Maharashtra Apex Corporation ... vs Sol Ltd. And Anr.
2005 Latest Caselaw 1781 Del

JUDGMENT

Anil Kumar, J.

1. Plaintiff has filed this suit under Order 37 of the Code of Civil Procedure for recovery of Rs. 66,11,726/- with interest pendentilite and future at 36% per annum. The summons under Order 37 were served on Ms. Pamela Kumar, Advocate as she had written a letter to the plaintiff that processes in respect of the suit in the name of the defendants could be served on them through her though she did not held any vakalatnama or authority on behalf of either of the defendants to receive the processes in their name.

2. The service of summons on the defendants through Ms. Pamela Kumar, therefore, by order dated 26.9.2001 was held to be not proper service on the defendants through Ms. Pamila Kumar as she did not have proper authorization from the defendants and the summons could not be served on them through her and therefore fresh summons under Order 37 of the Code of Civil Procedure to the defendants were ordered.

3. During the pendency of the suit an official liquidator was appointed for defendant No. 1 company and therefore, the plaintiff applied to the Company Court to continue the suit against the defendant No. 1 by filing an application being CA No. 244/2003 in C.P. No. 223/1997 titled Green Line v. SOL Ltd. By order dated 13.11.2003 the company Judge directed that the claim in the suit against the defendant No. 1 could be raised by the plaintiff before the official liquidator in accordance with the provisions of the Companies Act, however, the plaintiff shall be entitled to continue and proceed against the defendant No. 2 guarantor in the present suit.

4. The service on defendant No. 2 was effected by publication in the edition of The Statesman (New Delhi edition) on 17.10.2005 but no appearance has been made on behalf of defendant No. 2.

5. The defendant No. 2 was duly served and he was not entitled to defend the suit unless he had entered appearance. As the defendant No. 2 failed to enter appearance, the allegations in the plaint are deemed to be admitted against the defendant No. 2 and the plaintiff should become entitled to a decree for the sums as mentioned in the plaint together with interest at the rate specified.

6. The plaintiff has filed this suit for recovery contending that the plaintiff is a company incorporated under the Companies Act, 1956 and Sh. Dinesh Jain is the General Power of Attorney of the said company. He was competent to sign, verify and institute the suit on behalf of the plaintiff company. Plaintiff filed memorandum of articles of the company, copy of the General Power of Attorney and Resolution dated 19.9.1997 authorizing Sh. Dinesh Jain to act as a constituted attorney.

7. The plaintiff asserted that defendant No. 1 is a company and plaintiff is engaged in lease financing. At the instance of defendant No. 1, the plaintiff had granted bill discounting facilities to the defendant No. 1 company in accordance with the terms of the agreement dated 24.1.1996. The bill discounting agreement was signed by the Managing Director of the defendant No. 1 and the agreement was filed by the plaintiff with the plaint. Under the agreement the bill discounting facilities for Rs. 40 lakhs at 29% per annum for 120 days was extended to the defendant No. 1. The plaintiff contended that a letter dated 24.1.1996 Along with a cheque of Rs. 36,18,630/- was issued to the defendant No. l. The bill amount was Rs. 43,52,500/- and sanctioned amount was Rs. 40,00,000 and after considering the discount charges of Rs. 3,81,370/-, a net amount of Rs. 36,18,630 was paid. The plaintiff produced the original bill of exchange dated 24.1.1996 and original invoices dated 16.1.1996 and 18.1.1996 along with the plaint.

8. On the date of maturity on 25th June,1996, the bill of exchange dated 24.1.1996 was duly presented for payment to the defendant No. 1 but the bill was returned unpaid. A cheque was also given by the defendant No. 1 on 22nd July,1997 which was also returned unpaid.

9. Defendant No. 2 had stood as a guarantor for the defendant No. 1 and had executed the deed of guarantee dated 24.1.1996. The deed of guarantee signed by Mr. Rakesh Sharma, defendant No. 2 was produced by the plaintiff along with the plaint. The deed of guarantee stipulated that defendant No. 2 agrees to pay all the amounts due from defendant No. 1 and defendant No. 2 agreed to discharge the liability of defendant No. 1 towards the plaintiff company in full under the bill discounting agreement. Under the deed of guarantee the defendant No. 2 also consented to the plaintiff company to make any variation that the plaintiff could think fit in terms of company's contract with defendant No. 1 enlarging or varying any credit to the defendant No. 1. Under the term of guarantee, the defendant No. 2 also agreed that guarantee shall be a continuing guarantee. It was also stipulated that a certificate in writing under the hand of any of the officer of the plaintiff company stating the amount at any particular time due and payable to the plaintiff company by the defendant No. 1 shall be conclusive evidence of liability of the defendant No. 1 and the defendant No. 2 shall be liable for the same and the liability of defendant No. 2 shall be joint and several.

10. A notice of demand dated 6.8.1997 was sent to defendant No. 1, however, the amounts as had been claimed were not paid. The plaintiff has claimed a sum of Rs. 66,11,726 with interest penditilite and future at 3% per month (36% per annum).

11. The defendant No. 2 was served with the summons of the suit under Order 37 and has failed to put appearance as contemplated under Order 37 Rule 2(3). Consequently the averments made in the plaint are deemed to be admitted and the plaintiff has become entitled to a decree against the defendant No. 2.

12. The plaintiff has claimed an amount of Rs. 43,52,500/- on account of discounted bill of exchange dated 24.1.1996 and a total amount of Rs. 66,11,626/-, however, the plaintiff has failed to disclose as to how he has become entitled for Rs. 66,11,726/-. The plaintiff has not averred in the plaint the amount of interest he is entitled to except giving the total amount claimed by the plaintiff and the rate of interest interest at 36% per annum in terms of letter dated 24.1.1996 stipulating an amount @ 3% per month on account of over due compensation.

13. The plaint does not disclose specifically as to how the plaintiff has become entitled for Rs. 66,11,726 and only discloses that he is entitled for Rs. 43,52,500 on account of discounted bill of exchange dated 24.1.1996 which was not paid on maturity on 25th June,1996. Since the defendant failed to put in appearance in compliance with the provision of Order 37 of Code of Civil Procedure, the plaintiff has become entitled for sum of Rs. 43,52,500/-.

14. The bill discounting agreement stipulate that interest rate will be charged at 29% per annum calculated for 120 days payable upfront whereas the letter dated 24th January, 1996 stipulates that the overdue compensation will be 3% per month (36% per annum) and both are excessive and the plaint does not discloses the rate of interest claimed by the plaintiff specifically, the plaintiff is not entitled for interest @ 36% per annum on the amount of discounted bill. Though the defendant No. 2 has failed to file the appearance, yet considering that the amount of interest @ 36% is too excessive and it can not be awarded to the plaintiff against the defendant No. 2, it is held that the plaintiff shall be entitled for simple interest @ 12% per annum from the date of maturity of bill of exchange on 25th June, 1996 uptill 23rd October,1998 when the suit was instituted.

15. The suit of the plaintiff is, therefore, decreed against defendant No. 2 for recovery of a sum of Rs. 43,52,500 along with simple interest at the rate of 12% from 26.6.1996, the date the bill became due for payment till 28th October,1998, the date of institution of the suit. From the date of institution of the suit till the recovery of decreetal amount, the plaintiff is awarded pendent lite and future simple interest @ 9% per annum. Cost of the suit is also awarded to the plaintiff against the defendant No. 2. The suit is, thus, decreed in terms hereof. Decree sheet be prepared accordingly.