Delhi District Court
Corporate Law Group vs Export Promotion Council For Eous & Sezs on 30 September, 2014
IN THE COURT OF MS. VINEETA GOYAL, ADDITIONAL
DISTRICT JUDGE 01, PATIALA HOUSE COURTS, NEW DELHI
DISTRICT, NEW DELHI
Suit No. 357/13
Unique ID no. 02403C0170242013
Corporate Law Group
11011104, 11th Floor, Kailash Building
26, K.G. Marg, New Delhi - 110 001 Flats,
Through its Proprietor Ms. Krishna Sarma
......... Plaintiff
Versus
1. Export Promotion Council for EOUs & SEZs
(Ministry of Commerce and Industry, Government of India)
8G, Hanasalaya Building, 15, Barakhamba Road
New Delhi - 110 001
Through its Chairman
2. Union of India
Through the Secretary
Department of Commerce,
Ministry of Commerce and Industry
Udyog Bhawan, New Delhi
........ Defendants
Suit presented On : 29.10.2013
Arguments Heard On : 11.09.2014
Order Pronounced On : 30.09.2014
Appearance : Sh. Navneet Kumar, counsel for the plaintiff.
Sh. G.S. Arora, counsel for the defendant.
ORDER
1. Plaintiff filed a suit u/o 37 of Civil Procedure Code, 1908 for Suit no. 357/13 Corporate Law Group V. Export Promotion Council page no. 1 of 11 recovery of Rs.12,00,000/ (Rupees Twelve Lacs only) against defendants on account of balance consultation fee due towards defendants under a written contract.
2. The facts in nutshell are that in year 2009 Export Promotion Council for EOUs and SEZs, defendant no. 1 requested for the services of plaintiff for upgrading and finalization of six draft regulations which were prepared and submitted by plaintiff on January 19, 2006. Plaintiff was further requested to propose the terms and conditions for rendering its professional services for the said purpose. The plaintiff, accordingly, sent a proposal vide letter dated May 28, 2009 specifying its professional fee as Rs. 20,00,000/ for the following professional services :
a) Updating the six draft IFSC Regulations ; b) Discussion with concerned ministries / department of
government of India and regulatory authorities like RBI, IRDA etc ;
c) Interactions with market players like insurance and banking companies ;
d) Finalization of six draft IFSC Regulations ; and
e) Drafting of finalization of any other regulations, if required. 2.1 The defendant no. 1 accepted the said proposal vide communication no. EPC/SEZ/AM04/A.14 dated June 1, 2009 conveying its confirmation to plaintiff's terms and conditions including the professional fee. It was also confirmed that the payment of plaintiff's fee will be made by defendant no. 1 after Suit no. 357/13 Corporate Law Group V. Export Promotion Council page no. 2 of 11 submission of report by plaintiff to it and on receipt of bill. Accordingly, the plaintiff updated the six draft IFSC Regulations and forwarded the same and a review report to defendant no. 1 vide letter dated November 18, 2009. The plaintiff averred that in the meantime Under Secretary, Department of Commerce (SEZ Section) sought for the details of cost, estimates (man, month / rate etc) of the said work vide letter no. J.7/1/2009SEZ dated September 14, 2009. The plaintiff clarified vide letter dated November 18, 2009 that the amount of Rs.20,00,000/ quoted in its letter dated May 28, 2009 is only towards its professional services and is exclusive of expenses. The defendant no. 1 advised the plaintiff to raise an invoice for Rs. 15,00,000/ towards the part settlement of total fee of Rs.20,00,000/ as it was being anticipated that there may be further discussions / interactions with concerned ministries / departments / regulatory authorities / stake holders / market players and there may be further changes to the updated Regulations on the basis of such discussions / interactions. The plaintiff raised invoice dated November 18, 2009 for an amount of Rs.15,00,000/ towards part settlement of total fee and forwarded the same to defendant no. 1. However, only a partial payment of Rs.8,00,000/ was made by defendant no. 2, the Administrative Ministry which controls and manages the affairs of defendant no. 1 by cheque no. 604113 dated March 26, 2010 drawn in favour of Ms. Krishna Sharma, proprietor of plaintiff's law firm. Suit no. 357/13 Corporate Law Group V. Export Promotion Council page no. 3 of 11 2.2 The plaintiff further averred that subsequent to the submissions of revised draft IFSC Regulations to defendant no. 1, the plaintiff has had meetings with concerned Government and regulatory authority and during the month of March - April 2010, the plaintiff has had a series of such meetings with Ministry of Finance, the Reserve Bank of India, Department of Commerce and also had meetings which stake holders such as Government of Gujarat, Trade Association, etc. The lasting meeting was with Insurance Regulatory and Development authority at Hyderabad on April 27, 2010 where the plaintiff has made a presentation on IFSC and Offshore Insurance Regulations 2009. The plaintiff has completed the process of discussions with various authorities and regulators by April 27, 2010. However, none of the aforesaid authorities made any suggestions warranting any change to the updated draft IFS Regulation either during the said meetings / presentation or thereafter, so, they are deemed to be final, further, there was neither any necessity to draft any other regulations in this connection nor defendant no. 1 instructed to do so. Given these and of the fact that a considerable time has elapsed since the submission of updated six draft IFSC regulations and the review report, plaintiff raised invoice no. CLG/2010/0259 dated August 30, 2010 in terms of letters dated May 28, 2009 and June 1, 2009 for the balance amount of Rs.5,00,000/ and forwarded the same to Suit no. 357/13 Corporate Law Group V. Export Promotion Council page no. 4 of 11 defendant no. 1. However, both the defendants had failed to pay aforesaid amount and had also failed to pay the balance amount of Rs.7,00,000/ against the said first invoice dated November 18, 2009.
2.3 The plaintiff also averred that during the period of September 2010September 2011 numerous communications were sent through email and letters to defendants at various levels, requesting to release outstanding consultation fee due to the plaintiff. Despite this the defendants neither paid the amount nor respond to the said letters and emails. A notice dated August, 24, 2013 in terms of Section 80 of CPC calling upon the defendant to pay the outstanding amount was issued, it was delivered to defendant no. 1 on August 27, 2013 and defendant no. 2 on August 26, 2013. Defendant no. 1 sent a reply dated October 3, 2013 acknowledging that out of total consultation fee of Rs.20,00,000/ only Rs.8,00,000/ was paid to the plaintiff. However, since many averments and contentions therein were factually incorrect, the plaintiff issued a response dated October 17, 2013 denying all incorrect contentions and reiterating the factual position. The plaintiff claimed that the present suit is being filed u/o 37 of CPC on the basis of outstanding amount payable by defendant no. 1 arising on a written contract and defendant no. 1 admitted the outstanding amount due to the plaintiff.
Suit no. 357/13 Corporate Law Group V. Export Promotion Council page no. 5 of 11
3. Pursuant to notice issued as per prescribed format, the defendants put appearance and thereafter filed an application for leave to defend u/o 37 rule 3(5) of CPC which is under consideration inter alia pleading that there are various triable issues which needs adjudication. The suit filed by plaintiff is barred in law as status of plaintiff is under a cloud. The draft Regulations which are the subject matter of present matter, the proposal to submit the same, the agreement to submit the same and infact the same were submitted by a partnership firm, whereas the present suit has been filed by a proprietorship concern and that too by a stranger to the present suit. The plaintiff has not completed the agreement awarded to it as the agreement entailed apart from submission of Draft Regulations the task of conducting various meetings, interacting with various Government Departments and Organizations and none of the said acts were performed by plaintiff. The plaintiff has claimed that he had submitted the Draft Regulations to the Ministry of Commerce but no such Draft Regulations has been submitted by plaintiff alongwith plaint as a document with the plaint. The defendants further submitted that in year 2009 Ministry of Commerce requested defendant no. 1 to engage the plaintiff for updating and finalizing six draft regulations relating to IFSC in SEZ. A detailed proposal was received from plaintiff acting through its partner one Mr. Ng. Junior vide letter Suit no. 357/13 Corporate Law Group V. Export Promotion Council page no. 6 of 11 dated 28.05.2009. The defendant no. 1 acting as agent of defendant no. 2 awarded the plaintiff the task of updating and finalization of draft IFSC regulation on the terms and condition to carry out required changes in six draft IFSC regulations as mentioned in letter dated June 01, 2009. Apart from this, the agreement entailed four other task to be performed, to be considered as valid performance of agreement. The defendant no. 1 admits that plaintiff submitted the six draft regulations, albeit belatedly on November, 18, 2009 however, no other tasks were performed. Considering that a certain portion of work assigned to the plaintiff has been completed, the defendant no.2, the Principal of defendant no. 1, released a payment of Rs.8,00,000/ to the plaintiff. The defendants further alleged that till July 2010, the plaintiff did not contact the defendants for conducting any meeting / interaction with any Government Agency or Private Players for the purpose of discussion on the Draft Regulations so that the same may be finalized. On August 30,2010 the defendant no. 1 received an invoice for Rs.5,00,000/ claiming to be towards the balance payment, however, till that time no communication has been received by defendants regarding any meetings or interactions conducted by them. The defendant no. 2 was constrained to initiate communications with various Government Department for discussion on the said draft regulations so that the same may be finalized the Ministry of Commerce also initiated an internal think Suit no. 357/13 Corporate Law Group V. Export Promotion Council page no. 7 of 11 rank group under the Chairmanship of Sh. S.S. Thakhur, Chairman, Central Depository Services (India) Ltd to discus the Draft Regulation submitted by plaintiff and to finalize the same before they are formally accepted by Ministry of Commerce. The defendants alleged that one of the primary task was not to performed nor offered to be performed by the plaintiff and infact had to be performed by Ministry itself. Defendants further alleged that in June 2009 the defendants were approached by the plaintiff acting through its partner one Mr. N.G. Junior, latter in July 2010 the same person now acting as a partner of another Law Firm a "Kochar and Company" approached the defendants with the submission that he, infact, is the author of six draft regulations as mentioned in letter dated June 08, 2009 and that for finalizing the same. He undertook all the activities of the nature of meetings presentation etc which were at the time in the letter dated June 01, 2009 awarding the work to the plaintiff and this is the reason why the plaintiff did not appear for holding any meeting, interactions with Government Department or Private Player for finalization the draft regulations as the sole person having expertise of the same had left the plaintiff firm and joined another law firm. On the strength of aforesaid submissions, a prayer was made that there are various triable issues including "whether the plaintiff had indeed performed the terms and conditions as enshrined in letter dated June 02, 2009".
Suit no. 357/13 Corporate Law Group V. Export Promotion Council page no. 8 of 11 3.1 The Ld counsel for defendants after referring aforesaid submissions pointed out towards letters dated March, 2010, written by Sh. D.K. Mittal, Additional Secretary, Ministry of Commerce and Industry to Chairman, SEBI, Deputy Governor RBI and Chairman, IRDA to give their comments on the draft regulations submitted by the plaintiff so that the same may be formally accepted as annexed as Exhibit E (colly) and further referred to documents / letters evidencing activity initiated by Ministry of Commerce under the Chairmanship of Sh. S.S. Thakur, Chairman Central Depository Services (India) Ltd annexed as Exhibit F (Colly) and also referred to email of one Mr.Luwang as annexed Exhibit H (Colly).
4. The plaintiff contested the application of leave to defend filed by defendants and contended that defendants had not filed any document prima facie showing that the work is incomplete or the plaintiff has not performed the work in terms and conditions of communication dated June 01, 2009. The plaintiff has sent various communications to the defendants at various levels demanding the outstanding professional fees stating that plaintiff has completed the project in accordance of terms and conditions of letter dated June 01, 2009. The defendants admitted the receipts of said communication and neither disputed the said facts nor cleared to respond any of the said communications. Even in the reply notice nothing has been stated by defendants.
Suit no. 357/13Corporate Law Group V. Export Promotion Council page no. 9 of 11
5. I have heard arguments advanced by ld counsel for parties and gone through documents on record.
6. A decree in a summary suit is to be granted provided it fulfills all the criteria laid down therein. The position in law has been explained by Hon'ble Supreme Court in Santosh Kumar vs. Mool Singh (1958) SCR 1211, Milkhiram (India) Private Ltd. vs. Chaman Lal Bros. AIR 1965 SC 1698 and Michalec Eng. & Mfg. vs. Bank Equipment Corporation AIR 1977 SC 577. The propositions laid down in these decisions was summed up in case of M/s. Sunil Enterorises and Anr v. SBI Commercial and International decided on 30.04.1994 as follows:
(a) If the defendant satisfies the Court that he has a good defence to the claim on merits, the defendant is entitled to unconditional leave to defend.
(b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence, although not a possibly food defence, the defendant is entitled to unconditional leave to defend.
(c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is, if the affidavit disclosed that at the trial he may be able to establish a defence to the plaintiff claim, the court may impose conditions at the time of granting leave to defend the conditions being as to time of trial or mode of trial but not as to payment into Court or furnishing security.
Suit no. 357/13 Corporate Law Group V. Export Promotion Council page no. 10 of 11
(d) If the defendant has no defence, or if the defence is sham or illusory or practically moonshine, the defendant is not entitled to leave defend.
(e) If the defendant has no defence or the defence is illusory or sham or practically moonshine, the Court may show mercy to the defendant by enabling him to try to prove a defence but at the same time protect the plaintiff imposing the condition that the amount claimed should be paid into Court or otherwise secured.
7. Reverting back to the case in hand, it has been vehemently argued by defendant that terms of written contract were not complied by plaintiff. Meetings and discussions with concerned ministries / department of Government of India and Regulatory Authorities like RBI, IRDA etc and interactions with market players like Insurance and Banking Companies was not performed and therefore this needs examination and it cannot be said that the defence raised by defendants is totally defenceless or moonshine or illusionary. This raises triable issue indicating that defendants have a reasonable defence, therefore, the defendants are entitled to unconditional leave to defend.
Put up for filing of written statement on 15.11.2014. Pronounced in the open Court on 30.09.2014. (VINEETA GOYAL) Additional District Judge1 New Delhi District : PHC New Delhi : 30.09.2014 Suit no. 357/13 Corporate Law Group V. Export Promotion Council page no. 11 of 11