Balmer Lawrie & Company Limited vs Ravishankar Ramchandran & Ors

Ashis Kumar Chakraborty, J

This is an application at the instance of the plaintiff in the suit, under Order XII Rule 6 of the Code of Civil Procedure, 1908 (in short "the Code") for a judgment upon admission against the defendants for a sum of Rs.4,45,42,894.98.

The petitioner company carries on the business, inter alia, of travel and vacation services. The respondent no.3 was engaged in the business of travel and tour operations under the trade name, "Vacation Exotica". The respondent nos. 1 and 2 were the directors of the respondent no.3. By and under an agreement dated January 28, 2014 executed between the petitioner and the respondents, the petitioner acquired the tours and travel business run by the respondent no.3 on terms and conditions mentioned therein. A copy of the said agreement has been annexed to the petition. As per the said agreement dated January 28, 2014 as the consideration for purchase of all the assets of the respondent no.3 including its trade name in respect of the said travel and tour business, without any liability, the petitioner agreed to pay Rs.13.50 crore to the respondent no.3. Any liability of the debit balance in the cash credit account of the respondent no.3 vendor with bank if, paid by the petitioner would be deducted from the agreed consideration of Rs.13.50 crores. The closing date of the said agreement was fixed on March 31, 2014 or such earlier date as the parties would mutually agree. According to the petitioner, the consideration agreed upon in the said agreement dated January 28, 2014 was fixed at Rs.13.50 crores but was subject to final accounting of the liabilities of the respondent no.3 and in terms of the closing date as agreed amongst the parties. The petitioner claims that subsequently, upon finalisation of the accounts between the parties and post transfer of the business assets and liabilities, it transpired that the petitioner had also bought in excess liabilities than that what had been agreed upon between the parties. As such, the petitioner called upon the respondents, particularly the respondent nos. 1 and 2 to make over a sum of Rs.4,09,93,806.70 that had been paid more than their obligation. Out of the said sum of Rs.4,09,93,806.70 on July 30, 2015 and on August 16, 2015 the said respondents made payment of Rs.8.50 lakhs and Rs.2 lakhs to the petitioner. The respondent nos. 1 and 2 further assured the petitioner that they would pay the balance amount of Rs.3,99,43,806 at the earliest. By an instrument executed on March 18, 2016 the respondent nos. 1 and 2 acknowledged their liability to the petitioner for the said sum of Rs.3,99,43,806.70 and also sought to create a mortgage of a property situated at Village Chembur, Taluka Kurla, Mumbai. A copy of the said instrument dated March 18, 2016 executed by the respondent nos. 1 and 2 has also been disclosed in this application. The petitioner claims that by executing the said instrument dated March 18, 2016 the respondent nos. 1 and 2 have not only admitted their liability to pay the said sum of Rs.3,99,43.806.70 to the petitioner but they also acted upon the said instrument by making over the original title deed of one of their properties to the petitioner. The petitioner has also disclosed a copy of the said original title deed in respect of the property situated at Flat no.202, on the Second Floor in the building, at Station Avenue Road, Village Chembur, Taluka Kurla, Mumbai, has also been disclosed. In spite of the acknowledgement of their liability to pay Rs.3,99,43,806.70 the respondent nos. 1 and 2 have failed and refused to pay the said amount to the petitioner. In view of the default committed by the respondent nos. 1 and 2 to repay the said sum of Rs.3,99,43,806.70 the petitioner also claims interest claimed on the said amount at the rate of 12% per annum on and from October, 2016 till February 28, 2018. Thus, the petitioner has filed the suit against the respondents claiming a decree for Rs.4,45,42,894.98 against them.

According to the petitioner, the said instrument dated March 18, 2016 contains the admission of the respondent nos. 1 and 2 of the liability to pay Rs. Rs.3,99,43.806.70, as also to pay interest at the rate of 12%, per annum from October 01, 2016 and respondent no.1 has allowed deduction of Rs.21,77,133.25 from his salary. After giving credit to the respondent for the said sum of Rs. 21,77,132.25, a sum of Rs.4,45,42,894 remains due and owing by the respondents to the petitioner. The petitioner claims that in view of the the clear and unequivocal admission made by the respondent no.s 1 and 2 by the said agreement dated March 18,2018 it is entitled to a judgment upon admission against the said respondents for the said sum of Rs.4,45,42,894.98.

The respondent nos. 1 and 2 have contested the present application and they have jointly filed an affidavit in opposition. In the affidavit in opposition the respondent nos. 1 and 2 admitted the petitioner to have acquired the travel and tours business of the respondent no.3 under the said agreement dated January 28, 2014. They, however, alleged that prior to the signing of the said agreement dated January 28, 2014 the petitioner through its men and agents checked all the relevant records including the bank account and reconciled all the assets and liabilities of the respondent no.3. It is the case of the respondent nos. 1 and 2 that after due diligence and reconciliation, the petitioner informed the respondent no.3 that the consideration for the purchase of the entire travel business of the respondent no.3 (without liabilities) would be Rs.13.50 crores to be paid by the petitioner in tranches. As per the understanding between the parties recorded in the said agreement dated January 28, 2014 the respondent no.1 resigned from the respondent no.3 and he became an employee of the petitioner. It is further alleged that although as per Clause 1.3 of the said agreement dated January 28, 2014 the business of the respondent no.3 was recorded to be taken over by the petitioner latest by March 31, 2014 but as agreed between the parties, the petitioner took actual control of the said business of the respondent no.3 as a going concern on and from January 28, 2014 itself. The respondent nos. 1 and 2 further have claimed that as per the terms of the said agreement dated January 28, 2014 after deducting a sum of Rs.1 crore (approximately) being the amount of current liabilities over and above current assets and fixed assets of the respondent no.3 the petitioner paid Rs. 7.36 crores to the respondent no.3 and Rs.5.12 crores to the Bharat Cooperative Bank for repayment of the credit facilities obtained by resonant no.3. The respondent 1 and 2 further alleged that the entire amound of Rs.7.36 Crores received from the petitioner was utilized for making payment to be credited to respondent no.3 and none of them received any money from the petitioner. According to the respondent nos. 1 and 2, suddenly in the month of December, 2014 the petitioner came up with the case that during the reconciliation of the accounts of the respondent no.3 they have done gross miscalculations and later on it appeared to them that a sum of Rs. 4.09 crores have not been taken into account during reconciliation but the petitioner did not provide them with the basis/particulars of such alleged miscalculations. The respondent nos. 1 and 2 have alleged that due to the continuous coercion and threats by the petitioner that Central Bureau of Investigation (CBI)/Vigilance authorities would be arresting them within moments unless they pay the amounts or they issue such comfort letters and that too when the petitioner was having a dominant position over them, the respondent nos. 1 and 2 executed the said instrument dated March 18, 2016 which has been alleged to be the products of fraud, coercion and undue influence. It is further alleged that the respondent no.1 was an employee of the petitioner from January, 2014 and the petitioner illegally and arbitrarily was adjusting the salary payable to the respondent no.1 who has taken a strong objection to the same and had issued a legal notice to that effect also in view of the arbitrarily adjustment of his salary, the respondent no.1 resigned from the services of the petitioner.

The petitioner filed in his affidavit in reply and denied all the allegations made by the respondent nos.1 and 2 in their affidavit in opposition.

Mr. Anirban Roy, learned advocate appearing in support of the application filed by the petitioner under Order XII Rule 6 of the Code submitted that there is no dispute between the parties with regard to acquiring of the travel and tour business of the respondent no.3 by the petitioner under the said agreement dated January 28, 2014 at a consideration of Rs.13.50 crores. He further submitted that the consideration agreed upon in the said agreement dated January 28, 2014 was fixed at Rs.13.50 crores, but subject to final accounting of the liabilities of the respondent no.3 as on the closing date. It was argued for the petitioner that the respondent nos. 1 and 2 admitted the claim of the petitioner that upon finalization of the accounts between the parties and post transfer of the business, assets and liabilities of the respondent no.3 it transpired that the petitioner had also bought in excess liabilities and the respondent nos. 1 and 2 are liable to pay Rs.4,09,93,806.70 to the petitioner. In fact, the respondent nos. 1 and 2 acknowledged the liability to pay the said amount of Rs.4,09,93,806.70 and, as such on July 30, 2015 and August 16, 2015 they paid Rs.8.50 lakhs and Rs.2 lakhs, respectively to the petitioner. It was contended that the said instrument dated March 18, 2016 contains a clear and unambiguous admission by the respondent nos. 1 and 2 to pay the balance amount of Rs.3,99,43,806.70 to the petitioner. In view of such clear and unambiguous admission contained in the said instrument dated March 18, 2016 issued by the respondent nos.1 and 2 the petitioner is entitled to obtain a judgment upon admission as prayed for in this application. It was submitted by the petitioner that the case sought to be made out by the respondent nos. 1 and 2 in their affidavit in opposition that the petitioner obtained the said instrument dated March 18, 2016. Urging all these, the learned counsel appearing for the petitioner prays for a judgment upon admission for Rs. 4,45,42,894 against the respondent nos.1 and 2 in the said application.

On the other hand, it was argued by Mr. Rupak Ghosh learned counsel for the respondent nos. 1 and 2 that in their affidavit in opposition the respondent nos.1 and 2 has explained that they issued the said instrument date March 18, 2016 and due to the continuous coercion and threat by the petitioner that Central Bureau of Investigation/Vigilance Authorities would be arresting them within moments unless they pay the amounts or the issue such comfort letters, the petitioner obtained the said documents being issued by the respondent nos. 1 and 2 by exercising coercion and undue influence on them. Thus, according to Mr. Ghosh, the said instrument dated March 18, 2016 cannot be construed to be an admission on their part to pay any money to the petitioner. It was argued for the respondent nos. 1 and 2 that the present application filed by the petitioner is speculative and same is liable to be rejected.

It is settled law that for exercise of discretion of the Court under Order XII Rule 6 of the Code the admission must be unequivocal. Such admission may be in the pleadings or elsewhere. At the same time, it is also settled position that a defendant contesting an application under Order XII Rule 6 of the Code can explain his/her admission. In the instant case, the petitioner's claim for judgment upon an admission is based on the instrument dated March 18, 2016 executed by them. The first paragraph of the said instrument dated March 18, 2016 duly signed by the respondent nos. 2 and 3 states as follows:

"With reference to the discussion we had on 27th January 2016 at Mumbai on the captioned subject, please note that we do hereby acknowledge the balance business debt of Rs. 3,99,43,806.70 out of the original debt of Rs. 4,09,93,806.70 (out of which Rs.850,000 was paid back on 30th July, 2015 and Rs. 200,000 was paid back on 16th August, 2015) and promise to pay back the same soon.

Since the consideration paid by Balmer Lawrie & Co. Ltd. has already been used up to pay up the Creditors of Vacations Exotica Destinations Pvt. Nothing more is left in the account to be paid back to Balmer Lawrie & Co. Ltd. Hence, we arew trying to sell the property at B-55, 6th Floor, Sundaram Apartments, Opposite Diamond Garden, Sion Trombay Road, Chembur, Mumbai-400071 valued at Rs. 11 crores approx., jointly owned by Shri Ravishankar, Shri Arun Subbaya Shetty and Shri Basantraj Jain for paying back the admitted debt."

Further, the last paragraph of the said instrument contains the following statement:

"Shri Ravishankar and Shri Arun Subbaya Shetty are also ready to pay interest of 12% per annum from 1st October, 2016 till the date of actual payment or till the date Balmer Lawrie & Co. Ltd. realise their dues by selling the property (as described in the schedule of property attached) whichever is earlier. This is applicable if and only if payment could not be made by them on or before 30th September, 2016."

According to the petitioner, the aforementioned statements contained in the said instrument dated March 18, 2016 contain an clear and unambiguous admission on the part of the respondent nos. 1 and 2 to pay Rs.3,99,43,806.70 out of the original debt of Rs.4,09,93,806,70 as also to pay interest at the rate of 12%, per annum from October 01, 2016 till actual payment. On the strength of the above statements made by the respondent nos. 1 and 2 in the said indenture dated March 18, 2016 the petitioner has claim a judgment upon an admission for the said amount of Rs. 3, 99,43,806.70 along with interest , at the rate of 12 % per annum from October 1, 2016 against the respondents. However, the respondent nos. 1 and 2 have alleged that they had executed the said instrument dated March 18, 2016 by virtue of coercion and undue influence exercised upon them by the petitioner, in the manner mentioned hereinabove. It is, however, to be noted that the respondents have not alleged to have filed any suit against the present petitioner for avoiding the said instrument dated March 18, 2016. The respondent no.1 has also not filed any proceedings against the petitioner for recovery of Rs.21,77,132.25 being the amount recovered from his salary by the petitioner. In these facts, I do not find that the respondent nos. 1 and 2 have been able to make out any case for rejection of the claim of the petitioner in this application for judgment upon admission.

For all foregoing reasons, the application filed by the petitioner under Order XII, Rule 6 of the Code is allowed. There shall be a judgment upon admission against the respondent nos. 1 and 2 for a sum of Rs.4,45,42,894.98.

Urgent certified website copies of this judgment, if applied for, be made available to the parties subject to compliance with requisite formalities.