Delhi High Court
M/S Monnet Finance Ltd. vs Rattan Lal Garera & Anr. on 17 October, 2012
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 901/2000
% 17th October, 2012
M/S MONNET FINANCE LTD. .... Plaintiff
Through: Mr. S.P.Kalra, Sr. Adv. with Mr. Rajiv
Kapoor, Adv. and Mr. Avinash Kumar,
Advocates.
VERSUS
RATTAN LAL GARERA & ANR. ...... Defendants
Through:
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
1. The subject suit has been filed by the plaintiff for recovery of
`3,02,70,732/- against the two defendants, and who are the guarantors. Only the
guarantors are sued inasmuch as the liability of the guarantors/defendants is
averred to be joint and several with the principal borrower. The principal borrower
M/s H-Lon Hosiery Ltd-company has not been sued inasmuch as it has already
gone into liquidation.
CS(OS) 901/2000 Page 1 of 6
2. The facts of the case are that the plaintiff granted to the company- M/s
H-Lon Hosiery Ltd lease of equipments under the lease agreement dated 7.12.1995
(Ex.PW1/3). The equipment which was leased was for a total amount of
`1,42,41,700/-, and which amount was to be repaid with interest in instalments
with machinery being security against repayment. The defendants executed the
guarantee letters dated 7.12.1995, Ex.PW1/6 and Ex.PW1/7, agreeing to make the
payment in case of a demand being raised upon the guarantors on the default in
repayment committed by the principal borrower. The maximum amount payable
under each of the guarantee agreement was `1,94,00,000/-.
3. The schedule of repayment is contained in the lease agreement
exhibited as Ex.PW1/3, and which is as under:-
"SCHEDULEANNEXED TO THE LEASE AGREEMENT DATED 7th DECEMBER, 1995
MADE BETWEEN THE PARTIES:
DESCRIPTION OF THE EQUIPMENT:
55 Nos. Automatic Socks Knitting Machines, Colour Motif, Colour-in-Colour, Floating Pattern,
Mesh Pattern, Plating Horizontal & Vertical Stripes etc.
LEASE RENT:
-- - - - - - - - -
SL. PERIOD FOR WHICH DUE DATE OF AMOUNT OF
NO. LEASE RENT PAYABLE PAYEMNT LEASE RENT
PAYABLE
1. 7.12.95 to 6.03.96 7.12.95 13,17,358.00
2. 7.03.96 to 6.06.96 7.03.96 13,17,358.00
CS(OS) 901/2000 Page 2 of 6
3. 7.06.95 to 6.09.96 7.06.96 13,17,358.00
4. 7.09.96 to 6.12.96 7.09.96 13,17,358.00
5. 7.12.96 to 6.03.97 7.12.96 13,17,358.00
6. 7.03.97 to 6.06.97 7.03.97 13,17,358.00
7. 7.06.97 to 6.09.97 7.06.97 13,17,358.00
8. 7.09.97 to 6.12.97 7,09.97 13,17,358.00
9. 7.12.97 to 6.03.98 7.12.97 13,17,358.00
10. 7.03.98 to 6.06.98 7.03.98 13,17,358.00
11. 7.06.98 to 6.09.98 7.06.98 13,17,358.00
12. 7.09.98 to 6.12.98 7.09.98 13,17,358.00
13. 7.12.98 to 6.03.99 7.12.98 13,17,358.00
14. 7.03.99 to 6.06.99 7.03.99 13,17,358.00
15. 7.06.99 to 6.09.99 7.06.99 9,25,709.00
4. The principal borrower M/s H-Lon Hosiery Ltd. failed to pay even a
single instalment, and therefore, the subject suit came to be filed. During the
pendency of the suit, on account of compromise with the defendants, the
defendants on different dates paid amounts totalling to ` 13,00,000/-. Since, the
balance amount is not paid, the plaintiff seeks the decree for recovery of balance
moneys.
5. Plaintiff has filed its affidavit by way of evidence. Two affidavits
have been filed. One of Sh. N.K.Jain, PW-1 and another of handwriting expert Sh.
B.N.Srivastava, PW-2.
CS(OS) 901/2000 Page 3 of 6
6. Plaintiff has through the affidavits by way of evidence proved on
record the Board of Resolution dated 5.10.1998 Ex.PW1/1showing due filing of
the suit, Certificate of Incorporation of the plaintiff has been proved and exhibited
as Ex.PW 1/2, the lease agreement and the supplemental agreement have been
proved and exhibited as Ex.PW1/3 and Ex.PW1/4 respectively, guarantees
executed by defendant nos. 1 and 2 proved and exhibited as Ex.PW1/6 and
Ex.PW1/7, notice of demand upon the defendants to make payment of the suit
amount is notice dated 10.4.2000 which has been exhibited as PW1/35 and the
postal receipts have been proved and exhibited as Ex.PW1/36 to Ex.PW1/41.
7. Learned senior counsel appearing for the plaintiff with reference to
the guarantee agreements Ex.PW1/6 and Ex.PW1/7 contends that in the present
case, liability against the guarantor commences after the default of the principal
borrower, only when the notice of demand is served upon the
defendants/guarantors, and which is argued to be clear from the expression "in the
event you advise me that the Lessee has not paid the lease rent...." in the guarantee
agreement. It is argued that in such cases, the Article applicable for limitation will
be Article 113 of the Limitation Act, 1963 and the cause of action or the right to
sue will arise on sending of the demand notice dated 10.4.2000. It is argued that
the suit is therefore within limitation as the same has been filed on 2.5.2000.
CS(OS) 901/2000 Page 4 of 6
8. Learned senior counsel for the plaintiff also confines his relief to the
refund of the principal amount of `1,42,41,700/- less the amount of ` 13,00,000/-
i.e. the amount of ` 1,29,41,700/- and interest payable thereon.
9. I may state that though as per the lease agreement Ex.PW1/3, interest
at 4% per month is the contractual rate of interest, however, this rate of interest
cannot be granted in view of the Usurious Loans Act, 1918 as amended qua Delhi
by the Punjab Relief of Indebtedness Act, 1934. As per this amendment of the
Usurious Loans Act, as applicable to Delhi, the rates of interest which can be
charged by a lender are at two different rates. One rate is when the debt is a
secured debt and another is when the debt is unsecured. For a secured debt,
interest at 7 ½% per annum simple will be payable whereas for an unsecured debt
interest at 12 ½% per annum simple is payable-vide Section 3 (i)(e) of the Act. Of
course, the Usurious Loans Act will not apply to any loan by the bank or any other
notified company as per the proviso to the aforesaid Section, however, the plaintiff
is not a notified company exempted from application of the Usurious Loans Act
inasmuch as that is not the case as set up by the plaintiff.
10. In view of the above, the plaintiff has proved the entitlement to claim
` 1,29,41,700/- against the defendants and for which amount a decree is passed in
favour of the plaintiff and against the defendant. Plaintiff will also be entitled to
CS(OS) 901/2000 Page 5 of 6
pendente lite and future interest till payment at 7 ½ % per annum simple. Plaintiff
is also entitled to costs in terms of Rules of this Court. Decree sheet be prepared.
OCTOBER 17, 2012 VALMIKI J. MEHTA, J.
ib
