Bombay High Court in PVR vs. Proteus LLP: A Bank Account in One City Does Not Mean Bill is Payable in that City

Bombay High Court in PVR vs. Proteus LLP: A Bank Account in One City Does Not Mean Bill is Payable in that City

The Bombay High Court by its single Judge Justice Justice Arif S Doctor has observed that merely receiver’s bank account mentioned in a bill being in a particular city does not amount to the bill being payable in that city. In today’s times of electronic transfers payment can be made from anywhere in the world.

The Court was adjudicating PVR’s commercial summary suit against one Proteus LLP and directed Proteus to pay its dues for screening ads at PVR’s multiplexes in Pune and Mumbai, while dismissing Proteus’ challenge to Bombay High Court’s jurisdiction in the matter.

The brief facts of the case are that Plaintiff- PVR Ltd. is a Company, which operates various multiplexes across the Country. Defendant No.1- M/S Proetus Ventures LLP is a Limited Liability Partnership Firm under the provisions of the Limited Liability Partnership Act, 2008 (“the LLP Act”). Defendant Nos. 2 and 3 were the partners of Defendant No.1.

PVR screened ads at its multiplexes in Mumbai and Pune as per purchase orders given by Proteus LLP between December 2019 and February 2020. As per the terms of the invoices issued by PVR, Proteus had to notify any discrepancy in the bills within 5 days of receipt, otherwise the bill would be deemed to be accepted. Further, if payment is not done even after 7 days from the due date, the bill amount was to be doubled with an interest of 20 percent.

Though having received the tax invoices the Defendants admittedly had not pointed out any discrepancy in respect of any of the said invoices. Despite repeated follow-ups and reminders, the Defendants failed and neglected to make payment of the amounts due and payable under the said invoices, according to Plaintiff.

Therefore, PVR issued a legal notice on August 14, 2020 demanding payment of Rs. Rs.1,13,06,080/- along with interest at 20 percent. Proteus neither responded to the legal notice nor made any payments. After mediation failed, PVR filed the present suit. PVR also impleaded two partners of Proteus LLP as defendants.

According to Clause 8 of the invoice terms, all disputes were subject to Delhi jurisdiction only.

The Court stated that existence of a dispute is a precondition for invoking Clause 8.

However, since Proteus never raised any dispute regarding the invoices before filing its reply affidavit in the suit, thus, no dispute exists and Proteus’ reliance on Clause 8 is mala fide, the Court held.

Proteus contended that the amount was payable in Delhi as PVR’s bank is in New Delhi.

Disagreeing with the same the Court discerned that the invoices merely set out various acceptable modes of payment such as account cheque, demand draft, RTGS/NEFT etc. PVR’s bank details in the invoices are only meant to facilitate electronic payment and nothing more, the court opined.

Additionally, even assuming that the only RTGS/NEFT mode of payment had been provided in the invoices, it would not by itself amount to the monies being payable in Delhi, the Court added.

The Court rejected Proteus argument contending that since PVR’s Head Office is in New Delhi, thus Courts in New Delhi shall have the jurisdiction due to the common law principle ‘debtor must seek out its creditor.’

The Court opined that accepting this argument would turn the principle on its head, as PVR has already filed the suit as per principle of forum conveniens. Further, the Court noted that the work against which the invoices were issued were done within Maharashtra. i.e., within Bombay High Court’s jurisdiction.

In this regard, the Court observed, “The common law proposition is undoubtedly based on the doctrine of forum conveniens, it is basis this that the Plaintiff has filed the present suit in this Court only to be told by the Defendant who neither disputes nor denies the Plaintiffs claim that Suit must necessarily be instituted in a Court which for the Plaintiff is clearly not forum conveniens and within which, no part of the cause of action has arisen. Such a contention must only be stated to be rejected.”

Moreover, the judge highlighted that the invoices were raised in the name of Proteus LLP, therefore, under section 27(3) of the Limited Liability Partnership Act, obligation of payment is solely upon Proteus LLP.

The Court rejected PVR’s contention that as per section 27(2) of the LLP Act, Bayas and Deo are liable for their individual acts and omission as they were at the helm of the affairs of Proteus LLP.

According to the High Court, suit was based on payment of invoices and not for any claim/damages on the basis of any wrongful act or omission by Bayas and Deo.

Finding no merits in the submissions, the Court ordered Proteus LLP to pay Rs. 1,13,06,080/- along with 12 per cent interest from the date of filing of the suit till payment.

Advocate Abhijeet A Desai along with Advocates Karan Gajra and Vijay Singh represented PVR.

Advocates Abhinav Chandrachud, Samsher Garud, and Juhi Valia represented Proteus LLP.