JET ASIA AIRWAYS LTD v. AIR INDIA LIMITED

1. The plaintiff, on 21st September, 2017, instituted this suit under Order XXXVII of the Code of Civil Procedure, 1908 (CPC), for recovery of USD 12,092,550 equivalent to Rs.78,60,15,750/- along with pendente lite and future interest @ 24% per annum, pleading (i) that the plaintiff is an international airlines company based in Thailand and provides full-service scheduled and chartered services as well as long and short terms Aircraft, Crew, Maintenance and Insurance (ACMI) which are also known as „Wet Lease‟; (ii) that the defendant is a Public Sector Airlines; (iii) that in the month of June 2014, the defendant approached the plaintiff and represented that the defendant needs aircrafts of the plaintiff for Haj pilgrimage from India to Saudi Arabia; (iv) that after discussions, a Wet Lease Agreement dated 25th August, 2014 was executed between the parties where it was agreed that the basic ACMI price for each Block hour shall be calculated at 2018:DHC:2196 USD 9000 per hour and will be payable to the plaintiff by the defendant, without any delay; (v) that on the basis of instructions/schedules and in terms of Wet Lease Agreement, aircrafts of the plaintiff were made to ply on various dates; plaintiff has all the details available in nature of travel logs to support its claim but since the said travel logs are very bulky therefore the same shall be produced when required; (vi) that due to shortage of aircrafts of defendant and due to emergent situation, on instructions of the defendant, some domestic tours were also done by the aircrafts of the plaintiff; (vii) that as the Wet Lease Agreement is on the basis of per hour, the plaintiff billed the defendant on hourly basis and the defendant by its emails expressed gratitude to the plaintiff; (viii) that the plaintiff sent ten invoices for a total amount of USD 12,092,550 to the defendant; (ix) that as per international practices and being bound by the Wet Lease Agreement, the plaintiff did not stop the services mid-term citing payment issues etc. but completed the entire obligation; however the defendant, even after receipt of invoices, did not clear the same; (x) that the defendant has already made money from the Haj operation; (xi) that the defendant did not relieve the Pilots, crew members and the aircrafts of the plaintiff, even after the Wet Lease Agreement came to an end and the plaintiff, only with the intervention of other international players, could get its staff and aircrafts back; (xii) that the plaintiff has been sending various communications to the defendant for clearing of the dues but to no avail; (xiii) that meetings were also held between the officials of the plaintiff and the officials of the defendant but again in vain; (xiv) that a sum of Rs.78,60,15,750/- plus interest @ 24% per annum till realization is due from the defendant to the plaintiff.

2. The plaintiff, along with the plaint, has filed photocopies of (a) Resolution dated 20th September, 2013 of its Board of Directors; (b) Wet Lease Agreement dated 25th August, 2014; (c) invoices issued by the plaintiff to the defendant; and, (d) email dated 21st November, 2014 of the defendant to the plaintiff.

3. The suit was entertained and summons thereof ordered to be issued. The defendant entered appearance and the order dated 7th November, 2017 records that the appearance was within time. Thereafter, summons for judgment were ordered to be issued and in response to which this application for leave to defend has been filed.

4. The defendant, in the affidavit accompanying the leave to defend application, has sought leave to defend pleading/contending, (I) that as per the copy of the Wet Lease Agreement filed by the plaintiff, its execution, performance and interpretation is to be governed by the laws of the United States and the plaintiff has not filed any affidavit of an expert in US laws to establish the maintainability of present suit; (II) that the resolution passed in the meeting of the Board of Directors of the plaintiff held on 20th September, 2013 with respect to disputes under the Wet Lease Agreement dated 25th August, 2014 does not inspire confidence and the suit has not been filed by a duly authorized person on behalf of the plaintiff; (III) that while the cause of action is pleaded to have accrued first on 25th August, 2014, the suit has been filed beyond three years therefrom on 20th September, 2017 and is barred by time; (IV) that to ensure smooth transportation of the Haj pilgrims, the defendant had on 29th April, 2014 floated a tender for carriage of pilgrims from India to Saudi and back; (V) that Dynamic Airways LLC (Dynamic), a company incorporated under the laws of USA submitted its bid and a Charter Agreement dated 16th June, 2014 was executed between Dynamic and defendant and the schedule of flights was chalked out; (VI) that 14 aircrafts proposed to be procured by Dynamic also included the aircrafts which are sought to be made the basis of recovery in the present suit; (VII) that Dynamic applied for and was granted 100% tax relief; (VIII) that as per the Charter Agreement between Dynamic and defendant, Dynamic was fully responsible for all the costs of the charter operation including but not limited to providing adequate number of aircrafts, complete crew to operate the fleet, maintenance and insurance, fuel, airport fees, over flying charges, navigation fees, ground handling charges, aircraft positioning and de-positioning; (IX) that since Haj operations are time bound, Dynamic was required to strictly follow the schedule laid down by the defendant; (X) that payment of all the charter operations was made by the defendant to Dynamic in terms of Charter Agreement; (XI) that invoices for the aircrafts qua which the plaintiff is making claims in the present suit, were raised by Dynamic on the defendant and have been paid by the defendant and nothing further is due and payable from the defendant for operation of the said aircrafts; (XII) that the plaintiff appears to be having some dispute with Dynamic and the defendant cannot be fastened with liability on account thereof; (XIII) that Dynamic defaulted in performance of its obligation under the Charter Agreement and defendant had to incur huge costs; (XIV) that the defendant was constrained to invoke arbitration proceedings against Dynamic and Dynamic made counter-claim against the defendant; (XV) that the arbitration proceedings culminated in an Award dated 10th March, 2017 wherein the claims of the defendant were accepted and the counter-claim of Dynamic rejected and a sum of USD 10,036,285 million was awarded to the defendant against Dynamic; (XVI) that the Arbitral Tribunal also held that the Wet Lease Agreement was never acted upon by the parties herein and the same cannot override the provisions of the Charter Agreement; (XVII) that Dynamic preferred a petition under Section 34 of the Arbitration and Conciliation Act, 1996 being OMP(COMM) No.294/2017 and in which Dynamic has stated that the plaintiff is the sister concern of Dynamic and that Dynamic had procured the aircrafts of the plaintiff for performing its obligations under the Charter Agreement; (XVIII) that the plaintiff has concealed the said material facts; (XIX) that the sole purpose behind the execution of the Wet Lease Agreement was to overcome the last minute technical objection raised by the General Aviation Civil Authority in Kingdom of Saudi Arabia (KSA), requiring a specific agreement between defendant and the aircraft owner; (XX) that the date of the Wet Lease Agreement is 25th August, 2014 i.e. one day before the commencement of the Haj operations; (XXI) that in accordance with the requirement aforesaid of General Aviation Civil Authority in KSA, besides the Charter Agreement, a Wet Lease Agreement was also entered into between the defendant and Dynamic with respect to the aircrafts owned by Dynamic; (XXII) that the defendant cannot be made liable to pay under the Charter Agreement with Dynamic as well as under the Wet Lease Agreement with the plaintiff;

(XXIII) that the Addendum created to the Wet Lease Agreement has been forged and fabricated by the plaintiff; (XXIV) that the Wet Lease Agreement August, 2014 does not even bear the signature of the defendant;

(XXV) that no invoices were raised by the plaintiff on the defendant and the copies of the invoices filed along with the plaint have been forged and fabricated; and, (XXVI) that there is no contractual relationship between the plaintiff and the defendant.

5. The plaintiff has filed a reply to the leave to defend application, pleading (A) that the Wet Lease Agreement is not to be governed by the laws of United States; moreover, necessary witnesses would be produced during the evidence; (B) that the signatory of the plaint is the Director of the plaintiff and the typographical error in the Board Resolution cannot be taken advantage of by the defendant; (C) that the suit was instituted on 23rd August, 2017, within three years of 25th August, 2014 i.e. when the cause of action therefor arose; (D) that there was no Charter Agreement between defendant and Dynamic and the Charter Agreement being relied upon by the defendant has no relevance to the present suit. Else, the plaintiff has denied the other contents of the leave to defend application.

6. The counsels have been heard.

7. I may at the outset state that the suit, on the averments in the plaint and the documents filed therewith, is not found to be maintainable under Order XXXVII of the CPC and summons for appearance under Order XXXVII of CPC ought not to have been issued. Only such suits for recovery of money are permitted to avail of the summary procedure under Order XXXVII of the CPC, which are (a) upon bills of exchange, hundies and promissory notes; or (b) in which the plaintiff seeks only to recover a debt or liquidated demand of money arising (i) on a written contract; or (ii) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or (iii) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only. The plaintiff in the plaint has not specified in which class/category its suit falls. It is certainly not on a bill of exchange, hundi or promissory note or on a guarantee. That leaves only the category of “on a written contract” or “on an enactment”.

8. The plaintiff, in the plaint has referred to a Wet Lease Agreement August, 2014 with the defendant and of which a copy has also been filed along with the plaint. The said Wet Lease Agreement, as per its copy, has been signed on 25th August, 2014 by Hemendra Sharma, Assistant General Manager (F) and the seal purportedly of the defendant is affixed below his signatures. However, the said Wet Lease Agreement only describes the equipment being leased thereunder, the term of the lease, programme to be operated, other obligations etc. and does not contain any commitment of the defendant to pay any amount to the plaintiff. The said Wet Lease Agreement, against caption “Basic ACMI Price” states “specified in Addendum to this Agreement paid in United States Dollars”. However, the Addendum to the Wet Lease Agreement does not bear the signature of anyone on behalf of the defendant and does not even bear the seal of the defendant. Moreover, the same merely describes the „Basic ACMI Price‟ as USD 9000 per Block hour. The Addendum does not even state the total number of hours for which the payment had to be made. It is also the case of the plaintiff that the payment was to be computed on the basis of number of hours the aircraft was airborne. Thus, even if the Addendum were to be presumed to be part of the Wet Lease Agreement and signed by the defendant, even therefrom, the debt or liquidated demand in money payable by the defendant, which is the requirement of Order XXXVII of CPC, cannot be known. The plaintiff itself in the plaint has pleaded that the same has to be computed from travel logs of the aircrafts, copies even of which have not been filed. Thus, as per the plaintiff also, the amount payable by defendant to plaintiff under the Wet Lease Agreement is not liquidated or in the nature of debt and has to be computed by multiplying the Basic ACMI price with the number of hours the aircrafts of plaintiff were airborne under Wet Lease Agreement with defendant recorded in the travel logs which are neither before Court nor is it the plea that there is an acknowledgement of contents thereof by the defendant. When the amount claimed to be due has to be so computed, the suit is not maintainable under Order XXXVII CPC.

9. A debt is an obligation, in presenti, to pay. Even according to the plaintiff, on the date of signing/execution of the Wet Lease Agreement, there was no obligation of the defendant to pay any amount to the plaintiff and the obligation of the defendant to pay in terms of Wet Lease Agreement was to accrue on the aircrafts of the plaintiff being airborne for the defendant. Thus the Wet Lease Agreement was not for payment of any debt already due from defendant to plaintiff. The suit may qualify as for recovery of liquidated demand of money arising under the Wet Lease Agreement in writing between the parties, if the amount due was capable of being made certain from other documents in writing by the parties i.e. if there was a writing between the parties of the number of hours for which the aircrafts of plaintiff remained airborne for the defendant and whereupon, from arithmetical calculation i.e. multiplying the Basic ACMI price with the number of hours. However no such writing is before the Court. Though the plaintiff pleads travel logs but has not filed the same. There is no plea of admission of defendant of correctness of such travel logs. Supreme Court, in Kesoram Industries & Cotton Mills Ltd. Vs. Commissioner of Wealth Tax (Central), Calcutta AIR 1966 SC 1370, though while interpreting the word „debt‟ in the Wealth Tax Act, 1957, held that a sum payable upon a contingency does not become a debt until the said contingency has happened. Here, the amounts agreed to be paid under the Wet Lease Agreement were to become a debt/liquidated demand in money payable by the defendant to plaintiff only on contingency of the aircraft of plaintiff remaining airborne for defendant happening. Once Order XXXVII provides for a „written contract‟, the proof of contingency having happened, also must be in writing, unless it is resipsa-loquitor, as in the case of liability for payment of rent under a lease deed which is writ large from the defendant continuing in possession of premises. Here, I repeat, there is no writing of contingency having accrued and thus no debt or liquidated demand of money arising from a written contract. Reference can also be made to Food Corporation of India Vs. Balkrishna Garg ILR (1982) I Delhi 756.

10. The plaintiff, in the plaint has referred to ten invoices raised on the defendant. The plaintiff, at pages 16 to 35 of its documents, has filed photocopies of the said invoices. However, there is nothing to suggest that the same were delivered to the defendant or that the defendant had accepted the same. Thus, the said invoices also cannot be accepted as a written contract within the meaning of Order XXXVII of CPC.

11. It is for this reason that I state that the suit as drafted does not lie under Order XXXVII of the CPC and the plaintiff, by filing the same under Order XXXVII of the CPC, has wasted the time till now. The plaintiff also, fully aware of the suit being not maintainable under Order XXXVII CPC, in the reply to application for leave to defend has pleaded that “necessary witnesses would be produced during the evidence”. The suit has been wrongly entertained under Order XXXVII of the CPC.

12. Though in the light of above, there is no need but I may also state that the defence of the defendant as disclosed in the application for leave to defend is such qua which it could be said within the meaning of IDBI Trusteeship Services Limited Vs. Hubtown Limited (2007) 1 SCC 568, that it is not substantial or does not raise triable issues indicating that it is a fair or reasonable defence.

13. There is indeed a serious issue with respect to the claim being within time also.