Bombay High Court
M/S. Elegant Capitals Private ... vs In Cablenet (Andhra) Limited on 9 November, 2011
Bench: S. J. Kathawalla
1 sj-296-09-ss-1144-09
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
jmi
SUMMONS FOR JUDGMENT NO. 296 OF 2009
IN
SUMMARY SUIT NO. 1144 OF 2009.
M/s. Elegant Capitals Private Limited. ..Plaintiff.
vs.
In Cablenet (Andhra) Limited. ..Defendant.
ig ....
Mr. Gaurav Joshi, i/b. Anil T. Agarwal, for Plaintiff.
Mr. Niranjan Pandit, a/w. Mr. Murlidharan, i/b. Joy Legal
Consultants, for Defendant.
....
CORAM : S.J. KATHAWALLA, J.
RESERVED ON : 4TH AUGUST 2011.
PRONOUNCED ON : 9TH NOVEMBER, 2011.
JUDGMENT :
By the above Summons for Judgment, the Plaintiff has
prayed that the Judgment be entered in favour of the Plaintiff
in the Suit against the Defendant for the sum of Rs.
15,37,70,000/- as more particularly set out in the particulars of
claim being Exhibit - I to the Plaint, along with further interest
at the rate of 13% per annum on Rs. 11,10,00,000/- from 24th
March 2009 till payment and/or realization thereof and costs.
2. The Plaintiff is a Company registered under the
2 sj-296-09-ss-1144-09
Companies Act, 1956. The Defendant is also a Company
registered and incorporated under the Companies Act, 1956.
The Defendant is engaged in the business of providing cable
television network to the subscribers in the State of Andhra
Pradesh.
3. According to the Plaintiff, in or about March 2006, Mr.
R.V.R. Chowdary (Managing Director of the Defendant)
requested the Plaintiff for financial assistance by way of Inter
Corporate Deposit (ICD). On 25th March 2006, an Inter
Corporate Deposit Agreement was entered into between the
parties whereunder the Plaintiff agreed to make ICDs to the
tune of Rs. 33 crores in installments. It was agreed that each
disbursemet of ICD would be designated as a separate inter
corporate deposit and the same would be repayable after one
year for which the Defendant would execute a Demand
Promissory Note in respect of that particular ICD. Under the
terms and conditions of the Agreement, interest at the rate of
13% per annum was payable to the Plaintiff by the Defendant
every quarter. The entire ICD was to be secured by collateral
security i.e. deposit of shares along with duly executed transfer
deeds as detailed in Annexures I and II of the said Agreement.
Annexure I sets out the details of the shares of the Promoters of
the Defendant. Annexure II sets out the shares of one M/s. AP-
AKsh Broadband Limited which were to be pledged.
3 sj-296-09-ss-1144-09
4. Thereafter, the Defendant requested the Plaintiff to
release an amount of Rs. 10 crores by way of an ICD. The
Defendant by its letter dated 25th March 2006 forwarded the
ICD Agreement, Board Resolution, certain Share Certificates,
Transfer Forms, etc. to the Plaintiff. According to the Defendant
the share certificates and transfer deeds of the shares of M/s.
AP-AKsh Broadband Limited listed in Annexure II of the Plaint
were not forwarded to the Plaintiff as the share certificates for
the same were not issued to them. On the same day i.e. 25 th
March 2006 , a demand promissory note of Rs. 10 crores and an
ICD receipt of Rs. 10 crores were executed by the Defendant in
favour of the Plaintiff.
5. The Defendant by its letter dated 31st March 2006
forwarded five cheques dated 31st March, 2006, 30th June 2006,
30th September 2006, 31st December 2006 and 31st March 2007,
for Rs. 1,10,497/-, Rs.25,13,794, Rs. 25,41,418/-, Rs.
25,41,418/- and Rs. 24,86,170/- respectively, towards the
payment of quarterly interest at the rate of 13% per annum on
the ICD of Rs. 10 crores.
6. According to the Plaintiff, on 23rd May, 2006 a further sum
of Rs. 1.10 crores was released to the Defendant as ICD. The
Defendant executed a demand promissory note for a sum of Rs.
1.10 crores and also executed an ICD receipt acknowledging
receipt of Rs. 1.10 crores from the Plaintiff.
4 sj-296-09-ss-1144-09
7. According to the Plaintiff, out of the 5 post dated cheques,
received from the Defendant towards interest on the ICD of Rs.
10 crores, only cheque bearing No. 528910 dated 31st March
2006 for a sum of Rs. 1,10, 496/- was honoured. Initially, at
the request of the Defendant, the remaining cheques were not
deposited on their due dates. Subsequently, when the same
were deposited, they were dishonoured by the bank on the
ground - 'payment stopped by the Drawer' and the cheques
were returned to the Plaintiff on 27th December 2006 and 3rd
January 2007.
8. The Plaintiff by its letter dated 24th August 2006
addressed to the Managing Director of the Defendant, inter alia
recorded that the Plaintiff had not yet received the collateral
security described in Annexure II of the Agreement. The
Plaintiff also recorded that they would not be in a position to
provide any more ICD funding as the collateral security had not
been furnished. The Defendant by its letter dated 27th August
2006 inter alia contended that the Plaintiff's inability to fulfill
its obligation had put the Defendant in great financial difficulty.
The Defendant claimed that it had provided all the shares listed
out in Annexure I. As pointed out by the Plaintiff, significantly
there was no mention of the shares of Annexure II in the said
letter.
5 sj-296-09-ss-1144-09
9. The Plaintiff by their letter dated 29th August 2006
requested the Defendant to complete the D-MAT formalities so
that the shares of Annexure I pledged with the claimant
(Plaintiff herein) could be converted into D-MAT form. The
Plaintiff once again recorded that it had not received the shares
listed in Annexure II. The Defendant by their Advocate's letter
dated 31st March 2006 inter alia claimed that the entire shares
held by the Defendant in M/s. AP-AKsh Broadband Limited
were deposited with the Plaintiff.
10.
The Defendant by its letter dated 15th December 2006
requested the Plaintiff to release the balance loan amount of Rs.
21.90 crores. The Plaintiff by its reply dated 30th December
2006 recorded that the Defendant No.1 had not deposited any
part of the securities mentioned in Annexure II of the
Agreement. The Plaintiff therefore called upon the Defendant
to pay the principal amount of Rs. 11.10 crores with interest
accrued thereon till 30th December 2006, amounting to Rs.
1,10,13,431/- together with further interest at the rate of 13%
per annum, from 31st December 2006 till payment and or
realisation.
11. On 24th March 2009 the Plaintiff filed the present
Summary Suit for recovery of an amount of Rs. 15,37,70,000/-.
In Paragraph 16 of the Plaint, the Plaintiffs have averred that
the cause of action for filing the Suit first arose in December
6 sj-296-09-ss-1144-09
2006 when two cheques for interest were dishonoured and
action arose in March 2007/May 2007 when the Defendant
failed and neglected to repay the amount of Inter Corporate
Deposits, and the amounts due under the demand promissory
notes. Thereafter, the Plaintiff has taken out the above
Summons for Judgment in the above Summary Suit, and has
prayed for relief as set out in Paragraph 1 hereinabove.
12. The learned Advocate appearing for the Plaintiff has
therefore submitted that the Defendant has no defense
whatsoever to the above Suit and therefore, the Plaintiff is
entitled to a Judgment, as prayed for in the Summons for
Judgment.
13. The Defendant has submitted that the Plaintiff has
suppressed important facts which are relevant to the matter,
and in particular the fact that the Plaintiff has shares of the
Defendant whose value is more than Rs. 90 crores and which
are more than sufficient to cover the claim of the Plaintiff. It is
submitted that since the Plaintiff are already holding security
the value of which is more than 90 crores and since the Plaintiff
have not given up the said security, a Summary Suit under
Order XXXVII of the Civil Procedure Code is not maintainable.
It is submitted that the Plaintiff were to provide Inter Corporate
Deposits to the Defendant in the sum of Rs. 33 Crores before
the end of April 2006, so as to enable the Defendant to make an
7 sj-296-09-ss-1144-09
investment in M/s. AP-AKsh Broadband Limited, in order that
the Defendant could earn returns/profits in time, so as to able
to refund the amount with interest to the Plaintiff within one
year. It is submitted that in view of the Plaintiff having
committed default in providing the ICDs to the tune of Rs. 33
crores on time to the Defendant the investment in M/s. AP-AKsh
Broadband Limited came to be forfeited for non-payment of
call money. It is therefore submitted that the Defendant has
suffered severe financial losses. The Defendant has submitted
that where a contract contemplates reciprocal promises and in
view thereof the Defendant has raised an issue of
maintainability of the Summary Suit, the Defendant is entitled
to grant of unconditional leave to defend the Suit. In support of
this submission the Respondent has relied on a decision of this
court in Ravi Prakash Vs. Bank of India (2007 (3) Mh.L.J.8.).
The Defendant has submitted that there are several
irregularities committed by M/s. AP-AKsh Broadband Limited
in the matter of the alleged forfeiture of shares of the Defendant
and the Defendant is in the process of challenging the said
forfeiture in an appropriate proceeding. It is submitted that in
the event that the Company M/s. AP-AKsh Broadband Limited
should eventually succeed in forfeiting the shares, then the
Defendant would have a valid and legal claim against the
Plaintiff for damages on account of breach committed by the
Plaintiff in not honouring the terms of the Inter Corporate
Deposit Agreement, although the Defendant had fulfilled all
8 sj-296-09-ss-1144-09
the terms and conditions of the Inter Corporate Deposit
Agreement dated 25th March 2006. It is submitted that
therefore the Defendant has a legitimate counter claim for the
losses to be quantified eventually in a Suit to be filed by the
Defendant against the Plaintiff and others.
14. It is pointed out on behalf of the Defendant that on 9th
January 2007, the Defendant filed a Suit being No. 86 of 2007
before the Fourth Senior Civil Judge, City Civil Court,
Hyderabad seeking a permanent injunction against the Plaintiff
from transferring the shares pledged under the ICD Agreement
to itself or any third party. The Defendant has failed to get any
interim relief in the Suit, but the hearing of the Suit has been
expedited.
15. It is further pointed out by the Defendant that, the
Defendant also filed a criminal complaint being Complaint No.
277 of 2007 before the Third Additional Chief Metropolitan
Magistrate, Hyderabad alleging that the Plaintiff and others had
conspired to dishonestly cheat the Defendant by not honouring
the terms of the ICD Agreement. The said complaint was
quashed by the High Court of Andhra Pradesh under section
482 of the Criminal Procedure Code by an Order dated 8th
December 2009.
16. The Defendant has also pointed out that they had filed a
9 sj-296-09-ss-1144-09
Petition No. 69/2006 under section 397 and 398 of the
Companies Act, 1956, before the Company Law Board, Chennai,
against M/s. AP-AKsh Broadband Limited and its Promoters
being Respondent Nos. 1 to 5 therein. The Plaintiff was joined
as Respondent No. 6. The Company Law Board by its Order
dated 17th December 2007 dismissed the Company Petition No.
69 of 2006. The Appeal to the High Court of Andhra Pradesh
under section 10F of the Companies Act, 1956 was also
dismissed. An S.L.P. was filed therefrom by the Defendant,
being S.L.P. No. 9110 of 2006, which was also dismissed by an
Order dated 7th May 2010.
17. In is therefore submitted on behalf of the Defendant that,
the Defendant be granted unconditional leave to defend the
suit.
18. In rejoinder, the learned Advocate appearing for the
Plaintiff has submitted that the valuation report relied upon by
the Defendant to the effect that the shares pledged with the
Plaintiff are worth Rs. 90 crores is incorrect. The said shares
are worthless. The valuation report is not only undated but it
does not contain any working or details or calculations, nor
does it set out the date of valuation. The shares are of an
unlisted company which have no re-sale value in the secondary
stock market. Therefore, the claim that the security provided by
the Defendant is and was always sufficient is incorrect. In
10 sj-296-09-ss-1144-09
response to the defense advanced on behalf of the Defendant
that the Suit filed is not maintainable as a Summary Suit as the
Plaintiff had security by way of pledged shares, the learned
Advocate appearing for the Plaintiff has relied on the decision
of this Court in Suraj Sanghi Finance Limited vs. Credential
Finance Limited and Others, reported in 2002 (Supp.2) Bom.
C.R. 316, wherein it is held that under section 176 of the
Indian Contract Act, 1872, the Plaintiff has the right to retain
the pledged goods until such time the Defendant makes
payment and only then does the Plaintiff have to return the
pledged goods. In the said decision, it is clearly held that the
Plaintiff has a right to file a suit for recovery of the amount
without proceeding against the pledged goods or other
collateral securities. This right conferred on the Plaintiff under
section 176 Indian Contract Act, does not whittle down the
right to maintain the Suit as a Summary Suit as long as the
Plaintiff satisfies the Court that the Suit is based on a written
agreement, an acknowledgment of the debt or based on a
negotiable instrument. Security can be a ground for
consideration when leave to defend is to be considered, but not
for canvassing the argument that a Summary Suit cannot be
filed. This Court has in the said decision also held that merely
because a counter- claim had been filed, it would not detract or
result in the Suit which is filed as Summary Suit being treated
as a regular Suit. It is further held that the counter claim was
for damages, and not an ascertained amount or debt.
11 sj-296-09-ss-1144-09
19. The learned Advocate appearing for the Plaintiff has also
relied on the decision of the Hon'ble Apex Court in the case of
Union of India vs. Raman Foundry, reported in 4 AIR 1974
SC 1265, where the Hon'ble Apex Court has laid down that
damages are not debt.
20. The learned Counsel appearing for the Plaintiff has further
relied on the decision of the Hon'ble Supreme Court in the case
of Indian Bank vs. ABS Marine Products (P) Limited,
reported in 2006 (5) SCC 72, wherein the Hon'ble Supreme
Court inter alia held that while the claim of the bank was for an
ascertained sum due from the borrower, the claim of the
borrower was for damages, which required firstly determination
by the Court as to whether the bank was liable to pay damages
and thereafter assessment of the quantum of such damages.
Thus, there is absolutely no connection between the subject
matter of the two Suits and they are in no way connected. The
decision in one does not depend on the other.
21. I have considered the submissions advanced on behalf of
the Plaintiff and the Defendant. Admittedly, the parties have
entered into an Inter Corporate Deposit Agreement dated 25th
March, 2006. Each disbursement of ICD was agreed to be
designated as a separate Inter Corporate Deposit and was
repayable after one year unless extended by mutual agreement,
12 sj-296-09-ss-1144-09
for another term.. It was agreed that the deposits would bear
interest at the rate of 13% per annum payable by the Company
every quarter. The Defendant was to execute demand
promissory note and an ICD receipt in respect of each ICD, in
favour of the Plaintiff. The entire inter corporate deposit was to
be secured by collateral security by way of deposit of shares
along with duly executed Transfer Deeds in favour of the
Plaintiff, as more particularly set out in the said Agreement.
22. Admittedly, on 25th March 2006, the Plaintiff released an
amount of Rs. 10 crores in favour of the Defendant by way of
ICD pursuant to which the Defendant by its letter dated 25th
March 2006 forwarded the ICD Agreement, Board Resolution
certain share certificates, Transfer Forms, etc. to the Plaintiff.
The Transfer Deeds of shares of M/s. AP-AKsh Broadband
Limited were not forwarded as the share certificates were not
issued. The Defendant also executed an ICD receipt and a
Demand Promissory Note of Rs. 10 crores in favour of the
Plaintiff. Admittedly, though the Defendant forwarded five
cheques dated 31st March 2006, 30th June 2006, 30th September
2006, 31st December 2006 and 31st March 2007, for Rs.
1,10,496/-, Rs.25,13,794, Rs. 25,41,418/-, Rs. 25,41,418/- and
Rs. 24,86,170/- respectively to the Plaintiff, towards the
payment of quarterly interest at the rate of 13% per
annum on the ICD of Rs. 10 crores, except for cheque
bearing No. 528910 dated 31st March 2006 for a sum of Rs.
13 sj-296-09-ss-1144-09
1,10, 496/- all the other cheques were dishonoured by the
bank on the ground of 'payment stopped by the drawer'.
Though the Defendant has contended that the Plaintiff was
required to give ICDs in the agreed sum of Rs. 33 crores to the
Defendant by the end of April 2006 and the Plaintiff failed to
do so, thereby committing breach of the Agreement, the
Defendant has waived the said breach, if any, by
unconditionally accepting an ICD of Rs. 1.10 crores from the
Plaintiff on 23rd May 2006, for which the Defendant has issued
an ICD receipt as well as the Demand Promissory Note as set
out hereinabove.
23. The Plaintiff by letter dated 24th August 2006 addressed
to the Defendant inter alia recorded that they have not received
collateral security described in Annexure II of the Agreement,
and that they would not be in a position to provide any more
ICD funding. The Defendant by their response letter dated 27th
August 2006, claimed that it had provided all the shares listed
in Annexure I, but avoided making any mention pertaining to
the shares set out in Annexure II in the said letter. The Plaintiff
once again by its letter dated 29th August 2006 addressed to the
Defendant, recorded that the Defendant has not provided the
shares listed in Annexure II. Almost three and a half months
thereafter the Defendant by its Advocate's letter dated 13th
December 2006 recorded that it had deposited with the
Plaintiff the shares listed in Annexure II also, without
14 sj-296-09-ss-1144-09
mentioning as to when the same were so deposited. Thereafter,
the Defendant by its letter dated 17th December 2006 requested
the Plaintiff to release the balance loan amount of Rs. 21.90
crores. The Plaintiff by its letter dated 30th December 2006
once again recorded that the Defendant had not deposited any
part of the securities mentioned in the Annexure II of the ICD
Agreement.
24. The Defendant, as set out hereinabove, filed a Suit against
the Plaintiff before the City Civil Court at Hyderabad seeking
Orders against the Plaintiff restraining it from
transferring/selling the shares pledged by the Defendant with
the Plaintiff. In the list of documents filed therein the letter
dated 27th March 2007 is mentioned. In the description column
it is mentioned "Letter from 1st Plaintiff (Defendant herein)
expressing readiness to provide collateral securities with share
certificate numbers along with blank share transfer deeds".
Interestingly the said list of documents makes no mention of the
letter dated 31st March 2006 now relied upon by the Defendant.
Copies of the said two letters dated 27th March, 2006 and 31st
March, 2006, are now for the first time brought on record by
annexing the same to the Affidavit in Reply of the Defendant
dated 5th January 2011. The contents of the said letters makes
interesting reading. In the letter dated 27th March 2006 the
Defendant has admittedly expressed its "readiness to provide
collateral securities with share certificate numbers along with
15 sj-296-09-ss-1144-09
blank transfer deeds". In the purported letter dated 31st March
2006 (relied upon and produced for the first time in January
2011) it is alleged that the Defendant had inter alia dispatched
the Transfer Deed Forms and Share Certificates for shares held
in Ap-Aaksh Broadband Ltd. on 25th March, 2006 which was
delivered to the Plaintiff on 27th March 2006. Exhibit B-1 to the
Plaint is a letter dated 25th March 2006 addressed to the
Petitioner wherein the Defendant had categorically stated that
"TD forms and share certificates for shares held in APAKSH
BROAD BAND LTD could not be made out as the share certificates
are being issued. These will also be sent in a couple of days." The
question therefore of the Defendant despatching the Transfer
Deed Forms and Share Certificates held in Ap-Aaksh Broadband
Ltd. on 25th March 2006 does not arise. The Plaintiff has denied
receipt of the Transfer Deeds or the share certificates pertaining
to the shares of AP-AKsh Broadband Ltd. They have also
denied having received letters dated 27-3-2006 and 31-3-2006.
The Defendant has failed to produce any evidence to show that
the purported letters were forwarded and/or received by the
Plaintiff. The above facts establishes beyond doubt that atleast
the letter dated 31-03-2006 is fabricated. Therefore the
allegation of the Defendant that though the Defendant had
forwarded all the shares to the Plaintiff as agreed, the Plaintiff
failed to provide ICD's of Rs.33 crores is false and incorrect to
the knowledge of the Defendant.
16 sj-296-09-ss-1144-09
25. To support the contention of the Defendant that the
Plaintiff is in possession of shares of the Defendant, the value
of which is more than Rs. 90 crores and therefore more than
sufficient to cover the said claim of the Plaintiff, the Defendant
has relied upon the Certificate / Valuation Report running into
three lines. The said Report does not contain any working ,
details or calculations and nor does it set out the date of the
said valuation. In this regard an advantageous reference may
be made to the Judgement of this Court in the case of Suraj
Sanghi Finance Limited vs. Credential Finance Limited and
Others (supra) wherein the learned Single Judge held that
under section 176 of the Indian Contract Act, 1872, the Plaintiff
has the right to retain the pledged goods, until such time the
Defendant makes payment, and then only need return the
pledged goods. The learned Single Judge has clearly held in
the said Judgment that the Plaintiff has a right to file a Suit for
recovery of money without proceeding against the pledged
goods or other collateral securities. Though Security can be a
ground for consideration when leave to defend is to be
considered, the right conferred on the Plaintiff under section
176 Indian Contract Act, does not whittle down the right to
maintain a Suit as a Summary Suit as long as the Plaintiff
satisfies the Court that the Suit is based on a written
Agreement, acknowledgment of a debt or on a negotiable
instrument. As set out in Paragraph 13 of the Plaint - "the
present suit is filed to recover a liquidated sum of money with
17 sj-296-09-ss-1144-09
interest due under negotiable instruments being the said Demand
Promissory notes and cheques for the amount of interest as well as
a written agreement contained in the said agreement dated 25th
March, 2006 read with the said ICD receipts." In any event, the
learned Advocate for the Plaintiff has upon instructions
informed the Court that the Plaintiff is giving up the said
collateral security i.e. the shares deposited with the Plaintiff.
26. The Defendant has stated in its Affidavit in Reply that it
has suffered loss since the Plaintiff has failed and neglected to
provide the entire loan amount to it, leading to the forfeiture of
shares of the Defendant by M/s. AP-AKsh Broadband Ltd. The
Defendant has further stated that there are several irregularities
which were committed by AP-AKsh Broadband Ltd. The
Defendant is therefore in the process of challenging the
forfeiture of the shares by M/s. AP-AKsh Broadband Limited
and if the said M/s. AP-AKsh Broadband Limited eventually
succeeds in forfeiting the shares, then the Defendant would
have a valid and legal claim against the Plaintiff for damages
on account of breach committed by the Plaintiff in not
honouring the terms of the Inter Corporate Deposit Agreement
and in view thereof, the Defendant has a legitimate counter
claim for the losses to be quantified eventually in the Suit filed
by the Defendant against the Plaintiff and others. Admittedly,
though M/s. AP-AKsh Broadband Limited has forfeited the said
shares on 8th December 2006, the Defendant has not filed any
18 sj-296-09-ss-1144-09
Suit against M/s. AP-AKsh Broadband Limited. In any event,
even if the Defendant does file any counter claim against the
Plaintiff the said counter claim would be in the nature of
damages and cannot prevent this Court from directing the
Defendant to pay to the Plaintiff the amount due and payable
by it under the Inter Corporate Deposit
Agreement/receipts/promissory notes/dishonoured cheques,
i.e. the amount due on an ascertained amount of debt.
27. In the case of the Indian Bank vs. ABS Marine Products
(P) Limited (supra), the Bank had sanctioned adhoc banking
credit limit of Rs. 20 lacs on 12th July 1991 and an additional
adhoc banking credit limit of Rs. 5 lacs on 6th December 1991,
subject to the terms contained in the sanctioned advice dated
12th July 1991. Claiming that the company failed to pay the
amounts advanced by the Bank, the Bank filed an application
before the Tribunal for recovery of Rs. 30,67,820.04. The cause
of action for the bank's application was the alleged non
payment of the amounts advanced to the borrower in pursuance
to adhoc limit sanctioned on 12th July 1991 and 6th December
1991. The borrower company had also filed a Suit against the
Bank on the ground that at the request of the Company the
Bank by its letter dated 12th September 1991 had sanctioned
several credit facilities to the borrower and the Bank had also
agreed to absorb the adhoc banking credit facility of Rs. 25 lacs
already sanctioned (for which the Suit was filed by the Bank)
19 sj-296-09-ss-1144-09
within the fresh limits sanctioned. The borrower had in its Suit
alleged that it proceeded to arrange its affairs and activities on
the assumption that the bank will be releasing the loans; and
that the bank failed to release the credit facilities thereby
putting him to huge losses apart from denying him the profits
from the business. An application was filed by the Bank for
transfer of the said Suit of the borrower to the Tribunal for
being heard along with the suit filed by the Bank against the
borrower. The Hon'ble Supreme Court held that the said
application was not maintainable interalia for reasons set out in
Paragraph 9 of the Judgment which is reproduced hereunder :
"9. The issues that arose in the Bank's application were
whether the borrower failed to repay the sums
borrowed and whether the Bank was entitled to the
amounts claimed. On the other hand, the issues that
arose in the borrower's suit were whether the Bank
had promised/agreed to advance certain monies;
whether the Bank committed breach in refusing to
release such loans in terms of the sanction letter;
whether the borrower failed to fulfill the terms and
conditions of sanction and therefore the Bank's refusal
to advance, was justified; and even if there was breach,
whether the borrower suffered any loss on account of
such non-disbursement and if so whether the borrower
was entitled to the amounts claimed. While the claim
of the Bank was for an ascertained sum due from the
borrower, the claim of the borrower was for damages
which required firstly a determination by the Court as
to whether the Bank was liable to pay damages and
thereafter assessment of quantum of such damages.
Thus there is absolutely no connection between the
subject-matter of the two suits and they are in no way
20 sj-296-09-ss-1144-09
connected. A decision in one does not depend on the
other. Nor could there be any apprehension of
different and inconsistent results if the suit and the
application are tried and decided separately by
different forums. In the circumstances, it cannot be
said that the borrower's suit and the Bank's
application were inextricably connected."
28. Dealing with a similar contention, the learned Single
Judge of this Court in Suraj Sanghi Finance Limited vs.
Credential Finance Limited and Others (supra) has inter alia
held that merely because a counter claim had been filed, it
would not detract or result in a Suit filed as a Summary Suit
being treated as a regular Suit. It is further held that the
counter claim was for damages and not an ascertained amount
of debt. It is therefore not material for considering the amount
to be deposited in the event the Court is to grant conditional
leave.
29. In view thereof, the submission advanced on behalf of the
Defendant that the Defendant is entitled to unconditional leave
on the ground that it may file a counter claim against the
Plaintiff, is rejected.
30. In the circumstances I am satisfied that the Defendant has
no defence to the suit. The defence sought to be raised by the
Defendant is sham, illusory, and practically moonshine. The
decision of the Hon'ble Division Bench of this Court in Ravi
Prakash Khemka and Others vs. Bank of India and Others,
21 sj-296-09-ss-1144-09
reported in 2007(3) Mh.L.J. 8, relied on by the Defendant is of
no assistance to the Defendant since the facts of the case in that
matter as also the conduct of the parties therein, cannot be
compared to the facts and the conduct of the Defendant in the
present Suit. In my view, the Plaintiff is entitled to a decree at
this stage . However as held in the case of M/s. Mechalec
Engineers and Manufacturers vs/ M/s. Basic Equipment
Corporation, reported in AIR 1977 SCC 577, only to show
mercy to the Defendant to enable him to try and prove his
defence, leave is granted to the Defendant to defend the
Suit on condition that the Defendant deposits with the
Prothonotary and Senior Master of this Court an amount of
Rs. 15,37,70,000/- on or before 4th January 2012. Upon deposit
of the said amount by the Defendant, the Prothonotary shall
invest the said amount in fixed deposits of a nationalised bank
and the Suit shall stand transferred to the list of commercial
causes and the Defendant shall file its Written Statement on or
before 25th January, 2012. The Summons for Judgment is
accordingly disposed of.
[ S.J. KATHAWALLA, J. ]
