Case Note & Summary
The plaintiff, India Realty Excellence Fund II LLP, a limited liability partnership registered as a Category-II Alternative Investment Fund under SEBI regulations, filed a commercial summary suit under Order XXXVII of the Code of Civil Procedure, 1908, against the defendants, Gautam Jagdish Ahuja and Jagdish Ahuja, who were promoters and directors of Sai Ashray Developers Pvt. Ltd. and Gajanana Land & Developers Pvt. Ltd. (the primary obligor). The plaintiff had invested in compulsorily convertible debentures issued by the primary obligor, and the defendants executed personal guarantees for the investment. Upon default by the primary obligor, the plaintiff invoked the guarantees and demanded payment. The defendants failed to pay, leading to the suit. The plaintiff sought a decree for Rs. 15,80,00,000/- with IRR at 20% per annum from 31st March 2018 to 31st July 2020, amounting to Rs. 24,19,35,000/-, plus further IRR from 1st August 2020 till payment, and additional interest at 2% per month on Rs. 22,58,50,000/- from 16th March 2020 to 31st July 2020 and thereafter. The defendants did not appear despite service, and the court proceeded ex parte. The court examined the plaint, documents, and submissions. It found that the suit was based on a written contract and a liquidated amount, and the defendants had not disclosed any triable issues or sought leave to defend. The court held that the plaintiff was entitled to a summary judgment. The court decreed the suit in favor of the plaintiff for the principal amount of Rs. 15,80,00,000/- with IRR at 20% per annum from 31st March 2018 to 31st July 2020, and further IRR at 20% per annum from 1st August 2020 till realization, and also for the additional interest at 2% per month on Rs. 22,58,50,000/- from 16th March 2020 to 31st July 2020 and from 1st August 2020 till payment. The court also awarded costs.
Headnote
A) Civil Procedure - Summary Suit - Order XXXVII CPC - Leave to Defend - The court considered whether the defendants had raised any triable issues entitling them to leave to defend the summary suit. Held that the defendants failed to disclose any substantial defense or triable issues, and thus were not entitled to leave to defend. (Paras 1-12) B) Contract - Investment Agreement - Guarantee - Liability of Guarantor - The plaintiff invested in compulsorily convertible debentures of the primary obligor, guaranteed by the defendants. Upon default, the plaintiff sought recovery from the guarantors. Held that the guarantors are jointly and severally liable for the amount due under the guarantee. (Paras 3-8) C) Interest - IRR - Default Interest - The plaintiff claimed IRR at 20% per annum and additional interest at 2% per month on overdue amounts. The court examined the terms of the agreement and found the claims to be in accordance with the contract. Held that the plaintiff is entitled to the claimed interest amounts. (Paras 1-2, 9-10)
Issue of Consideration
Whether the defendants are entitled to leave to defend the summary suit under Order XXXVII of the Code of Civil Procedure, 1908, and whether the plaintiff is entitled to a decree for the claimed amount.
Final Decision
The court allowed the Summons for Judgment and decreed the suit in favor of the plaintiff. The defendants were ordered to jointly and severally pay the plaintiff the principal amount of Rs. 15,80,00,000/- with IRR at 20% per annum from 31st March 2018 to 31st July 2020, and further IRR at 20% per annum from 1st August 2020 till realization. Additionally, the defendants were ordered to pay interest at 2% per month on Rs. 22,58,50,000/- from 16th March 2020 to 31st July 2020 and from 1st August 2020 till payment. The plaintiff was also awarded costs.
Law Points
- Summary judgment under Order XXXVII CPC
- Leave to defend
- Triable issue
- Commercial dispute
- Investment agreement
- Guarantee
- Liability of guarantor
- Interest rate
- IRR
- Default
- Liquidated damages
