Delhi High Court on TDS Deposit, Section 19 Limitation, and Unpleaded Defences in Summary Suits

Overview of the Appeal

The Division Bench of the Delhi High Court, comprising Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora, dealt with an appeal in Samyak Projects Private Limited Vs Ansal Housing Limited (Delhi High Court) arising from a summary suit under Order XXXVII of the Code of Civil Procedure, 1908.

The appeal was directed against the order dated 26 April 2023 passed by the learned Single Judge in CS(OS) No. 497/2018. Although the Single Judge had granted unconditional leave to defend, the impugned order also contained a clear finding that the suit was within limitation, on the basis of a TDS deposit treated as payment under Section 19 of the Limitation Act, 1963.

The appellant, Samyak Projects Private Limited, invoked Section 10 of the Delhi High Court Act, 1966 to challenge only that limitation finding, not the grant of leave to defend.

Factual Matrix Relevant to Limitation

Deed of Cancellation and Payment Obligations

  • The respondent, Ansal Housing Limited, filed a summary suit under Order XXXVII CPC seeking recovery of Rs. 11,79,83,525 along with pendente lite and future interest.
  • The claim was founded on a Deed of Cancellation dated 20 April 2013, under which:
    • The appellant undertook to refund Rs. 12 crore.
    • Interest was agreed at 24% per annum.
  • As per the plaint:
    • The appellant was required to discharge the entire liability by 31 December 2013.
    • On the appellant’s request, the time for repayment was extended till 31 March 2015.

Payments and TDS Deposits

The plaint set out the following steps taken by the appellant towards the liability:

  • The appellant was regularly deducting TDS at 10% on the interest accruing under the Deed of Cancellation and depositing it with the Government.
  • An on-account payment of Rs. 1 crore was made on 27 March 2015.
  • A final TDS deposit of Rs. 13,96,886 was made on 30 September 2015, which, according to the respondent, related to the same transaction and was supported by a Form 16A (TDS Traces) dated 26 October 2015 (TDS certificate).

Plea of Limitation in the Leave to Defend Application

In its application for unconditional leave to defend:

  • The appellant argued that the summary suit, instituted on 20 September 2018, was barred by limitation.
  • The basis of this plea was that the last “on account” payment admittedly made was on 27 March 2015. Counting three years from that date, the appellant asserted that the prescribed period had expired before institution of the suit.
  • The appellant further contended that the TDS deposit dated 30 September 2015 could not be treated as an admission or acknowledgment of liability and therefore did not extend limitation under Section 19 of the Limitation Act, 1963.

No plea was taken at that stage that the TDS entry of Rs. 13,96,886 related to any transaction other than the Deed of Cancellation dated 20 April 2013. No supporting particulars or alternative transaction details were pleaded.

Findings of the Single Judge on Limitation

The Single Judge, while granting unconditional leave to defend, decisively rejected the limitation objection.

Application of Section 19 of the Limitation Act, 1963

The Single Judge extracted and applied Section 19 of the Limitation Act, 1963, which deals with the effect of payment on account of debt or of interest on a fresh period of limitation. The provision requires:

  • A payment on account of a debt (or interest) made before the expiry of the prescribed limitation period, by the person liable or an authorized agent; and
  • An acknowledgment of such payment in writing in the handwriting of, or signed by, the person making the payment.

The Court reasoned as follows: