Delhi High Court
Jindal Menthol India Ltd. vs Mr. J.C.Khandelwal & Others on 22 February, 2011
Author: V. K. Jain
Bench: V.K. Jain
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Pronounced on:22.02.2011
+ CS(OS) No.2352/1997
JINDAL MENTHOL INDIA LTD. .....Plaintiff
- versus -
MR. J.C.KHANDELWAL & OTHERS ....Defendants
Advocates who appeared in this case:
For the Plaintiff: Mr. Nishant Dutta and
Ms.Ruchita Dutta, Advs.
For the Defendants: None.
CORAM:-
HON'BLE MR JUSTICE V.K. JAIN
1. Whether Reporters of local papers may
be allowed to see the judgment? No
2. To be referred to the Reporter or not? No
3. Whether the judgment should be reported No
in Digest?
V.K. JAIN, J. (ORAL)
1. This is a suit filed under Order XXXVII of the Code of Civil Procedure for recovery of Rs.42,15,138.22. It is alleged in the plaint that the plaintiff company had advanced an inter-corporate deposit of Rs.50 lakhs, for 90 days, to a Company PAN Asia Industries Limited vide two agreements, both dated 16.1.1996. The deposit carried CS(OS)No.2352/1997 Page 1 of 6 interest rate of 28% per annum. The amount of interest for 90 days, the period of inter-corporate deposit, was deducted at the time of disbursal. Defendants No.1 to 3 stood guarantors for repayment of the deposit. Since there was default in repayment of the deposit, the plaintiff served a notice dated 15.9.1997 to the borrower as well as the guarantors seeking repayment of the deposit. The deposit was, however, not repaid either by the borrower or by the guarantors. The plaintiff made a payment of Rs.14 lakhs in various instalments between 10.6.1996 to 23.8.1997. The plaintiff company also sold shares of Europlast India Limited totalling 1,53,100 for a total amount of Rs.10,47,415/-. The principal amount which remained payable to the plaintiff comes to Rs.25,52,585/-. The interest claimed by the plaintiff at the rate of 28% per annum is 16,12,796.22. The plaintiff has also claimed Rs.49,757/- towards expenses and other charges.
2. An application for leave to contest being IA 1807/1998 was filed by defendants seeking unconditional leave to defend the suit. This was accompanied by IA 1808/1998 for condonation of delay in seeking leave to contest. Before any order could be passed on the merits of CS(OS)No.2352/1997 Page 2 of 6 these applications, the defendants filed IA 2258/1999 seeking the stay of proceedings on the ground that the principal borrower PAN Asia Industries Limited had been registered under Sick Industrial Companies Act, 1985, and the proceedings had been stayed vide order dated 13.5.1999. The proceedings were revived by the Court vide order dated 22.5.2002. The plaintiff brought it to the notice of the Court that BIFR, vide its order dated 15.1.1999, had granted permission to the creditors who had filed the suit for recovery of money, though it had directed that in case of decree being passed against M/s. Pan Asia Industries Limited, the decree holders were required to obtain the consent of the Board for its execution. Since there was no appearance on behalf of defendants No.1 to 3, IAs 1807/1998 & 1808/1998 filed by defendants were dismissed in default on 14.1.2011.
3. Clause 17(c) of the Agreements dated 16.1.1996 reads as under:-
(c) The liability of the Guarantor's is joint and given several along with the liability of the Borrower as and coextensive with that of the Borrower as between the Company and Guarantor, they will be considered as principal debtor to the Company for all dues of the CS(OS)No.2352/1997 Page 3 of 6 Borrower."
4. Clause 17(e) of the Agreements reads as under:-
"The guarantor's obligation to pay hereunder shall arise on the notice being given by the Company irrespective of whether the borrower has been called upon to pay or proceeded against."
5. It would thus be seen that in this case, the liability of guarantor is at par with that of the principal borrower and therefore it arose when a notice was served on him requiring him to pay the dues of the creditor.
6. Vide notice dated 15.9.1997 sent to the defendants, the plaintiff referring to the guarantee furnished by them and reminding that their liability was joint as well as several and co-extensive with the liability of M/s. PAN Asia Industries Limited, called them upon to pay the amount of Rs.41,15,412/- within seven days of the receipt of this notice. The principal borrower M/s. PAN Asia Industries Limited sent a reply dated 6.10.1997 alleging therein that the plaintiff had not sent accounts to them and was demanding exorbitant interest. Defendant No.1 - J.C.Khandelwal sent a reply dated 29.9.1997, denying his liability to make any payment to the plaintiff and also denied having given any personal guarantee whatsoever. He CS(OS)No.2352/1997 Page 4 of 6 also expressed surprise at the sale of the shares which had been pledged with the plaintiff company. In its reply dated 30.9.1997, defendant No.3 - Blue Whale Trading P. Ltd., referring to the sale of the shares which had been pledged with the plaintiff company, claimed that no details of the sale has been furnished to them. Defendant No.3 also denied its liability to make payment to the plaintiff and sought details of the shares.
7. Considering the terms of the Agreements dated 16.1.1997, defendants No.1 to 3 are liable to pay the amount which is due to the plaintiff under these Agreements.
8. The learned counsel for the plaintiff states that the amount of interest claimed by the plaintiff is based on the aggregate interest of 31% per annum since there was default in repayment of the inter-corporate deposit taken from the plaintiff company. Since the application of the defendants for leave to contest stands dismissed, the plaintiff is entitled to recover the principal amount of Rs.25,52,585/- as also the amount of interest from defendants. In view of the provisions contained in Order XXXVII Rule 1(2) of the Code of Civil Procedure, only the CS(OS)No.2352/1997 Page 5 of 6 principal sum and interest can be claimed in a suit under Order XXXVII of the Code. Hence, the expenses amounting to Rs.49,757/- cannot be claimed and the plaintiff company, therefore, is not entitled to this amount.
9. For the reasons given in the preceding paragraphs, the decree for recovery of Rs.40,65,655/- (principal amount with interest) with proportionate costs and pendente lite and future interest at the rate of 6% per annum is hereby passed in favour of the plaintiff and against the defendants.
I am awarding pendent lite and future interest at rather low 6% per annum considering the facts that the interest for the pre-suit period appears to be very much on higher side.
Decree sheet be drawn accordingly.
(V.K. JAIN) JUDGE FEBRUARY 22, 2011 'sn' CS(OS)No.2352/1997 Page 6 of 6