Bangalore District Court
Agni Aero Sports Adventure Academy vs Agni Aviation Consultants (Dissolved) on 31 January, 2017
IN THE COURT OF THE XIX ADDL. CITY CIVIL &
SESSIONS JUDGE AT BANGALORE CITY: (CCH.18)
Dated this 31st day of January, 2017.
Present
SMT.K.B.GEETHA, M.A., LL.B.,
XIX ADDL. CITY CIVIL & SESSIONS JUDGE,
BANGALORE CITY.
O.S.NO.4514/2011
PLAINTIFF : Agni Aero Sports Adventure Academy,
AASAA(P) Ltd.,
A Company incorporated under
The Companies Act, 1956,
Having its registered office at
Jakkur Airprot,
12th KM, Bellary Road,
Bangalore-560 064.
Rep.by its Director
Smt.Sapna Sharma,
w/o Arvind Sharma,
major, aged about 43 years.
(By Sri A.Sampath,Advocate)
-VS-
DEFENDANTS : 1. Agni Aviation Consultants (Dissolved)
A Partnership firm,
No.36, 2nd Cross, 10th Main Road,
4th Block, Koramangala,
Bangalore-34.
Represented by its Partners
Arvind Sharma and K.T.Sebastian,
major.
2 O.S.No.4514/2011
2. Sri.K.T.Sebastian,
Major,
Partner,
M/s. Agni Aviation Consultants,
No.36, 2nd Cross, 10th Main Road,
4th Block, Koramangala,
Bangalore-34.
3. Sri.Arvind Sharma,
Major,
M/s.Agni Aviation Consultants,
No.15, Gitanjali Farm,
Lalithadripur Road,
Mysore.
(D.1 & D.3 - By Sri.MS, Advocate)
( D.2 - By Sri.RS, Advocate)
Date of Institution of the suit : 25/6/2011
Nature of the Suit : Recovery of money
Date of commencement of recording
of evidence : 23/8/2012
Date on which the Judgment was
pronounced : 31/1/2017
Year/s Month/s Day/s
Total Duration : 05 07 06
JUDGMENT
The plaintiff has filed this suit for recovery of Rs.5,24,872/- from defendants jointly and severally with 3 O.S.No.4514/2011 current and future interest at the rate of 18% p.a. from the date of suit till realization; for court costs and such other reliefs.
2. The case of plaintiff in nutshell is that the plaintiff is a registered company incorporated on 8/8/1994 as Private Company Limited by shares under the provisions of Indian Companies Act, 1956. The Board of Directors of Plaintiff Company authorized one of its directors-Smt.Sapna Sharma by passing the resolution on 4th May to represent the Company and to file the suit. Plaintiff company is engaged in the business of promoting Aero sports activities, hotels and restaurants, travel and tourism, manufacturing, leasing and servicing of aircrafts, hover crafts of all types and descriptions and also take up the cloud seeding, weather modification and atmospheric projects. At the time of incorporation of Plaintiff Company, there were 2 directors i.e., Captain Arvind Sharma and Smt.Sapna Sharma. Later Sri Arvind Sharma retired from the company w.e.f. 3/3/2010. Present Plaintiff Company has 3 directors. 1st defendant was a 4 O.S.No.4514/2011 Registered Partnership Firm under the provisions of Indian Partnership Act, 1932 established by a Deed of Partnership dtd:22/7/2003. Defendant Nos.2 & 3 were its partners. 3rd defendant who is the partner of 1st defendant was also director of Plaintiff Company till his retirement on 3/3/2010. Plaintiff company has a Hanger at Jakkur Airport wherein it conducts its Aviation activities like parking its aircraft and carrying out maintenance/servicing the same. 3rd defendant was the director of Plaintiff Company since from its inception. 2nd defendant had retired from Indian Air force on his health ground and approached 3rd defendant through his father-in-law - Sri.K.Ramadas and his wife Smt.Latha and suggested that 2nd defendant can join the 3rd defendant and should start a business in aviation since the 3rd defendant had already established the plaintiff company. 1st defendant firm was carrying its day to day activities from Koramangala. Partnership got an assignment from the Govt. of Karnataka for Weather Modification and Cloud Seeding in the State of Karnataka. Since the Weather Modification 5 O.S.No.4514/2011 and cloud Seeding required installation of Radars and use of Foreign Aircrafts, the 1st defendant thought it fit to request the plaintiff company to provide its expertise and resources available with them to enable the 1st defendant firm to effectively carry out the Cloud Seeding operations. 1st defendant firm continued to do its business in Cloud Seedling and Weather Modifications for various State Governments and IITM, Pune. Since 3rd defendant continued to be the partner of the 1st defendant, the plaintiff company continued the facilities offered to them when their first project was launched. Since 1st defendant was getting their Aircraft serviced from the plaintiff, it was advantageous to both the Plaintiff Company and the 1st defendant firm. Under these circumstances, plaintiff had a running account of 1st defendant firm. The 1st defendant continued taking on lease the aircraft servicing and maintenance of aircraft, technical support, maintenance of personnel, etc. from Plaintiff Company. Various transactions have been taken place between parties and they were running very smoothly and transfer of amount 6 O.S.No.4514/2011 was also taking place periodically. Since the 3rd defendant was involved in both the Plaintiff Company and the 1st defendant firm, the transaction was very smooth. 1st defendant used to take on lease the aircrafts from outside India for its cloud seeding business and these aircrafts used to be serviced by the plaintiff company. On one of the occasions when 1st defendant was not in a position to take on lease foreign aircraft due to the financial constraint, it though it fit to take on lease one of the aircrafts belonging to the plaintiff company. Unlike the Aircraft which were being hired from outside India, the Aircrafts of the plaintiff was not readily suitable for cloud seeding. The aircrafts had to be modified. However, aircrafts were suitable for modification and ultimately to be used as a cloud seeding Aircraft. In fact, defendant Nos.2 & 3 representing defendant No.1 firm discussed with Plaintiff Company and arrived at a conclusion that taking on lease an Indian Aircraft and then getting it suitably modified by fitting the required equipments for the purpose of cloud seeding would still work out much 7 O.S.No.4514/2011 cheaper than taking lease of foreign Aircraft. They further thought that Indian Regd. Aircraft could be flown by an Indian Pilot, which was not the case with foreign registered Aircraft. Under these circumstances, 1st defendant firm though it fit to enter into a lease agreement on 1/4/2007 to take on lease a Cessna 180 Aircraft bearing Regn.No.VT-DUQ from the plaintiff company initially for a period of one year with an option to extend by another two years. Since the said aircraft was not fitted with seeding equipments suitable for weather modification, the Aircraft had to be modified by the lessees i.e., defendant No.1 at his own costs. Said process was intricate and time consuming. The lease charge for the first year was fixed at Rs.16,00,000/- and extended for further 2 years with the lease charge at Rs.30,00,000/-; the said amount being payable at the end of lease period. Lease agreement was executed on 1/4/2007 between parties and 1st defendant paid Rs.16,00,000/- on 31/3/2008 for the 1st year of the lease period to Plaintiff Company. This payment is reflected in the ledger accounts 8 O.S.No.4514/2011 maintained by the 1st defendant. The Aircraft Lease Charges Extract also made it clear that 1st defendant firm has made the initial payment under the lease deed to the plaintiff company. 1st defendant had deducted tax at source at that time. Thereafter, Plaintiff Company had handed over the Aircraft to the 1st defendant firm in as is where is condition to enable it to get the aircraft suitably modified for the purpose of their business of weather modification which included seeding. 1st defendant had a long drawn interaction with agencies like National Aeronautical Laboratory (NAL) Govt.of India Laboratory and Aviation Consultants on behest of the 1st defendant regarding the proposed designs for modifying the aircraft to suit cloud seeding. The engineers of Plaintiff Company were also involved in that process. 1st defendant firm continued their research and development on the said aircraft in order to make it suitable for cloud seeding and it continued to possess the said Aircraft till the end of the period and thereafter handed over the Aircraft to the Plaintiff Company. Thus, 1st defendant company has 9 O.S.No.4514/2011 become due and liable to pay lease charges of Rs.30,00,000/- as on 31/3/2010. Due to differences between defendant Nos.2 & 3, 3rd defendant dissolved the first defendant firm vide notice dtd:16/12/2009 followed by a public notice published in the Hindu Newspaper on 5/1/2010. After dissolution of said 1st defendant firm, 2nd defendant harassed the plaintiff company in as much as the third defendant continued to be a director of plaintiff company till his retirement on 3/3/2010. 2nd defendant had sent an e-mail dtd:2/1/2010 to the 3rd defendant which is to the knowledge of plaintiff company wherein he has stated that "I have decided to target Arvind's business systematically. I will make him spend money and then pull the rug from under." Plaintiff Company had running account with 1st defendant. As per the audited account of the plaintiff company, the plaintiff company was liable to the 1st defendant a sum of Rs.15,76,261/- as on 31/3/2008 which increased to Rs.24,75,128/- as on 31/3/2009. In the financial year commencing from 1/4/2009 the 1st defendant had become liable to pay a 10 O.S.No.4514/2011 sum of Rs.30,00,000/- under the lease deed dtd:1/4/2007. Because of the dissolution of 1st defendant firm by 3rd defendant, 2nd defendant had been seeking vengeance against plaintiff company and even resorted to issue notice of Winding up of the plaintiff company on 28/1/2010 claiming that plaintiff company was due to 1st defendant a sum of Rs.24,75,128/-. Since 2nd defendant was well known to one of the directors of the plaintiff company and further since the accounts of plaintiff was yet to be reconciled, a reply was sent to the said notice on 10/2/2010 under Certificate Of Posting calling upon 1st defendant represented by 2nd defendant to reconcile the account and thereafter pay the amount that may become due and payable to the plaintiff company. Inspite of the reply, the 2nd defendant claiming to represent 1st defendant filed a Company petition for Winding up of the plaintiff company before Hon'ble High Court of Karnataka. Plaintiff Company has appeared and filed their objections. Subsequently, Hon'ble High Court of Karnataka on 24/2/2011 admitted the said petition. Immediately, 11 O.S.No.4514/2011 Plaintiff Company filed an application under Rule 9 and Rule 96 of the Companies (Court) Rules praying for recalling the order of admission of the Company Petition. Plaintiff company got issued legal notice dtd:16/5/2011 to defendant Nos.2 & 3, partners of 1st defendant to pay the balance amount of Rs.5,24,872/- after deducting Rs.24,75,128/- due to the plaintiff company. 2nd defendant received said notice, but failed to make payment or replied the notice. However, 3rd defendant admitted liability by his letter dd:6/6/2011 and stated his inability to pay at that juncture and prayed time till the matter concluded by the learned Arbitrator. 2nd defendant had filed a suit for injunction against Plaintiff Company in respect of certain aircrafts before this Court in O.S.No.5937/2010 which is pending. Under these circumstances, plaintiff company has filed the present suit for recovery of Rs.5,24,872/- with court costs and current and future interest at 18% p.a. Hence, the suit for appropriate reliefs.
12 O.S.No.4514/2011
3. Defendant No.2 filed his written statement wherein he denied the suit claim of Plaintiff Company. However, he admitted that he and 3rd defendant are partners of 1st defendant firm and only Sapna Sharma and defendant No.3 were directors of Plaintiff Company. He also admitted about filing of Company Petition No.55/2010 for Winding up of plaintiff company and contended that on 11/11/2010 plaintiff company appeared in said petition and filed objections. However, in said objection, plaintiff not stated about this lease deed or Rs.30,00,000/- due and outstanding from 1st defendant firm to the plaintiff company. There is no mention of aircraft lease agreement of 1/4/2007 in the said objection statement. Plaintiff failed to respond to the statutory notice issued on 11/1/2010 and 28/1/2010 which were issued under S.433(1)(a) of Companies Act. Hence, he filed Company Petition No.55/2010.By order dtd:24/2/2011, Hon'ble High Court of Karnataka in Company Petition No.55/2010 passed an order and admitted the said company petition. Only afterwards, for the first time, plaintiff company had 13 O.S.No.4514/2011 issued false legal notice dtd:16/5/2011. On 24/3/2011 plaintiff company had filed an application under Rule 9 of the Company (Court) Rules before Hon'ble High Court of Karnataka for recalling the order dtd:24/2/2011. The claim of plaintiff is false and vexatious and only for the purpose of recalling the order dtd:24/2/2011 passed by the Hon'ble High Court of Karnataka in Company Petition, this suit is filed. In earlier legal proceedings in A.A.No.160/2010 filed before this Hon'ble High Court of Karnataka on 22/1/2010 by defendant No.2 against defendant No.3 under the provisions of S.9 of the Arbitration & Conciliation Act, 1996 seeking injunction relief, plaintiff company filed an application to implead itself in the proceedings and in the affidavit annexed to said application, one of the directors of plaintiff company - Smt.Sapna Sharma had categorically stated that business of plaintiff company has nothing to do with the 1st defendant firm and plaintiff company is an independent company that has no connection with 1st defendant firm. 1st defendant had never taken lease of any aircraft from 14 O.S.No.4514/2011 the plaintiff company. 1st defendant has never utilized the services of Plaintiff Company for maintenance and servicing of its foreign aircrafts. Plaintiff company has not authorized by law to service or maintain the foreign aircraft of the 1st defendant firm. He completely denied the execution of lease agreement bearing Regn. No.VT-DUQ on 1/4/2007 and contended that it is false and fabricated documents concocted for the purpose of this suit. The alleged agreement was never produced in winding up petition before Hon'ble High Court of Karnataka in Co.P.No.55/2010. 1st defendant never used the said aircraft which is 60 years old for its business. Said aircraft is not suitable for the purpose of cloud seeding which was the main business of 1st defendant firm. 1st defendant had 7 of its own foreign aircrafts for the purpose of cloud seeding that were suitable and modified with expensive instruments for cloud seeding and thus, there was no question of obtaining lease of aircraft from plaintiff and modify for the purpose. 1st defendant firm is not due a sum of Rs.30,00,000/- towards aircraft lease charges to 15 O.S.No.4514/2011 plaintiff company. Any alleged acknowledgment of debt issued by 3rd defendant on behalf of 1st defendant by way of letter dtd:6/6/2011 is after defendant No.3 initiated arbitration proceedings for dissolution of 1st defendant firm and for rendition of accounts between partners and this is not binding on 2nd defendant. 3rd defendant and his wife were the only promoters and first directors of plaintiff company. Only after dispute arose between defendants No.2 & 3 regarding partnership affairs and when defendant No.2 opposed the misuse of assets of 1st defendant by 3rd defendant for the benefit of his family, 3rd defendant as a belated act, resigned as a director to Plaintiff Company on 3/3/2010. However, even to this day, third defendant is the master mind behind all operations and day to day activities of the plaintiff and he is still controlling the plaintiff company. 3rd defendant's family alone gain financially from the business of the plaintiff and hence, it is beneficial for the 3rd defendant to issue the acknowledgement of bogus debt. Plaintiff Company was in severe financial doldrums in the year 16 O.S.No.4514/2011 2002-03 due to contractual obligations that the plaintiff company has failed to fulfill with its customers and thereafter enable to fully recover from its financial losses. After 1st defendant was established on 22/7/2003, plaintiff represented by its promoter/director/chairman-Capt. Arvind Sharma-3rd defendant who was also partner in the 1st defendant firm requested 1st defendant firm to advance money to plaintiff, to help the plaintiff with the assurance that all advances would be returned to the 1st defendant firm. Under these circumstances, 1st defendant began advancing substantial sum to the plaintiff from time to time, as and when required by the plaintiff. All the above said advances were rendered by the 1st defendant firm through account payee cheques drawn in favour or issued in favour of employees of plaintiff towards salaries of employees. As mutually agreed between the plaintiff represented by its promoters and directors, 3rd defendant and his wife, defendant No.2, the hanger spaces that were leased by the Govt. of Karnataka to the plaintiff company i.e., land with two hanger spaces, together numbered as 17 O.S.No.4514/2011 Hanger No.2, Jakkur Aerodrome, 12th K.M., Bellary Road, Bangalore was used by the 1st defendant firm as its registered office or place of business. As also mutually agreed by plaintiff represented by its promoter and directors, the 3rd defendant and his wife and 2nd defendant, on the establishment of the 1st defendant firm during the period 2003-04, it was the 1st defendant firm utilizing funds brought in by both its partners and constructed an office premises abutting one of the Hanger spaces by constructing additional office space, a kitchen, class rooms, radar operations room, etc., on the said land, renovated the existing dilapidated hangers and paving the area in front of the hangers with interlocking tiles. 1st defendant firm constructed the said office building with provision for class rooms, for additional rooms for storage and radar operations, for maintenance rooms, for a new accounts and administrative section, for a kitchen and for additional bathrooms and it had spent a sum of Rs.1.44 Crores on renovation/modification/up-gradation at Hanger No.2, Jakkur Aerodrome, over a period of 7 years. 1st 18 O.S.No.4514/2011 defendant firm has been paying the ground rents for the lease of hanger space at Hanger No.2, Jakkur Aerodrome, to the Govt. of Karnataka on behalf of plaintiff company. Both the plaintiff as well as 1st defendant firm ran their day to day affairs from the same office premises situated at Hanger No.2, Jakkur Aerodrome, 12th K.M., Bellary Road, Bangalore. The accounts of both entities maintained by common accounts personnel from the same computers situated at the office at Hanger No.2. In fact, father-in-law of 3rd defendant i.e., father of Smt.Sapna Sharma - M.R.Narayana Rao was appointed as the Chief Financial Officer of the 1st defendant firm from the time of its inception till the maintenance of accounts of the 1st defendant were abruptly stopped by the 3rd defendant in November, 2009. During 2007-08 at the instance of 3rd defendant and at his expressed request to reduce the huge loss shown in the balance sheet of the plaintiff company for the financial year, a part of the dues payable by the plaintiff to the 1st defendant firm to an extent of Rs.16,00,000/- was adjusted as having been paid by 1st 19 O.S.No.4514/2011 defendant firm to plaintiff and the reason shown was a one-time lease of aircraft charges. There was no actual money transaction for this Rs.16,00,000/-, except TDS for that amount which was paid directly by 1st defendant to the IT authorities. This was one a one off adjustment and there was no recurring entry of Rs.16,00,000/- as due and outstanding from 1st defendant to the plaintiff in the statement of account of either the plaintiff or the 1st defendant firm in the following financial year i.e., 1/4/2008 to 31/3/2009. Further balance sheet of 1st defendant firm for 2008-09 does not reflect any due to Plaintiff Company. Even after adjusting said sum of Rs.16,00,000/- on 24/4/2008, plaintiff was still due a sum of Rs.24,75,128/- to 1st defendant firm as reflected in the plaintiff's statement of accounts filed before the Registrar of Companies for the year 2009-2010 is shown as a loan and not as an advance to the plaintiff company. No recurring lease charges are reflected in the statement of account of plaintiff for 2009-2010. Only after filing Company Petition No.55/2010 and it was admitted by 20 O.S.No.4514/2011 Hon'ble High Court of Karnataka on 24/2/2011, plaintiff prepared a false statement of account for the year ending 31/3/2010. He further contended that plaintiff has authorized only to assemble small Micorlites from kits manufactured by Zen Air, a foreign Microlite Company and no other aircrafts. He denied that his wife and his father-in-law suggests that 2nd defendant to join the 3rd defendant and should start a business in Aviation. However, admitted about the partnership firm with third defendant. He denied that 1st defendant was carrying business from Koramangala address. He denied that Govt. of Karnataka for Weather Modification and Cloud Seeding in the State of Karnataka was given to 1st defendant firm, but it was given to foreign American entity - WMI. He denied all other averments made in the plaint regarding request made by 1st defendant to provide expert's advise, etc. But, admitted that 1st defendant firm continued to do its business of cloud seeding and weather modification for various State Governments and IITM, Pune. He denied all other averments made in the plaint except admitting about 21 O.S.No.4514/2011 TDS. He further contended that he challenged the power of 3rd defendant in unilaterally dissolving 1st defendant firm in arbitration proceedings initiated by him before the Arbitral Tribunal in CMP.No.51/2010. Plaintiff Company is still a family concern of 3rd defendant and his wife. He denied that 1st defendant had running account with Plaintiff Company. He contended that there is due of Rs.24,75,128/- from plaintiff company and hence, legally, he filed Company Petition and denied the averments regarding settlement talks or efforts made by plaintiff company and hence, prayed for dismissal of suit with exemplary costs.
4. After filing of written statement, the orders passed by the Hon'ble High Court of Karnataka in Co.P.55/2010 challenged by the plaintiff company before Divisional Bench of Hon'ble High Court of Karnataka in O.S.A. No.8/2012 which was partly allowed on 21/11/2013 and further held that petitioner (present 2nd defendant) can seek decree for Rs.24,75,128/- by filing a Counter-Claim by paying requisite court fee in the present suit as this suit 22 O.S.No.4514/2011 is pending for consideration filed by the present plaintiff company. It is further held in the said case that unless a competent forum holds that the amount deposited by present plaintiff company is due, question of paying said amount would not arise and thereby claiming the amount deposited before Company Court, where the present suit is pending.
5. After passing this order, 2nd defendant filed amendment application to permit 2nd defendant to file the Counter-Claim and it was allowed and accordingly, 2nd defendant amended the written statement by inserting the Counter-Claim relief under Order VIII R.6(A) & (B) CPC and further contended that plaintiff company is indebted to 1st defendant firm a sum of Rs.24,75,128/-. Plaintiff had not even responded to 2 statutory notices issued on behalf of 1st defendant firm. Only after Hon'ble High Court of Karnataka considering the arguments of both parties on merits, it admitted the Company Petition No.55/2010 by its order dtd:24/2/2011 and ordered for advertisement of petition under Order 96 of the Company(Court) Rules, 23 O.S.No.4514/2011 1959; only afterwards, plaintiff for the first time issued false legal notice dtd:16/5/2011 calling upon defendants to pay a sum of Rs.5,24,872/- alleged to be due from 1st defendant firm by deducting Rs.24,75,128/- payable by plaintiff to 1st defendant firm and filed this false suit. He has further stated about the details of company petition, order passed in Company Petition at Application No.294/2011 and also Co.Petition No.863/2011 filed by present plaintiff in said Company Petition, order passed on it and other details of the orders passed in OSA.8/12, orders passed in said OSA.8/2012 is the cause of action for 2nd defendant to file this Counter-Claim. Hence, prayed for dismissal of suit and for allowing the Counter- Claim and direct to release a sum of Rs.24,75,128/- with interest accrued there under in favour of 1st defendant firm and 2nd defendant.
6. After filing this Counter-Claim, plaintiff has filed written statement to the Counter-Claim by contending that 2nd defendant has no right to seek Counter-Claim in the absence of 1st defendant. 1st defendant is a Registered 24 O.S.No.4514/2011 Partnership Firm and 2nd defendant had filed written statement seeking Counter-Claim in the absence of plea by 1st defendant and thus, Counter-Claim is not maintainable. According to this Counter-Claim averments, the amount due to 1st defendant firm is as per the statement of accounts of plaintiff dtd:31/3/2009. Hence, the Counter- Claim filed at this belated stage on 27/5/2013 and thus, is barred by limitation. 2nd defendant ought to have filed the suit within 3 years from 31/3/2009. He further contended that the Counter-Claim is based upon the proceedings that have taken place in Co.P.No.55/2010 and O.S.A. No.8/2012. 2nd defendant has not understood the pleadings in those proceedings properly. However, plaintiff admitted about all the above said proceedings in Company Petition; also its appeal before Hon'ble High Court of Karnataka and filing of present suit and all other details and contended that 2nd defendant has wrongly understood the facts and he is misleading the facts. Hon'ble High Court of Karnataka has not granted any liberty to 2nd defendant to file the Counter-Claim. He 25 O.S.No.4514/2011 reiterated the plaint averments regarding how Rs.16,00,000/- was paid by 1st defendant firm and TDS was remitted to Income-Tax Department, etc. It further reiterated that defendant No.1 was availing the services of plaintiff from time to time and obtained lease of aircraft from plaintiff. Defendant No.2 had not pleaded the cause of action for filing the Counter-Claim. Hence, prayed for rejection of Counter-Claim and decree the suit of plaintiff.
7. 3rd defendant had filed written statement to the plaint wherein he contended that 1st defendant firm has already dissolved and was doing business in weather modification of cloud seeding. Defendant Nos.2 & 3 were partners of defendant No.1 firm. 1st defendant was importing the aircrafts for its cloud seeding operations. Because, 1st defendant firm was newly constituted, it started utilizing various services offered by the plaintiff including servicing of the aircrafts, maintenance, technical support, etc. Defendant No.3 was the director of Plaintiff Company and also the partner of 1st defendant firm. Transactions were carried on very smoothly. There is running account 26 O.S.No.4514/2011 between Plaintiff Company and 1st defendant firm. The transfer of amount was also taking place periodically. 1st defendant was taking foreign aircraft for the purpose of its cloud seeding business and was working out very costly. Therefore, 2nd defendant along with this defendant thought it fit to take on lease the aircraft of the plaintiff company in as is where is condition and alter the same to suite its business of cloud seeding and accordingly, took lease from plaintiff company, the aircraft bearing No.VT- DUQ on 1/4/2007 and further admitted the lease charges at Rs.16,00,000/- paid in the first year on 31/3/2008 by deducting TDS and Rs.30,00,000/- for the next two years. This defendant had to dissolve the 1st defendant firm on 16/12/2009 by issuing notice to 2nd defendant since the differences arose between this defendant and 2nd defendant and thereby the firm was dissolved. Dispute between defendant Nos.2 & 3 was pending before Hon'ble Justice Jairam Chouta. He further admitted that plaintiff had issued notice by deducting Rs.24,75,128/- to pay a sum of Rs.5,24,872/- for which he has given suitable reply 27 O.S.No.4514/2011 and admitted the dues to plaintiff company. He further pleaded that he resigned to the Post of Director of Plaintiff Company on 3/3/2010 and thus does not hold any position in the plaintiff company. Hence, prayed for dismissal of suit at present as it is pre-mature.
8. From the above facts, the following issues and additional issues were framed:-
ISSUES
1. Whether the plaintiff proves that defendants are due and liable to pay the suit claim of Rs.5,24,872/- as prayed for?
2. Whether the plaintiff proves that the defendants are also liable to pay the interest as claimed?
3. Whether the plaintiff is entitled for a judgment and decree as sought for?
4. To what order or decree?
ADDITIONAL ISSUES
1. Whether the defendant No.2 proves that plaintiff is liable to pay Rs.24,75,128/- out of the lease amount of Rs.30 which was unilaterally deducted by plaintiff and defendant Nos.1 and 2 are entitle for the said Counter-Claim amount of Rs.24,75,128/-?
2. Whether the defendant No.2 further proves that he is entitle for the amount of Rs.24,75,128/- with interest accrued 28 O.S.No.4514/2011 thereon which has been deposited in the court by the plaintiff?
9. On behalf of plaintiff company, one of the directors of plaintiff company is examined as P.W.1, got marked Ex.P.1 to Ex.P.10 and closed its side. On behalf of 2nd defendant, 2nd defendant is examined as D.W.1, got marked Ex.D.1 to Ex.D.50 & Ex.D.64 to Ex.D.66 and closed his side. On behalf of 3rd defendant, 3rd defendant is examined as D.W.2, got marked Ex.D.51 to Ex.D.63 closed his side.
10. After recording evidence and while hearing arguments, this court noticed there were some mistakes in additional issues and some more additional issues ought to have been framed. Hence, on 16/1/2017 additional Issue Nos.1 & 2 were re-casted and 6 additional issues were framed.
RE-CASTED ADDITIONAL ISSUES
1. Whether defendant No.2 proves that plaintiff is liable to pay Rs.24,75,128/- to defendant No.1 firm and plaintiff company had unilaterally set-off said amount?
29 O.S.No.4514/2011
2. Whether defendant No.2 further proves that he on behalf of defendant No.1 firm is entitled for the amount of Rs.24,75,128/- with interest accrued there on which has been deposited in the court by the plaintiff?
ADDITIONAL ISSUES
1. Whether plaintiff company proves that there was lease agreement executed between plaintiff and defendant No.1 firm dated 01-04-2007 pertaining to lease of Cessna 180 aircraft bearing registration number VT-VUQ from Plaintiff Company?
2. Whether plaintiff company further proves that under the said lease agreement, 1st defendant firm has paid Rs.16,00,000/- on 31/3/2008?
3. Whether plaintiff company further proves that defendant No.1 firm is due a sum of Rs.30,00,000/- under the said lease agreement?
4. Whether plaintiff company is entitled for set-off of Rs.24,75,128/-?
5. Whether counter-claim is barred by limitation?
6. Whether court fee paid is sufficient?
11. After framing additional issues, both sides submitted that they have no further evidence.
12. Heard arguments of both sides.
30 O.S.No.4514/2011
13. Findings of this court on the above issues are :-
Issue No.1:- In Negative;
Issue No.2:- In Negative;
Issue No.3:- In Negative;
Recasted Addl.Issue No.1:- In Affirmative; Recasted Addl.Issue No.2:- Partly in affirmative;
Addl.Issue No.1:- In Negative; Addl.Issue No.2:- In Negative; Addl.Issue No.3:- In Negative; Addl.Issue No.4:- In Negative; Addl.Issue No.5:- In Negative; Addl.Issue No.6:- In Affirmative; Issue No.4:- As per the final order for the following:-
REASONS ADDITIONAL ISSUE No.1 to 4 & RECASTED ADDL.ISSUE NO.1 (Recasted on 16/1/2017)
14. These issues are considered together, as they require common discussion.
15. Admitted facts of the case are that Plaintiff Company was incorporated in the year 1994 and initially, its promoters, shareholders and directors are only Arvind 31 O.S.No.4514/2011 Sharma and Smt.Sapna Sharma - the husband and wife. Arvind Sharma retired from the plaintiff company on 3/3/2010 and then, his mother and his sister were impleaded as shareholders.
16. Defendant No.1 was a partnership firm established under the Indian Partnership Act through a Deed of Partnership dtd:22/7/2003 constituted by defendant No.2 K.T.Seabstian & defendant No.3 Arvind Sharma. This Arvind Sharma is the partner of defendant No.1 firm as well as the Director of plaintiff company. Defendant Nos.2 & 3 have 50% shares in the partnership firm - defendant No.1. Defendant No.3 had issued notice of dissolution of defendant No.1 on 16/12/2009 to defendant No.2.
17. To understand the facts of the present case in better way earlier proceedings between parties before discussing the facts of the present case is required. These proceedings between parties in several courts are admitted by both parties.
32 O.S.No.4514/2011
18. Initially, defendant No.2 had filed A.A.No.160/2010 against defendant No.3 and obtained exparte interim injunction against defendant No.3 i.e., defendant No.3 was restrained from defendant No.2 entering the office premises situated at Hanger No.2, Jakkur Airport, Bangalore. The present plaintiff company had filed an impleading application under Order I R.10 CPC to implead it as party in that proceeding and also prayed for vacating interim order and both the above said applications were dismissed.
19. The present 2nd defendant representing defendant No.1 firm had issued mandatory notice under S.434(1)(a) of Company's Act for winding up of Company proceedings in Co.P.No.55/2010. Plaintiff Company had filed objections to said company petition. Even though this plaintiff company had filed objections to company petition, the Hon'ble High Court of Karnataka had admitted the company petition. Later, plaintiff company had filed C.A.No.294/2011 in Co.P.No.55/2010 and took several contentions and ultimately, it had deposited 33 O.S.No.4514/2011 Rs.24,75,128/-, the amount claimed by defendant No.1 represented by defendant No.2 in said company petition. Ultimately, said company petition was allowed and it was ordered that the amount deposited by present plaintiff company be transferred to arbitration proceedings pending between the parties and the Co.P.No.55/2010 was closed. This order was passed on 24/1/2012. Against said order in Co.P.No.55/2010 along with C.A.No.294/2011 & C.A.No.863/2011, the present plaintiff company had preferred O.S.A.No.8/2012 before Divisional Bench of Hon'ble High Court of Karnataka. Said appeal was allowed on 21/11/2013 and it was ordered that the amount deposited before company court shall be transferred to CCH.No.19 where O.S.No.4514/2011 is pending. In the mean while, arbitration proceedings between defendant Nos.2 & 3 were commenced and defendant Nos.2 & 3 have given their evidence in A.C. No.51/2010 and an order was passed on issue No.6 in said arbitration case by the learned arbitrator. Said order was challenged by the present 3rd defendant by filing an Arbitration Suit. With 34 O.S.No.4514/2011 this background, facts of the present suit are to be analyzed.
20. The facts of the plaintiff are that plaintiff company is incorporated under the provisions of Companies Act and it is engaged in the business of promoting Aero sports activities, hotels and restaurants, travel and tourism, manufacturing, leasing and servicing of aircrafts, hover crafts of all types and descriptions and also take up the cloud seeding, weather modification and atmospheric projects. Plaintiff Company has Hanger at Jakkur Airport wherein it conducts its Aviation activities like parking its aircraft and carrying out maintenance/servicing the same. 2nd defendant is a Retired Indian Air-Force Employee and he took retirement on his health-ground and approached defendant No.3 through his father-in-law and his wife and as per their suggestions, defendant No.2 joined defendant No.3 and started business in aviation in the name of defendant No.1 firm. 1st defendant firm was carrying on its day to day activities through Koramangala. 1st defendant firm got an assignment from Govt. of Karnataka 35 O.S.No.4514/2011 for weather modification and cloud seeding in the State of Karnataka. It requires installation of Radars and use of Foreign Aircrafts and hence, 1st defendant thought it fit to request the plaintiff company to provide its expertise and resources available with them to enable the 1st defendant firm to effectively carry out the Cloud Seeding operations. 1st defendant firm continued to do its business in Cloud Seedling and Weather Modifications for various State Governments and IITM, Pune. As 3rd defendant was partner of 1st defendant firm as well as director of Plaintiff Company, he continued the facilities offered to 1st defendant firm when their 1st project was launched. Since 1st defendant was getting their Aircraft serviced from the plaintiff, it was advantageous to both the Plaintiff Company and the 1st defendant firm. Thus, 1st defendant had a running account with Plaintiff Company; it continued to utilize various services including taking on lease the aircraft servicing and maintenance of aircraft, technical support, maintenance of personnel, etc. from Plaintiff Company. Thus, various transactions have been taken 36 O.S.No.4514/2011 place between parties and they were running very smoothly, because, 3rd defendant was involved in both the Plaintiff Company and the 1st defendant firm.
21. It is the specific further contention of plaintiff that the aircraft of plaintiff was not readily suitable for the purpose of cloud seeding and it is to be modified and to be used as cloud seeding aircraft. Defendant Nos.2 & 3 representing defendant No.1 had ultimately discussed with Plaintiff Company and arrived at conclusion that taking of lease an Indian aircraft and then getting it suitably modified by fitting the required equipments for the purpose of cloud seeding would still workout much cheaper than taking lease of foreign Aircraft. They further thought that Indian Regd. Aircraft could be flown by an Indian Pilot, but that is not the case in respect foreign registered Aircraft. Thus, 1st defendant firm thought it fit to enter into a lease agreement on 1/4/2007 to take on lease a Cessna 180 Aircraft bearing Regn. No. VT-DUQ from the plaintiff company initially for a period of one year with an option to extend by another two years and the 37 O.S.No.4514/2011 lease charges are fixed for the first year at Rs.16,00,000/- and Rs.30,00,000/- for the remaining 2 years which is payable at the end of the lease period. The said aircraft was not fitted with cloud seeding equipments suitable for weather modifications, but it is to be modified by defendant No.1 at his own cost, the said process was intricate and time consuming. As per the lease agreement, 1st defendant paid Rs.16,00,000/- on 31/3/2008 for the 1st year of lease to plaintiff company which is clear from account extract of plaintiff company.
22. Defendant No.1 firm is represented by defendant Nos.2 & 3. Defendant No.3 is the Ex-Director of plaintiff company and also the husband of one of the present directors of plaintiff company and blood relative of other 2 shareholders of plaintiff company. Thus, he supported the plaintiff company in all respects. Defendant No.3 filed his written statement wherein he categorically admitted the plaint pleadings in toto. Both plaintiff company and 3rd defendant contended that after 3rd defendant issued dissolution notice to defendant No.2, defendant No.2 38 O.S.No.4514/2011 started harassing defendant No.3 and all his family members and plaintiff company, because, 3rd defendant was one of its directors.
23. 2nd defendant categorically denied the lease agreement between Plaintiff Company and 1st defendant firm in his written statement. However, he took specific contention that as 3rd defendant is also one of the directors of plaintiff company as per the express demand of 3rd defendant, they have made book adjustment transfer of Rs.16,00,000/- from 1st defendant firm to plaintiff company on 31/3/2008 and there was no monetary transaction on this point and they have also paid TDS to I.T. Department. In the written statement, at para No.12, 2nd defendant specifically pleaded as under:-
"During the financial year 2007-2008, at the instance of the 3rd defendant and at his express request to reduce the huge loss shown in the balance sheet of the plaintiff company for that financial year, a part of the dues payable by the plaintiff to the 1st defendant firm to the extent of Rs.16,00,000/-(Rupees Sixteen Lakhs Only) 39 O.S.No.4514/2011 was adjusted as having been paid by the 1st defendant firm to the plaintiff and the reason shown was a onetime lease of aircraft charges. There was no actual monetary transaction between the plaintiff and the 1st defendant firm for this sum of Rs.16,00,000/- (Rupees Sixteen Lakhs Only) that took place, except TDS for that amount which was paid directly by the 1st defendant to the IT authorities."
24. Learned counsel for plaintiff vehemently submitted arguments that when defendant No.3 had admitted lease deed between Plaintiff Company and 1st defendant company; indirectly by making above pleadings at para 12, defendant No.2 also admitted lease between plaintiff and defendant No.1 company and there is nothing for plaintiff company to prove its case.
25. It is to be noted here that by making the above said pleadings in the written statement at para No.12, defendant No.2 has only admitted about payment of Rs.16,00,000/- as one time lease charges and strongly 40 O.S.No.4514/2011 disputes the existence of such lease deed. He does not admit the lease deed in its entirety.
26. On the other hand, defendant No.2 pleaded that the lease agreement dtd:1/4/2007 said to have been produced along with the plaint is a false and fabricated document, concocted only for the purpose of this suit. In fact, this agreement was never been produced in the winding up petition, etc.
27. By giving some specific reasons, 2nd defendant took serious contentions of fabrication of lease agreement dtd:1/4/2007 in his written statement. This court holds that the entire pleadings of the party in plaint or written statement is to be looked into to decide whether there is any admission in the pleadings regarding any specific fact in issue or not and a stray sentence in the pleadings cannot be considered as an admission of a fact in issue. Hence, this court holds that defendant No.2 has not admitted the execution of lease agreement dtd:1/4/2007 by defendant No.1 firm. Hence, it is the initial burden of plaintiff to establish that on 1/4/2007, defendant No.1 firm 41 O.S.No.4514/2011 has executed the lease agreement in favour of Plaintiff Company and obtained lease of Cessna 180 Aircraft bearing Regn. No.VT-DUQ. If plaintiff able to establish the execution of this lease deed, then only, plaintiff is entitled for the subsequent pleadings i.e., it is entitled for set-off of an amount of Rs.24,75,128/- and entitled for suit claim of Rs.5,24,872/-. Hence, basically, plaintiff company has to establish the due execution of lease deed dtd:1/4/2007 on behalf of 1st defendant firm.
28. To substantiate the above contention of plaintiff company, plaintiff company has produced the lease agreement dtd:1/4/2007 as per Ex.P.4. This agreement was typed on plain paper and by paying duty and penalty; plaintiff got it admitted in evidence. This deed is pertaining to movable property; hence, registration of the lease deed is not required. This Ex.P.4 is signed by Sapna Sharma (P.W.1) representing Plaintiff Company who is one of its directors & wife of defendant No.3 and defendant No.3 signed it representing defendant No.1 who was one of its 42 O.S.No.4514/2011 partners and one of the directors of Plaintiff Company at that relevant point of time.
29. When there are serious allegations of concoction of document by 2nd defendant, this court is to be very cautious in looking in to the documents and to decide whether it is genuine document executed on 1/4/2007 or whether it was created subsequently by putting antedate.
30. At first, as this agreement was executed only on white paper, contention of 2nd defendant that this is concocted document is more probable, because, it was signed by wife and husband who are representing Plaintiff Company and defendant No.1 firm respectively. It is to be noted here that third defendant was also one of the directors of Plaintiff Company at the time of execution of Ex.P.4. D.W.2 in his cross-examination admitted that he had given affidavit in favour of Sandy Land and it was produced before U.S. Court and said certified copy of affidavit is marked as Ex.D.64 on behalf of second defendant. In the said affidavit at para No.6, D.W.2 categorically stated that even after dissolution of the 43 O.S.No.4514/2011 partnership firm, he has maintained many records and have access to them. Thus, indirectly, D.W.2 admitted that he was in possession of records of first defendant firm and he had access to those records even after the dissolution of the firm. Thus it is clear that even after defendant No.3 issued dissolution notice to 2nd defendant, defendant No.3 was in possession of the seal of defendant No.1 firm. Hence, the contention of 2nd defendant on this point is more probable. Hence, there is heavy burden on plaintiff to prove the due execution of this Ex.P.4 on 1/4/2007 itself and not created subsequently.
31. Plaintiff's counsel vehemently contended that lease agreement was admitted by defendants and it was acted upon and the payments of Rs.16,00,000/- to plaintiff company towards lease charges was shown in the balance sheet of defendants for the Assessment Year-2008-09.
32. In the Profit And Loss Account for the year ended 31/3/2008 of 1st defendant firm, i.e., part and parcel of Balance sheet as per Ex.D.55, expenses of Rs.16,00,000/- towards aircraft lease charges is shown. This was also 44 O.S.No.4514/2011 reflected in the details of additions and deletions to fixed assets for the same year as Rs.16,00,000/-. In Ex.D.55 at Schedule-18, payment made to specified persons under S.40A(2)(b), it is shown as aircraft lease charges of Rs.16,00,000/- and in Remarks column, it is stated that this amount is paid to Agni Aero Sports Adventure Academy Pvt.Ltd. (plaintiff company).
33. In the cross-examination, D.W.1 admitted that the balance sheets of 1st defendant are duly signed by both partners and they were audited balance sheets.
34. Defendant No.3 in his evidence has produced the audited balance sheets of 1st defendant firm from 2003-04 to 2009-2010 and they were marked through him as Ex.D.51 to 56 and these documents were not disputed by 2nd defendant while cross-examining D.W.2. Further, in the cross-examination, D.W.1 has deposed that both he and defendant No.2 signed the balance sheets. Thus, this audited balance sheet as per Ex.D.55 for Assessment Year 2008-09 could be looked into and the entries in it are also looked in to. Thus, the combined reading of profit and 45 O.S.No.4514/2011 loss account and schedule No.18 annexed to the balance sheet, as per Ex.D.55, this court holds that there is a specific entry in the balance sheet of 1st defendant firm that it has paid Rs.16,00,000/- towards lease charges to plaintiff company. This will substantiate the contention of plaintiff.
35. Plaintiff's counsel further submitted arguments that all the lease agreements with Sandy Land Underground Water Conservation District, a Government Entity under the Land of State of Textas, were signed by defendant No.3 alone who is representing defendant No.1 firm and accordingly, defendant No.3 also signed the lease agreement with plaintiff company and no fault in it. Further defendant No.3 has produced Ex.D.57 to Ex.D.63 the lease agreements with Sandy Land. However, 2nd defendant's counsel strongly objected for exhibiting these lease deeds contending that they are not certified copies. According to defendant No.2, the original or authenticated copies of lease deeds were produced before US Court. 46 O.S.No.4514/2011 Defendant No.3 has obtained certified copies of these lease deeds from U.S.Court in Case No.5/2013.
36. In the cross-examination, at para No.13, D.W.2 has deposed that according to him, one set of original of Ex.D.57 to Ex.D.63 are still with defendant No.2 and another set of original of Ex.D.57 to Ex.D.63 are with Sandy Land. He presumes that originals of Ex.D.57 to Ex.D.63 are produced before US Court. He admitted that Ex.D.64 is the certified copy of affidavit which he had filed before U.S. District Court and he admitted that Ex.D.64 was sent to Sandy Land. Sandy Land had filed similar affidavit and embossed certified copy of affidavit as per Ex.D.65 in the said suit. He denied the suggestion that originals of Ex.D.57 to Ex.D.63 were not produced before U.S. Court.
37. D.W.1 in his cross-examination denied that he has produced the original lease deed in the above said U.S. Court. 2nd defendant was called for production of original leased deed with Sandy Land in this case twice or thrice. However, this court by passing orders on I.A.No.15, 47 O.S.No.4514/2011 rejected summoning of documents from defendant No.2 as defendant No.2 stated that he was not in possession of those lese deeds. Again by passing orders on I.A.No.16, this court has not directed 3rd defendant to produce these lease deeds with Sandy Lands. When defendant No.3 himself is not sure Ex.D.57 to Ex.D.63 are authenticated certified copies of lease deeds, there is no evidence produced by defendant No.3 to say that Ex.D.57 to Ex.D.63 are the certified copies of original lease deeds between defendant No.1 firm and Sandy Land. Hence, those lease deeds cannot be looked into in this suit.
38. Even otherwise, in the cross-examination, D.W.1 at para No.50 admitted that all the lease deeds with Sandy Land were signed by defendant No.3 representing defendant No.1 firm. However, he volunteered that third defendant might have signed some documents and deposed that he cannot produce documents pertaining to said transaction, because, he is not in possession of those documents. He cannot identify the lease-cum-purchase agreement confronted to him, which he has produced in 48 O.S.No.4514/2011 AC.51/2010 by him. But, it is not in dispute that there was lease agreement between defendant No.1 firm and Sandy Land for procuring the aircraft for completion of the project of defendant No.1 i.e., water modification and cloud seeding project. Whether those lease deeds with Sandy Land were only lease deeds or lease-cum-purchase deeds and whether defendant No.1 firm has purchased the aircrafts or it has only taken them on lease is not material issue to be decided in the present case. Hence, lengthy evidence given by both parties on this point cannot be looked in to.
39. The arguments of learned counsel for plaintiff on this point is also probable that when defendant No.3 signed the lease deed with 3rd parties; there is no bar for him to sign lease deed on behalf of defendant No.1 firm with plaintiff company. However, it is to be noted here that defendant No.3 is having dual capacity i.e., as a partner of defendant No.1 firm and also director of plaintiff company. Under these circumstances, this court opines that some believable evidence is to be produced by 49 O.S.No.4514/2011 plaintiff to prove that defendant No.3 was authorized to sign the lease deed on behalf of defendant No.1 with Plaintiff Company and there were discussions with plaintiff company for taking lease of Cessna 180 Aircraft bearing Regn.No.VT-DUQ. 2nd defendant noted some specific circumstances in the written statement to disbelieve the lease deed dtd:1/4/2007 came into existence.
40. As discussed earlier, it is an admitted fact that A.A.No.160/2010 was filed by present 2nd defendant against 3rd defendant and in that case, plaintiff has filed impleading application. Said impleading application and Order 39 R.4 CPC application filed by Plaintiff Company in A.A.No.160/2010 was confronted to P.W.1 in her cross- examination and as she admitted them, they were marked as Ex.D.27 & Ex.D.28. In the affidavit annexed to Ex.D.37, P.W.1 has sworn to said affidavit and stated in para No.5 that "M/s.Agni Aero Sports Adventure Academy, AASAA(P) Ltd., is an independent company and has no connection with the partnership firm Agni Aviation Consultants (defendant No.1 firm)" and she further 50 O.S.No.4514/2011 submitted that "the company has been carrying on business which is nothing to do with Agni Aviation Consultants (defendant No.1 firm). Even in para No.14 of her affidavit, she reiterated that "M/s. Agni Aero Sports Adventure Academy, AASAA(P) Ltd., is an independent company and has no connection with the partnership firm (defendant No.1 firm)".
41. In the affidavit annexed to Ex.D.28 also, the same facts were reiterated in para No.5 and para No.14. Thus, immediately when the dispute commenced between parties, plaintiff company had taken a specific stand that there is no business or any connection between plaintiff company and 1st defendant firm. This is the affidavit sworn by the Director of Plaintiff Company and filed in judicial proceedings. Hence, it is to be held that facts narrated in the said affidavit were contended by plaintiff as "true & correct". P.W.1 in her cross-examination admitted that she has stated so in the affidavit annexed to I.A. filed under Order 1 R.10 & under Order 39 R.4 CPC in Ex.D.27 & Ex.D.28.
51 O.S.No.4514/2011
42. In the Co.P.No.55/2010 filed by 1st defendant firm, the present plaintiff company had filed its objections which is duly signed by P.W.1 and it was confronted to P.W.1 and as she admitted it, it is marked as Ex.D.29. In this objection statement, at para No.6, P.W.1 has stated that "it is pertinent to mention the said firm (present 1st defendant firm) has been a client of the respondent (present plaintiff company) for over 7 years utilizing various services from the respondent company like leasing of aircraft, servicing and maintenance of aircraft, technical support, maintenance personnel, etc. For the purposes of these transactions various monies have been transacted between the two entities. Monies paid by the said firm have been in the form of advances and payments against the various services mentioned above which it has utilized."
43. In the said objection statement, except mentioning leasing of aircraft, there is no specific mention in the objection statement by plaintiff company on which date, which aircraft was leased by plaintiff company to 52 O.S.No.4514/2011 defendant No.1 company. This objection statement was filed by present plaintiff company on 19/11/2010. But, in the beginning on 8/2/2010 when it has filed the impleading application in A.A.No.160/2010, present plaintiff company had taken specific stand that there is no transaction between plaintiff company and 1st defendant firm. However, 8-9 months after filing of such objections in the Co.P.No.55/2010, Plaintiff Company has taken a different stand that it has lease transaction with 1st defendant firm. However, it was not elaborated or elicited that what was this lease transaction; whether plaintiff had taken lease or whether it has leased the aircraft to 1st defendant firm are not mentioned in detail in this objection statement.
44. It is to be noted here that after filing of A.A.No.160/2010, the present 2nd defendant representing 1st defendant firm has given notice to Plaintiff Company under S.434 of the Companies Act for Winding up of plaintiff company for which plaintiff company had not given reply. Hence, the Hon'ble High Court of Karnataka 53 O.S.No.4514/2011 in company petition had admitted the claim of 1st defendant firm. The claim of 1st defendant firm in the said company petition is noted in the balance sheet of Plaintiff Company. It is shown under the head "unsecured loan"
Rs.24,75,128/- is due to the 1st defendant firm and it is not paid. Hence, 1st defendant firm had issued legal notice calling upon plaintiff company to pay the dues.
45. The balance sheets of Plaintiff Company for 2006-07 to 2008-09 were confronted to P.W.1 and as she admitted the same, they were marked as per Ex.D.19 to 21. In this balance sheet as per Ex.D.19, as on 31/3/2007 under the heading "Loan Funds" unsecured loan of Rs.34,39,426/- was shown as due by Plaintiff Company to its creditors. In the Schedule 'D' under the heading "unsecured loan; the amount due to "M/s.Agni Aviation Consultants (defendant No.1)" as on 31/3/2007 is Rs.28,46,661/- shown.
46. Plaintiff has produced the ledger account extract as per Ex.P.2. In page No.26 of her cross-examination, P.W.1 has deposed that in their statement of accounts, all the 54 O.S.No.4514/2011 amount paid by defendant No.1 for rendering services by them are shown as 'advance'. But, in the balance sheet, under the heading, 'advance received from parties' as on 31/3/2007 was shown as Rs.27,34,090/-. This amount is not tallied to opening balance of defendant's ledger account as per Ex.P.2. According to Ex.P.2, the opening credit balance is Rs.28,46,661/- as on 1/4/2007. In the Schedule 'D' of Ex.D.19, as discussed earlier, it is shown as 'unsecured loan' of 1st defendant firm amounting to Rs.28,46,661/-. This amount tallies with Ex.P.2 ledger account extract produced by plaintiff with opening credit balance is Rs.28,46,661/- as on 1/4/2007 and not with advances, as deposed by P.W.1 in her cross-examination.
47. As per Ex.D.20, in the balance sheet as on 31/3/2008, under the heading "Loan Funds", unsecured loan is shown as Rs.29,49,907/- was shown as due by Plaintiff Company to its creditors. In the schedule "D", under the heading "unsecured loan", the amount due to "M/s.Agni Aviation Consultants (defendant No.1)" as on 31/3/2008, it was shown as Rs.15,78,261/-. In Ex.P.2, as on 31/3/2008, it 55 O.S.No.4514/2011 was shown as Rs.15,78,261/-. Thus, these 2 entries are tally with each other.
48. As per Ex.D.21 - balance sheet as on 31/3/2009, under the heading "Loan Funds", unsecured loan is shown as Rs.58,64,561/- was shown as due by Plaintiff Company to its creditors. In the Schedule-C under the heading "unsecured loan", the amount due to M/s.Agni Aviation Consultants (defendant No.1 firm) as on 31/3/2009, it is shown as Rs.24,75,128/-. Thus, according to Ex.D.21, this amount of Rs.24,75,128/- was due and payable by plaintiff company to 1st defendant firm.
49. Based on this balance sheet as per Ex.D.21, 2nd defendant had issued notice and then filed Co.P.No.55/2010. Though Plaintiff Company had filed objections to this company petition as per Ex.D.29, denying its liability to make payment, considering the above said balance sheet of plaintiff company and not filing reply to the statutory legal notice, Hon'ble High Court of Karnataka initially passed an order on 24/2/2011 as per 56 O.S.No.4514/2011 Ex.D.35. In the said order, Hon'ble High Court of Karnataka has made an observation as follows:-
"Though the respondent has filed the objection statement and denied the liability, there is nothing to show that he has replied the statutory notice issued by the petitioner. So prima-facie looking into facts and circumstances, I am of the opinion that it is a fit case for payment. Hence, the petition admitted.
And then ordered to list the matter on 14/3/2011."
50. In Ex.D.29 at para No.7, present plaintiff company has denied its liability of payment of Rs.24,75,128/- to 1st defendant firm. In this para, it is stated as follows:-
"The allegation in para 11 of the petition that the company is admittedly indebted to the petitioner in the sum of Rs.24,75,128/- is vehemently denied as false, malicious and concocted. The respondent has never admitted the alleged debt and has in fact specifically denied the alleged debt in its reply notice to the petitioner."57 O.S.No.4514/2011
51. Though the present plaintiff company had such a defence of denying its liability and stated that it has given reply, Hon'ble High Court of Karnataka in the order as per Ex.D.35 as discussed earlier, made an observation that reply was not given by present plaintiff company to the winding up notice and thereby admitted the company petition.
52. When company petition was admitted by Hon'ble High Court of Karnataka, the present plaintiff company immediately moved an application for amending the said order and filed C.A.No.294/2011 in Co.P.No.55/2010 and defendant has produced the certified copy of the said application as per Ex.D.30. In Ex.D.30 at para No.6, present plaintiff company has mentioned about lease of Cessna 180 aircraft bearing Regn.No.VT-DUQ from Plaintiff Company to 1st defendant firm and also stated that lease agreement was entered in April 2007. But, not mentioned the exact date of lease deed in the said petition. Said petition was filed on 24/3/2011. Only in this petition, this plaintiff company had mentioned the details of the lease 58 O.S.No.4514/2011 between parties, but not mentioned the exact date of lease deed.
53. As discussed earlier, in the initial stage, for the first time, when Plaintiff Company filed its impleading application in A.A.No.160/2010, it is stated that there is no transaction between plaintiff and 1st defendant firm at any point of time. This was filed in February 2010 i.e., immediately after commencement of the dispute between defendant Nos.2 & 3. Subsequently, in the objections to company petition as per Ex.D.29, field on 19/11/2010, it is only stated about leasing aircrafts, but not given any details of lease deed dtd:1/4/2007. Subsequently, as per Ex.D.30, on 24/3/2011, this plaintiff company has given details of lease deed dtd:1/4/2007, but has not mentioned the exact date of lease even in Ex.D.30. This suit is filed on 25/6/2011 and before filing this suit, plaintiff company had issued legal notice dtd:16/5/2011 demanding to pay the present suit claim and stated that it has adjusted Rs.24,75,128/- and in the said notice, for the first time, plaintiff company had given all the details of lease deed, 59 O.S.No.4514/2011 date of lease deed and demanded 1st defendant firm to pay the balance after adjusting the admitted RS.24,75,128/-. Thus, about 1-½ years after commencement of the dispute between defendant Nos.2 & 3, this lease deed dtd:1/4/2007 was came into sunlight. Thus, it was not whispered earlier to 16/5/2011 or earlier to 24/3/2011. Thus, when Ex.P.4 was executed only between husband and wife and when husband is one of the directors of plaintiff company and he is also the partner of defendant No.1 firm, this court opines that there is greater burden on Plaintiff Company to prove the lease deed.
54. Aircraft is a movable property. If it is leased to defendant No.1 firm by Plaintiff Company, then, its possession is to be with first defendant firm and not with plaintiff. However, in the cross-examination at page No.51, P.W.1 has deposed that "keys of aircraft were with Plaintiff Company only. She has deposed that the aircraft keys were with their company through out 2008 & 2009 till 31st March 2010 and defendant No.1 used to take the key 60 O.S.No.4514/2011 whenever it was required. The physical possession of aircraft was in the Hanger of Plaintiff Company during the aforesaid period. Defendant No.1 was having access to their Hanger during that period. There was no formal handing over back of aircraft to them by defendant No.1."
55. The above evidence of P.W.1 made it very clear that the keys of aircraft was never handed over to defendant No.1 firm by plaintiff No.1 to say that lease deed was acted upon.
56. In the cross-examination, P.W.1 has deposed that they purchased the aircraft in question for Rs.45,00,000/- and it was purchased during 2004. But, according to the averments in Ex.P.4, the lease amount was Rs.16,00,000/- for 1st year and Rs.30,00,00/- for remaining 2 years. Thus, the total charges of lease is Rs.46,00,000/- whereas the aircraft was purchased only for Rs.45,00,000/- and it was not even ready for use of cloud seeding. It was initially having Airworthiness Certificate for only private purpose.
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57. In the cross-examination of P.W.1, defendant's counsel confronted Airworthiness Certificate and it was marked as Ex.D.24. Ex.D.24 is issued to the aircraft bearing Regn.No.VT-DUQ and it was Cessna 180 aircraft. It reveals that there was Certificate for Airworthiness for some period. The last but one entry reveals that from 7/3/2006 to 6/9/2006, this aircraft had Airworthiness Certificate. Afterwards, Airworthiness Certificate was issued only from 11/7/2008 to 10/7/2009. Thus from 7/9/2006 onwards till 10/7/2008, this aircraft had no Airworthiness Certificate. It is a private aircraft. Thus, this aircraft without Airworthiness Certificate could not have been used for any purpose from 7/9/2006 to 10/7/2008 i.e., during commencement of alleged lease deed.
58. P.W.1 also admitted Ex.D.25 in her cross- examination. It was issued from Asst. Director of Airworthiness on behalf of Deputy Director General of Civil Aviation. In this document, it is stated that Plaintiff Company is owner of the Cessna aircraft 180 VT-DUQ. It 62 O.S.No.4514/2011 further reveals that there was no operator for this aircraft as it was not operated by any organization as on the date of issuance of this letter i.e., on 30/5/2011. It further reveals that the aircraft in question had Airworthiness Certificate, but it was not valid. This also reveals that from 11/7/2008 to 10/7/2011 the Airworthiness Certificate was revalidated. It further reveals that Plaintiff Company had not at all applied for renewal of Airworthiness Certificate.
59. According to Ex.P.4, the leasing of aircraft commenced on 1/4/2007. Thus, as on the date of 1/4/2007, there was no Airworthiness Certificate at all. In the cross-examination, at page No.44, P.W.1 has deposed that as on the date of entering into Ex.P.4-lease agreement, the aircraft was not having Airworthiness Certificate, but in page No.38, she had deposed that they had valid Airworthiness Certificate of VT DUQ while entering into lease.
60. This evidence of P.W.1 reveals that she herself was not definite whether their aircraft had Airworthiness Certificate or not. When it was not there, there cannot be 63 O.S.No.4514/2011 any question of leasing the aircraft. Without Airworthiness Certificate, it could not have been leased.
61. In the further cross-examination at page No.49, P.W.1 has deposed that Airworthiness Certificate was got revalidated for private purpose and not cloud seeding.
62. As discussed earlier in Ex.D.24, there is an entry on this point. Details of aircraft with Regn.No.VT-DUQ was marked Ex.D.45. According to this document, it was issued by competent authority under RTI Act. According to Ex.D.45, this aircraft in question belongs to Plaintiff Company and its address is "Hanger No.2, Jakkur Aerodrom, 12th K.M., Bellary Road, Bangalore". According to this document, the operator's name is M/s.Pinnacle Air Pvt.Ltd., and its address is at New Delhi. It has Airworthiness Certificate, and it is valid from 11/7/2008 till 10/7/2009. It is having Sub-category - Passenger; that means this aircraft earlier was having only for private purpose and now, it is modified for passenger use. The aircraft which is used for passenger purpose cannot be used for cloud seeding. This fact is admitted by P.W.1 in 64 O.S.No.4514/2011 her cross-examination. She has deposed that she has not applied for obtaining Airworthiness Certificate as shown in Ex.D.24.
63. It is an admitted fact that the aircraft in question was not suitable for cloud seeding. There is specific condition even in Ex.P.4 that this aircraft is to be modified to suit cloud seeding purpose and it is the responsibility of lessee.
64. In page No.37 of cross-examination, P.W.1 had categorically deposed that without Airworthiness Certificate, aircraft cannot be used for any particular use; the purpose of use will be mentioned in the Airworthiness Certificate and before modifying aircraft for cloud seeding, design model is to be submitted to Director General of Civil Aviation (DGCA) and approval is to be taken from him for modification of aircraft. After taking approval of DGCA, required modification is to be made for aircraft and thereafter the modified aircraft is to be approved and certified by DGCA for the purpose of cloud seeding.
65. In the cross-examination, at page No.47 & 48, P.W.1 has deposed that after entering into lease agreement, 65 O.S.No.4514/2011 defendant started fitting flare racks in July, 2007 and before fitting the flare racks, the design of the fitting need not be submitted to DGCA.
66. When it was confronted to P.W.1 that in previous hearing date, at page No.37, she has deposed as stated above, she changed her version and deposed that the above evidence at page No.37 is incorrect. This shows that P.W.1 is not deposing the truth on this point. But, further, she admitted that if after fittings of flare racks, the old airworthiness certificate was got revalidated, it would be waste of effort.
67. As discussed earlier; in Ex.D.45, Airworthiness Certificate was modified only for the purpose of 'passenger' and not for 'cloud seeding' and Airworthiness Certificate was given to third parties of New Delhi and not in Bangalore. Thus, it is impossible to believe that aircraft was in possession of defendant firm during the lease period.
68. P.W.1 in further cross-examination at page No.48 has deposed that when lessee feels that the modification 66 O.S.No.4514/2011 is complete and ready, he can apply for Airworthiness Certificate before DGCA; defendant No.1 has not taken any signature for any application from her and therefore, she is of the opinion that defendant No.1 had not applied for post modification Airworthiness Certificate.
69. In para 16 of the plaint, it is stated that plaintiff company handed over the aircraft to the 1st defendant firm in as is where is condition to enable it to get the aircraft suitably modified for the purpose of their business of weather modification which included seeding. 1st defendant had a long drawn interaction with agencies like National Aeronautical Laboratory (NAL) Govt. of India Laboratory and Aviation Consultant regarding the proposed designs for modifying the aircraft to suit cloud seeding. The engineers of Plaintiff Company were also intensively involved in this process.
70. In this regard, in the cross-examination, at page No.49 to 51, P.W.1 has deposed that discussion between National Aerospace Laboratories (NAL) and plaintiff and defendant took place in Hanger at Jakkur; on behalf of 67 O.S.No.4514/2011 plaintiff; herself, on behalf of defendant No.1, defendant Nos.2 & 3 had participated in the discussion; one Mr.Sathish and another official of NAL participated in the said discussion. In the first two discussions, she was present and the fittings of flare racks, the time frame required for aircraft for cloud seeding was discussed and thereafter, discussion took place amongst scientists, defendant No.2 and 3 and technicians of Plaintiff Company at hanger at Jakkur. The NAL officials prepared the report regarding the modification required. The modification was not completed and after 2008 the scientists stopped coming and defendant No.1 told that for that monsoon, (2008) they are not using aircraft for cloud seeding and designs were already discussed and given to them; after June or July 2008 the scientists did not come; when defendant No.1 told that they were not using for the monsoon of 2008, the flare racks were ready but they were not fitted to the aircraft; up to middle of 2009, the defendant No.1 started preparing flare racks and fitting the same and removing the same from the aircraft and 68 O.S.No.4514/2011 thereafter they did not do anything; when aircraft was returned to plaintiff company by defendant No.1, the cloud seeding parts were not fitted to aircraft; no damage was caused to the aircraft when it was handed over to Plaintiff Company and it was returned as it was given to defendant No.1.
71. If really the flare racks were tried to fit to the aircraft in question, definitely, there would be some damages at least when screws were put out and taken back. But, according to P.W.1, no damage was caused to the aircraft and it was returned with the same condition as it was given to defendant No.1. Further Plaintiff Company has not made any efforts to produce the report given by NAL officials regarding the required modification to the aircraft.
72. Though P.W.1 has deposed that up to June or July 2008, scientists were coming to Hanger at Jakkur for modification of the aircraft, as already discussed above, plaintiff has already obtained Airworthiness Certificate valid from 11/7/2008 as per Ex.D.45 for passenger 69 O.S.No.4514/2011 purpose and its operator was a third party residing at New Delhi.
73. When no document is produced by plaintiff company to show that efforts were made for modification of the aircraft, it is to be held that no such efforts was being made, because there should be documentary evidence to prove these facts. The Certificate of Airworthiness is always required for pre-modification and for post- modification. Under those circumstances, without obtaining proper permission or license from DGCA, aircraft in question would not have been modified for any other purpose.
74. It is an admitted fact that as on the date of alleged lease deed, 1st defendant firm had 3 aircrafts which was suitable for cloud seeding and they were obtained from foreign company i.e., Sandy Land. One of them is Singe engine and unpresurised aircraft and other two are twin pressurized engine aircrafts. When defendant No.1 firm had 3 aircrafts of foreign company, why it made efforts to 70 O.S.No.4514/2011 take on lease single engine unpressurised Cessna 180 bearing Regn.No.VT-DUQ from Plaintiff Company which was not suitable for weather modification including cloud seeding, which is the business of first defendant firm is not explained by the plaintiff company.
75. Plaintiff Company had taken contention that there was financial constraint to defendant No.1 firm and hence, defendant No.1 firm had thought it fit to enter agreement with plaintiff company to take lease of Indian aircraft and Indian aircraft could be flown by Indian pilot; whereas foreign aircrafts are to be flown only by pilots authorized by FAA. In this regard, in the cross-examination at page No.29, a question was put to P.W.1 that what was the financial constraint defendant No.1 was facing to obtain foreign aircraft for cloud seeding. For which P.W.1 answered that defendant No.1 told that foreign aircraft would cost about Rs.One Crore whereas they could get aircraft from Plaintiff Company within Rs.30 Lakhs and in order to get the foreign aircraft, foreign pilot is to be secured whereas Indian pilot can be used for plaintiff 71 O.S.No.4514/2011 company's aircraft. Thus, P.W.1 has not answered to the question what is 'financial constraint' of defendant No.1 firm. Again, when the same question was put to her, she has deposed that she does not know what was the financial constraint, the defendant No.1 was facing during July-July 2006. But, she admitted that defendant No.1 was in profit in several Crores from the date of its inception till the date of its closure at the end of 2009 and also admitted that defendant No.3 being the partner of defendant No.1 firm had been drawing the monthly income of Rs.10 Lakhs from 2005 till the end of 2009. So also, admitted that 1st defendant company was possessing fully modified cloud seeding aircraft three in number from 2005 till the end of 2009.
76. The above evidence of P.W.1 clearly establishes that there was no financial constraint to defendant No.1 firm. This is being substantiated by the balance sheet of defendant No.1 produced by defendant No.3 as per Ex.D.51 to Ex.D.56. Ex.D.51 to Ex.D.56 are the balance sheets of defendant No.1 firm from the date of its 72 O.S.No.4514/2011 inception i.e., from 22/7/2003 till the Assessment Year 2009-2010. In these balance sheets, the net profit were shown more than Crore for the 1st year, more than Rs.2,88,00,000/- for the year ending 31/3/2007, more than Rs.8,20,00,000/- for the assessment year 2009-2010. Thus, at the relevant point of time, there was no financial constraint for defendant No.1 firm to obtain foreign aircraft for cloud seeding.
77. It is the contention of defendant No.2 that as the Plaintiff Company was under loss, as per express request of defendant No.3, they had made adjustment of Rs.16,00,000/- to plaintiff company as one time lease charges, but virtually, there was no such lease. This fact is little bit substantiated from the admission of P.W.1 in the cross-examination, at page No.29 that Plaintiff Company was running under loss from 2003 till 2009.
78. In the cross-examination at page No.6, P.W.1 admitted that they can undertake the business, which are authorized by Memorandum of Association. 73 O.S.No.4514/2011
79. It is the contention of defendant No.2 that Plaintiff Company was not authorized through Memorandum of Association for leasing the aircrafts as on the date of alleged lease deed. In this regard, 2nd defendant confronted the Memorandum of Association of Plaintiff Company to P.W.1 and got it marked as per Ex.D.1. It is clearly stated in The Memorandum of Association that it was only on 16/12/2009 at Extraordinary General Meeting, Objectives No.4, 5 & 6 were included to this Memorandum of Association. These Objectives No.4, 5 & 6 are pertaining to "manufacturers, producers, designers, importers, exporters, maintainers, cleaners, reconditioners or otherwise deal in or trade in all types of aircrafts, hovercrafts or other crafts of all types and descriptions; to take up any project in the nature of cloud seeding, weather modification, etc; to purchase, take on lease, hire, take licenses of, or otherwise acquire or sell; let out, or otherwise, given any exclusive or other right or interest in the aerodromes, land grounds, airports, etc." 74 O.S.No.4514/2011
80. P.W.1 denied the suggestion that as per Ex.D.1, the leasing, manufacturing, maintenance, producing, designer, importing, exporting, which are shown in para No.4 were not there in the earlier Memorandum of Association as on the date of incorporation till 2009. However, on perusal of Ex.D.1 made it very clear that prior to above said amendment to Memorandum of Association of Plaintiff Company on 16/12/2009, there was no authorization in Memorandum of Association of Plaintiff Company and these objectives were incorporated only at the time of amendment to this document on 16.12.09. P.W.1 in her cross-examination has deposed that she will produce the documents to show that Plaintiff Company was permitted to carry out business of manufacturing, leasing of aircraft, etc., even earlier to 16/12/2009. However, she has not produced any such document. Thus, it is clear that plaintiff company had no authority to lease the aircraft to 1st defendant company before 16/12/2009 i.e., as on 1/4/2007.
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81. It is the specific contention of plaintiff in the plaint that Plaintiff Company was providing services to 1st defendant firm. It is pleaded that Plaintiff Company has Hanger at Jakkur wherein it was conducting aviation of aircrafts like parking aircraft or servicing and maintenance of aircrafts, technical support, maintenance personnel, etc. It is further pleaded in para & 10 of the plaint that weather modification and cloud seeding requires installation of radar and use of foreign aircrafts and hence, 1st defendant thought it fit to request the plaintiff company to provide its expertise and resources available with them to enable the 1st defendant firm to effectively carry out the cloud seeding operations. Since the 3rd defendant continued to be the partner of 1st defendant, the plaintiff company continued the facilities offered to them since their 1st project was launched. It is further stated that 1st defendant was getting their aircraft serviced from plaintiff and thus, it was advantageous for Plaintiff Company and 1st defendant firm. Thus, Plaintiff Company had a running account with 1st defendant firm.
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82. In this regard, in the cross-examination, P.W.1 has deposed at page No.9 that Government has allotted two pieces of land and in the first piece, they got Hanger and for convenience, they call it as Hanger No.1 and subsequent constructed one is called as Hanger No.2. In page No.10 of cross-examination, P.W.1 has deposed that she provided architecture service of cushion and interior works of aircraft. The interior work of aircraft includes the hanging of seat, carpeting and some annexures and affixtures of electrical. She has deposed that they have got approved Federal Aviation Authority (FAA) Certified Engineers and therefore, they used to undertake the interior works of the aircraft under their supervision. She was not authorized to attend the interior works of aircraft of U.S. Architects. There is no document authorizing her to attend the work of architecture in Aviation of U.S. Registered aircraft.
83. As discussed earlier, defendant firm had aircrafts of only US registration and it was not having any Indian Registration Aircraft. Hence, P.W.1 was not authorized to 77 O.S.No.4514/2011 make interiors of the aircrafts of defendant No.1 firm. However, she has deposed that they have got the FAA Certified Engineers. In the subsequent cross-examination, at page No.13, P.W.1 has deposed that they have written contract for empanelling the engineers; there is one engineer continuously empanelled from 2003 till 2009 for servicing US aircrafts and his name is Ashwin Bellmark. Though, it is typed as Ashwin Bellmark, the correct name of said person is Ashwin Belmar.
84. P.W.1 has deposed that she can produce documents to show that Ashwin Bellmark was empanelled as engineer from 2003 to 2009 for servicing US aircraft. But, no such document is produced by P.W.1. According to her, they were making payment to this Ashwin Bellmark by cash and also through cheques, but she has not produced even a single bank statement or copy of cheque to show that Plaintiff Company made payment to this Ashwin Belmar. 2nd defendant has produced certified copy of the statement given by this Ashwin Belmar to Customs Department as per Ex.D.40. Ex.D.40 is the statement of 78 O.S.No.4514/2011 Ashwin Belmar working as Certified Federal Aviation Administration (FAA) Engineer at M/s.Agni Aviation Consultants (present defendant No.1) given before Superintendent of Customs, Headquarters CIU, Bangalore, on 10/8/2009 under Section 108 of Customs Act, 1962. This statement was given by Ashwin Belmar to the Customs Authorities as the defendant No.1 firm had brought one of the aircrafts from U.S., but could not return it back within the specified period and hence, case was launched against defendant No.1 firm. At that time, this Ashwin Belmar had given statement that there was some problem in the aircraft and thus, it could not be sent back within the prescribed period. In this statement, Ashwin Belmar has stated that he is the qualified FAA Engineer and he works for 1st defendant firm from the year 2003-2009. Thus, it is clear that Ashwin Belmar was employed by 1st defendant firm and not by Plaintiff Company. D.W.1 was not cross-examined either by plaintiff's counsel or by third defendant regarding the above statement of Ashwin Belmar as per Ex.D.40. As 79 O.S.No.4514/2011 discussed earlier, Plaintiff Company had not produced any documentary evidence to prove that plaintiff company had provided services of Ashwin Belmar, FAA Certified Engineer of 1st defendant firm. On the other hand, Ex.D.40 establishes that Ashwin Bellmark was working for first defendant firm.
85. P.W.1 had also given evidence in page No.14 that they have provided services of engineers to 1st defendant firm i.e., Mr.Jadav, Rasool, Viswanath and Ashwin Bellmark and whole team was involved including the aforesaid persons. However, in further cross-examination at page No.16, P.W.1 deposed that except certificate issued by DGCA to Mr.Rasool, he had not been qualified as Civil Aviation Engineer and all the above 3 persons i.e., Jadhav, Vishwanath and Rasool are not having engineering degrees. Thus, the say of P.W.1 that plaintiff company had provided services of Jadhav, Rasool and Vishwanath - FAA Certified Engineers to 1st defendant firm and they had running account with 1st defendant firm cannot be accepted as true.
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86. P.W.1 in her cross-examination at page No.16 & 17 admitted that from 2010 to 2012, Plaintiff Company had undergone cloud seeding projects and for that purpose, they had taken lease of aircraft from Sandy Land of USA and they were USA Registered aircrafts and they were substantially modified for the purpose of cloud seeding and plaintiff company had no aircraft for cloud seeding. Thus, if really Plaintiff Company's aircraft i.e., Cessna VT- DUQ (mentioned in Ex.P.4) was suitable for cloud seeding, there was no occasion for Plaintiff Company to take lease of aircraft from Sandy Land of US for cloud seeding. Only after amendment to Memorandum of Association in the year 2009, only after commencement of dispute between defendant Nos.2 & 3, plaintiff company in the year 2010 had taken lease of aircraft from Sandy Land and undertook the project of cloud seeding.
87. In the further cross-examination at page No.18, P.W.1 has deposed that she had consented defendant No.1 firm to use the office of plaintiff company i.e., lobby of plaintiff company for hospitality of clients of 1st 81 O.S.No.4514/2011 defendant firm, for using fax, phone, internet connection and for the purpose of waiting the representatives of defendant No.1.
88. P.W.1 has further deposed in cross-examination at page No.19 that every year usually, they had serviced 2-3 aircrafts of defendant No.1 and she has got log for the service of maintenance provided to the aircrafts of defendant No.1; said log reveals the spare parts of aircrafts got replaced, number of hours of work done for the purpose of maintenance and she can produce the log book. They had some spare parts for replacing and they have got import license to import some of the parts of the aircrafts of defendant. She can produce the said license, and said log book; however, said log book and import license were not produced by plaintiff company to prove that it made servicing to 1st defendant company's aircrafts. No other document is produced to prove the same.
89. In the cross-examination, P.W.1 deposed in page No.19 that they were having about 10 different clients for servicing of aircrafts from 2003 to 2010. Those clients are 82 O.S.No.4514/2011 NCC, defendant No.1, Oriental Flying and private owner by name Anil Bageladi and Arvind Singh Mewad of Udayapur, Maharaja.
90. P.W.1 admitted that to all the above said clients, Plaintiff Company had sold Microlite aircrafts except to defendant No.1. She admitted that none of those clients had taken maintenance service of Cessna and Piper aircrafts. It is an admitted fact that the aircrafts, which defendant No.1 firm procured from Sandy Land were either Cessna or Piper. Thus, it is clear that no document is produced by plaintiff to prove that they have provided services and maintenance of aircrafts of 1st defendant firm.
91. In page No.25 of the cross-examination, P.W.1 has deposed that all the transactions that had taken place between her and defendant No.1 for the period from 1/4/2007 to 31/3/2008 are depicted in Ex.P.2. But, subsequently, she has deposed that Ex.P.2 reflects only the cheque transactions and they are having another ledger account extract to show the cash transactions. She 83 O.S.No.4514/2011 has deposed that the cash transaction and non-cheque transactions between plaintiff and defendant No.1 are reflected in the audited statement of accounts. However, plaintiff has not produced any separate audited balance sheet, except confronted to her by 2nd defendant.
92. According to Ex.P.2, Plaintiff Company had made some payments on behalf of 1st defendant firm and immediately, those payments were refunded to plaintiff company through cheques. For example, as per cheque No.791893 was issued to PSP Freight towards freight charges on behalf of 1st defendant firm and immediately on 13/4/2007 through cheque No.797200, said amount was received from 1st defendant to plaintiff company and these entries were noted in Ex.P.2 under the dates 23/4/2007 and 24/4/2007. Likewise, several transactions were shown in Ex.P.2. The amount which was paid by plaintiff company on behalf of 1st defendant was immediately repaid to plaintiff company, but this credit of Rs.28,46,661/- was in tact. In Ex.P.2, under the date, 31/3/2008, being their invoice accounted towards aircraft 84 O.S.No.4514/2011 lease charges receivable for the year accounted as per agreement and Rs.16,00,000/- were shown as debit. The next entry is by TDS for Financial Year 2008-2009 being TDS on aircraft lease charges accounted Rs.3,29,600/- was shown. This amount was paid by 1st defendant firm. The closing balance in Ex.P.2 is Rs.42,18,630/- and the amount in credit is Rs.15,76,261/-. As discussed earlier, this amount tallies with unsecured loans to 1st defendant firm in the balance sheet of plaintiff company as per Ex.P.20.
93. It is pertinent to note here that though lease charges were paid by 1st defendant firm to Plaintiff Company and also paid Rs.3,29,600/- to Income Tax Department towards TDS for this lease charge; thus, it ought to have deducted TDS charges and pay only the balance amount of Rs.12,70,400/- to Plaintiff Company. But, in the instant case, the entire Rs.16,00,000/- was paid to plaintiff company and 1st defendant company also paid TDS amount to the Income-Tax Department. This is not a proper accounting. Nobody would pay double the amount 85 O.S.No.4514/2011 i.e., make payment to the party and also pay tax to the concerned department. This also substantiates the contention of defendant No.2 that there was no lease deed as per Ex.P.4 and lease charges of Rs.16,00,000/- shown only in Books of Accounts.
94. For the assessment year 2010-2011, statement of total income of plaintiff company as per Ex.P.3 was produced and marked. In this document, at Schedule "C", unsecured loan from directors was shown and under this heading, 1st defendant firm is shown as creditor for Rs.24,75,128/- and it is mentioned that in that firm, "directors are interested". This amount of Rs.24,75,128/- is also shown as amount due from plaintiff company in the balance sheet of 1st defendant firm which was produced by 3rd defendant as per Ex.D.56 under the heading "loans & advances". Thus, it is clear from both the balance sheets that the amount of Rs.24,75,128/- shown in plaintiff company is the amount taken as loan from 1st defendant firm and the said sum is shown as amount due from plaintiff company to 1st defendant firm in the balance 86 O.S.No.4514/2011 sheet of defendant No.1 firm and said sum was not received by Plaintiff Company as advances for the services rendered by Plaintiff Company to defendant No.1 firm.
95. In the further cross-examination at page No.27, P.W.1 has deposed that they have not charged any amount to defendant No.1 for using the space at Hanger. However, at page No.31 & 32, she admits the execution of Ex.D.22. Ex.D.22 is the letter written by father of P.W.1, as authorized signatory of plaintiff company to Govt. Flying Training School (GFTS). According to this letter, 3 cheques of UCO Bank were given to the Government towards payment of lease charges from 1/1/2009 to 31/12/2009 and 1/1/2011 to 31/12/2011 totally amounting to Rs.3,09,000/-. This payment was made in advance on 1/1/2009 towards ground rent lease charges for the space provided at Jakkur for Hanger to Plaintiff Company. As these Hangers were being used by defendant No.1 firm, it has made payment on behalf of Plaintiff Company. Ex.D.23 is the payment voucher showing payment of lease to be paid amounting 87 O.S.No.4514/2011 Rs.3,09,000/-. It is stated in Ex.D.23 that these amounts were paid towards Hanger lease charges for three years commencing from 1/1/2006 to 31/12/2008. These 2 payments were made by 1st defendant firm on behalf of Plaintiff Company. It is admitted by P.W.1 in her cross- examination.
96. Learned counsel for defendant No.2 submitted arguments that if really, the aircraft was taken by defendant No.1 firm for cloud seeding; definitely, there would be some efforts for modifications of said aircraft, but it was not done. In this regard, in the further cross- examination at page No.36, P.W.1 has deposed that in order to make aircraft ready for cloud seeding, flare racks are to be fixed; in order to spray the chemicals, doors are to be modified and some other modifications are to be made and report will be given for such modification. Some officers from National Aeronautical Laboratories and other experts have come to give reports. She will produce those reports along with the notes prepared by the engineers. 88 O.S.No.4514/2011
97. In the cross-examination, at page No.30, P.W.1 has deposed that they have handed over their aircrafts to defendant No.1 in June or July 2006 i.e., unmodified aircraft. Defendant No.1 told that if aircraft was feasible they would sign the agreement and they signed it on 1/4/2007.
98. In page No.39, P.W.1 has deposed that she signed the lease agreement one weak earlier to 1st April. Thus, this agreement was not signed on 1/4/2007 as alleged in the plaint. P.W.1 has deposed that defendant No.2 was not at present while entering lease agreement and about 4 lines afterwards, she has deposed that it was signed in presence of defendant No.2, but no witnesses were present and they have not paid the stamp duty on the lease agreement. It shows that P.W.1 is changing her version from time to time.
99. In the cross-examination at page No.4, P.W.1 has deposed that defendant No.3 is residing in Mysore at the time of filing suit and now, he returned from Mysore and is residing with her; defendant No.3 was studying Law 89 O.S.No.4514/2011 Course in Sharada Vilas College, Mysore and therefore, he started to reside in Mysore and he started his law course in the year 2004 and now, he has to complete one subject. She has deposed so on 21/10/2013. In the subsequent cross-examination held on 10/3/2014, she has deposed that defendant came from Mysore in February 2012. Thus, it is clear that as on the date of alleged lease agreement, defendant No.3 was not resident of Bangalore, but he was residing in Mysore. Eventhen, he came back to Bangalore and signed the lease agreement on 1/4/2007. 3rd defendant in his arguments has submitted that he joined the Law Course only in September, 2007 and not in 2004; to substantiate the same, he has not produced any document in that regard. Hence, as it is, it is to be held that as on 1/4/2007, 3rd defendant was not resident of Bangalore.
100. D.W.1 in his cross-examination at para No.60 & 61, admitted that defendant No.3 has signed all the lease deeds executed in the year 2005 for procurement of aircraft and he admitted that those aircraft bearing Regn. 90 O.S.No.4514/2011 No.N 888 HB; N 69456; N 69538 and N 21691; and aircraft bearing No. N 21691 was Cessna 188 Model with single engine.
101. As discussed earlier, all the lease deeds with Sandy Land were signed by defendant No.3 on behalf of defendant No.1 firm except the one deed of the year 2009. In the year 2009, defendant No.2 signed for purchasing aircraft bearing No.N 361 JC. He admitted that all the above said 3 aircrafts were procured from Sandy Land; but denied that they were modified by defendant No.1 firm for cloud seeding. According to D.W.1, those aircrafts were modified by Sandy Land for cloud seeding and then, they were procured by defendant No.1 firm. This fact was also admitted by P.W.1 in her cross- examination that all those aircrafts were suitably modified for cloud seeding.
102. D.W.1 was cross-examined in length regarding from which place 1st defendant firm was running its business. However, that fact is not so much relevant to decide the present suit. That may be relevant for the parties in the 91 O.S.No.4514/2011 arbitration case pending between defendant Nos.2 & 3. Hence, D.W.1 might have been cross-examined on this point.
103. In the cross-examination, D.W.1 admitted that there are no documents to show that plaintiff company permitted 1st defendant firm to run its business from Jakkur. Again, this fact is pertaining to place of business, but balance sheet produced by defendant No.1 firm as per Ex.D.51 & Ex.D.52 reveals that they have shown address at Hanger No.2, Jakkur Aerodrum, as their place of business. But, subsequently, the address in balance sheet was changed from Jakkur Aerodrum address to Koramangala address as per Ex.D.53 to Ex.D.56.
104. D.W.1 has given some evasive answers pertaining to his evidence given in A.C.No.51/2010, which was between him and defendant No.3 pending before Learned Arbitrator. However, said evidence is not relevant to decide the present suit. In this suit, this court cannot decide whether the aircrafts taken by defendant No.1 firm from Sandy Land were on lease basis or on purchase 92 O.S.No.4514/2011 basis. That is to be decided by learned Arbitrator and it is his exclusive jurisdiction; he has already decided the preliminary issue No.6 in those proceedings that this transaction between defendant No.1 firm and Sandy Land is not the lease transaction, but it is the purchase transaction. Said order of learned Arbitrator was already challenged by 3rd defendant by filing an Arbitration Suit in competent court of law. Hence, those facts need not be discussed in this suit.
105. In the cross-examination, D.W.1 has only deposed that the seal and signature found in Ex.D.4(a) might be the seal and signature of defendant No.3, but he cannot authenticate it. However, as discussed earlier, defendant No.3 has categorically admitted his signature and seal on Ex.P.4. Even then, for the reasons stated earlier, said admission of defendant No.3 cannot be considered as admission even on behalf of defendant No.1 & 2.
106. Learned counsel for plaintiff and 3rd defendant vehemently submitted arguments that the lease deed as per Ex.P.4 was came into existence during peace period 93 O.S.No.4514/2011 i.e., on 1/4/2007 when there was no dispute whatsoever between defendant Nos.2 and 3; hence, this document is an admitted document.
107. However, such document cannot be accepted for the simple reason that Ex.P.4 was typed on a plain paper and as discussed earlier, it was signed by the husband and wife representing 2 different entities. Furthermore, as defendant No.2 took contention that this document was created subsequent to the peace period, said arguments of learned counsel for plaintiff has no relevance.
108. As discussed earlier, D.W.1 has deposed that they might have deducted Rs.3,29,600/- as TDS towards lease charges of Rs.16,00,000/-, but it is only book adjustment to reduce the loss of plaintiff company.
109. D.W.1 was cross-examined in length pertaining to which year how much amount was lent by 1st defendant firm to Plaintiff Company. However, D.W.1 has given evasive answer that he does not remember and he has to look into documents, etc. etc. But, as already discussed earlier in Co.P.No.55/2010, though in the beginning 94 O.S.No.4514/2011 plaintiff company disputed its liability to pay Rs.24,75,282/-; subsequently, it admitted that said amount was due from plaintiff company to defendant No.1 and deposited the said amount. Hence, only question to be decided here that whether plaintiff is entitled for Set- Off of said amount or not and court need not discuss in length whether the said amount was due from plaintiff company to defendant No.1 firm or not. Hence, the cross- examination of D.W.1 on this point at para No.55 to 57 is not much relevant.
110. In Para No.61 of his cross-examination, D.W.1 admitted that he had admitted lease agreements for 2006 pertaining to N.69456: N 69538 and N 21691 before Income-Tax authorities, but, he volunteered that he submitted those lease agreements for Income Tax Scrutiny in the year 2009 for the year 2006 and those lease agreements were signed by defendant No.3, but virtually those aircrafts were not taken on lease for 2006. As discussed earlier, this evidence is pertaining to dispute 95 O.S.No.4514/2011 between defendant Nos.2 & 3 pending before learned Arbitrator. Hence, it cannot be considered in this case.
111. D.W.1 admitted that Ex.D.66 is his deposition before learned Arbitrator. At the time of arguments, 3rd defendant pointed out several lacunas in the above said evidence of D.W.1. However, those lacunas cannot be considered in this suit, because, they are not pertaining to dispute of present suit and said evidence is given in some other proceedings. The particular point which was brought to the notice of this court at the time of arguments by 3rd defendant were not confronted to D.W.1 at the time of his cross-examination. Hence, those discrepancies cannot be considered in this suit.
112. 3rd defendant has given evidence in this suit and in the affidavit evidence, he reiterated that there were several transactions took place between plaintiff and defendant No.1 firm and also admitted about execution of lease deed dtd:1/4/2007, etc., and also stated about payment of Rs.16,00,000/- from defendant No.1 to plaintiff company is towards lease.
96 O.S.No.4514/2011
113. In the cross-examination, D.W.2 admitted that he is the promoter, 1st director and 1st shareholder of plaintiff company along with his wife and it was commenced in the year 1994 and he was its director till he resigned during 2010. He admitted that even after he resigned the plaintiff company, he is the legal adviser as an advocate for Plaintiff Company and he represented plaintiff company in some legal proceedings. He became enrolled as an advocate only in the year 2014. He admitted that he had given notice of dissolution of 1st defendant firm on 16/12/2009 to 2nd defendant.
114. D.W.2 was cross-examined by 2nd defendant's counsel pertaining to subsequent events took place after issuance of said dissolution notice which are not relevant to decide the present suit, but, they are relevant only in arbitration proceedings.
115. In the further cross-examination, at para No.16, D.W.2 also reiterated that there are documents to show that after the alleged lease of Indian Aircraft to 1st defendant company, the said Indian Aircraft was used by 97 O.S.No.4514/2011 1st defendant firm. According to him, it was reflected in the IT Returns for the financial year 2007-08 to 2009-10. However, as discussed earlier, only in the financial year 2007-08, it is reflected about payment of Rs.16,00,000/-, but it does not reflect about all other details of aircraft as discussed earlier. The IT returns of 1st defendant firm do not reveal about this lease.
116. D.W.2 has deposed that he does not remember the exact dates of use of aircraft leased by plaintiff company to 1st defendant firm. However, 1st defendant firm started using aircraft one year prior to execution of lease deed. Even P.W.1 also deposed so, but there are no documents produced by either plaintiff company or D.W.2 to prove the same.
117. Plaintiff company contended that on 10/2/2010 Plaintiff Company had given reply to 1st defendant for the notice issued for winding up and it has produced office copy of said reply as per Ex.P.6. In the said reply, it is only stated that 1st defendant had running account with Plaintiff Company and it was not running under loss and 98 O.S.No.4514/2011 company had leased aircraft to the 1st defendant firm and payments are not yet settled. This is the reply notice dtd:10/2/2010. Defendant No.2 strongly contended that he has not received said notice from Plaintiff Company. Plaintiff Company has produced one certificate of posting as per Ex.P.5. It bears the words "received" and countersigned by the official, but generally, such words will not be forthcoming in any Certificate Of Posting Receipt. Even otherwise, this copy of reply notice was not produced in Company Petition at the earliest stage and Hon'ble High Court of Karnataka admitted the Company Petition stating that no reply was given to statutory notice. Hence, much importance cannot be attached to this notice as per Ex.P.6 and certificate of posting receipt as per Ex.P.5.
118. P.W.1 has produced several photographs with CD and her Degree Certificate - Bachelor of Architecture as per Ex.P.7 to Ex.P.9 to show that she is having degree of Architecture and she is doing interiors of aircrafts. 99 O.S.No.4514/2011
119. These documents were produced at belated stage by P.W.1. After producing these documents, P.W.1 was cross-examined by 2nd defendant's counsel. In the said cross-examination, P.W.1 admitted that all the photographs shown in Ex.P.7 and Ex.P.8 are Microlite aircraft photographs. Thus, P.W.1 might have done interior to Microlite aircraft and not Cessna 188 or other aircrafts of foreign company, which were taken on lease by 1st defendant firm. Hence, these photographs will not prove that P.W.1 was having authority to do interiors of foreign aircraft. In the earlier cross-examination itself, a question was posed to P.W.1 that whether a degree of B.E. (Architecture) certifies a person to do interior in US Registered aircraft. She has answered that any person qualified in B.E. Architect can attend the work of architecture in Aviation. She has deposed that she was not authorized to attend the interior work of architecture in Aviation of US registered aircraft. In the cross- examination also P.W.1 categorically admitted that the photographs as per Ex.P.7 and Ex.P.8 do not depict 100 O.S.No.4514/2011 aircrafts of defendant firm. Thus, these documents are not helpful for plaintiff to prove that Plaintiff Company had done servicing and maintenance of aircrafts of defendant No.1 firm.
120. In the further cross-examination at page No.60, P.W.1 had deposed that one Ayaz was daily wage worker in Plaintiff Company and he was Asst. Technician and he used to work for 1st defendant in Bangalore, Hyderabad and Pune. Even for their employees, 1st defendant firm had taken Medi-claim Insurance because the work of their employees was dangerous. This evidence of P.W.1 shows that Ayaz was not working in Plaintiff Company. No document is produced to prove the same.
121. P.W.1 in further cross-examination has deposed that Bhaskar an Aircraft Engineer approved by DGCA to work on different aircrafts and he was an independent consultant and he was paid by plaintiff company for the work done for 1st defendant company and would get reimbursement from 1st defendant company. Thus, this evidence is also not helpful for Plaintiff Company to prove 101 O.S.No.4514/2011 that they were providing services to 1st defendant firm and they were maintaining aircrafts of 1st defendant firm.
122. The above discussion reveals that the lease deed dtd:1/4/2007 was executed by husband and wife who are representing different entities in a plain paper; further, defendant No.3 was acting in dual capacity, i.e., the director Plaintiff Company and partner of defendant No.1 firm. Though there is an entry in the balance sheet of 1st defendant firm pertaining to payment of Rs.16,00,000/- from 1st defendant firm to plaintiff company towards lease charges, that will not prove execution of Ex.P.4, because, there is no details of aircraft and lease deed in that balance sheet. Said entry might prove only the payment of Rs.16,00,000/- towards lease charges. During subsistence of lease period, plaintiff has given this aircraft to third parties that too at New Delhi. The keys of aircraft were with Plaintiff Company and not with 1st defendant firm during this lease period; neither the Plaintiff Company nor 1st defendant firm had obtained any permission from DGCA for pre-modification of the aircraft or post- 102 O.S.No.4514/2011 modification of the aircraft. Aircraft in question was not suitable for cloud seeding and it as only a private passenger aircraft. During subsistence of lease period, Certificate of Airworthiness for this aircraft was obtained for passenger purpose and not for cloud seeding. There were no changes in the aircraft even after the alleged return of aircraft from 1st defendant firm to Plaintiff Company. No documentary evidence is produced to show that aircraft was taken by 1st defendant firm and used by 1st defendant and some attempts were made for its modification. None of the witnesses who assisted in this alleged modification were examined either by Plaintiff Company or by third defendant. Plaintiff Company had not stated about the existence of this lease deed at the inception i.e., in A.A.No.160/2010; in earlier objections filed to Co.P. No.55/2010 and only about one year after commencement of dispute between parties, in May 2011, it had taken plea of existence of lease deed.
123. The above circumstances made it clear that plaintiff company failed to prove that there was lease agreement 103 O.S.No.4514/2011 executed between plaintiff and defendant No.1 dtd:1/4/2007 pertaining to lease of Cessna bearing Regn. No. 180 D-VUQ. But, it is defendant No.2 has proved that it is only book adjustment.
124. When Plaintiff Company failed to prove these facts, definitely, it failed to prove that defendant No.1 firm is due a sum of Rs.30,00,000/- under the above said lease agreement and thus, it is not entitled for Set-Off of Rs.24,75,128/-. On the other hand, 2nd defendant proves that plaintiff is liable to pay Rs.24,75,128/- to defendant No.1 firm and Set-Off made by plaintiff company is not proper. Accordingly, additional Issue Nos.1 to 4 are answered in negative and Re-casted Additional Issue No.1 is answered in affirmative.
ADDITIONAL ISSUE NO.5 (FRAMED ON 16/1/2017)
125. In the written statement to Counter-Claim, plaintiff took contention that the Counter-Claim is barred by limitation, because, as per defendant No.2, he is claiming Rs.24,75,128/- based on the balance sheet of plaintiff 104 O.S.No.4514/2011 company of 2008-09. Hence, it ought to have filed this Counter-Claim on or before 31/3/2012. However, learned counsel for defendant No.2 submitted arguments that at the time of filing of its written statement to this suit, already Co. P. No.55/2010 was allowed and it was directed to transfer this amount before learned Arbitrator. Hence, there was no occasion for defendant No.2 to pray for Counter-Claim in this suit. However, only after passing judgment in O.S.A.No.8/2012 and the observation made by Hon'ble Divisional Bench of Hon'ble High Court of Karnataka that defendant No.2 has to establish his right before this court, the cause of action for 2nd defendant arose to pray Counter-Claim and hence, his Counter-Claim is not barred by limitation.
126. In Ex.D.49, the certified copy of the orders passed in O.S.A.No.8/2012 dtd:21/11/2013 at para 10 at Page 12 & 13, the Hon'ble High Court of Karnataka held that "the petitioner (defendant No.1) can seek the decree for the afore said amount by filing the Counter-Claim by paying the requisite court fee". When such an observation is 105 O.S.No.4514/2011 made by Hon'ble High Court of Karnataka, defendant No.2 filed application and amended the written statement and inserted the Counter-Claim and thus, the Counter-Claim was well within the limitation period. Hence, this court holds that Counter-Claim of defendant No.2 is not barred by limitation. Accordingly, this additional issue No.5 is answered in negative.
ADDITIONAL ISSUE NO.6 (FRAMED ON 16/1/2017)
127. Defendant No.2 took contention in the written statement that the court fee paid is not sufficient. However, plaintiff unilaterally get set off of Rs.24,75,128/- and filed the suit only for Rs.5,24,872/- and hence, the court fee paid by plaintiff on this amount is sufficient. Accordingly, additional issue No.6 is answered in affirmative.
ISSUE No.1
128. In view of finding on additional issue Nos.1 to 4 and on re-casted issue No.1, this court holds that plaintiff has failed to prove that defendants are due and liable to pay 106 O.S.No.4514/2011 the suit claim. Accordingly, issue No.1 is answered in negative.
ISSUE No.2
129. In view of findings on additional issue Nos.1 to 6, re-casted issue No.1 & issue No.1, this court holds that plaintiff is not entitled for interest as prayed in the plaint. Accordingly, issue No.2 is answered in negative.
ISSUE No.3
130. In view of findings on additional issue Nos.1 to 6, re-casted issue No.1 & issue No.1 & 2, this court holds that plaintiff is not entitled for judgment and decree as prayed in the plaint. Accordingly, issue No.3 is answered in negative.
RE-CASTED ADDITIONAL ISSUE No.2
131. In view of findings on additional issue Nos.1 to 6, re-casted issue No.1, this court holds that defendant No.1 firm is entitled for Rs.24,75,128/- from Plaintiff Company. Hence, defendant No.1 firm is entitled for Rs.24,75,128/- with accrued interest on this counter-claim amount, which was already deposited in the court as per Orders 107 O.S.No.4514/2011 passed in O.S.A. 8/2012 dtd:21.11.2013 and as per the order of this court dtd:18/2/2014, again deposited before Union Bank of India. However, presently, 1st defendant firm is under dissolution. Hence, this amount is to be remitted to A.C.No.51/2010. Accordingly, Re-casted additional issue No.2 is answered partly in affirmative.
ISSUE No.4
132. In view of findings on additional issue Nos.1 to 6, re-casted additional issue Nos.1 & 2 and issue Nos.1 to 3, this court proceeds to pass the following:-
ORDER Suit filed by Plaintiff Company is dismissed with costs. Counter-Claim of defendant No.2 representing defendant No.1 is allowed with costs. Defendant No.1 firm is entitled for receiving Rs.24,75,128/-, with accrued interest.
Presently, 1st defendant firm is under dissolution and dispute between defendant No.2 & 3 is before learned arbitrator in A.C.No.51/2010.
This Counter-Claim amount is already deposited in this court as per orders passed in O.S.A.No.8/2012 dtd:21/11/2013 and as per orders dtd:18/2/2014, this amount is deposited 108 O.S.No.4514/2011 before Union Bank of India. Hence, office is directed to transfer said amount of Rs.24,75,128/- with accrued interest to arbitration proceedings pending between defendant Nos.2 & 3 in A.C.No.51/2010.
(Dictated to the Judgment Writer, transcribed and computerized by her, corrected and then pronounced by me in the open Court on this the 31st of January, 2017.
(K.B.GEETHA) XIX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY.
ANNEXURE I. List of witnesses examined on behalf of :
(a) Plaintiff's side :
P.W.1 - Mrs.Sapna Sharma
b) Defendants' side :
D.W.1 - K.T.Sebastian D.W.2 - Arvind Sharma II. List of documents exhibited on behalf of :
(a) Plaintiff's side :
Ex.P.1 Extract of Board Resolution
dtd:4/5/2011
Ex.P.2 Copy of ledger extract for the
period from 1/4/2007 to 31/3/2008
Ex.P.3 Statement of total income for the
year 2011-11 along with annexures
of 10 sheets
Ex.P.3(a) The amount receivable shown in
Schedule L of Ex.P.3
Ex.P.4 Lease deed dtd:10/4/2007
Ex.P.4(a) Signature of Arvind Sharma in
lease deed
Ex.P.5 UCP certificate
109 O.S.No.4514/2011
Ex.P.6 Letter dtd:10/2/2010 addressed to
Juris Consult
Ex.P.7 10 sheets containing 70
photographs
Ex.P.7(a) & (b) 2 photographs of Hanger of plaintiff company Ex.P.8 CD produced along with photographs Ex.P.9 Degree certificate of Sapna Sharma Ex.P.10 Account Extract of defendant maintained by plaintiff
(b) Defendants' side : -
Ex.D.1 Memorandum of plaintiff company
Ex.D.2 Agreement dtd:15/6/2010
executed between plaintiff
company and Sandy Land
Ex.D.3 Photograph of office at Jakkur
when started initially
Ex.D.4 Photograph of another Hanger at
that point of time
Ex.D.5 Photograph of Hangar after
renovation
Ex.D.6 Photograph of Hangar after
renovation
Ex.D.6(a), (b) Persons appearing in Ex.D.6
& (c)
Ex.D.7 to 2 Photographs of inside of the
Ex.D.9 office
Ex.D.10 Photograph of the Conference Hall
Ex.D.11 Photograph of one Chamber in the
office
Ex.D.12 & 2 Photographs depicting Hanger
Ex.D.13 No.2
Ex.D.14 Photograph depicting portion of
Hanger No.2
110 O.S.No.4514/2011
Ex.D.15 & 2 Photographs depicting renovation Ex.D.16 of Hanger No.2 Ex.D.17 & 2 Bills pertaining to mobile Ex.D.18 belonging to P.W.1 Ex.D.19, Balance sheets pertaining to the Ex.D.20 & period 31/3/2007, 31/3/2008 and Ex.D.21 31/3/2009 Ex.D.22 Letter written by P.W.1's father to Govt.Flying Training School (GFTS) Ex.D.23 Statement of Account of plaintiff company Ex.D.24 & Airworthiness Certificates issued by Ex.D.25 DGCA & RTI Application and reply to RTI application Ex.D.26 Profit & Loss Statement for the year ending 31/3/2008 of the plaintiff company Ex.D.27 Certified copy of impleading application filed by plaintiff in A.A.No.160/2010 Ex.D.28 Certified copy of the I.A. under Order 39 Rule 4 of CPC filed by plaintiff in A.A.No.160/2010 Ex.D.29 Certified copy of statement of objections filed by plaintiff in Co.P.No.55/2010 before Hon'ble High Court of Karnataka Ex.D.30 Certified copy of the Company Application filed by plaintiff in C.A.No.294/2011 in Company Petition No.55/2010 Ex.D.31 Certified copy of the statement of objection field by plaintiff to the application filed by defendant No.1 seeking permission to withdrawn the amount deposited by plaintiff in Co.P.No.55/2010 111 O.S.No.4514/2011 Ex.D.32 Print of the website:www.agniaero.com.
Ex.D.33 Letter of Hindusthan Zinc Ltd., addressed to Govt. of Rajasthan dtd:12/7/2010 (Ex.D.1 to Ex.D.33 are marked in the cross-examination of P.W.1) Ex.D.34 Certified copy of the petition for winding up filed inCo.P.No.55/2010 Ex.D.35 Certified copy of the order sheet in Co.P.No.55/2010 Ex.D.36 Certified copy of the petition in A.A.No.160/2010 Ex.D.37 Statement of Income of the defendant No.1 partnership firm for the assessment year 2009-10 Ex.D.38 Balance sheet of the defendant No.1 partnership firm for the year ending 31/3/2009 Ex.D.39 Profit and Loss Account of defendant No.1 partnership firm for the year ending 31/3/2009 Ex.D.40 Certified copy of the statement on oath given by Mr.Ashwin Bellmark before the Customs Authority Ex.D.41 Office copy of the RTI Application dtd:28/11/2013 made to National Aerospace Laboratories(NAL) Ex.D.42 Original response given by NAL dtd:20/12/2013 Ex.D.43 Office copy of the RTI application dtd:5/1/2014 made to National Aerospace Laboratories(NAL) Ex.D.44 Original response given by NAL dtd:22/1/2014 Ex.D.45 Print out taken from the website of the Director General of Civil Aviation (DGCA) pertaining to Aircraft bearing Regn.No.VT DUQ 112 O.S.No.4514/2011 Ex.D.46 Office copy of the legal notice dtd:11/1/2010 issued to plaintiff company Ex.D.47 Office copy of the legal notice dtd:28/1/2010 issued to plaintiff company Ex.D.48 Certified copy of the order dtd:24/1/2012 passed in Company Petition No.55/2010 along with Company Application Nos.294/2011 and 863/2011 passed by Hon'ble High Court of Karnataka Ex.D.49 Certified copy of the order dtd:21/11/2013 passed in O.S.A.No.8/2012 by Hon'ble High Court of Karnataka Ex.D.50 Certificate under S.65B of Indian Evidence Act pertaining to Ex.D.45 Ex.D.51 to Certified copies of Balance Sheet, Ex.D.56 Profit & Loss Account and Audited Report for the Assessment Years 2004-2005 to 2009-2010 of the partnership firm Ex.D.57 to Certified copies of 3 Lease-cum-
Ex.D.63 Purchase Agreements dtd:15/5/2005 pertaining to Aircraft Nos. N 69456, N 69538 & N 21691; 3 Lease-cum-Purchase Agreements dtd:15/5/2006 pertaining to Aircraft Nos. N 69456, N 69538 & N 21691; and Lease-
cum-Purchase dtd:23/4/2009 pertaining to Aircraft No.N 361 JC Ex.D.64 Certified copy of the affidavit filed by Arvind Sharma before the U.S.District Court Ex.D.65 Certified copy of eh affidavit filed by Sandy Land before the U.S.District Court.
113 O.S.No.4514/2011Ex.D.66 Entire cross-examination portion of D.W.1 in Arbitration Case -
CMP.51/2010 before the Learned Sole Arbitrator (K.B.GEETHA) XIX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY.
GVU/-
114 O.S.No.4514/201131/1/2017 Judgment pronounced in open court vide separate detailed judgment with the following operative portion:-
ORDER Suit filed by Plaintiff Company is dismissed with costs.
Counter-Claim of defendant No.2 representing defendant No.1 is allowed with costs. Defendant No.1 firm is entitled for receiving Rs.24,75,128/-, with accrued interest.
Presently, 1st defendant firm is under dissolution and dispute between defendant No.2 & 3 is before learned arbitrator in A.C.No.51/2010.
This Counter-Claim amount is already deposited in this court as per orders passed in O.S.A.No.8/2012 dtd:21/11/2013 and as per orders dtd:18/2/2014, this amount is deposited before Union Bank of India. Hence, office is directed to transfer said amount of Rs.24,75,128/- with accrued interest to arbitration proceedings pending between defendant Nos.2 & 3 in A.C.No.51/2010.
(K.B.GEETHA) XIX ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE CITY.