1sj-4-10 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUMMONS FOR JUDGMENT No.4 of 2010 IN SUMMARY SUIT No.2802 of 2009 M/s Global Trade Finance Ltd. .. Plaintiffs. versus M/s Kaytee Corporation Pvt Ltd. and others. .. Defendants. Mr Chirag Balsara, Rajesh Talekar a/w M.V. Gaurav G. Pandharkane i/by Ashar & Co. for the Plaintiffs. Mr Ravi Kadam, Advocate General a/w Dr Birendra Saraf a/w Mr S.K.Chari for defendant Nos. 1 and 2. CORAM:- S.C.DHARMADHIKARI,J DATED :- 9th December, 2010. L 2sj-4-10 P.C.:- 1. The plaintiffs have invoked provisions of Order XXXVII of the Code of Civil Procedure to recover sum of Rs.4,67,78,176.91, as per the particulars of claim being Annexure-R to the plaint, with interest at 18% per annum. Annexure-R to the plaint reads, thus: PARTICULARS OF CLAIM Towards amount jointly and severally payable by defendant Nos. 1 and 2 in respect of outstandings towards its Export Invoices 85% of US $ 1010989.40 being US $ 859340.99 x INR 48.16 Exchange Rate. Rs.4,67,78,176.91 ------------------------- Rs.4,67,78,176.91 With further interest on Rs. 4,67,78,176.91 @ 18% p.a.(LIBOR) +500 bps) on monthly rest till payment and/or realization. 2. Mr Balsara, learned counsel appearing on behalf of the plaintiffs, submitted that Order XXXVII of the C.P.C. has been invoked to recover a liquidated sum of money. Para 23 of the plaint reads, thus :- “The present suit is filed under Order XXXVII of the C.P.C.,1908 to recover a liquidated sum of money and is based on the Demand Promissory Note L 3sj-4-10 issued by Defendant No.1 and the Letter of Guarantee issued by the Defendant No.2 in favour of the plaintiffs which constitute a written contract between the Plaintiffs and the Defendants and no relief not falling within the scope and ambit of the Order XXXVII Rule 2 of the Code of Civil Procedure, 1908 is claimed in the present suit”. 3. At the out set and in all fairness, it must be stated that Mr Balsara, learned counsel appearing for the plaintiffs, submits that the plaintiffs were approached by defendant No.1-Company and defendant No.2 who is Director of Defendant No.1 for Trade Finance Facility. That Trade Finance Facility was sanctioned as per the sanction letter dated 6.2.2008 and the terms of such sanction have been duly acknowledged, approved and accepted by defendant No.1. Thereafter, defendant No.1 executed the documents mentioned in para 4 of the plaint. In para 5, it is said that for the purpose of securing the repayment of the said Facility, the defendant No.2 had issued, an irrevocable and unconditional, joint and several guarantee in favour of the plaintiffs on 15.2.2008 (Annexure-D). It is, then, submitted that the modifications to the terms of Letter of Sanction were also agreed to and the charges including interest @ 2% per annum, as L 4sj-4-10 over due interest, was also accepted. Mr Balsara submitted that essentially suit is based on 85% of the payment made by the plaintiffs in pursuance of the said facility of the Invoices mentioned in para 9 of the plaint. 4. It is submitted that foreign buyer M/s 4004 Incorporated filed for protection under Chapter 11 and, therefore, the plaintiffs were left with no option than to freeze the limits of the first defendant on account of the above action. Therefore, Mr Balsara submits that in terms of the Letter of Sanction and the conditions of the agreement in that behalf, the plaintiffs were entitled to recover the amount under subject Invoices from the foreign buyer and in default of the foreign buyer, thereafter the first defendant was obliged to assist the plaintiffs in recovering the sum or if the plaintiffs are unable to recover it, even by approaching their insurer, then, first defendant would pay the amounts, or the plaintiffs can enforce the guarantee executed by defendant No.2. 5. Shri Balsara submits that defaults were committed on account of the foreign buyer, M/s 4004 Incorporated, not making the payment and even the Insurer rejecting the claim of the plaintiffs. Further, breach was committed by the first defendant in approaching Export Credit Guarantee Corporation (ECGC) and despite the freezing of their account, L 5sj-4-10 representations made to ECGC, would show that the defendants were not interested in abiding by the terms and conditions. For all these reasons and pursuant to the letters of demand, as set out in paras 11 to 13, the claim has been summarized and it arises as has been pointed out in para 14, when the first defendant availed this facility, namely, Trade Finance Facility but failed to repay the amounts due thereunder, and, secondly, the defendants by executing guarantee failed to adhere to the terms and conditions contained therein. The payment has not made in spite of the demands raised by the plaintiffs. For all these reasons, he submits that this claim is maintainable under Order XXXVII of C.P.C. and all defences raised are merely to circumvent the liability which is admitted under the subject Invoices. Thus, it is moonshine and untenable. 6. On the other hand, Mr Kadam, learned Advocate General for the defendants, submits that this suit is not maintainable as Summary Suit. He invited my attention to para 23 of the plaint and paragraphs 9 to 14. It is submitted that none of these averments make out a case of the first defendant, committing breach of the terms and conditions of the agreement. The cause of action, as argued, is not what is pleaded. Now, it is stated that approaching ECGC was a default by the defendant No.1. However, when the account was freezed and export obligations were L 6sj-4-10 undertaken already, there was no alternative for the first defendant but to approach ECGC. In fact, entire sum of Rs.5 crore was never disbursed and only an amount of Rs. 4 crore was released and thereafter the account was suddenly frozen. Therefore, the first defendant had to approach the ECGC. Mr Kadam, learned Advocate General, also submits that terms of the agreement are clear inasmuch as right of the plaintiffs in the receivable goods is intact. If the right to recover amounts under the subject Invoices stands vested in the plaintiffs, then, going by the terms and conditions and, particularly, Clauses 3 to 6 and 8, it was incumbent for the plaintiffs to have pleaded as to how despite such measures and authority or power under the agreement, the plaintiffs failed to recover the amounts and even their Insurer failed to indemnify them. Something more was required to be pleaded and attributed so as to invoke summary jurisdiction. In any event, triable issues arise. He has invited my attention to the correspondence also. 7. After perusing the plaint, annexures thereto, and the affidavits placed on record, I am of the opinion that the defendants deserve unconditional leave to defend, principally on the ground that the plaintiffs invoke summary jurisdiction of this Court in pursuance of trade finance facility wherein they made payment of 85% aggregating to US dollar under the L 7sj-4-10 Invoices Exhs. H-1 to H-24, copies of which are annexed to the plaint. They pleaded that payment of the aforesaid Invoices was not received from M/s 4004 Incorporated and, therefore, the plaintiffs set out the amount and refer to the clauses of the Global Accounts Receivable Management Agreement. They further pleaded that in the event there was rejection of the claim of the plaintiffs by the foreign buyer, the amount can be recovered by defendant No.1. However, they failed to explain and without setting out further materials by which rejection of the claim entitled the plaintiffs to recover the amounts from the defendants that the summary jurisdiction could not have been invoked. This itself is a triable issue and at the same time it is pleaded that there is violation committed by defendant No.1 in respect of the terms of sanction. The Insurer vide email dated 24.9.2008 has rejected the claim of the plaintiffs. However, this rejection also entitles the plaintiffs to make the demand on the defendants and to invoke also the guarantee given by defendant No.2 should have been specifically pleaded. Possibly something could have been said in their favour but assertions in the pleading regarding the breach is also in approaching the ECGC. The assertions in the affidavit in rejoinder, to my mind, are beyond the statements made in the plaint. That would make out a case of unconditional leave, as triable issues arise on account of these L 8sj-4-10 statements. 8. In the result, the summons for judgment fails and the defendants are granted unconditional leave to defend the suit. The Suit is transferred to the list of commercial causes, with usual directions to file W.S.,discovery and inspection. The Summons for Judgment is, accordingly, disposed of. Considering nature of the claim there will be no order as to costs. (S.C.DHARMADHIKARI,J) L