Delhi High Court
Indian Airforce Benevolent ... vs Enkay Texofood (I) Ltd. on 11 May, 2006
Author: S K Kaul
Bench: S K Kaul
JUDGMENT
Sanjay Kishan Kaul, J.
Page 1771
1. The plaintiff is a charitable society registered under the Societies Registration Act, 1860 formed with the object of rendering financial assistance Page 1772 to the widows and family of the deceased personnel of Indian Air Force and for the enhancement of various welfare schemes floated and approved by the plaintiff society. The schemes are stated to be funded with the annual interest on various investments made with the contribution granted by the personal of Indian Air Force.
2. In the year 1997 the defendant company, duly incorporated and registered under the Companies Act, 1956, is said to have approached the plaintiff through its Chairman and Managing director for obtaining a fixed deposit of Rs. 1.0 crore for a period of one year for meeting part of the enhanced working capital margin money. This proposal was accepted by the plaintiff and in terms of the letter dated 21.4.1998 agreed to invest the sum of Rs. 1.0 crore as fixed deposit in the public scheme of the defendant for a period of one year. The amount was carrying interest @ 15% per annum payable quarterly.
3. The cheque was issued by the plaintiff for the sum of Rs. 1.0 crore in favor of defendant and the defendant issued a fixed deposit receipt (Ex.PW-1/3) stating that the deposit is for a period of 12 months, would carry interest @ 15% per annum, the interest is payable quarterly and the maturity date is 4.5.1999. The defendant company also sent a letter dated 22.4.1998 (Ex.PW-1/1) undertaking to pay penal interest @ 24% per annum from due date till the expiry of period of extension in the event of the cheques issued by the defendant on account of interest/principal amount being returned by the bankers due to any reason.
4. The defendant, however, did not make payment of interest in time stipulated and vide letter dated 21.9.1998 (Ex.PW-1/4) undertook to make payment in the second week of October, 1998 inclusive of penal interest. The reason for delay was stated to be a recession in the textile market. The cheques issued by the defendant were dishonoured and by letter dated 20.11.1998 (Ex.PW-1/2) a replacement cheque was provided by the defendant.
5. The defendant failed to return the FDR on the maturity date though the interest up to date was paid. In view of above, discussions were held between the parties which resulted in Memorandum of Understanding dated 6.9.1999 (Ex.PW- 1/5). The Memorandum of Understanding recorded that after maturity only a sum of Rs. 5.0 lacs had been paid leaving a balance amount of Rs. 95.0 lacs. The defendant company had applied for permission of financial institutions to hive off the textile business into a separate company and pending funding arrangement the defendant agreed to pay a sum of Rs. 4,73,630/- through a pay order to cover interest dues from 5.5.1999 to August, 1999 and to continue to pay Rs. 5.0 lacs every fortnight beginning from 15.9.1999 towards outstanding principal. The interest on the principal calculated on reducing balance was also agreed to be paid on quarterly basis with the assurance in case of earlier infusion of funds into the defendant company outstanding balance would be cleared in lumpsum. The defendant company is stated to have paid a sum of Rs. 8.0 lacs in total.
6. The defendant failed to honour the further commitments and the plaintiff received a letter dated 20.6.2001 (Ex.PW-1/5A) stating that the defendant had filed an application before the Board for Industrial and Page 1773 Financial Reconstruction on account of the net worth of the company being wiped out.
7. The plaintiff finally filed the suit for recovery of Rs. 1,13,10,000/- under the provisions of Order xxxvII of the Code of Civil Procedure, 1908 along with the future interest @ 15% per annum and past interest was claimed at 15% per annum apart from the principal amount of Rs. 87.0 lacs which totals to the suit amount. The interest was calculated from September, 1999 to April, 2001. The plaintiff claimed only 15% interest thought penal interest was 24% chargeable for default by the defendant. The defendant failed to appear despite service and though the suit was filed under the provisions of Order xxxvII of the Code, by the Order dated 17.11.2004 it was considered appropriate that the plaintiff should record the evidence by way of affidavit.
8. The affidavit of evidence has been filed of Wing Commander B.K. Chowdhury, Secretary of the plaintiff, who has proved the resolution of the plaintiff dated 5.5.2003 in his favor authorizing the institution of the suit as (Ex.PW1/A). The other documents exhibited and as referred to above have also been proved by the said witness. The witness stated that the amount due as set out in the plaint is payable to the plaintiff.
9. The facts set out aforesaid and the evidence led by the plaintiff show that the defendant failed to clear the amount of the FDR and pay the sum on maturity. The defendant also failed to adhere to the Memorandum of Understanding dated 6.9.1999 and only made part payments of the amount leaving the principal balance of Rs. 87.0 lacs. Interest has been claimed @ 15% from 1.9.1999 which is agreed rate of interest. In fact the defendant was even liable for penal interest for default which has not been claimed.
10. The letter ExPW1/5A shows that case No. 188/2001 was filed before the BIFR, but nothing has been brought on record to show whether the proceedings are still pending. The defendant did not appear before the Court and thus could not apprise about the pendency of any proceeding before BIFR. Learned Counsel for the plaintiff on the other hand states that plaintiff being unsecured creditor is not aware whether there is any proceedings pending before BIFR.
11. A decree is passed in favor of the plaintiff and against the defendant for a sum of Rs. 87.0 lacs along with simple interest @15% per annum from 1.9.1999 till the date of payment. The plaintiff shall also be entitled to costs. Decree-sheet be drawn up accordingly.
