TaxTMI 
TaxTMI 
2013 (3) TMI 807
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....hat the defendant No.2 in both the suits viz. Mr. Janak Goyal, being the Director of the defendant No.1 Company, had approached the plaintiff in each of the suits in January, 2010 for business loan of Rs. 4,35,00,000/- and Rs. 7,50,00,000/- respectively for the purpose of romoting and developing the business of the defendant No.1 Company. (ii) That the defendant No.3 Smt. Neelam Goyal is also a Director of the defendant No.1 Company. (iii) That the defendants required the subject loan for the period with effect from 20.01.2010 to 31.05.2010 extendable upto 30.09.2010 with interest thereon at 36% per annum. (iv) That the plaintiff in CS(OS) No.47/2011 agreed to lend the said loan to the defendant No.1 Company on the guarantee of the defendant No.2 and the plaintiff in CS(OS) No.48/2011 agreed to lend the said loan to the defendant No.1 Company on the guarantee of the defendants No.2 and 4. (v) That the defendant No.1 executed the Loan Agreements dated 20.01.2010 with each of the plaintiffs and the defendant No.2 stood as guarantor with respect to the loan subject matter of CS(OS) No.47/2011 and the defendants No.2 and 4 stood as guaran....
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....ed is thus not felt for referring separately to each of the applications for leave to defend and reference hereinafter shall be made to the leave to defend of the defendant No.1 Company only. 4. The grounds urged in the affidavits accompanying the applications for leave to defend are as under: i) That the suit against the defendant No.3 on the ground of her being the Director of the defendant No.1 Company and against the defendants No.2 and 4 as guarantors, is bad for misjoinder of parties and cannot be tried as a summary suit. ii) That the original documents on which the suit is based have not been filed and the suit is thus not maintainable under Order 37 as the plaintiffs will have to lead evidence requiring trial. iii) That the defendants are still willing to honour their commitments of allotting the "said plot of land" to the plaintiffs after the clearance of already pending Court cases. iv) That the claim for interest is beyond the scope of summary procedure. v) That the alleged mortgage deed is neither registered nor is it properly stamped and no reliance can be placed thereon. vi) That the defendant No.1 Company had star....
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....0/- were never paid by the plaintiffs to the defendant by way of loan. xviii) That the account with the Bank of Baroda, Lajpat Nagar Branch, New Delhi in which the loan amount was given was not the normal account of the defendant No.1 Company but had been opened a day or two prior to the Agreements dated 20.01.2010 and the plaintiff only had introduced the defendant No.1 Company for the purposes of opening the account as the plaintiff in each case had a long standing account with the said Branch. xix) That the modus operandi was that the cheques would be deposited by the plaintiffs on one day and would thereafter be taken out by the plaintiffs themselves on the basis of signed cheques taken by them. xx) That the fact of the matter is that the two plaintiffs had advanced Rs. 1,00,00,000/- and Rs. 1,75,00,000/- respectively only to the defendant and in the case of CS(OS) No.48/2011, in respect of M/s Astute Real Estate Pvt. Ltd., money was sought to be shown as given by the plaintiff therein namely Mr. Ravi Sharma. xxi) That even the Loan Agreements dated 20.01.2010 provide that if the project of the defendant No.1 Company is approved, the area whi....
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....e account of plaintiff in CS(OS) No.47/2011 on 18th & 20th January, 2010 and a total sum of Rs. 6,30,75,211/- was transferred on 19th & 20th January, 2010 from the account of defendant No.1 to the account of M/s Astute Real Estate Pvt. Ltd. 7. The senior counsel for the defendants has next invited attention to a report submitted by Serious Fraud Investigation Office (SFIO) of the Ministry of Corporate Affairs, Government of India in Company Petition No.277/2011 filed by the plaintiff in CS(OS) No.48/2011 for winding up of the defendant No.1 Company. It is argued that the argument of the defendants of the transaction between the parties being a "money rotation transaction" is supported from the said report also. The senior counsel has further argued that the cheques of the plaintiff in each case, by which the loan in each case is stated to be disbursed to the defendant No.1 Company, are of prior to the date of the Agreements and there is no disbursement of loan after the Loan Agreements dated 20.01.2010 and the Agreements are thus without consideration and cannot be relied upon. Reference in this regard is made to the language of the Agreements which is of the loan being disburse....
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.... Attention is also invited to the statement of the defendants recorded on 02.05.2011 in the Court of Sh. Vikrant Vaid, MM (NI Act)-02/South, where it was stated that the cheque was given as security to be presented „upon failure of the defendants to abide by the terms and conditions of the Agreement‟. It is argued that the Loan Agreements dated 20.01.2010 which in the application for leave to defend is being called a farce, is not denied in the said proceedings. The senior counsel for the plaintiffs relies on Ms. V.K. Enterprises Vs. M/s Shiva Steels AIR 2010 SC 2885 to contend that where the issuance of the cheque on which the suit under Order 37 of the CPC is based is not disputed, leave to defend has to be refused. It is further argued that the defendants had been injuncted vide order dated 22.01.2007 in OMP No.36/2007 filed by some other person, from dealing with the land which in pursuance to the Loan Agreement dated 20.01.2010 was mortgaged with the plaintiffs. It is stated that owing to the earlier injunction order, the said mortgage is useless. Copy of the application dated 13.08.2010 filed by the defendant No.1 in S.B. Civil Writ Petition No.195/2009 titled M/s....
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....s on the report of SFIO is concerned, the senior counsel for the defendants has argued that the defendants have not had the opportunity to cross examine the persons examined by the SFIO and which opportunity the defendants would have upon leave being granted and during the trial of the present suit. 10. I have considered the rival submissions. What is abundantly borne out is that, the execution of the Loan Agreements of 20.01.2010 and issuance of the cheques in repayment of loan with interest, on which the suit is based, is no disputed. 11. The Loan Agreements of the year 2010 are unequivocal and record, i) loan having been advanced by each of the plaintiffs to the defendant No.1 and the terms of the said loan; ii) guarantees furnished by the other defendants for repayment thereof; iii) equitable mortgage having been created to secure the said loans; iv) post dated cheques for repayment of the loan amount with interest due having been issued; and, v) tax having been deducted thereon. 12. The argument of the senior counsel for the defendants, of the transactions of the year 2010 in the bank account of the defendant No.1 Company being a "money rotation transaction", besides ....
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....tiffs, but also the incidental charges and / or the repurchase price which the defendant No.1 had agreed to pay to the plaintiffs and which the defendant No.1 had admittedly been unable to pay to the plaintiffs owing to the project being held up. The execution of the Agreements of the year 2010 show that the parties then decided to give the transaction of financing, earlier in the year 2008 given the colour of a Flat Booking Agreement, the true colour of Loan Agreement. However to show such a loan transaction, money was required to be shown to have flown from the plaintiffs to the defendant No.1 and for which purposes the account aforesaid of the defendant No.1 was opened in the bank and monies transacted. Further however, since the aforesaid monies were already with the defendant No.1 under the Flat Booking Agreements of the year 2008 and were not required to be again given to the defendant No.1, the monies in the said account shown to have been advanced by the plaintiffs to the defendant No.1 were directed back into the accounts of the plaintiffs and M/s /s Astute Real Estate Pvt. Ltd. To my mind, the defendants now cannot be permitted to rake up the transactions of the year 2008....
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....nental Cellular Corporation MANU/FEFC/0637/1987 where it was observed that when the transaction is commercial, the parties sophisticated, and the contract itself detailed, it is wise for the Courts to rely on express language than to imply a promise on their own. 16. Though the law permits a plea of a transaction being a sham one but for such a plea to be taken, the circumstances in which the person (pleading the transaction to be a sham) was made to succumb thereto and the reasons for creating a camouflage have to be pleaded. There is no pleading whatsoever to this effect in the leave to defend applications of the defendants. Upon the same being put to the senior counsel for the defendants, he stated that the reasons would be given in the written statement. This cannot be an argument for seeking leave to defend under Order 37. It is incumbent upon the defendant applying for leave to defend to make out a plausible case and the defendant cannot be heard to state that the case will be made after the leave to defend is granted. 17. The defendants having signed the loan Agreements and having issued post dated cheques, are bound thereby and if commercial men, especially those deal....