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Siti Network Ltd. v. I Right Television Network .
Factual and Procedural Background
The petitioner, originally named Siti Cable Network Ltd. and later renamed Shiva Kirti Singh, is a Multi-System Operator (MSO) who entered into a Channel Placement Agreement dated 29.07.2015 with the respondent, a broadcaster operating the channel "A-One." Under the agreement, the respondent was obligated to pay a yearly carriage fee of Rs. 7,80,000 plus taxes, invoiced monthly at Rs. 65,000 plus taxes. The petitioner issued six invoices covering May 2015 to October 2015, but the respondent failed to pay the full amounts, leading to an outstanding claim of Rs. 2,81,100/- as of the petition date. The petition was filed on 02.08.2018 seeking recovery of this amount along with interest and costs. The respondent did not appear or contest the petition despite notice by publication, resulting in an ex-parte hearing.
Legal Issues Presented
- Whether the petitioner’s claim for outstanding dues amounting to Rs. 2,81,100/- is within the period of limitation and thus recoverable.
- Whether the interest claimed at 18% per annum is justified under the agreement and applicable law.
- The applicability of Sections 18 and 19 of the Limitation Act, 1963, in computing the fresh period of limitation based on acknowledgments or part payments made by the respondent.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Rajpati Prasad v. Kaushalya Kuer, AIR 1981 Pat 187 | Recognition that a dishonoured cheque may still constitute an acknowledgment of debt under Section 18 of the Limitation Act. | The court accepted this principle to support the petitioner's claim that the dishonoured cheques constituted acknowledgment restarting the limitation period. |
| Hindustan Apparel Industries v. Fair Deal Corporation, AIR 2000 Guj 261 (Full Bench) | Approval of the Patna High Court’s view on dishonoured cheques as acknowledgment under Section 18. | The court relied on this Full Bench judgment to reinforce the applicability of Section 18 in the present case. |
| Rajesh Kumari v. Prem Chand Jain, 1997 (47) DRJ | Under Section 19 of the Limitation Act, part payment of debt restarts the limitation period from the date of such payment. | The court found this judgment particularly relevant in accepting that part payments through cheques within the limitation period reset the limitation clock. |
Court's Reasoning and Analysis
The court analyzed the limitation issue by examining the dates of invoices and payments. It noted that three of the invoices were due as far back as July 2015, potentially barred by limitation, but the remaining three were within the limitation period. To address the limitation concern, the court applied Sections 18 and 19 of the Limitation Act, 1963, which provide for restarting the limitation period upon written acknowledgment of debt or part payment respectively.
The petitioner relied on dishonoured cheques as acknowledgments under Section 18, supported by relevant case law. However, the court found it safer and more reliable to apply Section 19, given the existence of a running account and actual part payments made in August and September 2015. These part payments, credited within the limitation period, triggered a fresh limitation period for the entire outstanding amount.
Consequently, the court held that the entire claim of Rs. 2,81,100/- was within the limitation period and recoverable. The court further observed no other legal impediments, especially since the respondent did not contest the petition.
Regarding interest, although the agreement stipulated 18% per annum, the court reduced the rate to 9% for both pre- and post-litigation periods, following its own precedents. The pre-litigation interest period was fixed from November 2015 to July 2018, and post-litigation interest from filing of the petition until realization of the amount.
Holding and Implications
The petition is allowed. The court directed the respondent to pay Rs. 2,81,100/- along with interest at 9% per annum from November 2015 to July 2018 and thereafter till realization. The respondent is given two months to comply, failing which the petitioner may execute the decree through appropriate proceedings.
The decision directly benefits the petitioner by confirming the recoverability of the claimed amount within limitation and awarding interest at a moderated rate. No new precedent was established, as the ruling followed existing legal principles and prior judgments. The respondent's failure to contest led to an ex-parte decree without costs awarded.
Shiva Kirti Singh, Chairperson:— This petition has been heard ex-parte against the respondent because even after service of notice through paper publication it chose not to appear and has not filed any reply to contest the claim of the petitioner.
2. The prayer of the petitioner is as follows:—
“(i) Pass a decree in favour of the Petitioner thereby directing the Respondent, pay a sum of Rs. 2,81,100/- (Rupees Two Lakhs Eighty One Thousand and One Hundred Only) to the Petitioner towards the outstanding dues as on date;
(ii) Pass a decree in favour of the Petitioner awarding interest @ 18% from 09.10.2015 till realization of the outstanding amount;
(iii) Pass a decree in favour of the Petitioner awarding pendentelite and future interest @ 18% till the realization of the outstanding amounts;
(iv) Award litigation costs in favour of the Petitioner;
(v) Pass such other further orders as this Hon'ble Tribunal may deem fit in the facts and circumstances of the case.”
3. Petitioner is an MSO. At the relevant time petitioner's name was Siti Cable Network Ltd. which appears in the Channel Placement Agreement dated 29.07.2015 (Annexure P4) made with the respondent who is a broadcaster. Subsequently, the name of the petitioner company was changed to the present nomenclature as per certificate issued by Registrar of Companies, Mumbai, dated 05.08.2016.
4. By referring to the Channel Placement Agreement, learned counsel for the petitioner has shown that the name of the respondent's channel was A-Oneand the term of the agreement was from 01.05.2015 to 30.04.2016. The agreement could be terminated earlier in accordance with the provisions contained therein, mainly if there was default in payment of the carriage fee as per stipulation in Clause 9 of the agreement which is as follows:—
“(i) In consideration of providing access of its network by SITI CABLE within the Territory for carriage of Channel(s) of the Local channel operator during the Term, the Local channel operator shall pay negotiated Carriage Fee of Rs. 7,80,000/- (Rupees Seven Lakh Eighty Thousand Only) per annum plus taxes.
(ii) In addition, the Local channel operator shall be liable for the payment of all applicable taxes, cesses, etc. including service tax, as may be applicable on the Carriage Fee payable by the Local channel operator to SITI CABLE.
(iii) SITI CABLE shall raise invoice on Monthly Basis to the Broadcaster for payment of carriage fee and the same has be paid within a period of seven days from the date of receipt of the invoice.
(iv) The payment of Carriage Fee shall be subject to deduction of Income Tax at source (TDS) at applicable rates, for which necessary TDS Certificates shall be issued by the Broadcasters within thirty (30) days from the date of deduction of the same by the Local channel operator from the Carriage Fee.
(v) If the Local channel operator fails to pay the Carriage Fee to SITI CABLE on or before the due date(s), then without prejudice to any action which may be taken by SITI CABLE under the applicable Statute/Regulations etc. for the time being in force, the Local channel operator shall be liable for the payment of interest @ 18% per annum during the period of such delay beyond the due date(s).”
5. The pleadings of the petitioner disclose that it was issuing invoices for each month @ Rs. 65,000 plusTaxes which amounted to Rs. 74,100/- per month. The actual invoices whose numbers are mentioned in the statement of account (Annexure P6) are altogether 6 in number. These are contained in Annexure P5 (Colly). Against the invoices for six months covering the period from May, 2015 to October, 2015, in the running statement of account, the various amounts received from the respondent are indicated against the respective dates when the payments were received. Afteradjusting the payments made by the respondentand reversing entries of paymentsagainst cheques whichsubsequently got dishonoured, the petitioner has claimed through this petition a total outstanding amount of Rs. 2,81,100/-.
6. The petition was filed as late as on 02.08.2018 whereas the first three invoices had become due for payment in July, 2015 itself. The subsequent three invoices, as per terms of payment agreed between the parties became due for payment after at least a week from 01.08.2015, the date of issue of the 4 invoice. Hence, the claim for recovery of the amount covered by three later invoices is apparently within the period of limitation. That amount would come to Rs. 2,22,300/. So far as the remaining claimed amount of Rs. 58,800/- is concerned, that was clearly outstanding for payment before the issuance of the 4 invoice on 1.8.2015 and hence prima facie this amount appears to be barred by limitation.
7. In order to overcome the aforesaid hurdle, learned counsel for the petitioner has placed reliance upon provisions in Sections 18 and 19 of the Limitation Act, 1963. As per Section 18 a fresh period of limitation is to be computed from the time when the competent person acknowledges his liability in writing and singed by such person. She has relied upon two judgements, one of Hon'ble Patna High Court in AIR 1981 Pat 187 (Rajpati Prasad v. Kaushalya Kuer) rendered by a learned single Judge of the said court and the other, a full Bench judgment of Hon'ble High Court of Gujarat at Ahmedabad reported in AIR 2000 Guj 261 (Hindustan Apparel Industries v. Fair Deal Corporation, New Delhi .). The judgement of Patna High Court differed from a judgement of Bombay High Court so as to hold that merely because a cheque is subsequently dishonoured, it cannot be said that there is no admission of the liability of the debt for which the cheque purports to have been issued. The aforesaid view of Patna High Court has been approved and accepted by the full Bench of Gujarat High Court in the case of Hindustan Apparel Industries (Supra).
8. On the basis of aforesaid proposition of law, learned counsel for the petitioner has submitted that prior to 01.08.2015 the statement of account shows that two cheques, each for Rs. 30,000/-, had been dishonoured leading to reversal of the entries and after 01.08.2015 three more cheques were dishonouredwhose total valueis Rs. 1,10,000/-. On that basis it has been claimed that fresh period of limitation would begin on account of acknowledgement of debt for which those cheques had been issued. The amount of dishonoured cheques is more than Rs. 58,400/- for which the issue of limitation has arisen.
9. Alternatively, learned counsel for the petitioner has referred to Section 19 of the Limitation Act, 1963 which prescribes that the fresh period of limitation shall be computed from the time when a debt is paid even in part, provided the prescribed period of limitation has not expired when such part payment is made. In support of this proposition, that if payment is made through a cheque in part payment of the debt, a fresh, period of limitation should be computed from the date such cheque is given, reliance has been placed upon a judgement of Hon'ble High Court of Delhi reported in 1997 (47) DRJ (Rajesh Kumari v. Prem Chand Jain). The aforesaid judgement of Delhi High Court clearly helps the case of the petitioner because in this case part payments have been credited to the benefit of the respondent in August and September, 2015, when the outstanding was more than One Lakh even after adjusting the two payments made through cheques. Hence, the entire outstanding at least till the date of such part payment, would be well within the period of limitation which has to be computed afresh from the date of such payments which were made within the period of limitation.
10. In a case like the present one where there is a running account between the parties maintainedduring the usual course of business, it appears safer and more reliable to accept the plea of fresh limitation on the basis of Section 19 of the Limitation Act instead of Section 18 because under Section 18 a cheque may, in a given situation be accepted as acknowledgment even if it is dishonoured but then evidence may be led to show that the outstanding debt had been subsequently paid by the concerned party. Since there was a running account and part payments were made in August and September, 2015, a fresh period of limitation commenced in the light of the provisions under Section 19 of the Limitation Act, 1963 and the judgement of Hon'ble High Court of Delhi in case of Rajesh Kumari (Supra).
11. In view of aforesaid discussion, the entire claim of the petitioner for Rs. 2,81,100/- is found to be within the period of limitation and, therefore, recoverable because it is supported by relevant invoices and the statement of account available on record. Accordingly, the claim of the principle amount of Rs. 2,81,100/- is allowed.
12. It must be clarified here that there is no other legal impediment available on the records in maintaining this petition and in grant of reliefs, particularly when no objection of any kind has been raised by the other side who has preferred to leave the matter uncontested.
13. So far as prayer for interest for the pre and post litigation period is concerned, the same appears to be justified but not at the rate of 18% although it finds mention in the agreement. Following several judgements of this Tribunal in similar matters, interest is allowed but only @ 9% for both the periods. The pre litigation period will be counted from the month of November, 2015 because the last invoice issued in the beginning of October, 2015 can safely be deemed to have been served by end of October, 2015. Hence, that period will be from November, 2015 to July, 2018 because the petition was filed on 02.08.2018. For the latter period, interest shall be calculated from the date of filing of the petition till the decretal amount is realised. Since the respondent has chosen not to contest the petition, there shall be no order as to costs.
14. The petition is allowed in aforesaid terms. The respondent is permitted to pay the decretal dues including interest within two months from today failing which the petitioner will be entitled to execute the judgement and decree through appropriate proceedings. The Registry shall prepare a decree on the basis of this judgement at an early date, preferably within four weeks.
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