Commercial Dispute Need Not Wait for a Written Contract: Delhi High Court Upholds Rs.6 Lakh Decree in Rent Recovery Suit Against Storage Defaulter

“Entrustment of Goods, Continued Default, and Absence of Defence Establish a Commercial Transaction under Section 2(1)(c) of the CCA” — Delhi High Court  upholding a ₹6,00,000 decree passed by the Trial Court in favour of a packers and movers company for recovery of unpaid storage rent. The appeal, which challenged the maintainability of the suit as a “commercial dispute,” the admissibility of electronic records, and the reliance on previous judgments, was dismissed with costs, with the Court holding that both legal and factual foundations of the decree were sound.

The case has reinforced several important legal principles — especially the broad interpretation of “commercial dispute” under the Commercial Courts Act, 2015, and the validity of electronic and circumstantial evidence in the absence of a formal written contract.

“Provision of Transport and Storage Services is Commercial by Nature — Even Without a Signed Agreement”

The central objection raised by the Appellant was that, since there was no signed agreement or formal contract, the underlying transaction could not qualify as a “commercial dispute” under Section 2(1)(c) of the Commercial Courts Act, 2015. The High Court flatly rejected this argument, holding that:

“The Plaintiff is engaged in the business of movers and packers… the Defendant approached the Plaintiff for provision of service of transportation and storage of goods… The transaction is, therefore, commercial in nature.” [Para 24]

Further strengthening the legal basis, the Court noted that both clause (vii) and clause (xviii) of Section 2(1)(c) of the CCA squarely cover such transactions:

“Where the rent sought to be recovered is relatable to a commercial arrangement or business usage… the suit squarely falls within the definition of a ‘commercial dispute’.”

The Court dismissed the Appellant’s contention that only “mercantile documents” could trigger commercial jurisdiction, reiterating that actual entrustment and business conduct are sufficient to establish a commercial relationship.

“Document Called a ‘Quotation’ Was Accompanied by Actual Delivery — Entrustment Cannot Be Denied”

A crucial document dated 26.06.2017 was labelled as a “quotation” by the Defendant in an attempt to evade liability. The High Court, however, took a pragmatic view based on conduct and chronology. It held that the physical movement and storage of goods on the same date as the so-called quotation was clear evidence of a concluded transaction.

“The very act of delivery establishes entrustment… Even assuming, for the sake of argument, that the said document is a quotation… it serves as a proof of the number and type of items handed over.” [Para 31]

The Court concluded that the Defendant’s plea was an “afterthought, advanced merely to evade accountability.”

“Electronic Evidence Valid Under Section 65B IEA and Order XI CPC – Procedural Compliance Sufficient”

The Defendant had challenged the admissibility of digital records, alleging non-compliance with Order XI Rule 6 of CPC and Section 65B of the Indian Evidence Act, 1872 / Section 63 of the Bharatiya Sakshya Adhiniyam, 2023. The Court ruled that the Plaintiff had filed the required Statement of Truth and 65B Certificate, and thus fulfilled all procedural requirements:

“The Plaintiff stands compliant with procedural requirements governing the production and inspection of electronic evidence.” [Para 26]

Thus, the Court affirmed the sufficiency of procedural compliance for the admissibility of electronic documents in commercial litigation.

“Previous Judgments Are Relevant to Show Habitual Default – Not Barred by Section 43 IEA”

Another notable legal issue addressed was the relevance of previous unchallenged judgments against the same Defendant. The Appellant objected to their admissibility under Section 43 of the Indian Evidence Act / Section 37 of the Bharatiya Sakshya Adhiniyam, claiming such judgments were irrelevant.

The Court clarified that judgments may be relevant under Sections 8 and 13 of the Evidence Act, even if not conclusive proof:

“Such conduct is squarely relevant… prior judgments are not sought as conclusive proof… but to show continued conduct and repeated default.” [Paras 28–29]

Thus, the earlier judgments were admissible not to prove liability, but to demonstrate a consistent course of conduct, reinforcing the Plaintiff’s claim.

“No Defence Led, No Evidence Filed — Pleadings Remain Unrebutted”

A key factual consideration was that the Defendant, despite raising various legal and factual contentions in the pleadings, failed to lead any evidence in her defence during trial. The Court noted:

“The Defendant has not only failed to adduce any evidence in support of her defence, but she has even substantially admitted the Plaintiff’s claim.” [Para 20]

The Court also relied on the Local Commissioner’s Report, which was ordered at the Defendant’s own request to inspect the condition of stored goods. The inspection showed only minor wear and tear, and the Defendant’s refusal to open certain sealed items led the Court to draw an adverse inference:

“Such conduct may reasonably invite an adverse inference against the Defendant… there is no material proof of major loss or misappropriation by the Plaintiff.” [Para 30]

“Equity Forbids Enjoyment Without Payment – Defendant Benefitted While Evading Legal Obligation”

In its closing observations, the Bench strongly criticised the Defendant’s conduct:

“The Defendant has attempted to evade her contractual and legal obligations, while continuing to enjoy the benefit of the arrangement, thus, seeking to reap the benefits of the fruits without paying the consideration that the law and equity demand.” [Para 32]

The Court found the Trial Court’s decree of ₹6,00,000 (calculated at ₹25,000/month for the relevant period) with interest @10% per annum to be fair and legally sound, rejecting the appeal in its entirety.

 “No Perversity, No Error” — Appeal Dismissed With Costs

Affirming the decree passed by the Commercial Court, the Division Bench concluded:

“This Court finds no illegality, perversity or incorrect approach in the reasoning adopted or the conclusions arrived at by the Trial Court in the Impugned Judgement.” [Para 33]

Accordingly, the appeal was dismissed along with pending applications, sending a strong message that commercial obligations cannot be evaded on technicalities or afterthoughts when the conduct and facts clearly show business usage and benefit enjoyed by the defaulting party.

Date of Decision: 03/12/2025