Calcutta High Court
Adair Dutt Instruments Pvt. Ltd vs Exhibitors Syndicate Limited on 13 December, 2022
ORDER SHEET
ODC-12
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
[COMMERCIAL DIVISION]
IA No. GA/1/2022
In
CS/96/2022
ADAIR DUTT INSTRUMENTS PVT. LTD.
VERSUS
EXHIBITORS SYNDICATE LIMITED.
BEFORE:
The Hon'ble JUSTICE ARINDAM MUKHERJEE
Date: 13th December, 2022.
Appearance:
Mr. Chayan Gupta, Adv.
Mr. Souveek Ray, Adv.
For the plaintiff/petitioner.
Mr. Subrata Goswami, Adv.
For the defendant/respondent.
The Court :- This is an application filed by the plaintiff, inter alia, for a
direction upon the defendant to furnish security in a suit for recovery of money,
lent and advanced. The plaintiff says that it had given a short-term
accommodation loan to the plaintiff repayable with interest. There is no dispute
that a principal sum of Rs.2.2 crores was initially given as in tranches loan as
financial assistance to the defendant. There is no dispute that neither the said
sum of Rs.2.2 crores or any part thereof has been repaid. The defendant had paid
interest for upto certain period of time and nothing thereafter. The plaintiff
further says that the defendant has deducted tax at source (in short TDS) from
the interest amount that have accrued on the principal sum of Rs. 2.2 crores and
have deposited the said sum as TDS in the plaintiff's account as will appear from
a print out of the Form-26AS against the plaintiff's assessee number downloaded
from the official website of the income tax department. The plaintiff also says that
unless money is due and payable which carries interest the defendant would not
have deposited TDS deducted from the interest amount.
Relying upon this 26AS form the plaintiff says that the defendant
should be directed to furnish security for a sum of Rs.3,18,55,126/- on account
of principal and accrued interest, the break up of which is given in paragraph-23
of the application.
The only substantial defence that the defendant has taken in its
affidavit is that the plaintiff is not a money lender holding a valid licence under
the Bengal Money Lenders Act, 1940 and as such transaction is barred under the
provisions of the said Act.
The issue as to the applicability of the provisions of the Bengal Money
Lenders Act, 1940 to one or two sporadic transactions of loan with interest has
fallen from consideration before this Court in various judgments. The plaintiff
has relied upon the following judgments on this point [2002] 2 CLJ 185; 2010
SCC OnLine Cal.44; [2014] 5 CHN 72. The plaintiff has also relied upon [2021]
6 SCC 418 (paragraph-42) to demonstrate that in an appropriate case security
can be directed to be furnished under the provisions of Section 151 of the Code of
Civil Procedure, 1908 (in short CPC). The plaintiff also says that the defence of
the defendant is sham and does not entitle the defendant even leave to defend in
a proceeding under the provisions of Chapter-XIIIA of the Original Side Rules of
this Court. The plaintiff also says that the case is a fit case under Order XXXVII
of the Code of Civil Procedure, 1908 for directing the defendant to furnish
security. It is also submitted that the plaintiff is in fact entitled to signing of a
judgment even in the present case. The plaintiff in the instant case is claiming an
inferior relief than a summary judgment.
After considering the submissions made by the parties and the
materials on record, I find that the plaintiff has established that the entire sum of
Rs.2.2 crores on account of principal is due and payable to the plaintiff by the
defendant. The plaintiff has also established that interest at the rate of 15% is
payable on the said sum of Rs. 2.2 crores from the balance conformation as also
from the amount deducted as TDS on account of interest. The defendant has not
disputed the transaction or payment of interest and repayment of a part of the
principal. The only point that the plaintiff is a money lender is not backed by any
document. In absence of any supporting materials that the plaintiff carries on
business as a money lender merely on the basis of a stray allegation, the plaintiff
cannot be said to be a money lender. Even if the plaintiff is a money lender then
also there is no bar to filing of the suit or proceeding with it. The only embargo is
that no decree can be passed. The license fee is a paltry sum and imposition of
penalty will also not take the same beyond five figures. The plaintiff is therefore
directed to deposit a sum of Rs. 5000/- with the Registrar, Original Side to the
credit of the suit by 6th January, 2023.
After introduction of the Commercial Courts Act, 2015, the issue of
security has been considered by the Supreme Court in reference to commercial
suit and/or suits instituted in the Commercial Division. The view expressed by
the Supreme Court in respect of the criteria to be fulfilled for providing security
under the provisions of Order XXXVIII Rule 5 of CPC has undergone a sea
change. In the judgment reported in [2021] 6 SCC 418 (Rahul S. Shah-Versus-
Jitendra Kumar Gandhi) the Hon'ble Supreme Court while considering a money
suit arising out of commercial dispute has held that in an appropriate case
security can be directed to be furnished even in exercise of power under Section
151 of CPC. The strict compliance of the criteria to be fulfilled under Order
XXXVIII Rule 5 of CPC as held in 2008 (2) SCC 302 (Raman Tech.& Process
Engineering Company & Anr. -Vs- Solanki Traders) have been diluted in an
appropriate case in the perspective of commercial suit.
In the light of the judgment Rahul S. Shah (supra) and upon
considering the facts of the case this Court is of the view that this is an
appropriate case wherein the defendant should be directed to furnish a security
for a sum of Rs. 3,18,55,126/- by 27th January, 2023 by depositing the said sum
with the Registrar, Original Side of this Court, failing which there shall be an
automatic decree for the said sum of Rs.3,18,55,126/- in favour of the plaintiff as
against the defendant. The security is directed to permit the defendant to go to
trial upon imposition of condition.
Nothing further remains to be adjudicated in this application, the
application is, accordingly, disposed of without, however, any order as to costs.
The interim order passed in IA No. GA/1/2022 restraining the
defendant from operating its bank account is modified to the extent that the
bank account of the defendant's can be operated only to the tune of Rs.
3,18,55,126/- for the purpose of putting in the security as directed by this order.
After the security is furnished for the amount as directed the defendant shall be
free to operate his bank account.
(ARINDAM MUKHERJEE, J.)
snn
