2018 (2) TMI 1191 - HC - Companies Law

Decree against the Defendants to jointly and severally pay to the Plaintiffs the outstanding principal amount along with interest accrued thereon - whether the present suit filed on 27th October, 2015 is barred by the Law of Limiation? - Held that - Mentioned paragraph in the e-mail dated 12th April, 2013 (Exhibit-BB-8 at page 374 of the Plaint) constitutes an acknowledgment on the part of Om Sai Motors that they are liable to pay ₹ 5 Crores to Tata Motors/TML. Om Sai Motors, therefore, cannot be now heard to say that the paragraph from the email dated 12th April, 2013 cannot be treated as an acknowledgement by Om Sai Motors and that the suit is barred by the law of limitation. Charges towards taxes and duties would also include charges towards Form-C under the provisions of the Sales Tax laws. It also cannot be accepted that the Summary Suit is not maintainable because Tata Motors/TML have relied upon a ledger account maintained by Tata Motors/TML. The claims of Tata Motors/TML is based on the invoices raised against Om Sai Motors for vehicles supplied by Tata Motors to Om Sai Motors and for Logistic support provided by TML to Om Sai Motors. The claim, as submitted by Tata Motors/TML is based on a written contract and, therefore, the Summary Suit is maintainable. After accepting all the vehicles from Tata Motors/TML and acknowledging the same on the invoices submitted to them by Tata Motors/TML and also acknowledging their liability to pay the balance dues of ₹ 5 crores, Om Sai Motors have thereafter for the first time by its e-mail dated 13th June, 2013 tried to raise the defence that Tata Motors/TML had handed over the vehicles to Om Sai Motors despite Om Sai Motors not having ordered for the same only because the same were lying in their yard. The defence on the face of it appears to be false and is not bonafide and has no merit. The present case is covered under clauses (e) and (f) of para 18 of the decision in IDBI Trusteeship Services Ltd. (2016 (11) TMI 1529 - SUPREME COURT) and Tata Motors/TML are entitled to a judgment forthwith. Even otherwise, the learned Advocate appearing for the Defendants has informed the Court that the Defendants are not in a position to even deposit in Court any amount whatsoever. The above Summons for Judgment is therefore allowed in terms of prayer clause (a) with a modification to the extent that the Plaintiffs shall be entitled to interest on unpaid invoices only from the date of filing of the Suit

Summary

Issues Involved:
1. Payment of outstanding principal amount.
2. Liability for interest on delayed payments.
3. Liability for Form-C and other expenses.
4. Maintainability of the Summary Suit based on ledger accounts.
5. Bar of limitation on claims.
6. Acknowledgement of debt.
7. Alleged wrongful delivery of vehicles.
8. Blocking of Code and resulting business losses.
9. Leave to defend the suit.

Detailed Analysis:

1. Payment of Outstanding Principal Amount:
The Plaintiffs sought a decree for the outstanding principal amount of ?4,88,69,226.15, split between Plaintiff No.1 and Plaintiff No.2, along with interest. The Defendants acknowledged the outstanding amount but raised several defenses against the payment.

2. Liability for Interest on Delayed Payments:
The Plaintiffs claimed interest at 18% per annum till the filing of the suit and 21% thereafter. The Defendants argued there was no contract for payment of interest. The Court held that the Plaintiffs are entitled to interest on unpaid invoices from the date of filing the suit, as per the dealership agreements which included clauses for interest on delayed payments.

3. Liability for Form-C and Other Expenses:
The Defendants contended there was no contract for payment of Form-C and other expenses. The Court rejected this, citing clauses in the dealership agreements that required the Defendants to bear all taxes, duties, and incidental expenses, including Form-C charges.

4. Maintainability of the Summary Suit Based on Ledger Accounts:
The Defendants argued the suit was not maintainable as it was based on ledger accounts. The Court clarified that the suit was based on written contracts and invoices for vehicles supplied, making the summary suit maintainable.

5. Bar of Limitation on Claims:
The Defendants claimed the suit was barred by limitation as the invoices were beyond three years. The Plaintiffs relied on an email dated 12th April 2013, which they argued was an acknowledgment of debt, thus extending the limitation period. The Court agreed, citing precedents that an acknowledgment renews the debt and extends the limitation period.

6. Acknowledgement of Debt:
The email dated 12th April 2013 from the Defendants acknowledged a liability of ?5 crores to the Plaintiffs. The Court held this as a valid acknowledgment under Section 19 of the Limitation Act, thus the suit was not barred by limitation.

7. Alleged Wrongful Delivery of Vehicles:
The Defendants alleged that vehicles were delivered without their orders, leading to losses. The Court found this defense to be false and not bona fide, as the Defendants had accepted and acknowledged the deliveries in the invoices.

8. Blocking of Code and Resulting Business Losses:
The Defendants claimed they suffered losses due to the Plaintiffs blocking their Code, preventing them from doing business. The Court did not find this defense sufficient to negate the liability for the outstanding amount.

9. Leave to Defend the Suit:
The Defendants sought unconditional leave to defend the suit. The Court, applying principles from the IDBI Trusteeship Service Ltd. case, found that the Defendants had no substantial defense and their arguments were frivolous. Consequently, the Plaintiffs were entitled to judgment forthwith without granting leave to defend.

Conclusion:
The Court allowed the Summons for Judgment in favor of the Plaintiffs, ordering the Defendants to pay the outstanding amount with interest from the date of filing the suit. The Defendants' defenses were found to lack merit, and the suit was not barred by limitation due to the acknowledgment of debt. The summary suit was deemed maintainable based on the written contracts and invoices.