2020 (2) TMI 1515 - HC - Indian Laws

Financial distress - time to make payment of the principal amount and interest - HELD THAT - The decree provided for the payment of a sum of ₹ 10.83 crore. The amount was to be paid by a certain date. Such date has passed. The default clause in the decree has come into effect and by virtue of such default clause, the appellant is liable to pay interest at the rate of 12 per cent per annum from October 10, 2017 till repayment. At the suggestion of the Court and completely without prejudice, the respondent has agreed to receive ₹ 10.83 crore, together with interest at the rate of seven per cent per annum from October 10, 2017 till full payment is discharged, in monthly instalments, subject to adequate security being furnished and the monthly instalments being reasonable. Let the matter stand over for a fortnight.

Summary

Issues:
Financial distress leading to delayed payment, default on payment leading to interest liability, provision of security for payment, negotiation for revised payment terms.

Analysis:
The judgment addresses the issue of immediate financial distress cited by the appellant, leading to a delay in making payment of the principal amount and interest. The appellant has mentioned that a sister concern owns an unencumbered immovable property, and the appellant will provide copy title deeds to the respondent within ten days for inspection to ensure security. The decree originally required a payment of &8377; 10.83 crore by a specific date, which has passed. Due to the default, the appellant is now liable to pay interest at 12% per annum from October 10, 2017. However, the respondent, without prejudice, has agreed to receive the original amount with interest at 7% per annum in monthly instalments, subject to suitable security and reasonable instalment terms. If the security is deemed inadequate or the instalments are unreasonably extended, the concession will not be valid. The court has decided to adjourn the matter for a fortnight to allow further discussions.

This judgment highlights the importance of meeting financial obligations as per the decree and the implications of default, leading to interest liabilities. It also emphasizes the significance of providing adequate security when negotiating revised payment terms. The court's intervention in suggesting a revised payment plan showcases a balanced approach to address the financial distress of the appellant while ensuring protection for the respondent's interests. The decision to adjourn the matter indicates the court's willingness to facilitate a fair resolution through ongoing discussions and assessments of the proposed security and instalment terms.

In conclusion, the judgment underscores the need for parties to adhere to court decrees, the consequences of default, and the possibility of renegotiating payment terms with the court's involvement to address financial challenges. The focus on ensuring suitable security and reasonable instalment arrangements reflects a pragmatic approach to resolving the situation while safeguarding the rights of both parties involved in the legal dispute.