Full Text
RFA NO. 18/1997
NATIONAL SMALL INDUSTRIES CORP. LTD. …... Appellant
Through: Mr. S.S. Saluja, Advocate.
Through:
Date of Reserve : November 10, 2010
Date of Decision: November 29, 2010
JUDGMENT
1. Whether reporters of local papers may be allowed to see the judgment?
2. To be referred to the Reporter or not?
3. Whether judgment should be reported in Digest?
JUDGMENT
29.11.2010: REVA KHETRAPAL, J. This appeal is directed against the judgment and decree dated 19th September, 1996 passed in Suit No. 870/1994 whereby and 2010:DHC:5752 whereunder the learned Additional District Judge, Delhi, decreed the suit of the appellant for ` 2,09,674/- with 10% interest on the principal amount from the date of the filing of the suit till the realization of the amount.
2. The facts leading to the filing of the suit briefly delineated are that the respondent no.1 as the proprietor of M/s. Mahabir Plastic Industries submitted an application for obtaining certain machines from the plaintiff under a Hire-Purchase Scheme. The respondent no.2 stood as a guarantor under the said Scheme. Along with the application, the respondent no.1 supplied the details of the machines and the name of the supplier from whom the machines would be purchased. The respondent no.1 also furnished a declaration in the said application regarding the terms and conditions governing the supply of machinery under the aforesaid Scheme of the appellant. Earnest money was paid by the respondent no.1 to the appellant and the order was placed by the appellant on the suppliers of the respondent no.1’s choice for the supply of the requisite machines.
3. According to the terms of the Hire-Purchase agreement entered into between the parties on 21st April, 1988, the respondent no.1 was required to pay the installments of hire on the dates stipulated in the Agreement. The hire-purchase value of the machines was fixed at ` 3,78,703/-. The first hire installment was to be in the sum of ` 27,599/- payable on the 1st of November, 1989, followed by twelve half-yearly installments of ` 27,609/- each payable on the 1st of May and the 1st of November, i.e. after every six months till the whole of the hire-purchase value amount was paid.
4. In terms of the aforesaid Hire-Purchase agreement, executed between the appellant and the respondent no.1, the following machines were supplied by the defendant no.1: - (a) 65 mm Extruder machine (b)Take Off Unit with 6 Rubber Rolls.
(c) High Speed Mixture
(d)Scrap gruder 12” (e) One Air Compressor 200 Lbs.
5. According to the clause 6 of the Hire-Purchase agreement, the respondent no.1 was required to pay the half-yearly installments on the due dates, failing which the respondent no.1 would be liable to pay interest @ 2% per annum over and above the normal rate of interest of 13% per annum on such defaulted installments or part thereof, as the case may be, until payment.
6. Clause 3 of the Hire-Purchase agreement stipulated that the respondent no.1 could exercise the option of purchasing the machines supplied by the appellant after three years of the date of the Agreement by paying the entire amount of hire-purchase value of the machines, but till such time the machines would remain the sole property of the appellant and the respondent no.1 would remain a hirer and a mere bailee thereof. The relevant part of the Clause 3 of the said Agreement is reproduced hereunder: -
7. The appellant’s case, as set out in the plaint, is that inspite of repeated demands, the respondents failed to pay the installments of hire on the due dates as laid down in the hire-purchase agreement, and thereby the respondents defaulted in the payment of the appellant’s dues. The appellants also alleged that the respondent no.1 committed breach of the Agreement by shifting the machines to a place which had no shed or roof, where the machines were put in a dismantled condition. This was despite the covenant in the Hire-Purchase Agreement whereby the respondent no.1 had undertaken not to sell, mortgage, pledge, assign, let or otherwise deal with or part with the possession of the hired machines [clause 2 (iv)].
8. The appellant alleged that the respondents having failed to pay a sum of ` 2,09,674/- (rupees two lakh nine thousand six hundred and seventy four) as arrears of installments of hire and of interest thereon due to the appellant from the respondent no.1 on account of the fifth to the tenth installments, the appellant terminated the Hire Purchase Agreement by a legal notice dated 4th October, 1994, calling upon the respondent to handover the possession of the hired machines along with a sum of ` 4,67,867/- inclusive of interest. The notice having gone unheeded, the appellant filed a suit for recovery of ` 2,09,674/- as arrears of installment and for possession of the machines, claiming possession under clause 2(v) of the Agreement with the prayer that in case the respondent had damaged or destroyed the machines or had removed them, or for any reason, the machines could not be handed back to the appellant in a sound condition, the appellant be in the alternative held entitled to a decree in the sum of ` 2,58,674/-, being the residual value of the machines, in addition to the amount claimed towards the hire installments.
9. The suit was filed on 27th October, 1994. The notice of the filing of the suit was served upon the respondents no.1 and 2. The said respondents, though initially appeared and sought time for filing written statement, were subsequently proceeded ex parte in default of appearance, leading to an ex parte judgment being rendered by the learned trial court, whereby the suit of the plaintiff was decreed in the sum of ` 2,09,674/- with costs of the suit, against the respondents, who were held jointly and severally liable to pay the amount with interest.
10. Aggrieved and dissatisfied with the judgment of the learned trial court, the present appeal was preferred by the appellant. Notice of the appeal was served upon the respondents who did not care to appear and the appeal was accordingly heard ex parte.
11. The main thrust of the learned counsel for the appellant was that the learned trial court while decreeing the suit in the sum of ` 2,09,674/-, which was an amount due to the appellant for default in payment of hire money under the Hire Purchase Agreement, completely lost sight of the prayer of the appellant for possession of the machines valued at ` 2,58,674/-.
12. In this context, Mr. S.S. Saluja, the learned counsel for the appellant invited my attention to the sub-clause (v) of clause 2 of the Hire Purchase Agreement which reads as under: -
13. Reliance was also placed by Mr. Saluja, the learned counsel for the appellant on the decisions rendered by this Court in National Small Industries Corporation Ltd. vs. Tenmand Engineers and Ors. 1998 1 AD (DELHI) 526 and The National Small Industries Corporation Ltd. vs. M/s. Globe Circuits (India) 2005 VI AD (DELHI) 782 to contend that apart from the arrears of installments of hire rent and interest on the overdue payments, the appellant was entitled to a decree for the recovery of possession of the machines hired and in the event of the failure of the respondents to give repossession of the hired machines to the appellant in a sound condition to a decree in the sum of ` 2,58,674/-, being the residual value of the said hired machines, against the respondents with pendente lite and future interest @ 15% per annum, which was the contractual rate of interest.
14. Indubitably, I find from the judgment of the learned trial court that the trial court has not at all dealt with the prayer for possession of the machines by the appellant and in the alternative for payment of the sum of ` 2,58,674/-, i.e. the value of the machines. Thus, in terms of the agreement between the parties, the appellant must be held entitled to the restoration of the hired machinery, the particulars whereof are set out in paragraph 1 of the plaint, at serial no.1 (a) to (e). In the event of the failure of the respondents to give repossession of the aforesaid machinery to the appellant, the appellant shall be entitled to a decree in the sum of ` 2,58,674/- for the residual value of the machines along with costs and interest @ 15% per annum, which is the contractual rate of interest, from the date of the institution of the suit till realization.
15. In the circumstances, it is directed that the respondent no.1 shall restore the machinery mentioned above to the appellant in sound condition within one month from today and in case it is not possible for the respondent no.1 to do so, the respondent no.1 and 2 shall be jointly and severally liable to pay the residual value thereof in the sum of ` 2,58,674/- with interest thereon @ 15% per annum. Needless to say that the respondents no.1 and 2 shall also be jointly and severally liable to pay a sum of ` 2,09,674/- with costs and interest @ 15% per annum from the date of the filing of the suit till the realization of the amount.
16. The appeal is allowed in the above terms.
REVA KHETRAPAL (JUDGE) November 29, 2010 sk