Karnataka High Court
The National Small Industries vs M/S.Mysore Lamp Works Limited on 12 July, 2023
Author: P.S. Dinesh Kumar
Bench: P.S. Dinesh Kumar
R.F.A No.1557/2010
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF JULY 2023
PRESENT
THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR
AND
THE HON'BLE MR. JUSTICE T.G. SHIVASHANKARE GOWDA
R.F.A NO.1557 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 REGISTERED OFFICE
AT NSIC BHAVAN, OKHLA INDUSTRIAL
ESTATE, NEW DELHI-110 020
AND HAVING ONE OF ITS BRANCH OFFICES
AT NO.C-424, PEENYA 1ST STAGE
BEHIND PEENYA POLICE STATION
BANGALORE-560 058
REPRESENTED BY ITS
CHIEF MANAGER
SRI. M.L. PRAKASHA ... APPELLANT
(BY SHRI. S. KRISHNA SWAMY, ADVOCATE)
AND :
1. M/S. MYSORE LAMP WORKS LIMITED
OLD TUMKUR ROAD
MALLESHWARAM WEST
BANGALORE-560 055
REPRESENTED BY ITS CHAIRMAN
AND MANAGING DIRECTOR
2. SRI. MUDDUKRISHNA
PROP:MYSOLITE PRODUCTS
C-26, VEERASANDRA INDUSTRIAL
R.F.A No.1557/2010
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ESTATE, HOSUR ROAD
19TH K.M. P.B.22903
BANGALORE-501 229 ... RESPONDENTS
(BY SHRI. MALLEGOWDA, ADVOCATE FOR R2;
R1 IS SERVED )
THIS RFA IS FILED U/SEC. 96, OF CPC, AGAINST THE JUDGMENT
AND DECREE DATED 31.05.2010 PASSED IN O.S.8279/2001 ON THE
FILE OF THE XXVII-ADDL. CITY CIVIL JUDGE, BANGALORE, DECREEING
THE SUIT FOR RECOVERY OF MONEY.
THIS RFA, HAVING BEEN HEARD AND RESERVED FOR JUDGMENT
ON 25.05.2023 COMING ON FOR PRONOUNCEMENT OF JUDGMENT, THIS
DAY, P.S. DINESH KUMAR J., PRONOUNCED THE FOLLOWING:-
JUDGMENT
This 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 O.S.No.8279/2001 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, parties herein are referred as per their ranking before the Trial Court. R.F.A No.1557/2010 3
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.
R.F.A No.1557/20104
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 goods Date & dated Finance (Amount of finance) 01 957/13.1.99, 344/9.4.99, 13.04.1999 Rs.5,13,614 1033/5.3.99 349/30.7.99 & & 301/26.7.99 362/2.9.99 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 09.04.1999 and 09.09.1999 confirmed the bill. Hence, the plaintiff filed the suit for recovery of a total R.F.A No.1557/2010 5 sum of Rs. 5,13,614/- (Rupees Five lakh Thirteen Thousand Six Hundred and Fourteen only) along with interest at 16.5% p.a., 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 seven issues. The Representative of the plaintiff was examined as PW.1 and Exs.P1 to P20 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.P21 to P23. 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. R.F.A No.1557/2010 6
7. Sri.S.Krishna Swamy, learned Advocate 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 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.R.F.A No.1557/2010
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8. Notice to the first defendant has been dispensed with and the second defendant has been served with notice of the present appeal and is unrepresented.
9. We have considered the submissions of the learned Advocate 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:
"18. 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 R.F.A No.1557/2010 8 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. 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 09.04.1999 written by the second defendant, wherein he has confirmed his liability to the plaintiff as principal debtor in the event of non-payment of the amount by the first defendant. In the letter dated 09.04.1999 (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 remain liable to the bills as principal debtor. The relevant portion of the letter reads thus:
"We confirm that NSIC will be under no obligation to present the bills for payment on due dates and not withstanding 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."
13. Having regard to the specific undertaking given by the second defendant as is forthcoming from the letter dated R.F.A No.1557/2010 9 09.04.1999 (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 second defendant has chosen not to contest the suit. 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 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.P21) and 15.9.2006 (Ex.P22) 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.P23) the first defendant offered to pay a sum of Rs. 1,12,00,008/- (Rupees R.F.A No.1557/2010 10 One Crore Twelve Lakhs and Eight Only) in settlement of its dues. Vide letter dated 9.3.2007 (Ex.P24) the plaintiff intimated the first defendant that it has accepted the proposal for payment of the said sum of Rs.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 would be withdrawn.
17. In the Memorandum of Appeal, the appellant/plaintiff has averred as follows:
"6. After matter was heard for final arguments and 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 Rs. 5,13,614.
7. The plaintiff appropriated a sum of Rs. 5,13,614/- 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 reads thus:
R.F.A No.1557/201011
"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. 8279/2001 by XXVII Additional City Civil Judge, Bangalore or by allowing this appeal with costs thought out by decreeing the suit for Rs.2,61,850/- against defendant No.2 to pay Rs.2,61,850/- with cost and interest in the interest of equity and justice."
19. Having regard to the aforementioned discussion and in view of the fact that liability of defendants No.1 and 2 is joint and several based on the settlement between the plaintiff and the first defendant, the prayer made in the present appeal merits consideration. 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 O.S.No.8279/2001 on the file of the XXVII Addl. City Civil Judge, Bengaluru, is modified by holding that the suit of the R.F.A No.1557/2010 12 plaintiff is decreed against defendant No.2;
also; and
iii) The judgment and decree dated 31.5.2010 passed in O.S. No.8279/2001 in all other respects shall remain unaltered.
Sd/-
JUDGE Sd/-
JUDGE SPS