PK GUPTA Vs. ESS AAR UNIVERSAL PVT LTD

JUDGEMENT

(1.) A suit, under Order XXXVII of the Code of Civil Procedure, was filed by the respondent against M/s.Prestige H.M.Poly Containers Ltd. (respondent No.2) and its Managing Director and Director respectively i.e. appellants No.1 and 2. Decree prayed for was in sum of Rs.20,40,023/- (Rupees Twenty Lakhs Forty Thousand and Twenty Three only). It had four elements:-

(2.) THE suit was instituted on 28th June 1997 and after a protracted battle, leave to defend was granted to the appellants and respondent No.2 upon the condition that the appellants and respondent No.2 would deposit Rs.25,00,000/- (Rupees Twenty Five Lakhs only) towards not only the sum claimed in the suit but even to secure the interest which may accrue if claim was decreed.

(3.) REASON why aforesaid issues were settled was that in the plaint it was asserted by the plaintiff that it was a company registered under the Companies Act 1956 and had taken over the company M/s.Rustagi Engineering Udyog Pvt. Ltd. as per a scheme sanctioned, which company had executed a lease agreement dated 10.09.1993 with respondent No.2 and had leased out 1250 sets of M.S. Moulds on the covenants contained in the agreement, obliging respondent No.2 to pay lease rental in sum of Rs.2,90,495/- for each quarter of the year, and since the lease was for three years, for the twelve quarters, twelve cheques, each in sum of Rs.2,90,495/- were issued by respondent No.2 and appellant No.1 and appellant No.2 executed personal guarantee(s) to secure any outstanding due and payable to the plaintiff by respondent No.2. The company, M/s.Rustagi Engineering Udyog Pvt. Ltd. had received Rs.30,31,250/- (Rupees Thirty Lakhs Thirty One Thousand Two Hundred and Fifty only) towards margin money as per the agreement. It was pleaded that service charges, in case lease rentals went into arrears, were payable at 3% compounded quarterly as per the agreement. It was alleged that whereas seven cheques pertaining to seven quarters of the lease period were duly honoured, the respondent No.2 company defaulted qua two quarters as the cheques relatable thereto were returned dishonoured by the banker on whom the cheques were drawn. The three other cheques were not presented for encashment but the moulds were retained by the respondent No.2 for another one year and thus on expiry of three years after commencement of the lease, entire lease rental for the twelve quarters had to be paid and since it was paid only for seven quarters, amount due for the remaining five quarters was liable to be paid to the plaintiff.