Calcutta High Court
Shri Bihariji Cold Rollers (P) Ltd vs Ajay Tube Industries Pvt. Ltd on 18 September, 2024
Author: Sugato Majumdar
Bench: Sugato Majumdar
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
Present:
The Hon'ble Justice Sugato Majumdar
CS/57/2017
SHRI BIHARIJI COLD ROLLERS (P) LTD.
VS
AJAY TUBE INDUSTRIES PVT. LTD.
For the Plaintiff : Mr. Debdut Mukherjee, Adv.
Mr. Anath Bandhu Datta, Adv.
Mr. Gourab Kr. Das, Adv.
Mr. Mukesh Kr. Gupta, Adv.
Hearing concluded on : 09/09/2024
Judgment on : 18/09/2024
Sugato Majumdar, J.:
This is a suit for recovery of money lent.
The plaint case may be summarized as follow:
i. The Plaintiff is a company registered under the Companies' Act
1956 having it's registered office at Jalan Industrial Complex,
Domjur, Howrah. The Plaintiff, since its inception carries on
business of manufacturing cold rolled sheets, selling the same to
various parties. The Defendant is also a company registered under
2|Page
the Companies' Act, 1956 having its registered office at 23A, Netaji
Subhas Road, Kolkata - 700001 within jurisdiction of this Court.
ii. In due course of business, the Plaintiff was introduced to the
Defendant company by two of its business partners namely M/S
Prity Tube Pvt. Ltd and M/S E-Zone Strips Pvt. Ltd. In or about
the first week of March, 2014, the Defendant approached the
Plaintiff for obtaining financial assistance to meet business
requirements. Considering the business relationship with the
Defendant, the Plaintiff agreed to grant financial assistance subject
to payment of interest at a rate of 18% per annum. Interest was
agreed to be payable from the date of receipt of the loan till
repayment. The Defendant agreed to the terms and conditions and
assured to repay the amount after three months. Relying upon
such assurances, the Plaintiff lent and advanced a sum of
Rs.12,18,94,000/- to the Defendant. The amount was remitted
from the banker HDFC Bank Ltd., Sector I, Salt Lake City, Kolkata,
by way of RTGS. Details of the remittances are as follow:
Date of Payment Mode Amount in rupees
RTGS/Cheque
reference
20/03/2014 06 3,42,60,000/-
20/03/2014 07 2,01,50,000/-
21/03/2014 08 1,49,00,000/-
3|Page
21/03/2014 09 1,69,88,000/-
21/03/2014 10 1,68,40,000/-
21/03/2014 11 1,65,26,000/-
21/03/2014 12 22,30,000/-
Total 12,18,94,000/-
iii. On expiry of the agreed period of three months, the Defendant
neglected and failed to repay the loan or any part thereof. In
spite of repeated demands, the loan remained unpaid. As on
17/03/2017 an amount of Rs.18,77,16,760/- became payable by
the Defendant to the Plaintiff, details of which are as follows:
Principal amount : Rs. 12,18,94,000/-
Interest at a rate of 18% p.a : Rs. 6,58,22,760/-
from 21/03/2014 till 17/03/2017
Total Rs. 18,77,16,760/-
iv. Initially the Plaintiff had caused issuance of two notices dated
24/07/2015 and 21/08/2015 demanding payment but the
Defendant neglected and failed to repay the loan. Subsequently,
the Plaintiff served a notice through his Learned Advocate dated
26/11/2015 under section 433/434/439 of the Companies Act,
1956. The Defendant, in terms of the reply dated 16/12/2015
refuted all the allegations. The Plaintiff also filed an application
4|Page
in this Court in appropriate jurisdiction for winding up of the
Defendant which was registered as C.P. 48 of 2016 and the same
is pending for adjudication.
v. It was contended by the Defendant, both in the reply letter dated
16/12/2015 as well as in the counter affidavit, filed in C.P. 48 of
2016 that the amount lent by the Plaintiff was actually advanced
payment on account of supply of various goods by the Defendant.
Those goods were allegedly supplied by the Defendant from
02/03/2015 to 14/03/2015. The Defendant issued tax invoices
also in respect of those goods. The Defendant also claimed that it
had supplied goods worth Rs.12,54,33,061/- to the Plaintiff and
after adjustment the Defendant was entitled to a sum of
Rs.35,39,061/-. The Defendant raised the claim in terms of the
demand notice dated 23/12/2015.
vi. The Defendant, in order to thwart the claim of the Plaintiff also
relied upon an alleged VAT return filed by itself on 03/09/2015
on account of the alleged sale of goods.
vii. It is averred in the plaint that the parties herein had never
entered into any agreement for sale of goods and the Plaintiff had
never issued any purchase order upon the Defendant in respect of
any alleged goods and had never received any such goods from
the Defendant. It is further alleged in the plaint that the
Defendant manufactured alleged invoices in respect of sale of
goods to the Plaintiff for an alleged amount of Rs.12,54,33,061/-.
5|Page
The Defendant also forged and fabricated stamp of the Plaintiff
company and affixed the same on the alleged invoices. The
Defendant also fraudulently filed its VAT returns before the
statutory authorities on the basis of fictitious supply. The plaint is
also rife with other allegations against the Defendant.
viii. The Plaintiff was constrained to file the instant suit praying, inter
alia, for recovery of a sum of Rs.18,77,16,760/- along with
interest at a rate of 18% per annum from 17/03/2017, decree for
declaration that the alleged invoices are illegal, manufactured,
null and void, decree for declaration that the alleged VAT return
filed by the Defendant on 03/09/2015, is null and void, decree
for cancellation and delivery up of the alleged VAT returns to the
Plaintiff along with consequential reliefs.
The Defendant contested the suit by filing written statement refuting all the
allegations contained in the plaint.
a) The Defendants case is that in usual course of business, the
Plaintiff placed orders on the Defendant for supply of M.S. Pipes,
CR Sheets, HR Sheet and other articles. All the orders placed
were oral. Towards the oral orders placed the Plaintiff issued
cheques between 20/03/2014 and 21/03/2014. The aggregate
sum was Rs.12,18,94,000/-. This amount was paid by the
Plaintiff on account of price of goods purchased by the Plaintiff
from the Defendant. The Defendant supplied goods between
02/03/2015 and 14/03/2015. All delivery of materials were
6|Page
taken by the Plaintiff from the go-down of the Defendant. The
Defendant issued tax invoices cum challans. The Plaintiff duly
received the goods without raising any objection whatsoever. The
Defendant raised tax invoices aggregating a sum of
Rs.12,54,33,061/-. Since the advance had been paid by the
Plaintiff towards the price of goods sold and delivered, the
Defendant adjusted the advance amount against the price of
goods after which a sum of Rs.35,39,061/- was payable by the
Plaintiff to the Defendant. Despite repeated assurances, the
Plaintiff neglected and failed to pay that outstanding amount to
the Defendant.
b) In these circumstances, to the utter shock and disbelief, the
Defendant received a letter from the Plaintiff under section 434
of the Companies Act, 1956. Contention of the Defendant is that
the claim raised by the Plaintiff is false, fictitious and frivolous.
The Defendant issued a notice dated 23/12/2015 to the Plaintiff
demanding payment of the outstanding amount of Rs.
35,39,061/-. Yet the amount remained unpaid. The Defendant
instituted a suit on 08/01/2016 in this Court claiming for a
decree for a sum of Rs.40,12,029/-. The suit was registered as
C.S. 19 of 2016. At the same time the Plaintiff also drawn up
proceeding for winding up of the Defendant which was registered
as C.P. 48 of 2016.
7|Page
c) It is further contended in the written statement that the instant
suit was filed after drawing up the proceeding for winding up of
the Defendant.
d) It is further contended that an e-auction sale notice was
published by the State Bank of India under SARFAESI Act, 2002
against the Plaintiff for recovery of an amount in excess of rupees
fifty-five crores. It is preposterous to suggest, therefore,
according to the Defendant, that a company with a loan burden
of more than rupees fifty-five crore would venture to lend
another company a sum in excess of rupees twelve crores. All
other allegations, made in the plaint, are denied by the
Defendant.
On the basis of rival pleadings, the following issues were framed:
1. Whether the plaintiff lent and advanced a sum of
Rs.12,18,94,000/- to the Defendant by way of financial assistance
for a period of 3 months against interest at the rate of 18% per
annum?
2. Whether there was any oral agreement between the parties by
which the Plaintiff agreed to sell goods to the Defendant?
3. Whether the Defendant supplied any goods to the Plaintiff under
the alleged oral agreement for sale?
4. Whether the invoices referred to in paragraph 19(a) of the plaint
have been fabricated and/or forged?
8|Page
5. Whether the Plaintiff is entitled to a decree for Rs.12,18,94,000/-
against the Defendant?
6. Whether the Plaintiff is entitled to a decree for interest against the
Defendant at the rate of 18% per annum?
7. To what other relief or reliefs is the Plaintiff entitled?
Plaintiff adduced oral as well as documentary evidences.
The Defendant did not come forward to adduce any evidence. None appear
for the Defendant to argue the suit.
All the issues are taken up together.
According to the plaint, genesis of the dispute is the loan advanced by the
Plaintiff to the Defendant. None-payment of the loan is the cause of action of the
suit. Existence and proof of loan is sine qua non to be established. The Plaintiff
adduced the statement of bank account maintained in HDFC Bank, Salt Lake,
Sector-II Branch from 12/02/2014 to 31/03/2014 (Ext. A), legal notice (Ext. B, C
and D).
It is contended by Mr. Mukherjee that the bank statements contained in
(Ext. A), establish transmission of the loan amount to the Defendant. Plaintiff
demanded repayment and also served notice under Section 433, 434 and 439 of the
Companies Act, 1956 (Ext. B, C and D) to which the Defendant did not respond.
This conduct of the Defendant, according to the Mr. Mukherjee, establish that the
financial accommodation in the form of loan is tacitly admitted by the Defendant
and confirms that loan was advanced to the Defendant.
9|Page
Both the parties are corporate bodies engaged in the business. Both the
corporate bodies understand their business interest best. It is very unlikely that one
corporate body would lent an hefty amount of Rs.12,54,33,061/- without creation of
any document. No loan agreement or any written document purporting to contain
that a loan of Rs.12,54,33,061/- given to the Defendant by the Plaintiff. Had there
been any agreement that could furnish one of the best evidences of existence of the
loan. The Plaintiff did not produce copy of books of accounts or financial statement
of the company filed annually before the register of the companies. The amount of
loan advanced by the Plaintiff to the Defendant, as pleaded, should have found a
place in those documents just now. The books of accounts, financial statement of
the company could bear eloquent testimony of the loan. Mere transaction evidenced
in the bank statement is not enough to establish a loan. Legal notices are not also
conclusive proof. Mr. Mukherjee referred to the conduct of the Defendant but
conduct cannot prove a corporate loan or loan advanced by one corporate entity to
the other one. Best evidence rule demands adducing as evidence, the books of
accounts and annual financial statement of the Plaintiff filed before the Register of
Companies for that year. In absence of such best evidence, as aforesaid, this Court
of view that the Plaintiff has failed to establish the loan of Rs.12,54,33,061/- or
entitlement of any interest on that account. In absence of proof of loan, the Plaintiff
is not entitled to a decree of money, as prayed for, or any decree for interest.
The Plaintiff failed to adduce alleged invoices and VAT returns as mentioned
in the plaint as well as in prayers (c), (d), (f) and (f). Therefore, the Plaintiff is not
entitled to any relief in respect of those documents.
In nutshell, the plaint case is not proved.
10 | P a g e
It is ordered, therefore, the instant suit be dismissed on merit without any
costs and disposed of along with all pending applications, if any.
(Sugato Majumdar, J.)
