SRF FINANCE LIMITED Vs. RANDEEP SINGH

JUDGEMENT

(1.) By this order, I would be disposing of IA. 6234/99 filed by the defendants seeking leave to contest the suit. The plaintiff had initially filed this suit under Order XXXVII, for recovery of a sum of Rs. 9,68,651.00 (rupees nine lacs sixty eight thousand six hundred and fifty one only). The plaintiff's case was that it had advanced a loan of Rs. 10,23,750.00 (rupees ten lacs twenty three thousand seven hundred and fifty only) to the defendant at an interest of 36% p.a. An agreement dated 5.10.1995 and a promissory note of the said date were executed. The defendant is said to have pledged, 1970 equity shares of M/s. Smithkline Beecham Healthcare Limited. According to the plaintiff, there were defaults in payment by defendant and the plaintiff sold the equity shares that were pledged during the period September, 1996 to November, 1996.

(2.) The plaintiff in the course of the proceedings and after summons in Appendix-B Form-IV had been issued, sought the permission of the court for amendment. The amendment was allowed vide orders 26.5.1998, by which the plaintiff reduced the suit amount to Rs. 7,77,350.00 . The plaintiff also sought an amendment reducing the rate of interest payable on the amount advanced from 36% to 25%. The amendment was allowed without opposition from the defendant.

(3.) It is in the back drop of the foregoing facts that the defendant's application for leave to contest is to be considered. Leaed counsel for the defendant Mr. Manmohan has urged before me that the defendant is entitled to unconditional leave to contest. He firstly submits that this is a clear case where the plaintiff had earlier filed a suit for recovery of a sum of Rs. 9,68,651.00 and then sought an amendment reducing the amount to a sum of Rs. 7,77,350.00 apart from seeking an amendment in the rate of interest from 36% to 25%. At this stage, the contention of the plaintiff may be noted that the institution of the suit for recovery of Rs. 9,68,657.00 was an inadvertent error and in fact the plaintiff had given the credit of the price of the shares which were sold for Rs. 5,60,455.00 . Learned counsel for the defendant further submitted that the plaintiff had a duty to minimise the loss to the defendant and in fact had the shares in question, which were lying with the plaintiff been sold in the month of January, 1996, when the alleged default occurred, the prevailing market price was Rs. 690 per share, which could have even wiped out the entire loan. Learned counsel relies on explanation under Section 73 of the Indian Contract Act in this regard. Learned counsel also argued that the plaint suffered from several inherent defects in as much as it was not instituted by an authorised person and had been instituted and signed by a person in whose favour no authority has been disclosed. Learned counsel for the defendant argued that the promissory note was blank and that is why there was discrepancy in the rate of interest claimed initially and subsequently sought to be claimed.