SPACE ENTERPRISES Vs. SRIVIVASA ENTERPRISES LTD

JUDGEMENT

(1.) THE plaintiff, a registered partnership firm through its Managing Partner, Sh. Anil Kumar Aggarwal, has filed this suit under Order 37 CPC on the basis of an agreement dated 12th June, 1991 under which a short term loan of Rs. 10,00,000/ - (Rupees ten lakhs) was given to defendant No. 1, through its Managing Director Sh. N.S.H. Prasad, to be returned on 31st October, 1991 alongwith interest at the rate of 24% per annum payable on first of every month. The amount was paid through a Bank draft of Canara Bank dated 17th June, 1991. The defendant assured under the agreement that it would be returned on or before 31st October, 1991 with interest at the rate of 24 per cent. The defendant, in addition to above, also agreed and undertook to give other benefit to the plaintiff arising out of exports made by defendant No. 1 and the post -shipment facilities available to the exporters. The defendant failed to honour his commitment and also failed and neglected to pay the said amount of Rs. 10,00,000/ - with interest. A post -dated cheque dated 1st August, 1992 for a sum of Rs. 12,72,475/ - was given to the plaintiff on 16th July, 1992. This included Rs. 10,00,000/ - towards repayment of loan plus interest Rs. 2,71,475,. This cheque was dishonoured on account of insufficient funds. On 15th October, 1992, the defendants issued a cheque bearing No. 448681 for Rs. 6,00,000/ -. This was also dishonoured. Similarly, on 31st August, 1993 another cheque bearing No. 215209 for a sum of Rs. 1,74,032/ - was also dishonoured. Further, on 15th November, 1993 payment of Rs. 1,74,032/ - was made. On 1st October, 1993, the plaintiff issued a legal notice. The defendants again on 31st December, 1993 issued a further cheque for a sum of Rs. 10,00,000/ -. The said cheque was again dishonoured with a remark "insufficient funds" dated 12th January, 1994. The plaintiff's Bankers debited the plaintiff's account with a sum of Rs. 1,600/ -. On 25th January, 1994, another legal notice was issued calling upon the defendants to pay the entire amount including interest accrued upto 31st December, 1993 after making due adjustment in respect of an amount of Rs. 1,74,032/ - received by the plaintiff. On 9th February, 1994, the defendant replied the notice through their Advocates and clearly and unequivocally admitted its liability but requested the plaintiff not to initiate legal proceedings and to grant them last opportunity by 30th June, 1994. In response to letter dated 7th July, 1994, on 15th July, 1994 the Advocate of defendants again duly and unequivocally admitted its liability in writing and reiterated the assurance of his clients and again sought time to enable his clients to make the payment of the amounts. Ultimately the plaintiff filed this suit under Order 37, CPC for recovery of Rs. 10,00,000/ - as principal and Rs. 4,04,506/ - as unpaid interest as mentioned in Annexure -A.

(2.) THE defendants moved an application for leave to defend (IA No. 3350/95) on various grounds. The plaintiff seeks a decree of Rs. 14,04,506/ - against defendants No. 1 and 2 while the agreement relied upon by the plaintiff, which is the basis of the suit dated 12th June, 1991, is between the plaintiff and defendant No. 1. As the plaintiff seeks the recovery of the suit amount from defendant No. 2 also, the suit as framed under Order 37, CPC is not competent. Under Order 37, CPC, the plaintiff is not entitled to any future interest as has been claimed in the suit. The amount was advanced by the plaintiff for the operation of sea fishing trawlers. It is claimed that the whole industry has been declared sick by the Government of India and a Technical Committee was appointed vide order dated 11th May, 1993. The Technical Committee gave its report dated 11th March, 1994 which is being examined by the Central Government, Ministry of Food Processing. It is also claimed that since the plaintiffs had taken the proceedings under Section 8 of the Negotiable Instruments Act (hereinafter called "the NIA" for short), in view of this the present suit is liable to be stayed. It is claimed that triable issues arise and therefore, unconditional leave should be granted. Defendant No. 2, Sh. N.S.H. Prasad, has also sought leave on the same ground.

(3.) AN application under Section 5 of the Limitation Act has also been filed by the defendants. It is claimed that the last date of filing of the application for leave to appear, contest and defend the suit was 15th April, 1995. But on that day the High Court was closed. The application was sent through courier and it was received on 12th April, 1995. However, the packet containing the application for leave to defend was received in Delhi on 17th April, 1995 and it was filed in the Court on the same day. As such there was delay of just one day in moving the application for leave to defend. It was not intentional and was bonafide. This is supported with an affidavit of Sh. N.S.H. Prasad, defendant 2.