Technology Development Board ... vs M/S Usha (India ) Ltd And Anr.
2012 Latest Caselaw 6782 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                              CS(OS)No. 754/2002

%                                                      November 27, 2012

         TECHNOLOGY DEVELOPMENT BOARD (TDB) ..... Plaintiff
         Through: Mr. Suraj Kumar with Mr. Rakesh Bhardwaj, Advs.


                      versus


         M/S USHA (INDIA ) LTD AND ANR.                      ..... Defendants
         Through: Counsel for the applicant/defendant.
                   (appearance not given).

CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

    To be referred to the Reporter or not?


VALMIKI J. MEHTA, J (ORAL)
IA No.7524/2005(u/O.37 R.5 CPC r/w S.22 of SICA 1985) &
IA No.17059/2012(u/S.8 of the Arbitration & Conciliation Act, 1996)
in CS(OS) No.754/2002

1.

The present suit for recovery of Rs.1,38,04,188/- was filed by

the plaintiff-Technology Development Board against two defendants. The

first defendant is the Company-M/s. Usha (India) Ltd. and the second

defendant is Sh.Vinay Rai, the guarantor and director of the defendant no.1.

2. The subject suit was filed under Order 37 CPC as a summary

suit way back in the year 2002 in which no proceedings could take place

immediately after service of the defendants inasmuch as firstly an

application being IA No.7524/2005 was moved on behalf of the defendant

no.2 pointing out the factum of the defendant no.1-company being a sick

company under the aegis of Board for Industrial and Financial

Reconstruction (BIFR) and therefore it was said that leave to defend was not

required and, subsequently an application being IA No.3724/2009 was

specifically filed under Section 22 of the Sick Industrial Companies (Special

Provisions) Act, 1985 (in short SICA) for staying the suit.

3. IA No.3724/2009 under Section 22 of SICA has been dismissed

by a detailed order on 7.9.2012. That order has become final because that

order has not been further challenged as informed to me by counsel for the

plaintiff. The suit therefore has to proceed ahead. I may also note that the

Supreme Court in the recent judgment reported as Raheja Universal Limited

vs. NRC Limited & Ors., AIR 2012 SC 1440 has also held that suits are not

automatically stayed under Section 22 of SICA once there are no properties

of the companies which are sought to be sold or transferred in the suit.

4. Today, the suit was listed pursuant to the order dated 7.9.2012

which noted that the plaintiff had not filed documents in support of the

plaint. Now, the original documents, with respect to the loan transactions

and the guarantee executed by the defendant no.2, have been filed. The

provision of Order 37 Rule 3 sub-Rule 6 is clear in that if no leave to defend

application is filed within the prescribed period of service of the summons

for judgment, the plaintiff will be entitled to judgment forthwith. Summons

for judgment were issued vide IA No.1513/2004 and service was effected on

the defendants by publication as recorded in the order dated 4.4.2006.

Defendant no.1 failed to file any application for leave to defend and the

defendant no.2 only filed the IA Nos.7524/2005 and 3724/2009. Therefore,

there is no leave to defend application on behalf of any of the defendants and

therefore the plaintiff is entitled to judgment forthwith.

5. The facts of the present case show that the defendant no.1-

Company-M/s Usha (India) Ltd. was granted at its request a loan for setting

up of the project for manufacture of Epitaxial Silicon Wafers. The loan

agreement in this regard is dated 21.1.1998 under which Rs.222 lakhs was to

be granted to the defendant no.1. Out of Rs.222 lakhs, Rs.170 lakhs was for

procuring new machines and Rs.52 lakhs was towards installation and

commissioning. The defendant no.2 executed a shortfall undertaking on

27.1.1998 agreeing to pay the dues of the plaintiff.

6. The plaintiff disbursed financial loan assistance of Rs.170 lakhs

vide cheque no.430502 dated 4.2.1998 in favour of the defendant no.1 which

was encashed and subsequently another amount of Rs.52 lakhs was given

vide cheque no.119151 dated 22.10.1998 which was also encahsed.

Therefore, the total amount of loan of Rs.222 lakhs stood disbursed to the

defendant no.1.

7. As per the plaint, the defendant no.1 only paid two amounts of

Rs.26,32,000/- and Rs.6,28,800/- on 25.1.2000 and 1.8.2000 respectively.

The suit was filed after service of the legal notices dated 11.7.2001 and

24.7.2001 on the defendants.

8. Since as stated above, no leave to defend applications have

been filed, contents of the plaint are deemed to be admitted. Plaintiff is

entitled to judgment forthwith and the suit is decreed for `1,38,04,188/-

against the defendants alongwith pendent lite and future payment @ 9% per

annum simple. The plaintiff will be also entitled to the costs of the suit.

Decree sheet be prepared. IAs stand disposed of.

IA No.17059/2012(u/S.8 of the Arbitration & Conciliation Act, 1996) & IA No.17060/2012(u/S.151 CPC for exemption)

9. So far as the application under Section 8 of the Arbitration and

Conciliation Act, 1996 filed by the defendant no.2 is concerned being IA

No.17059/2012, the said application is not maintainable at this stage

inasmuch as the said application ought to have been immediately filed on the

defendants being served in the suit. Once the defendants failed to file any

applications for leave to defend, and the suit is to be decreed, at that stage, to

frustrate the suit, an application under Section 8 of the Arbitration &

Conciliation Act, 1996 cannot be filed. The application is therefore

dismissed as not maintainable because the entitlement to seek arbitration

proceedings is contractual right which can be waived and the said right

stands waived in the facts and circumstances of the present case where no

application has been filed in the suit of the year 2002 till the year 2012,

though the defendants have been served way back in the year 2004. The

defendant no.2 has taken steps in the suit by filing IAs. Applications being

IA No.17059/2012 and IA No.17060/2012 accordingly stand dismissed and

disposed of.

10. In view of the above suit is decreed. Decree sheet be prepared.

VALMIKI J. MEHTA, J NOVEMBER 27, 2012 ak