Canbank Financial Services Ltd v. Sfl Industries

RAJIV SAHAI ENDLAW, J. NOVEMBER 9, 2016

"pp/bs" (corrected & released on 6th December, 2016)

*IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 9th November, 2016 + CANBANK FINANCIAL SERVICES LTD. ..... Plaintiff Through: Mr. Ravi Krishan Chandna, Adv. Versus SFL INDUSTRIES LTD. & ANR ..... Defendants Through: Mr. Jagjit Singh, Adv. for D-2. CORAM:- HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW 1. The counsel for the plaintiff and the counsel for the defendant no.2 Shri Harbhajan Singh have been heard. 2. The plaintiff instituted this suit for recovery of Rs.1,20,49,597.24p with interest, jointly and severally from the two defendants, pleading (i) that the plaintiff, vide its letter dated 12th December, 1990 sanctioned and agreed to provide the defendant no.1 lease finance to the extent of Rs.50,00,000/- for installing the plant, machinery and equipment at Village & P.O. Rail Majra, Tehsil Balachaur, District Nawanshahr, Punjab; (ii) on 12th December, 1990 itself an agreement of lease of the said plant and machinery was executed at New Delhi; (iii) as per the said lease agreement the lease rentals were to be paid in eight years w.e.f. the handing over of the plant and machinery; (iv) that on 21st August, 1991 a supplementary agreement was entered into between the parties whereunder the equipment worth Rs.29,64,018/- was leased to the defendant and lease rentals were to commence w.e.f. 21st August, 1991, for a period of eight years i.e. up to 20th August, 1999; (v) the said plant and machinery were installed at the factory aforesaid of the defendant no.1; (vi) the said lease expired on 20th August, 1999 and the defendant became liable to pay the entire lease rentals along with interest as per the terms of the agreement; (vii) that on 27th September, 1991 another supplementary agreement was executed between the parties whereunder equipment worth Rs.39,59,370/- was leased to the defendant and the leased rentals were to commence from 27th September, 1991 and till 26th September, 1999; (viii) the plant and equipment under the said agreement also was installed at the factory of the defendant no.1; (ix) the said lease has also expired on 26th September, 1999 and the defendant became liable to pay the entire lease rentals along with interest; (x) that both the supplementary agreements dated 21st August, 1991 and 27th September, 1991 were to form part and parcel of the Agreement dated 12th December, 1990; (xi) that the defendant no.2 Shri Harbhajan Singh stood as guarantor, to the said transaction, to secure the re-payment of the amounts and executed Guarantee Deed dated 15th March, 1996 in favour of the plaintiff; (xii) that the defendant no.2 is thus jointly and severally liable with the defendant no.1 to pay the outstanding amount; (xiii) that the defendants failed to maintain financial discipline and were never regular in making payments of lease rentals inspite of repeated requests and reminders of the plaintiff and acknowledgment of the defendants; (xiv) on 6th December, 1996, the defendants admitted and acknowledged liability of Rs.61,34,897.45p as on 31st August, 1996; (xv) however till the date of institution of the suit, payment had not been made inspite of legal notice; (xvi) the defendant no.1 on 6th May, 1999 approached the Board for Industrial & Financial Reconstruction (BIFR) under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) and the said reference was registered; (xvii) the plaintiff approached BIFR for permission under Section 22 of the SICA; (xviii) BIFR vide order dated 3rd January, 2000 rejected the application of the plaintiff; (xix) the plaintiff filed an appeal to Appellate Authority for Industrial and Financial Re-construction (AAIFR); (xx) AAIFR vide order dated 12th September, 2000 allowed the application of the plaintiff under Section 22 of SICA; (xxi) that as per the books of accounts of the plaintiff maintained in the regular course of business, the defendants at the time of institution of the suit were liable to pay a total sum of Rs.1,20,49,597.24p to the p