9911796707
TMI Blog2016 (7) TMI 1680X X X X Extracts X X X X X X X X Extracts X X X X ..... e duly credited and debited to each other's account and as per the said account the sum of Rs. 1.48 crores is due from the defendant to the plaintiff; (iv) that the defendant has failed to pay the said amount despite demands; (v) that the duly audited balance sheet of the defendant admits and acknowledges the aforesaid amount to have been received by the defendant and re-payable to the plaintiff; and (vi) that the transaction being a commercial one, the plaintiff is entitled to interest at 18% per annum. 2. The suit was entertained and the defendant has contested the same by filing a written statement on the grounds; (i) that the plaintiff and the defendant are family owned and controlled companies in the nature of quasi partnerships; (ii) that prior to the demise of Shri Sudhir Sareen, till about the year 2010, the plaintiff was being primarily run and managed by Shri Sudhir Sareen who was the majority share holder of the plaintiff as well as the defendant companies; (iii) Shri Sudhir Sareen on 6th November, 2009 gifted more than 95% shares of the defendant company to his daughter Ms. Parul Gupta; (iv) Shri Sudhir Sareen was the alter ego and directing will and mind of both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gift, given out of natural love and affection between the father Shri Sudhir Sareen and the daughter Ms. Parul Gupta; (xvi) the said monies which were advanced, were never intended to be recovered as loan or to be re-paid and for this reason only neither of the two companies booked any interest on the said advances/amounts as payable expense or a receivable income; (xvii) Mr. Siddharth Sareen acting in the capacity of a Director enjoying a fiduciary position in the defendant company has stripped the defendant company of its assets; (xviii) that the monies advanced by the plaintiff company to the defendant company are described as advance in the financial books of the company only by way of accounting convenience, whereas actually the same were in the nature of gift given out of natural love and affection between the father Shri Sudhir Sareen and the daughter Ms. Parul Gupta; and, (xix) denying that any legal notice was received. 3. Needless to state that the plaintiff company has filed a replication denying the contents of the written statement which are contrary to the plaint and denying that Mr. Siddharth Sareen is guilty of any acts of misappropriation qua the defendant company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the defendant after 31st March, 2012 has been showing the said amount as loan from the plaintiff company and if not how has the said amount been dealt with in the balance sheet. 7. The counsel for the defendant states that he has no instructions in this regard. 8. I may in this regard notice that the plea of limitation is shown to be only in paras 2 and 9 of the preliminary objections in the written statement and which is found to be a bald one and the defendant company has not stated that after 31st March, 2012 the amount has not been shown as due to the plaintiff company. 9. Be that as it may, let the daughter of Mr. Sudhir Sareen who is the owner of the defendant company be present in person on the next date of hearing. 10. The counsel for the defendant states that she is young and the authorised person of the defendant company be permitted to appear. 11. Since the defendant company has given a personal colour to the matter, the daughter of Mr. Sudhir Sareen cannot be exempted from appearance. She is however at liberty to bring whosoever she wants to bring with her to the Court. 12. List on 21st July, 2016." 5. In pursuance thereto, Ms. Parul Gupta is stated to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is that it was in the "nature of gift". 13. The counsel merely reiterates what has been pleaded in the written statement. However the pleas drafted while sitting in chamber have to be substantiated before a Court on the basis of legal principles, law and precedents and none of which is being cited. I am unable to understand the argument of "in the nature of gift". 14. The counsel for the defendant has then referred to Durga Builders P. Ltd. Vs. Motor And General Finance Ltd. to contend that the entries in a balance sheet can be explained and if they do not per se reflect the transaction, the matter has to be put to trial. 15. On my reading of the said judgment, it appears that the question there was whether a mortgage decree on admissions could be passed on the basis of the entries in the balance sheet and it was held that entries in the balance sheet were not evidence of mortgage. The said judgment cannot be of any assistance to the counsel for the defendant company who is also unable to show therefrom any ratio thereof which can be applied to the facts of this case. 16. The counsel for the defendant company has next referred to R. Janakiraman Vs. State (2006) 1 SCC 697 whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherewith the auditor's report is prepared. Without the same, the weightage to be given to the Note cannot be deciphered. Even otherwise, I am of the view that the same cannot wash away the liability of the defendant company reflected in its own balance sheet. 23. It is also the argument of the counsel for the defendant company that Ms. Parul Gupta has challenged the Will of Shri Sudhir Sareen under which Mr. Siddharth Sareen claims right to the shares of the plaintiff company and if the present suit is decreed immediately, the plaintiff company may siphon off the monies so paid by the defendant company to the plaintiff company and nothing may remain for Ms. Parul Gupta, even after she succeeds in the challenge to the Will, to earn out of the shares of the plaintiff company. 24. As far as the said apprehension expressed is concerned, it will be open to Ms. Parul Gupta, to in an appropriate proceeding, obtain necessary orders for securing the assets/monies of the plaintiff's company awaiting the outcome of the share in the inheritance. 25. I am of the view that defences which are in violation of laws and amount to defrauding the taxation authorities cannot be permitted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seeks the assistance of the Court to effectuate an illegal transaction, the Courts will refuse assistance. Supreme Court in S.P Chengalvaraya Naidu Vs. Jagannath (1994) 1 SCC 1 also cautioned against allowing the process of the Court being used inter alia by tax evaders. 28. I am therefore of the view that it is not open to the defendant to before this Court contend that the monies which the defendant in its books of accounts and balance sheet has shown as loan from the plaintiff and repayable to the plaintiff (and on the basis whereof the defendant has been assessed for tax) are not a loan from the plaintiff but "in the nature of gift" from the plaintiff and not repayable to the plaintiff. 29. Supreme Court, in Karam Chand Thapar & Bros. (P) Ltd. Vs. Commissioner of Income Tax, Calcutta (1971)82 ITR 899 held the circumstance that the assessee was showing the shares as investment shares in its books of accounts as well as in the balance sheet, though not conclusive, but is relevant circumstance on which reliance could be placed upon and necessary inference drawn. It was further held that the explanation, that the Company had to do so because of provisions of the Company Law, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny to be authorising the Company to make any donations, it was held that the same could not be traced to the residuary clause authorising the Company to do all other things as are incidental or conducive to the attainment of the main objects. It was further held that the act of the Company of making donations being not within the objects mentioned in the Memorandum of Association, the act of making donations was ultra vires and no legal relationship or effect could ensue therefrom. It is not the case of the defendant in the present case that the plaintiff Company was authorised to make gift or that the defendant Company was authorised to receive gift. For this reason also the defence of the amount being by way of gift or in the nature of gift cannot be entertained. 33. Though the defendant company in the written statement has also challenged the authority of the person who has instituted the suit and signed and verified the plaint but in view of the aforesaid state of affairs, where the defendant is accusing the plaintiff to be acting at the behest of Mr. Siddharth Sareen and attributing motives to the plaintiff company for instituting the present suit, need to frame the said issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the position in this suit is the same as the other suit and the decree as aforesaid can be passed. 41. The counsel for the defendant company has fairly stated that the position is the same save for the fact that in the present case there is an express admission on the part of the plaintiff that the loan was interest free and that the terms and conditions of re-payment of the principal amount of loan had not been agreed. 42. In this view of the matter, need to write a detailed judgment is not felt. The suit is decreed in favour of the plaintiff and against the defendant for recovery of principal amount of Rs. 1,30,43,901/- with interest at the rate of 8% per annum till the date of this decree and for a period of three months from the date of this decree within which time the defendant company is expected to discharge its debt under the decree. However if the decretal amount is not paid within three months herefrom, with effect from the expiry of three months, the principal amount of Rs. 1,30,43,901/- shall incur interest @ 15% per annum. If the payment of the entire decretal amount is made within three month, the plaintiff company shall not be entitled to any costs of the suit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
