1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. SUMMONS FOR JUDGMENT NO.380 OF 2003 IN SUMMARY SUIT NO.2647 OF 1998 Mahindra & Mahindra Ltd. ..Plaintiff. Vs. NEPC Micon Ltd. ..Defendant. .... Mr. K.H. Mody i/b JMB Partners for the Plaintiff. Mr. R.A. Pardiwala i/b Mulla & Mulla for the Defendant. .... CORAM : DR. D.Y. CHANDRACHUD, J. 18th August, 2009. P.C. : 1. The Plaintiff granted a bill discounting facility to the Defendant. A Bill of Exchange drawn by M/s. Natural Energy Processing Company and accepted by the Defendant was duly discounted by the Plaintiff. As against an amount of Rs.1 Crore which was the value of the bill, an amount of Rs.93,59,870/- was paid to the Defendant after deducting the bill discounting charges, calculated at the rate of 25% per annum. A cheque was issued in the amount of Rs.93,59,870/- on 6th November, 2 1995. A resolution was passed by the Defendant on 18th October, 1995 for availing of short term fund assistance to the extent of Rs.1 Crore from the Plaintiff by way of bill discounting. A post dated cheque issued by the Defendant came to be dishonoured on presentation and a memo of dishonour was issued by the Canara Bank on 13th March, 1996. The Defendant had also accepted a Hundi drawn by Natural Energy Processing Company on 6th November, 1995 which was payable to the Plaintiff in the sum of Rs.1 Crore. A promissory note dated 26th October, 1995 was also accepted by the Defendant. 2. By a letter dated 3rd November, 1995 the Defendant had expressly acknowledged the bill discounting facility in the amount of Rs.100 lacs at the rate of 25% for a period of ninety days. On 5th February,1996 the Defendant sought to excuse the delay on its part in repaying the amount due under the bill discounting facility on the ground of its financial constraints. By a further letter dated 13th March, 1996 the Defendant sought a roll over of the facility for a further period of ninety days. An amount of Rs.20 lacs was paid by two demand drafts each of Rs.10 lacs 3 on 16th March, 1996 and 4th April, 1996. By a letter dated 17th April, 1996 the Defendant acknowledged that an amount of Rs.80 lacs was due and payable and assured that the payment would be made in the first week of May 1996. This was followed by a further acknowledgment on 9th May, 1996. The monies have not been paid. 3. The suit came to be instituted as a summary suit under Order 37 of the Code of Civil Procedure. The Plaintiffs took out a Summons for Judgment being Summons for Judgment 1177 of 1999. The Summons for Judgment came to be withdrawn on 18th February, 2002 with liberty reserved to take out a fresh Summons for Judgment after the Plaint was amended. The amendment of the plaint was carried out on 7th January, 2003 and a fresh Summons for Judgment came to be instituted on 23rd April, 2003. The Summons for Judgment was dismissed in default and was restored to file by an order dated 27th July, 2009 subject to the payment of costs. Costs have been paid. 4. Three defences have been raised in response to the Summons for 4 Judgment at the hearing of the application. Firstly, it has been submitted that there was a delay in amending the Plaint after the order of the Court dated 18th February, 2002. The Plaint was amended only 11 months thereafter on 7th January, 2003. It has also been urged that the Summons for Judgment was not taken out within a period of six months as specified in the High Court (Original Side) Rules. Secondly it has been urged that this Court would have no jurisdiction to entertain and try the suit. Thirdly, it has been submitted that in the particulars of claim the Plaintiff has calculated interest at the rate of 30% per annum on which there is no agreement. 5. Insofar as the question of delay is concerned, it would be necessary to note that the earlier Summons for Judgment was taken out in 1999. The suit was instituted in 1998. Rule 227 of the High Court (Original Side) Rules confers an enabling power upon the Court, if the Plaintiff does not apply for a decree within six months after the filing of the Plaint, to set down the suit for dismissal and to thereupon dismiss the suit. As the Full Bench of this Court held in Bankay Bihari G. Agrawal v. M/s. 5 Bhagwanji Meghji1 : “A delay in taking out Summons for Judgment beyond the period of 6 months prescribed by Rule 227 does not automatically entitle the defendant to unconditional leave to defend the suit; but it is a relevant factor to be considered in conjunction with the nature of the defence while granting conditional or unconditional leave to defend the suit or refusing the application for leave to defend.” The provisions of Rule 227 confer a discretion on the Court on whether or not the suit should be dismissed. In the present case, the Plaintiff took out a Summons for Judgment which was allowed to be withdrawn on 18th February, 2002 with liberty reserved to take out a fresh Summons for Judgment after the Plaint was amended. From the record it emerges that the amendment was carried out on 7th January, 2003. The delay is certainly not of a nature that would non suit the Plaintiff or entitle the Defendant to unconditional leave to defend. 6. Insofar as the question of jurisdiction is concerned, it would be necessary to note that in paragraph 26 of the Plaint it has been averred that the Plaintiff had disbursed the fund from Mumbai; that part 1 2001(1) Mh.L.J.345. 6 payments in pursuance of the obligation of the Defendant have also been made in Mumbai and that a substantial part of the cause of action has arisen within the territorial jurisdiction of this Court. However, inasmuch as the registered office of the Defendant is situated at Chennai and one of the cheques that was issued was deposited in the Chennai Branch of the Plaintiff’s bankers, leave was sought under Clause XII of the Letters Patent. Leave was granted by a Learned Single Judge of this Court on 17th June, 1998. The Defendant thereupon took out a Chamber Summons for the revocation of the leave granted under Clause XII. The Chamber Summons was dismissed by Hon’ble Mr. Justice A.M. Khanwilkar by an order dated 25th July, 2005. Counsel appearing on behalf of the Defendant has stated before the Court that the appeal that was filed against the order passed by the Learned Single Judge also came to be dismissed. In these circumstances, the plea of jurisdiction cannot be countenanced. 7. Insofar as the rate of interest is concerned, I am of the view that a triable issue does arise as to whether the Plaintiff is entitled to claim 7 interest at the rate of 30% per annum. Prima facie, the Bill discounting advice (Exhibit A) and the Defendant’s communication dated 3rd November, 1995 (Exhibit B-1) would reflect that the agreed rate was 25%. 8. Insofar as the principal sum of Rs.60 lacs is concerned, there is absolutely no defence to the claim. The Defendants have in terms acknowledged their liability by their letters dated 17th April 1996 (Exhibit F) and 9th May, 1996 (Exhibit G). In part payment of the outstanding of Rs.80 lacs an amount of Rs.20 lacs was paid. There is no dispute about the fact that a balance of Rs.60 lacs is due and outstanding. The suit shall accordingly have to stand decreed, insofar as the principal sum of Rs.60 lacs is concerned. There shall accordingly be the following order on the Summons for Judgment ; (i) The Summons for Judgment is made absolute to the extent of the principal sum of Rs.60 lacs and the suit shall stand decreed to that 8 extent; (ii)The Defendant will be entitled to unconditional leave to defend the suit insofar as the claim for interest is concerned. The Summons for Judgment shall accordingly stand disposed of. Stay refused. *****