Sai Smaran Foods Ltd vs Katwa Cold Storage Pvt. Ltd. & Ors

Shekhar B. Saraf, J

The plaintiff is a company incorporated under the provisions of the Companies Act, 2013 having its registered office at T-50, MIDC, Nanded,

Maharashtra â€" 431603 [hereinafter referred to as ‘plaintiff company’] engaged in the business of various kinds of food and food related

products. Whereas, the defendant nos. 1 and 2 are companies incorporated under the provisions of the Companies Act, 2013, having its registered

office at 19, Synagogue Street, 3rd Floor, Room No. 321, Kolkata â€" 700001 and 113, Park Street, Poddar Point, Ground Floor, Suite No. 26, Rear

Portion, Kolkata â€" 700016 respectively. Defendant nos. 3 and 4 happen to be the directors of both the defendant company no. 1 and 2 respectively.

The plaintiff company has instituted this suit against the defendants praying for a decree of Rs. 1,14,00,000/-(Rupees One Crore Fourteen Lakhs

Only) which is the principal amount due alongwith interest pendente lite at the rate of 18% per annum from 1st August, 2015 till the date of realisation

of the amount.

The chronological facts leading to the instant case is delineated below:

a. The defendant no. 2 company held 1583.33 Metric Tons of First Grade Potatoes (hereinafter referred to as “the productâ€) which the defendant

no. 2 intended to sell to the plaintiff company at the rate of Rs. 6000/- per Metric Ton, thus, aggregating to an amount of Rs. 95,00,000/- (Rupees

Ninety-Five Lakhs Only). The product was stored at the cold storage owned by the defendant no. 1 company situated at Katwa, Burdwan.

b. Thereafter, the plaintiff company on 12th February, 2015, entered into a buy back agreement with the defendant no. 2 company, as per which the

plaintiff agreed to purchase the product from the defendant no. 2 for a sum of Rs. 95,00,000/- (Rupees Ninety-Five Lakhs Only) with an option to

resell the same to the defendants for a sum of Rs. 1,14,00,000/-(Rupees One Crore Fourteen Lakhs Only), payable on or before 31stJuly, 2015.

c. On the same day, that is, on 12th February, 2015, the plaintiff company entered into a written agreement of bailment with the defendant no. 1

company to give custody of the product and ensure that the same was free from any kind of risks arising under any circumstances. Such agreement

of bailment recorded that in case of deficiency or loss arising from the product, the defendant no. 1 company would be held liable and would be

required to indemnify the plaintiff company as to the complete value of the product.

d. The plaintiff company made payment of Rs. 95,00,000/- (Rupees Ninety-Five Lakhs Only) to defendant no.2 company in two instalments by way of

Real Time Gross Settlement (RTGS) on 4th February, 2015 and 13th February, 2015.

e. In part performance of the aforesaid agreement to buy back the said goods from the plaintiff company, the defendant no. 1 company, being the

sister concern of the defendant no. 2 company, issued seven post-dated cheques of an aggregate value of Rs. 85,00,000/-(Rupees Eighty-Five Lakhs

Only) to the plaintiff company but the same were returned with the representation of “funds insufficientâ€. The defendant nos. 3 and 4 assured the

plaintiff that the balance payment of Rs. 29,00,000/- (Rupees Twenty-Nine Lakhs Only) would be made within 15th February, 2016 but the same went

in vain.

f. During January, 2017, the plaintiff came to know that the product which were given in bailment had been misappropriated by the defendants. Upon

receipt of such information, the plaintiff conducted an inspection at the cold storage of the defendant no. 1 at Katwa, Burdwan through one of its

representatives and found that the cold storage was empty and abandoned. Hence, the suit.

The Deputy Registrar on the request of the plaintiff company certified that the defendants did not enter appearance either in person or through its

advocate until 20th March, 2019, inspite of substituted service by affixation and publication by the Orders dated 4th July, 2018 and 18th July, 2018

respectively. Thus, the matter was directed to be heard as an undefended suit.

The sole point of consideration before this court is whether the plaintiff is entitled to get the decree prayed for.

Mr. Naresh Goenka, the director of the plaintiff company since 1993, has been examined as a witness on behalf of the plaintiff company. it appears

from the board resolution of a meeting held on 1st November, 2017 that Mr. Naresh Goenka has been duly authorised by the plaintiff company to

depose before this Court for and on behalf of the plaintiff company with regard to this case. The board resolution has been further tendered and

marked as Exhibit “Eâ€. It transpires from the certified copy of the letter issued by the Chief Manager of Nanded branch of State Bank of India

that the plaintiff company had made a payment of Rs. 95,00,000/- (Rupees Ninety-Five Lakhs Only) to the bank account of the defendant no.2

company in two instalments by way of Real Time Gross Settlement (RTGS) on 4th February, 2015 and 13th February, 2015 respectively which has

been marked as Exhibit “Aâ€. During the examination of the witness of the plaintiff company has deposed that the plaintiff company entered into a

Buy Back Agreement dated 12th February, 2015, with the defendant no. 2 company, wherein, the plaintiff company agreed to purchase the product at

a sum of Rs. 95,00,000/-(Rupees Ninety-Five Lakhs Only). The parties also agreed, that at the option of the plaintiff company, the defendant no. 2

company would be obliged to Buy Back the entire quantity of the product at a sum of Rs. 1,14,00,000/-(Rupees One Crore Fourteen Lakhs Only),

payable on or before 31stJuly, 2015. The agreement has been marked as Exhibit “B†and the signature of the director of the defendant no. 2

company one Mr. Anup Kumar Agarwal (defendant no.3) has been marked as Exhibit “B/1â€. Moreover, on the same day an agreement of

Bailment was entered into between plaintiff company and the defendant no. 1 company and the same has been tendered and marked as Exhibit

“Câ€​.

The witness during the Examination-in-Chief has deposed that the defendant no. 1 company, being the sister concern of the defendant no. 2

company, issued seven post-dated cheques of an aggregate value of Rs. 85, 00,000/- (Rupees Eighty-Five Lakhs Only) in favour of the plaintiff

company but all the seven post-dated cheques were dishonored upon presentation by the plaintiff company and the same were returned unpaid by the

plaintiff company banker with the representation “funds insufficientâ€​ the same has been tendered and marked as Exhibit “Dâ€​.

I have heard the counsel appearing for the plaintiff company and have perused the materials on record.

In my opinion the defendants have never denied and in fact has admitted to have received a sum of Rs. 95,00,000/- (Rupees Ninety-Five Lakhs

Only) from the plaintiff company in terms of the agreement dated 12th February, 2015. Therefore, according to the terms of the said agreement the

defendants were under an obligation to Buy Back the product for a sum of Rs. 1,14,00,000/- (Rupees One Crore Fourteen Lakhs Only) in the month

of July, 2015. Inspite of such an agreement the defendants have not paid the said sum due to the plaintiff company or any part thereof despite several

reminders by the plaintiff company.

In my view the interest sought for by the plaintiff company, at the rate of 18% per annum, is not backed by any documentary evidence, and

accordingly, I am of the view that the interest claimed by the plaintiff company in the present suit is neither justified nor proved. Hence, interest at the

rate of 8% per annum would serve the ends of justice in the present case.

In the above circumstances the plaintiff company is entitled to a decree of Rs. 1,14,00,000/- (Rupees One Crore Fourteen Lakhs Only) along with

interest to be calculated at the rate of 8% per annum from 1st August, 2015 till the date of realisation of the principal amount.

There shall be no orders as to costs. The department is directed to draw up the decree expeditiously.

Urgent photostat certified copy of this judgment, if applied for, should be made available to the parties upon compliance with the requisite

formalities.