Karnataka High Court
The National Small Industries ... vs M/S.Mysore Lamp Works Limited on 9 June, 2023
Bench: P.S.Dinesh Kumar, C.M. Poonacha
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 9TH DAY OF JUNE, 2023
PRESENT
THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
R.F.A. No.1558 OF 2010 (MON)
BETWEEN
THE NATIONAL SMALL INDUSTRIES
CORPORATION LTD.THE COMPANY REGISTERED
UNDER THE COMPANIES ACT 1956
WHOLLY OWNED BY GOVERNMENT OF INDIA,
HAVING ITS REG. OFFICE AT NSIC BHAVAN,
OKHLA INDUSTRIAL ESTATE,
NEW DELHI 110020 &
HAVING ONE OF ITS BRANCH OFFICES AT
NO.C-424, PEENYA 1ST STAGE
BEHIND PEENYA POLICE STATION
BANGALORE - 560058
REP BY ITS CHIEF MANAGER
SHRI M L PRAKASHA
... APPELLANT
(BY SRI S KRISHNA SWAMY, ADVOCATE)
AND
1. M/S.MYSORE LAMP WORKS LIMITED
OLD TUMKUR ROAD,
MALLESHWARAM WEST,
BANGALORE-560055,
REP. BY ITS CHAIRMAN AND
MANAGING DIRECTOR
2
2. M/S FLOU-LITE PRIVATE LIMITED
PLOT M-11, 7TH CROSS,
1ST STAGE,PEENYA INDUSTRIAL ESTATE,
BANGALORE-560068
REP. BY ITS DIRECTOR
SRI. B.T.AJWANI.
...RESPONDENTS
(NOTICE TO R1 IS DISPENSED WITH V/O DTD 1.10.2012
R2 SERVED AND UNREPRESENTED)
THIS RFA IS FILED U/SEC. 96, OF CPC, AGAINST THE
JUDGMENT AND DECREE DATED 31.05.2010 PASSED IN
O.S.7869/2001 ON THE FILE OF THE XXVII-ADDL. CITY CIVIL
JUDGE, BANGALORE, DECREEING THE SUIT FOR RECOVERY OF
MONEY AND ETC.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 06.04.2023, COMING ON FOR PRONOUNCEMENT
OF JUDGMENT, THIS DAY, POONACHA J., DELIVERED THE
FOLLOWING:
JUDGMENT
The above appeal is filed under Section 96 of the
Code of Civil Procedure, 1908 (hereinafter referred to as
the 'CPC') by the Plaintiff challenging the judgment and
decree dated 31.5.2010 passed in OS No.7869/2001 by
the XXVII Additional City Civil Judge, Bengaluru
(hereinafter referred to as the 'Trial Court'), wherein the
suit for recovery filed by the Plaintiff has been decreed
only against the first Defendant and the suit against the
second Defendant is dismissed. In the present appeal, the
Appellant has sought for decreeing the suit against the
second Defendant.
2. For the sake of convenience, the parties herein
are referred as per their rank before the Trial Court.
3. The case of the Plaintiff necessary for
consideration of the present appeal is that, for the purpose
of assisting the Small Scale Industries, various schemes
have been introduced by the Plaintiff including bill
discounting known as 'Integrated Marketing Support
Programme'. That the first Defendant is engaged in the
manufacture of fluorescent lamps/tubes and accessories
and was enjoying bill discounting facility since 1994 and
limit of the said facility was enhanced periodically. That
the bill discounting facility was granted under certain
terms and conditions.
3.1 That several small scale industries approached
the Plaintiff to finance for selling their products and they
identified the first Defendant who agreed to purchase the
materials from them. The second Defendant was one
among such small scale industry who approached the
Plaintiff seeking financial assistance. That the second
Defendant was engaged in the manufacture of such items
as required by the first Defendant and upon the first
Defendant purchasing the materials, the second Defendant
approached the Plaintiff with a request to finance and
discount the bills raised on the first Defendant.
3.2 It is the further case of the Plaintiff that under
the said bill discounting facility the first Defendant agreed
to pay the value of the goods as per the bills raised by its
suppliers along with interest, service charges, etc., as
agreed, directly to the Plaintiff. The second Defendant
being a supplier to the first Defendant had knowledge of
the terms and conditions of the bill discounting facility and
agreed and consented to pay to the Plaintiff such sums due
and payable under the bill discounting scheme in the event
of non payment by the first Defendant.
3.3 Accordingly, at the request of the second
Defendant the Plaintiff advanced monies against Hundies
drawn on the first Defendant, the particulars of which are
as follows:
Sl.No Invoice No. Hundi No. Date of Value of
Date & dated Finance goods
(Amount of
finance)
01 886/24.3.99 347/30.7.99 30.07.1999 Rs.1,00,920
& 899/31.3.99
3.4 That though the bills were accepted by the first
Defendant, payments were not forthcoming in spite of
repeated requests and demands made by the Plaintiff.
That the second Defendant by letter dated 30.7.1999 had
undertaken to be liable for the said bills as principal
debtor. Hence, the Plaintiff filed the suit for recovery of a
total sum of `1,51,119/- (Rupees one lakh fifty one
thousand one hundred and nineteen only) together with
interest at 19.5% p.a., and service charges as also costs.
4. The first Defendant entered appearance and
contested the suit filed by the Plaintiff by filing written
statement inter alia denying the case of the Plaintiff. The
first Defendant also contended that the suit is barred by
limitation. The second Defendant remained absent and
was placed ex parte.
5. The Trial Court framed six issues. The
Representative of the Plaintiff was examined as PW.1 and
Exs.P1 to P8 were marked in evidence. The
Representative of the first Defendant was examined as
DW.1 and the documents confronted to DW.1 were marked
as Exs.P9 to P12. No documents were marked on behalf of
the first Defendant.
6. The Trial Court by its judgment and decree
dated 31.5.2010 decreed the suit of the Plaintiff only
against the first Defendant and dismissed the suit against
the second Defendant. Being aggrieved, the present
appeal is filed.
7. Sri.S.Krishna Swamy, learned Counsel for the
Appellant/Plaintiff contended:
i) that the liability of the second Defendant under
the bill discounting scheme having been specifically
pleaded as also evidence having been adduced regarding
the same and the aspect regarding the liability of the
second Defendant having been uncontested since the
second Defendant was placed ex parte, the suit ought not
to have been dismissed against the second Defendant;
ii) that the second Defendant by its letter dated
30.7.1999 (Ex.P4) had specifically undertaken to be liable
in respect of the bills discounted as principal debtor and
the Trial Court erred in not considering the same;
iii) that during the pendency of the suit, the
Plaintiff has settled the matter with the first Defendant and
in respect of 14 suits filed by the Plaintiff with regard to
recovery of amounts pertaining to bill discounting facility,
in full and final settlement has received a sum of
`1,07,00,000/- from the first Defendant and that it was
entitled to continue the suit as against the second
Defendant.
8. Notice to the first Defendant has been
dispensed with and the second Defendant has been served
with the notice of the present appeal and is unrepresented.
9. We have considered the submissions of the
learned counsel for the Appellant and perused the material
on record.
10. The questions that arise for consideration are:
i) Whether the dismissal of the suit against the
second Defendant is just and proper?
ii) Whether the suit is liable to be decreed only
against the second Defendant as sought for by the
Appellant/Plaintiff?
Re. Question No.(i):
11. The Trial Court while dismissing the suit
against the second Defendant has recorded the following
findings:
"17. Plaintiff alleges that, both the
defendants are jointly and severally liable to pay
the suit claim with interest and service charges.
As could be seen from the records of this case,
the main transaction was in between plaintiff and
defendant No.1. Defendant No.2 is the supplier of
goods to the first defendant. As per the invoices it
supplied the goods and presented the hundi for
payment drawn by the first defendant and
accordingly, plaintiff has paid the amount to the
second defendant by discounting the hundi. So
defendant No.2 is mainly a supplier of the goods
ordered by defendant No.1. So the real
transaction is in between plaintiff and defendant
No.1 with regard to recovery of money financed
by Plaintiff Company. There exists no previty of
contract between Plaintiff Company and
defendant No.2. So, in this case, defendant No.1
alone is liable to pay the suit claim and not the
defendant No.2."
12. It is forthcoming from para 10 of the plaint
that the Plaintiff has specifically pleaded regarding the
letter dated 30.7.1999 written by the second Defendant,
wherein it has confirmed its liability to the Plaintiff as
principal debtor in the event of non payment of the
amount by the first Defendant. In the letter dated
30.7.1999 (Ex.P4) written by the Director of the second
Defendant to the Bill Discounting Department of the
Plaintiff, the second Defendant has specifically undertaken
to be liable to the bills as principal debtor. The relevant
portion is extracted herein below for ready reference:
"We confirm that NSIC will be under no obligation
to present the bills for payment on due dates and
not with standing the non-presentation in case the
payment is not made by M/s. The Mysore Lamp
Works Ltd., @ on due dates, we will remain liable
on the said bills as principal debtors.
We also agree that we shall have no
objection to NSIC advising our bankers of sanction
of the above mentioned Bills financing facility."
13. Having regard to the specific undertaking given
by the second Defendant as is forthcoming from the letter
dated 30.7.1999 (Ex.P4) and this aspect of the matter
having also been specifically pleaded by the Plaintiff, the
finding recorded by the Trial Court is erroneous and is
liable to be interfered with. The suit of the Plaintiff has
also not been contested by the second Defendant. Hence,
the Trial Court ought not to have absolved the second
Defendant of its liability to pay the amounts.
14. The question No.(i) framed for consideration is
answered in the negative, in favour of the Plaintiff.
Re. Question No.(ii):
15. In the prayer made in the plaint, the Plaintiff
has sought for a decree against both the Defendants. The
Plaintiff has specifically averred in para 13 of the plaint
that the Defendants are jointly and severally liable to pay
the suit claim.
16. It is forthcoming from letter dated 25.4.2006
(Ex.P9) and 15.9.2006 (Ex.P10) that proposals were
exchanged between the Plaintiff and the first Defendant for
One Time Settlement to pay the outstanding dues. Vide
letter dated 14.12.2006 (Ex.P11) the first Defendant
offered to pay a sum of `1,12,00,008/- (Rupees One Crore
Twelve Lakhs and Eight Only) in settlement of its dues.
Vide letter dated 9.3.2007 (Ex.P12) the Plaintiff intimated
the first Defendant that it has accepted the proposal for
payment of the said sum of `1,12,00,008/- (Rupees One
Crore Twelve Lakhs and Eight Only) and upon receipt of
the same, the suits filed against the first Defendant will be
withdrawn.
17. In the Memorandum of Appeal, the
Appellant/Plaintiff has averred as follows:
"6. After matter was heard for final arguments and
the matter was posted for judgment plaintiff
received a sum of `1,07,00,000/- from 1st
defendant and this amount has to be approximated
towards 14 suits filed and propitiate share available
in the suit is `1,00,920.
7. The plaintiff appropriated a sum of `1,00,920/-
towards the debt payable by the 1st defendant in
this suit in full satisfaction and the balance money
was to be recovered by the plaintiff from 2nd
defendant."
18. The prayer made in the Memorandum of
Appeal is extracted herein below for ready reference:
"Wherefore it is prayed that the Hon'ble Court be
pleased to set aside the judgment and decree
dated 31.05.2010 passed in O.S. 7869/2001 by
XXVII Additional City Civil Judge, Bangalore or by
allowing this appeal with costs thought out by
decreeing the suit against defendant No.2 in the
interest of equity and justice."
19. Having regard to the aforementioned and in
view of the fact that liability of Defendant Nos.1 and 2 is
joint and several and in view of the settlement between
the Plaintiff and the first Defendant and the prayer made in
the present appeal is liable to be granted. Hence, question
No.(ii) framed for consideration is answered in the
affirmative.
20. In view of the aforementioned, we pass the
following:
ORDER
i. The above appeal is allowed with costs;
ii. The judgment and decree dated 31.5.2010 passed in
OS.No.7869/2001 on the file of the XXVII Addl. City
Civil Judge, Bengaluru, is modified by holding that
the suit of the Plaintiff is decreed against Defendant
No.2.
iii. The judgment and decree dated 31.5.2010 passed in
OS No.7869/2001 in all other respects shall remain
unaltered.
Sd/-
JUDGE
Sd/-
JUDGE
nd
