The judgment establishes the importance of privity of contract, the liability of the principal for acts of the authorized person, and the impact of fraudulent activities on legal proceedings.

JUDGMENT

N J Jamadar, J. - This commercial division summary suit is instituted for recovery of a sum of Rs.6,73,84,000/- along with further interest at the rate of 2 percent per month, on the principal sum of Rs.5,80,00,000/- from the date of the suit till realization on the basis of a written contract.

2. The material averments in the plaint, can be stated in brief, as under :-

(a) The plaintiffs are members of one family. The defendant is a company registered under the Companies Act, 1956. It deals in the business of a brokerage house and is a corporate member of the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited. The defendant had invited deposits through its business partner M/s.Crefin India Management Private Limited. It was represented to the plaintiffs that a monthly return/interest of 2 percent would be paid on investment. The principal amount would be invested in an Index Stock Option Funds, which would ensure a guarantee on capital invested. Over a period of time, the plaintiffs invested a sum of Rs.5,80,00,000/-, the particulars of which, are tabulated in paragraph 3(a) of the plaint.

(b) The defendant acknowledged the receipt of the said amount by issuing letters dated 8th July, 2016, 15th September 2016, 1st March 2018, and 1st September 2016 ('Welcome Letters') and undertook the obligation to pay interest @ 2 percent per month from the date of investment, with a lock-in period of six months. The said letters captioned, "Welcome Letters" incorporate the contract to repay the principal amount and the interest thereon.

(c) Initially, the defendant did pay interest, at the agreed rate, through banking channels. In the month of January 2019, the plaintiffs were in pressing need of the funds. Hence, the plaintiffs sought refund of the principal amount. Despite a refund request having been lodged with the defendant, the latter not only committed default in refunding the invested amount but also stopped the payment of interest, which fell due. The plaintiffs, thus, addressed a legal notice on 10th August 2019, and called upon the defendant to repay the principal sum along with accrued interest in terms of the contract.

(d) Despite service of the legal notice, the defendant neither paid the amount nor gave reply. Hence, the plaintiffs were constrained to institute the suit for recovery of the outstanding amount along with interest.

3. The defendant appeared in response to the service of the writ of summons. The defendant filed an affidavit in reply and sought an unconditional leave to defend the suit. Thereupon, the plaintiffs took out the summons for judgment.

4. The substance of the defence put-forth by the defendant is that there was no privity of contract whatsoever between the plaintiffs and the defendant. It was categorically denied that M/s. Crefin India Management Private Limited, through whom the plaintiffs had allegedly made the deposits, is the business partner of the defendant. The defendant never had any relationship either commercial or otherwise with the said M/s. Crefin India Management Private Limited.

5. It was denied that the plaintiffs had collectively invested the principal sum of Rs.5,80,00,000/- with the defendant. Without disputing that the defendant is a share and stock broker, it was contended that the defendant does not accept any deposits or loans from any third party, individual or corporate and has not authorized anybody to accept any amount as and by way of deposit or otherwise in the name of the defendant.

6. The defendant contended that the Welcome Letters, which allegedly constitute the contract, were never addressed by the defendant. Those letters are forged and fabricated. Those letters appear to have been issued by one Mr.Ameet Savant. Though the said Mr.Ameet Savant was affiliated to the defendant as its franchisee/authorised person in accordance with the rules and regulations of SEBI/Stock Exchange, he had no authority to issue and sign the said letters on beha