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TMI Blog2006 (7) TMI 574X X X X Extracts X X X X X X X X Extracts X X X X ..... ng such units in a number of ways, one of which is to extend raw material assistance to them. Under the 'Raw Material Assistance Scheme', the plaintiff procures raw material from canalised/Government agencies and others for and on behalf of the small scale units by making payment directly to the suppliers and delivering the said raw material to the small scale units as per their requirement. 3. The defendant No. 1 is a company incorporated under the Companies Act, 1956 and is engaged in the manufacturing of electronic goods such as TV, CTV, etc. as a small scale unit. The defendant No. 2 is the Managing Page 2813 Director of the defendant No. 1, the defendant No. 3 (a director of the company) is the wife of the defendant No. 2, and the defendant No. 4 is the mother of the defendant No. 3 and mother-in-law of the defendant No. 2. Defendants No. 3 and 4 are the legal representatives of late Shri P.C. Manchanda (an erstwhile director of the company) being his daughter and widow. 4. The defendant No. 1 had approached the plaintiff vide letter dated 1st August, 1986 for financial assistance under the 'Raw Material Assistance Scheme' of the plaintiff for the import of CTV parts and T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med to be hypothecated/pledged to the agent to secure such investment, expenditure, liability interest of loss arising out and accruing on account of the procurement of the goods. 8. The amounts advanced paid or incurred by the Corporation towards remittance for payment of goods to the foreign Suppliers, Freight, Page 2814 Insurance, Bank Charges Freight for movement of goods, clearances charges, customs duty and other statutory duty or levies, charges for transporting the imported goods, expenses for storing the goods in the godown, postal expenses and all other charges and expenses incurred by the Corporation in connection with the import of the goods will be debited to importer's account and the importer agrees and undertakes to repay or reimburse the amount so debited to importer's account with interest at the rate of 16% from the date of debit of such amount till reimbursement. Importer agrees that such repayment or reimbursement of the amount debited to importer's account will be made on or before the expiry of 100 days from the date of storage of the goods in the godown a notice whereof shall be given by the Corporation. 9. In consideration of the service rendered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, in the event of the importer failing to lift the goods within the specified period or period so extended commits any breach of this agreement, the margin money or balance thereof after adjustment of the service charges shall stand forfeited. 19. ... 20. All expenses and charges paid by the Corporation to Banks with whom the Corporation shall have arrangements for opening Letter of Credit and/or of custody, clearance and maintenance of stock of goods shall be debited to importer's account and be payable by the importer in terms of the agreement. 21. ... 22. ... 23. ... 24. ... 25. ... 26. ... 27. ... 28. The importer agrees to reimburse to the Corporation on demand all or any amount that the Corporation may be required to pay or bear by way of levy charges of duties or taxes on the said goods imported on behalf of the importer in terms of the agreement either before or after the delivery of the said goods. 5. The plaintiff having agreed to provide assistance to defendant No. 1, defendants No. 2 to 4 executed a Deed of Guarantee dated 07.11.1986, whereby defendants No. 2 to 4 undertook to ensure that the terms and conditions laid down in the agreement execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant follow up by the plaintiff, the defendant No. 1 came forward with a proposal for settlement of dues and requested the plaintiff for re-scheduling of its dues. Pursuant to the proposal of defendant No. 1, the parties entered into an agreement dated 25th June, 1999, whereby the defendant No. 1 again acknowledged and accepted its liability to the tune of Rs. 26,88133.78. Significantly, by the said agreement, all personal guarantees furnished from time to time for availing Raw Material Assistance were to remain valid till the entire payment under the agreement was received by the plaintiff. The relevant clauses of the said agreement are as under: 1. The party of the second part acknowledges and accepts its liability of Rs. 26,88,133.78 on account of assistance availed by the unit from NSIC Head Office, Marketing Division and agreed to settle the said dues by making down payment of Rs. 1.50 lakhs by 15th July, 1999 and the balance amount in monthly Installments of Rs. 50,000/- per month starting from 1st August, 1999 for the first year and Rs. 75,000/- per month from 1st August, 2000 and Rs. 1 lakh per month from 1st August, 2001 and thereafter w.e.f. 1st August, 2002 @ 1.5 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said application, the names of the legal representatives of Shri P.C. Manchanda were disclosed as follows: (i) Smt. Nirmal Kant Manchanda Widow of late Shri P.C. Manchanda C-225, State Bank of India Colony Paschim Vihar, New Delhi. (ii) Smt. Madhu Khullar D/o late Sh. P.C. Manchanda B-30, Lajpat Nagar-III New Delhi. 12. It was submitted by the plaintiff that since Smt. Madhu Khullar had already been imp leaded in the suit as defendant No. 3 as she had given a personal guarantee, the plaintiff be permitted to implead the only other legal representative of the deceased Shri P.C. Manchanda, namely, Smt. Nirmal Kant Manchanda. The prayer of the plaintiff was allowed and an amended memo of parties was ordered to be filed by the plaintiff. Summons were served on the defendant No. 4 by ordinary process and by registered post, but she has not cared to contest the petition. 13. The application for issuance of summons for judgment in the proforma prescribed under Order 37 Rule 3, Sub-Rule 4 CPC was next filed by the plaintiff being IA 3370/2003. The defendant No. 3 having been served with the summons for judgment filed IA 3387/2004 under Order 37 Rule 3(5) read with Section 151 CPC s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and frivolous claim has been made. 17. It was also contended that the plaintiff was liable and responsible for having caused losses to the defendant No. 1 company by not releasing the goods lying in the possession and power of the plaintiff and as such, no liability could be fastened upon the defendants. Finally, it was stated that the claim of the plaintiff was based upon an agreement alleged to have been entered into on 25th June, 1999 and that thus there was an admission that the claim was not based upon the earlier agreement alleged to have been entered into in or about January, 1987 and, therefore, the claim of the plaintiff against the defendants is not tenable. 18. As already noticed, the case of the plaintiff is based upon a written agreement entered into between the parties on 25th June, 1999. In terms of the said agreement dated 25th June, 1999, the defendant No. 1 unequivocally acknowledged and accepted its liability to the tune of Rs. 26,88,133.78 due as on 31st March, 1992 (first acknowledgment is dated 1st July, 1998). Further, in terms of the agreement, the defendant No. 1 agreed to settle the acknowledged dues by making down payment of Rs. 1.50 lakhs by 15th J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not only in the agreement between the parties but also in the 'Raw Material Assistance Scheme'. Defendant No. 1 consistently failed to make the said payments, resulting in huge outstandings, being in the sum of Rs. 26,88,133.78, which amount was acknowledged by the defendants by the letter dated 1st July, 1998. 20. It is also manifestly clear from the record that the defendants themselves gave a proposal to the plaintiff for re-scheduling of payments due from them and it was in this backdrop that the agreement dated 25th June, 1999 was entered into between the parties, wherein the defendants specifically acknowledged that a sum of Rs. 26,88,133.78 (apart from the interest) was due and payable by them to the plaintiff. Having failed to abide by the terms of the agreement dated 25th June, 1999, it does not now lie in the mouth of the defendants to allege that they have a substantial defense to the suit. The defendants have nowhere denied the agreement dated 25th June, 1999 or the deeds of guarantee executed by them on 07.11.1986, which by virtue of Clause 6 of the agreement dated 25th June, 1999 were agreed to be extended by them till such time as the entire payment was made to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction or authority. It is a matter of common knowledge that denial by a party is the easiest method of delaying the proceedings before the Court and in fact without being subjected to rigors of high cost and penal loss. A plea which is put forward by the defendant should go to the root of the liability and must raise an issue which in law would be triable. 22. In the case of M/s. Dura-Line India Pvt. Ltd., as in the instant case, the suit under Order 37 Code of Civil Procedure was based upon the acknowledgment and confirmation of the balance issued by the defendant and it was held therein that the mere maintenance of a running account by the plaintiff does not disentitle the plaintiff from filing the suit under Order 37 Code of Civil Procedure based on a written contract and acknowledgment in writing. 23. The legal principles relating to the grant of leave to contest a summary suit have been evolved by a catena of decisions. The Supreme Court in the case of Mechalec Engineers and Manufacturers v. Basic Equipment Corporation clearly held that where the defendant sets up a defense which is illusory, sham or practically a moonshine, then ordinarily the plaintiff is entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The rate of interest as provided for in the agreement dated 12th January, 1987 was to be 16% from the date of the debit of the amount till reimbursement. Clause 14 which is relevant reads as follows:- The importer agrees to redeem the goods from pledge by clearing the Page 2822 goods against payment of the cost of goods and all the other charges incurred by the corporation in terms of this agreement with interest thereon as agreed herein within 100 days from the date of storage of the goods. In the event of the importer seeking extension of time for removing the goods against payment, it shall be law-full for the corporation at its sole discretion to grant such extension on condition that the importer shall be liable to pay as agreed damages for delay in redemption, additional interest of 1% over and above the agreed interest @ 16% on the amount due and payable in terms of this agreement for the period for which the extension of time is allowed to the importer on importer's application in that behalf. It is expressly agreed that in the event of the importer applying for extension of time the importer shall not be entitled to rebate on service charges provided for hereinbefore. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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