M/S Indian Aluminium Co. Ltd. vs M/S Prem Metal Syndicate & Ors.
2001 Latest Caselaw 704 Del

ORDER

A.K. Sikri, J.

IA No.8399/2000

1. This application is filed seeking condensation of delay in filing the application for leave to defend (IA No.8399/2000) by defendants 1 and 2. In fact there is no delay in filing the said application, and therefore, this application is not pressed.

2. The IA stands disposed of.

IA No.8399/2000

3. The Plaintiff has filed the suit for recovery of Rs.31,36,820.18 paisa (Rs.18,70,667.48 paisa as principal amount and Rs.12,66,152.70 paisa as interest thereon). The averments made in the plaint are that Memorandum of Agreement dated 31st July, 1996 was executed between the plaintiff and the defendant No.1 and as per that Agreement, the plaintiff has been supplying its product to the defendants from time to time raising invoices against the supplies so made. The plaintiff in due course maintained a statement of account, the amount received from the defendants against the invoices were duly credited and the amounts remained unpaid were debited to the account of the defendants. The defendant No.1 is a sole proprietorship firm of which Mr. Santosh Kumar is the sole proprietor. After his death, defendant No.2, nephew of Mr. Santosh Kumar, became the sole proprietor. The defendant No.3 is the uncle of defendant No.2 who is imp leaded in the suit on the ground that he has been dealing with the plaintiff on behalf of the defendant No.1 firm.

4. It is further averred in the plaint that defendants 1 and 2 failed to make the payments on the invoices raised and interest on the delayed payment. Thereafter meetings were arranged and the defendants vide letter dated 28th May, 1997 acknowledged the liability to pay the outstanding amount and showed willingness to clear the entire outstanding dues. However, still payment was not. Again in meeting dated 25th October, 1997 defendants admitted that a sum of Rs.22,36,903/- was payable and agreed to pay the outstanding dues by Installments of Rs.2 lacs. per month commencing from November, 1997. Still, the defendants failed to make the payment, Notice dated 6th January, 1998 was sent to the defendants which was replied by letter dated 3rd February,1998 again acknowledging the liability and requesting the plaintiff not to take legal action. However, the defendants 1 and 2 paid a sum of Rs. 50,000/- only. By another letter dated 12th August, 1998 the defendants 1 and 2 again admitted and acknowledged the total dues but did not make the payment. Therefore, the plaintiff vide notice dated 22nd April, 1999 called upon the defendants to clear the dues of Rs.20,60,914/- outstanding as on 31st March, 1999. Some payments were made but as the defendants 1 and 2 failed to make the payment of the balance amount which was Rs. 18,70,667.48 paisa as on 30st November, 1999, Present suit was filed under Order xxxvII of the Code of Civil Procedure (for short 'CPC').

5. This IA has been filed on behalf of defendants 1 and 2 under Order xxxvII Rule 3(5) CPC seeking leave to defend the suit. It is the contention of the defendants 1 and 2 that the suit is not maintainable under the provisions of Order xxxvII as purported Memorandum of Agreement dated 31st July, 1996 is not a valid document which is self-contradictory and bad in law inasmuch as it is not executed in the presence of witnesses, made operative from retrospective date and three dates are self contradictory. These dates are mentioned in paras 4 and 10 as well as in the concluding para. It is also submitted that the suit does not fall within the ambit of Order xxxvII CPC. In support of this contention, it is submitted that the plaintiff agrees that the parties were dealing with each other for last 2-3 years. However, no statement of account showing the alleged balance dues has been filed. Moreover, Memorandum of Agreement dated 31st July, 1996 was for the period from April, 1996 to March, 1997 and the suit is not filed on the basis of the dues payable under this Agreement because for the goods purchased under this agreement, defendants 1 and 2 have made the payment. For this details are mentioned in para IV at pages 7 and 8 as per which the defendants 1 and 2 have purchased the goods worth Rs.18,27,226.63 paisa during this period whereas payments made during this period total up to Rs.21,42,828.76 paisa. It is contended that what is sought to be recovered are the alleged dues of the past period i.e. for the period prior to the Agreement dated 31st July, 1996 and therefore, suit for recovery of such dues is not based on any written Agreement, it would not fall within the scope of Order xxxvII CPC. It is further argued that in any case the interest sought to be charged is exorbitant and there was no Agreement/clause relating to interest, and therefore, plaintiff could not charge interest at the rate of 24 per cent per annum and further, the interest part in any case would not fall within the ambit of Order xxxvII CPC. The defendants 1 and 2 have also submitted that the defendants 1 and 2 were pressurised to sign the acknowledgements/minutes of the meetings wherein defendants 1 and 2 have acknowledged the liability, and therefore, such acknowledgements are not binding on the defendants 1 and 2.

6. On the other hand, learned counsel for plaintiff submitted that the suit is maintainable under the provisions of Order xxxvII CPC inasmuch as the supplies are made as per the Memorandum of Agreement dated 31st July, 1996 for which the plaintiff has preferred the claim. It is also submitted that even otherwise the various acknowledgments/minutes of the meetings by which the defendants 1 and 2 have acknowledged the liability would constitute the written contract between the parties wherein liquidated debt is acknowledged, and therefore, the suit is maintainable under Order xxxvII CPC. It is further submitted that the interest at the rate of 24 per cent per annum is charged as stipulation to this effect is contained in the Memorandum of Agreement as well as in the invoices vide which the goods were supplied to the defendants 1 and 2. it is also submitted that there was no question of pressuring the defendants 1 and 2 nor any particulars of such pressure or coercion have been stated by the defendants 1 and 2 in the application for leave to defend.

7. I have considered the submissions of counsel on both sides. One significant aspect which needs to be mentioned at the outset is that the defendants 1 and 2 have acknowledged the dues from time to time in various communications. The defendants 1 and 2 have not denied their signatures on these acknowledgments. Stocks defense raised now is that the signatures were obtained under pressure. However, no detailed particulars of such pressure have been given whereas it is the mandatory requirements o Section 17 of the Contract Act. However, on the other hand, It may be stated that in the absence of any statement of account filed by the plaintiff on record, it cannot be assumed, as of now, as to whether payment demanded in respect of goods supplied pursuant to Memorandum of Agreement dated 31st July, 1996. Further in some of the documents, defendants have indicated that dues which are claimed and which are acknowledged by the defendants 1 and 2 may relate to the period prior to the Memorandum of Agreement dated 31st July, 1996. Interest is charged on the basis of Agreement and it would depend upon ultimately as to whether the goods were supplied under the Agreement or they are relate to the period prior to the Agreement. Copy of invoices has not been filed to show the rate of interest. Thus defendants 1 and 2 shall be entitled to leave to defend the suit. But in view of the acknowledgement of the dues by the defendants in various communications, it would be appropriate to give conditional leave to the defendants 1 and 2. Excluding element of interest, the defendants 1 and 2. Excluding element of interest, the suit is filed for principal amount is in the sum of Rs.18,70,667.48 paisa. It would serve the interest of justice if the defendants 1 and 2 are directed to deposit a sum of Rs.10 lacs. in this Court and give the surety of the balance amount out of this principal amount to the satisfaction of the Registrar. Leave to defend the suit is granted on the aforesaid condition which should be complied with within two months.

8. This IA is accordingly disposed of.

S.No.2798/99

9. Defendants 1 and 2 may file written statement within eight weeks. Replication may be filed within four weeks thereafter.

IA No.8400/2000

10. List for arguments on 8th November, 2001.