Bombay HC Nixes Order Granting Company, Which Had Not Denied Its Outstanding Dues, Unconditional Leave To Defend In Summary Suit
Sanjana Dadmi
21 Nov 2024 10:15 AM IST
In a plea challenging the dismissal of summons to judgment in a commercial summary suit, the Bombay High Court set aside a trial court's order granting a company unconditional leave to defend itself, while noting that the company had not denied the existence of outstanding dues owed for the services rendered by the other party.
In such a case, the court said, the company should not have been granted any opportunity to defend the suit proceedings by the trial court.
In the present case the petitioner/plaintiff a Lebanese company providing digital advertising services and respondent/defendant a media entertainment company, had entered an agreement where the former would provide digital advertising services to the latter. However, the petitioner claimed that the respondent failed to clear its dues of around 110,570 USD.
In doing so the court said that the facts of the case were so strong that the trial court should have taken cognizance of it and should not have given the defendant company an opportunity to defend itself in the suit once it was accepted by the defendant that it had received the plaintiff company's services.
Justice Milind N Jadhav in its order said, "Defendant has neither the invoices nor the services received. The invoices have thus become payable under the contract. Once that is the case, finding returned by the learned Trial Court in paragraph No. 10 that the exact nature of transaction between the parties cannot be ascertained from the contents of the agreement is clearly an incorrect finding. The Media Sales Insertion Order clearly refers to publisher information in detail. Thereafter it refers to campaign information, payment terms and rate / budget as also the start / end date to be determined by the parties by email. Said instructions in the contract / order relate to cancellation period. Bank details have been furnished in the contract along with authorization. Terms and conditions of the contract clearly envisage liability of the advertiser and the provider".
The respondent sent an e-mail to the petitioner that it would settle the outstanding dues by paying monthly instalments of 20,000 USD over a period of 6 months and in lien thereof interest of 6% on the same was waived of by petitioner.
The next day, the respondent sent another e-mail that it was undergoing financial constraints and crisis and was on the verge of liquidation.
Subsequently, the petitioner filed a Summary Suit seeking recovery of outstanding dues along with interest and the Trial Court issued a writ of summons to the respondent.
The petitioner then filed an application of 'Summons for Judgment' (which requires a debtor to appear in court) in the Trial Court. However, the Trial Court rejected the petitioner's application and granted the respondent an unconditional leave to defend itself.
The petitioner thus challenged the Trial Court's order, rejecting its application of summons for judgment.
Justice Milind N. Jadhav noted that the respondent did not deny the agreement between the parties.
The Court looked into the correspondence exchanged between the parties in after their agreement and opined that there was a clear acknowledgement of the debt due from the respondent.
The Court noted that the respondent offered to pay $20,000 in instalments, though this was not agreed by the petitioner. It noted that the emails confirmed the amount of around 110,570 USD was due.
It was of the view that the correspondence clearly prove the contents of the agreement and the services provided by the petitioner to the respondent.
The Court remarked that the facts of the case were so “strong” that the Trial Court ought to have taken cognizance of the same. It noted that as the defendant did not deny that there was an outstanding amount due, there was no reason to give respondent any opportunity to defend the suit proceedings.
“Facts in the present case are so strong that learned Trial Court ought to have had taken cognizance of the same. Once there is no denial on the part of Defendant with respect to the contract and the outstanding amount due and payable for the services which have been availed and received by Defendant, there is no reason as to why Defendant should be given any opportunity to defend the suit proceedings.Defendant's case for non payment of outstanding amount is clearly based on its own financial constraints and the fact that Defendant Company has faced a closure. This is evident in the correspondence and emails exchanged by the Defendant with Plaintiff and which is on record and is not denied. Once that is the case, there is no reason for allowing Defendant to defend the suit proceedings at all,” the court said.
The Court further observed that the defendant's financial constraints led to the non-payment of dues and that this was evident from the correspondence exchanged between the parties. In such a case, there was no reason to allow the respondent to defend the suit proceedings, the Court noted.
It stated that the petitioner gave more than adequate prima facie proof in support of its claim for the Summons for Judgment to be made absolute.
The High Court thus set-aside the Trial Court's order and made that the summons for judgment absolute. It held that the defendant was not entitled to any leave to defend the suit proceedings.
Case title: M/s. Mobile Arts S.A.L. vs. M/s. Mauj Mobile Private Ltd. (WRIT PETITION NO.5795 OF 2024)
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