit, alleging the goods supplied were defective. The Commercial Court decreed the suit for ₹7,10,324/- with pendente lite and future interest at 12% per annum, finding the appellant's defence of defective goods unsubstantiated. The appellant appealed this judgment and decree.

Held

The Court held that the appellant's contention regarding the non-maintainability of the suit due to lack of pre-litigation mediation was contrary to the record. The Court found that the respondent had indeed initiated pre-institution mediation, and notices were issued, but the appellant failed to respond or appear. Therefore, the suit was maintainable. Regarding the second issue, the Court found that the appellant failed to discharge the burden of proof to establish that the goods supplied were defective. The appellant's own evidence and cross-examination revealed an admission of liability for ₹7,10,320/-. The Court noted the absence of any documents or communications supporting the claim that the respondent was asked to take back the goods. Consequently, the Court concurred with the impugned judgment decreeing ₹7,10,320/- and awarding pendente lite and future interest at 12% per annum. The claim for pre-suit interest was not decreed as the respondent could not establish entitlement.

Key Issues

1. Whether the suit filed by the respondent was maintainable in light of Section 12A of the Commercial Courts Act, 2015, which mandates pre-litigation mediation? The appellant argued the suit was not maintainable for non-compliance. The respondent contended that pre-litigation mediation was initiated and closed as a 'non-starter' due to the appellant's non-participation, and that this defence was not effectively raised in the written statement. 2. Whether the appellant is liable to pay for the goods supplied by the respondent, or if the alleged defects in the goods absolve him of payment? The appellant argued the goods were defective, causing business loss. The respondent contended that the appellant failed to prove the defects and had admitted liability for a significant portion of the amount.