Madras High Court
M/S.Denwood Merchandising vs Y. Rubandas on 21 January, 2019
Equivalent citations: AIR 2019 (NOC) 278 (MAD.)
Author: M.Sundar
Bench: M.Sundar
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 21.01.2019
CORAM
THE HONOURABLE MR.JUSTICE M.SUNDAR
C.S.No.667 of 2018
M/s.Denwood Merchandising
and Industries Private Limited,
represented by its Authorised Representative,
P.Deepak Kothari,
aged 43 years,
S/o.Mr.P.C.Kothari,
No.C-13/11, 2nd Floor,
10th Street, C Block,
Anna Nagar East,
Chennai-600 102. .. Plaintiff
Vs.
Y. Rubandas ..Defendant
Prayer: This Civil Suit is preferred under Order XXXVII Rule 2 of O.S. Rules
read with Order VII Rule 1 and Order XXXIV Rules 4 and 5 of Civil Procedure
Code, 1908 seeking to grant a judgment and decree in favour of plaintiff as
against the defendant, (a) directing the defendant to pay the plaintiff a sum of
Rs.3,00,00,000/- (Rupees three crores only) along with a further interest
calculated at the rate of 24% per annum from the date of this plaint till the
date of realization of the amount, compoundable with monthly rests and also
the costs of this suit on some day to be named by this Court and in default to
sell the schedule mentioned property and apply the proceeds (after defraying
thereout the expenses of the sale) in and towards the payment of the said
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sum, interest and costs and if such proceeds are not sufficient for the payment
in full of such amount, directing the defendant to pay to the plaintiff the
amount of the deficiency with interest therein at the rate of 24% per annum
until realization and (b) pass such further or other orders as this Court may
deem fit and proper in the facts and circumstances of the case and thereby
render justice.
For Plaintiff : Mr.K.Surendar
For Defendant : Set ex parte
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JUDGMENT
There is a sole plaintiff and a lone defendant in this suit. Sole plaintiff is a juristic person, i.e., private limited company. Lone defendant is an individual, i.e., a natural person.
2. With regard to jurisdiction of this Commercial Division, the same has been articulated in paragraph 9 of the plaint. Paragraph 9 of the plaint reads as follows :
“9.The subject matter of this suit is for recovery of the loan advanced to the defendant along with the agreed interest. The loan was released by the plaintiff in favour of the defendant, in its ordinary course of business as a financier and the said loan is duly supported by mercantile documents including the loan agreement http://www.judis.nic.in 3 dated 13th December, 2011, promissory note dated 13th December, 2011; the mortgage deed dated 13th December, 2011 and the MOU dated 16th April, 2018, which were executed by the defendant in favour of the plaintiff. Since the defendant has failed to honour his commitment under the said documents, the plaintiff is seeking to enforce its rights through this suit and as such the dispute involved in this suit is a 'commercial dispute', within the meaning of Section 2(1)c(i) of Act 4 of 2016. Further, the money sought to be recovered in this suit is Rs.4,00,00,000/- (Rupees four crores only), which is of specified value as stipulated under Section 2(i) of Act 4 of 2016.”
3. The defendant was duly served with suit summons, but as he did not enter appearance through counsel and as he did not choose to appear before this Court in person either, the defendant was set ex parte on 07.01.2019. The suit was set down for recording ex parte evidence before the Additional Master-I on 10.01.2019. One Mr.Deepak Kothari, authorised representative of the plaintiff's company deposed as P.W.1 and 10 exhibits, i.e., Exs.P.1 to P.10 were marked. The suit is listed today before me for arguments post recording of such ex parte evidence and Mr.K.Surendar, learned counsel on record for the sole plaintiff is before me.
4. Today also, name of the defendant with his full / complete address is shown in the cause list, but there is no representation. As mentioned supra, the defendant was already set ex parte on 07.01.2019 and ex parte http://www.judis.nic.in 4 evidence was recorded on 10.01.2019.
5. A perusal of the plaint reveals that it is a simple loan transaction. It unfurls from plaint averments that plaintiff is a Non Banking Financial Company engaged in the business of finance for more than a decade (a decade as on the date of presentation of the suit). It is the case of the plaintiff that the defendant approached the plaintiff some time in December, 2011 and sought financial assistance stating that he is carrying on business in the name and style 'Allwyn Builders'. It is submitted that the defendant sought financial assistance for his business, i.e., for his business “Allwyn Builders”. Defendant offered the property set out in the schedule in the plaint as security for the financial assistance and the said schedule reads as follows :
SCHEDULE OF PROPERTY All that piece and parcel of the land measuring an extent of 2 Acre and 50 cents, comprised in Survey No. 19/1A2 part of Poyyappakkam Village, Arakkonam Taluk, Vellore District, bearing Patta No. 106 and bounded on the North by : Road South by : Residential plots of Alliyar Bai East by : land belonging to Amudhu Porkol Arasi West by : Road Situated within the limits of Registration Sub District of Arammonam (Joint -II) and Registration District of Arakkonam.
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6. The plaintiff advanced moneys, i.e., provided financial assistance to the defendant taking the aforesaid immovable property as security. This was under a loan agreement which has been marked as Ex.P.3. The loan advanced is Rs.50 lakhs. It is submitted that thereafter, there was delay and default on the part of defendant in making good the aforesaid loan.
7. In the interregnum, a memorandum of understanding ('MOU' for brevity) came to be executed between the parties and the same is dated 16.04.2018. To be noted, this MOU has been marked as Ex-P6. It is submitted that a schedule of payment was drawn up in this MOU and the same reads as follows:
S.No. Amount in Rs. Month
1 50,00,000.00 In May 2018
2 25,00,000.00 In June 2018
3 5,00,000.00 In July 2018
4 25,00,000.00 In August 2018
Notwithstanding this MOU (Ex.P6), the borrowing was not made good and MOU terms were not adhered to, is learned counsel for plaintiff Mr.K. Surendar's say. Learned counsel submits that even the first payment in the schedule extracted supra namely, Rs.50 lakhs on or before May, 2018 was not made. In other words, it is learned counsel's say that this MOU (Ex.P6) http://www.judis.nic.in 6 virtually became a non-starter and no payments were made under this MOU. Therefore, plaintiff had caused issuance of a pre-suit notice dated 12.06.2018 to the defendant calling upon him to settle the loan outstanding. Despite receipt of notice, the defendant failed to respond and evaded payment leading to the filing of this suit.
8. It is necessary to point out that along with loan agreement, a demand promissory note dated 13.12.2011 was executed and it has been marked as Ex.P5. A registered mortgage deed, marked as Ex.P4, was also executed by defendant in favour of plaintiff mortgaging schedule mentioned property. Settlement deed dated 21.03.2011 has been marked as Ex.P2. Copy of Encumbrance certificate pertaining to schedule mentioned property has been marked as Ex.P10. Statement of accounts qua loan transaction which forms subject matter of this suit has been marked as Ex.P.9.
9. I have perused the aforesaid exhibits. This takes us to deposition. As mentioned supra, one Deepak Kothari, authorised representative of plaintiff company, has deposed as P.W.1. The Board resolution of plaintiff's company authorising him to so depose has been marked as Ex.P.1. It is a certified copy of Board resolution passed in the meeting of Board of Directors of plaintiff's company on 13.08.2018.
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10. Deposition of P.W.1 was perused. The same is cogent. It is cogent and in synchrony with plaint pleadings which have been alluded to supra. Deposition of P.W.1 supports the pleadings and it is also in tune with 10 exhibits which have also been marked through P.W.1.
11. This takes us to prayer paragraph in the plaint which reads as follows :
“The plaintiff therefore humbly prays that this Hon'ble Court may be pleased to grant a judgment and decree in favour of the plaintiff as against the defendant
(a) directing the defendant to pay the plaintiff a sum of Rs.3,00,00,000/- (Rupees three crores only) along with a further interest calculated at the rate of 24% per annum from the date of this plaint till the date of realization of the amount, compoundable with monthly rests and also the costs of this suit on some day to be named by this Court and in default to sell the schedule mentioned property and apply the proceeds (after defraying thereout the expenses of the sale) in and towards the payment of the said sum, interest and costs and if such proceeds are not sufficient for the payment in full of such amount, directing the defendant to pay to the plaintiff the amount of the deficiency with interest therein at the rate of 24% per annum until realization and
(b) pass such further or other orders as this Court may deem fit and proper in the facts and circumstances of the case and thereby render justice.
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12. It is submitted that dues at the time of inception of suit stood at over Rs.3 Crores and plaintiff is entitled to interest at 24% per annum. It is submitted that actual dues as on the date of plaint is Rs.4,09,74,941/-, but the plaintiff has restricted this claim to Rs.3 Crores. This has been articulated in paragraph 7 of the plaint, which reads as follows :
“7.The plaintiff further submits that the total loan outstanding payable by the defendant to the plaintiff as on the date of this plaint works up to Rs.4,09,74,941/- (Rupees four crores nine lakhs seventy four thousand nine hundred and forty one only). However, the plaintiff restricts its claim to an amount of Rs.3,00,00,000/- (Rupees three crores only).”
13 As plaintiff has claimed interest at the rate of 24% per annum, in tune with Section 34 of 'The Code of Civil Procedure, 1908' ('ÇPC' for brevity), I examined as to whether there is any contract between parties in this regard. Learned counsel drew my attention to Ex.P.3 which as mentioned supra is the loan agreement. Ex.P.3, loan agreement, stipulates that rate of interest is 36% per annum. However, plaintiff has restricted interest claim to 24% per annum. As there is a obtaining contract between parties with regard to rate of interest, plaintiff is entitled to claim interest at the contracted rate. However, to be noted, plaintiff has not claimed at the contracted rate of 36%, but has claimed at the rate of 24% per annum.
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14. With regard to costs, considering the trajectory of this hearing and considering the fact that plaintiff has filed this suit by paying substantial court fee and has also carried this matter to its logical end coupled with the fact that defendant had left plaintiff to do so without even entering appearance, I am convinced that suit deserves to be decreed with costs.
15. Furthermore, taking me through the second limb of the prayer paragraph namely, sub-paragraph (b) of prayer paragraph, which is in the nature of a usual residuary limb of any prayer paragraph, learned counsel for plaintiff submits that plaintiff is entitled to compensatory costs as well under Section 35-A of amended CPC as amended by 'The Commercial Courts Act, 2015 ('said Act' for brevity). Learned counsel referring to Section 35-A of amended CPC as amended by the said Act submits that there is no cap or upper limit for imposing compensatory costs which, in other words, is referred to as exemplary costs in common parlance. Learned counsel for plaintiff also points out that this suit was presented on 30.08.2018 and plaintiff has been compelled to carry this matter to its logical end. Learned counsel referring to MOU (Ex.P6) submits that the defendant by executing Ex.P6 made the plaintiff believe that the lis will be settled without driving them to litigation. In other words, it is submitted that the defendant by executing Ex.P6 led to a situation where plaintiff was lulled into the belief that there may not be any need or http://www.judis.nic.in 10 necessity even to file a suit, but, Ex.P6 was only observed in the breach.
16. Specific attention of this Commercial Division was drawn to the position that even first payment under Ex.P6 was never made. Therefore, Ex.P6 was entered into by the defendant with no intention to honour the same is learned counsel's say. It is also pointed out that this Commercial Division has interpreted Section 35-A of amended CPC as amended by the said Act to include vexatious ways and means of defending a claim and defending a suit also. Learned counsel submits that executing Ex.P6 and making the plaintiff to be lulled into the belief that claims will be settled is clearly a false and vexatious means of delaying the very filing of suit which also qualifies as a vexatious and false means of defence.
17. I have given my careful consideration to the submissions and I find that there is substantial force in the submissions made by learned counsel for plaintiff. In other words, I come to the conclusion that plaintiff is entitled to compensatory costs under Section 35-A of amended CPC as amended by said Act owing to the conduct of the defendant leading to the trajectory of this lis. It is therefore deemed appropriate to award compensatory costs of Rs.3 lakhs also.
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18. The narrative supra will reveal that plaintiff company has proved its claim. Claim proved.
19. The prayer paragraph that has been extracted supra will reveal that the suit is on the foot of a mortgage, i.e., mortgage of an immovable property which has been set out in the schedule. As the suit is on the foot of a mortgage, a time frame has to be fixed for defendant for satisfying the decreetal amount and in default, plaintiff will be entitled to sell the schedule mentioned property i.e., mortgaged property and realise the dues. A time frame of three months is fixed. Defendant shall satisfy the decree within three months from the date on which certified copies of judgment and decree are made available by the Registry.
20. Defendant should make good payment as per this decree within aforesaid three months. In default of defendant satisfying the decree within the aforesaid time frame of three months, plaintiff company will be entitled to sell and / or deal with the immovable property which is subject matter of mortgage as set out in the plaint.
http://www.judis.nic.in 12 M.SUNDAR, J.
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21. This suit is decreed as above with costs and compensatory costs.
21.01.2019 Speaking Order Index : Yes/No nv C.S.No.667 of 2018 http://www.judis.nic.in