Delhi High Court Affirms Validity of Suits Against Sole Proprietorships Under Assumed Names, Stresses Substantive Justice Over Technicalities in Commercial Disputes

Court’s Decision

The Delhi High Court allowed the defendant, Brij Mohan Goel, to file a corrected written statement in a commercial suit concerning unpaid amounts under a contractual agreement for the supply of California almonds. Despite the plaintiff’s objection regarding procedural lapses and delays, the Court emphasized that substantive justice must prevail over procedural technicalities. The Court imposed Rs. 50,000 in costs on the defendant for the delay and directed compliance within two weeks.

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Facts of the Case

1. Parties and Contracts:
   • The plaintiff, Balcorp Limited, is a Canadian company engaged in exporting California almonds.
   • Contracts were executed in 2015 between Balcorp Limited and the defendant, M/s Ganga Ram Brij Mohan (a sole proprietorship claimed to be owned by Brij Mohan Goel), for the supply of specific almond quantities.
2. Breach of Contract:
   • The defendant failed to take delivery of the almonds and pay $6,56,325 as per the agreed terms.
   • The plaintiff sold the goods to a third party, incurring a loss of $2,74,275, including additional costs like demurrage and ground rent.
3. Litigation Timeline:
   • A suit was filed in 2018, claiming recovery of losses and additional costs.
   • The defendant filed a written statement in 2019 through Ankit Goel, asserting his proprietorship over M/s Ganga Ram Brij Mohan, challenging the suit’s maintainability and alleging procedural defects.

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Issues

1. Whether the suit was maintainable against a sole proprietorship without explicitly naming its proprietor.
2. Whether the written statement filed by Ankit Goel could be rectified by the actual proprietor, Brij Mohan Goel, despite procedural delays.

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Arguments Presented

1. Plaintiff (Balcorp Limited):
   • Claimed that the suit was valid under Order XXX Rule 10 of the CPC, as it was filed against the assumed proprietor, Brij Mohan Goel.
   • Objected to allowing Brij Mohan Goel to endorse the written statement filed by Ankit Goel, citing delays beyond the statutory period for filing written statements under the Commercial Courts Act.
2. Defendant (M/s Ganga Ram Brij Mohan):
   • Argued that Ankit Goel, not Brij Mohan Goel, was the actual proprietor.
   • Sought permission to rectify the procedural defect by endorsing the written statement and filing supporting affidavits.

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Court’s Observations

1. Maintainability:
   • Held that suits against sole proprietorships under assumed names are valid under Order XXX Rule 10 CPC, as the real party being sued is the proprietor.
2. Procedural Justice:
   • The Court emphasized that technicalities must not override substantive justice, particularly in commercial disputes.
   • Referred to Supreme Court precedents highlighting the curability of procedural defects to ensure no party is non-suited unjustly.
3. Costs for Delay:
   • Acknowledged the delay in correcting the procedural lapse but deemed it a curable defect.
   • Imposed Rs. 50,000 costs on the defendant for causing delays in adjudication.

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Conclusion

The High Court allowed the defendant to submit corrected written statements and supporting affidavits within two weeks. It imposed costs of Rs. 50,000 on the defendant, payable to the plaintiff, as a pre-condition for taking the corrected submissions on record.

Implications

This judgment reinforces the judiciary’s focus on substantive justice over procedural rigidity in commercial disputes. It underscores that procedural lapses, when curable, should not bar access to justice, provided delays are addressed through appropriate sanctions.

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