TaxTMI 
TaxTMI 
2018 (2) TMI 1191
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....nty Lacs Forty Seven Thousand Six Hundred Seventy Four Eight Paise only) payable to Plaintiff No.2, along with interest accrued thereon at the rate of 18 per cent per annum till the date of filing of the present Summary Suit and further interest at the rate of 21 per cent per annum from the date of filing of the Suit until realization thereof as per particulars of claim annexed and marked Exhibit-FF to the Plaint. 2. After the Writ of Summons was served on the Defendants, the Defendants through their Advocates entered appearance. In view thereof, the Plaintiffs took out the above Summons for Judgment and prayed that Judgment be entered in favour of the Plaintiffs and against the Defendants in terms of the prayer made in the Suit and as set out hereinabove. 3. Briefly set out hereunder are the facts as narrated by the Plaintiffs in the Plaint : 3.1 The Plaintiff No.1 - Tata Motors Limited (Tata Motors) (formerly known as Tata Engineering and Locomotive Company Limited) is a Company incorporated under the provisions of the Companies Act, 1913 and is engaged, inter alia, in the business of designing, developing, manufacturing and selling, among others, passenger and commercial vehi....
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....roperties owned by him, the provisional balance sheet and also profit and loss accounts of Om Sai Automobiles and Om Sai Motors. On the basis of the said representations, Tata Motors issued its approval for appointment of Om Sai Automobiles as their authorised dealer. 3.4 On 25th October, 2001, Tata Motors issued a Letter of Intent to Gangadhar Shetty thereby allowing Om Sai Automobiles to start and establish dealership at Kandivali for Tata Indica, Tata Safari, Tata Sierra, Tata Estate and Tata Sumo. The Letter of Intent was interalia accompanied by a draft Dealership Agreement. The Letter of Intent for dealership was duly accepted and signed by Gangadhar Shetty on behalf of Om Sai Automobiles. 3.5 Pursuant to the above mentioned Letter of Intent, Gangadhar Shetty executed a Deed of Guarantee with Tata Motors on 22nd February, 2002 wherein Gangadhar Shetty admitted and accepted his personal and irrevocable liability to pay to Tata Motors such amounts of money as may be due and payable and may remain unpaid under or arise from the said Dealership Agreement. It was also provided that the guarantee would remain effective and operative notwithstanding that Gangadhar Shetty ceases to....
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....ade applicable to Om Sai Motors and Om Sai Motors was appointed as the Authorised Dealer for sale and service of Tata Indica, Tata Safari, Tata Carrier, Tata Scorpio, Tata Touring and parts and accessories thereof in terms of the said second Dealership Agreement. 3.11 In furtherance of the aforesaid merger of Om Sai Automobiles and Om Sai Motors and in view of the permission from Tata Motors vide its letter dated 16th September, 2009 for the said merger, on 15th March, 2005, Gangadhar Shetty and Uday Shetty executed "Deeds of Guarantee" whereunder Gangadhar Shetty and Uday Shetty admitted and accepted their personal and irrevocable liability to pay such amounts of money to Tata Motors as may be due and payable and which may remain unpaid under or arise from the said second Dealership Agreement. As agreed, under the earlier guarantee, the present guarantees were also to remain effective and operative, notwithstanding that Gangadhar Shetty and Uday Shetty ceased to be the Directors/Officers of Om Sai Motors. Gangadhar Shetty and Uday Shetty also agreed that these guarantees shall remain in force and shall be enforceable until the amounts due from Om Sai Motors are fully received by ....
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.... authorising TML to act as a facilitator and thereby help Om Sai Motors by arranging transit insurance and transportation of Tata vehicles sold under the said third Dealership Agreement to the place of the Authorised Dealer. 3.15 On 18th March, 2009, Tata Motors addressed a letter to Om Sai Motors thereby authorising Om Sai Motors to act as a dealer for sale and service of Tata Nano, also manufactured by Tata Motors, in addition to the Tata vehicles set out under the said third Dealership Agreement dated 31st July, 2008. The said letter for dealership of Tata Nano cars was duly accepted and signed by Gangadhar Shetty. 3.16 Vide Letter of Intent dated 2nd June, 2007, Om Sai Motors and its Directors Gangadhar Shetty and Uday Shetty were further allowed to start the Tata Passenger Used/Pre Owned Cars space business at Jyoti Plaza, S.V. Road, Kandivali (West), Mumbai, for the State of Maharashtra. Thereafter Tata Motors issued another Letter of Intent dated 23rd June, 2010 to Om Sai Motors and its Directors Gangadhar Shetty and Uday Shetty allowing them to start the Fiat Dealership in the City of Greater Mumbai, Maharashtra, for Fiat range of vehicles including palio, linca and grant....
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....Agreements, Om Sai Motors raised numerous requirements for Tata vehicles and the same were duly provided/supplied to Om Sai Motors within the time frame. Om Sai Motors never raised any demur/protest/objection on any issues relating to the supply of vehicles. Tata Motors/TML in good faith extended credit facilities to Om Sai Motors whenever they needed it. According to Tata Motors/TML, even though they were not bound to extend their help, as a goodwill gesture and in good faith, considering the representation of Om Sai Motors and Gangadhar Shetty, Tata Motors/TML agreed to deliver the Tata passenger vehicles to Om Sai Motors on credit. 3.20 According to the Plaintiffs, though Om Sai Motors continued to purchase vehicles and spare parts from Tata Motors/TML on the terms and conditions as contained in the said Agreements, Om Sai Motors failed and neglected to pay on one pretext or the other the legitimate amounts due to Tata Motors/TML. According to Tata Motors, till March, 2012, Tata Motors raised 38 invoices totalling to Rs. 2,21,88,162.20 (Rupees Two Crores Twenty One Lacs Eighty Eight Thousand One Hundred Sixty Two Twenty paise only) as listed in List-1 of paragraph 31 of the Pla....
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.... its Directors for clearance of its dues. Upon request of Om Sai Motors, Tata Motors/TML have been providing copies of the statements of the transactions pertaining to the sale of vehicles and outstanding amounts due from time to time by Om Sai Motors. Exhibits BB-1 and BB-8 are the copies of various e-mails and letters sent to Om Sai Motors recording minutes of such meetings and demanding the outstanding dues. According to Tata Motors / TML, since in spite of repeated requests, reminders and demands sent to Om Sai Motors by Tata Motors/TML, Om Sai Motors has failed and neglected to make the payments of the total outstanding amount of Rs. 4,88,69,226.15 (which is a total sum of outstanding of Rs. 2,68,21,522.07 payable to Tata Motors and outstanding of Rs. 2,20,47,674.08 payable to TML) along with interest at the rate of 18 per cent thereon as prayed for. 3.21. That Gangadhar Shetty and Uday Shetty being Directors of Om Sai Motors are jointly and severally and personally liable to pay the entire outstanding amount to Tata Motors/TML under the deeds of guarantee entered into between Tata Motors and Gangadhar Shetty and Uday Shetty dated 15th March, 2005 and in pursuance of joint se....
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....nabove. 5. Om Sai Motors and its Directors have filed their Affidavit-in-Reply wherein they have raised the following defences : (i) That there is no contract for payment of interest between Tata Motors/TML and Om Sai Motors and its Directors. They are therefore not liable to pay any interest; (ii) Tata Motors/TML are also not entitled to claim the amount due on account of Form-C and amount due on account of other expenses as shown in Exhibits AA-1 and AA-2 to the Plaint as there is no contract between Tata Motors/TML and Om Sai Motors for the payment of the same; (iii) That since the amount of interest, Form-C and other charges claimed by Tata Motors/TML are disputed amounts, the Summary Suit filed on the basis of such claims is not maintainable; (iv) That Tata Motors/TML have relied upon the ledger account of Om Sai Motors maintained by them and a Summary Suit filed/based on the ledger account is not maintainable; (v) That till March, 2012, Tata Motors raised 38 invoices totalling to Rs. 2,21,88,162.20. The invoices referred therein are for the period October,2011 to February, 2012 and the last invoice raised by Tata Motors is of 29th February, 2012. The Suit is lodged by T....
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....ey were not able to do any business, therefore, the Defendants suffered heavy losses in the business with the result that they closed down all the showrooms and Om Sai Motors have till date not recovered from such financial loss which was caused to them due to the aforesaid act of Tata Motors/TML. (xii) That Om Sai Motors are, therefore, entitled to unconditional leave to defend the suit. 6. Tata Motors/TML have filed Affidavits in Rejoinder and have, after repeating and reiterating the facts set out hereinabove, denied and disputed the submissions advanced on behalf of Om Sai Motors. In support of their contention that the e-mail dated 12th April, 2013, constitutes an acknowledgement and therefore the suit filed by them is not barred by the law of limitation, Tata Motors/TML have relied on the decision of the Hon'ble Supreme Court in the case of Khan Bahadur Shapoor Fredoon Mazda vs. Durga Prasad Chamaria and others ((1962) 1 SCR 140 : AIR 1961 SC 1236) and the decision of this Court in Temal Bishamal Sidhai vs. Amar Mohandas Sindhi ((1972) 74 Bom LR 644). Further, Tata Motors / TML in support of their contention that Om Sai Motors are not entitled to conditional or uncondit....
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....ed or far-fetched process of reasoning. Broadly stated that is the effect of the relevant provisions contained in Section 19, and there is really no substantial difference between the parties as to the true legal position in this matter." 8. Again, a learned Single Judge of this Court in his decision in Temal Bishamal Sidhai (supra) has also explained how Section 18 of the Limitation Act pertaining to acknowledgement should be construed. Paragraph 7 of the said judgment is reproduced hereunder: "7. In Megh Raj v. Mathura Das, ILR (1913) All 437, it has been observed that a liberal construction should be placed upon documents purporting to be acknowledgments. It is sufficient if the statement on which a plea of acknowledgment is based relates to a present subsisting liability though the exact nature or the specific character of the said liability is not indicated in words. All that is necessary is that the words used in acknowledgment must indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implicati....
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.... follies, we wish to again revive our original business and for this we want your full support. We request you to open our Code and give us a chance to do regular business, we assure you that in no time we will bring the business to normal and clear all our pending dues with you." 10. Om Sai Motors have in the said e-mail clearly admitted as follows: (i) That the outstanding amount due to Tata Motors/TML had accumulated upto Rs. 10 crores and by January, 2012, the amount had been reduced to Rs. 5 crores; (ii) Om Sai Motors were able to clear the outstandings of approximately Rs. 5 crores as their Code was not blocked by Tata Motors/TML; (iii) That Om Sai Motors have learnt their follies and they wish to revive the original business for which they want the full support of Tata Motors/TML; (iv) That Om Sai Motors requested Tata Motors/TML to open the Code and give a chance to Om Sai Motors to do their regular business and that Om Sai Motors assured Tata Motors/TML that in no time they will bring the business to normal and clear all the pending dues (which according to Om Sai Motors is Rs. 5 crores ) of Tata Motors/TML. 11. In view of the above decisions of the Hon'le Supre....
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....ereafter for the first time by its e-mail dated 13th June, 2013 tried to raise the defence that Tata Motors/TML had handed over the vehicles to Om Sai Motors despite Om Sai Motors not having ordered for the same only because the same were lying in their yard. The defence on the face of it appears to be false and is not bonafide and has no merit. 13. The Hon'ble Supreme Court of India in its decision in IDBI Trusteeship Service (supra) in paragraph 18 held as under: "18. Accordingly, the principles stated in paragraph 8 of Mechelec? case will now stand superseded, given the amendment of O.XXXVII R.3, and the binding decision of four judges in Milkhiram? case, as follows: (a) If the defendant satisfies the Court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit; (b) If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign judgment, and the defendant is ordinarily entitled to unconditional leave to defend; ....