Ambalal J. Doshi and Others vs Bharat Traders and Another

H.N. Devani, J.—This appeal arises out of the judgement and order dated 28th April, 1993 passed by the learned Company Judge in Suit No. 2 of 1979, whereby the suit has been decreed in favour of the respondent No. 1 original plaintiff.

The facts stated briefly are that the plaintiff firm consisted of two partners, Rajendra Sheth and Harish Himmatlal Sheth, who were members of the first defendant Company i.e. M/s Shri Bharat Hand-Weaving Mills Pvt. Ltd. (the Company). Shri Himmatlal Sheth and Shri Harish Sheth were also Directors of the said Company. The defendants No. 2 to 6 belonged to the group of the defendant No. 2 - Shri Ambalal G. Doshi and according to the plaintiff, they were all members of the Company. Shri Himmatlal Sheth and Shri Ambalal G. Doshi had promoted the Company and were running the business of the Company. In substance, the Company had two groups of shareholders, led by Shri Himmatlal Sheth and and the other led by Shri Ambalal G. Doshi.

According to the plaintiff, an arrangement had been arrived at between both the groups pursuant to which, a meeting was held between the parties on 24th September, 1973 in the office of M/s Singhvi & Company, Accountants & Auditors, and it was decided that the group of Shri Ambalal G. Doshi should take over the management of the Company from the group of Shri Himmatlal H. Sheth, and for that purpose, as a part of an overall agreement, it was agreed by Shri Himmatlal Sheth, that the shares held by him and the members of his group would be transferred to Shri Ambalal G. Doshi and the members of his group at the face value of Rs. 31/- per share and the shares had in fact been transferred at the aforesaid face value as per the said arrangement and the agreement had been acted upon between the parties.

The plaintiff firm was acting as the sole selling agent of the Company and it was agreed that the plaintiff firm shall cease to act as such sole selling agent and shall terminate the agency agreement with effect from 30th September, 1973. According to the plaintiff, it was agreed between the parties that the outstanding amount standing to the credit of the plaintiff firm in the books of the Company as on 30th September, 1973 had to be paid in the manner indicated in the said arrangement and Shri Ambalal G.Doshi and his group undertook personal liability to pay the said amount in equal installments within a period of six months, with interest at the rate of 15% per annum.

It was further the case of the plaintiff that it was agreed between the parties, that Shri Himmatlal Sheth be authorized to recover the outstandings of the Company and to credit the amount of such recovery when made towards the amount standing to the credit of the plaintiff firm and M/s Bharat Stores. However, if such outstandings were recovered directly by the Company, it would be paid over immediately towards the repayment of the amount due to the plaintiff firm and M/s Bharat Stores. According to the plaintiff, it was specifically understood that credit was to be given of those amounts of the outstandings, which were in fact recovered by Shri Himmatlal H. Sheth.

It was also agreed that an option be given to Shri Himmatlal Sheth to purchase finished stocks of the Company as on 30th September, 1973 and the amount of such stock was to be adjusted towards the amount due to the plaintiff firm. The plaintiff firm exercised such option and purchased the available stock as on 30th September, 1973 for an amount of Rs. 8,770=50 and the said amount was given credit towards the amount due and payable to the plaintiff firm by the Company.

It was also the case of the plaintiff that, on 9th October, 1973, the Company also wrote a letter to the plaintiff firm acknowledging the liability to pay the amount standing to the credit of the plaintiff firm in the books of accounts of the Company by six equal monthly installments. It was the say of the plaintiff that the amount standing to the credit of the plaintiff firm in the books of accounts of the Company was to the tune of Rs. 25,706=74 inclusive of the amount of Rs. 10,000/- paid as deposit by the plaintiff firm as per the agency agreement. The said amount was arrived at after giving credit for the amount of the value of the stock purchased by the plaintiff firm on 29th September, 1973. It was the case of the plaintiff that, an amount of Rs. 25,706=74 with interest at 15% per annum was due and payable by the defendants to the plaintiff firm. That, the defendants No. 2 to 6 had undertaken a personal liability for repayment of the said amount to the plaintiff firm. That, it was because of the fact that the defendants No. 2 to 6 had undertaken a personal liability that Shri Himmatlal Sheth and members of his group had agreed to transfer the shares belonging to them in the Company to the second defendant and the members of his group. That, as a part of the arrangement and because of the said arrangement, Shri Himmatlal Sheth and the members of his group had agreed to handover the management of the Company to the second defendant and the members of his group. As the defendants had failed and neglected to make payment for the same, the plaintiff had given notice dated 1st January, 1974 through their advocate to all the defendants making a demand for the amount then due according to the monthly installments. In response to the notice, the defendant had given a reply, which according to the plaintiff was false and got up. The plaintiff, therefore, instituted a suit in the Court of the learned Civil Judge (S.D.), at Rajkot, which came to be numbered as Special Jurisdiction Suit No. 63 of 1974. The appellants herein were the original defendants No. 2, 3 and 5 in the said suit. Another suit also came to be instituted against the Company by M/s Bharat Stores.

The appellants had filed written statement disputing the claim of the plaintiff. It was the case of the appellants that the accounts of the Company had been written under the management and chairmanship of Shri Himatlal Sheth who was the father of the partners of the plaintiff firm. That, all accounts were not correctly written. Certain amounts had wrongly been credited and debited in the account books. According to the appellants the suit of the plaintiff was premature, as the same was instituted before making recoveries of all the book debts belonging to the company as per the arrangement dated 29th September, 1973. That, as per the letter dated 9.10.73, the plaintiff was only entitled to execution of promissory notes for the amount that may be due to the plaintiff. Hence, the plaintiff could not have filed a suit for a money decree and that only a suit for specific performance of contract could be filed. That, the accounts were still not settled hence, the suit was not maintainable.

On behalf of the plaintiff firm, Shri Harishkumar Himmatlal Sheth had been examined , whereas on behalf of the defendants, Shri Ambalal Doshi had been examined as witnesses. Documentary evidence was also produced, of which the most relevant documents are the agreement/minutes of meeting dated 29th September, 1973 and the letter dated 9th October, 1973 purportedly written by Shri Ambalal G. Doshi on behalf of the Company.

Subsequently, the Company went into liquidation on 21st June, 1976, hence, the suits were brought over to the High Court and came to be numbered as Suit No. 2 of 1979 and Suit No. 3 of 1979. Both the suits were heard together and decided by a common judgement and order dated 28th April, 1993, whereby Suit No. 2 of 1979 was decreed in favour of the plaintiff, whereas the Suit No. 3 of 1979 was dismissed.

Heard Mr. S.M. Shah, learned advocate for the appellants and Mr. J.S. Yadav, learned advocate for the respondent No. 2, Official Liquidator. The respondent No. 1 was initially represented by learned advocate Mr. D.D. Vyas, however, subsequently the learned advocate has withdrawn his appearance. Thereafter, despite service of notice, there is no appearance on behalf of the respondent No. 1.

Mr. S.M. Shah, learned Advocate for the appellants has advanced the following submissions:

During the pendency of the suit the Company had gone into liquidation, however, the Liquidator had not been joined as a party to the suit, hence the impugned judgement and decree stands vitiated.

The suit was instituted in respect of the alleged dues of the plaintiff for the loans advanced from time to time to the Company, however, the so called loans had not been proved and no evidence had been led to prove such loans despite the fact that the said claim was disputed in the suit. The learned Judge had failed to appreciate that the copy of the account books, ledger, purported to have been audited by the Auditor is not proof of the so called loans. The account books are not primary evidence of loans and unless primary evidence in respect of the loans is produced and the account book entries are proved by leading necessary evidence, there is no evidence about the dues in respect of which the suit was filed. Merely because the plaintiff had produced a certified extract of the account books of the Company bearing the verification of the Chartered accountant, the same could not have been accepted as sufficient proof of the so called loans.

The entire claim of the plaintiff was based upon the document Exhibit-61. However, despite the fact that the appellants have disputed their liability, the Chartered Accountant in whose presence the document Exhibit-61 was executed has not been examined to substantiate the case of the plaintiff.

Referring to the document Exhibit 61, it was pointed out that the same is primarily in the nature of Minutes of the Meeting of the Directors of the Company, held on 24th September, 1973. As per Clause (1) of the said document two Directors of the Company along with one Rajendra Sheth had decided to resign after the preliminary transfer of shares etc. had been completed. Under the second clause, Shri Ambalal G. Doshi had undertaken to purchase through himself or through his nominees, the entire block of shares held by the Shri Himatlal Sheth group at the initial value of Rs. 31/- per Share. It was submitted that insofar as Clauses (1) and (2) are concerned; the same had already been acted upon. That, insofar as the present case is concerned the relevant part of the document is contained in Clause (3) thereof, whereby it has been agreed that the loans standing in the name of M/s Bharat Stores and M/s Bharat Traders as on 30th September, 1973 would be paid as provided thereunder. It was pointed that under the said clause the loan should exist in the account books on the said date i.e. on 30th September, 1973, to contend that there is nothing on record to show any such outstanding loan on that date.

The directors had signed the document Exhibit 61 in their capacity as directors and not as individuals. Four directors were present during the meeting which was held for working out the entire dues of the Company, and not merely the repayment of loan to the plaintiff

As per Clause (3) of the document Exhibit-61, the loan was to be recovered as provided there under. Firstly, Shri Himatlal Sheth was empowered to recover all book debts belonging to the Company and in case the Company recovered such book debts, the same were to be directly given against the repayment of the loan. Secondly, Shri Himatlal Sheth had been given an option to purchase the finished stocks as on 30th September, 1973 against the said dues. It was submitted that it is an admitted position that Shri Himatlal Sheth had exercised the option and purchased stock worth Rs. 8,770/-. It was contended that under the document Exhibit-61, there was complete obligation upon Shri Himatlal Sheth to recover the book debts of the Company. However, he does not appear to have taken proper steps under Sub-clause (a) of the document. It was submitted that firstly the amount was to be ascertained, from which the amount recovered under Sub-clauses (a) and (b) of Clause (3) were to be deducted and the remaining amount was to be paid under Sub-clause (c). It was contended that the Company was liable for repayment of only the balance loan and it was incumbent upon Shri Himatlal to recover the book debts towards repayment of loan. It was contended that the said Shri Himatlal Sheth has not been examined as a witness; hence, nothing has been brought on record to show as to what steps had been taken under Sub-clauses (a) and (b) of Clause (3) of the document. It was accordingly urged, that the decree cannot be sustained as the debt has not been proved.

As per the document exhibit 62, which is in the nature of a communication written by Shri Ambalal Doshi on behalf of the Company, the company was liable to pay the actual amount payable to the plaintiff under promissory notes in six equal installments. It was submitted that Shri Ambalal Doshi had taken all actions in his capacity as director of the Company and as such there can be no individual decree against him or the present appellants and that individual property could not have been held liable. Referring to the provisions of Section 25 of the Contract Act, it was submitted that the agreement in question was void, as the same was without consideration inasmuch as the agreement did not provide for any consideration for the liability to be taken over.

It was further submitted that interest has been awarded at the rate of 15% per annum whereas the Code of Civil Procedure, 1908, provides for payment of interest at the rate of 6%, hence even the interest part requires to be interfered with.

Mr. J.S Yadav learned Advocate for the Official Liquidator submitted that the date of winding up of the Company was 21st June 1976. That the suit was filed in 1979, without leave of the Court, hence in view of the provisions of Section 446(2)(a) of the Companies the suit itself was not maintainable, and the decree was liable to be set aside on that count alone.

Dealing with the first contention, namely that despite the fact that the Company had gone into liquidation during the pendency of the suit, the Liquidator had not been joined as a party respondent, thereby vitiating the decree, the record of the case indicates that notice had been issued to the Liquidator in the proceedings of the suit and on behalf of the Liquidator, on several occasions time was sought for filing reply. However, no reply has come on record. Hence, it does not appear as if the suit proceedings have gone on without notice to the Liquidator.

As regards the contention that the suit was not maintainable as the permission of the Company Court had not been obtained as envisaged u/s 446(2)(a) of the Companies Act, the same is de hors the record of the case, which shows that the Company Court had granted permission to continue the proceedings of the suit on condition that the plaintiff deposits expenses of the Official Liquidator within the time stipulated in the said order.

As is apparent from the facts noted hereinabove, the entire claim of the plaintiff is based upon the so called agreement Exhibit-61 dated 24th September, 1973, and the subsequent letter dated 9.10.73 Exhibit-62, hence the controversy involved in the present case revolves round the interpretation of the said documents. The agreement dated 24th September, 1973 reads as under:

We the following Directors of M/s Shree Bharat Handweaving Mills Pvt. Ltd., Rajkot met to-day on 24th Sept., 1973 at 4-30 p.m. in the Office of M/s Sanghvi & Co., Accountants & Auditors and following decisions were arrived at:

Shri Himatbhai H. Sheth & Shri Harish H. Sheth, the two directors of the Company decided to resign alongwith Shri Rajendra H. Sheth after the preliminary transfer of Shares etc. has been completed.

Shri Ambalal G. Doshi undertook to purchase through himself or through his nominees the entire block of Shares held by Shri Himatlal H. Sheth group at initial value of Rs. 31/- per Share. The price for the Share will be paid on the date of transfer of the Shares but not less than 30 days.

The loan standing in the name of M/s Shree Bharat Stores and Bharat Traders as on 30.9.73 will be paid as under:

all the book debts belonging to the company will be recovered by Shri Himatbhai H. Sheth or if it is recovered by the Company, the same will be directly given against the repayment of the loan.

Shri Himatbhai H. Sheth will be given an option to purchase the finished stocks as on 30.9.73 against the above dues.

The balance loan will be paid by Shri A.G. Doshi group in equal instalments within a period of six months @ of interest 15% and this loan will be secured by necessary charge of the company�s property. Regarding the mortgage for the security of the loan Shri A.G. Doshi and Shri H.H. Sheth will mutually decide.

Partners of M/s Bharat traders, Rajkot have agreed to cancel their selling agency agreement as from 30-9-1073. Letter to obtain accordingly.��

The aforesaid document has been signed by (1) Ambalal G. Doshi, (2) Himatbhai H. Sheth, (3) Harish H. Sheth and (4) Gunvant M. Joshi.

The document Exhibit 62 is in the nature of a communication dated 9.10.73 whereby Shri Ambalal Doshi has on behalf of the Company admitted that upon cancellation of the plaintiff''s agency with effect from 1.10.73, an amount of Rs. 36,700/- standing to their credit or whatever is actually shown to the credit of the plaintiff as per the books of accounts are payable by them to the plaintiff under promissory notes by way of six installments and that the first installment would start from 1.11.73.

On a plain reading of the aforesaid document Exhibit-61, it is apparent that the Directors of the Company had met on 24th September, 1973 and taken the decisions stated therein. The first decision was that two of the Directors along with Shri Rajendra H. Sheth had decided to resign after preliminary transfer of Shares etc. had been completed. The second decision was that Shri Ambalal G. Doshi was to purchase the entire block of shares held by Shri Himatbhai H. Sheth group, either through himself or through his nominees at the initial value of Rs. 31/- per share. It appears to be an admitted position that both the aforesaid decisions have been acted upon and completed. The third decision, which is most relevant for the purpose of the present case, is as regards the manner in which the loan standing in the name of the plaintiff as on 30.9.1973 was to be paid. The manner indicated is in three stages. The first stage is that all the book debts belonging to the Company were to be recovered by Shri Himatbhai Sheth or if they were recovered by the Company, the same were to be directly given against repayment of the loan. The second stage was that Shri Himatbhai was given an option to purchase the finished stocks as on 30.9.1973 against the said dues. Admittedly, Shri Himatbhai had exercised the option and purchased finished stock worth Rs. 8,770.50. The third and most important stage is that the balance loan was to be paid by Shri A.G. Doshi group in equal installments within a period of six months with interest at the rate of 15% per annum. The said loan was to be secured by necessary charge on the property of the Company.

It may be pertinent to note that the amount payable to the plaintiff is not quantified in the said document. However, within a short period thereafter, i.e. on 9.10.1973, Shri A.G. Doshi has vide Exhibit-62 admitted that upon cancellation of the plaintiff�"s agency with effect from 1.10.73, an amount of Rs. 36,700/- standing to their credit or whatever is actually shown to the credit of the plaintiff as per their books of accounts are payable by them to the plaintiff under promissory notes by way of six installments and that the first installment would start from 1.11.73. Thus, by the subsequent document Shri A.G. Doshi has admitted a liability of about Rs. 36,700/- or whatever is standing to the credit of the plaintiff in their books and has also promised to pay the same through promissory notes by way of six installments. As per the said document, the first installment would commence on 1.11.73.

A conjoint reading of the documents Exh.61 and 62 would show that vide agreement dated 17.9.73 it was agreed between the parties that the balance loan would be paid by Shri A.G. Doshi group in equal instalments within a period of six months @ of interest 15%. The subsequent document quantifies the amount to the certain extent and indicates that the intention of the parties is that the first installment would commence from 1.11.73. Hence, the entire amount standing to the credit of the plaintiff was to be paid within six months by way of six equal installments, the first installment becoming due on 1.11.73. Thus, the entire amount was required to be paid within six months i.e., by 1st May, 1974. The suit was filed thereafter, in June, 1974.

As regards the interpretation of the clauses of the agreement Exhibit-61, the learned Company Judge recorded the following findings:

A plain reading whereof clearly indicates that Shri Himmatbhai H. Sheth on his own was to try for recovery of book-debts and likewise, the Company i.e. defendant No. 1 was also to do so. In either event, whatever be the recovery, it was to be applied towards repayment of loan which is the subject matter of this agreement. It is, therefore, not possible to accept the case tried to be putforth by the defendants that unless the book-debts are recovered by the said Shri Himmatbhai Sheth, he can have no claim against all or any of the defendants.

Otherwise also, even if the Company were not wound-up, it being the debt due to the Company the suit will have to be filed in the name of the Company for and on behalf of its Directors. Shri Himmatbhai Sheth had ceased to be one as per Exh.61. This legal implication of clause A would clearly indicate that there was no idea of the loan being repaid to Shri Himmatbhai Sheth as only what remains as balance after the book debts are recovered. It only indicates that if the book debts are recovered, the amount of loan will be reduced to that extent and balance left is to be paid as per Clause (c) xxxx.

21 L.A. Shri S.M. Shah appearing for defendants 1 to 5 is right in submitting that this is an executary agreement. Several things were required to be done. However, as noted above, transfer of shares are over and the selling agency agreement is also cancelled. That portion of the agreement having already been executed, what remains to be done is only repayment of loan. In trade disputes when agreement of the nature indicated above at Exh.61 is arrived at, it is always a package deal. There are mutual obligations and undertaking to be given or executed and carried out. If out of the parties to the dispute, one side has concluded and upheld its part of the bargain, it becomes all the more necessary for the other side to carry out its obligation and keep up its part of the bargain.

In this background, if the defence that there is no personal liability of defendants 2 to 5 and that the liability is only that of the Company is evaluated, in my opinion, the attempt on the part of the defence must fail. Firstly, Exh.61 is signed by defendant No. 2 only. He has not signed as Director of the Company at the office of the Sanghvi, the Accountant and auditors where A.G. Doshi, S.C. Sheth, Harish H Sheth and G.M. Doshi and they Ahmedabad met as Directors of defendant No. 1 as per agreement Exh.61. However what they were discussing, was not the affairs of the Company as Directors, but they were sorting out their mutual problems which they were facing in running the Company because time had come for Sheth group and Shri Doshi along with his nominee and Associates to part Company. That precisely was the reason why agency agreement was cancelled and the entire block of shares held by Sheth Group was agreed to be transferred and accordingly, was transferred in favour of Shri Ambalal Doshi or his nominees. No doubt, Shri Doshi and his nominees have not been referred to as Doshi Group, which description is to be found in case of Shri Himmatbhai Sheth and his associates and they are specifically referred to as Himmatbhai Sheth group, but it is quite apparent on reading Exh.61 that on one hand there was Sheth or a group led by Shri Himmatbhai Sheth group and on the other hand, there were persons interested in running of the Company led by Shri Ambalal Doshi defendant No. 2 and this conclusion is further fortified when Clause (c) quoted hereinabove is referred to and read carefully. The balance loan is agreed to be paid by Shri A.G. Doshi Group in equal installments as stated therein.

As per Exh.61 when benefits were derived by Shri Doshi and his nominees whether referred to as a group or not, and when, dispute between the two rival groups was settled in the aforesaid manner, the persons who have purchased the shares through Doshi as his nominee, should be held to be bound by the agreement Exh.61. But for the agreement, they would not have derived the benefit which they did to the extent to which Shri Doshi and his nominee were to get the benefit under agreement Exh.61.

Had it been the intention of the parties who had met at the office of Shri Sanghvi to make only the Company liable for the repayment of the loan, it would have been specifically so stated in cl.(c) of paragraph 3 of Exh.61. In a short, but effective cross examination of Shri Doshi, it is found that he had put signature below Exh.61 for an on behalf of Shri A.G. Doshi group. He has also admitted that after Exh.61 was executed, defendants 2 to were in the management of defendant No. 1 Company. The whole purpose of Exh.61 was to sort out the dispute as to who should be in the management. till then, it was Sheth group which was in the management and it was Doshi that has stepped in. If defendants 2 to 5 have thus got the benefit of Exh.61, they cannot be heard to say that none of them should be held liable because Exh.61 was executed on behalf of the Company. As stated above, Exh.61 itself does not so disclose and further, we have the aforesaid admission of the defendant No. 2 himself during his cross-examination.

It is, therefore, not possible to accept that the plaintiff should first recover the outstanding debts belonging to defendant No. 1. The defendants have failed to show that the suit is premature in any manner and that the plaintiffs have a right only to obtain promissory note.

From the tenor of the agreement Exh.61, it is apparent that during the meeting held on 24th September, 1973 at the office of M/s Sanghvi & Co. Accountants & Auditors, it was not the affairs of the Company which was subject matter of discussion. The directors appear to have met to sort out issues amongst themselves, and accordingly by virtue of the agreement Exh.61, it was agreed that on the one hand two directors viz. Shri Himatbhai H. Sheth and Harish H. Sheth as well as one Rajendra H. Sheth, who belonged to the Himatbhai Sheth Group would resign and on the other hand Shri Ambalal G. Doshi undertook to purchase the shares held by the Sheth Group either himself or through his nominees. Under the said agreement, the partners of the plaintiff M/s Bharat Traders, who also belonged to the Sheth Group, had agreed to cancel their selling agency agreement with the Company with effect from 30th September, 1973. Thus, upon execution of the said agreement, the entire Sheth Group would go out of the picture insofar as the Company is concerned and the only remaining link would be the loan standing in the name of the plaintiff. Thus, after the first two steps were taken, namely after the persons named in Clause (1) of the agreement resigned and transferred their shares and the agency agreement was cancelled, what remained for final severance of the Sheth Group from the Company was the repayment of the loan standing to the credit of the plaintiff.

As contended by the learned Advocate for the appellants, it is true that the agreement Exh.61 is an executory agreement. At the same time it is also an admitted position that the Himmatbhai Sheth Group has abided by its part of the agreement. In the circumstances, the appellants who are beneficiaries of the said agreement cannot be permitted to shirk from the responsibility of executing the remaining part of the agreement, whereby they are liable to pay the amount standing to the credit of the plaintiff firm.

As regards the quantum of the amount claimed by the plaintiff, the learned Company Judge found as follows:

Over and above the deposition of plaintiff''s witness, where he has, as expected relied on the account books at Exh.69, there is a certified extract of the books of the defendant Co. and it bears the verification of Chartered Accountants Messrs Duftari and Duftari. Clearly at the foot of the balance as on 30.6.1974, a sum of Rs. 24,160.19 had been shown as due and payable by the defendant Company to the plaintiff-firm. Had this been the only document, obviously, there would be no question of defendants 2,3 & 5 becoming liable. However, their liability is on account of Exh.61. In suit of 79 the plaintiff has claimed Rs. 25,706.74 ps. with running interest and costs. The interest claimed is at the rate of 15 per cent per annum. The principal sum claimed in paragraph 16 Clause (A) of the plaint is Rs. 22,675.94 and by way of interest Rs. 3.030.80 have been claimed. The entire amount therefore, becomes payable with interst at 25% on the said principal sum from the date of the suit till realisation.

On behalf of the appellants, it has been contended that insofar as the alleged dues of the plaintiff for loans advanced from time to time to the Company are concerned, despite the fact that the said claim had been disputed in the suit, the plaintiff has neither proved the so-called loans, nor has any evidence been led to prove such loans. In this regard, it may be noticed that by the document Exhibit-62, Shri A.G. Doshi has admitted that as on the date of the said document i.e., 9th October, 1973, an amount of Rs. 36,700/- or the amount actually standing to the credit of the plaintiff firm in their books was due and payable to the plaintiff. Thus, it is not as if the appellants have disowned their liability towards the plaintiff firm. According to the plaintiff, the amount standing to its credit in the books of accounts of the first defendant Company is to the tune of Rs. 25,706.74 (Rs. 22,675.94 plus Rs. 3,030.80 being interest at 15% per annum from 1.10.73 till the date of the suit). This amount is arrived at after giving credit for the value of the stock purchased by the plaintiff on 29th September, 1973 i.e. Rs. 8,770=50. The documentary evidence on record in support of the said claim is in the nature of a certified copy of the accounts of the plaintiff as per the books of accounts of the defendant Company for the year 1973-74, extracted from the books of the defendant Company, that bears the verification of Daftary and Daftary Chartered Accountants which shows that the total balance payable to the plaintiff as on 30.6.74 is Rs. 24,160.51. Thus, the contention that the plaintiff has not produced any evidence to prove its claim, does not merit acceptance.

As regards the contention that Shri Himatbhai Sheth was first required to recover all the book debts belonging to the Company and it was only thereafter that the balance dues were to be paid by A.G. Doshi Group, on a plain reading of the documents Exh.61 and 62, this does not appear to the intention of the parties. Sub-clause (a) of Clause (3) states that all book debts belonging to the Company will be recovered by Shri Himatlal Sheth or if it is recovered by the Company, the same will be directly given against the repayment of the loan. Thus, it was never the intention of the parties that only Shri Himatbhai Sheth should recover the book debts. The intention was that whatever was recovered from the book debts belonging to the Company was to be given against the repayment of the loan. This interpretation is fortified by the subsequent document Exh.62, which was executed by Shri A.G. Doshi a few days after the date of the agreement Exh.61, whereby he has admitted quantified dues and has also stated that the same would be paid in six equal installments, the first of which would commence from 1st November, 1973. Thus, the parties have agreed that the A.G. Doshi Group would commence repayment of the outstanding loan amount with effect from 1st November, 1973 and the entire amount would be paid within six months. Had it been the intention of the parties that only the balance amount after Shri Himatbhai recovers the book debts would be payable to the plaintiff firm, the question of making payment by installments commencing from 1st November, 1973 would not have arisen. In the circumstances, the contention raised on behalf of the appellants does not merit acceptance.

The contention that as the loan was to be secured by necessary charge on the Company�"s property, the liability to pay the outstanding loan amount was solely that of the Company also does not merit acceptance, in view of the fact that the very clause which provides that the loan will be secured by necessary charge over the Company�"s property, also provides that the balance loan will be paid by Shri A.G. Doshi group in six equal installments within a period of six months @ of interest 15%.

Insofar as the rate of interest is concerned, the contention that the same is on the higher side as the Code of Civil Procedure, provides for payment of interest at the rate of only 6% does not merit acceptance, inasmuch as by virtue of the agreement Exh.61, the parties have agreed that interest shall be payable at the rate of 15% per annum.

As to whether the suit was premature as contended on behalf of the appellants, on a conjoint reading of the agreement Exh.61 read with the document Exh.62 it is apparent that the defendants i.e., the appellants herein were liable to pay the amount standing to the credit of the plaintiff-firm within a period of six months with effect from 1st November, 1973. Thus the suit which came to be instituted in June 1974, after a period of more than six months from the date when the first installment was to commence, cannot, in any manner, be said to be premature.

For the foregoing reasons, this Court is in complete agreement with the reasoning adopted by the learned Company Judge while decreeing the suit. The learned Company Judge has given sufficient, cogent and convincing reasons for decreeing the suit and this Court finds no infirmity with the same. Besides, it is settled law that even if it were possible to take a second view, that by itself would be no ground for interference by this Court.

In the result, the appeal fails and is accordingly, dismissed. Interim relief, if any, stands vacated.