JETU JACQUES TARU LALVANI Vs. ROCKHARD BUILDING MATERIALS

JUDGEMENT

(1.) THE plaintiffs have filed the suit against the defendants for recovery of a sum of Rs.2,24,48,355/- as per the particulars given in the statement annexed as Exhibit "AM" to the plaint, with interest of Rs.1,80,00,000/- at 15% per annum. The defendant No.1 is a company registered under the Companies Act. The defendant No.2 is the Managing Director of the defendant No.1. The plaintiffs had advanced certain monies to the defendant No.1 on the basis of demand promissory notes executed by the defendant No.1 in the sum of Rs.50 lacs and Rs.30 lacs respectively together with interest at the rate of 15% per annum. Two cheques were also issued by the defendant No.1 Company in the amount of Rs.50 lacs and Rs.30 lacs both dated 28th February 1996. The defendant No.1 Company had represented to the plaintiff that it was coming with public issue on or before 31st March, 1996 and that the said amount was required to enable the company to commence its operation. A resolution was passed by the defendant No.1 company on 17th October, 1995 in favour of the defendant No.2 authorising the defendant No.2 to borrow the amount from the plaintiff. The defendant No.2 also gave undertaking to the effect that he will personally repay the loan. For this purpose, he issued letters of guarantee, both dated 8th November, 1993. Thereafter there is a series of correspondence in which the liability of the plaintiff is admitted. The plaintiff in fact advanced a total sum of Rs.1.80,00,000/- on various occasions. Receipt of this amount is admitted. Liability is also admitted. Inspite of this summons for Judgment is opposed by the defendants on the ground that the summary suit is not maintainable.

(2.) THE counsel for the defendant No.1 has submitted that these transactions are hit by the Bombay Money Lenders Act, 1946. He submits that the plaintiff is not a registered money lender. Thus, the summary suit is not maintainable. He also submits that the loan advanced was conditional upon the defendant No.1 coming out with a public issue. He further submits that the Plaintiff was, in fact, interested in taking over the defendant No.1 Company. He submits that only when the Plaintiff realised that becoming a Director of the defendant No.1 company was not profitable, he has changed his stand. He has, in fact, filed a criminal complaint on the ground that the defendant No.1 Company has cheated the plaintiff by not coming with a public issue. The counsel further submits that the defendant No.1 has no intention of not repaying the plaintiff. The defendant No.1 Company is going through genuine difficulties due to depressed state of the economy. He further submits that the project which has bean started by the defendant No.1 Company is the first of kind in India. In view of the above, the company was facing teething problem. He submits that the loan, in fact, was not advanced for the public issue of the company as alleged by the plaintiff. All these, according to the defendant No.1 are triable issues and therefore, unconditional leave to defend the suit ought to be granted to the defendants.

(3.) SUMMONS for Judgment is disposed of accordingly with no order as to costs.