The Delhi High Court set aside a trial court decree awarding Rs. 8,40,982 with 12% interest to a commission agent, holding that the plaintiff's internal statement of account - not filed with the plaint or with its evidence - could not be proved by confronting the defendant's witness during cross-examination. The Court further ruled that a commission agent appointed exclusively for government supplies must prove actual delivery to government departments to claim commission, and that mere restoration of agency on enhanced security does not condone prior non-performance.
Background & Facts
The Dispute
The appellant, M/s Jindal Photo Ltd (defendant company), manufactures photo films including X-Ray films. By letter dated 22nd May 2003, the defendant appointed the respondent, M/s Rays Medical Services (P) Ltd (plaintiff company), as its agent for supplying X-Ray films to government departments and institutions in Delhi on a commission basis. The agency was withheld on 26th March 2004 and subsequently restored on 27th September 2004 upon deposit of an enhanced security of Rs. 75,000 (paid on 27th October 2004).
Key Facts
- 22.05.2003: Appointment letter (Ex.PW1/3) designating plaintiff as authorized agent for medical X-ray films business to government/state institutions in Delhi
- 27.05.2003: Document (Ex.PW1/5) specifying commission structure: 0.5% for Delhi liaisoning agent for realisation of 98%/2% payment from Pay & Accounts Office, Delhi
- 26.03.2004: Agency withheld by defendant
- 27.09.2004: Agency restored on enhanced security deposit of Rs. 75,000
- 27.10.2004: Security deposit paid
- 02.05.2007: Legal notice issued by plaintiff seeking recovery of Rs. 8,40,982 towards commission and refund of security deposit
- 03.08.2007: Suit instituted for Rs. 12,20,000 (commission, security deposit, interest at 18% per annum)
- 07.07.2008: Issues framed by Trial Court including whether plaint properly signed/verified, non-joinder/misjoinder, entitlement to suit amount, malpractice, and interest
- 04.01.2014: Trial Court allowed amendment under Order VI Rule 17 CPC substituting defendant company for Sh. R.B. Paul (ex-MD) subject to Rs. 5,000 costs
- 28.09.2015: Impugned judgment decreeing suit for Rs. 8,40,982 with interest at 12% per annum
Procedural History
- 19.01.2016: Appeal admitted by Delhi High Court; stay subject to deposit of decretal amount with interest
- 18.04.2016: Registry directed to release deposited amount to plaintiff subject to security
- 25.03.2025: Matter referred to Delhi High Court Mediation and Conciliation Centre
- 14.07.2025: Mediation unsuccessful; parties directed to file written submissions
- 17.07.2026: Oral submissions for appellant heard
- 06.08.2026: Oral submissions for respondent heard; additional written submissions taken on record; judgment reserved
- 03.09.2026: Judgment pronounced
The Parties' Positions
The appellant contended the suit was barred by limitation for Rs. 4,06,229 (admitted due as on 26.03.2004), misjoinder existed as suit was originally against Sh. R.B. Paul individually, the amendment was belated and costs unpaid, and the plaintiff's statement of account was inadmissible under Order VII Rule 14 CPC. The respondent argued limitation was not raised below, the amendment corrected mere misdescription, the statement of account was produced pursuant to court direction, and the defendant's own statement of account was an uncertified computer printout.
Relief Sought
The appellant sought setting aside of the decree dated 28.09.2015 and refund of the decretal amount deposited with the Court. The respondent sought affirmation of the decree.
The Legal Issue
The central questions were: (1) Whether a plaintiff's internal statement of account not filed with the plaint or with its evidence can be exhibited and proved by confronting the defendant's witness during cross-examination under Order VII Rule 14 CPC; (2) Whether a commission agent appointed exclusively for government supplies can claim commission without proving actual delivery to government departments; (3) Whether the plea of limitation can be raised for the first time at the appellate stage when not pleaded in the written statement and no issue was framed.
Arguments Presented
For the Appellant
Counsel submitted that the suit was ex-facie barred by limitation under Article 113 of the Limitation Act, 1963 for Rs. 4,06,229 admitted as due on 26.03.2004, the suit being filed on 03.08.2007. Reliance was placed on Nikhila Divyang Mehta v. Hitesh P. Sanghvi for the proposition that limitation, as a pure question of law apparent on pleadings, may be raised in appeal. On misjoinder, it was argued the suit was instituted against Sh. R.B. Paul in his individual capacity, not the company, and an officer is not personally liable for company debts per Praveen Bethapudi v. Savithramma. The amendment under Order VI Rule 17 CPC was filed belatedly at final arguments stage, violating the proviso requiring due diligence. The Rs. 5,000 costs imposed were never paid, rendering the amendment order inoperative. Under Section 21 Limitation Act, the suit against the substituted defendant would be deemed instituted on 04.01.2014 and thus barred. The plaintiff's statement of account (Ex.PW1/D1) was introduced only during cross-examination of DW-1, not filed with the plaint per Order VII Rule 14 CPC. Another statement of account filed at final arguments on 21.11.2014 had no court leave. The defendant's statement of account (Ex.DW1/4) was wrongly rejected for want of certification. PW-1's cross-examination admissions (01.12.2009) established no proof of supply to government departments, disentitling the plaintiff to commission.
For the Respondent
Counsel contended limitation was never raised before the Trial Court and no issue framed, precluding its consideration at the appellate stage per Brakewel Automotive Components v. P.R. Selvam Alagappan and Chitturi Subbanna v. Kudapa Subbanna. The agency restoration on 27.09.2004 and continued dealings through 2005-2006, with DW-1 admitting no payment after 02.05.2007, established subsisting cause of action. The amendment corrected mere misdescription; costs were paid and any objection waived by non-raising over subsequent hearings. Section 21 Limitation Act did not apply as no new defendant was added, per Pradeep Khanna v. Ashok Electric Company and Ashbee Systems v. Agauta Sugar. The defendant's statement of account (Ex.DW1/4) was an unsigned, unstamped computer printout without Bankers' Books Evidence Act or Section 65-B Evidence Act certification. The plaintiff's statement of account was produced pursuant to court direction for clarification. The three letters dated 24.12.2007 relied on for malpractice were procured post-suit and related to pre-withholding period, conduct condoned by restoration on enhanced security. The plaintiff was a liaisoning/collection agent entitled to 0.5% commission on realisation (Ex.PW1/4), under no independent obligation to supply goods. The defendant never disputed the business/supplies or payments received, amounting to implied admission.
The Court's Analysis
The Court examined Issues iii (entitlement to suit amount) and iv (malpractice) together. On the plaintiff's statement of account (Ex.PW1/D1), the Court noted it was an internal document not filed with the plaint or with plaintiff's evidence. An application for producing documents was allowed on 16.04.2009, but the document was confronted with DW-1 during cross-examination and exhibited as Ex.PW1/D1 on 02.12.2011. The Court analysed Order VII Rule 14(3) CPC: a document not produced with the plaint cannot be received in evidence without leave of court. Referring to Subash Chander v. Bhagwan Yadav, the Court held that a document produced for the first time during cross-examination can only be used to confront the witness; the producing party cannot thereafter prove it in its own evidence unless entitled to lead rebuttal evidence. Since the statement of account was the plaintiff's internal document and not relevant to DW-1, it could not be exhibited during the defendant's evidence.
"The aforesaid statement of account was an internal document of the plaintiff company and if the plaintiff company was seeking to place reliance on the same, the same should have been filed along with the plaint or at the very least along with the evidence of the plaintiff company. Even if the aforesaid statement of account was taken on record, the same had to be proved in accordance with law, and the plaintiff company failed to prove the same. It could not have been exhibited during the defendant company's evidence by confronting the witness of the defendant company with the same during cross examination, as the said document was not relevant for the said witness."
A second detailed statement of account filed on 21.11.2014 at final hearing had no supporting court order and was not even exhibited. The Trial Court's reliance on it was erroneous. The defendant's statement of account (Ex.DW1/4) showing Rs. 1,914 due was not accepted, but the plaintiff could not succeed merely on the defendant's failure to prove its case; the burden remained on the plaintiff.
On malpractice, PW-1's cross-examination admissions were decisive: he could not produce any document regarding payment by government departments, delivery proof of supply to government departments, or proof of payment to the plaintiff. The appointment letters (Ex.PW1/3 and Ex.PW1/5) confirmed the plaintiff was appointed only for government department supplies, with commission payable solely for such supplies. The Trial Court erred in holding that restoration of agency condoned prior acts, overlooking that commission was payable only for goods supplied to government bodies.
On misjoinder, the Court declined to interfere with the Trial Court's amendment order dated 04.01.2014 as the defendant had not challenged it. Mere correction of misdescription did not attract Section 21 Limitation Act. On limitation, the issue was neither raised in the written statement nor framed, and Nikhila Divyang Mehta was distinguished as an Order VII Rule 11 application had been moved there.
The Verdict
The appellant succeeded. The impugned judgment and decree dated 28.09.2015 passed by the Additional District and Sessions Judge (Central) 03, Tis Hazari Courts in Suit No. 144/2007 was set aside. The Registry of the Delhi High Court was directed to refund the decretal amount deposited by the appellant (defendant company) together with accrued interest to the appellant. The plaintiff's claim for Rs. 8,40,982 with 12% interest was dismissed.
What This Means For Similar Cases
Internal Account Statements Require Timely Filing
- A plaintiff's internal statement of account must be filed with the plaint or at the latest with its evidence affidavit; it cannot be introduced for the first time during cross-examination of the opponent's witness and then proved as the plaintiff's own document
- Order VII Rule 14(3) CPC mandates leave of court for documents not filed with the plaint; absence of such leave renders the document inadmissible
- The Subash Chander principle limits cross-examination documents to confrontation only; the producing party cannot later prove them unless entitled to rebuttal evidence
Commission Agents Must Prove Actual Performance
- An agent appointed exclusively for government supplies bears the burden of proving actual delivery to government departments to claim commission
- Mere restoration of agency on enhanced security does not constitute condonation of prior non-performance or waiver of the requirement to prove supply
- Admissions in cross-examination regarding absence of delivery proof, payment proof, or supply documentation are fatal to the agent's claim
Procedural Defences Must Be Raised At Trial
- Limitation and misjoinder objections must be raised in the written statement and issues framed; they cannot be raised for the first time at the appellate stage
- An amendment correcting misdescription of parties under Order VI Rule 17 CPC, once allowed by the trial court and not challenged, binds the parties
- Section 21 Limitation Act applies only to addition of new defendants, not correction of misdescription
