S P BROTHERS Vs. BIREN RAMESH KADAKIA

JUDGEMENT

(1.) The plaintiff filed a suit under the provisions of Order 37 of the Code of Civil Procedure, 1908 (hereinafter "the Code") against the defendant praying for a decree of Rs. 8,28,605.95 with future interest on the principal amount of Rs. 5,00,000/- at the rate of 15 per cent per annum from the date of institution of the suit till realisation. This decree was prayed by the plaintiff on the facts that the defendant is a partnership firm , carrying on the business at Narayan Dhru Street, Mumbai. The plaintiff being a non-resident Indian filed the suit through his father and power of attorney holder. According to the plaintiff, his father and the family of the defendant had good relations. Shri Sharad P. Kadakia, a partner of the defendant firm approached the plaintiff and took a loan of Rs. 5,00,000/-. This loan was paid by a cheque drawn on the Ahmedabad Mercantile Co-operative Bank Limited. There was an oral agreement between the parties that they would pay interest at the rate of 18 per cent per annum on the amount advanced. The defendant actually paid 18 per cent interest upto 31st March, 2001 and thereafter at the rate of 15 per cent per annum on the total sum of Rs. 5,00,000/-. The defendant also deducted Tax at Source and issued Form 16-A for such deductions. The interest was paid upto 26th September, 2003, whereafter only TDS certificates were issued, copies of which have been annexed to the plaint at Exhibits-A, A-1 to A-3. Thereafter, no amount was paid to the plaintiff as per the agreed terms,despite his repeated requests. The plaintiff had averred in the plaint that the defendants are liable to pay the principal sum of Rs. 5,00,000/- and interest at the rate of 15 per cent per annum from 1st April, 2002 upto 31st March, 2003, after reducing the TDS amount and thereafter 15 per cent interest upto the date of filing of the suit and even thereafter. The plaintiff, through his advocate, issued a notice to the defendant on 28th August, 2006 for payment of the amount in question which was duly served upon the defendant. Despite such notice, the defendant has failed to pay the amount resulting in institution of the present suit. In paragraph 13 of the plaint, the plaintiff had claimed that the suit had been filed under the provisions of Order 37, Rule 2 of the Code on the basis of the debt due to the plaintiff and no relief had been claimed beyond the ambit of the said rule.

(2.) Upon service of the plaint, appearance was filed by the defendant. The plaintiff took out Summons for Judgment to which an application for leave to defend was filed by the defendant supported by an affidavit. In the affidavit, a preliminary objection was taken that the suit of the plaintiff is barred by law of limitation. It was stated that family members of the defendant and the plaintiff are partners of the firm known as M/s. S.R. N. Engineering Industries and the claim of the plaintiff was false. Other detailed facts have been given in the reply denying the liability to pay any amount to the plaintiff. It is averred that the plaintiff had not lent any amount to the defendant. In fact, the amount of Rs. 2,00,000/- paid by the plaintiff was paid to the Defendants under arrangement and the amounts if at all payable are to the extent of 50 per cent and that too they will be payable to Ramesh C. Kadakia, Mr. Biren R. Kadakia or Mrs. Taru R. Kadakia. The amount lying to the defendant is part of investment to be maintained by M/s. P.S. Parekh & Co., with the defendant towards business jointly done by M/s. Parekh & Co., and the defendant with one Mr. Lalit of Lalit Profile & Steel (India) Limited and the amount can be returned to the plaintiff only upon receipt of amount from the said Mr. Lalit. On the basis of the averments made in the plaint, the defendant also took up an objection that the plaintiff could not have lent money. He is not entitled to claim the amount as he does not possess any licence under the Bombay Moneylenders Act, 1946 and the suit is not maintainable.

(3.) The learned single Judge while considering the merits of the application for leave to defend came to the conclusion that the defendant would be entitled to grant of conditional leave vide order dated 16th July, 2007. The learned Judge thus granted conditional leave on the following terms.