Suit For Money Recovery Cannot Be Maintained Solely On Invoices Without Proof Of Running Account: Supreme Court

"Suit as we found was filed on the strength of the invoices raised and not on the basis of a running account. The mere deduction shown with respect to the payment of the admitted bills, in the schedule to the plaint, will not make it a running account." Supreme Court, in a judgment dated August 12, 2026, held that a suit for money recovery based on specific invoices is barred by limitation if filed beyond the statutory period, clarifying that intermittent payments for admitted bills do not convert an invoice-based claim into a running account.

A bench of Justices J.B. Pardiwala and K. Vinod Chandran observed that the initiation of winding-up proceedings does not extend or impact the limitation period for a separate and independent civil suit for recovery of money.

The respondent-firm had instituted a suit for the recovery of Rs. 23,41,693 based on various bills and supplies made to the appellant. The Trial Court dismissed the suit primarily on the ground that the plaintiff failed to prove its status as a registered partnership firm under Section 69(2) of the Indian Partnership Act, 1932. Upon appeal, the First Appellate Court reversed the finding after admitting additional documents under Order XLI Rule 27 of the CPC, which established the registration of the firm, and proceeded to decree the suit in favor of the plaintiff.

The primary questions before the court were whether the plaintiff-firm's registration was duly proved in accordance with law, and whether the suit for recovery of money was barred by the law of limitation. The court was also called upon to determine the applicability of Section 14 of the Limitation Act, 1963, regarding time spent in prosecuting prior winding-up proceedings before the Company Court.

Court Upholds Partnership Registration Proof

The bench examined Exhibit-8, a memorandum issued by the Registrar of Firms along with a certified copy of Form-VIII produced under Order XLI Rule 27 CPC, and concluded that the respondent-firm was duly registered with Registration No. L73931 since May 14, 2010. The court affirmed the First Appellate Court's decision allowing the additional document to further the cause of justice, holding that the Trial Court erred in nonsuiting the plaintiff on the issue of partnership registration.

"Registration of Firm Stands Proved"

The Supreme Court observed that the documents placed on record by the respondent conclusively established the valid registration of the partnership firm, thereby satisfying the mandatory bar imposed under Section 69(2) of the Indian Partnership Act, 1932. The bench found no legal infirmity in the First Appellate Court's appreciation of the documentary evidence concerning the firm's registration status.

Distinction Between Winding-Up And Civil Recovery Suits

Addressing the core issue of limitation, the court relied on its previous rulings in Yeswant Deorao Deshmukh v. Walchand Ramchand Kothari and Jignesh Shah and Anr. v. Union of India and Anr., reiterating that a winding-up proceeding and a civil suit for recovery of money are separate and independent remedies. The bench noted that the time spent pursuing a company petition cannot automatically be excluded under Section 14 of the Limitation Act unless the reliefs sought are identical and prosecuted with due diligence.

"Remedies Are Distinct And Independent"

The court underscored that the initiation of a winding-up proceeding, which may or may not enable recovery, does not impact the limitation period prescribed for instituting an independent suit for the recovery of money. The bench observed that the company petition earlier filed by the respondent was not entertained on merits as a bona fide commercial dispute existed regarding the substantial part of the claim.

Invoices Do Not Constitute A Running Account

Analyzing the nature of the transaction, the bench pointed out that the suit was specifically founded on individual bills raised against specific supplies and not on the basis of a running account between the commercial entities. The court scrutinized Annexure P-18, a communication relied upon by the plaintiff, and held that it did not amount to an acknowledgment of debt under Section 18 of the Limitation Act, but merely reflected payment made towards specific admitted invoices.

"No Acknowledgment Of Debt Found"

The court categorically noted that the mere adjustment or deduction shown with respect to the payment of admitted bills in the schedule to the plaint does not transform an invoice-based claim into a running account. The bench emphasized that the notice of demand, the reply issued by the appellant, and the conditional payment made on admission of specific bills conclusively dismantled the respondent's plea regarding a continuous cause of action.

Suit Found Barred By Limitation

Calculating the limitation period from the dates of the relevant invoices, the court observed that the last unpaid bill was dated March 6, 2007, while the suit was instituted on June 5, 2010, well beyond the prescribed three-year limitation period under the Limitation Act, 1963. Even factoring in the date of filing the company petition, the claim remained time-barred with respect to the core transactions, rendering the suit liable to be dismissed on the ground of limitation alone.

In conclusion, the Supreme Court allowed the appeal filed by Mageba Bridge Products Private Limited, setting aside the judgment and decree passed by the First Appellate Court. While upholding the legal standing and registration of the respondent partnership firm, the bench firmly ruled that the monetary claim was barred by limitation, thereby dismissing the suit in its entirety.

Date of Decision: 12 August 2026