Dismissed

Johnson Cables Pvt.Ltd. v. Sicom Ltd.

Bombay HC20 Jan 2014S/1911/2001

Case brief

AI extract

What is this about?

In an ex-parte suit where the defendant failed to file a written statement after dismissing a notice of motion to stay the decree, the court granted relief against the defendant. The court adjudicated the factual matrix of a failed property sale and awarded a refund of earnest money with interest.

What did the court decide?

Decree for refund of Rs. 27,30,000 with interest at 12% per annum from specific dates of payment and from the date of suit.

1.Though the suit was filed in 2001, since no written statement was filed by the sole defendant, the matter appeared for ex-parte decree or under various other captions in 2013. It was adjourned on at least six or seven occasions.

2.The reason it comes to be listed today for ex-parte decree must be noted. On 23rd October 2007, the Prothonotary & Senior Master of this Court transferred the suit to the list of undefended suits since no written statement had been filed even after service of the writ of summons. Six years later, the defendant, SICOM, filed Notice of Motion No.1311 of 2013 to set aside the Prothonotary & Senior Master’s order and seeking condonation of the delay in filing that application. In that notice of motion, it was not disputed that the

writ of summons was served on 5th July 2001. The only ground made out was the negligence of the defendant’s own advocates, against whom the most serious allegations were made. Notice was issued to the defendant’s advocates. They appeared through independent counsel at the hearing of the Notice of Motion on 19th November 2013.

3.The order of 19th November 2013 notes the quite extraordinary submissions made by the defendant. This Court found that there was, in fact, no tenable ground for the reliefs sought. In the order of 19th November 2013, which is very detailed, careful and elaborate, every submission made on behalf of the defendant was noted and considered. This Court dismissed the notice of motion and awarded exemplary costs of Rs.25,000/- against the defendant. The result was that the suit continued on the list of suits for ex-parte decree for want of written statement.

4.Today, Ms. Dalvi learned advocate for the defendant, says that the defendant’s Advocates “have instructions” to appeal from the order of 19th Novemebr 2013. No such appeal has yet been filed. There is no explanation, even orally, as to why this has not yet been done. Ms. Dalvi also states that some submissions made by the defendant on 19th November 2013 were not considered by the learned Judge (N.M. Jamdar, J.). That is a submission that ought never to have been made, especially since, admittedly, no application for modification, recall, review or speaking to the minutes of that order was ever made. Faced with this, Ms. Dalvi submits that the defendant’s law officer, one V.C. Deo, who was attending to this mattter, has retired. He retired only 31st December 2013. The order on the notice of motion is of 19th November 2013. Mr. Deo’s retirement is also no ground to further adjourn this matter.

notice issued issued before the present assignment began. A warn list of all pending matters assigned to this Court was also available. In any event, the defendant could not have been unaware that the suit would be listed for ex- parte hearing after the dismissal of their notice of motion. The defendant ought to have taken whatever steps were needed to obtain a stay or any other suitable order from a appellate Court. If the defendant chose not to do so, it has only itself to blame. The approach and attitude of the defendant, that it can proceed at its own convenience, must be decried in the strongest possible terms.

6.Mr. Palan, learned advocate for the plaintiffs is justified in contending that there is no ground made out for adjournment of this matter and that the plaintiff is entitled to a decree as prayed for.

7.I have heard Mr. Palan for the plaintiffs and, with his assistance, gone through the documents that have been relied upon by the plaintiffs, a compilation of which is tendered, taken on record and marked Exhibit “P-1” (colly).

8.The plaintiffs’ case is that the defendant advertised for the sale of a immovable property described in Exhibit “A” to the plaint. This is a tract of land, Gat Nos. 11/1/2A and 11/2, admeasuring about 8000 sq mts, at Village Birdawadi, in Pune District. That property originally belonged to one Penwin Cables Ltd (“Penwin”), which had mortgaged it to the defendant as security for certain finance facilities extended by the defendant.

9.Penwin defaulted in repayment of its dues to the defendant. The defendant exercised its powers under section 29(1) of the State Financial Corporations Act, 1986 and took possession of the property and put it to sale. It issued a public advertisement inviting offers. The plaintiffs made an offer to

purchase the property along with the plant and machinery for Rs.36 lakhs. At the defendant’s instance, this bid was increased to Rs.81 lakhs. The plaintiffs’ offer of Rs.81 lakhs was accepted by the defendant on 23rd March 1999. The plaintiffs paid Rs.3 lakhs as earnest money. They were to pay Rs.24,30,000/- (30% of the offer price) within 30 days of the acceptance of their offer and the remaining Rs.53,70,000 in six installments from 15th May 1999.

10.The plaintiffs claim that they had made it clear from the beginning that, notwithstanding anything in the defendant’s acceptance letter, any defect, material or otherwise, in the title of the property had to be disclosed, whether or not the defendant was the purchaser. The plaintiffs had enhanced their offer only to ensure that they obtained an encumbrance-free title to the property. The plaintiffs offered to issue a public advertisement putting third parties to notice of the intended sale. The defendant refused to accept this request and demanded the second instalment of Rs.24,30,000/-.

11.The plaintiffs claim that they informed the defendant of the plaintiffs’ apprehension of certain sales tax liabilities of Penwin that were likely to be an encumbrance on the title to the property. The plaintiffs contend that at a joint meeting the defendant’s representatives assured the plaintiffs that the title to the property would be clear and that the plaintiffs would be protected against any such claims. The defendant’s assurance to the plaintiffs was conveyed in the defendant’s letter of 10th June 1999. On the basis of that assurance, the plaintiffs paid a further amount of Rs.24,30,000/- as required to the defendants on 8th July 1999. The plaintiffs has thus paid 30% of the purchase price. In the covering letter of 8th July 1999 by which the plaintiffs sent their cheque for the second amount, the plaintiffs made it clear that a clause regarding the freeing of the property from Penwin’s sales tax liabilities was to be incorporated in the agreement for sale. The defendant accepted this payment. The plaintiffs’ cheque was deposited.

12.The plaint narrates the considerable correspondence that then ensued. The defendant delayed execution of the agreement. The draft or drafts of the agreements prepared by the defendants did not incorporate suitable clauses protecting the plaintiffs from the apprehended sales tax liabilities. This correspondence continued without resolution till 17th August 2000 when the defendant sent a legal notice to the plaintiffs forfeiting the amounts paid by the plaintiffs (Rs.27,30,000/- in the aggregate) and informing them that the property would be resold, and that the plaintiffs would be liable for the shortfall, if any. The plaintiffs responded, disputing the defendant’s right to forfeit the amount and offering to make a one-time payment of the balance (instead of paying it in instalments as earlier agreed), but on condition that the title to the property was assured to be unencumbered. It is the plaintiffs’ case that till the time of filing the suit, the defendant has not fulfilled its obligations as agreed. It wrongly forfeited the amounts paid by the defendant.

13.The plaintiffs on this basis claim to be entitled to a refund of Rs.1,00,08,08,000/-. The particulars on this claim are set out in Exhibit “O” to the plaint and include interest on the amount paid by the plaintiffs. The plaintiffs have also sought an amount of Rs.68,00,000/- as damages.

14.On a perusal of Exhibit “O” to the plaint, it appears that there is a typographical error in prayers (c) and (d). Prayer (c), which is for a refund, should be in the amount of Rs.40,08,000/-. Prayer (d) which is for damages, should be for an amount of Rs.68,00,000/-. The claim of Rs.68,00,000/- is for interest, computed at 24% per annum. By any standard, this is much to high. This is not a contractually agreed rate of interest, nor is there any evidence to show that this was the prevailing rate at the relevant time. Mr. Palan, in fairness, submits that the rate of interest can be left to the discretion of the court.

15.Mr. Palan submits that in any view of the matter, he is entitled to a decree forthwith in view of the provisions of Order 8 Rule 10 of the Code of Civil Procedure, 40,08,000/-. Mr. Palan is justified in this contention. However, here, too, the claim for interest for the period prior to the date of the suit is at 24 per cent. There is no agreement about this rate of interest either. The amount paid by the plaintiffs as purchase consideration is Rs.27,30,000/-. The plaintiffs are entitled to a decree for a refund of the amount Rs.27,30,000/- with interest upto the date of the suit and with further interest thereafter. The amount of Rs.27,30,000/- was paid in two tranches of Rs.3,00,000 (paid on 12th September 1998) and Rs.24,30,000/- (paid on 12th June 1999). The suit was filed on 10th May 2001. The suit is within time.

Johnson Cables Pvt.Ltd. v. Sicom Ltd.

Case brief

What is this about?

What did the court decide?

Johnson Cables Pvt.Ltd. v. Sicom Ltd.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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Case details

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