Sbi Global Factors Ltd vs M/S.Greenwoods India And 2 Ors
2021 Latest Caselaw 1117 Bom

                                                           8-s-508-2014.doc




       IN THE HIGH COURT OF JUDICATURE AT BOMBAY
           ORDINARY ORIGINAL CIVIL JURISDICTION

                       SUMMARY SUIT NO.508 OF 2014

SBI Global Factors Limited                        ...Plaintiff
          vs.
M/s. Greenwoods India and Others                  ...Defendants

Mr. Rahul Jain a/w. Ms. Khushboo Rupani i/b. HSA
Advocates, for the Plaintiff.
None for the Defendants.

                            CORAM : N. J. JAMADAR, J.

DATE : JANUARY 18, 2021

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ORAL JUDGMENT

. This commercial division Summary Suit is instituted for

recovery of a sum of Rs. 3,04,54,783.70/- with further

interest on the principal sum of Rs.2,57,93,969/-.

2. The material averments in the Plaint can be stated in

brief as under:

The Plaintiff is a Non- banking fnance company and a

subsidiary of "State Bank of India". The Defendant No. 1 is a

registered partnership frm. Defendant Nos. 2 and 3 are its

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partners. Defendant No. 1 deals in the business of trading in

raw rubber and allied products. Pursuant to the request of

the Defendants, Plaintiff had sanctioned Trade Finance

Facility in favour of Defendant No. 1 which included a

maximum funds in use limit of Rs.5 Crore for Domestic

(Sales) Letter of Credit Discounting Facility in terms of the

sanction letter dated 1st June, 2011. The Defendants had

represented the Plaintiff that Defendant No. 1 sold rubber to

M/s. New Gujrat Impex and has raised invoice for the same.

At the instance of the purchaser M/s. New Gujarat Impex,

Union Bank of India, Narsanda Branch had allegedly issued

irrevocable transferable Letter of Credit in favour of

Defendant No. 1 for the sum of Rs.4,91,96,240/- for a period

of 180 days, with maturity on 24th February, 2012. The

Defendant No. 1 and M/s. New Gujrat Impex also jointly

executed a Bill of Exchange dated 6 th September, 2011 drawn

on Union Bank of India for the said sum. By letter dated 7 th

September, 2011 the Defendant No. 1 authorized the Plaintiff

to collect the payment as benefciary of the said Letter of

Credit on the due date and confrmed that the Plaintiff shall

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have the sole right to receive the payment thereunder. Union

Bank of India was also instructed to make the payment

under the said Letter of Credit to the Plaintiff. In the month

of September, 2011, the Plaintiff, however learnt that the

Letter of Credit issued by Union Bank of India was a

fraudulent instrument. Thus, the Plaintiff vide

communication dated 22nd September, 2011 requested the

banker of Defendant No. 1 namely Bank of Baroda,

Ernakulam Main Branch to freeze the account of the

Defendants maintained with them and not to allow further

debit in the said account. The issue of genuineness of the

said Letter of Credit also became a subject matter of criminal

investigation.

3. The Defendant No. 2 agreed to transfer a sum of Rs.

2,24,80,000/- to the Plaintiff towards the liability of the

Defendant. Accordingly, pursuant to the request to Bank of

Baroda to unfreeze the account and transfer the said amount

of Rs. 2,24,80,000/-, the said amount was received by the

Plaintiff. The Defendants by executing writing dated 23 rd

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September, 2011 undertook to pay further sum of

Rs.2,40,00,000/- together with interest being shortfall

against the said Letter of Credit discounted by the Plaintiff

within 75 days from 24th September, 2011. As the Defendants

committed default, the Defendant No. 1 had drawn cheque

bearing No. 607456 for an amount of Rs. 2,40,00,000/- on

State Bank of Travancore, Ponkunnam branch payable on 5 th

December, 2011. The cheque was dishonored on presentment.

Thus, the Plaintiff issued a demand notice under section 138

of the Negotiable Instruments Act, 1881 and on failure to

comply with the demand, instituted complaint for the offence

punishable under section 138 of the Act in the Court of

Metropolitan Magistrate, Bandra, Mumbai. Thus, the Plaintiff

was constrained to institute the suit to recover the said

amount along with interest and costs.

4. As the writ of summons could not be served on the

Defendants in the ordinary manner, the Plaintiff was

permitted to serve the writ of summons by way of substituted

service. By an order dated 15th March, 2018 it was noted that

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none appeared on behalf of the Defendants despite service of

writ of summons. By a subsequent order dated 21 st January,

2020 it was again noted that the writ of summons was duly

served on the Defendants and yet there was no appearance.

5. In view of default in appearance on the part of the

Defendants after the service of writ of summons within the

period stipulated by Order XXXVII (2)(3) of the Code of Civil

Procedure, 1908, the Court is enjoined to hold that the

allegations in the plaint shall be deemed to be admitted by

the Defendant and the plaintiff is entitled to a decree.

6. Nonetheless, this Court has considered the justifability

of the claim and its admissibility under sub Rule (2) of Rule 1

of Order 37 of the Code. By an order dated 21 st February,

2020 the Plaintiff was directed to fle an affdavit in support

of the claim along with compilation of original documents.

Ms. Komal Viaykumar Sahastrabuddhe (P.W.1), Executive

(Legal), of the Plaintiff has fled affdavit in lieu of

examination in chief (Exhibit P-1/1). The compilation of the

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documents is also tendered for the perusal of the Court.

7. The affdavit and the documents on which the Plaintiff

relied indicate that the genesis of the transaction is in the

Trade Finance availed from the Plaintiff by Defendant No. 1.

The claim of the Plaintiff that after realizing that the Letter of

Credit appeared to be a fraudulent document, it has

instructed the Defendant No. 1's banker namely Bank of

Baroda, Ernakulam Main Branch to freeze the account and

stop payment therefrom fnds support in the copy of the letter

dated 22nd September, 2011. A similar request appears to

have been made on behalf of Defendant No. 1 to its banker

i.e. Bank of Baroda on 22nd September, 2011. Further claim of

the Plaintiff that the account was later on requested to be

unfreezed and a sum of Rs. 2,24,80,000/- was received by it,

is evidenced by the documents which shows that the money

was transferred by RTGS on 24th September, 2011. The

undertakings dated 23rd September, 2011 by Defendant No. 2

in personal capacity and Defendant Nos. 2 and 3 in the

capacity of the partners of the Defendant No. 1 indicate that

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Defendants had acknowledged the liability to pay Rs.

2,40,00,000/- and jointly and severally agreed to repay the

said amount together with interest being the shortfall in the

Bill discounted on 14th September, 2011 on behalf of

Defendant No. 1 within 75 days therefrom.

8. The factum of issue of cheque payable on 5 th December,

2011 for the sum of Rs. 2,40,00,000/- and its dishonor are

evidenced by the cheque return memo dated 29 th May, 2012

issued by the drawee bank. The Plaintiff has tendered the

original cheque drawn on State Bank of Travancore,

Ponkunnam branch for the perusal of the Court.

9. The aforesaid material thus indicates that the

Defendants had acknowledged the liability to repay the sum

of Rs. 2,40,00,000/-. The undertakings dated 23 rd

September, 2011 constitute a written contract. Moreover, the

Defendants had drawn a cheque in favour of the Plaintiff to

repay the said amount. The cheque was returned un-

encashed on account of insuffcient funds. The fact that the

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Defendants had made a part payment to repay the liability on

account of discounting of the Letter of Credit, which was

allegedly fraudulent, lends support to the claim of the

Plaintiff. The Plaintiff is entitled to recover the balance

amount of Rs. 2,40,00,000/- which the Plaintiff was made to

part with on the representation of the Defendants and which

the Defendants had agreed to repay. The claim thus falls

within the ambit of sub Rule (2) of Rule 1 of Order 37 of the

Code.

10. The claim of the Plaintiff is supported by documents of

unimpeachable evidentiary value. The claim has also gone

un-controverted. Hence, there is no impediment to pass the

decree for the sum of Rs. 2,40,00,000/-. As regards the claim

of interest, the Plaintiff has claimed interest @ 11.75% from

2nd March, 2012 to 31st May, 2013 and @ 18% p.a from 1st

June, 2013 on the sum of Rs. 2,57,93,969/- which comprises

penal interest and legal charges etc. It was fairly submitted

on behalf of the Plaintiff that there is no contract as regards

the rate at which the interest was to be charged on the said

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amount of Rs. 2,40,00,000/-. In my considered opinion, it

would be justifable to apply interest @ 9% p.a. from 5 th

December, 2011, the day the cheque drawn by the Defendants

in favour of the Plaintiff was payable. Hence, the following

order.

ORDER

1. The Suit stands partly decreed.

2. The Defendants No. 1 to 3 do jointly and severally pay to

the Plaintiff the sum of Rs. 2,40,00,000/- along with interest

@ 9% p.a. from 5th December, 2011 till the realization.

3. Court fee refund, if any, be made as per rules.

4. Decree be drawn up and sealed expeditiously.

(N. J. JAMADAR, J.) Digitally signed by V.

V. S.         S. Parekar
              Date:
Parekar       2021.01.20
              14:40:13
              +0530




  Vishal Parekar, P.A.                                                  ...9