S B ENTERPRISES Vs. RMB ASSOCIATES LIMITED

JUDGEMENT

(1.) This appeal by the plaintiffs appellants is against the order dated May 9, 1997 of learned Single Judge dismissing I.A.No.2997/97 filed by it under Order XXXVIII Rule 5 and Section 151 CPC.

(2.) Appellants have filed suit contending that Harinderjeet Singh Walia is the proprietor of appellants 1 to 3 and is a partner alongwith his mother Smt.Harjit Kaur of appellant No. 4. He is also managing Appellants 5, 6 & 7 firms on behalf or his mother as well as the wife Smt.Sweety Walia. Respondent No. 1 is a company incorporated under the Companies Act having its registered office at 23, Convent Road, Calcutta and Branch office at A-6, Maharani Bagh, New Delhi. It is engaged in the business of management, consultancy, leasing hire purchase financing and other related fields. Respondent No. 2 is the President while respondents 3 & 4 are the directors of respondent No. 1 Respondents 5 & 6 are the banks with whom respondent No. 1 has cash credit facility to the extent of Rs. 40 Lakhs for financing the goods supplied to the customers under hire-purchase agreements. Respondent No. 1 had account Nos. 152 and 136 with respondent No. 5 and respondent No. 6 respectively. It is, inter alia, alleged that one of the terms of cash credit facility granted to respondent No. 1 by respondent No. 5 was that respondent No. 5 would finance 75% of the cost of the goods supplied to the customers under the hire-purchase agreements while the balance 25% was to be financed by respondent No. 1. Similarly, one of the terms of the cash credit facility granted by respondent No. 6 was that 70% would be financed by it and the balance 30% by respondent No. 9.

(3.) It is further alleged that respondent No. 1 did not have funds to finance its share of 25%/30%. As such to enter into an agreement with the appellants for advancing 25% or 30% of the cost of the goods supplied to the customers under the hire-purchase agreements and in return respondent No. 1 was to refer the customers to the appellants' office from where the goods under the hire-purchase agreements were purchased. Amount of 25%/30% advanced by the appellants to respondent No. 1 was to be treated as loan carrying interest 22% per-annum and the amount was repayable as and when respondent No. 1 was to receive the instalments from the hire-purchasers. Aforesaid arrangement was also reiterated by respondent No. 2 on behalf of respondent No. 1 in his letter dated July 7, 1993.