Final Order 3

Order Details: Other
Pdf Text: 1 Comm. Suit 251/2019
MHCC010119792019 Presented on : 22/11/2019
Registered on : 09/12/2019
Decided on : 12/10/2022
Duration : 2Y 10M 3D
IN THE CITY CIVIL COURT AT MUMBAI.
COMMERCIAL SUIT NO.251 OF 2019
M/s Oscar Fashion Pvt. Ltd.
A company incorporated under the
Companies Act, carrying on its business
at office unit no.101, 1st floor, Safalya
Building, B. Parulekar Marg, Off Bhavani
Shankar Road, Dadar (West), Mumbai
400 028.
Through its Director Mr. Sharad Ratanshi
Pasad, aged about 59 years, occu.
business
…PLAINTIFF
Versus
Bharat Shivaji Udeshi
Age about 68 years, occu. Business,
Proprietor of M/s Shiv Sneha Associates,
Dolat Manzil, 1st floor, Next to Parsee
Gymkhana, 607A, Dr. B. Ambedkar
Road, Dadar (East), Mumbai 400014. ... DEFENDANT
Shri. P.N. Vira, learned Advocate for Plaintiff.
Shri. R.J. Ghag, learned Advocate for Defendant.
CORAM : SHRI.N.P.TRIBHUWAN, ADHOC DISTRICT JUDGE
(C.R.NO.32)
J U D G M E N T
(Delivered on 12/10/2022)
This is a suit for recovery of sum of Rs.39,64,800/ and
interest @ 18% on sum of Rs.30,50,000/ from the date of suit till
realization of entire amount.
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2. It is case of plaintiff that it is a private limited company
dealing in business as manufacturer and exporter of readymade
garments for women. Defendant is businessman. Prior to 12/4/2017 he
was partner of registered partnership firm viz. M/s Shiv Sneha
Associates. The said partnership firm dissolved on 12/4/2017.
Thereafter, defendant become sole proprietor of the said firm.
3. In the month of March, 2017, defendant approached to the
directors of plaintiff and requested them to advance loan to the said
partnership firm – M/s Shiv Sneha Associates for its business. In
pursuance of request of defendant, on 12/4/2017 the plaintiffcompany
gave loan of Rs.25,00,000/ to the said partnership firm. Defendant
being partner and authorized signatory of M/s Shiv Sneha Associates
with the consent of other partners has signed and executed a writing in
favour of plaintiff and thereby acknowledged the receipt of the said
amount of loan. Defendant with the consent of other partners of the
said firm issued cheque for Rs.25,00,000/ in favour of plaintiff towards
the discharge of the liability of the said partnership firm for repayment
of the said loan amount.
4. Thereafter, defendant approached the directors of plaintiff
and requested them to extend the time for repayment of the said loan
amount and further assured that he will issue fresh cheques towards
repayment of the said loan with interest. On 15/10/2017, defendant
being proprietor of M/s Shiv Sneha Associates issued three postdated
cheques in favour of plaintiff towards repayment of loan with interest as
under :
Cheque No Date Amount Interest period
081222 15/1/2018 Rs.25,00,000/ Principal sum
081223 15/1/2018 Rs.4,50,000/ 12.4.2017 to 11.1.2018
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015787 11/4/2018 Rs.1,00,000/ 12.1.2018 to 12.3.2018
Total Rs.30,50,000/
At that time defendant informed in writing that the said partnership has
been dissolved. When all aforesaid cheques presented for encashment,
the same were dishonoured due to funds insufficient.
5. Despite repeated reminders and demands the defendant
neglected to make payment of aforesaid loan amount. On 17/4/2018
the plaintiff through advocate sent notice to defendant and called upon
him to pay Rs.30,50,000/. However, defendant by letter dt.5/5/2018
denied the demands of plaintiff and raised false defence that the
transaction of advancement of loan was a professional money lending
transaction within the meaning of Maharashtra Money Lending and
Regulation Act, 2004. He has accepted and admitted the receipt of the
said loan amount of Rs.25,00,000/. Defendant has undertaken to repay
the said loan amount with interest. Defendant is liable to pay the
amount as under :
Outstanding admitted amount of loan and interest :
Cheque No.081222 dt.15/1/2018 + Interest @ 18%
p.a. from 9/4/2018 to 20/11/2019
Rs.25,00,000/
Rs.7,50,000/
Cheque No.081223 dt.15/1/2018 + Interest @ 18%
p.a. from 9/4/2018 to 20/11/2019
Rs.4,50,000/
Rs.1,35,000/
Cheque No.015787 dt.11/4/2018 + Interest @ 18%
p.a. from 13/4/2018 to 20/11/2019
Rs.1,00,000/
Rs.29,800/
TOTAL Rs.39,64,800/
6. Plaintiff contended that since the transaction is a
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commercial transaction, it applied for preinstitution mediation
settlement but the matter could not settle in the pre institution
mediation process. Hence, this suit.
7. Defendant has filed written statement (Exh.5) and
contended that the dispute/claim raised by plaintiff is not a
“Commercial Dispute” and hence not tenable as “Commercial Suit”
under commercial division of this court.
8. Plaintiff is a private limited company incorporated under
the Companies Act, 1956 but it has not passed a resolution of the Board
of Directors of the company before granting alleged loan to defendant.
Defendant has crossexamined the Director of plaintiff namely Sharad
Pasad in complaint no.1370/SS/2018 before learned Metropolitan
Magistrate Sewree, Mumbai. During crossexamination the said director
has admitted that : (i) plaintiffcompany has no money lending licence,
(ii) there was no resolution of board of directors before giving loan to
accused.
9. Therefore, alleged transaction is illegal and hence cannot
be enforced by plaintiff. Plaintiff admitted that he is carrying on the
business of professional money lending and he did not and does not
hold money lending license under the Maharashtra Money Lenders
Regulation Act. Hence, suit is not maintainable as per section 13 of the
said Act.
10. Defendant denied that he met plaintiff either prior to
12/4/2017 or thereafter. He denied that he has accepted liabilities of
M/s Shiv Sneha Associates and responsible for dues and liabilities of the
said firm. He denied that he has requested the directors of plaintiff to
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advance the loan. According to defendant after receipt of said amount
of Rs.25,00,000/, he surprised to know that same has been paid by
plaintiff by falsely representing that plaintiff is holding valid license of
money lending and therefore insisted upon the defendant to keep the
said amount as loan from plaintiffcompany. Hence, defendant had no
choice but to issue said three cheques for Rs.25,00,000/, 4,50,000/
and 1,00,000/ respectively. In view of above pleading defendant
denied all other adverse contents of plaint.
11. Plaintiff has filed application (Exh.6) for summary
judgement u/order XIIIA of CPC. The said application came to be
rejected on 23/2/2021.
12. In view of rival pleading of parties, learned predecessor
Shri S.N. Yadav has framed issues (Exh.12) and I recorded findings
thereon for the reasons stated as under.
ISSUES FINDINGS
1. Whether the plaintiff is entitled for
recovery of amount of Rs.39,64,800/ with
interest @ 18% p.a. on Rs.30,50,000/
from the date of filing of the suit till its
realization?
…Nil
2. Whether defendant proves defendant
proves that the plaintiff is carrying on
money lending business without license in
violation of section 13 of the Maharashtra
Money Lending (Regulation) Act,2014?
…Nil
3. Whether this court has jurisdiction to try
the suit?
…No
4. What order and decree? …As per final order
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REASONS
AS TO ISSUE No.3:
13. In order to prove its case, plaintiff has examined four
witnesses as under :
PW1 Mr. Sharad Ratanshi Pasad Director of Plaintiffcompany
PW2 Mr. Saurabh Suman
Sachhidanand Prasad
Branch Manager, Canara
Bank, Dadar (W) Branch
PW3 Mr. Nikhil Kailashchandra
Sirsat
Sr. Manager, Canara Bank,
Byculla (E) Branch
PW4 Mr. Deepak Gopal Kole Assistant Manager, The
Greater Bombay Cooperative
Bank Ltd.
14. In rebuttal defendant has not examined himself or any
witness on his behalf. Heard learned counsel of both parties.
PW1/Director of plaintiff company has reproduced all contents of plaint
in his chiefexamination. Plaintiff has filed documentary evidence :
certified copies of (i) certificate dt.29/8/2018 issued by Canara Bank,
(ii) Writing dt. 15/10/2017 issued by defendant, (iii) Dishonoured
cheques bearing no. 081222, 081223 & 015787, (iv) six cheques return
memo dt. 9/4/2018 & 13/4/2018, (v) Notice dt.17/4/2018 issued by
plaintiff, (vi) Reply dt. 5/5/2018 sent by advocate of defendant, (vii)
Board resolution dt.30/4/2019, (viii) Bank statement of account of
plaintiff, (ix) Bank statement of account of defendant.
15. Heard learned counsel of both parties. Perused written
argument filed by learned counsel of defendant. According to plaintiff
the subject matter is commercial dispute and hence this Commercial
Court has jurisdiction. Defendant submitted that the alleged
dispute/claim is not a commercial dispute/suit and hence not
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maintainable as commercial suit under the commercial division of this
court. On this point, learned counsel of plaintiff relied on case law of
Base Industries Group and anr. vs Mahesh P. Raheja and others,
Chamber Summons No.488/2018 in Comm. Execution Application
No. 63/2017 in Suit no.119/2016, dt.13th/22nd July 2018, wherein
held,
36. From this discussion the following propositions emerge :
(a) Not every loan is axiomatically a moneylending transaction
for the purposes of the 1946 or the 2014 Acts. There is no such
presumption in law.
(b) It is doing of the ‘business of moneylending’ that attracts the
provisions of the statute. In interpreting the phrase, the correct
emphasis is on the word ’business’ not ‘moneylending’. It is the
word ‘business’, and not the expression ‘moneylending’. That is
determinative. Simply but, every instance of lending money is not
moneylending. Not every lender is a Shylock.
(c) To constitute ‘business’, a single isolated instance does not,
and even several isolated stray instances do not, constitute ‘the
business of moneylending’. To be engaged in the ‘business of
moneylending’. The activity must be systematic, regular,
repetitive, and continuous, and must generate an appreciable
revenue. The fact that the borrower is a stranger to the lender
does not on its own make the latter a ‘moneylender’.
(d) A loan recovery action is not barred merely because there is a
loan. It has to be shown that the loan was part of ‘the business of
moneylending’.
(e) A plaintiff seeking a recovery of a loan is not required to show
that his suit is not barred by the Money Lenders Act. It is always
for the defendant who puts up moneylending as a defence to
show that the transaction is forbidden by the Money Lenders Act.
16. On the point of “commercial dispute” the Hon’ble Supreme
Court in case law of Ambalal Sarabhai Enterprises Limited Vs. K. S.
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Infraspace and another :(2020) 15 SCC 585 held that,
For a dispute to be a commercial dispute under S. 2(1) (c) (vii),
the agreement between the parties must refer to immovable
property used/being used exclusively in trade or commerce. The
word “used” occurring in S.2(1)(c)(vii) denotes “actually used”
and it cannot be either “ready for use” or “likely to be used” or “to
be used”. Merely because the property is likely to be used in
relation to trade and commerce, the same cannot be a ground to
attract jurisdiction of Commercial Court. Such a wide
interpretation would defeat the object of Commercial Courts Act
with regard to speedy disposal of commercial disputes
thereunder. In present case, there was nothing on record to show
that at the time when the agreement to sell concerned came to be
executed, the property was being exclusively used in trade and
commerce so as to bring the dispute within the ambit of S. 2(1)
(c)(vii) of Commercial Courts Act. Consequently, the impugned
order of High Court directing Commercial Court to return the
plaint for its presentation before the appropriate court was
proper.
17. Hon’ble Bombay High Court in case law of Glasswood
Realty Pvt. Ltd. and others .v/s. Chandravilas Kailashkumar Kothari
: 2021 SCC Online Bom 5032 : (2022) 1 Bom CR 527, held
9. The disputes which are in the nature of ordinary transactions
of merchants, business, financers and traders will fall within the
purview of ‘commercial disputes’, and particularly those relating
to merchantile documents. Thus, it covers the ordinary/normal
transactions carried out by the entities mentioned in the said
clause and the term ‘merchant’ would cover a person who buy
and trade, in any commodity and therefore, the term as explained
correspond to all sort of traders, buyers and sellers. A trader is,
necessarily a person who engages himself in trading in goods;
buying and selling them at profit and the word ‘trader’ has
received a liberal interpretation with passage of time, being not
only one who sell goods substantially in the form in which they
are bought, but it would also cover a member of stock exchange,
who buy and sell securities on the exchange floor or one who
buys and sells commodities and commodity futures for others, in
anticipation of speculative profit. A ‘financer’ as per Oxford
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Dictionary is an administrator, collector of taxes or one who
isskilled in levying and managing public money or as a capitalist
concerned in financial operations. The aforesaid is an indicator
that the goal of a financier is to secure ample revenue.
17. In the wake of the above, the impugned order which take a
view that the transaction of advancing the amount as a friendly
loan is commercial in nature, is an erroneous finding as a solitary
transaction of advancing loan, on friendly terms, unlike a
commercial lending with the prevailing market rate, would fall
short or ordinary transaction of a financer, banker. Moreso, even
the plaintiff is conscious of this position and in her response to
the Application filed for return of plaint for presentation of
appropriate court, she admit so.
18. In the present case the plaintiff is a private limited
company dealing in business as manufacturer and exporter of
readymade garments for women. According to plaintiff, in the month of
March, 2017, defendant approached to the directors of plaintiff and
requested them to advance loan to the said partnership firm – M/s Shiv
Sneha Associates. In pursuance of request of defendant, on 12/4/2017
the plaintiffcompany has given loan of Rs.25,00,000/ to the said
partnership firm.
19. During cross examination PW1 admitted that defendant is
doing business of construction in the name of Shiv Sneha Associates.
Plaintiffcompany has not purchased any flat from defendant or sold
any goods to defendant.
20. Considering pleading of plaint, written statement and
evidence, the nature of transaction is not commercial transaction. There
is no trading transaction between plaintiff and defendant. Plaintiff is
not license holder money lender. The business of plaintiff is not money
lending. Thus, in view of aforesaid case law and facts of present case,
this suit does not come under the definition of commercial dispute.
Hence, this court has no jurisdiction to entertain and try this suit.
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Therefore, it is necessary to return the plaint to plaintiff to be presented
to the court in which the suit should have been instituted. The plaint
can be returned at any stage of the suit under Order VII Rule 10 and
10A of C.P.C. Hence, I answer issue no.3 in negative. Therefore, issue
no.1 & 2 are not decided & answered. I pass following order.
ORDER
The plaint stands returned to plaintiff for presentation to the
appropriate court, not being a commercial dispute.
Date : 12/10/2022.
(N.P. Tribhuwan)
Judge, City Civil Court,
Mumbai. C.R.No.32
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Dictated on : 12/10/2022.
Checked on : 12/10/2022.
Signed on : 12/10/2022.
CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL
SIGNED JUDGMENT/ORDER”
Mr. V. S. Shinde
UPLOAD DATE AND TIME NAME OF STENOGRAPHER
Name of the Judge(with CR
No.)
HHJ SHRI. N. P. TRIBHUVAN
(C.R.No.32)
Date of pronouncement of Order 12/10/2022.
Order signed by P.O. on 12/10/2022.
Order uploaded on 12/10/2022.
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