Delhi High Court
M/S. Ratna Commercial Enterprises Ltd. vs Vasu Tech Ltd. & Ors. on 26 November, 2009
Author: Manmohan Singh
Bench: Manmohan Singh
* HIGH COURT OF DELHI : NEW DELHI
+ I.A No. 5376/2007 and I.A No. 13109/2007 in CS (OS) No.
850/2007
AND
I.A No. 1487/2009 in CS (OS) No. 1093/2008
M/s Ratna Commercial Enterprises Ltd. ... Plaintiff
Through : Mr. N.K. Kaul, Sr. Adv. with
Mr. Sudhir K. Makkar and
Ms. Meenakshi Singh, Advs.
Versus
Vasu Tech Ltd. and Ors. ... Defendants
Through : Mr. Sanjiv Bahl with
Mr. Ajay Shekhar, Advs.
Reserved on: March 3rd, 2009
Decided on: November 26th, 2009
Coram:
HON'BLE MR. JUSTICE MANMOHAN SINGH
1. Whether the Reporters of local papers may
be allowed to see the judgment? No
2. To be referred to Reporter or not? Yes
3. Whether the judgment should be reported
in the Digest? Yes
MANMOHAN SINGH, J.
1. By this common order I propose to dispose of I.A. Nos. 5376/2007 and 13109/2007 in CS(OS) No. 850/2007 and I.A. No.1487/2009 in CS(OS) No.1093/2008 and other pending applications in both the suits.
2. The brief facts are that the plaintiff filed two suits for recovery under Order XXXVII of the Code of Civil Procedure, 1908 CS (OS) No. 850/2007 Page 1 of 37 against the defendants being CS(OS) No.850/2007 for recovery of a sum of Rs. 26,26,41,644/- and another suit for recovery of Rs. 41,64,47,667/- in CS(OS) No. 1093/2008 before this court. In both the suits the defendants moved an application for grant of leave to defend being I.A. No. 13109/2007 in CS(OS) No. 850/2007 and I.A. No.1487/2009 in CS(OS) No. 1093/2008 under Order XXXVII Rule 3(5) read with Section 151 CPC and I.A. No. 5376/2007 under Order 2 Rule 2 in CS(OS) No. 850/2007.
3. Brief facts are that the Plaintiff Company is registered under the Companies Act, 1956. Similarly, the defendant No.1 is also a company duly incorporated under the provisions of the Companies Act, 1956. The registered office of the defendant no. 1 company is situated at Vasu Tech Ltd, P.O. Sangwari, District Rewari, Haryana 121401. The head office of the company is situated at C-7, Second Floor, Friends Colony (East), New Delhi- 110065. Defendants no. 2 and 3 are the Directors of the defendant No.1 company and defendant No.4 is a HUF headed by defendant No.3 as its Karta.
4. The defendant No.1 company is engaged in the business of manufacturing industrial control equipment and it approached the plaintiff from time to time for advancing loans for funding its capital requirement for the purpose of development of the chip called VSU (Versatile Component Unit).
5. The plaintiff advanced various amounts to the defendants from time to time, besides the amounts covered in the loan agreement CS (OS) No. 850/2007 Page 2 of 37 dated 15th April,, 2005, details of which are mentioned hereinafter in this order totaling a sum of Rs. 32,88,93,273/- and the total outstanding of defendant no. 1 towards the plaintiff is claimed to be Rs. 54,08,93,273/- towards the principal loan amount exclusive of interest. No separate agreement was executed between the parties as regards this amount as the same was loaned after the loan agreement was executed. However, all amounts were advanced through cheques, the receipts of which were acknowledged by defendant no. 1 and for which the said defendant even issued post dated cheques to the plaintiff. It was understood between the parties that the amounts so advanced by the plaintiff were on the same terms and conditions as stipulated in the loan agreement dated 15th April, 2005. The defendant no. 1 is liable to pay interest @ 12% per annum from the date of advancing of the loan till the date of payment on the amount of Rs. 54,08,93,273/-.
6. A major portion of the amounts was advanced to the defendant No.1 as short term loan payable after one year and in certain cases payable with the close of financial years. Copies of various cover notes and acknowledgments by the defendants have been filed.
7. The agreement dated 15th April, 2005 was entered into between the plaintiff and defendants whereby the defendants have acknowledged that a sum of Rs. 19.20 crores already stood advanced to defendant No.1 and defendants No. 2, 3 and 4 are confirming parties in the loan agreement.
CS (OS) No. 850/2007 Page 3 of 37
8. The agreement stipulated that to meet the funding requirement of defendant No.1 the plaintiff shall advance a further sum of Rs. 2 crores to defendant No.1 in terms of the said agreement and the amount advanced to defendant No.1 shall carry interest @ 12% p.a. and the interest accrued till „interest period‟ would be paid by defendant No.1 to the plaintiff on the „interest payment dates‟, as stated in the said loan agreement.
9. It is also mentioned in the agreement that the defendant No.1 was liable to repay the entire outstanding dues to the plaintiff in four equal quarterly installments commencing from the date immediately succeeding the date when each „moratorium period‟ expired, but in any event not later than the final maturity date as defined in the agreement. The moratorium period was defined as a period of 18 months from the date of execution of the agreement.
10. The outstanding dues in the said agreement were to mean aggregate of loan (as from time to time reduced by any repaid amounts) under the said agreement, including interest due and payable by defendant No.1 to the plaintiff in accordance with clause 2.3 and 2.5 of the said agreement.
11. Simultaneous with the execution of the aforesaid Loan Agreement a Share Pledge Agreement dated 15th April, 2005 was signed and executed by defendant no. 4 M/s. R.L. Varma & Sons (HUF) as pledgers, the Plaintiff as pledgees, and defendant No.1 herein as Confirming Party. It was duly acknowledged in the Share Pledge CS (OS) No. 850/2007 Page 4 of 37 Agreement that the plaintiff had already advanced a sum of Rs. 19.20 Crores to the defendant No.1 and that it further agreed to advance an amount of Rs. 2.00 Crores. In consideration of the said loan M/s. RL Varma & Sons (HUF) pledged with the plaintiff its rights, title and interest, present and future, in five lakhs equity shares of Rs.10/- held by defendant no. 4 in defendant No.1 company herein.
12. At the same time, with the execution of the above referred loan agreement and Share Pledge Agreement, the directors/promoters of the Defendant No.1 company Mr. Dhruv Varma & Mr. RL Varma (defendants No.2 and 3 herein) and M/s RL Varma & Sons (HUF) (Defendant No.4 herein) executed a Deed of Guarantee in favour of the plaintiff whereby the said Defendants, as guarantors, irrevocably and unconditionally guaranteed due payment to the plaintiff on its first demand, of all amounts outstanding under the above referred loan agreement and all indebtedness due and payable by the defendant No.1 to the plaintiff including all interest, accumulations, costs, charges, expenses and other monies whatsoever due and payable by defendant No.1 to the plaintiff, in the event of failure of the defendant No.1 to repay the same to the plaintiff.
13. An MOU dated 31st August, 2006 was executed between the plaintiff and defendant No.1 wherein the defendant No.1 acknowledged its liability for payment of a sum of Rs. 49,83,93,273/- as on the date of the said MOU, exclusive of the interest amount, which the defendant No.1 confirmed to be payable by it alongwith interest @12% per annum. CS (OS) No. 850/2007 Page 5 of 37
14. In the said MOU, it was mentioned that the amount of interest payable by the defendants, during the financial year 2005-06 shall stand deferred and shall be paid by the defendants in the financial year 2007- 08 and the payment of deferred interest in 2007-08 shall be in addition to the payment of interest due for the said financial year.
15. It was also agreed that a sum of Rs. 1,15,06,727/- paid by the defendants during the said financial year would stand adjusted against the repayment of the principal loan amount.
16. The defendants have not disputed the memorandum of understanding dated 31st August, 2006 entered into between the parties as the defendants themselves have referred the memorandum of understanding in the suit filed by the defendants against the plaintiff being Suit No.570/2007, inter-alia, praying therein that the plaintiff be restrained from presenting the cheques totaling a sum of over Rs.60 Crores in its possession which were admittedly issued by defendant No.1 towards the repayment of loan agreement.
17. The defendants in Suit No. 570/2007 had contended that the loan agreement between the parties stood novated. An ex parte ad interim injunction was initially passed against the plaintiff, restraining it from presenting the said cheques for encashment. In the appeal filed by the plaintiff being FAO(OS) No.206/2007, a Division Bench of this court vacated the said injunction by order dated 15th June, 2007 which was challenged by the defendants vide SLP No.10749-50/2007 and the CS (OS) No. 850/2007 Page 6 of 37 same was dismissed by the Supreme Court by order dated 4th February, 2008.
18. Thereupon the plaintiff moved an application under Section 151 CPC for dismissal of the suit as being infructuous. However, the learned single Judge while hearing the application under Order 7 Rule 11 as well as application under Section 151 CPC for dismissal of the suit, inter-alia, allowed the applications holding that as regards the relief for injunction against the presentation of cheques, the suit is to be dismissed and for the purpose of the remaining two reliefs two preliminary issues were framed.
19. Vide order dated 3rd September, 2008 the defendants were permitted to withdraw the suit No.570/2007 with liberty to put forward all contentions in their defense in the pending suit filed by the plaintiffs.
20. In the first suit filed by the plaintiff against the defendants the plaintiff also moved an application under Order 2 Rule 2 CPC being I.A. No. 5376/2007 seeking leave of this court for filing a suit for recovery for the remaining amount which was not specifically covered by the loan agreement dated 15th April, 2005.
21. In Para 3 of the application the plaintiff has specifically mentioned that CS(OS) No.850/2007 has been filed for recovery of principal amount of Rs.21.20 crores and interest thereon which was specifically the stipulation in the loan agreement dated 15th April, 2005. The plaintiff has specifically mentioned that the plaintiff would be filing a separate suit for the remaining principal amount of Rs.32,88,93,273/- CS (OS) No. 850/2007 Page 7 of 37 which was advanced by the plaintiff to defendant No.1 in various phases after the date of loan agreement dated 15th April, 2005 at a later stage.
22. When the Division Bench of this court vacated the order of injunction granted in suit. No. 570/2007, the plaintiff presented the cheques which were the subject matter of the injunction for encashment. Upon presentation, all the cheques were returned due to insufficiency of funds. After giving the statutory notice, the plaintiff initiated legal proceedings against the defendants under Section(s) 138 read with 142 of the Negotiable Instruments Act, 1881, the same being pending adjudication in the court of Magistrate, New Delhi.
23. After the said cheques were dishonored, the plaintiff filed the second suit being CS (OS) No. 1093/2008 for recovery of Rs. 41,64,47,667/- seeking to recover the balance principal loan amount of Rs. 32,88,93,273/- along with interest i.e. the amount which was advanced by the plaintiff to the defendant after execution of the loan agreement dated 15th April, 2005 and was consequently not mentioned in the said loan agreement. Although this application is opposed by the defendants, however, I find no force and merit in the submission of learned counsel for the defendants and therefore, the said application is allowed.
24. The defendants in both suits being CS(OS) No.850/2007 and 1093/2008 filed applications for requesting for grant of leave to defend by stating that there is a bona fide dispute regarding the nature of the transaction which has taken place between the parties and the defendants CS (OS) No. 850/2007 Page 8 of 37 have raised strict plausible defense which requires evidence and the dispute is a disputed question of fact requiring trial and, therefore, unconditional leave to defend should be granted to the defendants.
25. The main defenses raised by the defendants as well as the background to the loan agreement dated 15th April, 2005 are as follows:-
a) In 1984 defendant No.1 Co. Vasutech Ltd was promoted as a family concern of Shri R.L. Varma & Shri Dhruv Varma. It later secured foreign collaboration of Trofaq of Switzerland for the manufacture of pressure switches & controls. Defendants invented "Versatile System on Chip" (hereinafter known as "VsoC"), a technology in the Vanguard of new processor technology that overcomes limitations of traditional microprocessors. It integrates all key controller functions, including discrete control, volatile and non-volatile memory and analog/digital signal processing, into single Complimentary Metal Oxide Semi-conductors (hereinafter known as "CMOS") integrated circuit (hereinafter known as "IC") device. The technology has a total addressable market in excess of US $ 25.00 Billion.
b) In late 2003, a private investor Mr. Pradeep Burman, Managing Director of Plaintiff, stepped in through his company, M/s. Ratna Commercial Enterprise Ltd. i.e. the plaintiff. He gave an inter corporate deposit of Rs. 2 crores in three installments with 12% interest per annum initially. After a series of meetings between CS (OS) No. 850/2007 Page 9 of 37 Mr. Pradeep Burman and Mr. Dhruv Varma, the former started taking personal interest in the project and the plaintiff continued to advance additional funds for the project.
c) In March, 2004 Mr. Dhruv Varma realized that since new technology had to be commercialized initially in the U.S. before a global launch, therefore, he promoted a company, Vasu Corp Inc, which was incorporated in the State of Delaware, USA.
d) On 27.06.2004 Mr. Pradeep Burman was appointed Director in Vasu Corp Inc. by Mr. Dhruv Varma to enable him to take personal interest in of the project by participation.
e) On 01.7.2004, Founder‟s Agreement was entered into between the parties where they agreed to subscribe to 7,000,000( 7 Million) shares of Vasu corp Inc.
f) On 10.08.2004, Vasu Corp Inc issued 1.05 million shares to M/s.
Wogan Technologies, an organization owned and controlled by Mr. Pradeep Burman ( as part of the subscription referred to in (e) above.
g) On 10.03.2005, amended and restated Founder‟s Agreement was executed.
h) On 11.03.2005, Mr. Dhruv Varma transferred 0.065 million (sixty hundred and fifty thousand) shares to M/s. Wogan Technologies and a Stock Purchase Agreement and Rights Agreement was executed.
CS (OS) No. 850/2007 Page 10 of 37
i) On 31.03.2005, due to change in funding policy of ICICI, defendants and plaintiff mutually agreed to buy out ICICI‟s interest. Loan of Rs. 2 crores was repaid to ICICI by the plaintiff on behalf of defendants along with interest.
j) On 15.04.2005, a loan agreement executed by defendants in favour of plaintiff. On the same day an agreement to take over equity held by ICICI by paying consideration was executed. Plaintiff bought out the equity investment of ICICI in the defendant No.1 of Rs.7,38,234 for a sum of Rs. 2,25,48,000/- on the understanding that it would be transferred to Mr. Dhruv Varma. A part of this equity, i.e. Rs.1,94,725 of Rs.10/- each were transferred to Mr. Dhruv Varma pending transfer of balance.
k) On 14.10.2005, the amended and re-stated Founder‟s agreement was executed.
l) On 09.05.2006, Mr. Dhruv Varma sent an email informing Mr. Pradeep Burman of the following :
"For the loans that you give beyond those existing on date, for every Rs. 1 crore an additional 350,000 shares in Vasucorp Inc. will be transferred to you. This transfer will be restricted to 1.45 million shares, beyond which the shares will be given by Vasu Tech out of the shares it holds in Vasucorp."
On the same date itself Mr. Pradeep Burman gave a counter proposal by e-mail confirming that 8.835 million shares should be transferred to the plaintiff on a formula set out as per the understanding of the parties for conversion of loan of 50 crores to CS (OS) No. 850/2007 Page 11 of 37 the plaintiff into equity of Vasucorp Inc. The said formula as mentioned as follows :
- Every additional Rs. 1 crore will be converted into 3,50,000 shares.
- 46.25% royalty on all sales connected with VsoC.
m) On 31.08.2006, and MOU was as the defendants agreed to treat advances as interest free from 01.04.2005.
n) In between certain e-mails were exchanged for concluding the contract for issuance of equity against the loans given by the plaintiff.
o) On 10.10.2006, an E-mail to the following effect was sent by Mr. Pradeep Burman :
"Here are current outstanding of Vasu Tech and shares due on 30.09.2006 calculating on basis agreed that the then outstanding loan of about Rs. 60 crores was to be converted into 8.885 million shares of Vasucorp Inc."
On 11.10.2006, Mr. Dhruv Varma sent an E-mail confirming the same upto that date. The novation as per the defendants, took place for the amounts advanced by the plaintiff till that date.
p) On 06.12.2006, Mr. Pradeep Burman confirmed the conversion of further loan amounts advanced w.e.f. 11.10.2006 till that date into equity.
q) Between 27.09.2006 to 06.12.2006 post dated cheques were issued by the plaintiff under various covering letters where the plaintiff admitted the amount of loans along with furnished calculation of interest and break up of principal amount and CS (OS) No. 850/2007 Page 12 of 37 interest being paid as the amount of tax deducted at source. However, there are no cover letters for the amounts advanced till the date of novation. Cover letters for the amount novated on 11.10.2006 are all prior to this date of novation. Cover letters between 11-10-06 to 6.12.2006 are only for the additional amounts advanced during this period. These additional amounts were novated on 6.12.2006 and after the date of novation, there is no letter for these additional amounts.
r) On 11.12.2006, Mr. Pradeep Burman and his advisors visited Vasu corp Inc in the U.S. on 13-12.2006 to 15.12.2006. Meetings were held and it transpired that it would be the sole responsibility of Mr. Dhruv Varma to ensure that V.S.o.C Technology is transferred to Vasucorp Inc and any funds introduced by him could not be converted into equity.
s) On 19.12.2006 Mr. Pradeep Burman officially resigned from the Board of Vasucorp Inc.
t) The plaintiff presented 7 cheques for a total sum of Rs. 4,31,193.00 on account of collateral notional interest though the same were not payable in view of the agreement dated 31-08-2006 and subsequent novation of contract.
26. In reply to the applications filed by the defendants for leave to defend the plaintiff has denied the plea taken by the defendants regarding novation of contract in view of e-mails/communication exchanged between the defendants and Mr. Prdeep Burman during the CS (OS) No. 850/2007 Page 13 of 37 period from 9th May, 2006 to 6th December, 2006. It is stated that the said defense of novation of contract is bogus, false and frivolous and not tenable in law due to the following reasons:-
i) The agreement regarding issuance of shares was arrived at between the parties in consideration of Mr. Burman agreeing to assist the defendants and Shri Dhruv Varma by way of advancing loans and as an incentive to him to continue funding the venture of defendants in India, which was proposed to be commercially exploited by Vasucorp Inc.
ii) The defendants have duly acknowledged the liability for payment of the outstanding amount in various documents.
iii) Defendants have made deliberate false references by completely distorting the interpretation of the text in the e-mails exchanged between the parties and what the defendants have not disclosed is as follows :
- That the understanding between the parties regarding subscription of shares in the US based company namely Vasucorp Inc was in pursuance of a Founders Agreement entered into between Vasucorp Inc, Mr. Dhruv Varma, M/s. Wogan Technologies Inc and Mr. David Dell. A copy of the Founders Agreement has already been placed on record during the course of arguments on the instant application. The said Founders Agreement forms part of the counter CS (OS) No. 850/2007 Page 14 of 37 affidavit filed by the plaintiff in the Special Leave Petition filed by the respondent before the Hon‟ble Supreme Court and the same is not disputed by the defendants.
- Under the terms of the agreement between the parties, Mr. Pradeep Burman was to subscribe to the equity of Vasu corp Inc USA through a company called Wogan Technologies Inc and the said subscription of shares was duly paid for.
- That the entitlement of Wogan Technologies to subscribe to the shareholding of Vasu corp was in addition to the obligation of Vasu tech for repayment of loan amount and not in lieu thereof.
- Whatever equity was subscribed to by Wogan Technologies in Vasu corp was separately paid for.
- The face value of the share of Vasu corp Inc USA is US$ 0.0001. Total cost of one million shares was US$ 100 only as the share was of face value of 0.001 US$, which fact the defendants have conveniently omitted to mention.
iv) It is denied by the plaintiff that it agreed to subscribe to equity worth a few hundred Dollars in the US Company against investment of over Rs.60,00 crores in the Indian Company, CS (OS) No. 850/2007 Page 15 of 37 particularly when the said US Company presently has no business and its shares have no market value.
27. It is also argued by the plaintiff that in case the submissions of the defendants are to be accepted, then all the documentation signed and executed between the parties would be infructuous and redundant when admittedly the defendants have not disputed the execution of the following documents:-
i) The Loan Agreement dated 15th April, 2005 entered into between the parties and other contemporaneous documentation in the form of Share Pledge Agreement and Deed of Guarantee.
ii) Issuance of post dated cheques by defendant No.1 in favour of the plaintiff and various covering letters issued along with said cheques;
iii) Execution of the MOU dated 31st August, 2006.
iv) Issuance of Balance confirmation Certificates in respect of the outstanding dues;
v) Issuance of cheques for payment of interest, in addition to the principal amount, and deduction of TDS thereon.
28. As regards the issuance of share capital in Vasu corp Inc it is argued by the plaintiff that the same was in addition to the liability of repayment of loan amount and since the loan was advanced by the plaintiff to defendants for commercialization of VCU project, it was CS (OS) No. 850/2007 Page 16 of 37 agreed between the defendants acting through Mr. Dhruv Varma and Mr. Pradeep Burman.
29. It was stated that Mr. Pradeep Burman and/or his nominee would be entitled to share capital in Vasu corp Inc. equivalent to specific percentage of total amount advanced by the plaintiff to the defendants. However, as regard the liability of repayment of loan amount, the same was independent of the outstanding regarding the issuance of equity in Vasu Corp Inc. in favour of Pradeep Burman and/or his nominee.
30. It is alleged that Vasu Corp Inc. issued the shares to Wogal Technologies Inc. which were duly paid for and in fact the defendants‟ reference to e-mail messages is out of context. The value of the shares of Vasu Inc. is 0.0001 US$ per share i.e. US $ 100 for a million shares and therefore, the question of converting the loan of Rs. 60 crores into the equity shares in a company which is not worth a few hundred dollars is false and misconceived.
31. It is also pertinent to mention that the defendants themselves have placed on record a copy of the memorandum of understanding dated 31st August, 2006 whereby the defendants have acknowledged that a sum of Rs. 49,83,93,273/- was due and payable by the defendants to the plaintiff as on the date of said memorandum of understanding inclusive of interest @ 12% per annum.
32. In the said agreement it is mentioned that the payment of interest for the financial year 2005-06 would be made on deferred payment basis by defendant No.1 and the payment of interest would CS (OS) No. 850/2007 Page 17 of 37 stand deferred for a period of 12 months from the date the interest otherwise would have been payable. It was also agreed between the parties that the defendants would not make payment of interest in the financial year 2006-07 and the interest payable for the said period shall be paid by the defendants in the financial year 2007-08 which shall be in addition to the interest payable in the said financial years. Therefore, it is very clear that by execution of the memorandum of understanding dated 31st August, 2006 the contention of the defendants for novation of the contract is without any basis.
33. Had there been novation of contract between the parties by virtue of the e-mails and letters exchanged, the defendants‟ conduct would have been different after the said arrangement. But in the present case the circumstances speak for themselves that the understanding regarding the issuance of share capital in Vasu Corp Inc was in addition to the liability of repayment of loan, although in the correspondence there was a discussion about the liability of repayment of loan along with interest.
34. In any case the admitted loan cannot be waived by way of interpretation of the said e-mail messages exchanged between the defendants and Mr. Burman. The conduct of the defendants itself shows that it was additional to the liability of repayment of loan.
35. Further, Mr. Pradeep Burman could not have waived the liability of repayment of loan along with interest and it appears that it was an independent understanding regarding the issuance of equity in CS (OS) No. 850/2007 Page 18 of 37 favour of Mr. Pradeep Burman.
36. As per clause 12.5 of the Loan agreement dated 15th April, 2005 it is specifically mentioned that no variation of the agreement would be binding upon the parties unless such variation was in writing and signed by each party.
37. The memorandum of understanding dated 31st August, 2006 demolishes the defense raised by the defendant. In the agreement it is stipulated that the agreement constituted the whole agreement relating to subject matter and superseded all prior agreements or understandings relating to the subject matter of the agreement.
38. The plaintiff has placed reliance on Section 92 of the Indian Evidence Act which reads as under:-
"92. Exclusion of evidence of oral agreement- when the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting form, its terms:
Proviso (1) Any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, (want or failure) of consideration, or mistake in fact or law.
Proviso (2) The existence of any separate oral agreement as to any matter on which a document is silent, and which is not inconsistent with its terms, may be proved. In considering whether or not this proviso applies, the court shall have regard to the degree of formality of the document.CS (OS) No. 850/2007 Page 19 of 37
Proviso (3) The existence of any separate oral agreement, constituting a condition precedent to the attaching of any obligation under any such contract grant or disposition of property, may be proved.
Proviso (4) The existence of any distinct subsequent oral agreement to rescind or modify any such contract, grant or disposition of property may be proved, except in cases in which such contract, grant or disposition of property is by law required to be writing, or has been registered according to the law in force for the time being as to the registration of documents.
Proviso (5) Any usage or custom by which incidents not expressly mentioned in any contract are usually annexed to contracts of that description, may be proved.
Provided that the annexing of such incident would not be repugnant to, or inconsistent with, the express terms of the contract.
Proviso (6) Any fact may be proved which shows in what manner the language of document is related to existing facts."
39. In support of his submission the learned counsel for the plaintiff has referred the judgment reported in the case of Tamil Nadu Electricity Board & Another vs. N.Raju Reddiar & Anr., 1996(4) SCC 551 the relevant portion whereof reads as under:-
"7. At the outset it must be borne in mind that the agreement between the parties was a written agreement and therefore the parties are bound by the terms and conditions of the agreement. Once a contract is reduced to writing, by operation of Section 91 of the Evidence Act, 1872 it is not open to any of the parties to seek to prove the terms of the contract with reference to some oral or other documentary evidence to find out the intention of the parties. Under Section 92 of the Evidence Act where the written instrument appears to contain the whole terms of the contract then parties to the contract are not entitled to lead any oral evidence to ascertain the terms of the contract. It is only when the written contract does not contain the whole of the agreement between the parties and there is any ambiguity then oral evidence is permissible to prove the other conditions which also must not be inconsistent with the written contract. The case in hand has to be adjudged CS (OS) No. 850/2007 Page 20 of 37 bearing in mind the aforesaid principles and the plaintiffs being conscious of this position along with the tender appended a letter and in that letter inserted certain terms by writing in ink to establish the case that the acceptance of the plaintiffs‟ tender would tantamount to the acceptance to the terms contained in the letter in which there was insertion in writing to the effect that it was on multi-slab basis. It is in this context the question whether such handwritten portion was originally there or was subsequently inserted assumes great significance. We are unable to accept the stand taken by the learned counsel for the respondents that there was no such issue on this question inasmuch as this question was considered by the learned trial Judge while discussing Issue 1 on the basis of evidence laid and the trial Judge had given a finding in favour of the plaintiffs. The said finding, however, on the face of it appears to us to be wholly unsustainable. As has been stated earlier there was no signature either by the persons submitting the tender or by the persons receiving the same on the handwritten portion of the letter. The learned trial Judge had noticed that the certified copy which was issued by the Board on 11-7-1978 of the aforesaid letter clearly contains the handwritten portion and therefore he came to the conclusion that the handwritten portion was there at the time of submission of the tender. The tender itself was submitted on 12-7-1978 and we fail to understand how the Board could grant a certified copy of the letter on 11-7-1978 when the plaintiffs‟ case itself is that along with the tender he had appended the letter in question. On this ground alone it can be safely held that handwritten portion in Exhibit P-1 was not there at the time of submission of the tender but was subsequently inserted obviously with the connivance of the officers of the Board. The Board in its rejoinder-affidavit filed in this Court has stated that the attested copy was actually received on 28-12-1978, much later than the finalisation of the tenders and agreement and in order to build up a case the aforesaid interpolation has been made. In the facts and circumstances of the present case the aforesaid stand of the Board appears to us to be wholly justified and at any rate we have no hesitation to come to the conclusion that the handwritten portion in Exhibit P-1 was not there initially and has been inserted subsequently. The main basis of the plaintiffs‟ case on which a multi-slab rate was claimed therefore fails. The written agreement between the parties nowhere indicates that the rate to be paid to the plaintiffs was on multi-slab basis and the terms and conditions of the written contract is not susceptible of such a construction."
40. Another judgment referred by the learned counsel for the plaintiff is reported in the case of Citi Bank N.A. vs. Standard Chartered Bank, 2004(1) SCC 12 at Page 34 which reads as under:-
"47. Novatio, rescission or alteration of a contract under CS (OS) No. 850/2007 Page 21 of 37 Section 62 of the Indian Contract Act can only be done with the agreement of both the parties of a contract. Both the parties have to agree to substitute the original contract with a new contract or rescind or alter. It cannot be done unilaterally. The Special Court was right in observing that Section 62 would not be applicable as there was no novatio of the contract. Further, it is neither Citi Bank‟s nor CMF‟s case nor even SCB‟s case that there was a tripartite arrangement between the parties by which CMF was to accept the liability. Such a case of novatio does not arise for consideration. Shri Andhyarujina, the learned Senior Counsel for Citi Bank has also not seriously pressed for Citi Bank‟s case being considered by reference to Section 61 abovesaid."
41. On the other hand, the argument of the learned counsel for the defendants on the question of novation of agreement is that on 10th October, 2006 Mr. Pradeep Burman sent an e-mail wherein the current outstanding of Vasu Tech and shares due on 30th September, 2006 calculated on the agreed basis was mentioned with the outstanding loan of about Rs.60 crores which was to be converted into 8.885 million shares of Vasu Inc. and on 11th October, 2005 he confirmed the same upto that date and novation took place for the amount advanced by the plaintiff till that date. Mr.Pradeep Burman also confirmed the same on 6th December, 2006.
42. It is argued by learned counsel for the defendant that there were no covering letters for the amounts advanced till the date of novation on 11th October, 2006 and the covering letters between 11th October, 2006 to 6th December, 2006 are only for the additional amounts advanced during this period which were novated on 6th December, 2006.
43. He argued that Mr. Pradeep Burman and his advisor visited US from 13th December, 2006 to 15th December, 2006 and in the CS (OS) No. 850/2007 Page 22 of 37 meeting that was held, it transpired that it would be the sole responsibility of Mr. Dhruv Varma to ensure that the technology is transferred to Vasu Corp. Inc and any fund introduced by him would not be converted into equity and on 19th December, 2006 Mr. Burman finally resigned from the Board of Vasu Corp Inc. On his return to India, the plaintiff presented seven cheques for a total sum of Rs.4,31,193/- on account of collateral national interest. The said amount was paid in order to avoid criminal proceedings.
44. It is submitted that e-mails exchanged between the parties clearly establish that the debt shown by the defendants was initially a loan but was subsequently converted into investment in the form of equity shares of Vasu Corp Inc. It is contended by learned counsel for the defendants that the said e-mails exchanged between the parties are documents within the meaning of law and the said position is admitted between the parties and, therefore, the defendants are rightly claiming the novation on the basis of the same very e-mails.
45. It is also argued by learned counsel for the defendants that at this stage the court is to take a view while deciding the application about the triable issue which have arisen qua the interpretation of the documents.
46. As regards Sections 91 and 92 of the Evidence Act referred by the plaintiff, the learned counsel for the defendant has argued that the said provisions are not applicable to the facts and circumstances of the present case as it does not involve the interpretation of even a single CS (OS) No. 850/2007 Page 23 of 37 agreement between the parties.
47. Learned counsel for the defendants has strongly relied upon the latest judgment of the Hon‟ble Court in the case of Nalini Singh Associates vs. Prime Time IP Media Services Ltd, 153(2008) DLT 174 . The counsel has referred to Paras 17 to 22 of the judgment which read as under:-
"17. The principal contention of the Objector overlooks the distinction between the technical law of accord and satisfaction in England and the statutory provisions of the Indian Contract Act, 1872, namely, Sections 62 and 63. In India in a given case, accord and satisfaction may be based upon a mutual agreement or by unilateral act and acceptance by the promissee. In both cases, Courts will have to examine whether conditions mentioned in Sections 62 and 63 of the Contract Act are satisfied. It may also be noted that the words „accord and satisfaction‟ have not been specifically used in the two sections and as these are statutory provisions, on each occasion, the Court or the arbitrator will have to examine whether the statutory requirements of the two sections are satisfied.
18. In India, law of contract is a codified law and the provisions of the said Act govern and apply. Sections 62 and 63 of the Contract Act read as under:
"62. Effect of novation, rescission and alteration of contract.--If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.
63. Promisee may dispense with or remit performance of promise.--Every promisee may dispense with or remit, wholly or in part, the performance of the promise made to him, or may extend the time for such performance, or may accept instead of it any satisfaction which he thinks fit."
19. Section 62 of the Contract Act allows novation, rescission, modification and alteration of an earlier contract with a new agreement or even alteration of an earlier agreement. It gives rights to parties to put a contract to an end or terminate it. Under the new agreement or upon amendment of an earlier contract, prior rights of the parties are extinguished and new CS (OS) No. 850/2007 Page 24 of 37 rights and obligations come into existence. Original contract is discharged or modified and substituted by the new obligations under the new contract or as a result of amendment. Unless the new contract is void or unenforceable or the amended terms are unenforceable, a party cannot revert back to the original contract. Original contract can get revived in two cases :
firstly, when the new contract is unenforceable or void and secondly, when the terms of novation itself provide that original contract can be revived and the said clause becomes applicable. In case these two conditions are not satisfied, the original contract gets obliterated or wiped out. It dies and cannot confer any cause of action. Section 62 is based upon the principle that a contract is the outcome of a mutual agreement and it is equally open to the parties to mutually agree to bring the said contract to an end, enter into a new contract or modify the earlier contract. Contractual obligations can be modified by mutual consent. Parties can vary the terms of the contract and absolve a party from the original obligations. Once Section 62 of the Contract Act applies, parties are bound by the terms and conditions mentioned in the second contract or the amended terms and not by the first contract. Breach of the subsequent contract will not revive the original contract, unless intention of the parties is to the contrary. The question is of intention of the parties, when they enter into second contract or modify earlier terms.
20. Section 62 of the Contract Act does not require additional or new consideration or possibility thereof by any party, to be a valid and enforceable contract. Discharge of the original contract is regarded as consideration in the new contract. Release from the past consideration is a good consideration to enter into a new contract. No further consideration is required. Privy Council way back in 1943 in Gauri Dutt Ganesh Lal v. Madho Prasad, reported in AIR 1943 PC 147 has held that novation constitutes good consideration for the fresh/new contract and a compromise between a creditor and a debtor operates as satisfaction of debts and affords an answer to an action of the creditor based on original liability.
21. Some Courts have drawn a distinction between executed and executary contracts for application of Section 62 of the Act. However, majority of the Courts and the Law Commission have favoured the approach that Section 62 of the Contract Act will apply to both executed and executory contracts. I may have gone into this question in greater depth and detail but I find that the said issue was not specifically raised before the learned Arbitrator. The Objector did not draw any distinction between the executed and executory contract CS (OS) No. 850/2007 Page 25 of 37 and raise the contention that Section 62 of the Contract Act did not apply. The Objector cannot be permitted and allowed to raise this plea in oral arguments under Section 34 of the Act.
22. Section 63 of the Contract Act applies when a creditor or a promisee by his unilateral act discharges or partly discharges the promisor. Unlike Section 62 of the Act which requires mutual agreement between both the parties, Section 63 of the Act applies in case of unilateral act of the promisee. A promisee is at liberty to accept part performance or condone non performance, if he is satisfied. It requires and implies intention on the part of the promissee to discharge the promisor in spite of his failure to meet his obligations or part obligations."
48. Learned counsel for the defendants has also relied upon the following judgments on the question of novation and substitution of the original agreements:-
-Bharat Petroleum Corporation Ltd. Vs. Great Eastern Shipping Co. Ltd., AIR 2008 SC 357
-Ram Krishan Singhal Vs. Executive Engineer, 1991(1) Arb.L.R. 154
-Dharambir Vs. Central Bureau of Investigation, 148(2008) DLT 289
-Societe Des Products Nestle SA & Anr. Vs. Essar Industries & Ors., 2006 (33) PTC 469 (Delhi)
-K.S. Bakshi & Anr. Vs. State & Anr., 146(2008) DLT 125
-M/s. Dadri Cement Co. & Anr. Vs. M/s. Bird & Co. Pvt. Ltd., AIR 1974 Delhi 223
-Arun Khanna & Anr. Vs. Rajeev Gupta & Ors., 129 (2006) DLT 14 (DB)
-Nalini Singh Associates Vs. Prime Time-IP Media Services Ltd., 153 (2008) DLT 175
49. As far as law of novation of contract is concerned, there is no dispute on the said proposition. Learned counsel for the plaintiff is also agreeable with the same. However, whether there has been novation or not it depends upon the merit of each and every case in hand. In the CS (OS) No. 850/2007 Page 26 of 37 present case it is not disputed that from the year 2003 till 30 th August, 2006 there have been various e-mails exchanged between Mr. Pradeep Burman and the defendants and on 9th May, 2006 itself Mr. Pradeep Burman by e-mail gave a counter proposal confirming that 8.835 million shares are to be transferred to him on a formula set out as per understanding.
50. However, it is equally not in dispute that despite the said e- mail exchanged, the defendants admittedly entered into the MOU dated 31st August, 2006 confirming their liability for the payment of Rs.49,83,93,273/- as on that date exclusive of interest amount which was acknowledged to be payable with interest thereon @ 12% p.a. Not only that, the defendant No.1 also issued post dated cheques towards payment of outstanding loan amount and some of the cheques were replaced by fresh cheques at the request of the defendants as the defendants did not have funds. The said post dated cheques were issued by the defendants under various covering letters dated 27.09.06, 11.10.06, 19.10.06, 31.10.06, 22.11.06, 29.11.06 and 6.12.06.
51. Some of the covering notes were admittedly issued after the dates of the alleged e-mails in which the defendants have admitted the amount of loan but also furnished calculation of interest, break-up of principal amount and the interest being paid and also the amount of tax deducted at source.
52. It is pertinent to mention that after the alleged date of novation of contract between the parties the defendant No.1 has issued CS (OS) No. 850/2007 Page 27 of 37 the letter dated 6th December 2006 which reads as under:-
"06.12.06 The Chairman M/s. Ratna Commercial Enterprises Pvt. Ltd.
New Delhi
Reg : SHORT TERM LOAN
Dear Sir,
Please find enclosed herewith the following cheques towards repayment of short term loan of Rs.55,00,000/- (Rupees Fifty Five lacs only) alongwith interest @ 12% PA for the period 06.12.06 to 31.03.2007 as per detail given below :
1 381123 01.01.2007 36464 Interest @ 12% per annum for the period 06/12/2006 to 31/12/2006 on Rs.55,00,000/-
less TDS @ 22.44% i.e. Rs.10550/-.
2 381125 01.04.2007 126221 Interest @12% per annum for
the period 01/01/2007 to
31/03/2007 on Rs.55,00,000/-
less TDS @ 22.44% i.e.
Rs.36519/-.
3 381126 01.04.2007 5500000 Repayment of loan.
We hope you will find the above in order. We shall be grateful if you can provide us with your income tax PAN number for our records and for issue of TDS certificates. Thanking you, Yours faithfully, For VASU TECH LIMITED (ARUNA VARMA) DIRECTOR Encl. : as above."
53. Prior to this letter the defendants have also issued a letter in the month of September 2006 to the plaintiff which reads as under:-
"11.09.06 The Chairman M/s. Ratna Commercial Enterprises Pvt. Ltd.
New Delhi
CS (OS) No. 850/2007 Page 28 of 37
Reg. : SHORT TERM LOAN
Dear Sir,
Please find enclosed herewith the following cheques towards repayment of short term loan of Rs.50,00,000/- (Rupees Fifty lac only) alongwith interest @ 12% PA for the period.
1 370476 01.10.2006 25499 Interest @ 12% per annum for the period 11.09.2006 to 30.09.2006 on Rs.50,00,000/-
less TDS @ 22.44% i.e. Rs.7378/-.
2 370477 01.01.2007 117296 Interest @12% per annum for
the period 01/10/2006 to
31/12/2006 on Rs.50,00,000/-
less TDS @ 22.44% i.e.
Rs.33937/-.
3 370478 01.04.2007 114746 Interest @12% per annum for
the period 01/01/2007 to
31/03/2007 on Rs.50,00,000/-
less TDS @ 22.44% i.e.
Rs.33199/-.
4 370479 01.04.2007 5000000 Repayment of loan.
We hope you will find the above in order. We shall be grateful if you can provide us with your income tax PAN number for our records and for issue of TDS certificates. Thanking you, Yours faithfully, For VASU TECH LIMITED (ARUNA VARMA) DIRECTOR Encl. : as above."
Another letter issued by the defendant No.1 to the plaintiff in the month of September 2006 confirming the balance upto 25 th September, 2007 is as follows :
"September, 2006 The Chairman M/s. Ratna Commercial Enterprises Pvt. Ltd.
New Delhi
Reg. : SHORT TERM LOAN
CS (OS) No. 850/2007 Page 29 of 37
Dear Sir,
Please find enclosed herewith the following cheques towards repayment of short term loan to dated 27.09.2006 and interest payment @ 12% on above loan for the period 01.04.2005 to 31.07.2007 as per detail given below 1 370486 01.04.2007 508393273 Refund of principal loan received upto 27.09.2006 2 370487 01.04.2007 74727016 Interest @12% per annum for the period 01.04.2005 to 31.03.2007 on amount recd (including opening balance) for the period 01.04.05 to 31.03.07 less tds @ 22.44% (9.63,47365-21620349) as per calculation sheet attached.
We hope you will find the above in order. We shall be grateful if you return us all earlier issued cheques drawn on Central Bank of India so that we can pass the necessary entries in the books.
Thanking you, Yours faithfully, For VASU TECH LIMITED (ARUNA VARMA) DIRECTOR Encl. : as above."
54. Admittedly, (a) the defendants have not denied the loan agreement dated 15th April, 2005 and the execution of the documents in the form of Share Pledge Agreement and Deed of Agreement; (b) the defendants have also admitted the execution of memorandum of understanding dated 31st August, 2006; (c) the defendants have also not denied the issuance of post dated cheques by defendant No.1 in favour of the plaintiff and various covering letters issued along with the said cheques and issuance of balance confirmation certificates in respect of CS (OS) No. 850/2007 Page 30 of 37 the outstanding dues; (d) the defendants have not denied the issuance of cheques for payment of interest in addition to the principal amount and deduction of TDS thereon and (e) the defendants have not disclosed that the entitlement of Mr. Pradeep Burman to subscription of equity of Vasucorp Inc. USA was in addition to and not in lieu of the obligation of the defendants repayment of loan.
55. I agree with the submission of the learned senior counsel for the plaintiff that the defense of the defendants is moonshine and sham and it speaks for itself on the following reasons:-
i) That in view of the express written documentation between the parties, no such alleged understanding as mentioned by the defendants, to the contrary can be propounded or taken cognizance of ;
ii) The defendants in the MOU dated 31.8.2006 confirmed their liability for payment of Rs.49,83,93,273/- as on the date of the said MOU exclusive of interest amount, which the defendants acknowledged to be payable with interest thereon at 12% per annum;
iii) The defendant No.1 issued various post dated cheques towards payment of the outstanding loan amount and some of these cheques were replaced by fresh cheques at the request of the defendants, who did not have adequate funds and requested the plaintiff to accept fresh cheques;CS (OS) No. 850/2007 Page 31 of 37
iv) These post dated cheques were issued by defendants under various covering letters dated 27.9.2006, 11.10.2006, 19.10.2006, 31.10.2006, 22.11.2006, 29.11.2006 and 6.12.206.
In all these covering letters, some of which are issued after the dates of the alleged e-mails replied to, the defendants not only clearly admitted the amounts of loan, but also furnished calculation of interest and break up of principal amount and the interest being paid as also the amount of tax deducted at source;
v) That defendant No.1 had issued various post dated cheques towards payment of interest some of which were payable on 1.1.2007 and some on 1.4.2007. The cheques, which were payable on 1.1.2007 were presented for clearance by the plaintiff and five of the said cheques were returned dishonored due to insufficiency of funds pursuant to which the plaintiff sent a statutory legal notice under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881 to the defendants vide notice dated 6.1.2006;
vi) That the defendants in response to the legal notice made payment against the said dishonoured cheques through pay orders under cover letter dated 23.1.2007. The payment of the said cheques clearly establishes the transaction of loan between the parties and the liability of the defendants for payment of CS (OS) No. 850/2007 Page 32 of 37 interest at the agreed rate of 12% per annum for which the above referred cheques were issued;
vii) It is a fact that whatever share holding has been issued by Vasucorp Inc. USA is in favour of Wogan Technologies Inc and has been duly paid for to Vasucorp Inc.
56. There is also force in the submissions of the plaintiff that the contention of the Defendants is belied by the fact that the Defendants themselves have placed on record a copy of the MOU dated 31.08.2006 on record whereby the Defendants unequivocally acknowledged that a sum of Rs.49,83,93,273/- was due and payable by them to the Plaintiff as on the date of the MoU, exclusive of interest at the rate of 12% per annum.
57. It is clear that in view of the loan agreement, which is an admitted document between parties, no argument to the contrary can be pleaded by the Defendants. In so far as the second suit is concerned, the same is inter alia based on the dishonoured cheques, which were issued by the Defendant No.1 in pursuance of the Agreement of loan.
58. Further, it is a matter of fact that five of the said cheques were returned dishonoured for insufficiency of funds pursuant to which the Plaintiff sent a statutory legal notice under Section 138 read with Section 142 of the Negotiable Instruments Act to the Defendants vide notice dated 06.01.2006. In response to the legal notice the Defendants made payment against the said dishonoured cheques through pay orders under the cover of its letter dated 23.1.2007. The payment of the said CS (OS) No. 850/2007 Page 33 of 37 cheques clearly establishes the transaction of loan between the parties and the liability of the Defendants for payment of interest at the agreed rate of 12% per annum for which the above referred cheques were issued. Thus, all the contentions of the defendants are totally irrelevant and do not help the defence raised by the defendants, hence, the same are rejected.
59. The above-mentioned facts and circumstances clearly indicate that the defense of the defendants in regard to novation does not help the case of the defendants, rather it demolishes the defence raised by them. Further, as per averment of the plaintiff, value of the shares of Vasu Inc is 0.0001 US $ per share i.e. US $ 100 for million shares. Thus, the defendants‟ claim of conversion of loan of Rs.60 crores into equity shares for a company which is not worth a few hundred dollars, is not believable.
60. The conduct of the defendants shows that at the time of issuance of cheques the defendants were conscious that the said amount was due and later on, by reference to the documents and e-mails which are independent transactions between Mr. Pradeep Burman and the defendants, the same cannot be taken as a valid defense, given the facts and circumstances of the present case. The defendants, if so advised, may initiate appropriate proceedings in accordance with law against Mr. Pradeep Burman. However, these e-mails cannot be used as defense as liability for repayment of the loan amount along with interest thereon was independent of the understanding regarding issuance of equity in CS (OS) No. 850/2007 Page 34 of 37 Vasucorp Inc. in favour of Mr. Pradeep Burman and/or his nominee.
61. Various judgments have been cited by both the parties. However, the law relating to grant of leave to defend has been laid down by a Full Bench decision of the Supreme Court in the matter of Mechelec Engineers & Manufacturers vs. M/s Basic Equipment Corporation reported in SCC (1976) 4 SCC 687 wherein the Hon‟ble court laid down the following principles in Para 8 of the judgment as under:-
"8. In Smt. Kiranmoyee dassi V Dr J Chatterjee Das, J after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by Order 17 CPC in the form of following propositions:-
a. If the defendant satisfies the court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and 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 positively good defence the plaintiff is not entitled to sign judgment and 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 to say, although the affidavit does not positively and immediately make it clear that he has a defense, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff‟s claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the court may in its discretion impose conditions as to the time or mode of trial but not as to payment into court or furnishing security.
d. If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then CS (OS) No. 850/2007 Page 35 of 37 ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend.
e. If the defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the court may protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid into court or otherwise secured and give leave to the defendant on such condition, and thereby show mercy to the defendant by enabling him to try to prove a defence."
62. I do not see that any such defence is made out by the defendants for triable issue in view of the Full Bench judgment passed by the Apex court as no valid defence is available in the present case. The defendants‟ defence appears to be moonshine and sham. The present suit is squarely covered within the principles laid down in para 8
(d) and (e) of the judgment. All the cases referred by the defendants are of no help to them as they are inapplicable to the facts and circumstances of the present case.
63. The plea of the defendants is completely defence less, vexatious, unspecified, evasive and is contradictory, therefore, the defendants are not entitled to any leave to defend.
64. The principle of granting leave to defend is that the plaintiff must not be put to unnecessary trial to prove his case. The purpose of granting the defendants an opportunity to prove their case only arises if the defendants raise a triable issue. I am of the considered view that the defenses raised by the defendants in the affidavit seeking leave to defend disclose no triable issue.
CS (OS) No. 850/2007 Page 36 of 37
65. Therefore, both the applications filed by the defendant for leave to defend are dismissed. Consequently, both suits being CS(OS) No.850/07 and 1093/08 are decreed with costs in the following terms :
(a) CS (OS) No.850/2007 is decreed for a sum of Rs.26,26,41,644 (Rupees Twenty Six Crore Twenty Six Lac Forty One Thousand Six Hundred Forty Four Only) in favour of the plaintiff and against the defendants jointly and severally.
(b) CS (OS) No.1093/2008 is decreed for a sum of Rs.41,64,47,667(Rupees Forty One Crore Sixty Four Lac Forty Seven Thousand Six hundred and Sixty Seven Only) in favour of the plaintiff and against the defendants jointly and severally.
(c) As regards the pendente lite and future interest is concerned the plaintiff shall be entitled for interest @6% per annum from the date of filing of both the suits till the date of actual payment.
(d) Decree sheet be drawn accordingly in both the suits.
66. Both the suits as well as all pending applications are disposed of.
MANMOHAN SINGH, J.
NOVEMBER 26, 2009 sa CS (OS) No. 850/2007 Page 37 of 37