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TMI Blog2020 (2) TMI 1702X X X X Extracts X X X X X X X X Extracts X X X X ..... company engaged in the business of financial and advisory services. The defendants are entities which form part of SKIL Group of Companies and/or represent the SKIL Group. The plaintiff had exposure to SKIL Group of Companies. Various financial facilities were extended by the plaintiff to SKIL Group of Companies. These suits arise out those financial transactions. Hence, these summonses for judgments are being determined by a common order as common questions of facts and law arise for consideration, in all the suits. 3. Since the Summons for Judgment No. 30 of 2019 in Commercial Summary Suit No. 779 of 2019 was heard extensively as a lead case, the facts in the said are considered in detail. The facts in the rest of the suits are thereafter noted in brief. SJ 30 of 2019 in Comm. Summ. Suit No. 779 of 2019 4. This commercial division summary suit is instituted for recovery of a sum of Rs. 3,14,19,51,918/- along with further interest at the rate of 16% p.a. and additional interest at 2% p.a., penal interest at 2% p.a. and delayed payment interest at 2% p.a. 5. The material averments in the plaint can be summarised as under: Defendant no. 1 is a part of SKIL Group of Companies. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation under the contract, defendant no. 1 had issued Electronic Clearing Systems Mandates (ECS Mandates) dated 30th December, 2015, 26th May, 2016 and 27th June, 2016 for various amounts. However, defendant no. 1 started committing default in performance of its obligation. 10. There were meetings and exchange of correspondence. Defendant no. 1 made offers of One Time Settlement (OTS). In the correspondence, defendant no. 1 acknowledged the liability to repay the loan amount along with accrued interest thereon, in clear and unequivocal terms. However, the loan amount remained outstanding. Plaintiff no. 1 thereupon addressed notices mentioning the events of default and called upon defendant no. 1 and 7 to repay the outstanding amount along with interest. The first notice was issued on 25th July, 2018. In the meanwhile, the ECS Mandates issued by defendant no. 1 were dishonoured on account of insufficiency of funds. In replies to the notices issued by the plaintiff, defendant no. 1, on the one hand, acknowledged the liability and, on the other hand, made an endeavour to raise untenable and frivolous grounds. 11. Ultimately, the plaintiff was constrained to address recall notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tober, 2016. Defendant no. 4 pledged the shares of SKIL Infrastructure Limited by executing the Pledge Agreement dated 26th October, 2016. Defendant no. 2 pledged the shares of Reliance Naval and Engineering Limited by executing the Pledge Agreement dated 26th October, 2016. Defendant no. 1 has also drawn a Demand Promissory Note on 26th October, 2016. SJ 84 of 2019 in Comm. Summ. Suit No. 887 of 2019 14. This commercial division summary suit is instituted for recovery of a sum of Rs. 1,59,19,81,284/- along with interest. Defendant no. 1 Gujarat-Dwarka Portwest Limited, a SKIL Group entity, is the borrower. The loan of Rs. 120 Crore was offered in terms of sanction letter dated 22nd December, 2014. Upon acceptance of the terms and conditions therein by defendant no. 1, Loan Agreement came to be executed on 30th December, 2014. Defendant no. 2 is the corporate guarantor. Defendant no. 3 is the personal guarantor. Defendant no. 4, a partnership firm, has also guaranteed the repayment of due amount by defendant no. 1. Defendant nos. 2 and 4 executed the letters of guarantee on 30th December, 2014. Defendant nos. 1, 2 and 3 pledged the shares of the abovenamed companies by executing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintiff of "ever-greening the loan" is prohibited by law and also defeats the provisions of law. The defendants contend that the Serious Fraud Investigation Office ('SFIO') is investigating into the affairs of the plaintiff. A report is submitted on 28th May, 2019 ('SFIO Report'). The SFIO Report adverts to wide-scale "ever greening of loans" by the plaintiff which is wrongful and prohibited by law. The loan transaction in question has also been a subject matter of investigation. The SFIO Report reveals that the instant loan was also advanced in flagrant violation of binding directions and is, thus, legally unenforceable. The SFIO Report, according to the defendants, itself warrants an unconditional leave to defend the suit. Entire amount disbursed by the plaintiff returned to the plaintiff on the day of disbursement or soon thereafter: (C) Banking upon the SFIO Report, the defendants contend that the disbursal of fresh loan was an eye-wash. The plaintiff had advanced the loan, in question, only with a view to close the old outstanding loan accounts of defendant no. 1 and its group companies and prevent them from being labelled as bad loan or NPA. The plaintiff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minished sum of Rs. 58,39,35,781/-. (E) The defendants also contend that the Loan Agreement and the underlying transaction are hit by the provisions of Section 23 of the Indian Contract Act, 1872. The aforesaid defences raise genuine triable issues. The question of enforceability of the Loan Agreement, which was executed with the object of defeating the provisions of law, requires consideration. All these defences are rooted in facts: the determination of which hinges upon evidence. Moreover, SFIO Report, bolsters up the defences raised by the defendants. Hence, the defendants are entitled to an unconditional leave to defend. 19. I have heard Dr. Saraf, the learned Senior Counsel for the plaintiff in all the suits, Mr. Seervai, the learned Senior Counsel for the defendants in Comm Summary Suit No. 779 of 2019 and Mr. Mehta, the learned Counsel for the defendants in other suits, at a considerable length. 20. In the backdrop of the defences raised on the part of the defendants, I deem fit in the fitness of things to first deal with substantive grounds of defence sought to be raised by the defendants to seek an unconditional leave to defend the suit and thereafter consider the cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f showing repayment of the earlier loans sanctioned to group companies. The top officers of the plaintiff were fully aware that the said course of "ever-greening of loan" is statutorily proscribed. Yet, the plaintiff pursued the said fraudulent course with impunity, submitted Mr. Seervai. 25. Mr. Seervai invited the attention of the Court to the report submitted by SFIO in the matter of IL&FS limited and its subsidiaries, under Section 212(1)(c) of the Companies Act, 2013, to bolster up the aforesaid submissions. Special emphasis was laid on the following observations in the report: ABUSIVE FUNDING TO NON GROUP ENTITIES 1.13. . A number of these borrowers were not servicing their debt obligation timely. The top management of IFIN were aware of the potential problem accounts which were getting stressed in the succeeding months of the reports generated through the MIS of the company. Thereafter in order not to classify the loan/credit facility as a Non Performing Asset (NPA) as required under the RBI Directions, and not provisioning for such NPAs/defaulting loan facilities which otherwise would have adversely impacted the financial statements, lent to other companies belonging t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95.00 Crore was towards part financing the acquisition of 19% stake held by Punj Lloyd Group in RNEL by SKIL Group. Since then, IFIN has extended multiple facilities to the Group, resulting in current terminal exposure of Rs. 670.00 Crore. IFIN servicing and exit was predicated on divestment of RNEL stake by SKIL Group to strategic buyer given the thrust in the defence business and RNEL being one of the key players with facilities in place. However, with delay in defence orders and no significant cash flow generation from existing operations, servicing under the IFIN facilities were delayed. Accordingly, IFIN had been invoking pledged RNEL shares towards appropriation of dues under the facility. Aggregate 5.36 Crore pledged equity shares of RNEL have been invoked in phases since Jan 14 till Sept 14 & Jan 16-June 18 & Rs. 192.30 Crore are appropriated towards SKIL Group dues. Of these invoked shares, IFIN has till date sold 1.62 Crore RNEL shares & balance 3.75 Crore RNEL shares continue as part of IFIN investment & presently based on market appellate IFIN has been continuously selling these shares. The credit appraisal memos, bank statements, concerned emails along with the note ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enables the Reserve Bank to assume an advisory role but it also gives it the power to prohibit a banking company against entering into any particular transaction/s or class of transactions. The use of the words, "caution or prohibit" in Section 36(1)(a) clearly implies that when the Reserve bank of India prohibits the banking companies from entering into any particular transaction then such a direction which is issued would be binding on the banks and has to be complied with. While the Reserve Bank of India has the power under Section 36(1)(a) of the Act to give advice or to caution the banking companies which may not be binding on the banking companies, but when the Reserve Bank prohibits the banking companies against their entering into any particular transaction or class of transactions, the said prohibition has to be regarded as being binding. The power to prohibit, given by Section 36, will be meaningless if it was not meant to be binding on the banking companies." 30. Mr. Seervai further submitted that in the case of B.O.I. Finance (supra) the Supreme Court has referred to the judgment in the case of Tinsley vs. Millingan, (1993) 3 All ER 65, HL wherein it was noted that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the High Court of Australia was that the mortgage was rendered illegal and void by the provisions of Section 8 of the Banking Act, 1959 as the loan was advanced by a corporate entity without having an authority to carry on the banking business. The learned Judges, by separate judgments, unanimously concluded that the absence of a valid licence as granted by Section 8 of the Act does not vitiate the contract made by a body corporate in the course of carrying on a banking business in breach of the section, and the contracts of mortgage and guarantee were neither void nor unenforceable. 35. Aforesaid judgment in the case of Yango Pastoral (supra) was referred with approval by the Supreme Court in the case of B.O.I. Finance (supra), to hold that the non-compliance of directions issued by the Reserve Bank of India will not result in invalidation of the agreement executed in breach thereof. The observations in paragraphs 32 to 34 read as under: "32. It will also be useful to refer to the decision of the High Court of Australia in the case of Yango Pastoral Co. Pty. Ltd. v. First Chicago Australia Ltd. where Mason, J. made observations to this regard. That was a case where Section 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not for the court to hold that further consequences should flow, consequences which in financial terms could well far exceed the prescribed penalty and could even conceivably lead the plaintiff to insolvency with resultant loss to innocent lenders or with resultant loss to innocent lenders or investors. In saying this I am mindful that there could be a case where the facts disclose that the plaintiff stands to gain by enforcement of rights gained through an illegal activity far more than the prescribed penalty. This circumstance might provide a sufficient foundation for attributing a different intention to the legislature. It may be that the true basis of the principle is that the court will refuse to enforce a transaction with a fraudulent or immoral purpose: Bereford Vs. Royal Insurance Co. Ltd. (1937) 2 K.B. 197 at p. 220. On this basis the common law principle of ex turpi causa can be given and operation consistent with, through subordinate to, the statutory intention, dying relief in those cases where a plaintiff may otherwise evade the real consequences of a breach of statutory prohibition." (emphasis added) 33. The aforesaid principles will clearly be applicable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank (2002) 10 Supreme Court Cases 697. In the said case also, a defence was sought to be advanced that the transaction therein was contrary to the circulars of the Reserve Bank and opposed to public policy. The Supreme court after referring to its earlier judgment in the case of B.O.I. Finance (supra) observed that the instructions issued by the Reserve Bank of India were meant to be complied with only by the banking companies and could not be regarded as binding on the other parties. There was no evidence raised or sought to be raised in the said case which could possibly have led the Court to the conclusion that the transaction was opposed to public policy. 37. The exposition of the aforesaid legal position indicates that non-observance of the directives or the circulars of the Reserve Bank of India by the banking companies, though they are statutorily enjoined to observe, does not necessarily lead to invalidation of the underlying transactions. The judgment of the High Court of Australia in the case of Yango Pastoral (supra) which was referred to in the case of B.O.I. Finance (supra), with approval, was in the backdrop of the direct breach of a statutory provision. There was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action is void. It is pertinent to note that the defence that the debt has become unenforceable because of the aforesaid practice of 'ever-greening of the loans' did not see the light of the day till the affidavit-in-reply came to be fled. None of the correspondence placed on record emanating from the defendants indicates that the defendants had ever resisted the extension of the facility. Thus, the mere fact that SFIO has carried investigation in the affairs of the plaintiff and found that the plaintiff indulged in the practice of ever-greening of the loans, may not justify an inference that the entire transaction is void. It is especially for the reason that the existence of liability of the SKIL group to the tune of about 700 Crore was acknowledged by the defendants. Thus, I am not persuaded to agree with the submission on behalf of the defendants that the defendants are entitled to an unconditional leave to defend the suit on account of the extension of loan facility in breach of RBI directives. 43. It may be apposite to deal with another facet of the submission of Mr. Seervai, at this stage. An endeavour was made to demonstrate that since the entire amount which was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the plaintiff, in contrast, submitted that the aforesaid contention of the defendants is factually incorrect and legally unsound. There is no clinching material on record to indicate that at a particular time the defendants had made a request to invoke the pledged shares. In view of the provisions contained in Section 176 of the Indian Contract Act, the pledgee is not bound to take recourse to the securities. Nor the pledgee can be blamed for not invoking the securities at a particular point of time. In view of this well recognised position in law, the defence of not invoking the pledged shares by the plaintiff does not raise a triable issue, urged Dr. Saraf. 47. In order to led support to the aforesaid submission Dr. Saraf placed reliance on a judgment of a Division Bench of this Court in the case of State Bank of India vs. Smt. Neela Ashok Naik and another AIR 2000 Bom 151, wherein it was held that this Court was in agreement with a decision of the Delhi High Court in the case of Bank of Maharashtra vs. Racmann Auto (P) Ltd. AIR 1991 Delhi 278, wherein it was enunciated that Section 176 of the Contract Act makes it clear that it is the discretion of the pawnee to sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urgency of decision on the sale of the pledged shares to reduce the liability of the defendants. The aforesaid contention finds support in the reply to the notice (issued by the plaintiff on 25th July, 2018) dated 16th August, 2018 by Chief Fiance Officer of SKIL Infrastructure Limited. It is, inter alia, mentioned therein that despite having given approval to the take over deal the plaintiff failed to sell approximately 39.3 Crore RNEL shares at Rs. 63 per share, aggregating to total consideration of approximately Rs. 248 Crore in mid January 2016 to Reliance Group. Instead, the shares were sold at a much lower price (Rs. 27/- per). This ground is agitated in the offer of one time settlement dated 20th September, 2018, as well. 51. The pledgee may not be under an obligation to track the movement of the scrips on the Exchange and sale them at a particular point of time, which in the hindsight, appears to be the maximum price commanded by the share at that point of time. However, where it is alleged that there was an approval to take over bid and the lender had agreed to release the pledged security at a particular price and failed to do so resulting in loss to the pledgor, it rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. To lend support to the aforesaid submission, Dr. Saraf, placed a strong reliance on a judgment of the Supreme Court in the case of Hindustan Steel Limited vs. Messrs Dilip Construction Company. (1969) 1 SCC 597 The said case arose out of an award under Indian Arbitration Act, 1940. The award was unstamped. In the context of the provisions contained in Section 35 of the Indian Stamp Act, 1899, the Supreme Court observed as under: "5. An instrument which is not duly stamped cannot be received in evidence by any person who has authority to receive evidence, and it cannot be acted upon by that person or by any public officer. Section 35 provides that the admissibility of an instrument once admitted in evidence shall not, except as provided in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped. 7. The Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments: It is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponent. The stringent provisions of the Act are conceived in the interest of the revenue once that ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgments, the defendant cannot be given unconditional leave on such technicality." (emphasis supplied) 57. The aforesaid judgment was carried in appeal in the case of Kapil Puri vs. Rupinder Singh Arora. 2019(3) Mh.L.J. 155 A Division Bench of this Court, after adverting to the challenge posed on the basis of inadequate stamp-duty recorded that the approach of the learned Single Judge in impounding the document and sending it for adjudication instead of granting leave on the sole count of insufficiency of stamp-duty on the instrument in question, was in consonance with law and, thus, warranted no interference. Paragraph 12 of the judgment reads as under: "12. In regard to the contention that the appellant was coerced to enter into a settlement agreement, also has no basis as there is not a semblance of material to support this contention. Further the contention as urged on behalf of the appellant that the settlement was not adequately stamped and which was a valid defence for an unconditional leave, we are in complete agreement with the observations of the learned Single Judge. The Supreme Court in the case Hindustan Steel Limited vs. Messrs Dilip construction (Company), (19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and pass an order for ensuring payment of the same. Thus, the above mattes are not with which the Court is concerned and it can in appropriate cases such as the one before us proceed with the merits of the matter by ensuring that the proper stamp duty is adjudicated and paid. The learned single Judge has precisely ensured that. He has not allowed the appellants to rely on a technical plea and of the nature referred above. The course adopted by him, in the facts and circumstances of the case, cannot be faulted. We have found that in all the instruments based on which the suit has been laid and particularly those required by Order XXXVII there is 'an admission of' the liability. There is no denial on the execution of these documents. None of the defendants have ever questioned the contents thereof nor is there an interpretation other than the one placed by the plaintiffs on the contents thereof and which can be deduced from the defences raised. In such circumstances, allowing a just and legitimate claim to be defeated and frustrated by taking recourse to the fiscal measure was not permitted by the learned single Judge." (emphasis supplied) 60. In support of the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a proposal; (b) When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a promise; xxx xxx xxx (g) An agreement not enforceable by law is said to be void; (h) An agreement enforceable by law is a contract; xxx xxx xxx 29. When an arbitration clause is contained "in a contract", it is significant that the agreement only becomes a contract if it is enforceable by law. We have seen how, under Indian Stamp Act, an agreement does not become a contract, namely, that it is not enforceable in law, unless it is duly stamped. Therefore, even a plain reading of Section 11(6A), when read with Section 7(2) of the 1996 Act and Section 2(h) of the Contract Act, would make it clear that an arbitration clause in an agreement would not exist when it is not enforceable by law. This is also an indicator that SMS Tea Estates (supra) has, in no manner, been touched by the amendment of Section 11(6A)." (emphasis supplied) 63. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Supreme Court was essentially, whether Section 11(6A) of the Arbitration and Conciliation Act, 1996 introduced by Arbitration and Conciliation (Amendment) Act, 2015, has removed the basis of the judgment in the case of SMS Tea (supra) wherein it was, inter alia, held that where an arbitration clause is contained in an unstamped agreement, the Judge hearing Section 11 application shall impound the agreement and ensure that stamp-duty and penalty are paid thereon before proceeding with the said application. It was submitted that endeavour of the defendants to draw support and sustenance from the aforesaid pronouncement in the case of Garware (supra) to seek leave to defend on the count of insufficiency of stamp-duty, is legally impermissible. 67. The Supreme Court has framed the question which arose for its consideration in Garware (supra), in paragraph 4, as under: "4. The question raised in this appeal is as to what is the effect of an arbitration clause contained in a contract which requires to be stamped. This court, in SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 ["SMS Tea Estates"], has held that where an arbitration clause is contained in u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existence, as has been contended for by the respondent. The independent existence that could be given for certain limited purposes, on a harmonious reading of the Registration Act, 1908 and the 1996 Act has been referred to by Raveendran, J. in SMS Tea Estates (supra) when it comes to an unregistered agreement or conveyance. However, the Indian Stamp Act, containing no such provision as is contained in Section 49 of the Registration Act, 1908, has been held by the said judgment to apply to the agreement or conveyance as a whole, which would include the arbitration clause contained therein. It is clear, therefore, that the introduction of Section 11(6A) does not, in any manner, deal with or get over the basis of the judgment in SMS Tea Estates (supra), which continues to apply even after the amendment of Section 11(6A)." (emphasis supplied) 69. It was further submitted that this Court in the judgments pronounced after Garware (supra) has held that Garware (supra) is restricted to an application under Section 11 of the Act. Dr. Saraf placed reliance on the judgment of this Court in the case of Saifee Developers Private Ltd. vs. Sanklesha Constructions and others (G.S. Kulkarni, J) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , unless the stamp duty and penalty due in respect of the instrument is paid, the court cannot act upon the instrument, which means that it cannot act upon the arbitration agreement also which is part of the instrument. Section 35 of the Stamp Act is distinct and different from Section 49 of the Registration Act in regard to an unregistered document. Section 35 of the Stamp Act, does not contain a proviso like Section 49 of the registration Act enabling the instrument to be used to establish a collateral transaction. 20. The Scheme for Appointment of Arbitrators by the Chief Justice of Gauhati High Court, 1996 requires an application under Section 11 of the Act to be accompanied by the original arbitration agreement or a duly certified copy thereof. In fact, such a requirement is found in the scheme/rules of almost all the High Courts. If what is produced is a certified copy of the agreement/contract/instrument containing the arbitration clause, it should disclose the stamp duty that has been paid on the original. Section 33 casts a duty upon every court, that is, a person having by law authority to receive evidence (as also every arbitrator who is a person having by consent of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll Ropes Ltd. 2018(3) Mh.L.J. 22, this Court, in the context of the amendment to the Arbitration and Conciliation Act, 1996, by the Amendment Act, 2015, especially the insertion of sub-section (6A) in Section 11 of the principal Act, which prescribed that the Court shall confine itself to examination of the existence of an agreement, held that the question of impounding of the instrument unstamped or insufficiently stamped need not be considered by the Judge who is hearing Section 11 application, but by an Arbitrator, who is appointed under Section 11. 76. It would be contextually relevant to note that the Full Bench of this Court in the case Gautam Landscapes (supra) has also considered the impact of the legislative change brought about by insertion of sub-section (6A) and held that the issue as to whether sufficiency or otherwise of the stamp-duty on the agreement can be left to the decision of the Arbitral Tribunal (paragraph 102). The Full Bench further observed in 'paragraph 110' that even the decision in SMS Tea (supra) cannot be made applicable to the application filed after 23rd October, 2015. On the aforesaid premise, the Full Bench held that before passing final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra). 81. It is trite that a decision is an authority for what it decides and not what can logically be deducted therefrom. A profitable reference in this context can be made to the decision of the Constitution Bench in the case of Union of India vs. Chajju Ram (dead) By LRs. and others (2003) 5 SCC 568, wherein the Supreme Court in paragraph 23 has observed thus: "23. It is now well settled that a decision is an authority for what it decides and not what can logically be deducted therefrom. It is equally well settled that a little difference in facts or additional facts may lead to a different conclusion." 82. The aspect of insufficiency of stamp-duty and the bar incorporated by the provisions of Section 34 of the Stamp Act, 1958, is required to be considered in the backdrop of the special procedure prescribed in Order XXXVII of the Code for expeditious resolution of disputes based on negotiable instrument and written contracts etc. Indisputably, adjudication of deficit stamp-duty is within the province of the authorities under the Stamp Act, 1958. The adjudication orders are amenable to appeals and revisions. Can the Court stay its hands off and not consider the aspect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I wider interpretation of the word "trial" is not called for and the word "trial" in Section 10, in the context of summary suit, cannot be interpreted to mean the entire proceedings starting with institution of the suit by lodging a plaint. In a summary suit, the "trial" really begins after the Court or the Judge grants leave to contest the suit. Therefore, the Court or Judge dealing with the summary suit can proceed up to the stage of hearing the summons for judgment and passing the judgment in favour of the plaintiff if (a) the defendant has not applied for leave to defend and/or if such application has been made and refused or if (b) the defendant who is permitted to defend fails to comply with the conditions on which leave to defend is granted. 85. Placing heavy reliance upon the aforesaid proposition, it was urged by Dr. Saraf that at the stage of summons for judgment, it is not peremptory to defer the consideration where the instrument is either unstamped or insufficiently stamped. The said objection, in the backdrop of the nature of the summary procedure, wherein at the stage of the summons for judgment the Court has to consider the nature of the defence sought to be put-fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be advanced. 89. In the peculiar facts of the case, the aforesaid objection as to the insufficiency of the stamp-duty on the documents, in question, namely, the Loan Agreement and Guarantee Agreement and Pledge Agreement cannot be said to be of determinative significance as well. Apart from the said Loan, Guarantee and Pledge Agreements, there are other documents which fall within the ambit of the provisions contained in sub-rule (2) of Rule 1 of Order XXXVII. As indicated above, apart from the said agreement, defendant no. 1 has executed a promissory note in favour of the plaintiff, there is a balance confirmation letter executed on 15th May, 2018, confirming the balance due of 2,48,70,00,000/-. In each of the suits also, there is such a balance confirmation to the extent of principal amount. Moreover, in the OTS proposal submitted on 16th January, 2018 and 21st February, 2018 there is clear acknowledgment of liability of SKIL Group to the tune of Rs. 700 Crore. In view of the pronouncement of Full Bench in the case of Jyotsna K. Valia vs. T. S. Parekh & Co. 2007(3) Bom.C.R. 772 a summary suit can be instituted on the basis of a balance confirmation statement and settled accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n letters. Aliunde, there are admissions in writing in the form of OTS proposals acknowledging the aggregate liability to the tune of Rs. 700 Crore. 94. Thus, the proposition 17.6 of the judgment of the Supreme Court in the case of IDBI Trusteeship Services Limited vs. Hubtown Limited (2017)1 Supreme Court Cases 568, which envisages that whether any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court, governs the facts of the instant case. What should be the amount which the defendants be directed to deposit? The SFIO report indicates that interest which would have accrued was deducted upfront in respect of the line of credit extended to SKIL Infrastructure Ltd. and Gujarat-Dwarka Portwest Ltd. In my view it would be appropriate to direct the defendants to deposit the amount which was actually disbursed to the 'borrower company' in each of the suits. Hence, the defendants are entitled to conditional leave to defend the suit; subject to deposit of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to defend the suit is granted to defendant nos. 1 to 4 subject to deposit of a sum of Rs. 1,00,89,22,511/- in the Court within eight weeks from today. (ii) In the event of deposit of the aforesaid amount, the defendant nos. 1 to 4 shall file the written statement, within four weeks of the deposit. (iii) If the defendants do not deposit the aforesaid amount within said period, the suit be listed for directions after 10 weeks. (iv) The plaintiff has tendered the original Loan Agreement dated 30th December, 2014, the letters of guarantee dated 22nd December, 2014 and 30th December, 2014 and the Pledge Agreement dated 28th September, 2015. These documents are hereby impounded. (V) The Prothonotary and Senior Master is directed to forward all the above impounded documents to the Superintendent of Stamps/Collector of Stamps, Mumbai for adjudication. Copy of the forwarding letter be sent to the Advocate for the plaintiff and the defendants, in the respective suits. (VI) The Superintendent of Stamps/Collector of Stamps, Mumbai is directed to adjudicate the stamp-duty and penalty, if any, within six weeks from the date of the receipt of the impounded documents from the Prothono ..... X X X X Extracts X X X X X X X X Extracts X X X X
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