1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. Chamber Summons No.28 of 2008 IN Summary Suit No.1837 of 2003 Indira Sethi ... ... ... Plaintiff v/s. M/s.Jayantilal Khandwala & Sons & 3 ors. ... ... ... Defendants WITH Chamber Summons No.29 of 2008 IN Summary Suit No.469 of 2003 Jyoti Sethi ... ... ... Plaintiff v/s. M/s.Jayantilal Khandwala & Sons & 3 ors. ... ... ... Defendants WITH Chamber Summons No.30 of 2008 IN Summary Suit No.1536 of 2003 Varij S. Sethi .. .. .. Plaintiff v/s. M/s.Jayantilal Khandwala & Sons & 3 ors. .. .. Defendants 2 Chamber Summons No.733 of 2008 IN Summary Suit No.469 of 2003 Jyoti Sethi ... ... ... Plaintiff v/s. M/s.Jayantilal Khandwala & Sons & 3 ors. ... ... ... Defendants WITH Chamber Summons No.734 of 2008 IN Summary Suit No.1837 of 2003 Indira Sethi ... ... ... Plaintiff v/s. M/s.Jayantilal Khandwala & Sons & 3 ors. ... ... ... Defendants WITH Chamber Summons No.736 of 2008 IN Summary Suit No.1536 of 2003 Varij S. Sethi .. .. .. Plaintiff v/s. M/s.Jayantilal Khandwala & Sons & 3 ors. .. .. Defendants Mr.Kishore Jain with Mr.Sanjay Jain, Mr.Tushar Goradia, Ms.M. Mohantey and Mrs.S.T. Shaikh i/by M/s.S.K. Srivastav & Co. for the Plaintiffs/Decree- holders. 3 Mr.Vivek Kantawala i/by M/s.Kantawala & Co. for the Defendants / J u dgment- debtors. ------ CORAM : SMT.ROSHAN DALVI, J. DATED : 15 th July, 2008 P.C. : 1. These are three Summary Suits filed against the same Defendants and/or their sister concerns. The Suits came to be decreed pursuant to a decree on admission dated 25 th January 2005, under which the Defendants agreed to jointly and severally pay to the Plaintiffs the entire amount as prayed along with interest at 18% per annum from 5th May 2003 till realization and the costs of the Suits. However, by a concession, the Plaintiffs agreed that if the Defendants pay Rs.25 Lacs in 48 equal installments of specified figures with interest at 7% per annum upto the date of the installments on the principal amount then outstanding on reducing basis without committing more than two defaults, the decree would be marked fully satisfied. 2. The first installment was payable on 1.1.2006. The Defendants were to issue TDS Certificates for the interest payment. 4 3. If the Defendants made more than two defaults, the Court Receiver was to be appointed in execution and he would take possession first of the office premises and then of the residential premises of the Defendants in execution of the decree for the entire decretal amount, firstly towards interest and thereafter towards the principal amount by the sale of the Defendants’ offices and thereafter the Defendants’ residential flat. 4. Two Chamber Summons have been taken out in each of the aforesaid Suits by the Defendants / J u dgment Debtors. One is for marking the Decree on Admission passed in the above Suits, fully satisfied and the other is for the appointment of the Court Receiver got appointed by the Plaintiffs cancelled and for incidental reliefs. 5. The Defendants made the first default on 1.1.2006 itself. The very first installment was admittedly paid on or about 2.1.2006. Even the amount of interest payable on the installment of the specified liquidated amount was not calculated correctly at 7% on the principal amount then due. 6. This was the first and until then the only default. 5 7. The Defendants admittedly made a further default on 1.2.2007. That was election day. The Plaintiffs’ office was closed. The Defendants sought to tender their installment cheque. It could not be tendered. They tendered it a day thereafter. That was not strictly as per the schedule agreed by the parties. Hence, that was the second default committed by the Defendants in the payment of installment of the liquidated principal amount and the interest at 7% on the principal amount then outstanding. 8. This was until then the second default. 9. The Defendants have not made any further defaults. The Plaintiffs have not been able to show the specific date of the third default. 10. Nevertheless, the Plaintiffs sought to execute the decree on the premise that the entire decretal amount which is mentioned in Clause- 1 of the decree on admission which was the amount as prayed in the Suit became due and payable and that having not been paid, the Plaintiffs were entitled to execute the decree for the entire decretal amount as contemplated in 6 Clause 10(i) of the decree on admission and got Court Receiver appointed for that purpose under Clause 10 (iii) of the decree on admission. 11. It is the Plaintiffs’ contention that the Defendants made the first three defaults on 1.1.2006, 1.2.2006 and 1.3.2006, which were the first three dates for the payment of installments under the decree on admission. Mr.Jain argued that that was because since the first installment amount was sought to be tendered with an incorrect rate of interest being 7% on the amount of the installment and not 7% on the principal amount then outstanding, the balance amount which remained payable towards the interest came to be due and payable and since that was the reducing balance amount then due in the next month, which was not paid off in the next month, there is a default in the payment of the second installment in the very next month itself by payment of an amount less than the amount of the principal amount then due and the interest at 7% thereon. Similar is the argument for the third installment. It is the Plaintiffs’ contention that since the first installment was paid not on 1.1.2006 but on 2.1.2006, the Plaintiffs’ Advocates by their letter dated 3.1.2006 informed the Defendants of 7 the first default committed and upon realizing that even the amount of interest paid is lesser than the agreed rate of interest then called for calculations of the interest amount paid by the Advocates’ letter dated 4.1.2006 and thereafter by a further letter of their Advocates dated 16.1.2006, they clarified to the Defendants’ Attorneys that the interest was calculable on the principal amount of Rs.25,000/- and not on the installment amount. 12. It is the Plaintiffs’ case that despite this letter the Defendants did not pay off the remainder of the interest and, therefore, that amount fell in the next installment as the additional amount payable. 13. It is on this basis that the Plaintiffs contend that there have been three defaults in the first three installments itself and the decree became executable, but the Plaintiffs did not execute the decree immediately thereafter which they were entitled to. 14. It may at once be stated that the construction put on the decree on admission by the Plaintiffs is entirely misconceived. A default is necessarily an overt act of a fault, omission, neglect, failure to do a particular act 8 by the Defendants. The defaults, which are contemplated in payment of the installments, can never accrue due upon the calculation of some party. It necessarily has to be upon independent faults, denoting omissions by the party liable to perform a particular act viz. to make payment of the installments of the agreed rate. 15. The Plaintiffs’ Advocates, by their letter dated 31.5.2007 addressed to the Defendants, have explained by way of a chart how the defaults came to be. The very first installment of the principal amount together with the interest as aforesaid dated 1.1.2006 shows two defaults committed. It is inconceivable that in the first installment two defaults can be committed though two specified faults or omissions or wrongful acts of the Defendants could have been committed resulting in a default in payment of that installment. The plurality of the defaults is, therefore, ruled out in case of a single installment. The Plaintiffs’ contention that one default was the delay in payment by a day or two and the other default was the payment of lesser amount of interest cannot be accepted. 9 16. Further contention of the Plaintiffs that because the deficit in the interest amount was not made good in the same month and before the second installment became due and payable and the second installment paid was correctly paid only for the amount payable on the second installment date, there has been a chain reaction of the defaults in payment of interest by the first deficit amount having remained unpaid by the Defendants also cannot be accepted. 17. The construction of decree on admission is, therefore, required to be made. Clause- 4 of the decree on admission grants the Plaintiffs the concession to commit two defaults. It makes the decree executable as prayed for the decretal amount only if the Defendants committed “ more than two defaults”. 18. The kinetic flow of the interest would contemplate that the three defaults would be consecutive. The decree does not show a bar for committing two consecutive defaults. Hence, any two defaults by the Defendants are allowed. Not more than two defaults are allowed. The Defendants, therefore, cannot commit any three independent separate acts of defaults. If they do that, 10 that would be on pain and penalty of the decree becoming executable. 19. It is, therefore, neither reasonable nor just to construct the decree on admission as having in it any implied default. 20. This position can be explained by way of an illustration. If the Defendants had failed and neglected to pay anything or before 1.1.2006 but made the first installment on 1.2.2006, they would have committed one default. Having paid the second installment on 1.2.2006 as contemplated in Clause- 4 of the liquidated principal amount and the interest at 7% on the principal amount then outstanding due, they would not have committed the second default. Consequently, and as a matter of corollary, it is seen that if they had paid the liquidated principal amount of the installment and a lesser amount of interest, the principal amount then outstanding due would have been as calculated by the parties for the reducing balance each month. Clause- 4, therefore, cannot be read to include that the lesser amount of interest paid in the earlier installment could have a kinetic effect on the next installment, because the next interest amount would be calculable 11 only on the principal amount then outstanding on the reducing balance basis. 21. Of course, if interest amount was not paid on such principal amount then outstanding due though the amount of the principal and the lesser amount of interest was paid on or before due date, there would be a default in the installment and no further. 22. It is argued on behalf of the Plaintiffs that the Court Receiver came to be appointed by Justice Vazifdar to take formal possession of the property of the Defendants without security or royalty on 18th January 2008 in the Chamber Summons taken out by the Plaintiffs. However, the Chamber Summons of the Defendants came to be heard by Justice Dharmadhikari on 7.4.2008. In that order, he has observed that there was marginal delay which has occurred not on account of any negligence or lack of bonafides but purely on account of miscalculation of the amounts that have to be paid. The “amounts” relate to the amounts payable in the three Suits by and between the Plaintiffs and the same set of Defendants. The Defendants’ Advocate made a statement before the Court that the Defendants would deposit in each of the 12 Suits the summons that are due and payable along with interest within three weeks as per the Consent terms/Decree on admission. It must be noted that the Defendants’ Advocate did not make a statement that the Defendants would pay the entire decretal amount together with interest as per Clause- 1 of the Consent Terms. He made a statement that the Defendants would pay the amounts which were “due and payable” thereunder. 23. It is contended by Mr.Jain that this statement meant that they were payable under Clause- 1 of the Consent Terms because if there were no three defaults, the Defendants would not require to make any further payment and no further payment would become due and payable at that time. If however there were three defaults the entire decretal amount would become due and payable and that only could have been paid within three weeks. In the normal circumstances, within the next three weeks or so, only the next installment payment would become due and payable. 24. This argument may be attractive. Indeed, it is as misconceived as the earlier argument. However, a mere statement of the Defendants’ Advocate to offer to 13 pay even if no defaults are seen to be committed on proper construction of the Consent Terms can itself not go against the Defendants’ case and the true interpretation of the Consent Terms. 25. The statement of the Defendants’ Advocate came to be accepted by the Court and a further rider came to be added in the order that deposit was without prejudice to the rights of the Plaintiffs and if the Defendants did not comply with that statement, execution would proceed. If the Defendants defaulted in the compliance of that statement, the decree would become enforceable and executable and the Court Receiver would proceed to dispose of the property of the Defendants towards the decretal dues. 26. This default also was the default, if made, in the payment of the sums that were due and payable along with interest within three weeks from the date of that order. The Defendants did make payment of what they called the sums due and payable. It is the Plaintiffs’ contention that they did make payment of certain sums but that was not the entire amount due and payable as the decretal amount under Clause- 1 of the Consent Terms. 14 27. Mr.Jain drew my attention to the praecipe of the Defendants’ Attorneys dated 25.4.2008 in which they sought to make payment of the “entire outstanding amount” as per the decree on admission dated 25.1.2005. Mr.Jain contended that the entire outstanding amount could be nothing but the entire decretal amount under Clause- 1 of the decree on admission. 28. Mr.Kantawala on behalf of the Defendants contended that the entire outstanding amount was the amount of all further installments payable by the Defendants in the further months along with interest as agreed under Clause- 4 of the Consent Terms on the reducing principal amount. The amounts are paid as such. 29. Consequently, the Defendants have paid the remaining 13 installments of the liquidated principal amount. They have paid interest of the three months from the date of the order on such principal amount. They have also paid the shortfall which was the deficit of the first installment and they have paid the interest on the first installment for 851 days which was from 1.1.2006 to the date they made payment. The Defendants’ 15 Advocate contends that consequently all the sums “due and payable” along with the interest came to be paid within three weeks from the date of the order i.e. 7th April 2008. He contends that thereafter nothing remained due and payable under Clause- 4 of the decree on admission. Installments came to be paid off much earlier than as agreed between the parties without the three defaults allowed to the Defendants. 30. The Plaintiffs are not satisfied much like shylock. The Plaintiffs have accepted, albeit without prejudice, all the aforesaid amounts aggregating to approximately Rs.44 Lacs in each of the aforesaid Suits but claim that they are entitled to the entire decretal amount with interest at 18% per annum (instead of 7% per annum) on the premise of three defaults accepted by the Defendants to have been made, the statement of their Advocate for paying off the entire decretal amount for which they were given three weeks by the Court by way of a further concession and a default made even thereunder. Consequently, whereas the Plaintiffs seek to enforce the decree, the Defendants seek to stay the appointment of the Court Receiver and the further claim of the Plaintiffs. 16 31. It is clear that there are no three defaults committed by the Defendants. It is also seen that the Plaintiffs, sharp as they are, have sought execution of the decree. The Defendants were under the pain of having a Court Receiver already on their premises appointed since 18th January 2008. Consequently, it is reasonable to accept that for having Court Receiver removed from the premises they offered to make payment of all the further installments due and payable along with interest under the Consent Terms/Decree on admission. None can read into that statement that the offer to make payment is only under Clause- 1 of the Consent Terms/Decree on admission as contended on behalf of the Plaintiffs. The circumstances show the intent of the Defendants. The Defendants have acted in terms of the statement of their Advocate which followed their intent. Consequently, the entire outstanding amount under the decree, which was under further 13 installments, came to be paid off as the amounts due and payable as per that decree. 32. It may be mentioned that the statement contained in the order dated 7.4.2008 does not show that what was due and payable as on that date would be paid off within three weeks from that date. What was 17 specifically stated was that the sums, which were due and payable as per the decree on admission, would be paid off within three weeks. The consideration for the early payment was the removal of the Court Receiver from their premises. 33. Hence, the term “entire outstanding amount” must be read in conjunction with the decree on admission read as a whole which would mean and impute the entire outstanding amount payable under the decree as agreed between the parties which was to be paid by installment as agreed by them of specified principal amount and interest at a lesser rate of 7% on the reducing balance of the principal amount as per the decree on admission. 34. It is seen that the Defendants have complied with, not only substantially but completely, the statement made by their Advocate. Consequently, the rider in the order dated 7.4.2008 cannot come into force and be in force. There is, therefore, no question of executing proceedings against any of the Defendants. There is also no question of the decree becoming enforceable and executable since there is no default. There is similarly no question of the Court Receiver proceeding 18 to dispose of the immovable properties of the Defendants. 35. Mr.Jain argued that since there was an effect of the lesser interest amount of the first installment being taken towards the calculation of the interest and/or the principal amount in the later installments, the Plaintiffs accepted each of the installments specifically without prejudice to their rights and contentions. The Defendants’ Attorney tenders xerox copies of the letters showing the Plaintiffs’ Advocate’s stand with signatures and date showing the receipt of the amounts without any such endorsement. His statement to Court that copies tendered are true copies of the originals is recorded. It may be mentioned that the Advocates’ offices only accept letters by their stamp showing the date, time and signature of the receipt. No correspondence is accepted in Advocate’s office mentioning whether it is with or without prejudice. 36. Consequently, it is seen that the Defendants have complied with the decree on admission. Decree is to be marked fully satisfied. The Court Receiver stands discharged. The Plaintiffs shall give No Dues Certificate to the Defendants. 19 37. The Chamber Summonses in the aforesaid three Suits are disposed of accordingly. (SMT.ROSHAN DALVI, J.) 20