Court: District judge (Commercial court)-01 South District, Saket court: New Delhi
Nature: Ex-Parte Judgment
Introduction
The Plaintiff is a registered society under the Ministry of Agriculture & Farmers Welfare, Government of India. The Plaintiff brought this commercial suit under Section 2 (1) (c) Commercial courts act, 2015 against the Defendant for recovery of the loan that he received to build an agro processing unit. The Defendant had signed a binding contract that had repayment terms, had given the Plaintiff a post-dated cheque book, the Plaintiff had sent him multiple legal notices and the Plaintiff had even started a criminal proceeding against the Defendant for cheque dishonour. After the Plaintiff failed to mediate before commencing the suit and the Defendant did not make any attempts to defend himself, he was served with the summons and was subsequently found guilty by default. After examination of the evidence presented by the Plaintiff, which had not been denied by the Defendant, the Court has decided to grant the Plaintiff a judgment, including legal costs. The suit was filed under the summary procedure by Order 37 of the CPC, 1908, upon satisfying the mandatory pre-institution mediation under Section 12A of the Commercial Courts Act, 2015, which ended in a failure due to the non-appearance of the Defendant
Background of the Case
The Defendant contacted the Plaintiff in order to obtain financial assistance, in the form of a grant from the government to finance an agro-processing business. After an evaluation of the project, the Defendant was approved for the full amount of the grant and received all funds required for the financing of the project at that time. To document this transaction, an agreement was executed which required the Defendant to pay the entire amount of the grant back in one payment as soon as the Defendant repaid the loan to a pre-determined lender based on their original payment schedule. To ensure that the Defendant would fulfil his contractual obligations, the Defendant provided the Plaintiff with a post-dated cheque for the entire amount of the grant.
The cheque was dishonoured by the bank on its due date as they stated there were insufficient funds to honour it. The dishonour has resulted in a potential criminal liability against the Defendant under the Negotiable Instruments Act and has therefore constituted a clear default of the agreed repayment terms throughout the duration of the agreement. In spite of many reminders, including two formal legal demand letters, a formal criminal complaint lodged against the Defendant by the Plaintiff and the Plaintiff’s referral of the Defendant to the mandatory pre-mediation under Section 12A of Commercial courts act,2015 process prior to commencing litigation (but due to the Defendant’s absence from the mediation session, it could not be successfully completed), the Defendant neither paid the Plaintiff any amount nor provided the Plaintiff with any explanation for their failure to do so. After exhausting all other remedies available to him, Plaintiff has initiated this Summary Suit under Order 37 of CPC 1908 regarding Written Agreements and Negotiable Instruments which allows a Plaintiff to obtain quick relief as pertains to a contract based upon a written agreement or negotiable instrument.
Issues Raised by the Court
- Whether the Defendant is liable to repay the venture capital assistance in a lump sum together with interest in terms of the agreement.
- Whether dishonour of the post-dated cheque and failure to repay despite notices establish breach of contract and lack of financial discipline on the part of the Defendant.
- Whether the Plaintiff is entitled to a decree for the outstanding amount, accrued interest, pendente lite and future interest, and costs.
Legal Provisions
- Commercial Courts Act, 2015, which governs the suit as a commercial dispute.
- Section 12A of Commercial Courts Act, 2015
- Order 37 of the code of civil procedure, 1908
Analysis of the Case
The Plaintiff will continue this case against the Defendant as the Defendant was duly served with Notice of this litigation but has failed to appear or respond and therefore has been treated as if he has no defence by way of summary procedure under order XXXIX of the Civil Procedure Code 1908 which provides for default judgment against Defendants in undefended cases.
The Plaintiff satisfied himself that he complied with the provisions of Section 12A of the Commercial Courts Act 2015 by initiating mediation before the Commercial Court (as indicated in the Report on Mediation as Not Initiated). Therefore, the Plaintiff has shown that he has met his burden of proof that the Plaintiff is entitled to a judgment in his favour.
The Plaintiff called one witness (PW-1) to give evidence on his behalf, and this was an authorised representative of the Plaintiff, and this witness testified via his affidavit (Exh. PW1/A) and through the evidence of all documentary evidence in support of the claim (Registration, Letter of Authority, Letter of Sanction, Letter of Release, Executed Agreement, Original Dishonoured Cheque, Return Memo from Lexis, Notices, Complaint filed with the Court, Report on Mediation as Not Initiated, and Affidavit of Service.
PW-1 testified about the granting of approval and payment, execution of an agreement with a lump-sum obligation/commitment, return of his security cheque and constant failure of the Defendant’s payment. The absence of any cross-examination or other evidence being brought forward in contrast to his testimony, leaves no doubt as to the evidence presented by PW-1 and the documents are accepted as corroboration of statements and are proven. The presumption contained within the Negotiable Instruments Act in connection with the Defendant’s failure to appear or provide a defence creates certainty of the Defendant’s intentional breach of contract; therefore, the Plaintiff’s claim has been comprehensively substantiated.
Conclusion
The suit was granted to the Plaintiff exclusively with an order for costs to be paid by the Defendant. The Defendant was ordered to repay the outstanding balance plus the amount of interest accrued on the amount principal claimed from the date of the suit until the time of its final disposition under the law with an applicable rate of pendente lite or in the future, as well as interest accruing thereon. The Plaintiff is required to satisfy the entire obligation owed for the principal financial assistance plus interest accrued through the time of filing the suit as well as future interest accruing on the obligation at the time the contract was entered into until paid and/or collected. The Plaintiff must receive full reimbursement for expenses incurred to bring this action and all subsequent court costs. Prepare a decree based on this. After completion of all required documents, file shall be delivered to the court archives.
The Suit on behalf Plaintiff was presented and argued by Mr. Shantanu Garg, Senior Associate and Mr. Mahima Rathore, Associate.