SURAJ SANGHI FINANCE LTD Vs. CREDENTIAL FINANCE LTD

JUDGEMENT

(1.) IT is the case of the plaintiffs that they had granted an intercorporate loan to defendant No. 1 which was acknowledged by receipt dated 29-10-1996. The said loan was secured by personal guarantee of defendant No. 2. The intercorporate loan was thereafter acknowledged on several occasions. The documents form part of annexure to the plaint. By way of secured payments, defendants had pledged shares and had also issued cheques. It is the case of the plaintiff that when the cheques were deposited, they were dishonoured. Suit is filed under Order 37 of CPC. Receipt shows interest payable at the rate of 28. 15% per annum.

(2.) ON Summons for judgment being taken out, defendants have put in their appearance. Affidavit has been filed by one Deepak. Managing Director of the defendant. I need not advert to the various averments in the affidavit as at the hearing of the Summons for judgment, on behalf of the defendants, it is principally contended as under : (a) That the suit as filed is not maintainable as Summary Suit as the plaintiffs had security by way of pledged shares. Once there was security, the plaintiffs could have filed suit only on return of security or sale of securities. Having not so done, the suit as Summary suit would not be maintainable. The shares continue to be in possession of the plaintiffs. The judgment in State Bank of India v. Smt. Neela Ashok Naik, AIR 2000 Bombay 151 relied upon by the plaintiff does not support the case of the plaintiffs and they cannot maintain the summary suit while retaining the security. The judgment would be attracted when the suit is filed as a regular suit and not applicable in case of a Summary suit, which is covered by the special procedure under Order 37 of CPC. (b) It is next contended that the suit against defendant No. 3 is not maintainable as Summary Suit. The mere fact that plaintiffs are not claiming judgment against defendant No. 3 or pressing summons for judgment is no answer. The suit as filed in these circumstances, is not maintainable as a summary suit against one of the parties and as such the summons for judgment will have to be withdrawn with leave to file fresh Summons for judgment after the plaint is properly constituted against defendant Nos. 1 and 2. (c) Lastly it is contended that once the counterclaim as filed is accepted, it would mean that the suit as summary suit would not be maintainable as the learned Judge has allowed the defendants to file a counterclaim which means that the Defendants are at least entitled to set off against the claim of the plaintiff.

(3.) WE may now deal with the first contention as to whether the suit as filed is maintainable as Summary Suit. The suit filed by the plaintiff is based on the receipt acknowledging receipt of a sum of Rs. 25 lacs. Carrying interest on the intercorporate deposit of 28. 50% p. a. The said amount has been secured by defendant No. 2 along with defendant No. 1 by document of 10-6-1977 whereby defendant No. 1 and 2 on demand have jointly and severally promised to pay to the plaintiff the said amount, along with interest as set out therein. The said amount has also been secured by promissory note, cheques for the said amount as also pledge of shares. The suit therefore, is based on an agreement or in the alternative on a Negotiable instrument. The suit therefore, as a Summary suit is maintainable. The argument however, is that the Defendant had secured the plaintiff by pledging of shares and unless those shares were said or returned, the suit as summary suit will not be maintainable. Can it be contended that because collateral securities were given for the due repayment of the loan, it can be said that the suit as filed is not maintainable as a summary suit. On first principles not. Learned counsel for the plaintiff in support of his contention that the suit is maintainable as a summary suit has placed reliance in the judgment of a Division Bench of this Court in State Bank of India v. Nayak (supra ). It is true that the said judgment was delivered in a regular suit. That to my mind is immaterial. What is material is the ratio decendi of the judgment, no doubt bearing in mind the facts involved. The learned Division Bench of this Court speaking through Sabharwal, C. J. as His lordship then was, has construed the provisions of S. 176 of the Contract Act read with S. 2 (7) of the Sale of Goods Act. What, therefore, was in issue before the learned Division Bench was the construction of S. 176 of the Contract Act and S. 2 (7) of the Sale of Goods Act. In that case, it was contended on behalf of the defendants who were the respondents in appeal, that as they had given instructions to the plaintiff/appellants, to adjust the amount of F. D. s. lying as security with the appellant/plaintiff and as the plaintiff had failed to adjust the same, they were not liable. The judgment of the Delhi High Court in Bank of Maharashtra v. Racmann Auto Ltd. , AIR 1991 Delhi 278 cited in respect of the legal duty cast on the plaintiff bank in respect of pledged goods was relied upon. The learned Division Bench construed the ratio of the judgment as set out below :