Allowed

N.T.C.(S.M) v. Garment Entp.Ltd.

Bombay HC17 Nov 2006S/3194/1985

Case brief

AI extract

What is this about?

This judgment decrees a suit by National Textile Corporation (S.M.) Ltd against Garment Enterprises Ltd for a sum of Rs. 12,38,329/- with interest. The court held the transaction established based on the plaintiff's affidavit and the defendant's admission via its balance sheet, deeming the defendant's silence as an adverse inference.

What did the court decide?

Decree in the sum of Rs. 12,38,329/- with interest at 18% p.a. from the date of suit till payment and costs of the suit.

N.T.C.(S.M) Vs Garment Entp.Ltd. — Contract and Commercial Disputes | Bombay HC (2006)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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ORDINARY ORIGINAL CIVIL JURISDICTION

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SUIT NO.3194 OF 1985

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National Textile Corporation
(S.M.)Ltd
vs.
Garment Enterprises Ltd

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....Plaintiffs.
....Defendants.

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Mr.Sriniwas Deshmukh i/by.Bhaishankar Kanga &
Girdharlal for the plaintiffs.

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Ms. Mili V. Thakakr with Deepal J. Thakkar
i/by.Gordhandas and Fozdar
for the defendants.

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NOVEMBER 17, 2006.

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P.C. :

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1.The order dated 19/10/1983 is by consent taken
on record and marked Exhibit P2.

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2.The suit is filed to recover a sum of
Rs.19,43,621/- with interest at the rate of 18% p.a.
from the date of the suit till payment.

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2.The plaintiff is a subsidiary of the National

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Textile Corporation Ltd (NTC). Under the provisions
of the Textile Undertakings (Taking Over of
Management) Act 2003 and the orders passed
thereunder the plaintiff has been appointed as an
additional custodian of the textile undertaking of
the Gold Mohur Mills Ltd (GMML).

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3.The defendant is a wholly owned subsidiary of
GMML. Prior to 1975, the GMML had lent and advanced
a sum of Rs.5 lacs to the defendant which was agreed
to be repaid with interest at the rate of 3% per
month. During the period 30/6/1979 to 30/6//1982 a
further sum aggregating to Rs.6,11,471/- was lent
and advanced by GMML to the defendant on similar
terms. As on 30/6/1982 an aggregate amount of
Rs.12,38,329/- which included interest was due and
payable by the defendant to GMML.

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4.The aforesaid amounts has been admitted and
acknowledged in the Annual Report and Balance Sheet
of the defendant itself as well as GMML.

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5.The suit is also filed to recover the amounts

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in respect of another transaction in the sum of
Rs.7,05,292/-. The same has not been pressed. It
is not necessary therefore to deal with the same.

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6.The suit was filed on 26/11/1985. No written
statement has been filed.

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7.The plaintiff examined its Deputy Manager, one
Mr.D.J. Kshirsagar by filing his affidavit-in-lieu
of oral evidence dated 22.6.2006. The witness has

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set out the aforesaid facts. The witness has
averred that under the provisions of the said Act,
the amounts claimed in the suit are due. He also
deposed to the fact of the Textile Undertakings
(Rules) Act, 1995. He has further stated that the
defendant has admitted its liability in its Annual
Report and Balance Sheet dated 26/11/1982 (wrongly
mentioned as 1986 due to typographical error) under
the head ‘Unsecured Loans’. He has further
expressly stated that the defendant has also
admitted the sum payable in its Books of Accounts.

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8.The witness was cross-examined. An attempt

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has been made to establish that the amounts were not
due in respect of the textile undertaking, the
management of which was taken over/ which was
nationalised. Curiously, however, the defendant
itself did not file a written statement or lead any
evidence. For 20 years, the plaintiff’s assertion
that the amount is due in view of the provisions of
the said Act has remained unchallenged. Further
this is a fact which would be to the knowledge of
the defendant itself. The defendant has chose to
remain silent. These circumstances justify an
adverse inference against the defendant to the
effect that if the defendant had filed a written

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statement and led evidence it would have established
that the claim is due in view of the provisions of
the said Act. Further the positive assertion that
the amount is due under the said Act remains
uncontroverted.

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9.No adverse inference can be drawn against the
plaintiffs witness for not having personal
knowledge. Indeed he would not have personal
knowledge. The plaintiff took over the management

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and ultimately the undertaking itself for reasons
which are now well documented including in several
judgments dealing with provisions of the Act.

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10.The transactions itself was also not denied as
no written statement was filed. Strictly speaking
it may not even have been necessary for the
plaintiff to lead any evidence. The
cross-examination does not affect the testimony of
the plaintiff’s witness regarding his knowledge of
the transaction. I have no hesitation therefore in
holding that the transaction has been established.

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11.Added to this is the clear admission made by
the defendant the wholly owned subsidiary GMML and
GMML itself. The plaintiff tendered in evidence
(Exhibit P1) which the 56th Annual Report for the
year 1981-82. In compliance with the provisions of
law, GMML annexed to its said Annual Report the
Annual Report and Accounts for the year 1981-82 of
the defendant. This document is admitted. There
was no objection to the same. GMML in clear terms

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admits therein while setting out its current assets,
Loans and Advances that the aforesaid amount is due
from its subsidiary i.e. the defendant. The
defendant itself also in its Balance Sheet expressly
admits the said amount from GMML. Needless to add
that the balance sheet has been signed by the
Chairman and the Directors of the defendant. Thus
the fact of the existence and of the transaction
having been entered into is established. The
balance sheet admits and acknowledges the balance
amount due. It is not as if the plaintiff has only
relied upon the acknowledgement to establish the
principle transaction. The principle transaction is
established. The acknowledgment is evidence of the
amount due.

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11.In the circumstances, the suit is decreed in
the sum of Rs.12,38,329/- together with interest on
the amount of Rs.11,11,471/- at the rate of 18% p.a.
from the date of the suit till payment and/or
realisation. The defendants shall also pay the
costs of the suit as per rules. The plaintiff is at
liberty to take the original documents tendered in

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court in evidence but not received in evidence upon
undertaking to produce the same when called upon.

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sd/-

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********

N.T.C.(S.M) v. Garment Entp.Ltd.

Case brief

What is this about?

What did the court decide?

N.T.C.(S.M) v. Garment Entp.Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Coram

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