- (1.) THIS is the debtor's notice of motion to set aside the insolvency notice issued to them.
(2.) THE petitioning creditor filed Suit No. 1891 of 2000 against M/s Akar Laminators and the two judgement debtors for the repossession of the equipment leased to them and for consequential reliefs including the recovery of arrears of lease rental. By an order dated 9th November 2001 the suit was disposed of in terms of consent terms entered into between the parties. As the submissions on behalf of both the parties require a consideration of the consent terms it is necessary to set them out in extenso. They read as under :- '1. The Defendants admit the claim of the Plaintiffs as mentioned in the above suit. 2. It is however agreed between the parties that upon the Defendants paying to the Plaintiffs an amount of Rs.3,00,00,000/- (Rupees Three Crores) on or before 31.12.2001 the claim in suit should be marked as fully satisfied and the Defendants he discharged from their liability in respect of the said claim. 3. It is expressly agreed between the parties that the time is the essence of this consent terms and that in the event of failure of the Defendants in payment of the aforesaid amount of Rs.3.00 Crores as mentioned in clause 2 above within the stipulated period i.e. on or before 31.12.2001. The Plaintiffs shall be entitled to recover the entire decretal amount as claimed in the suit and that there shall be a decree passed by the Hon'ble Court in accordance with the reliefs claimed in the suit. 4. In case the Defendants make payment in respect of the amount guaranteed by Defendant No.4 shall stands discharges as guarantor in respect of the aforesaid guarantee executed by them in favour of the Plaintiffs. 5. The Directors of the Defendants hereby personally undertake to this Hon'ble Court as regards compliance of this consent terms and further undertakes not to dispose of and/or alienate and/or create third party interest in respect of the assets and properties of the Defendant No.1 company and/or their personally assessts till the dues of the Plaintiffs claimed in the suit are duly said of, except in case of amalgamation of the Defendant No.1 ' Company with some other company. 6. Suit disposed off in the aforesaid terms. Court fees refund as per rules. 7. Undertaking accepted. 8. There shall be order as to cost. Certified copy expedited.' It is necessary to preface the further facts by noting the rival contentions. Mr. Vashi, the learned counsel appearing on behalf of the judgement debtors, submitted that the consent terms do not bring into existence a decree for the payment of the entire amount claimed in the suit in the event of the defendants failing to pay the amount mentioned in clause 2 thereof. In other words according to him though there was a failure on the part of the defendants in payment of the amounts as per clause 2 of the consent terms there is today no decree in existence entitling the judgement creditors to recover the entire decretal amount as claimed in the suit. Mr. Jain on the other hand submitted that there is today a decree in existence in favour of the judgement creditors for the entire amount as claimed in the suit in view of the judgement debtors having failed to make payment as per clause 2 of the consent terms. The submission on behalf of the judgement creditors is well founded both on a construction of the consent terms as well as in view of an order passed in this matter which I will refer to shortly. The petitioner had filed Contempt Petition No. 66 of 2002 in the said suit inter-alia on the ground that the judgement debtors had failed to make payment under the consent terms despite the firm having failed to pay the said amounts. The contempt petition was disposed of by an order and judgement dated 13th June 2007. The learned judge did not go into the controversy as to whether a decree gets passed automatically on the failure of the defendants in the said suit to abide by the agreement contained in clause 2 of the consent terms. The learned judge, for the purpose of the Contempt Petition, presumed that a decree gets passed in favour of the plaintiff for the entire claim in the suit upon the defendant's failure to abide by the terms contained in the consent terms. The learned judge held that the undertakings contained in clause 5 of the consent terms cannot be read to mean that the defendants had undertaken to make payment of the said amount by 31st December 2001. This judgement is therefore of no assistance to either the judgement creditor or the judgement debtors.
(3.) THE judgement creditors thereafter took out/applied for a judge's order being Judges Order No. 157 of 2009 in the said suit for a decree on admission under Order 12 rule 6 of the Code of Civil Procedure, 1908. The same was disposed off by an order and judgement dated 24th June 2009. It was submitted on behalf of the judgement creditor that the occasion for applying for a decree on admission under Order 12 rule 6 was that the judgement debtors had contended before the learned judge in the contempt petition that no decree could be said to have been passed by this court automatically on the failure of the defendants to abide by the agreement to pay the amount of Rs.3,00,00,000/- on or before 31st December 2001. The learned judge held that merely because such a defence was raised would be no reason for the court to entertain an application under Order 12 rule 6 when the suit had already been disposed of. It is important to note the following observations of the learned judge :- "3. Under Order 12, Rule 6 the Court is empowered to pass a decree on admission at any stage of the suit. The suit has already been disposed of. As Clauses 1 and 3 of the Consent Terms would show, there is a decree of the Court upon failure of the defendants to pay the amount of Rs. 3, 00, 000, 000/-or before 31 s t December 2001. In the circumstances, there is no occasion for this Court to now pass a decree on admission under Order 12, Rule 6. The objection of the defendants to the Court exercising its jurisdiction under Order 12, Rule 6 on the ground that the suit has already been disposed of is, in these circumstances correct. The remedy of the plaintiffs must lie in adopting proceedings in accordance with the law for the execution of the decree dated 9 to November 2001." (emphasis supplied) The judgement clearly holds that as a result of the defendants having failed to pay the amount as required by the Consent Terms there is a decree of the court. The doubt if any in this regard is set at rest by the fact that the learned judge expressly held that the remedy of the judgement creditors must lie in adopting proceedings for the execution of the decree. This predicates the existence of a decree. The judgement is binding on me. I am in any event in respectful agreement with the learned judge. A plain reading of the consent terms establishes this. Clause 3 of the Consent Terms provided that in the event of the failure of the defendants to pay the amounts of Rs. 3 crores as mentioned in clause 2 the plaintiffs i.e. the judgement creditors "shall be entitled to recover the entire decretal amount as claimed in the suit and there shall be a decree passed by the court in accordance with the reliefs claimed in the suit." (Emphasis supplied). The decree operated against all the defendants therein including the judgement debtors. The contention on behalf of the judgement debtors that there is no decree is therefore not only incorrect on principle but is, I am constrained to say, dishonest. When it suited them they contended before the learned judge hearing the contempt petition that there was no decree. Thereafter when the judgement creditors applied for a decree under Order 12 Rule 6 they contended that the application was not maintainable as by virtue of the Consent Terms a decree is there by virtue of the Consent Terms themselves. Having persuaded the learned judge to hold that there is a decree as prayed and thereby having had the application dismissed they now contend yet again that there is no decree. The judgement debtors conduct leaves a lot to be desired.;