JUDGMENT
Reva Khetrapal, J.
Page 2812
1. The present suit has been filed under Order xxxvII of the Code of Civil Procedure praying for a decree in the sum ofRs. 57,78,585.86 in favor of the plaintiff and against the defendants jointly and severally along with interest at the rate of 17% p.a. with effect from 01.01.2002 pendente lite and future till realisation.
2. The plaintiff, M/s. National Small Industries Corporation Ltd. is a Government Company registered under the provisions of the Companies Act, 1956, having its registered office at NSIC Bhawan, Okhla Industrial Estate, New Delhi and various regional/branch offices all over the country. The suit has been signed, verified and instituted by Shri Hemraj Singh, Deputy General Manager (Law), who is the Principal Officer and the Constituted Attorney of the Plaintiff Corporation and as such duly authorised to file the same. The plaintiff is a government enterprise engaged in the development and growth of small scale industrial units in the country and is assisting such units in a number of ways, one of which is to extend raw material assistance to them. Under the ‘Raw Material Assistance Scheme’, the plaintiff procures raw material from canalised/Government agencies and others for and on behalf of the small scale units by making payment directly to the suppliers and delivering the said raw material to the small scale units as per their requirement.
3. The defendant No. 1 is a company incorporated under the Companies Act, 1956 and is engaged in the manufacturing of electronic goods such as TV, CTV, etc. as a small scale unit. The defendant No. 2 is the Managing Page 2813 Director of the defendant No. 1, the defendant No. 3 (a director of the company) is the wife of the defendant No. 2, and the defendant No. 4 is the mother of the defendant No. 3 and mother-in-law of the defendant No. 2. Defendants No. 3 and 4 are the legal representatives of late Shri P.C. Manchanda (an erstwhile director of the company) being his daughter and widow.
4. The defendant No. 1 had approached the plaintiff vide letter dated 1st August, 1986 for financial assistance under the ‘Raw Material Assistance Scheme’ of the plaintiff for the import of CTV parts and TV components. On consideration of the request of the defendant No. 1, the plaintiff initially agreed to grant the limit ofRs. 7 lakhs to defendant No. 1 under its Scheme. Accordingly, an agreement dated 09.01.1987 was executed between the plaintiff and the defendant No. 1. In terms of the said agreement and the terms and conditions of the aforesaid Scheme, which were duly accepted by defendant No. 1, the plaintiff was to provide Raw Material Assistance to the defendant No. 1 for procurement of raw material, both imported as well as indigenous. Relevant clauses of the said agreement are as under:
1. The Importer hereby authorises the Corporation to import such quantities of the said goods as may be indicated by them in their indent placed on the Corporation from time to time and agrees to deliver to the Corporation Letter of Authority in favor of the Corporation in such form as may be required to enable the Corporation to act as agents for import of the goods against the respective indents.
2. The Importer shall while placing their indent deposit with the Corporation a sum equivalent to 15 to 20% of the CIF value and pay another 15 to 20% on or before the payment of custom duty. The amount so deposited will not carry any interest.
3. For the purpose of such imports the Corporation is authorised to place order on the foreign suppliers for and on behalf of the importer, who is the actual user for the import of the items mentioned in the Schedule and also open Letter of Credit and make remittance of payment towards the goods and make arrangements for the movement of the goods imported as well as clearance of the goods and storage thereof.
4. …
5. Goods imported by the Corporation as agent of the importer will always be treated to remain and held ‘on account’ of the importer.
6. The importer shall at its own cost make a godown available for storage of the goods imported by the Corporation under its lock and key as agent of the importer well in advance and also provide necessary safeguard and security arrangement to the godown where the material is stored.
7. That the Corporation at all times till the importing of the goods delivery to the importer as provided under this agreement keep the goods so imported in their custody as security towards the amounts spent, invested and liability incurred towards the goods so imported and the same shall be deemed to be hypothecated/pledged to the agent to secure such investment, expenditure, liability interest of loss arising out and accruing on account of the procurement of the goods.
8. The amounts advanced paid or incurred by the Corporation towards remittance for payment of goods to the foreign Suppliers, Freight, Page 2814 Insurance, Bank Charges Freight for movement of goods, clearances charges, customs duty and other statutory duty or levies, charges for transporting the imported goods, expenses for storing the goods in the godown, postal expenses and all other charges and expenses incurred by the Corporation in connection with the import of the goods will be debited to importer’s account and the importer agrees and undertakes to repay or reimburse the amount so debited to importer’s account with interest at the rate of 16% from the date of debit of such amount till reimbursement. Importer agrees that such repayment or reimbursement of the amount debited to importer’s account will be made on or before the expiry of 100 days from the date of storage of the goods in the godown a notice whereof shall be given by the Corporation.
9. In consideration of the service rendered by the Corporation as agent of the importer in importing the goods in terms of the agreement, the importer agrees to pay to the Corporation as service charges five per cent of the cost of the said goods and other charges incurred by the Corporation on behalf of the importer for import of the said goods and clearance of the said goods and storage in terms of the agreement. The Corporation agrees to allow a rebate of 2% of the service charges in the event of the total value of the goods imported on behalf of the importer exceeding a sum of Rs. 25 lakhs during the financial years and on importer strictly complying with and fulfillling the terms and conditions on its part to be observed and performed contained in these presents.
10. …
11. …
12. …
13. …
14. The importer agrees to redeem the goods from pledge by clearing the goods against payment of the cost of goods and all the other charges incurred by the Corporation in terms of this agreement with interest there on as agreed herein within 100 days from the date of storage of the goods. In the event of the importer seeking extension of time for removing the goods against payment, it shall be lawful for the Corporation as its sole discretion to grant such extension on condition that the importer shall be liable to pay as agreed damages for delay in redemption, additional interest of 1% over and above the agreed interest @ 16% on the amount due and payable in terms of this agreement for the period for which the extension of time is allowed to the importer on importer’s application in that behalf. It is expressly agreed that in the event of the importer applying for extension of time the importer shall not be entitled to rebate on service charges provided for hereinbefore.
15. …
16. …
17. …
18. In the event of the importer failing to redeem or lift the goods within a period of 100 days from the date of storage or within such extended time as may be applied for by the importer and granted by the Corporation it shall be lawful for the Corporation to give fifteen days notice of its Page 2815 intention to sell the pledged goods for recovery of the dues with interest to any other user and with the approval of the appropriate authorities at such price as may be obtainable. The sale of such goods shall be without prejudice to the rights of the Corporation to recover losses and damages. Further more, in the event of the importer failing to lift the goods within the specified period or period so extended commits any breach of this agreement, the margin money or balance thereof after adjustment of the service charges shall stand forfeited.
19. …
20. All expenses and charges paid by the Corporation to Banks with whom the Corporation shall have arrangements for opening Letter of Credit and/or of custody, clearance and maintenance of stock of goods shall be debited to importer’s account and be payable by the importer in terms of the agreement.
21. …
22. …
23. …
24. …
25. …
26. …
27. …
28. The importer agrees to reimburse to the Corporation on demand all or any amount that the Corporation may be required to pay or bear by way of levy charges of duties or taxes on the said goods imported on behalf of the importer in terms of the agreement either before or after the delivery of the said goods.
5. The plaintiff having agreed to provide assistance to defendant No. 1, defendants No. 2 to 4 executed a Deed of Guarantee dated 07.11.1986, whereby defendants No. 2 to 4 undertook to ensure that the terms and conditions laid down in the agreement executed between the plaintiff and defendant No. 1 were duly complied with by the defendant No. 1. They also bound themselves jointly and severally to pay immediately on demand without any demur, any loss or expenses incurred by the Corporation in case of any default made by defendant No. 1 and further undertook not to sell, transfer, part with possession or alienate in any manner whatsoever, the properties owned by them and listed in the schedule annexed thereto. The said guarantee was a continuing guarantee and was to remain binding and operative until the terms of the agreement had been duly complied with.
6. Pursuant to the execution of the agreement, the plaintiff granted its assistance to defendant No. 1 as and when required by it, but allegedly the defendant No. 1 did not pay the full amount on the following assistance provided by the plaintiff to defendant No. 1 for Rs. 1,93,990.21 on 12.12.1989, Rs. 30,409.69 on 01.01.1990, Rs. 3,75,597/- on 09.01.1990, Rs. 7,00,000/- on 16.01.1990, and Rs. 11,80,000/- on 02.02.1990.
7. Accordingly, the plaintiff vide its various letters and reminders called upon defendant No. 1 to pay the outstanding dues of the plaintiff. On the failure of Page 2816 the plaintiff to pay the amounts due and outstanding in its account, the account of the defendant No. 1 with effect from 01.04.1992 was frozen by the plaintiff.
8. It is the case of the plaintiff that the defendant No. 1, though it stopped paying the dues of the plaintiff, has been acknowledging to the plaintiff from time to time the assistance availed by it from the plaintiff and has also been acknowledging the amounts due and payable to the plaintiff. It is also the case of the plaintiff that though the defendant No. 1 made some payments to the plaintiff, substantial amounts remained due and outstanding in its account. The defendant No. 1 made several promises to pay the dues but did not make any payments. By its letter dated 01.07.1998 however the defendant No. 1 acknowledged and accepted its liability towards the plaintiff to the tune of Rs. 26,88,133.78.
9. After the aforesaid acknowledgment made by the plaintiff of its outstanding liability to the tune of Rs. 26,88,133.78, the defendant No. 1 did not make any further payment to the plaintiff and by various letters informed the plaintiff that it was incurring heavy losses in the business. Eventually, after constant follow up by the plaintiff, the defendant No. 1 came forward with a proposal for settlement of dues and requested the plaintiff for re-scheduling of its dues. Pursuant to the proposal of defendant No. 1, the parties entered into an agreement dated 25th June, 1999, whereby the defendant No. 1 again acknowledged and accepted its liability to the tune of Rs. 26,88133.78. Significantly, by the said agreement, all personal guarantees furnished from time to time for availing Raw Material Assistance were to remain valid till the entire payment under the agreement was received by the plaintiff. The relevant clauses of the said agreement are as under:
1. The party of the second part acknowledges and accepts its liability of Rs. 26,88,133.78 on account of assistance availed by the unit from NSIC Head Office, Marketing Division and agreed to settle the said dues by making down payment of Rs. 1.50 lakhs by 15th July, 1999 and the balance amount in monthly Installments of Rs. 50,000/- per month starting from 1st August, 1999 for the first year and Rs. 75,000/- per month from 1st August, 2000 and Rs. 1 lakh per month from 1st August, 2001 and thereafter w.e.f. 1st August, 2002 @ 1.5 lakhs per month till realisation of entire dues Along with interest w.e.f. 01.04.1992.
2. That the amount of interest shall be paid after the recovery of said amount of Rs. 26,88,133.78. The party of first part may consider the request of party of second part for waiver of interest or allow concession thereon on recovery of the said amount of Rs. 26,88,133.78 in terms of this agreement.
3. That in case of breach of any of the terms of this agreement including the default in payment of down payment of Rs. 1.50 lakhs or any of the Installment as agreed herein, the entire amount shall become due and payable Along with the interest by the party of second part. In that event the party of the first part shall be at liberty to take all necessary action to recover its dues forthwith.
6. That all personal guarantees furnished from time to time on behalf of the party of the second part for availing Raw Material Assistance from the party of first part shall remain valid till entire payment under this agreement is received by party of first part.
Page 2817
10. Needless to say, the defendant No. 1 defaulted in the performance of the said agreement whereupon the plaintiff vide its legal notice dated 24th January, 2000, called upon defendant No. 1 to pay a sum of Rs. 52,60,699.38 due as on 30th November, 1999 along with up to date interest. The plaintiff by the said legal notice also invoked the guarantee deed dated 07.11.1986 executed by defendants No. 2 to 4. Despite the said legal notice, the defendants failed to pay the dues of the plaintiff. Hence the present suit filed by the plaintiff to recover the debt/liquidated sum of money payable by the defendant arising on a written contract entered into between the parties on 25th June, 1999.
11. Summons in this suit were issued vide order dated 11th April, 2002. In response to the said summons, defendants No. 1 to 3 entered their appearance by filing IA No. 4887/2002 along with their Memorandum of Appearance. In paragraph 4 of the said application, the defendants No. 1 to 3 disclosed that the defendant No. 4, namely Shri P.C. Manchanda had died on 31st April, 1997. This led to the filing of an application under Order 22 Rule 4 read with Section 151 CPC by the plaintiff for bringing on record the legal representatives of the deceased defendant No. 4 Shri P.C. Manchanda. This IA was numbered as IA 6563/2002. In paragraph 3 of the said application, the names of the legal representatives of Shri P.C. Manchanda were disclosed as follows:
(i) Smt. Nirmal Kant Manchanda
Widow of late Shri P.C. Manchanda
C-225, State Bank of India Colony
Paschim Vihar, New Delhi.
(ii) Smt. Madhu Khullar
D/o late Sh. P.C. Manchanda
B-30, Lajpat Nagar-III
New Delhi.
12. It was submitted by the plaintiff that since Smt. Madhu Khullar had already been imp leaded in the suit as defendant No. 3 as she had given a personal guarantee, the plaintiff be permitted to implead the only other legal representative of the deceased Shri P.C. Manchanda, namely, Smt. Nirmal Kant Manchanda. The prayer of the plaintiff was allowed and an amended memo of parties was ordered to be filed by the plaintiff. Summons were served on the defendant No. 4 by ordinary process and by registered post, but she has not cared to contest the petition.
13. The application for issuance of summons for judgment in the proforma prescribed under Order 37 Rule 3, Sub-Rule 4 CPC was next filed by the plaintiff being IA 3370/2003. The defendant No. 3 having been served with the summons for judgment filed IA 3387/2004 under Order 37 Rule 3(5) read with Section 151 CPC seeking unconditional leave to defend the suit.
14. The defendants No. 1 & 2 not having filed applications for leave to defend on service of summons for judgment upon them within the statutory period of ten days, by order dated 31st August, 2004 it was observed that legal consequences against defendants No. 1 & 2 would follow. This led to Page 2818 the filing of two applications by defendants 1 and 2 being IA 8036/2004 under Section 5 of the Limitation Act read with Section 151 CPC and IA 8037/2004 for recalling the order dated 31st August, 2004 on the ground that defendants No. 1 & 2 had not been served with summons for judgment. OA No. 6/2005 was also filed being a revision petition against the order dated 31st August, 2004. By order dated 3rd March, 2005 this Court held that the application filed by defendants No. 1 and 2 seeking leave to defend the suit was within limitation. It may be mentioned that this order was passed in OA No. 6/2005 and no orders were specifically passed in IAs No. 8036/2004 and 8037/2004, which remain pending till date.
15. Defendants No. 1 & 2 thereafter filed their application for leave to defend the suit being IA 728/2005 along with an application under Order 37 Rule 3(7) read with Section 5 of the Limitation Act for condensation of delay. All the aforesaid applications are pending consideration except IA 4887/2002, IA 6563/2002 and OA 6/2005 which, as stated above, were disposed of.
16. At the time of hearing of the applications, however, none appeared for the defendants despite the fact that the matter was adjourned so as to give opportunity to the defendants to press their applications for leave to defend the suit. This being so, the applications for leave to defend were gone into with the assistance of counsel appearing for the plaintiff. Primarily, leave to defend was sought on the ground that (i) the claim of the plaintiff was not within the ambit of the provisions of Order 37 of the Code of Civil Procedure, (ii) that it was not within limitation as the alleged guarantee was executed on 7th November, 1986 while the present suit was filed in or about March, 2002 and (iii) that the plaintiff corporation was in any case free to sell the goods for recovery of its alleged dues. It was contended that neither the goods were disposed of by the plaintiff nor the same were delivered to the defendant company and instead, a false and frivolous claim has been made.
17. It was also contended that the plaintiff was liable and responsible for having caused losses to the defendant No. 1 company by not releasing the goods lying in the possession and power of the plaintiff and as such, no liability could be fastened upon the defendants. Finally, it was stated that the claim of the plaintiff was based upon an agreement alleged to have been entered into on 25th June, 1999 and that thus there was an admission that the claim was not based upon the earlier agreement alleged to have been entered into in or about January, 1987 and, therefore, the claim of the plaintiff against the defendants is not tenable.
18. As already noticed, the case of the plaintiff is based upon a written agreement entered into between the parties on 25th June, 1999. In terms of the said agreement dated 25th June, 1999, the defendant No. 1 unequivocally acknowledged and accepted its liability to the tune of Rs. 26,88,133.78 due as on 31st March, 1992 (first acknowledgment is dated 1st July, 1998). Further, in terms of the agreement, the defendant No. 1 agreed to settle the acknowledged dues by making down payment of Rs. 1.50 lakhs by 15th July, 1999 and the balance amount in monthly Installments of Rs. 50,000/- per month starting from 1st August, 1999 for the first year and Rs. 75,000/- per month from 1st August, 2000 and Rs. 1 lakh per month Page 2819 from 1st August, 2001 and thereafter with effect from 1st August, 2001 at the rate of Rs. 1.50 lakhs per month till realisation of the entire dues along with interest with effect from 01.04.1992. It was further agreed between the parties that the amount of interest was to be paid after the recovery of the principal amount of Rs. 26,88,133.78. However, in case of breach of any of the terms of the agreement including default in down payment of Rs. 1.50 lakhs or of any Installment as agreed in the agreement, defendant No. 1 was to become liable to pay the entire amount along with interest. All personal guarantees furnished from time to time by the defendants, it was agreed, would remain valid till the entire payment under the agreement was received by the plaintiff (Clause 6 of the agreement). By the present suit, the plaintiff seeks to recover the acknowledged debt/liquidated sum of money payable by the defendant arising on the written contract entered into between the parties on 25th June, 1999. Accordingly, I have no hesitation in holding that the suit is well within the scope and ambit of the provisions of Order 37 of the Code of Civil Procedure. The agreement having been entered into on 25th June, 1999 and the suit having been filed on 16th March, 2002, it is also well within the period of limitation.
19. As regards the defense sought to be raised by the defendants that the raw material was in the possession of the plaintiff and the same was not being released to the defendants, resulting in huge losses to the defendants, no details or particulars in respect thereof have been given by the defendants. Not a single letter has been placed on record which the defendants might have written to the plaintiff requiring them to release the raw material in their possession. Nor there is any averment from the side of the defendants that a written request was ever made to the plaintiff to release the goods and the plaintiff failed to comply with the same. A plain reading of the agreement between the parties shows that defendant No. 1 was required to take over the supply of raw material from the plaintiff on payment to the plaintiff. It is so stipulated not only in the agreement between the parties but also in the ‘Raw Material Assistance Scheme’. Defendant No. 1 consistently failed to make the said payments, resulting in huge outstandings, being in the sum of Rs. 26,88,133.78, which amount was acknowledged by the defendants by the letter dated 1st July, 1998.
20. It is also manifestly clear from the record that the defendants themselves gave a proposal to the plaintiff for re-scheduling of payments due from them and it was in this backdrop that the agreement dated 25th June, 1999 was entered into between the parties, wherein the defendants specifically acknowledged that a sum of Rs. 26,88,133.78 (apart from the interest) was due and payable by them to the plaintiff. Having failed to abide by the terms of the agreement dated 25th June, 1999, it does not now lie in the mouth of the defendants to allege that they have a substantial defense to the suit. The defendants have nowhere denied the agreement dated 25th June, 1999 or the deeds of guarantee executed by them on 07.11.1986, which by virtue of Clause 6 of the agreement dated 25th June, 1999 were agreed to be extended by them till such time as the entire payment was made to the plaintiff. In the aforesaid circumstances, the defense sought to be set up by the defendants cannot be said to be a bona fide one.
Page 2820
21. Counsel appearing for the plaintiff non-applicant while relying upon the judgments of this Court in Bush Boake Allen (India) Ltd. v. Mehtajee and Company and Ors. reported in 2006 I AD (Delhi) 396 and Dura-Line India Pvt. Ltd. v. BPL Broadband Network Pvt. Ltd. , urged that the defense put forward by the defendants, far from being a substantial defense, was frivolous and vexatious, and hence the Court ought to decline leave to defend to the applicants. In the case of Bush Boake Allen (India) Ltd. (M/s.), it was observed as follows:
7.After amendment of 1976 of the Code the discretion to give leave to defend is delineated by the proviso. The first proviso to Order 37 Rule 3(5) provides that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defense to raise or that the defense intended to be put forward is frivolous and vexatious. The second proviso to the said Rule further states that claim of the plaintiff if admitted by the defendant, the leave will not be granted unless such amount was deposited. The discretion of the Court is to be guided by well established principals (sic.) of law, keeping in view the facts and circumstances of each case. But wherever the Court finds and satisfied (sic.) that there is absence of substantial defense or that the defense is frivolous or vexatious, the Court would decline leave to defend to the applicant. The use of the expression good defense must be understood so as to include in its ambit reasonable friable issue and a bonafide stand. The good defense of the defendant has not to be a defense which is illusory or shown to be ex facie unbelievable. Grant of leave to defend thus would be relateable to the content and value, in terms of law of the defense put forward by the defendant. The legislative intention in introducing the word good is to emphasise the need of a bonafide defense which is acceptable within the afore (sic.) corners of law. A dispute raised for the sake of dispute or denial for the sake of denial with intent to delay the proceedings would be a category of cases which cannot fairly fall under this category. It is the duty of Court to amplify act of justice rather than jurisdiction or authority. It is a matter of common knowledge that denial by a party is the easiest method of delaying the proceedings before the Court and in fact without being subjected to rigors of high cost and penal loss. A plea which is put forward by the defendant should go to the root of the liability and must raise an issue which in law would be triable.
22. In the case of M/s. Dura-Line India Pvt. Ltd., as in the instant case, the suit under Order 37 Code of Civil Procedure was based upon the acknowledgment and confirmation of the balance issued by the defendant and it was held therein that the mere maintenance of a running account by the plaintiff does not disentitle the plaintiff from filing the suit under Order 37 Code of Civil Procedure based on a written contract and acknowledgment in writing.
Page 2821
23. The legal principles relating to the grant of leave to contest a summary suit have been evolved by a catena of decisions. The Supreme Court in the case of Mechalec Engineers and Manufacturers v. Basic Equipment Corporation clearly held that where the defendant sets up a defense which is illusory, sham or practically a moonshine, then ordinarily the plaintiff is entitled to leave to sign judgment. To the same effect are the decisions in Aganall Traders Ltd. v. Shyam Ahuja , Minerals and Metals Trading Corporation Ltd. v. Dimple Overseas Ltd. 2001 V AD (DELHI) 206, Reliance Industries Ltd. v. Imperial Pigments (P) Ltd. 2003 III AD (DELHI) 278, Mrs. Raj Duggal v. Ramesh Kumar Bansal , Goyal Tax Fab Pvt. Ltd. v. Anil Kapoor 2001 IV AD (DELHI) 741 and Daya Chand Uttam Prakash Jain v. Santosh Devi Sharma 1997 III AD (Delhi) 556. In the last mentioned case, the suit under Order 37 was based on the written acknowledgment of the defendants and it was held by this Court that though the defendants specifically denied the written acknowledgment and alleged that the case of the plaintiff was based on a false document and the claim was barred by time, leave to defend the suit could be granted to the defendants only upon their furnishing a bank guarantee for the amount decreed by the trial court and in case of their failure to do so, the plaintiff would be entitled to pursue her execution application.
24. The case of the plaintiff in the instant case is on surer footing. The agreement dated 25th June, 1999 acknowledging and accepting the debt in the sum of Rs. 26,88,133.78 is not disputed by the defendants. The legal notice issued by the plaintiff to the defendants on 24th January, 2000 calling upon the defendants to pay the debt jointly and severally, and invoking the guarantee deed executed by the defendants No. 2 to 4 was also not replied to by the defendants, thereby leading to the inference that the liability is an admitted one, notwithstanding the applications for leave to defend which have not been pressed at the time of hearing.
25. For the reasons aforesaid, I find no merit in the applications for leave to defend filed by the defendants No. 1, 2 & 3. The same are accordingly, in my view, liable to be dismissed. In terms of the agreement dated 25th June, 1999, which is the written contract between the parties and the foundation of the suit of the plaintiff under Order xxxvII of the Code, the admitted liability is Rs. 26,88,133.78 as on 25th June, 1999. As regards interest payable to the plaintiff, this being a suit under Order xxxvII of the Code of Civil Procedure which by itself is a self-contained code, the claim of the plaintiff for the grant of interest wholly depends upon the terms of the agreement between the parties. The rate of interest as provided for in the agreement dated 12th January, 1987 was to be 16% from the date of the debit of the amount till reimbursement. Clause 14 which is relevant reads as follows:
The importer agrees to redeem the goods from pledge by clearing the Page 2822 goods against payment of the cost of goods and all the other charges incurred by the corporation in terms of this agreement with interest thereon as agreed herein within 100 days from the date of storage of the goods. In the event of the importer seeking extension of time for removing the goods against payment, it shall be law-full for the corporation at its sole discretion to grant such extension on condition that the importer shall be liable to pay as agreed damages for delay in redemption, additional interest of 1% over and above the agreed interest @ 16% on the amount due and payable in terms of this agreement for the period for which the extension of time is allowed to the importer on importer’s application in that behalf. It is expressly agreed that in the event of the importer applying for extension of time the importer shall not be entitled to rebate on service charges provided for hereinbefore.
26. A perusal of the agreement dated 25th June, 1999 shows that the defendants while accepting liability to the extent of Rs. 26,88,133.78 (without interest) had requested the plaintiff corporation for long term settlement of the dues and re-scheduling of the acknowledged debt/liability. The acknowledged liability of the defendants was accordingly re-scheduled as set out above. Clause 2 of the agreement stipulated that the amount of interest shall be paid after the recovery of the principal amount of Rs. 26,88,133.78 , and further stipulated that the plaintiff corporation may consider the request of the defendants for waiver of interest or allow concession thereon on recovery of the amount of Rs. 26,88,133.78 . Clause 3, however, laid down that in case of breach of any of the terms of the agreement including default in payment of down payment of Rs. 1.5 lakhs or any of the Installments as agreed in the agreement, the entire amount shall become due and payable along with interest by the party of the first part.
27. Accordingly, in terms of Clause 14 of the agreement reproduced hereinabove the defendants who are in breach of the agreement dated 25th June, 1999 are liable to pay interest on the acknowledged liability of Rs. 26,88,133.78 @ 16% per annum from 1st April, 1992 till the date of realization.
28. In view of the aforesaid discussion, a decree in the sum of Rs. 26,88,133.78 with interest @ 16% p.a. from the date of institution of the suit i.e. 16th March, 2002 till realization of the amount is passed in favor of the plaintiff and against the defendants who shall be jointly and severally liable to pay the same. The plaintiff shall also be entitled to costs of the suit. The registry shall draw up the decree-sheet in the above terms forthwith.
29. The suit and the applications being IA Nos.3370/2003, 3387/2004, 8036/2004, 8037/2004, 727/2005, 728/2005 are disposed of accordingly.