M/S Ambience Hotels and Resorts Ltd v. M/S Continental Furnishers

ASHWANI KUMAR MISHRA, J. (Oral)

¶1This appeal has been filed invoking jurisdiction of this Court under Section 13 of the Commercial Courts Act, 2015 assailing the judgment and decree passed by the Court below awarding a sum of Rs.1.70 crores along with interest @6% per annum w.e.f. 17.05.2010, in favour of the plaintiff-respondent.

¶2Undisputed facts of the case are that a contract was awarded by the defendant-appellant in favour of respondent for supply, erection, execution and commissioning of interior works at Leela Kempenski Ambience Hotel at Ambience Island, NH-8 Gurgaon in the year 2007. On submission of quotations by the plaintiff-respondent and after negotiations between the parties, the plaintiff-respondent was awarded two work orders on 16.07.2007 and

05.09.2007. The work orders have been referred to in para 3 of the judgment of RFA-COM-32-2018 (O&M) 2

the Commercial Court, which are reproduced as under:- "a)o Theoworkoorderodatedo16.07.2007oinvolvedosupply,oerection.oexecution andocommissionin oo!ointerioroworkso!oro"in orooms,otwinoroomsoando#orridor th th$unctionsoonotheo% o ando& o 'loorsoato(eelao"empenskio)m*ienceo+otel, ,ur aono!oroao!inalone otiatedo!irmopriceoo!o-s.o6,61,20,000./oti-s.o1ixo#rores 1ixtyo2neo(acsoTwentyoThousandsoonly). *) oTheoworkoorderodatedo03.0&.2007owaso!orosupply,oerection,oexecution andocommissionin oo!ointerioroworkso!oroservicedoapartmentsoandocorridor $unctionsoonotheo!i!thoandoseventho!loorsoato(eelao"empenskio)m*ienceo+otel, ,ur aono!oroao!inalone otiatedo!irmopriceoo!o-s.o4,23,05,%46./oti-s.o'ouro#rores Twentyo'iveo(acs,oThreeoThousandso6i hto+undredo'ortyo1ixoonly).7

¶3The pleadings on record would indicate that the aforesaid work order was modified, and the plaintiff-respondent was called upon to do interior th th th thwork for the 5 and 7 floor instead of 8 and 9 floor of the building. According to the plaintiff-respondent, the work was to be completed within a period of 150 days from the date of respective work order, but the work was actually completed on 17.05.2010. At the stage of final settlement of accounts, it was found that a sum of Rs.2.70 crores was due and payable to the plaintiff-respondent, and out of such amount, a cheque of Rs.1 crore was given to the plaintiff-respondent. The defendant-appellant acknowledged the liability to pay Rs.2.70 crores, out of which Rs.1 crore had been tendered by way of a cheque on

17.05.2010. The balance amount of Rs.1.70 crores, however was not paid. It is thereafter that a demand notice was issued by the plaintiff-respondent against the appellant on 28.03.2012 under section 434 read with section 433(e) of the Companies Act, 1956. In response to such demand notice, a reply was sent by the defendant-appellant on 30.04.2012, wherein para 5 and 10 stated as under:-

83.o9noviewoo!otheore:uestoo!oyouroclient,oareoclientoa reedowithoyour clientotooreleaseoaosumoo!o-s.1,00,00,000./oandoretainin otheo*alanceoamountoo! -s.o1,70,00,000./otoo*eopaidoinodueocourseoasoperoclauseo27oo!otheoletteroo! RFA-COM-32-2018 (O&M) 3

thawardodatedo16 o;uly,o2007.oTheosetoamountoo!o-s.o1,70,00,000./wasopaya*le tooyouroclientoonlyoa!teroaoperiodoo!o24omonthsoi.e.o2no17tho<ay,o2012osu*$ect toocompletion,orecti!ication.replacementoo!oworko otodoneo*yoyouroclient.

10.oThatoaccordin otooclauseo27oo!otheoletteroo!oaward,otheo*alance thamountoo!o-s.o1,70,00,000./owasopaya*leoonlyoono17 o <ay,o2012,oa!ter ad$ustin o the o various o amounts o incurred o *y o our o client o towards repairs.replacementoinotheoworkodoneo*yoyouroclient.oTheonoticeoissuedo*yoyou thdatedo2% o<arch,o2012ounderotheoinstructionsoo!oyouroclientsoisowhollyo!alse, !rivolous,omala!ideoandomotivatedo*esideso*ein opremature.8

¶4Since the balance amount of Rs.1.70 crores was not paid, therefore, the plaintiff-respondent ultimately instituted original suit before the concerned Commercial Court on 14.05.2015. This suit has been decreed by the Court below and decree has been passed directing recovery to be made from the appellant to the tune of Rs.1.70 crores as principal along with interest @6% per annum. Aggrieved by such judgment and decree of the Commercial Court, the defendant-appellant has preferred the present appeal.

¶5We may observe that on the previous occasion, this appeal was adjourned as it was indicated that some amicable settlement is likely to be worked out. However, ultimately such settlement could not work out, and therefore this Court is proceeding with the hearing of the matter.

¶6The only ground on which the judgment and decree of the Commercial Court is assailed is that the suit itself was barred by limitation, and therefore, the decree cannot be sustained. This argument on behalf of the defendant-appellant proceeds on the ground that the liability to pay balance amount of Rs.1.70 crores was determined on 17.05.2010, and therefore by virtue of Article 137 of the Limitation Act, the suit could have been filed within a RFA-COM-32-2018 (O&M) 4

period of 3 years which expired in the year 2013. It is also submitted that the plaintiff-respondent while submitting notice under section 434 of the Companies Act had clearly renounced its earlier claim of Rs.1.70 crores and had in fact demanded a sum of Rs. 3,92,02,908/-, and therefore the subsequent attempt to revive the claim of Rs.2.70 crores was legally unsustainable.

¶7On the basis of respective case set up by the parties, the only point which requires determination in the present appeal is as to whether the suit for recovery instituted by the plaintiff-respondent was within limitation or not.

¶8The plea of the defendant-appellant that the suit was barred by limitation has been objected to by the plaintiff-respondent relying upon the reply to the legal notice submitted by the defendant-appellant on 30.04.2012. In this reply, para 5 and 10 have already been extracted above, which would indicate that as per the defendant-appellant, the balance sum of Rs.1.70 crores was payable to the plaintiff-respondent only after a period of 24 months i.e.

17.05.2012, subject to completion, rectification/replacements of work got done by plaintiff-respondent. It is not in dispute that the suit has been instituted within a period of 3 years from the date mentioned in the reply of the defendant-appellant i.e. 17.05.2012.

¶9The Commercial Court has rejected the objection of the defendant-appellant to the suit on the ground of limitation, relying upon the notice dated

30.04.2012, which has been construed as acknowledgement of the liability of defendant-appellant on 30.04.2012. As per the case of the defendant-appellant itself, the amount was payable on 17.05.2012. The issuance of legal notice by the counsel for the defendant-appellant on 30.04.2012, or its contents including para 5, are not disputed. RFA-COM-32-2018o(O&M)oooooooooooooooooooooooo5ooooooooooooooooooooooooooooo ooooooooooooooooooooooooooo oooooooooooooooooooo

¶10Onceothatobeotheoposition,oweofindothatofilingoofotheosuitoon

14.05.2015owasowithinotheoperiodoofolimitation,oasoaccordingotootheodefendant-appellantoitself,otheoamountoofoRs.1.70ocroresoawardedobyotheoCommercialoCourt becameopayableoono17.05.2012.o

¶11Sectiono18oofotheoLimitationoAct,o1963oreadsoasounder:- "18.o������������������������������������—(1)oWhere,obeforeotheoexpiration ofotheoprescribedoperiodoforoaosuitooroapplicationoinorespectoofoanyopropertyoor right,oanoacknowledgmentoofoliabilityoinorespectoofosuchopropertyoororightohas beenomadeoinowritingosignedobyotheopartyoagainstowhomosuchopropertyoororight isoclaimed,oorobyoanyopersonothroughowhomoheoderivesohisotitleooroliability,oa fresh o period o of o limitation o shall o be o computed o from o the o time o when o the acknowledgmentowasosoosigned.

(2) o Whereo the o writingo containing o theo acknowledgmento is o undated, o oral evidenceomayobeogivenoofotheotimeowhenoitowasosigned;obutosubjectotoothe provisionsoofotheoIndianoEvidenceoAct,o1872o(1oofo1872),ooraloevidenceoofoits contentsoshallonotobeoreceived. Explanation.—Forotheopurposesoofothisosection,—

(a)oanoacknowledgmentomayobeosufficientothoughoitoomitsotoospecifyothe exactonatureoofotheopropertyoororight,ooroaversothatotheotimeoforopayment, delivery,operformanceooroenjoymentohasonotoyetocomeooroisoaccompaniedobyoa refusalotoopay,odeliver,operformooropermitotooenjoy,ooroisocoupledowithoaoclaimoto setooff,ooroisoaddressedotooaopersonootherothanoaopersonoentitledotootheoproperty ororight,

(b)otheowordo"signed"omeansosignedoeitheropersonallyoorobyoanoagent dulyoauthorisedoinothisobehalf,oand

(c)oanoapplicationoforotheoexecutionoofoaodecreeooroorderoshallonotobe deemedotoobeoanoapplicationoinorespectoofoanyopropertyoororight."

¶12TheoSupremeoCourtoinotheocaseoofoJ.C.oBudhrajaovs.oChairman, Orissa o Mining o Corporation o Ltd. oAnd o another, o (2008) o 2 o SCC o 444, o has interpretedoSectiono18oofotheoLimitationoAct,otooholdoasounder:- "20.oSectiono18oofotheoLimitationoAct,o1963odealsowithoeffectoof acknowledgementoinowriting.oSub-sectiono(1)othereofoprovidesothatowhere, beforeotheoexpirationoofotheoprescribedoperiodoforoaosuitooroapplicationoin respectoofoanyoright,oanoacknowledgementoofoliabilityoinorespectoofosuchoright RFA-COM-32-2018o(O&M)oooooooooooooooooooooooo6ooooooooooooooooooooooooooooo ooooooooooooooooooooooooooo oooooooooooooooooooo hasobeenomadeoinowritingosignedobyotheopartyoagainstowhomosuchorightois claimed,oaofreshoperiodoofolimitationoshallobeocomputedofromotheotimeowhenothe acknowledgementowasosoosigned.oTheoexplanationotootheosectionoprovidesothat anoacknowledgementomayobeosufficientothoughoitoomitsotoospecifyotheoexact natureoofotheorightooroaversothatotheotimeoforopaymentohasonotoyetocomeoorois accompaniedobyoaorefusalotoopay,ooroisocoupledowithoaoclaimotoosetooff,oorois addressedotooaopersonootherothanoaopersonoentitledotootheoright.oInterpreting sectiono19oofotheoLimitationoAct,o1908o(correspondingotoosectiono18oofothe LimitationoAct,o1963)othisoCourtoinoShapooroFreedoomoMazdaov.oDurgaoProsad Chamariaoheld: "6….oacknowledgementoasoprescribedobyosectiono19omerelyorenews debt; o it o does o not o create o a o new o right o of o action. o It o is o a o mere acknowledgementoofotheoliabilityoinorespectoofotheorightoinoquestion;oit needonotobeoaccompaniedobyoaopromiseotoopayoeitheroexpresslyooroeven byoimplication.oTheostatementoonowhichoaopleaoofoacknowledgementois basedomustorelateotooaopresentosubsistingoliabilityothoughotheoexact natureoorotheospecificocharacteroofotheosaidoliabilityomayonotobe indicatedoinowords.oWordsousedoinotheoacknowledgementomust,ohowever, indicateotheoexistenceoofojuralorelationshipobetweenotheopartiesosuchoas thatoofodebtoroandocreditor,oandoitomustoappearothatotheostatementois madeowithotheointentionotooadmitosuchojuralorelationship.oSuchointention canobeoinferredobyoimplicationofromotheonatureoofotheoadmission,oand needonotobeoexpressedoinowords.oIfotheostatementoisofairlyoclear,othenothe intentionotooadmitojuralorelationshipomayobeoimpliedofromoit.oThe admissionoinoquestiononeedonotobeoexpressobutomustobeomadeoin circumstancesoandoinowordsofromowhichotheocourtocanoreasonablyoinfer thatotheopersonomakingotheoadmissionointendedotooreferotooaosubsisting liabilityoasoatotheodateoofotheostatement.oStatedogenerally,ocourtsoleanoin favouroofoaoliberaloconstructionoofosuchostatementsothoughoitodoesonot meanothatowhereonooadmissionoisomadeooneoshouldobeoinferred,oor whereoaostatementowasomadeoclearlyowithoutointendingotooadmitothe existenceoofojuralorelationshiposuchointentionocouldobeofastenedoonothe makeroofotheostatementobyoanoinvolvedoorofar-fetchedoprocessoof reasoning.o...Inoconstruingowordsousedoinotheostatementsomadeoin writingoonowhichoaopleaoofoacknowledgementorestsooraloevidenceohas beenoexpresslyoexcludedobutosurroundingocircumstancesocanoalwaysobe considered.o

7.o...Theoeffectoofotheowordsousedoinoaoparticularodocumentomust inevitablyodependouponotheocontextoinowhichotheowordsoareousedoand RFA-COM-32-2018o(O&M)oooooooooooooooooooooooo7ooooooooooooooooooooooooooooo ooooooooooooooooooooooooooo oooooooooooooooooooo wouldoalwaysobeoconditionedobyotheotenoroofotheosaidodocument...."

21.oItoisonowowellosettledothatoaowritingotoobeoanoacknowledgementoofoliability mustoinvolveoanoadmissionoofoaosubsistingojuralorelationshipobetweenothe partiesoandoaoconsciousoaffirmationoofoanointentionoofocontinuingosuch relationshipoinoregardotooanoexistingoliability.oTheoadmissiononeedonotobeoin regardotooanyopreciseoamountonorobyoexpressedowords.oIfoaodefendantowritesoto theoplaintifforequestingohimotoosendohisoclaimoforoverificationoandopayment,oit amountsotooanoacknowledgement.oButoifotheodefendantomerelyosays,owithout admittingoliability,oitowouldolikeotooexamineotheoclaimoorotheoaccounts,oitomay notoamountotooacknowledgement.oInootherowords,oaowriting,otoobeotreatedoasoan acknowledgementoofoliabilityoshouldoconsciouslyoadmitohisoliabilityotoopayoor admitohisointentionotoopayotheodebt.oLetousoillustrate.oIfoaocreditorosendsoa demandonoticeodemandingopaymentoofoRs.1olakhodueounderoaopromissoryonote executedobyotheodebtoroandotheodebtorosendsoaoreplyostatingothatoheowouldopay the o amount o due, o without o mentioning o the o amount, o it o will o still o be o an acknowledgementoofoliability.oIfoaowritingoisoreliedoonoasoanoacknowledgement foroextendingotheoperiodoofolimitationoinorespectoofotheoamountoororightoclaimed inotheosuit,otheoacknowledgementoshouldonecessarilyobeoinorespectoofotheosubject matteroofotheosuit.oIfoaopersonoexecutesoaoworkoandoissuesoaodemandoletter makingoaoclaimoforotheoamountodueoasoperotheofinalobilloandotheodefendant agreesotooverifyotheobilloandopayotheoamount,otheoacknowledgementowillosave limitationoforoaosuitofororecoveryoofoonlyosuchobilloamount,obutowillonotoextend theolimitationoinoregardotooanyofreshooroadditionaloclaimoforodamagesomadeoin theosuit,owhichowasonotoaopartoofotheobilloorotheodemandoletter.oAgainoweomay illustrate.oIfoaohouseoisoconstructedounderotheoitemorateocontractoandotheoamount dueoinoregardotooworkoexecutedoisoRs.otwoolakhsoandocertainopartopaymentsosay aggregatingotooRs.1,25,0000/-ohaveobeenomadeoandotheocontractorodemands paymentoofotheobalanceoofoRs.75,000/-odueotowardsotheobilloandotheoemployer acknowledgesoliability,othatoacknowledgementowillobeoonlyoinoregardotootheosum ofoRs.75,000/-owhichoisodue.oIfotheocontractorofilesoaosuitofororecoveryoofotheosaid Rs.75,000/-odueoinoregardotooworkodoneoandoalsoofororecoveryoofoRs.50,000/-oas damagesoforobreachobyotheoemployeroandotheosaidosuitoisofiledobeyondothree yearsofromocompletionoofoworkoandosubmissionoofotheobillobutowithinothreeoyears fromotheodateoofoacknowledgement,otheosuitowillobeosavedofromobaroofolimitation onlyoinoregardotootheoliabilityothatowasoacknowledgedonamelyoRs.75,000/-oand notoinoregardotootheofreshooroadditionaloclaimoofoRs.50,000/-owhichowasonotothe subjectomatteroofoacknowledgement.oWhatocanobeoacknowledgedoisoaopresent subsistingoliability.oAnoacknowledgmentomadeowithoreferenceotooaoliability, cannotoextendolimitationoforoaotimeobarredoliabilityooroaoclaimothatowasonot RFA-COM-32-2018 (O&M) 8

madeoatotheotimeoo!oacknowled mentoorosomeootherolia*ilityorelatin otooother transactions.o)nyoadmissionoo!o$uralorelationshipoinore ardotootheoascertained sumodueooroaopendin oclaim,ocannoto*eoanoacknowled emento!oroaonew additionaloclaimo!orodama es.7

¶13Keeping in view the facts of the case, when analyzed in light of the statutory provisions contained under Section 18 of the Limitation Act as have been interpreted by the Supreme Court as above, we have no hesitation in coming to the conclusion that the suit filed by the plaintiff-respondent was clearly within the period of limitation. Appeal stands dismissed accordingly.

¶14Pending applications, if any, shall stand disposed of accordingly. (ASHWANI KUMAR MISHRA) JUDGE (ROHIT KAPOOR) MAY 05, 2026 JUDGE

RFA-COM-32-2018 (O&M) 1 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH RFA-COM-32-2018 (O&M) Date of decision: 05.05.2026 M/S AMBIENCE HOTELS AND RESORTS LTD. ....Appellant Versus M/S CONTINENTAL FURNISHERS ...Respondent CORAM: HON'BLE MR. JUSTICE ASHWANI KUMAR MISHRA HON'BLE MR. JUSTICE ROHIT KAPOOR ***** Present: Mr. Sanjay Kaushal, Senior Advocate with Mr. R. Kartikeya, Advocate for the appellant. Mr. Chetan Mittal, Senior Advocate with Mr. Udit Garg, Advocate for the respondent. *****