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1997 Supreme(Del) 683
High Court Of Delhi
VIJAYA HOME LOANS LIMITED - Appellant
Versus
CROWN TRADERS LIMITED - Respondent
Suit 1854 of 1996
Decided On : 08/21/1997
C.L.NASIMHAN
Failure to enter an appearance within the stipulated time in a suit filed under Order XXXVII, CPC, results in the admission of the allegations in the plaint, and the plaintiff is entitled to a decree for the suit amount, interest, and costs.
Headnote:
ORDER XXXVII, CIVIL PROCEDURE CODE - SUMMONS - SERVICE BY PUBLICATION - DEFAULT IN APPEARANCE - ADMISSION OF ALLEGATIONS - DECREE FOR SUIT AMOUNT WITH INTEREST - INTEREST ACT, 1978 - INTEREST @ 22% P. A.
Fact of the Case:
Plaintiff, a home finance company, entered into an agreement with Defendant No. 1 for the development of a property and construction of multi-storeyed apartments. Plaintiff disbursed various amounts to Defendant No. 1 and identified prospective purchasers for the flats. The agreement was later rescinded, and a new agreement was executed, under which Defendant No. 1 took over the obligations related to the prospective purchasers and agreed to pay the balance amount in installments. Defendant No. 1 failed to make timely payments, and the prospective purchasers withdrew from the purchase, demanding a refund. Plaintiff returned the booking amounts to the prospective purchasers and debited the accrued interest to Defendant No. 1's account. Plaintiff filed a suit under Order XXXVII, Civil Procedure Code, seeking a decree for the outstanding amount, interest, and costs.
Finding of the Court:
The court found that the defendants failed to enter an appearance within 10 days of the service of the summons by publication, and therefore, the allegations made in the plaint were deemed to be admitted by them under Order XXXVII, Rule 2(3), CPC. The court held that the plaintiff was entitled to a decree for the suit amount with interest pendente lite and future @ 22% p.a. being the contractual rate against the defendants.
Issues: Whether the defendants' failure to enter an appearance within the stipulated time resulted in the admission of the allegations in the plaint.
Ratio Decidendi: The court relied on Order XXXVII, Rule 2(3), CPC, which provides that if the defendant fails to enter an appearance within 10 days of the service of the summons, the allegations in the plaint shall be deemed to be admitted, and the plaintiff shall be entitled to a decree for the suit amount, interest, and costs.
Final Decision: The court decreed the suit in favor of the plaintiff for the recovery of Rs. 49,35,184.00 with interest pendente lite and future till realization @ 22% per annum on Rs. 32,56,630.00 and the costs against the defendants.
( 1 ) THIS suit under Order XXXVII, Civil Procedure Code has been filed alleging that M/s. Fairgrowth Home Finance Limited was incorporated on July 9, 1990, under the Indian Companies Act, 1956. After passing resolution under Section 21 of the Indian Companies Act and obtaining necessary approval from the Central Government, name of M/s. Fairgrowth Home Finance Limited was changed to Vijaya Home Loans Ltd.-Plaintiff. Registrar of Companies, Karnataka, Bangalore, also issued fresh certificate dated February 24, 1995, consequent upon the change of the name of the company. Plaintiff-Company is engaged in the business of development of properties and constructions. Defendant No. 2 is one of the directors of defendant No. 1. It is alleged that defendant No. 1 entered into an agreement dated May 7, 1991 with M/s. Fairgrowth Home Finance Ltd. to develop property No. B-64, Greater Kailash, Part-1, by demolishing the then existing structure and making construction of multistoreyed apartments on the land. Aforesaid agreement stipulated the condition, inter alia, that defendant No. 1 would construct 12 flats and the construction work will be completed within 20 months commencing from 1st May, 1991. It was further provided that the plaintiff was at liberty to advertise and canvass for sale of the flats to the prospective buyers and the plaintiff underwrote the sale of all the flats to be constructed for a total amount of Rs. 5 crores in the manner noted in Para 4 of the plaint. To secure the performance of the rights and obligations under the aforesaid agreement, defendant No. 1 was to deposit with the plaintiff the title deed of the above property. Plaintiff disbursed amount of Rs. 25 lakhs on April 8,1991, Rs. 10 lakhs on June 12, 1991, Rs. 5 lakhs on June 17, 1991, Rs. 10 lakhs on July 10, 1991, Rs. 10 lakhs on December 26, 1991, Rs. 40 lakhs on January 16, 1992, Rs. 4 lakhs on April II, 1992, Rs. 21 lakhs on April 20, 1992, Rs. 18 lakhs on May 30, 1992 and Rs. 7 lakhs on June 2, 1992, totalling Rs. l,50,00,000. 00 to defendant No. 1. It is alleged that the plaintiff identified M/s. BPL Sanyo Technologies Limited 1/1 Palace Road, Bangalore, M/s. BPL Sany Utilities and Appliances Ltd. , 708, Devika Tower 6, Nehru Place, New Delhi and M/s. Seahorse Shipping and Ship Management Pvt. Ltd. , Apsara Building (Meena Bazar), 3rd Floor, Colaba, Causeway, Bombay, as the prospective purchasers and collected from them by way of booking money Rs. 17 lakhs, Rs. l8,12,000. 00 and Rs. 20 lakhs respectively. Defendant No. 1 was to enter into agreement to sell with these prospective puchasers for sale of three flats to them.
( 2 ) IT is pleaded that for the reasons accepted by both the parties to the aforesaid agreement dated March 7,1991 plaintiff and defendant No. 1 mutually rescinded the agreement subject to the terms and conditions contained in another agreement dated June 30, 1992, entered into between the parties. Pursuant to the agreement dated June 30,1992, securities furnished under the previous agreement were discharged and new securities were furnished by the defendants to the plaintiff in terms of Clause 5 thereof including loan agreement, promissory note for Rs. 74. 88 lakhs and personal guarantee of defendant No. 2, all dated June 10, 1992. Under the aforementioned agreement, all the obligations relating to the said three prospective purchasers were taken over by defendant No. 1 and the booking amount of Rs. 55. 12 lakhs collected from them was agreed to be appropriated by the plaintiff against the total repayable amount of Rs. 1. 5 crores. To liquidate the balance amount defendant No. 1 agreed to pay Rs. 20 lakhs by August 14, 1992, Rs. 45 lakhs with interest thereon @ 22% p. a. from June 30,1992 to August 31,1992 i. e. , Rs. 46,70,877. 00 by August 1992 and Rs. 29,88,000. 00 with interest thereon @ 22% p. a. from June 30,1992 to December 31,1992 i. e. Rs. 33,21,182. 00 by December 31,1992. Defendant No. 1, however, paid o
