This court held the drawer (2nd defendant) not liable on a bill of exchange where the acceptor (1st defendant) derived the benefit. The suit was decreed against the acceptor alone with interest at 18% per annum.
Suit decreed against 1st defendant for Rs.25,00,000/- with interest at 18% p.a.; suit against 2nd defendant dismissed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 25.01.2018
CORAM
THE HONOURABLE MR.JUSTICE R.SUBRAMANIAN
C.S.No.899 of 1998
India Cements Capital Ltd.,
(Formerly Aruna Sugars Finance Ltd.,)
No.59, Sterling Road,
Nungambakkam, Chennai – 600 034.
[Amendment carried out as per
the order dated 19.07.2010 in
A.No.2239 of 2010]
... Plaintiff
Versus
1.Firenze Shoes (P) Ltd.,
158, Ganapathy Street,
Pallavaram, Chennai – 600 017
also at 38, Mount Road,
Guindy, Chennai – 500 032.
2.Lords Shoe Makers (P) Ltd.,
DP 34 [SP] Industrial Estate,
Guindy, Chennai – 600 032.
... Defendants
Plaint filed under Order VII Rule 1 of Civil Procedure Code read with Order IV Rule 1 of Original Side Rules praying to pass a judgment and decree
2
against the defendants:
a) for a sum of Rs.44,27,500/- together with interest
on the principal sum of Rs.25,00,000/- at 36% per annum from this date till date of realisation and
b) for costs of the suit.
For Plaintiff : Mr.M.R.Gokul Krishnan
For Defendants : Mr.Baskar
J U D G M E N T
The suit is for recovery of dues under a bill of exchange dated
05.02.1996.
The averments in the plaint are as follows:
as Aruna Sugars Finance Ltd., provided financial assistance to the 1st defendant for purchase of certain goods from the 2nd defendant to the tune of Rs.22,96,944/-. The said sum of Rs.22,96,944/- was paid by the plaintiff to the 2nd defendant at the instance of the 1st defendant. As an acknowledgment of the said payment, the 1st defendant executed a bill of exchange, admitting the borrowing and accepting to pay a sum of Rs.25,00,000/- at 90 days time.
3
endorsement “Always Door Locked” and “Refused”.
bill, and the 2nd defendant as Drawer are jointly and severally liable for the amount due to the plaintiff. The plaintiff states that the name of the Company “Aruna Sugars Finance Ltd.,” was changed into “India Cements Capital and Finance Ltd.,” on 02.05.1997 and as such the plaintiff is entitled to sue for recovery of monies due under the bill dated 05.02.1996.
It is seen that the name of the plaintiff was changed as India Cements Capital and Finance Ltd., after filing of the suit and hence the plaintiff
4
amended the plaint, by correcting the cause title, by an order dated 19.07.2010 in A.No.2239 of 2010.
is not maintainable. It is claimed that the 1st defendant alone has borrowed money from the plaintiff for the purpose of purchasing materials from the 2nd defendant. As the Borrower of the money, it is only the 1st defendant which is liable to return the money and the 2nd defendant, as the Drawer of the bill of exchange is not liable to make payment. It is claimed that the 1st defendant has been incurring loss due to severe recession in the Textile Industry and the net worth of the Company has been totally eroded.
Reconstruction (BIFR) under the provisions of the Sick Industrial Companies (Special Provisions) Act and the same was registered as Case No.8 of 2000. It is also claimed that the suit cannot be proceeded with in view of the prohibition contained in Section 22 of the Sick Industrial Companies (Special Provisions) Act. On merits it is contended that the rate of interest is abnormally high and is in violation of law.
5
liable for the suit claim. It is only the 1st defendant which is liable as acceptor of the bill of exchange and not the 2nd defendant, Drawer of the bill of exchange.
1.Whether the suit transaction is true and binding upon both the defendants?
2.Whether both the defendants are liable to pay the suit amount or only by the 1st defendant for the reasons stated in the written statement?
3.To what reliefs the plaintiff is entitled to?
plaintiff Company was examined as PW1. He has produced Exs.P1 to P21.
One Mr.Rajasekaran, S/o. SriRamulu, authorised representative of the 1st defendant Company has been examined as DW1 and he has produced Ex.D1.
plaintiff and Mr.Baskar, learned counsel for M/s.Kumar and Baskar for the defendants.
Issue No.1:
6
the pleadings it could be seen that the defendants have admitted the suit transaction, they have not disputed the same. The claim now made is that the plaintiff has not produced the original of the bill of exchange dated 05.02.1996. An application was taken out by the plaintiff seeking permission
to produce the xerox copy and the same was allowed by this Court subject to a rider that the objection raised by the respondents should be considered
at the time of trial.
the xerox copy of the bill of exchange dated 05.02.1996, on the basis of the objection that it is only the xerox copy that is sought to be produced.
Hence, the documents filed by the plaintiff which are admitted by the defendants are accepted as secondary evidence of the transaction.
7
1st defendant is not denied and the factum of the execution of bill of exchange by the 2nd defendant and its acceptance by the 1st defendant is also not denied. All that is pleaded in the written statement of the 1st defendant is that the 2nd defendant cannot be made liable. The 2nd defendant in its written statement would contend that as supplier of the goods it cannot be made liable for the non-honouring of the bill of exchange
by the 1st defendant.
Issue No.2:
8
of the plaintiff.
Issue No.3: To what reliefs the plaintiff is entitled to?
establish that the defendant had agreed to pay interest at 36% per annum.
9
25.01.2018
dsa
Index : No
Internet : Yes
Speaking Order
10
List of the witnesses examined on the side of the plaintiff :
PW1 - Mr. Venkataraman
List of Exhibits marked on the side of the plaintiff:
| Sl. | Exhibits | Description | Dated |
|---|---|---|---|
| No. | |||
| 1 | Ex.P1 | Xerox copy of the invoice for the supply of shoes. |
27.01.1996 |
| 2 | Ex.P2 | Xerox copy of the Bill of exchange. | 05.02.1996 |
| 3 | Ex.P3 | Xerox copy of certificate for change of Name. | 02.05.1997 |
| 4 | Ex.P4 | Letter from the Managing Director, Firenze Shoes Ltd., |
01.09.1997 |
| 5 | Ex.P5 | Xerox copy of the Notice. | 20.10.1997 |
| 6 | Ex.P6 | Letter from the Firenze Shoes Ltd., | 23.03.1998 |
| 7 | Ex.P7 | Copy of the Letter from the Manager- Corporate Finance, India Cements Capital & Finance Ltd., |
25.03.1998 |
| 8 | Ex.P8 | Copy of the Letter from the Manager- Corporate Finance, India Cements Capital & Finance Ltd., |
05.06.1998 |
| 9 | Ex.P9 | Letter from the Managing Director, Firenze Shoes Pvt. Ltd., |
20.06.1998 |
| 10 | Ex.P10 | Copy of the Letter from the Manager- Corporate Finance, India Cements Capita & Finance Ltd., |
26.06.1998 |
| 11 | Ex.P11 | Copy of the Letter from the Manager- Corporate Finance, India Cements Capita & Finance Ltd., |
09.06.1998 |
| 12 | Ex.P12 | Letter from the Managing Director, Firenze Shoes Pvt. Ltd., |
16.06.1998 |
| 13 | Ex.P13 | Copy of the Letter from the Manager- Corporate Finance, India Cements Capita & |
24.07.1998 |
11
| Sl. No. |
Exhibits | Description Dated |
|---|---|---|
| Finance Ltd., | ||
| 14 | Ex.P14 | Copy of the Letter from the Manager- Corporate Finance, India Cements Capita & Finance Ltd., 25.07.1998 |
| 15 | Ex.P15 | Copy of Notice from the Manager-Legal, India Cements Capita & Finance Ltd., 10.09.1998 |
| 16 | Ex.P16 | Returned covers and acknowledgment cards. -- |
| 17 | Ex.P17 | Statement of Accounts. 10.11.1998 |
| 18 | Ex.P18 | Xerox copy of Power of Attorney. 07.06.2011 |
| 19 | Ex.P19 | Xerox copy of Board Resolution. 22.10.2007 |
| 20 | Ex.P20 | Xerox copy of Letter. 11.02.1998 |
| 21 | Ex.P21 | Xerox copy of BIFR Order. 02.07.2012 |
| List o | f the witne | sses examined on the side of the Defendants : |
| DW1 | - Mr.Raj | asekaran |
| List o |
f Exhibits |
marked on the side of the Defendants: |
| Sl. | Exhibits | Description Dated |
| No. | ||
| 1 | Ex.D1 | Letter of Authorisation given to DW1 18.06.2016 |
| dsa | 25.01.2018 |
12
R.SUBRAMANIAN, J.
dsa
C.S.No.899 of 1998
25.01.2018
2 issues framed by the court
Whether both defendants are liable to pay the suit amount?
Whether the plaintiff is entitled to interest at 36% per annum?
R. Subramanian
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
