- (1.) This suit has been filed for recovery of a sum of Rs. 98,23,910.90 with further interest at 22% per annum on Rs.78,99,682.35, for selling the schedule mentioned property in the event of default, for a direction to the first defendant to pay the amount, so deficient if any, with further interest at 22% per annum and for costs.
(2.) The plaint averments are as follows : The first defendant approached the plaintiff for financial assistance upto Rs. 25.00 lakhs in order to process, store and export Marine products, some time in March and April 1993. He represented that a packing credit of Rs.25.00 lakhs could be sanctioned to him with which he would achieve a target of an export turn over of Rs. 300 lakhs per annum and in turn the plaintiff could charge apart from interest at 14% per annum on such credit, also service charges at 3% of the F.O.B. value of such exports. D1 further offered to keep all processed and finished stock at D1's cold storage fully hypothecated to the plaintiff, to secure repayment of the loan. It was contemplated that the plaintiff could negotiate the export documents, immediately on the opening of such letters of credit, realise the full value thereof, appropriate their service charges and accrued interest and any other expenditure incurred by the plaintiff with regard to such exports and also the amounts advanced to D1 till then and pay the balance to D1. Accordingly, an agreement between the plaintiff and D1 was entered into on 6-4-1993. D1 executed a hypothecation agreement on 6-4-1993, wherein D1 had represented that they were lessees of the cold storage belonging to New India Maritime Agency at Nima Complex, 26-32, G. A. Road, Madras-21. D1 also executed a promissory note on 6-4-1993 for Rs.25.00 lakhs. Upon execution of the abovesaid documents, Rs.10.00 lakhs were advanced by the plaintiff to D1 on 7-4-1993. Further advances were also made by the plaintiff to D1. D1 requested the plaintiff to sanction further advances to D1 to cover their operations at and from Mangalore storage also. Since D1 wanted more funds, the plaintiff insisted upon D1 furnishing some security of immovable property. The defendants 1 and 2 deposited the original title deeds relating to the immovable property described in the schedule, owned and possessed by D2, on whose written authority and on whose behalf, D1 deposited the title deeds with the plaintiff under covering letter dated 15-7-1993 with a view to create and equitable mortgage over such property. A memorandum of understanding was also entered into between the plaintiff and D1 on 21-7-1993. Thereafter, the plaintiff continued to make further advances to D1, at his request. In this process a total sum of Rs.1.17 crores was advanced by the plaintiff. Only a sum of Rs. 44,39,300/- was realised from the shipments effected by D1. There is a balance of Rs.72,60,700/- to be realised. From the statement it can be seen that there has been no export or realisation after 13-1-1994. In spite of repeated demands and reminders the defendants have not made any further payments. Since from 13-1-1994 there has been no export at all, the plaintiff is entitled to charge interest at 22% per annum on all outstandings, in terms of clause 8 of M. O. U. Interest works out to Rs.19,38,705.60. After giving credit to a sum of Rs.48034.05 realised by the plaintiff through sale of scrap, the interest outstanding would be Rs.18,90,671.55. The plaintiff was constrained to spend Rs.6,38,982.35 in respect of a container exported by D1, but returned due to rejection by the foreign buyer. Under this head, a sum of Rs.6,72,539.35 is due and payable by D1 which is inclusive of interest viz. Rs.33557/-. Thus a total sum of Rs.98,23,910.90 is due and payable by D1 to the plaintiff. D1 cleverly withheld one original bill of lading out of the three originals and made use of it by sending Abdul Rasheed directly to Singapore and getting the Cargo cleared with such bill, forging the signature of an officer of the plaintiff company and receiving the bill amount directly from the consignee without the knowledge of the plaintiff in violation of the Foreign Exchange Regulation Act. The plaintiff gave a written complaint to the Enforcement Directorate against D1 and Abdul Rasheed. The Enforcement Directorate initiated proceedings against these persons. D1 acknowledged his liability indicating Rs.70.00 lakhs as the extent of such liability vide his letter dated 7-6-1994. When the plaintiff confronted D1 with these instances of fraud, the first defendant issued a cheque for Rs.10.00 lakhs on 31-3-1994 with promise to clear the entire liability soon. The said cheque was returned by his Bank for want of funds. In spite of notice of demand dated 25-5-1994, the defendants have not cared to settle the account. Since the 2nd defendant's immovable property has been offered as security for the transaction, she is made a party to the suit. Hence the suit.
(3.) In the written statement filed by the first defendant and adopted by the second defendant, it is alleged that D2 has been unnecessarily dragged to court without any justification whatsoever. D2 is not a party to the suit. It is only the plaintiff who approached the first defendant and requested him to process and pack fresh marine products for export, which is clear from the agreement dated 6-4-1993. D1 has been acting as per the terms of the said agreement. The plaintiff committed breach and acted contrary to the terms of the agreement. The signature of D1 was taken in various documents and papers in blank. D1 has signed promissory notes, papers and other documents based on good faith. D1 had no bargaining power. As per the agreement, the plaintiff alone is the shipper and exporter. D1 is only a processor. The plaintiff is wholly responsible for negotiations with foreign buyers, to receive payments and maintain the accounts properly. D1 has given the processed and packed fresh marine products to the plaintiff for export and the total export value was to the tune of 2,07,649.15 US DOLLARS. No. Particulars are given regarding the further advance. As directed by the plaintiff, D1 signed the deed of hypothecation. The first defendant has signed all the papers and complied with all the formalities as dictated by the plaintiff in good faith. The plaintiff did not furnish any statement of account of their dealings to D1. D1 never requested for more advances. It was only the unilateral and arbitrary decision on the part of the officials of the plaintiff. In fact the Central Bureau of Investigation have filed a case against the officials of the plaintiff who are guilty of various charges. The plaintiff never furnished the accounts of all the exports and realisations made by them. The officials of the plaintiff increased the limits for their own purposes. The plaintiff's officials informed this defendant to deposit the title deeds of the immovable properties, belonging to D2. The covering letter dated 15-7-1993 is a document got prepared by the plaintiff. The alleged M.O.U. was got prepared and typed by the officials of the plaintiff in their letterhead and D1 was called upon to sign the same. As requested by the plaintiff, D2, the wife of D1, had deposited the title deeds. The title in the goods have passed on to the plaintiff as the plaintiff is a shipper and exporter. The shipments were effected only by the plaintiff. D1 has processed and packed sea food and handed over the same to the plaintiff and the plaintiff has made those 11 shipments. The plaintiff ought to have given credit to 2,07,649.15 US Dollars to the account of D1 then and there. The allegation that the export realisation was only Rs.44, 39,300/- is false. The plaintiff's claim for interest at 22% p.a. is untenable. In fact the plaintiff promised that crab can be exported but did not act as promised and thereby the first defendant has been put to loss. The entire calculation in annexure A is wrong and the claim is false. If the foreign buyer has rejected anything, it is purely a matter between the plaintiff and the foreign buyer and D1 is not at all concerned with that. The said container was exported by the plaintiff. The plaintiff alone is responsible. It is learnt that the container was unloaded at Colombo and was sent to Dubai belatedly and the foreign buyer has rejected. The plaintiff should have insured and made insurance claim. The allegation that the defendants played fraud on the plaintiff is per se defamatory. The defendants reserve their right to proceed against the plaintiff and its officials for defamation. There is absolutely no fraud on the part of the defendants. All the documents and other matters in relation to the shipments and exports are all negotiated only in the name of the plaintiff and so they are solely responsible for delivery and receipt of the sale proceeds. D1 had handed over all the documents to the plaintiff for export of the goods. The plaintiff without verifying the document would not have shipped the cargo and would not have exported the goods. D1 has not violated the provisions of the Foreign Exchange Regulation Act. The complaint given against D1 and others to the Enforcement Directorate is frivolous and nothing but an abuse of the process of law. The plaintiff has abused their official power which has caused huge loss and hardships to the first defendant. They have acted in bad faith. D1 reserves his right to proceed against the plaintiff and their officials for damages, and also to claim damages to the tune of Rs.2.00 crores from them. The first defendant is neither an exporter nor a shipper. D1 has not received any payment from the Singapore buyer. D1 never acknowledged the liability as alleged by the plaintiff. It is only the officials of the plaintiff who requested the first defendant to give a cheque for Rs.10.00 lakhs stating that if such a cheque is given it will be easy for them to show in their accounts as on 31-3-1994, to the high officials. D1 at the time of giving the said cheque made it very clear to the officials of the plaintiff that the cheque was given only for accounting purpose and not to be presented for encashment. But they have presented the cheque and got back the same as dishonoured. D1 has not committed any fraud. It is only the officials of the plaintiff who misled the first defendant. The plaintiff harassed D1 by filing a complaint under Sec. 138 of the Negotiable Instruments Act. D1 filed an application for discharge and the learned VII M. M., Madras was pleased to discharge the first defendant. Even though D1 has filed Caveat petition both in the City Civil Court and in the High Court as early as 1994, the plaintiff has filed the above suit only in 1995. Hence the suit may be dismissed with exemplary costs.;