AARYAN PROJECTS PRIVATE LIMITED vs KLOWIN INFRASTRUCTURE PRIVATE LIMITED

This is an application by the plaintiff for judgment upon admission on the basis of the balance-sheet ended on 31st March, 2015.

The petitioner claims that the respondent approached the petitioner for some financial accommodation. On the basis of such request an agreement dated 28th August, 2013 was executed. The said agreement was in relation to joint development of properties at Raipur. A sum of Rs.15 lakhs was paid by the petitioner to the respondent by RTGS dated 23rd August, 2013. The petitioner claims that in April, 2014 an oral agreement was entered into by which the respondent had agreed to look after the construction and the plaintiff would lend a sum of Rs.1.35 crores to the respondent inclusive of a sum of Rs.15 lakhs to be repaid in the following manner: (a) The loan of Rs.1,35,00,000/- would be repayable after two years from disbursement;

(b) 18% interest would be applicable to the loan and the agreement dated 28th August, 2013 would be performed.

The petitioner claims to have lent and advanced to the respondent a further sum of Rs.1.20 crores. The plaintiff has disclosed payment of such sum by demand drafts between 28th April, 2014 and 24th March, 2015. It is alleged that the respondent had failed to repay the loan after lapse of two years and has failed to take steps in respect of the agreement dated 28th August, 2013. The petitioner accepted the material breach of the agreement and has terminated the agreement dated 28th August, 2013. The plaintiff has also claimed refund of a sum of Rs.1.35 crores. On 1st March, 2017 the plaintiff demanded repayment of the said loan. The plaintiff contends that in spite of receipt of such notice the defendant has failed to pay such sums. The defendant has also refused to accept the service of this application as also the writ of summons. The writ has been returned with the endorsement "refused". The petitioner has prayed for a decree for a sum of Rs.2,32,20,000/-. The plaintiff has relied upon the balancesheet of the defendant for the year ending 31st March, 2015. In the balancesheet the defendant has acknowledged that it has received long term borrowings from Aaryan Projects Private Ltd., i.e., the plaintiff for a sum of Rs.1.35 crores.

The question arises whether on the basis of such entry in the balancesheet the plaintiff can get a judgment upon admission. The petitioner has produced the Financial Statements Presentation under Companies Act, 2013 Practitioner''s Perspective issued by the Institute of Chartered Accountants of India to show that the portion of borrowing, which is not due within 12 months after the reporting date i.e. balance-sheet date, is only required to be shown as long term borrowing. The petitioner has also referred to page 52 of the said document, which deals with long term borrowings. In the practice document "long-term borrowings" have been classified as ''non-current liability''. The phrase "long-term" has not been defined in the said practice. As a matter of guidance it is stated that the definition of ''non-current liability'' in the schedule III may be used for ascertaining long-term liability. If the said entry is read with the practice document produced before this Court then the respondent is duty bound to disclose such borrowings as long term borrowings. The said entry acknowledges that the respondent has borrowed a sum of Rs.1.35 crores. The petitioner is unable to demonstrate service of the letter dated 1st March, 2017. Even if it is assumed that the amount is payable on demand and after two years it is the responsibility of the petitioner to show that there is a demand made and refused by the respondent. The petitioner is unable to show that the letter dated 1st March, 2017 has, in fact, been served upon the respondent. Even if it is accepted that the refusal to accept the writ of summons would amount to a deemed service even then on the facts and circumstances of the case the Court may require the defendant to prove the duration of the long term borrowings i.e.

to say the period for which such borrowing was made. Long term debt would mean debt which need not to be repaid in the near future. The proximity of time is the essence of such borrowing.

On such considerations, this Court is not inclined to allow this application. The report filed by the Deputy Sheriff of Calcutta with regard to the service of the writ of summons is taken on record. The observations made in this order shall not affect the trial of the suit.

GA No.3204 of 2017 stands dismissed. However, there shall be no order as to costs.