M/S Ge Capital Services India vs Prasanta Ghosh & Anr
2014 Latest Caselaw 1280 Del

$~33.
*     IN THE HIGH COURT OF DELHI AT NEW DELHI
+        CS(OS) 2840/2011
%                                               Judgment dated 10.03.2014
         M/S GE CAPITAL SERVICES INDIA            ..... Plaintiff
                       Through : Mr.Gaurav Gaur, Adv.
                            versus
         PRASANTA GHOSH & ANR B+           ..... Defendants
                     Through : Mr.Aniruddha Deshmukh and
                               Mr.Aniruddha Rajput, Advs. for
                               defendants.
         CORAM:
             HON'BLE MR. JUSTICE G.S.SISTANI
G.S.SISTANI, J (ORAL)
I.A. 13599/2013.
    1.

This is an application filed by defendants seeking condonation of 430 days' delay in re-filing I.A. 13598/2013.

2. For the reasons stated in the application and in view of the stand taken by counsel for the plaintiff/non-applicant before the Joint Registrar of this Court on 23.1.2014 that he does not wish to oppose the present application, this application is allowed. Delay in re-filing I.A. 13598/2013 stands condoned. Let I.A. 13598/2013 be taken on record.

3. Application stands disposed of.

I.A. 13598/2013

4. Present application has been filed by the defendants under Order XXXVII Rule 3(5) of CPC seeking leave to defend in the present suit, which has been filed under the provisions of Order XXXVII of CPC.

5. As per the plaint, defendant no.1 had approached the plaintiff for financial assistance. Defendant no.2 executed a personal guarantee dated 23.5.2004 in favour of the plaintiff for due repayment of all and every sum payable

by defendant no.1.

6. Brief facts of the case, as stated in the plaint, are that defendant no.1 had approached the plaintiff in and around May, 2004, for obtaining finance for purchasing certain medical equipment for use in commercial purposes. Relying on the representations and assurances given by defendants, the following Equipment Master Security and Loan Agreement No(s) were entered into by the plaintiff with the defendants:

i) Old No.W11293 (New No.AI 20643), dated 23-May-2004.

ii) Old No.W11283 (New No.AI20634) dated 23-May-2004.

iii) Old No.W11283(A) (New No.AI20635) dated 23-May-2004.

(Hereinafter "Agreement")

7. Terms and conditions of the said Agreement were fully accepted by the defendant(s) in respect of the said loan for all matters, inter alia, relating to documents, disbursement, recovery, etc.

8. Further, according to the plaint, the agreement was negotiated, deliberated upon, concluded, and executed in New Delhi. The plaintiff sanctioned and disbursed the said loan amount from Delhi. As per the Loan Agreement, Rs.20.00 lakhs were financed to defendant no.1, which were, inter alia, used for the purchase of medical equipments i.e. one number of Logiq 3 Pro Ultrasound Scanner along with its accessories, one number of GE DX200 medical diagnostic imaging equipment and one number of 24 Channel Digital EEG Machine model NP 2400p/Digital EMG Machine model NP 2300 and Spirowin Spirometry Machine. The said term loan was sanctioned upon the terms and conditions as contained and agreed upon in the Agreement dated 23.5.2004.

9. Further, as per the terms and conditions of the Agreement, the loan amount so disbursed by the plaintiff company was repayable in the following manner:

             Particulars   Old    No.W11293 Old                    Old


                           (New        No.AI No.W11283             No.W11283
                          20643)            (New No.AI            (New No.AI
                                            20634)                20635)
             Principal    Rs.5,20,000/-     Rs.11,36,000/-        Rs.3,44,000/-
             Amount
             Tenor/EMI 60 EMI                   60 EMI            60 EMI
             Rate      of 11.00 %               11.00 %           11.00 %
             Interest
             First        07.07.2004            27.06.2004        27.06.2004
             Instalment
             Due Date

10. In case of default/delay defendants were liable to pay interest at the rate of 36%, per annum. Defendant no.1 issued post-dated cheques, comprising of the interest payment plus the part-payment of principle amount in accordance with the agreement.

11. In terms of the loan agreement it was also agreed that in case of default committed by defendant no.1 in paying any instalment of the loan amount as per the schedule, the entire amount of the term loan or balance then due including the outstanding penal interest would become due forthwith and payable by defendant no.1. In consideration of and as security for the loan and due repayment thereof and as security, defendant no.1 had created on 23.5.2004 first charge secured by way of pledging the medical equipments as collateral security in favour of the plaintiff. Additionally, defendant no.1, as proprietor, also executed demand Promissory Note dated 23.5.2004 in favour of the plaintiff, acknowledging thereby its liability to pay on demand to the plaintiff an amount of Rs.20.00 lakhs along with interest at the rate of 11%, per annum. In the Promissory Note, defendant also acknowledged and unconditionally promised to pay a late payment charge at the rate of 36%, per annum, over and above the applicable rate of interest on the defaulted amount until realisation of the same.

12. In order to further secure the term loan so advanced by the plaintiff to

defendant no.1, an irrevocable and unconditional personal guarantee dated 23.5.2004 was executed by defendant no.1. Defendant no.1 also executed a demand Promissory Note dated 23.5.2004 in favour of the plaintiff acknowledging thereby its liability to pay on demand to the plaintiff an amount of Rs.20.00 lakhs along with interest at the rate of 11%, per annum. In the Promissory Note, defendant no.1 also acknowledged and unconditionally promised to pay a late payment charge at the rate of 36%, per annum, over and above the applicable rate of interest on the defaulted amount until realisation of the same.

13. An irrevocable and unconditional personal guarantee dated 23.5.2004 was also executed by defendant no.2 in favour of the plaintiff for the due repayment of the loan, interest and all other charges accrued in terms of the loan agreement. Defendant no.2 also executed demand Promissory Note dated 23.5.2004 in favour of the plaintiff acknowledging thereby their liability to pay on demand to the plaintiff an amount of Rs.20.00 lakhs along with interest at the rate of 11%, per annum. In the Promissory Note defendants have acknowledged and unconditionally promised to pay a late payment charge at the rate of 36%, per annum, over and above the applicable rate of interest on the defaulted amount until realisation of the same. It is also the case of the plaintiff that after the loan was disbursed only few installments were paid by the defendants.

14. Learned counsel for the defendants submits that the defendants seek unconditional leave to defend primarily on the ground that, firstly, this Court has no territorial jurisdiction to try and entertain the present suit. Reliance is placed by counsel for the defendants on the documents placed on record by the plaintiff, which would show that stamp papers were purchased in Karnataka. Counsel further submits that it is further the case of the defendants that the defendants signed the loan document at West

Bengal and no part of cause of action has arisen within the territorial jurisdiction of this Court. Hence Clause 10(g) of the Agreement, cannot confer jurisdiction on this Court.

15. Learned counsel for the plaintiff submits that since the documents were signed at New Delhi, the loan was disbursed from New Delhi, Promissory Notes were signed and payable at New Delhi, and even the installments were payable at New Delhi, thus, this Court would have territorial jurisdiction to try and entertain this matter.

16. In support of his submission counsel for the plaintiff has relied upon GE Capital Services India v. G. Neuromed Diagnostic Centre Pvt. Ltd., reported at 2007 (98) DRJ 74, more particularly paras 14, 16 to 18, which read as under:

14. In L.N. Gupta and Ors. v. Smt. Tara Mani (supra), this Court held:

Under Section 20, Clause (c), CPC, a suit can be filed in a Court in whose jurisdiction the cause of action, wholly or in part arises. Place of performance in full or in part of the contract and therefore, the place of payment or of part payment will give rise to a cause of action in that place. Such place can be specified at the time of making the contract, may be appointed later on, or may be implied. Indian Contract Act, 1872, Sections 47, 48 and 49 deal with the place of performance. So far as the stipulated place is concerned, there should ordinarily be no problem.

16. Even if it were to be assumed that the loan agreement was executed in Kanpur (though this fact is disputed by the plaintiff), the fact of the matter is that the loan agreement itself states that the Courts in Delhi would have exclusive jurisdiction.

17. I find force in the submission of the plaintiff that the present is not a case of conferring jurisdiction on a Court which otherwise has none. This Court has jurisdiction to entertain the present suit, since the loan was repayable at Delhi. This is clear from a mere reading of the Loan Agreement coupled with the promissory notes executed by the defendant Nos. 1 to 4. The promissory notes have been

executed by the defendants in pursuance of the terms of the loan agreement itself, and are not independent of it. It is not the case of the defendants that the liability of the defendants under the Promissory Notes are in addition to their liability under the loan agreement. The loan agreement has to be read in conjunction with the promissory notes. Even though loan agreement itself does not state that the same is to be repaid at Delhi, or at any other designated place, a reading of the same along with promissory notes leaves no manner of doubt that the repayment of loan had to take place at Delhi. Even otherwise it is settled that it is for the debtor to find the creditor. see L.N. Gupta (supra) The loan agreement by itself does not, expressly or impliedly, provide that the repayment of loan would be in Lucknow or at any other place other than Delhi. In such a situation, the aforesaid legal principle would become applicable that the loan was repayable at the place where the plaintiff has its principle place of business, i.e., in Delhi.

18. The parties have expressly confined jurisdiction in this Court, which it is even otherwise possessed of."

17. Counsel for the plaintiff has further relied upon M/s GE Capital Services India v. Dr.Mohan Chatubhuj Jamvar and Ors, CS(OS)2031/2011, decided on 1.7.2013, more particularly paras 5, 6 and 8, which read as under:

5. The Agreement dated 31.01.2007 between the plaintiff and the defendant no.1, execution whereof is not denied, nowhere in the recitals thereof records the defendant no.1 having agreed to buy the machine on finance from the plaintiff on account of any representation by the plaintiff as to the quality or performance of the machine; rather the said Agreement nowhere refers to M/s Bausch & Lomb and only describes the machine which is financed thereunder; similarly the same does not require the plaintiff to, upon default, first attempt to recover the monies due by repossession or sale of the machine and rather empowers the plaintiff to immediately recover the monies due without being required to repossess or sell the machine. In the face of such Agreement in writing between educated commercial persons (as discussed in Satyendra Jain Vs. M/s Omway Buildestate Pvt. Ltd. 199 (2013) DLT 710 and in judgment dated 1st February, 2013 in CS(OS) No.1480/2009 titled

Chemical Systems Technologies (India) Pvt. Ltd. Vs. Simbhaoli Sugar Mills Ltd.) leave cannot be granted on grounds urged in contravention thereof.

6. As far as the objection to the territorial jurisdiction is concerned, Clause 10(g) of the Agreement admittedly executed by the defendants records the execution thereof by the authorized representative of the plaintiff at Delhi; there is no contravention of the said fact in the application for leave to defend; it thus cannot be said that no part of cause of action has accrued at Delhi for the agreement of the parties also contained in the Agreement dated 31.01.2007 as to the exclusive jurisdiction of the Courts at Delhi to be of no avail. Not only so, the address of the plaintiff in the Agreement is of Delhi only and the plaintiff is correct in relying on the principle of debtor must seek the creditor for vesting the Courts at Delhi with territorial jurisdiction over the matter. Similarly, the defendant no.2 also has addressed the personal guarantee to the plaintiff at Delhi and thus undertaken to make the payments thereunder to the plaintiff at Delhi. Thus the grounds urged by both the defendants of this Court lacking territorial jurisdiction have no merit.

8. The ground urged by the defendants no.1 and 2 of the claim being barred by limitation also has no substance. The date of signing of the Agreement is of no relevance. The defendants in the application for leave to defend have expressly admitted the loan of Rs.1.20 crores being repayable in 60 installments commencing from February, 2007 and to run till January, 2012; it is further not disputed that installments were paid till December, 2008. The suit has been instituted within three years therefrom, on 12.08.2011."

18. Learned counsel for the defendants in support of his submission that this court does not have territorial jurisdiction has relied upon National Horticulture Board v. M/s Flora Continental Limited & Ors., reported at 2004 I AD (DELHI) 81, more particularly para 11, which reads as under:

11. But in the instant application for leave to defend the applicants have also contended that this court has no territorial jurisdiction since the defendant No. 1 had already shifted its registered office from Pushpanjali, Delhi to the State of Haryana and at the time of

the filing of the suit the defendant was neither carrying on business nor was working for gain within the jurisdiction of this court. Admittedly the loan agreement, promissory note, the undertaking and other documents were executed by the defendants No. 1 to 5 in the State of Haryana. No part of the project was to be executed in Delhi. The argument advanced on behalf of the plaintiff is that no intimation of the shifting of the registered office from Delhi to Haryana was given to the plaintiff, therefore, the defendants No. 1 to 5 have raised a bonafide defense which may be established by them at the trial.

19. Counsel for the defendants has further relied upon GE Capital Services India v. May Flower Healthcare Private Limited, CS(OS)2859/2011, decided on 31.8.2012. Counsel has also relied upon Rashtriya Mahila Kosh v. The Dale View and Anr., reported at 2007 (95) DRJ 418, more particularly paras 15 and 16, which read as under:

"15. Having heard learned Counsels for the parties, I find that the present suit is based on agreements, guarantee deeds and pronotes which were executed by the defendants. The documents have been executed on the stamp papers and have been procured at Kerala. These documents also prima facie reflect that they have been executed at Kerala. The pronotes and guarantee deeds relied upon by the plaintiff also show that they have been signed by the defendants at Kerala. The payments which have been made by the plaintiff have admittedly been made through bank drafts. The copies of the bank drafts which have been placed on record show that the bank drafts are payable at Kerala. Therefore, so far as the contention of the plaintiff that these documents were executed at Delhi is concerned, the same is the matter which cannot be decided by a mere examination of the documents but would require evidence in support of the respective contentions. There is also no dispute that the loans have been issued to poor women needing micro-finance at Kerala as per the scheme of the plaintiff.

16. It is further noteworthy that the agreement dated 12th October, 1994 executed by defendant no. 1 stated that interest on the dues would be as was specified in the letter of sanction of the facility. The amount of the loan was sanctioned vide letter dated 30th September, 1994 wherein the rate of interest which the plaintiff could charge was 8% per annum. The plaintiff has based the suit

claim on a demand made on the defendants by its legal notice dated 19th September, 2003 wherein it has been stated that repayment of the loan amount was to be effected by the defendants to the plaintiff with interest at the rate of 8% per annum with quarterly rates. The suit claim is based on such computation of the interest. I find that the suit also contains a prayer for a demand of future interest at the rate of 16% per annum from the date of filing of the suit."

20. I find no force in the submission made by counsel for the defendants for the reason that even assuming that the loan agreements were not signed in Delhi, it is not in dispute that the loan amount was repayable at Delhi, which is evident from the reading of the document in question. Moreover, since the payments were to be made at Delhi, place of performance in full or part of the contract is in Delhi, therefore place of payment or any part will give rise to a cause of action in that place. Moreover, parties have agreed to confer jurisdiction on the Courts at Delhi. This Court cannot lose track of the fact that Promissory Notes were executed by the defendants in pursuance of the terms of the loan agreement and reading of the loan agreement shows that the amount was to be repaid at Delhi.

21. On reading of the loan agreement it can safely be said that parties have expressly conferred jurisdiction on this Court, which it has even otherwise. Three Single Judges of this Court while dealing with identical matters have held that Courts at Delhi would have jurisdiction in the matter. I have no reason to differ.

22. The second ground urged in this application by the defendants is that the Promissory Note does not contain the liquidated debt due and the statement of accounts, sought to be relied upon by the plaintiff, is not signed by the defendants and, thus, in the absence of a liquidated debt, a suit under the provisions of Order XXXVII of CPC would not be maintainable.

23. The second argument raised by learned counsel for the defendant is that

there is no liquidated debt as the Statement of Accounts are not signed by the defendants nor the Promissory Notes contain a liquidated debt. Without expressing any opinion on the merits of the matter, in my view, this is a triable issue, which requires consideration. Accordingly, it is a fit case where the defendants should be granted conditional leave to defend.

24. Accordingly, present application is allowed, subject to defendants' depositing 50% of the suit amount i.e. Rs.35,96,810/- with the Registrar General of this Court, within six weeks from today, which amount shall be kept in a fixed deposit, to be renewed periodically till further orders from this Court. In case, the order passed today is not complied with, the suit shall stand decreed in favour of the plaintiff and against the defendants in the sum of Rs.35,96,810 together with pendente lite and future interest at the rate of 8%, per annum.

25. Application stands disposed of.

CS(OS) 2840/2011

26. Let written statement be filed within thirty days from today. Replication, if any, be filed within thirty days thereafter. Parties, shall file documents, which are in their possession and power, within the same period.

27. List the matter before Joint Registrar for admission/denial of documents on 12.5.2014.

28. List the matter before Court for framing of issues on 21.7.2014, when parties shall bring suggested issues to Court.

G.S.SISTANI, J MARCH 10, 2014 msr