VIJAYA HOME LOANS LIMITED Vs. CROWN TRADERS LIMITED

JUDGEMENT

(1.) This suit under Order XXXVII, Civil Procedure Code has been filed alleging that M/s. Fairgrowth Home Finance Limited was incorporated on July 9, 1990, under the Indian Companies Act, 1956. After passing resolution under Section 21 of the Indian Companies Act and obtaining necessary approval from the Central Government, name of M/s. Fairgrowth Home Finance Limited was changed to Vijaya Home Loans Ltd.-Plaintiff. Registrar of Companies, Karnataka, Bangalore, also issued fresh certificate dated February 24, 1995, consequent upon the change of the name of the company. Plaintiff-Company is engaged in the business of development of properties and constructions. Defendant No. 2 is one of the directors of defendant No. 1. It is alleged that defendant No. 1 entered into an agreement dated May 7, 1991 with M/s. Fairgrowth Home Finance Ltd. to develop property No. B-64, Greater Kailash, Part-1, by demolishing the then existing structure and making construction of multistoreyed apartments on the land. Aforesaid agreement stipulated the condition, inter alia, that defendant No. 1 would construct 12 flats and the construction work will be completed within 20 months commencing from 1st May, 1991. It was further provided that the plaintiff was at liberty to advertise and canvass for sale of the flats to the prospective buyers and the plaintiff underwrote the sale of all the flats to be constructed for a total amount of Rs. 5 crores in the manner noted in Para 4 of the plaint. To secure the performance of the rights and obligations under the aforesaid agreement, defendant No. 1 was to deposit with the plaintiff the title deed of the above property. Plaintiff disbursed amount of Rs. 25 lakhs on April 8,1991, Rs. 10 lakhs on June 12, 1991, Rs. 5 lakhs on June 17, 1991, Rs. 10 lakhs on July 10, 1991, Rs. 10 lakhs on December 26, 1991, Rs. 40 lakhs on January 16, 1992, Rs. 4 lakhs on April II, 1992, Rs. 21 lakhs on April 20, 1992, Rs. 18 lakhs on May 30, 1992 and Rs. 7 lakhs on June 2, 1992, totalling Rs. l,50,00,000.00 to defendant No. 1. It is alleged that the plaintiff identified M/s. BPL Sanyo Technologies Limited 1/1 Palace Road, Bangalore, M/s. BPL Sany Utilities & Appliances Ltd., 708, Devika Tower 6, Nehru Place, New Delhi and M/s. Seahorse Shipping and Ship Management Pvt. Ltd., Apsara Building (Meena Bazar), 3rd Floor, Colaba, Causeway, Bombay, as the prospective purchasers and collected from them by way of booking money Rs. 17 lakhs, Rs.l8,12,000.00 and Rs. 20 lakhs respectively. Defendant No. 1 was to enter into agreement to sell with these prospective puchasers for sale of three flats to them.

(2.) It is pleaded that for the reasons accepted by both the parties to the aforesaid agreement dated March 7,1991 plaintiff and defendant No. 1 mutually rescinded the agreement subject to the terms and conditions contained in another agreement dated June 30, 1992, entered into between the parties. Pursuant to the agreement dated June 30,1992, securities furnished under the previous agreement were discharged and new securities were furnished by the defendants to the plaintiff in terms of Clause 5 thereof including loan agreement, promissory note for Rs. 74.88 lakhs and personal guarantee of defendant No. 2, all dated June 10, 1992. Under the aforementioned agreement, all the obligations relating to the said three prospective purchasers were taken over by defendant No. 1 and the booking amount of Rs. 55.12 lakhs collected from them was agreed to be appropriated by the plaintiff against the total repayable amount of Rs. 1.5 crores. To liquidate the balance amount defendant No. 1 agreed to pay Rs. 20 lakhs by August 14, 1992, Rs. 45 lakhs with interest thereon @ 22% p.a. from June 30,1992 to August 31,1992 i.e., Rs. 46,70,877.00 by August 1992 and Rs. 29,88,000.00 with interest thereon @ 22% p.a. from June 30,1992 to December 31,1992 i.e. Rs. 33,21,182.00 by December 31,1992. Defendant No. 1, however, paid only first instalment of Rs. 20 lakhs within the stipulated time of 45 days. It is stated that in between January 30,1993 to March 28,1993 towards part payment defendant No.1 paid various sums as reflected in the statement of account Annexure P1 filed alongwith the plaint. Most of these payments were made through cheques sent by defendant No. 2. It is further alleged that defendant No.1 could not make progress in the construction of the flats and due to that reason and also for the reason best known to the aforesaid three prospective purchasers they withdrew themselves from the purchase of their respective flats and demanded refund of booking amounts paid by them together with interest thereon. At the request of defendant No.1, plaintiff returned Rs. 55.12 lakhs to the said three prospective purchasers and debited the accrued interest thereon in the account of defendant No 1. Thus, the amounts paid by the plaintiff to three prospective buyers have also become payable by the defendants to the plaintiff together with interest thereon. Balance principal liquidated debt amount of Rs. 32,56,623.00 together with interest thereon @ 22% p.a. is due and payable by the defendants to the plaintiff. Notice for interest under the provisions of the Interest Act, 1978, demanding the interest @ 22% per annum was also issued by the plaintiff to defendant No. 1. The interest calculated at the said rate upto the date of the institution of the suit comes to Rs. 16,16,502.00 . As defendant No. 2 gave guarantee for payment of the amounts due from defendant No.1, both the defendants are jointly and severally liable for payment of the suit amount. It was prayed that a decree for Rs. 49,35,184.00 together with interest on Rs. 32,56,630.00 @ 22% p.a. pendente lite till realisation and costs may be passed in favour of the plaintiff and against the defendants.

(3.) Defendants were served with the summons under Order XXXVII, Civil Procedure Code by publication in'Statesman' on November 30, 1996.