S BHUPINDER SINGH Vs. RAVI SOMANI

JUDGEMENT

(1.) The plaintiff has instituted this suit for recovery of Rs.2,26,00,000/- from the defendant, pleading (i) that the defendant was a good friend of one of the Directors of M/s Utsav Safety Systems Pvt. Ltd. (hereinafter called as "Company"); (ii) that in the year 2002, the plaintiff was a shareholder in the Company and the defendant was the Managing Director and majority shareholder of the Company; (iii) that the plaintiff has rendered his services as Director in the Company; however the plaintiff resigned from the Company and at the time of tendering his resignation, demanded the monies towards goodwill qua surrender of rights in the Company from the defendant; (iv) that the defendant expressed his inability to make any payment to the plaintiff but assured the plaintiff that he will pay as soon as the Company shall start the business; (v) that in order to give trust and confidence to the plaintiff, the defendant agreed to acknowledge the said promise of payment in writing; (vi) that the defendant entered into an agreement to pay royalty with the plaintiff; (vii) that the agreement was named as "Payment of Royalty Agreement" and was executed on 19th September, 2002 between the plaintiff and the defendant; (viii) that as per the agreement, the plaintiff was to receive a royalty amount of Rs.1,50,00,000/- from the defendant towards the surrender of his rights and interest for the goodwill and reputation of the Company, which was duly acknowledged by the defendant; (ix) that however the royalty payment was to be paid by the defendant within the period starting after three months of the commencement of the business of the Company in any of the States and before expiry of one year from the day of commencement of such business; (x) that the plaintiff has been pursuing the defendant regarding payment but every time the defendant replied that since the work was yet to start, the same could not be paid; (xi) that on 17th August, 2013, the plaintiff wrote a letter to the defendant demanding the royalty and to which a reply dated 23rd August, 2013 was received and from which the plaintiff learnt that the defendant was no more a Director in the Company since 24th December, 2009; (xii) that the defendant however admitted the liability of payment of royalty to the plaintiff but pleaded that the Company had not generated any profits and had not started functioning and had not been awarded any contract directly by any State in the "HSRP project"; (xiii) that the plaintiff sent another letter dated 27th January, 2014 and to which a reply dated 24th April, 2014 was received; (xiv) that another letter dated 7th May, 2014 and reply dated 27th May, 2014 were exchanged between the parties; (xv) that the defendant is illegally withholding Rs.1,50,00,000/- of the plaintiff; (xvi) that the defendant is also liable to pay interest @ 24% per annum thereon with effect from 19th September, 2002. Hence, the suit for recovery of Rs.2,26,00,000/-.

(2.) The suit was entertained by the Joint Registrar and summons thereof issued and pleadings completed and admission/denial effected.

(3.) At this stage, it is deemed appropriate to reproduce herein below the agreement executed on 19th September, 2002, on the basis of which the suit has been filed. The same is as under: