Dismissed

Neelesh Kanade Group, through Proprietor, Shri. Neelesh Satish Kanade v. M/S. Twinkle Realtors Pvt. Ltd, through Shri. Sacchidanand a. Sahasrabuddhe

Bombay HC25 Oct 2012WP/10681/2011

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition seeking to quash an order granting leave to defend in a special summary suit. The court held that the suit was for recovery of liquidated payments under MOUs despite the 'liquidated damages' phrasing, upholding the security condition but extending the time to furnish it.

What did the court decide?

Writ petition dismissed; leave to defend granted on condition of furnishing solvent security with a six-week extension.

Neelesh Kanade Group, through Proprietor… — Contract and Commercial Disputes | Bombay HC (2012)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.10681 OF 2011

Neelesh Kanade Group

: Petitioner

versus

Twinkle Realtors Pvt Ltd. now known as Mirah Realtors Pvt Ltd.

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: Respondent

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Mr. P. S. Dani for the Petitioner

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Mr. Naushad Engineer with Ms Rahida Santiwal i/b Dhruve Liladhar & Co. for the Respondent

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CORAM:- R M SAVANT, J DATED :- 25^th OCTOBER, 2012.

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P.C.

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1 The Writ Jurisdiction of this Court under Article 227 of the Constitution of India is invoked against the order dated 20-7-2011 passed by the Learned 6^th Joint Civil Judge Senior Division, Pune, by which order, the Petitioner is granted leave to defend on the condition of furnishing a solvent security equal to the claim amount within 15 days.

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2 The Suit in question being Special Summary Suit No.16 of 2010 has its basis in the payments made to the Petitioner pursuant to two Memorandum of Understandings one of which is dated September 2006

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and the second dated June 2007. By the first MOU the Defendant i.e. the Petitioner herein was to make available to the Plaintiff i.e. the Respondent

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herein lands for development which are mentioned in the said MOU. The

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total consideration in so far as the first MOU is concerned was to the tune of Rs.16.40 crores. The schedule of payment was stipulated in the said MOU. Under clause (5) of the said MOU the Defendant had certain obligations which it had to fulfill within 6 months. The MOU postulates that if the payments were not made by the Plaintiff as per the schedule, the MOU would stand terminated. Similarly if the Defendant was not to fulfill its obligations within 6 months, the Plaintiff was entitled to terminate the MOU and get refund of the amounts which were paid.

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3 The second MOU entered in June 2007 was in respect of the adjoining land. The said MOU was on the similar lines as the first MOU of September 2006, save and except that the consideration in respect of the second MOU was to the extent of Rs.15.45 crores. It appears that pursuant to the first MOU the Plaintiff has paid the entire consideration of Rs.16.40 crores and in respect of the second MOU the Plaintiff had paid an amount of Rs.2 crores, making the total amount paid as Rs.18.40 crores. The fact that the Defendant has received the amount of Rs.18.40 crores can also be seen from the application seeking leave to defend filed by the Defendant. Though a stand is also sought to be taken in the said application that certain payments were received which were in respect of some other land. On the Defendant reneging from its obligations under the said two MOU's,

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the Plaintiff terminated the said contracts and by notice dated 13-5-2009 which was addressed to the Defendant and sought refund of the amounts paid with 18% interest. The said notice was replied to by the Defendant by its letter dated 16-5-2009 wherein it called upon the Plaintiff to pay the balance remaining amount which according to it was Rs.15.45 crores with interest. The Defendant sought to raise an issue as regards the party responsible for the breach of the contracts. This resulted in the Plaintiff filing the Suit in question being Special Summary Suit No.16 of 2010. The averments in the said Suit referred to the said two MOU's. The consequences for non fulfillment of the obligations as well as non payment and entitlement of the Plaintiff under clause (5) of the said MOU to refund of the amounts that it has paid. The Suit is founded on the notice dated 13-5-2009 by which the Plaintiff has claimed refund of the amounts which were paid by it to the Defendant with 18% interest. However, in the plaint in paragraph 13, the amounts claimed are shown as liquidated damages. It seems that a statement has been annexed to the plaint showing the amounts paid on different dates, the cheque numbers by which the amounts were paid and the dates on which they were paid. The said statement has been annexed to the Petition filed by the Respondent herein being Writ Petition No.9782 of 2012. The Suit is therefore for recovery of

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an amount of Rs.19,30,05,893/- with interest @ 18% from the date of default till the date of filing of the Suit i.e. Rs.8,89,41,340/-, making a total amount of Rs.28,18,47,233/-. After the summons were served in the said Suit the Defendant filed an application for leave to defend the said Suit. Suffice it to say that in the said reply the Defendant sought to put the blame for the breach of the contract on the Plaintiff on the ground that the Plaintiff was obliged to pay the entire amount of the consideration under the MOU's on account of non payment of which the lands in question could not be procured. The Defendant sought to make a case that there were triable issues in as much as the default, as well as the reasons thereafter would have to be ascertained would require leading of detailed evidence. Pertinently in paragraph 9 of the said Application, it was averred that it is the Plaintiff who has failed and neglected to pay a sum of Rs.13.45 crores as per the agreed schedule leading to unnecessary litigation and complications in the commencement and completion of the project.

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4 The Trial Court considered the said application for leave to defend and has by the impugned order as indicated above, has granted leave on the condition that the Defendant should furnish solvent security for the claim amount within 15 days.

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5 The Learned Counsel Mr. Dani appearing for the Petitioner i.e the original Defendant, would contend that if the Suit is for liquidated damages then the summary procedure under Order 37 could not have been invoked. The Learned Counsel would draw my attention to the averments made in the plaint as also the covenants of the MOU's to contend that there are triable issues as regards who is responsible for the breach of the contract and whether the Plaintiff has fulfilled its part of the contract. The Learned Counsel would contend that the Learned Judge having held that the suit being one for liquidated damages thereafter could not have imposed the condition that he has imposed of furnishing solvent security equal to the claim amount.

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6 Per contra, it is submitted by Mr. Engineer, the Learned Counsel appearing on behalf of the Respondent that though in the plaint the phraseology liquidated damages appears, it is in fact a suit for recovery of the liquidated demand as what the Plaintiff in fact is seeking to recover is the amount which has been paid to the Defendant pursuant to the two MOU's. The Learned Counsel would contend that the use of a wrong terminology in the plaint would not come in the way of the Plaintiff from pursuing the Suit as a Summary Suit and under the summary procedure. The Learned Counsel would place reliance on the Judgment of the Apex

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Court reported in (2007) 9 Supreme Court Cases 641 in the matter of Des Raj & Ors. Vs. Bhagat Ram (dead) through LRS. wherein the Apex Court has held that the pleadings from the mofussil must be construed liberally. The contention of the parties in their pleadings must be culled out from reading the same as a whole and only because the parties did not use the terminology which they should have, ipso facto, would not mean that the ingredients for satisfying the requirements of statute are absent. The Learned Counsel would further contend that merely because the defence has been raised that the Defendant would also have a claim which is an unliquidated amount, cannot impinge upon the Plaintiff’s right to invoke the summary procedure. The Learned Counsel would contend that the notice dated 13-5-2009 makes it clear as to what in fact the Plaintiff is seeking to recover.

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7 Having heard the learned Counsel for the parties, in my view, the order passed by the Trial Court granting leave to the Petitioner on the condition that it has to furnish solvent security within 15 days to the extent of the claim amount, cannot be taken exception to. Though in the Suit the phraseology “liquidated damages” has been used, the averments in the plaint as well as the notice on the basis of which the Suit has been founded make it clear that what the Plaintiff in fact is claiming is the recovery of the

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liquidated demand, which is the amount paid by the Plaintiff under the two MOU's dated September 2006 and June 2007. The claim has been calculated on the said basis. The fact that the phraseology “liquidated damages” is used, in my view, would not impinge upon the right of the Plaintiff to prosecute the said Suit as a Summary Suit as held by the Apex Court in matter of Deshraj & Ors. (Supra) the pleadings when read as a whole unmistakably and unequivocally lead to a conclusion that what is sought to be recovered is the amount which the Plaintiff has paid to the Defendant pursuant to the two MOU's. In the facts and circumstances of the present case, the order passed by the Trial Court granting leave on the condition of furnishing solvent security, in my view, cannot be faulted with. No case for interference is therefore made out, the Writ Petition is accordingly dismissed.

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8 However, in the facts and circumstances of the case, the time to furnish solvent security is extended by a period of 6 weeks from date.

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(R M SAVANT, J)

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Neelesh Kanade Group, through Proprietor, Shri. Neelesh Satish Kanade v. M/S. Twinkle Realtors Pvt. Ltd, through Shri. Sacchidanand a. Sahasrabuddhe

Case brief

What is this about?

What did the court decide?

Neelesh Kanade Group, through Proprietor, Shri. Neelesh Satish Kanade v. M/S. Twinkle Realtors Pvt. Ltd, through Shri. Sacchidanand a. Sahasrabuddhe

Case brief

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