R. Santosh v. ONE97 Communications Ltd.

1. This Regular First Appeal, instituted under Section 13 of the Commercial Courts Act, 2015 (in short, ‘the CC Act’), impugns the Judgment dated 25.11.2024 passed by the learned District Judge (Commercial Court-06), South-East District, Saket Courts, New Delhi (hereinafter referred to as the ‘District Judge’) in CS (COMM) 422/2023, titled ONE97 Communications Ltd. v. R. Santosh, whereby the suit filed by the Respondent was decreed, and the Appellant was directed to pay to the Respondent a sum of ₹5,00,000/-, together with the pendente lite and future interest at the rate of 8% per annum. The appellant was further directed to pay the cost of the Suit to the respondent, and in case the cost was not paid within thirty days, it was to carry interest at the rate of 6% per annum.

2. The facts relevant for adjudication of the present appeal, as emerging from the record, are thus: 2.1The Respondent (plaintiff before the learned District Judge), is a company engaged in the business of providing telecom-based value-added services, including services relating to bill payments, recharges, and ticketing. The Appellant, (defendant before the learned District Judge), being the owner of a movie theatre, namely Sharada Talkies, approached the Respondent for the purpose of marketing, promotion, listing, and booking of movie tickets of his cinema through the Respondent's platform. 2.2Pursuant to the discussions, the parties entered into a Ticketing Agreement dated 07.12.2016 (hereinafter referred to as the ‘Ticketing Agreement’), whereby the Appellant undertook to upload the ticket inventory of Appellant’s theatre and such other information for listing the same on the Respondent’s platform. In terms of the said agreement, the Respondent, in view of the services rendered to the Appellant, was entitled to charge convenience fee from the customers on every ticket booked through its platform, over and above the selling price of the tickets booked. 2.3Subsequently, on 04.01.2017, the parties executed an Addendum Agreement (hereinafter referred to as the ‘Addendum Agreement’), which was to operate with effect from the said date till its maturity. In terms of the Addendum Agreement, the Respondent advanced to the Appellant a sum of ₹5,00,000/-, to be treated as an interest-free refundable security deposit, deemed to have been made at the time of execution of the Ticketing Agreement. 2.4The Appellant’s movie theatre remained operational till April

2022. Thereafter, it ceased operations, which led the Respondent to terminate both the Ticketing Agreement and the Addendum Agreement, vide the notice dated 13.12.2022. Along with the termination, the Respondent addressed a communication to the Appellant on the same date, calling upon the Appellant to refund the amount of ₹5,00,000/-, advanced as security deposit in terms of the Addendum Agreement. 2.5As the Appellant failed to refund the said security amount, the Respondent instituted the aforementioned Suit before the learned District Judge, seeking recovery of the said sum. 2.6The Summons in the said Suit were issued by the learned District Judge on 09.05.2023. As the Appellant failed to file the Written Statement to the plaint within the stipulated time, the right of the Appellant to file the Written Statement in Suit was closed by the learned District Judge on 13.10.2023, and the matter was posted for Plaintiff’s Evidence. 2.7On 09.11.2023, the Respondent herein tendered the evidence of PW-1- Sh. Jitendra Kumar by way of affidavit, and the matter was posted for cross-examination of PW-1 on 12.12.2023. 2.8The right of the Appellant to cross-examine the Respondent’s witness was closed by the Learned District Judge on 12.12.2023, as the Appellant failed to avail the opportunity and the matter was proceeded for final arguments. 2.9On 29.02.2024, the Appellant filed an application under Order VII Rule 11 of the Code of Civil Procedure, 1908 (in short, ‘CPC’), seeking rejection of the plaint on grounds of nonjoinder of necessary parties, absence of cause of action, and existence of an arbitration clause in the agreement.

2.10 The said application was dismissed by the learned District Judge, by an Order dated 08.10.2024.

2.11 The Suit was thereafter listed for final arguments on 12.11.2024.

2.12 Upon hearing the parties, the learned District Judge passed the Impugned Judgment, decreeing the suit in favour of the Respondent and against the Appellant, in the terms mentioned herein above.

2.13 Aggrieved thereby, the Appellant has preferred the present appeal.

SUBMISSIONS OF THE LEARNED COUNSEL FOR THE APPELLANT

3. Ms. R. Gayathri Manasa, the learned counsel for Appellant submits that the learned District Judge has erroneously passed the Impugned Judgment in so far as it has prematurely decided that the Appellant is liable to pay the Respondent a sum of Rs.5,00,000/- along with pendente lite and future interest at 8% per annum, without appreciating that there is no document on record to substantiate such payment being made by the Respondent to the Appellant.

4. She submits that Respondent was afforded two opportunities by the learned District Judge, on 12.12.2023 and again on 22.01.2024, to place on record the documentary proof of the alleged payment of Rs.5,00,000/-, however, the Respondent failed to do so on both occasions. Yet, without considering the said serious lapse on part of the Respondent, the Suit was decreed by the learned District Judge. In support of this submissions, reliance was placed on the Decision of the Supreme Court in Anil Rishi v. Gurbaksh Singh, (2006) 5 SCC 558.

5. The learned counsel submits that the learned District Judge has arbitrarily observed that a payment has been made to one ‘Santosh Talkies’, whereas there is no such entity in existence, and in fact, the Ticketing Agreement itself mentions the name on the bank account of the Appellant as ‘Mysore Talkies’

6. She submits that since the entire Suit revolved around the recovery of Rs.5,00,000/, it should have been proved that such payment was received by the Appellant. The Respondent has merely relied upon a statement of account marked as Ex.PW-1/4, filed along with the Suit, which in no way substantiates the claim that the amount was paid to the Appellant.

7. The learned counsel submits that the Schedule ‘C’ to the Ticketing Agreement, as filed by the Respondent before the learned District Judge with the plaint, provides the Bank Account details of one ‘Mysore Talkies’, which has not been made a party to the Suit. She submits that, therefore, the Suit is also bad on account of nonjoinder of necessary parties as ‘Mysore Talkies’ and Mr. Manjunath Gowda have not been made parties.

8. Further, she submits that the learned District Judge has erred in disposing of the application under Order VII Rule 11 of the CPC without appreciating that there was an arbitration agreement between the parties in the Ticketing Agreement, therefore, the parties should have been referred to arbitration in accordance with Section 8 of the Arbitration and Conciliation Act, 1996 (in short, ‘A&C Act’). To support her contention, she placed reliance on the decision in R.K Roja v. U.S Rayudu & Anr., (2016) 14 SCC 275. The learned counsel, while relying upon the decision in Madhu Sudan Sharma & Ors. v. Omaxe Ltd., 2023 SCC OnLine Del 7136, submits, that nonfiling of the written statement cannot be a ground to not to refer the parties to arbitration.

ANALYSIS & FINDINGS