Judicial Analysis Court Copy Headnote Facts Arguments Court observation

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
N. J. Jamadar, J.
N. Halkara H.U.F. – Appellant
Versus
Pradip Bastimal Chopra – Respondent
Summons for Judgment No. 64 of 2021 in Summary Suit No. 02 of 2021
Decided On : 02-02-2022

Advocates Appeared:
Mr. Farhan Dubhash A/W Mr. Vishal Kanade, Kinjal Upadhyay I/By Jayesh R. Vyas, for the Appellant; Mr. Chirag Mody A/W Mr. Yash Momaya, Mr. S. M. Seegarla, Mr Swapnil Shikhare I/By Rmg Law Associates, for the Respondent.

The main legal point established in the judgment is the interpretation of the provisions of the Money-Lending Act, 2014, Section 13, and the Commercial Courts Act, 2015, Section 12A, to determine the tenability of the suit, including issues related to illegal money lending, limitation, and mandatory pre-institution mediation.

Headnote:
Money Lending - Recovery Suit - Commercial Division - [MONEY LENDING] - [RECOVERY SUIT] - [Money-Lending Act, 2014, Section 13; Commercial Courts Act, 2015, Section 12A] - The court discussed the provisions of the Money-Lending Act, 2014, Section 13, and the Commercial Courts Act, 2015, Section 12A. It interpreted the legal framework to determine the tenability of the suit, including issues related to illegal money lending, limitation, and mandatory pre-institution mediation. The court's decision was influenced by its interpretation of the provisions, leading to the grant of leave to defend the suit on the condition of deposit of the admitted liability.
Fact of the Case:

The plaintiff, a Hindu Undivided Family, filed a recovery suit against the defendant, a partner of a registered partnership firm, for the recovery of a loan amount of Rs. 4,00,00,000/- along with interest. The defendant raised three challenges to the tenability of the suit, including illegal money lending, limitation, and non-compliance with mandatory pre-institution mediation under the Commercial Courts Act, 2015.
Finding of the Court:

The court found that the suit was not barred by limitation and that the defence of illegal money lending was not substantial. It also held that the plaintiff had complied with the mandatory provisions of pre-institution mediation. The court granted leave to defend the suit on the condition of deposit of the admitted liability of Rs. 4,36,00,000/-.
Issues: The issues included the tenability of the suit based on illegal money lending, the bar of limitation, and compliance with mandatory pre-institution mediation under the Commercial Courts Act, 2015.
Ratio Decidendi: The court's decision was based on its interpretation of the provisions of the Money-Lending Act, 2014, Section 13, and the Commercial Courts Act, 2015, Section 12A. It found that the suit was not barred by limitation, the defence of illegal money lending was not substantial, and the plaintiff had complied with the mandatory provisions of pre-institution mediation. The court's decision was influenced by its interpretation of the legal framework.
Final Decision: The court granted leave to defend the suit on the condition of deposit of the admitted liability of Rs. 4,36,00,000/-.

JUDGMENT

1. This commercial division summary suit is instituted for recovery of aggregate amount of Rs. 17,84,34,432/- along with further interest @ 18% per annum on the principal amount of Rs. 4,00,00,000/-from the date of the suit.

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

(a) The plaintiff is a Hindu Undivided Family. Mr. Indarmal N.Halkara is its Karta. The plaintiff - Karta is a Director and Shareholder of a Company, 'Halkara Builders Private Limited' ("Halkara"). The defendant is a partner of a registered partnership firm, M/s. Cosmos Landmarks ("Cosmos"). Both Halkara and Cosmos deal in the business of real estate development.

(b) On 3rd April 2010, an agreement was executed between Halkara and Cosmos for the redevelopment of a SRA Project at Forjett street, Mumbai. At the request of the defendant, to enable him to tide over the financial constraints, the plaintiff had advanced to the defendant a friendly loan of Rs. 4,00,00,000/-. The plaintiff was given to understand that the defendant would use the said fund to meet its contractual obligations under the agreement dated 3rd April 2010. It was agreed that the said loan amount would carry interest @ 18% per annum. The plaintiff advanced the said amount under the cheque dated 28th January 2013 drawn on Corporation Bank (Now Union Bank of India). Upon the amount being credited in the account of the defendant, the later credited the said amount of Rs. 4,00,00,000/- in the account of Cosmos on 31st January 2013. And on the very day Cosmos, in turn, transferred the said amount in the account of Halkara, to finance the contractual obligations of Cosmos.

(c) Towards repayment of the said amount the defendant had executed a promissory note dated 28th January 2013 for the sum of Rs. 4,00,00,000/- payable on demand, with interest @ 1.5% per month i.e. 18% per annum. The defendant had also drawn three cheques; bearing No. 049998 for Rs.12,20,000/- payable on 31st March 2013, No. 049999 for Rs.23,80,000/- payable on 27th July 2013, towards interest and, No.049981 towards principal loan amount of Rs.4,00,00,000/-, payable on 27th July 2013. All the three cheques were returned un-encashed on presentment. Upon being apprised, the defendant sought time citing financial constraints and assured to repay the loan amount alongwith accrued interest thereon. The defendant thus confirmed the balance by executing balance confirmation letters every year, the first being on 1st April 2013 and the last being 1st April 2018.

(d) In the meanwhile, disputes arose between Halkara and Cosmos. Thus Cosmos invoked arbitration. Halkara in its counter claim made a claim of Rs.4,00,00,000/- and the accrued interest thereon. Cosmos questioned the jurisdiction of the Abitral Tribunal as regards the said claim. Thus, on 28th March, 2021, the plaintiff addressed a legal notice to the defendant, calling upon the defendant to repay the sum of Rs.4,00,00,000/- along with accrued interest thereon. The defendant falsely denied the liability. The plaintiff thus initiated mandatory pre-institution mediation under Section 12A of the Commercial Courts Act, 2015. As the defendant failed to appear, a Non Starter Report was filed. In the meanwhile, Halkara made a statement before the Arbitral Tribunal that the claim for the said advance of Rs. 4,00,00,000/- and interest thereon would not be pressed in the said arbitration.

(e) Thus, the plaintiff was constrained to institute this suit for recovery of the said amount of Rs.4,00,00,000/- along with interest accrued thereon at the agreed rate of 18% per annum, and future interest on the strength of the promissory note, balance confirmations and the dishonoured cheques.

3. In response to the writ of summons, the defendant appeared. Thereupon, the plaintiff took out the summons for judgment. The defendant sought an unconditional leave to defend the suit by filing an affidavit-in-reply, to which an affidavit-in-rejoinder has been filed by the plaintiff