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2011 DIGILAW 1006 (CAL)

RAVI UDYOG PVT. LTD. v. S. G. PROJECTS LTD.

2011-07-29

SANJIB BANERJEE

body2011
JUDGMENT The Court: GA No. 101 of 2011 is an application in the nature of attachment before judgment and the plaintiff desires that the defendant be directed to furnish security to the extent of the plaintiffs claim of slightly over Rs.3.86 crore. GA No.400 of 2011 is the plaintiffs application for judgment on admission based on the balance sheet of the defendant for the year ended March 31, 1999. The plaintiff says that though the claim in the suit is of a much higher amount, the judgment that it seeks on admission is limited to Rs.1,77,82,089.05/- as acknowledged in the defendant's relevant balance sheet. 2. The case in the plaint is that pursuant to requests made by the defendant, the plaintiff made over a total amount ofRs.4,26,40,000/- by cheques to the defendant by way of loan or inter-corporate deposit during the period between August 18, 2003 and March 31, 2004. The plaintiff says that in or about April, 2010, the plaintiff "verbally requested" the defendant to repay such amount together with the accrued interest thereon at the rate of 18% per annum but the defendant failed and neglected to make such payment. It is of some significance that where the loan or the inter-corporate deposit is pleaded, in the earlier paragraphs of the plaint, there is no agreement as to interest averred therein. The plaintiff issued a notice of demand on September 14, 2010 calling upon the defendant to make payment of the sum of Rs.4,26,40, 400/- together with interest at the rate of 18% per annum. The claim in the suit is in the sum of Rs.9,07,35,140/- which includes interest on the principal amount for the several years between the facility having been afforded to the defendant and the time of the institution of the suit. 3. In support of the claim, the plaintiff relies on the balance sheets of the defendants for several years. Though the plaintiff says that the plaintiff does not need to go behind the year ended March 31, 2009, since the amount due to the plaintiff is specifically mentioned therein, the plaintiff says that balance sheets of the defendant for the years ended March 31, 2005, March 31, 2006 and March 31, 2008 show the amount outstanding to the plaintiff to be Rs.3,86,15,956/-, Rs.3,68,79,756/- and Rs.3,86,45,756/-, respectively. The plaintiff says that the explanation furnished by the defendant, in both its affidavit-in-opposition and in a subsequent supplementary affidavit, should not be given any credence. The plaintiff says that though the defendant has admitted in its affidavit, at paragraph 4(i), that a sum ofRs.3.86 crore remained due and payable by the defendant to the plaintiff, the defendant has referred to various transactions which are either non-existent or, in any event, have no nexus with the present claim of the plaintiff. The plaintiff says that the defendant's attempt to explain away the admission in the supplementary affidavit does not warrant any consideration since the defendant says that the liability had been admitted "out of inadvertent error" and the defendant had apparently not taken into account the transaction pertaining to a memorandum of understanding dated September 15, 2004. 4. The plaintiff has referred to the various documents that have been disclosed by the parties in an attempt to demonstrate that the plaintiffs claim is corroborated both by the defendant's balance sheets and by the plaintiffs. For instance, the plaintiff says that though its balance sheets do not include the claim against the defendant under the head of "loans" such claim is included under the heading of "sundry debtors." The plaintiff relies on an affidavit filed on its behalf to the defendant's supplementary affidavit and says that the particulars of the amounts due to the plaintiff from its sundry debtors have been detailed in the documents appended to such affidavit which have been certified by the plaintiffs auditors. . 5. The plaintiff claims since the admission is evident and the transaction is admitted by the defendant in its affidavit, the plaintiff is entitled to immediate judgment for the sum of about Rs.1. 77 crore as would appear from the defendant's balance-sheet for the year ended March 31,2009. 6. In support of the plaintiffs case that security should be directed to be furnished by the defendant, the plaintiff says that since it is evident that a less than honest stand has been taken by the defendant in its various affidavits, and it is the admitted position that the plaintiff had paid the money to the defendant, it would unfair to leave the plaintiff to claim the balance at the trial without calling upon this defendant to furnish cash or other adequate security in support of the plaintiffs unimpeachable claim. 7. 7. The defendant says that not only has the defendant explained away the apparent admission that appears in its balance-sheets, but it would be evident from the plaintiff's accounts that the plaintiff was aware that it was not entitled to make the claim that it has now made. The defendant says that it is hardly expected of any commercial organization to leave such a substantial amount outstanding for an indefinite period without raising any demand. The defendant points out the demand having been made only prior to the suit being instituted. The defendant says that the only other reference to a previous request for repayment is that of the "verbal request" apparently made in April, 2010. 8. The defendant says that since the claim is on account of a loan or inter-corporate deposit, the amount should have been reflected in the plaintiffs balance-sheets under such head. The defendant questions the authenticity of the documents appended to the plaintiffs rejoinder to the defendant's supplementary affidavit. The defendant asserts that these documents do not form part of the annual accounts of the plaintiff and suggests that such documents may have been obtained with a view to buttress the claim. 9. In particular, the defendant says that the stand taken by it is honest since the defendant has neither denied the receipt of the original payment or that a sum ofRs.3.86 crore remains due and owing from the defendant to the plaintiff in respect of such transaction. However, the defendant contends that in view of the other transactions covered by the memorandum of understanding of September 15, 2004, which have been detailed at pages 10 to 17 of the affidavit-in-opposition, the plaintiff can have no further claim since there is a sum in excess ofRs.3.98 crore that is due from the plaintiff to the defendant in respect of such other transactions, which is in excess of the plaintiffs claim of Rs.3.86 crore in respect of the transaction that has been pleaded in the plaint. 10. On an application for judgment of admission, an opportunity is afforded to the person whose admission is sought to be relied on to explain the circumstances in which the admission was made. 10. On an application for judgment of admission, an opportunity is afforded to the person whose admission is sought to be relied on to explain the circumstances in which the admission was made. The defence in the present case is that notwithstanding the admission in the several balance-sheets, it would be evident from the other documents pertaining to the transactions between the parties that a memorandum of understanding was executed on September 15, 2004 and that the defendant had supplied goods or rendered services thereunder in respect whereof the defendant had a claim of about Rs.3.98 crore. It is possible that the plaintiff may still succeed and the plaintiff is able to demolish the claim that has been made by the defendant. However, once an explanation of the admission has been furnished by the defendant, to allow the plaintiff the judgment on admission that it seeks would be to adjudge the entire defence of the defendant unmeritorious without affording the defendant an opportunity to establish the same by adducing evidence in support thereof. 11. Notwithstanding the plaintiffs seemingly straightforward case that since the admission that the plaintiff relies on is in the balance-sheet of the defendant for the year ended March 31, 2009, it is possible that the plaintiffs name as a creditor continued to appear in the defendant's balance-sheets due to oversight or inadvertence as claimed by the defendant in the supplementary affidavit. It is not as if a plausible case in support of the plea of mistake has not been made out by the defendant. In any event, it does not appear from the defendant's balance-sheets relied on by the plaintiff that the amount remained constant over the years. The simple case that the plaintiff has come to Court with is that it had lent and advanced a sum of Rs.4.26 crore to the defendant which the defendant did not repay. Against such case, what is evident from the defendant's earliest balance-sheet that the plaintiff relies on is an acknowledgement of indebtedness in the sum of about Rs.3.8 crore or thereabouts. What is evident is that there is more to the plaintiffs case than has been stated in the plaint. 12. If there is any element of discretion available to Court on an application for judgment on admission, such discretion should be exercised in favour of the defendant if the facts are as recorded above. 13. What is evident is that there is more to the plaintiffs case than has been stated in the plaint. 12. If there is any element of discretion available to Court on an application for judgment on admission, such discretion should be exercised in favour of the defendant if the facts are as recorded above. 13. As to the plaintiffs claim for security to be furnished by the defendant, since it is evident that the basis therefor is the perceived false stand taken by the defendant and it is now, prima facie, found that there may be some substance to the defence, no order in the nature of attachment before judgment can be made. To obtain an order of attachment an unimpeachable claim has first to be shown. 14. The views expressed are tentative and will have no bearing at the trial. GA No.101 of 2011 and GA No.400 of 2011 are disposed of without any order as to costs. 15. The defendant should file its written statement within six weeks from date. Documents should be discovered within eight weeks thereafter and the plaintiff will have liberty to seek an early listing 0 the suit in January, 2012. 16. Urgent certified photocopies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.