SRINIVASA FERRO ALLOYS LIMITED Vs. VLS FINANCE LIMITED

JUDGEMENT

(1.) M/S Srinivasa Ferro Alloys Limited (for short hereinafter referred to as ,,SFAL) and its sister concern M/s Shri Girija Smelters Limited (for short hereinafter referred to as ,,SGSL) have filed the above-noted suits against the defendant for rendition of accounts. Both the suits are based on similar facts and had been consolidated for trial vide order dated 27th September, 2005. It was ordered that CS(OS) No. 575/1999 shall be treated as lead suit and the evidence be led in the said suit.

(2.) CASE of the plaintiffs, as set out in the plaint(s), is that SFAL had engaged defendant as a ,,Lead Manager for carrying out the job of its Public Issue vide Memorandum of Understanding dated 28th July, 1995 against the payment of management fee of `5 lakhs. SFAL paid a sum of `30 lakhs to the defendant vide cheque no. 152 dated 28th February, 1996 drawn on Vyasya Bank, New Delhi towards the caution money on the specific promise by the defendant that the same will be refunded after the Public Issue work was over. Similarly, SGSL also paid a sum of `45 lakhs to the defendant vide cheque no. 201 dated 28th February, 1996 drawn on Vyasya Bank, New Delhi towards the caution money. Defendant had promised to return this amount as well after the Public Issue work was over. Work of Public Issue was completed in the month of April, 1996. However, the ,,caution deposit was not refunded despite repeated requests. Defendant avoided to refund the caution money on one or the other pretext. SFAL vide letter dated 20th August, 1996 requested the defendant to refund the caution money of `30 lakhs. Similarly, SGSL vide letters dated 5th July, 1996 and 20th August, 1996 requested the defendant to refund the caution money of `45 lakhs. Aforesaid amounts were not refunded. Instead, vide fax reply dated 25th August, 1996, defendant stated that it had paid the said amount to their party as per their advice. Ultimately, legal notice dated 27th December, 1996 was served on the defendant calling upon it to refund `75 lakhs together with interest @ 24% per annum but to no effect. Defendant sent reply dated 3rd February, 1997 stating therein that the contents of legal notice were misconceived, misleading, false, frivolous and unwarranted and that no amount was payable. Hence, the suits.

(3.) ON the pleadings of the parties following issues were framed on 15th February, 2006 :-