Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2022 Supreme(Mad) 1819

IN THE HIGH COURT OF JUDICATURE AT MADRAS
SENTHILKUMAR RAMAMOORTHY, J.
Northern Arc Capital Limited, Rep. by its authorised signatory J. Veda Raguraj - Appellant
Versus
Sambandh Finserve Private Limited Rep. by its Director & Others - Respondent
Application No. 4248 of 2021 & Civil Suit.(Comm. Div.) No. 318 of 2020
Decided On : 08-06-2022

Advocates appeared:
For the Applicant:M/s. Anirudh Krishnan, Adarsh Subramanian, Shiva, Advocates. For the Respondents:R1, Rahul, M. Shankar, Supriyo Ranjan Mahopatra, R2, M/s. Prashant Rajagopal for T.M. Mano, Advocates.

The main legal point established in the judgment is the requirement for clear, categorical, unambiguous, and unequivocal admissions for a judgment on admissions under Order XII Rule 6 of CPC, and the necessity of further documentary evidence to support a suit claim before disposing of the suit summarily.

Headnote:
Summary Judgment - Application under Order XIII-A of CPC - Summary Judgment - [MONEY CLAIM] - [COMMERCIAL DISPUTES] - [Order XIII-A of CPC] - The court examined the legal framework of Order XIII-A of CPC and the grounds for summary judgment. It highlighted the burden of proof on the applicant to establish that the counter party has no real prospect of defending the claim or succeeding on the claim and the absence of any other compelling reason to dispose of the claim before recording oral evidence. The court emphasized the need for clear, categorical, unambiguous, and unequivocal admissions for a judgment on admissions under Order XII Rule 6 of CPC. It also discussed the requirement for documentary evidence to support the suit claim and the necessity of further evidence before disposing of the suit summarily.
Fact of the Case:

The Plaintiff filed an application for summary judgment seeking a decree for a money claim against the Defendants. The Defendants raised defences based on previous applications, inadequately stamped documents, and statutory circulars. The court rejected the application under Order XII Rule 6 CPC due to lack of clear admissions and the need for further evidence to support the suit claim.
Finding of the Court:

The court found that the suit claim was not duly proved by the Applicant and further documentary evidence was necessary. It concluded that while oral evidence may not be necessary, the suit could not be disposed of summarily based on the material on record. The court ordered the suit to be listed for framing issues and for filing affidavits of admission/denial of documents by the counter party.
Issues: The principal preliminary objection was whether the present application was liable to be rejected on account of the dismissal of a previous application under Order XII Rule 6 of CPC. The Defendants also raised defences related to inadequately stamped documents and statutory circulars.
Ratio Decidendi: The court emphasized the need for clear, categorical, unambiguous, and unequivocal admissions for a judgment on admissions under Order XII Rule 6 of CPC. It highlighted the requirement for documentary evidence to support the suit claim and the necessity of further evidence before disposing of the suit summarily.
Final Decision: The court disposed of the application by ordering the suit to be listed for framing issues and for filing affidavits of admission/denial of documents by the counter party.

JUDGMENT

(Prayer: This Application is filed under Order XIV Rule 8 of the Madras High Court original side Rules, 1956 r/w Order XIII-A of CPC praying to pass a judgment and decree and directing the first and second Respondents to pay the entire suit claim of Rs.38,16,45,711/-, jointly and severally to the Applicant herein.)

1. The Plaintiff has filed this application for summary judgment. By such application, the Plaintiff seeks a judgment and decree for the suit claim of Rs.38,16,45,711/-, jointly and severally, against the first and second Respondents/Defendants.

2. The Applicant/Plaintiff submits that the first Defendant borrowed money from the Plaintiff under multiple facility agreements. These loans were guaranteed by the second and third Respondents/Defendants. On 07.10.2020, the then Chief Financial Officer and other senior employees of the first Defendant issued a communication stating that the first Defendant does not have sufficient liquidity to service its debt obligations and had defaulted in repayment since 30.09.2020. The Applicant/Plaintiff also relies upon an email of 15.10.2020 from the second Defendant to the Plaintiff enclosing a letter dated 13.10.2020. In such letter, the first Defendant informed the Chief Executive Officer of the Plaintiff that members of the senior management team of the first Defendant had committed financial irregularities. The first Defendant also conceded therein that it is facing liquidity issues. The third communication that the Applicant/Plaintiff relied upon is an email of 17.10.2020 from the Assistant Manager, Finance, of the first Defendant, and, in particular, the Management Organizational Book Debt Certificate dated 01.10.2020 (the Book Debt Certificate), which was attached to the above mentioned email. The Certificate is to the effect that the aggregate principal outstanding of the first Defendant to the Plaintiff, by reckoning all the term loans, is Rs.40,56,00,000/- as on 01.10.2020. A further communication dated 17.10.2020 from the first Defendant to the Plaintiff whereby the first Defendant referenced an aggregate principal exposure of INR 40.56 crores is also relied upon.

3. The Plaintiff states that the suit was filed in the above facts and circumstances claiming a sum of Rs.38,16,45,711/- along with interest on the said amount at the rate of 18% per annum from 04.11.2020 till the date of repayment. About 91 documents were filed along with the plaint. These documents include the Facility Agreements, Deeds of Guarantee and Hypothecation Agreements. The above mentioned correspondence was also annexed. At paragraph 11 of the plaint, the Applicant/Plaintiff has set out details of amounts borrowed by the first Defendant under various term loan agreements, including amounts due and payable, including interest, in respect thereof. In paragraph 13, the details of the personal guarantees provided by the second Defendant in respect of these term loans are set out. In paragraphs 24 and 25, an admission of liability by the first Defendant and the second Defendant are referred to. The suit claim of Rs.38,16,45,711/- is made on such basis.

4. In the written statement filed by the first Defendant, at paragraph 31, the contents of paragraphs 8 to 14 of the plaint are said to be matters of record. Although the contents of paragraph 24 are denied, the first Defendant does not state the basis of denial except to the extent of stating that it cannot be construed as a clear admission of the debts.

5. By relying on the pleadings, the Applicant/Plaintiff contended that the Defendants have no real prospect of successfully defending the suit claim. The Applicant/Plaintiff asserted that the defences raised by the first Defendant to the application for summary judgment are untenable. By referring to the counter of the first Defendant, the Applicant pointed out that the first Defendant raised four defences. The first defence was that the prayer for summary judgment is contrary to the Prudential Framewo