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2019 Supreme(Mad) 2508
IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. SATHISH KUMAR, J.
M/s. IOCEE Exports Ltd., Teynampet, Chennai, Represented by its Executive Ganesh Patwari - Plaintiff
Versus
Moosa Ahmed (Deceased) & Others - Defendants
Civil Suit No. 343 of 2011 & A.No.2430 of 2011
Decided On : 06-11-2019
For the Plaintiff :M. Aravind Subramanian, Advocate.
For the Defendants :C. Manohar Gupta, Advocate.
The main legal point established in the judgment is the interpretation and application of Section 25(3) of the Indian Contract Act, emphasizing the validity of a promise to pay a time-barred debt and the importance of a valid acknowledgment of liability.
Headnote:
Recovery Suit - Financial Assistance - Indian Contract Act, Section 25(3) - The court allowed the suit for the admitted amount of Rs.38,71,214/- with subsequent interest at the rate of 6% from the date of decree till the date of realization.
Fact of the Case:
The suit was filed for recovery of a sum of Rs.2,26,82,963.78 together with interest at 24% p.a. from the date of plaint till the date of realization. The defendants availed loan and extended bank guarantees from the plaintiff. The defendants contended that the suit was barred by limitation and that they had already settled the amount by providing an embroidery machine.
Finding of the Court:
The court found that the suit claim for the entire amount was barred by limitation, but allowed the recovery of the admitted amount of Rs.38,71,214/- with subsequent interest at the rate of 6% from the date of decree till the date of realization.
Issues: The issues included whether the suit was barred by limitation, whether the plaintiff was entitled to the claimed amount, and to what relief the plaintiff was entitled.
Ratio Decidendi: The court held that the suit claim for the entire amount was barred by limitation, but allowed the recovery of the admitted amount of Rs.38,71,214/- with subsequent interest at the rate of 6% from the date of decree till the date of realization. The court also emphasized the importance of a valid acknowledgment of liability and the promise to pay a time-barred debt under Section 25(3) of the Indian Contract Act.
Final Decision: The suit was partly allowed and decreed for the admitted amount of Rs.38,71,214/- with subsequent interest at the rate of 6% from the date of decree till the date of realization, with costs.
JUDGMENT :
(Prayer: Suit filed under Order IV Rule 1 O.S. Rule Read with Order VII Rule 1 CPC to direct the defendants to pay a sum of Rs.2,26,82,963.78 together with interest at 24% p.a. from the date of plaint till the date of realization and for cost.)
This suit has been filed for recovery of a sum of Rs.2,26,82,963.78 together with interest at 24% p.a. from the date of plaint till the date of realization and for cost.
2. It is the case of the plaintiff that the first and second defendants are in-charge of and running the defendants companies 3 to 7. The defendants availed loan from the plaintiff on several occasions from 18.09.2000. Besides they have also extended bank guarantees for various amounts from 01.03.2002 to 30.11.2002. The plaintiff had also made several payments by cash and cheques as on 30.11.2002. The defendants are liable to pay a sum of Rs.92,21,744.02. Hence, the suit.
3. The written statement filed by the sixth defendant is adopted by the other defendants. It is the contention of the defendants that the sixth defendant forms part of Group of companies consisting of the defendant nos. 4 to 7. They had export orders. But, unfortunately, they did not have credit facilities with bankers in Order to execute the export orders in time. In such circumstances, the sixth defendant approached the plaintiff to extend financial help for executing the export orders. It is the contention of the defendants that when the business dealings between the defendants and the plaintiff came to an end, the defendants owed a sum of Rs.38,71,214/- collectively to the plaintiff. Since the defendants are facing business problems and since there was acute financial distress, the defendants on 11.11.2006 adjusted the remaining amount of Rs.38,71,214/- due and payable to the plaintiff by giving an embroidery machine belonging to the third defendant worth about Rs.40 lakhs. The plaintiff accepted the said embroidery machine towards full and final settlement of all its dues in 2006 itself. After accepting the final settlement, the present suit has been filed. Further, it is the contention of the defendant that the suit is barred by limitation.
4. In the reply statement filed, the plaintiff denied the contention of the defendants.
5. Based on the above pleading, the following issues have been framed :
1. Whether the suit is barred by limitation?
2. Whether the plaintiff is entitled to a sum of Rs.2,26,82,963.78 payable by the defendants, with interest at 24% per annum?
3. To what relief, the plaintiff is entitled?
6. On the side of the plaintiff, P.W.1 was examined and Ex.P.1 to Ex.P.42 were marked. On side of the defendants, D.W.1 has been examined and Ex.D.1 to Ex.D.4 marked.
Witnesses examined on the side of the plaintiff :
P.W.1. - Mr. Ganesh Patwari
Witnesses examined on the side of the defendants:
D.W.1 - Mr. C. Sreenivasalu
Exhibits produced on the side of the plaintiffs:
| S. No. | Date | Description of documents | Exhibit |
| 1. | 19.03.2001 | Letter from the fourth defendant to Bharath Overseas Bank | P-1 |
| 2. | 22.10.2001 | Copy of Fax from 6th defendant for export order No.PO 04447/04368 | P-2 |
| 3. | 07.08.2001 | Two purchase order Nos.0447 & 04368 of Liberto, France | P-3 |
| 4. | 23.10.2001 | Estimate of expenses for export Order Nos.0447/04368 for Trims Only | P-4 |
| 5. | 30.10.2001 | Letter of the fourth defendant to the plaintiff | P-5 |
| 6. | 07.02.2002 | Statement of the sixth defendant against the orders received from the plaintiff | P-6 |
| 7. | 15.02.2002 | Copy of S.A. Creations quality approval to the defendant | P-7 |
| 8. | 26.02.2002 | Copy of fax from the sixth defendant to parties | P-8 |
| 9. | 26.02.2002 | Copy of letter to Sagar Overseas dated 26.02.2002 | P-9 |
| 10. | 28.02.2002 | Copy of the letter from plaintiff to Kailash Threads | P-10 |
| 11. | 04.03.2002 | Fax received from T.G.Guru asking for payment | |
