Commercial Court’s Assessment of Disputed Transactions and Defective Goods Claims Upheld; 18% Interest Justified Under MSMED Act – Delhi High Court

In a detailed judgment passed by the High Court of Delhi, the bench comprising Hon’ble Mr. Justice Vibhu Bakhru and Hon’ble Ms. Justice Tara Vitasta Ganju dismissed an appeal filed by Casa 2 Stays Pvt. Ltd., thereby upholding the Commercial Court’s decree which had ordered the appellant to pay ₹8,49,385 with an 18% per annum interest for goods supplied by Comfia Ecom Private Ltd.The legal crux of the judgment revolves around the interpretation and application of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), particularly concerning the entitlement to pre-suit interest and the verification of claims regarding the supply of defective goods.

The appeal stemmed from a commercial dispute wherein Comfia Ecom alleged non-payment for 2500 T-shirts supplied under an invoice dated June 30, 2018. Casa 2 Stays contested the transactions and claimed the goods were defective. Furthermore, the appellant challenged the computation of 18% pre-suit interest, asserting that Comfia Ecom had not established its status under the MSMED Act nor provided adequate notice regarding the interest penalty.

The court found substantial evidence in the form of ledger entries and email exchanges which confirmed ongoing transactions and outstanding payments specific to the invoice in question.

The court noted that only 22 out of the 2500 T-shirts were disputed regarding quality. There was no evidence of a full return or sufficient denial of receipt, thereby undermining the appellant’s claim of defective goods.

The Commercial Court’s finding on the entitlement to 18% per annum pre-suit interest was upheld. It was determined that the appellant had received adequate notice and that the respondent’s status under the MSMED Act was sufficiently established to warrant such interest.

The High Court dismissed the appeal, affirming the Commercial Court’s decision which required Casa 2 Stays Pvt. Ltd. To fulfill its financial obligations including the principal amount and accrued interest as per the MSMED Act’s provisions.

Date of Decision: May 13, 2024

Casa 2 Stays Pvt. Ltd. Vs Comfia Ecom Private Ltd.,