2017 (9) TMI 1934 - HC - Indian Laws

Inter-Corporate Deposit - privity of contract between the plaintiff and Gati or not - HELD THAT - The confirmation of accounts by the respondent clearly shows that the respondent is indebted to the plaintiff for a sum of ₹ 10,83,55,294/-. The admission of liability is unequivocal. Moreover, there is no privity of contract between the plaintiff and Gati. The present transaction is independent of the contract between the plaintiff and Gati. The respondent has no lien, either statutory or contractual, over the said fund. In view of such unequivocal admission of liability and in absence of any defence to the aforesaid claim, there shall be a decree for a sum of ₹ 10,83,55,294/-. In the event the aforesaid amount is paid by 20 monthly equal instalments commencing from 10th October 2017 and payable by the 10th day of each succeeding month, no interest is awarded on the aforesaid sum - Application disposed off.

Summary

Issues:
1. Admissibility of claim arising from an inter corporate deposit.
2. Dispute regarding repayment of the inter corporate deposit.
3. Existence of a contractual relationship between the parties.
4. Decree terms and payment schedule.

Analysis:
1. The judgment deals with an application for judgment upon admission concerning a claim arising from an inter corporate deposit of ?5 crore created for a period of three months. It is undisputed that the entire amount, along with interest, has not been repaid to the plaintiff after the expiry period. The respondent acknowledged its liability through Tax Deduction at Source Certificates. A legal notice was issued, but it remained unanswered, leading to the court's intervention.

2. The respondent resisted the claim, citing a dispute between the plaintiff and another entity related to a hydroelectric project. The respondent argued that unless the arbitration proceeding related to the project is concluded and an award is passed, they are not liable to repay the inter corporate deposit. However, the court found this explanation difficult to accept, emphasizing that the respondent's confirmation of accounts clearly indicated its liability to the plaintiff. The court also noted the absence of privity of contract between the plaintiff and the other entity, emphasizing the independence of the transaction in question.

3. The court concluded that the respondent's admission of liability was unequivocal, and in the absence of a valid defense, a decree was issued for the repayment of ?10,83,55,294. The court specified a payment schedule of 20 monthly equal installments, starting from a specified date, without interest. However, default in payment would attract interest at 12% per annum on the outstanding balance until full realization, with immediate payment becoming due in case of default.

4. As the decree virtually disposed of the suit, the court decreed the case accordingly, treating it on the day's list. The related applications were disposed of, with no order as to costs. The department was directed to draw up the decree promptly to facilitate the enforcement of the court's decision.