AZRENCAR TUBES Vs. CLASSIC EXTRUSIONS PVT LTD

JUDGEMENT

(1.) The above Appeal challenges the Judgment and Decree dated 24th December, 2002, passed by learned Civil Judge, Senior Division, at Mapusa, in Special Civil Suit no. 31/96/B, whereby the suit filed by the Respondents came to be partly decreed.

(2.) The parties shall be referred in the manner as they appear in the cause title of the impugned Judgment.

(3.) The Plaintiffs filed the suit on the ground that the Defendant no.1 was facing competition from newcomers in the field of manufacturing Aluminium Collapsible tubes and this was coupled with the steep increase in the price of raw materials such as alluminium slugs, printing and coating inks, etc. The business activity of the Defendant no.1 was greatly affected and as such after mutual discussions, a written Agreement dated 27th February, 1991, was executed with the Defendants for getting the printed collapsible tubes manufactured at the Defendants' work place at Tivim. Pursuant to the said Agreement, it is the case of the Plaintiffs that the Defendants found the working of their establishment uneconomical and, therefore, father of Defendant nos. 2 and 3 late Venkatesh Azrencar proposed to the second Plaintiff to join them so that the second Plaintiff could bring in the finance, required to run the establishment. It is further the case of the Plaintiffs that by a written Agreement dated 1st January, 1992, the second Plaintiff entered into an Agreement with the Defendants for running their establishment. The said Agreement, inter alia, provided that it would continue for a period of six months and that a private limited company would be formed as a prospective partner of the first Defendant. The Plaintiffs further contended that one Mr. John Mendes, agreed to become another shareholder in the private limited company to be formed in accordance with the said Agreement. It is further their case that on the execution of the Agreement dated 1st January, 1992, the second Plaintiffs were put in charge of the Defendants' establishment at Tivim and necessary powers were given to him to manage the affairs of the establishment under a General Power of Attorney. It is further their contention that the Agreement dated 1st January, 1992, was extended on 1st July, 1992 and thereafter on 1st January, 1993, 1st July, 1993 and 1st January, 1994 for further period of six months. It is further their case that under letter dated 21st March, 1994, the second Plaintiff intimated the Defendants that though the market value of the assets of first Defendant is Rs.37,00,000/-, the Plaintiffs would take over the liabilities worth Rs.63,00,000/- and the remaining liability should be taken over by the second Defendant, third Defendant and their late father Venkatesh who was also a partner at that time. It is further their case that the Defendants did not accept the contention in the said letter but in the last week of June, 1994, the second Defendant refused to abide by the understandings and arrangements arrived at under the Agreement dated 1st January, 1992, and unilaterally and wrongfully put an end to the same from 15th March, 1995. In breach of the said Agreement, the establishments were transferred to a third party in August, 1995. It is further their case, that throughout the period from 1st January, 1992 to 15th March, 1995, the first Defendant was carrying out the business activities on job-work basis and during the aforesaid period, the Plaintiffs made substantial investments of funds to the tune of Rs.21.88,000/- free of interest for the settlement of the creditors of the Defendants, towards payment of arrears of wages of employees of the Defendants and towards payment of provident fund dues and other statutory dues by putting the establishment in the right stead with proper management and thereafter by adopting all measures for up keeping the said establishment as a going concern at all times. As a result thereof, the said establishment of the Defendants became very productive to manufacture alluminium collapsible tubes. It is further their case that the Defendants gained wrongful advantage by transferring the establishment to the third party. The Plaintiffs further stated that all the investments made by them were with the full knowledge of Defendants and have been shown in their balance sheets. In view of the wrongful termination of the Agreement, the Plaintiffs are entitled for refund of amount of Rs.21.88,000/- with interest at the rate of 20% per annum from the institution of the suit till realization.