The main legal point established in the judgment is that the exchange of letters between the parties and the admission of liability in the defendant's balance sheet can establish a binding agreement and disentitle the grant of leave to defend.

S. Ravindra Bhat, J. (Open Court)

C.M. NO. 15154/2013 (for condonation of delay)

For the reasons mentioned in the application, C.M. No. 15154/2013 is allowed.

RFA (OS) 125/2013, C.M. NO. 15155/2013 & 15156/2013

1. This is an appeal from an order of the learned Single Judge declining the unsuccessful defendant’s (in the suit, and the appellant herein) leave to defend a suit brought under Order XXXVII of the Code of Civil Procedure (“CPC”) by Jindal Steel and Power Ltd. (hereinafter “JSPL”) for recovery of a principal sum of Rs. 2,98,39,060/-along with interest at the agreed rate of 10% per annum accrued thereon with effect from April, 2007 to March, 2008 and thereafter at 12% per annum from April, 2008 till the institution of the suit in February, 2010, thus amounting to a total amount of Rs. 4,00,44,341.20/-.

2. As the Single Judge records, the pleading on behalf of the plaintiff is as follows:

“1. XXXXXX XXXXXX XXXXXX

(i) that the defendant is the sole proprietor of M/s Guru Mehar Construction;

(ii) that in December, 2000, the defendant approached the plaintiff with offer to conduct the excavation activities required by the Plaintiff at its mining site near Dongamohua village, District Raigarh, Chhattisgarh;

(iii) that after negotiations and deliberations, the plaintiff awarded to the defendant, the contract for hiring of heavy earth moving equipment and services for excavation works for a total period of four years i.e. till March, 2005 vide Work Order dated 02.03.2001;

(iv) that vide letter dated 13.06.2005, the defendant requested the plaintiff to provide a one time soft loan of Rs.7.17 crores recoverable over the period of five years on the ground that the defendant needed to replace and revamp the existing equipments;

(v) that the plaintiff agreed to so provide financial assistance to the defendant as is evident from the letters exchanged between the parties and disbursed the loan to the defendant and the defendant agreed to the plaintiff deducting instalments from the amounts becoming due and payable by the plaintiff to the defendant on the basis of bills raised by the defendant for the work done under the aforesaid Work Order;

(vi) that thereafter the defendant vide its letter dated 16.06.2005 informed the plaintiff that he needed a soft loan of Rs.500 lacs but since the plaintiff had agreed to provide a sum of Rs.300 lacs only, the said sum of Rs.300 lacs would be repayable by way of monthly installments of Rs. 10 lacs along with interest over a period of 30 months starting from November, 2005;

(vii) that the plaintiff released a total sum of Rs.563 lacs to the defendant from 18.06.2005 to 17.11.2005, out of which a sum of Rs.450 lacs was paid directly to the defendant and a sum of Rs. 113 lacs paid to SREI Infrastructure Finance Ltd. for and on behalf of the defendant towards lease financing of equipment;

(viii) that the defendant vide letter dated 24.11.2005 admitted and acknowledged the receipt of the aforesaid loan amount and requested for the same to be repaid over a period of five years instead of 30 months as agreed earlier and which was agreed to by the plaintiff;

(ix) that the defendant vide letter dated 19.07.2006 further requested for release of a sum of Rs.200 lacs for meeting its working capital requirement and further Rs.275 lacs to make down payment to financiers from whom he had got the required equipments financed on leasehold basis;

(x) that in response to the aforesaid request, the defendant was provided additional financial assistance of Rs.100 lacs on 02.08.2006;

(xi) that thus during December, 2004 till August, 2006 total financial assistance of Rs.663 lacs was provided by the plaintiff to the defendant;

(xii) that the plaintiff vide its letter dated 17.07.2006, on the request of the defendant, agreed to renew the Work Order for the period starting from 15.02.2006 till 31.03.2007 and a formal Work Order dated 04.08.2006 was issued by the plaintiff and accepted by the defenda