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M/s. Caprican Wire Products, rep. by its Partner, Tmt.M.Unnamalai, Coimbatore & Others v/s The Tamil Nadu Industrial Investment Corporation Ltd., Coimbatore & Others

    S.A.No. 1980 of 2002 & C.M.P.Nos. 16389 & 16950 of 2002

    Decided On, 22 July 2021

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE

    For the Appellants: Abbiraami for M/s. Sarvabhauman Associates, Advocates. For the Respondents: R1, Bijesh Thomas, K.F. Manavalan, Advocates, R2 to R4, No such persons.



Judgment Text

(Prayer:Second Appeal filed under Section 100 CPC, against the Judgment and Decree dated 16.7.1999 made in A.S.No.179 of 1998, on the file of the II Additional District Judge, Coimbatore, reversing the judgment and decree dated 24.8.1998 made in O.S.No.648 of 1994, on the file of the III Additional District Munsif at Coimbatore.)

(This case was heard through Video Conferencing)

This Second Appeal has been filed challenging the impugned judgment of the Lower Appellate Court viz., II Additional District Court, Coimbatore dated 16.07.1999 passed in A.S.No.179 of 1999 wherein the Lower Appellate Court has reversed the findings of the Trial Court passed in its judgment and decree dated 24.08.1998 in O.S.No.648 of 1994 on the file of the Munsif Court, Coimbatore.

2. The Appellants are the plaintiffs in the suit O.S.No.648 of 1994 on the file of the Munsif Court, Coimbatore. They filed a suit against the respondents seeking for a declaration that no amount is due from them to the first respondent/first defendant in its Loan Reference No.C-53 and consequential mandatory injunction was also sought for to direct the first respondent/first defendant to return the original title deeds of the third Appellant/third plaintiff.

3. The case of the Appellant/plaintiff before the Trial Court was that though the first defendant sanctioned the loan of Rs.3,60,000/-, they lent only a sum of Rs.2,46,824/- and that too the said sum was paid directly to the seller of the machineries which was purchased by the Appellants/plaintiffs. Therefore, according to them, they had suffered huge loss on account of the breach of contract committed by the respondents/defendants by not granting sanctioned loan amount of Rs.3,60,000/-. In such circumstances, they filed a suit for declaration and for consequential mandatory injunction against the respondents/defendants as stated supra.

4. A written statement has been filed by the first respondent/first defendant denying the allegations of the Appellants/plaintiffs. In the written statement, they have pleaded that the loan was granted by them to the Appellants/plaintiffs only for the purpose of purchasing machineries and not for their working capital. According to them, the loan contract entered into between the Appellants and the first defendant also makes it clear that the loan was granted only for the purchase of purchasing machineries and not for their working capital. Since the first respondent/first defendant has paid the value of the machineries purchased by the Appellants/plaintiffs which amounts to Rs.2,46,824/-, they have not committed breach of contract as alleged by the Appellants/plaintiffs.

5. The Trial Court framed issues and after trial, decreed the suit in favour of the Appellants/plaintiffs by its judgment and decree dated 24.08.1998 passed in O.S.No.648 of 1994.

6. Aggrieved by the same, the respondents/defendants preferred an appeal before the II Additional District Court, Coimbatore in A.S.No.179 of 1998. By judgment and decree dated 16.07.1999 passed in A.S.No.179 of 1998, II Additional District Court, Coimbatore reversed the findings of the Trial Court and allowed the appeal filed by the respondents/defendants on the ground that the suit filed by the Appellants/plaintiffs is barred by law of limitation. According to the Lower Appellate Court, since loan agreement was terminated by the respondents/defendants as per Ex.B14 on 20.01.1990, the suit having been filed only in the year 1994, the suit is barred by law of limitation.

7. The Lower Appellate Court has held that the Appellants/plaintiffs did not take proper steps as against the auctions of the machineries conducted by the respondents/defendants even though two suits were filed by them challenging the suit auctions. The Lower Appellate Court has also held that injunction cannot be granted to loan related suits and hence Trial Court ought not to have granted a decree in favour of the Appellants/plaintiffs.

8. Aggrieved by the reversal findings of the Lower Appellate Court in its judgment and decree dated 16.07.1999 passed in A.S.No.179 of 1998, the Appellants/plaintiffs have preferred this Second Appeal. At the time of admission of the Second Appeal on 13.12.2002, this Court formulated the following substantial question of law:

“Whether the learned District Judge is correct in law in dismissing the suit by allowing the appeal especially when appellant had established that first respondent committed breach of the terms of the agreement?”.

9. Learned counsel for the Appellants Ms.Abbiraami would submit that Ex.B1 loan contract is a reciprocal promise and the first respondent/first defendant failed to perform its part of the contract by lending the sanctioned amount of Rs.3,60,000/- to the Appellants/plaintiffs but instead has lent only Rs.2,46,824/- that too paid directly to the seller of the machineries.

10. Learned counsel for the Appellants drew the attention of this Court to the deposition of DW1 and would submit that the first respondent/first defendant's witness (DW1) has himself admitted that the loan was sanctioned for a sum of Rs.3,60,000/- but the said amount was not granted to the Appellants/plaintiffs.

11. Learned counsel for the Appellants also drew the attention of this Court to the deposition of DW2 and would submit that he also admitted that the sanctioned loan amount was Rs.3,60,000/- but the said loan amount was not granted its entirety. Therefore, she would submit that the Appellants/plaintiffs have proved that the first respondent/first defendant has committed breach of the loan contract and therefore, the Trial Court has rightly decreed the suit in favour of the Appellants/plaintiffs but the Lower Appellate Court has erroneously reversed the said findings. According to her, the suit was filed within the period of limitation. She would submit that since the machineries were auctioned only in the year 1994, the suit filed by the Appellants/plaintiffs against the respondents/defendants in the year 1994 is well within the period of limitation.

12. Learned counsel for the Appellants also drew the attention of this Court to the Lower Appellate Court findings and would submit that Lower Appellate Court has erroneously by total non-application of mind to the evidence available on record has reversed the findings of the Trial Court.

13. She has also drew the attention of this Court to the deposition of DW1 and DW2 and would submit that the respondents/defendants have admitted that no money was paid directly to the Appellants/plaintiffs. This being the case, she would submit that the Appellants/plaintiffs cannot be made liable to pay any further sums to the respondents/defendants.

14. Per contra, Mr.Bijesh Thomas, learned counsel for the respondents would submit that under Ex.B1 dated 15.06.1987, loan was granted to the Appellants/plaintiffs by the respondents/defendants only for the purpose of purchasing machineries and not for their working capital. Since the value of the machineries purchased by the Appellants/plaintiffs was Rs.2,46,824/-, the first respondent had lent only that amount. Therefore, he would submit that there is no breach of contract committed by the respondents/defendants as alleged by the Appellants/defendants.

15. He would also submit that the Lower Appellate Court has rightly reversed the findings of the Trial Court by holding the suit filed by the Appellants/plaintiffs is barred by law of limitation. According to him, the loan contract was terminated on 20.01.1990 under Ex.B14 but the suit was filed only in the year 1994 and therefore, the Lower Appellate Court rightly reversed the findings of the Trial Court by holding that the suit is barred by law of limitation.

16. Before the Trial Court, the Appellants/plaintiffs have filed 3 documents which were marked as Exs.P1 to P3, namely (a) Registration Certificate of the Appellants/plaintiff's Company, (b) Legal Notice sent by the Appellants/plaintiffs counsel to the respondents/defendants and (c) Reply dated 25.02.1993 sent by the respondents/defendants to the Appellants/plaintiff's counsel.

17. On the side of the Appellants/plaintiffs, the third Appellant/third plaintiff was examined as the only witness (PW1). On the side of the respondents/defendants, 26 documents were filed which were marked as Exs.B1 to B26 which included the loan contract entered into between the Appellants/plaintiffs and the respondents/defendants (Ex.B1) and the termination letter which was also marked as exhibit and two witnesses were examined viz., DW1 and DW2.

18. As seen from the evidence available on record, without demur, the Appellants/plaintiffs have accepted the loan of Rs.2,46,824/- from the respondents/defendants instead of Rs.3,60,000/- which the Appellants/plaintiffs claim was the sanctioned amount. The loan was disbursed by the respondents/defendants in the year 1987 and was directly paid to the seller of the machineries from whom Appellants/plaintiffs purchased.

19. Excepting for filing 3 documents which have been marked as exhibits as referred to supra, the Appellants/plaintiffs have not filed any documents to show that immediately after the disbursement of the loan amount in the year 1987, they had protested to the respondents/defendants about the lesser loan amount disbursed to them.

20. The Suit O.S.No.648 of 1998 before the District Munsif Court, Coimbatore was filed seeking for a declaration that no money is due and payable by the Appellants/plaintiffs to the respondents/defendants and in the same suit, a consequential mandatory injunction has also been sought for to direct the first respondent/first defendant to return the original title deeds of the third Appellant/third plaintiff.

21. The Trial Court in its judgment and decree dated 24.08.1998 has erroneously based on the deposition of DW2 that the full loan amount was not given to the Appellants/plaintiffs has given a finding that no amount is due and payable by the Appellants/plaintiffs to the respondents/defendants.

22. The Trial Court has also erroneously held that since machineries were repossessed by the respondents/defendants from the Appellants/plaintiffs, the Appellants/plaintiffs are entitled for a decree as prayed for in the suit. The findings of the Trial court are erroneous for the following reasons:

(a) As seen from Ex.B1 (Loan Contract), the loan was given by the respondents/defendants to the Appellants/plaintiffs for the purpose of purchasing the machineries and not for their working capital.

(b) The relevant clause in Ex.B1 (Loan Contract) makes it clear that the amount was sanctioned by the respondent/defendants to the Appellants/plaintiffs only for the purpose of purchasing the machineries and with regard to working capital, the Appellants/plaintiffs will have to make their own arrangement.

(c) A consistent stand has also been taken by the respondents/defendants before the Courts below that they are not liable to lent money under the contract for the working capital needs of the Appellants/plaintiffs. The written statement filed by the respondents/defendants also supports the said consistent stand.

(d) Admittedly, the loan was granted in the year 1987 by the respondents/defendants in favour of the Appellants/plaintiffs. If the Appellants/plaintiffs are aggrieved by the disbursement of a lesser loan amount than what was agreed upon, the Appellants/plaintiffs would have raised protest with the respondents/defendants. But as seen from the evidence available on record, no such protest letter was issued by the Appellants/plaintiffs to the respondents/defendants for non-disbursement of the entire loan of Rs.3,60,000/-.

(e) Admittedly, the Appellants/plaintiffs have not repaid the loan to the respondents/defendants in accordance with the loan contract marked as Ex.B1 before the Tribunal.

(f) In view of the default and in accordance with the terms and conditions of the loan contract, the respondents/defendants have repossessed the machineries from the Appellants/plaintiffs and thereafter have made attempts to auction the said machineries. Having lent a sum of Rs.2,46,824/- towards purchase of machineries at the request of the Appellants/plaintiffs, the respondents/defendants cannot be prevented from taking any legal action in accordance with the terms and conditions of the loan contract (Ex.B1).

(g) The Lower Appellate Court by its judgment and decree dated 16.07.1999 in A.S.No.179 of 1998 has rightly reversed the findings of the Trial Court by holding that the suit O.S.No.648 of 1994 filed by the Appellants/plaintiffs is barred by law of limitation. The Lower Appellate Court has given a finding that the loan contract was terminated by the respondents/defendants under Ex.B14 on 20.01.1990 which has also not been disputed by the Appellants/plaintiffs as seen from the evidence available on record.

(h)The Lower Appellate Court has also rightly held that since suit has not been filed within a period of 3 years from 20.01.1990 being the date of the termination letter, the suit is barred by law of limitation.

23. This Court is in agreement with the findings of the Lower Appellate Court and does not find any perversity in the said findings with regard to the consequential injunction also which was earlier granted by the Trial Court. The Lower Appellate Court has held that injunction cannot be granted

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to loan related suits. Though there cannot be any such blanket order and grant of injunction in a money related transaction depends upon facts and circumstances of each and every case, since this Court is in agreement with the findings of the Lower Appellate Court that the suit is barred by law of limitation, no necessity has arisen for this Court to give its point of view with regard to the finding of the Lower Appellate Court that injunction cannot be granted to loan related suits. 24. The Lower Appellate Court has rightly considered the evidence available on record and has rightly reversed the findings of the Trial Court by allowing the appeal filed by the respondents/defendants. This Court does not find any perversity in the findings of the Lower Appellate Court as the findings of the Lower Appellate Court are based on the materials and evidence available on record and is in accordance with law and there are no debatable question of law involved in this Second Appeal. 25. For the foregoing reasons, the substantial questions of law formulated by this Court on 13.12.2002 at the time of Second Appeal is answered against the Appellants/plaintiffs as there is no substantial questions of law involved in this appeal as the issues raised by the Appellants have been adequately and correctly considered by the Lower Appellate Court in accordance with law. 26. In the result, the Second Appeal is dismissed with costs. Consequently, connected miscellaneous petitions are closed.
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