Madras High Court · 2025

C.S.No.136 of 2020Original Side Rules read with Order VII Rule 1 of CPC to pass decree and Judgment against the defendant as hereunder:-a)Directing the defendant to pay a sum of Rs.1,69,77,038.82 with interest at 18% per annum from the date of the suit till the date of payment;b) for such further or other reliefs, as this Court may deed fit and proper in the circumstances; and c) For the costs of the suit.For Plaintiff : Ms.V.Nithiyasri for M/s.S.Ramasubramaniam AssociatesFor defendants : D1 to D4 set ex-parte on 05.01.2024J U D G M E N T The present suit has been filed for the recovery of a sum of Rs. 1,69,77,038.82 (Rupees One Crore Sixty-Nine Lakhs Seventy-Seven Thousand Thirty-Eight and Paise Eighty-Two only) from the defendants.2/13 https://www.mhc.tn.gov.in/judis C.S.No.136 of 20202) The plaintiff's case is that the plaintiff is a company incorporated under the Companies Act, 1956, engaged in the manufacture of agricultural tractors and farm equipment, holding a market share of 25% with annual sales exceeding 1,50,000 tractors. The first defendant was a dealer for the plaintiff, and the remaining defendants are partners of the first defendant. A dealership agreement was executed between the plaintiff and the defendants on 01.01.2015. The first defendant breached the dealership agreement by failing to pay the suit amount in respect of the purchase of tractors from the plaintiff. Despite several requests and communications from the plaintiff, the defendants failed to make the payment. Hence, the plaintiff has filed this suit for the recovery of the outstanding amount.3) On the side of the plaintiff, Mr.P.R.Mohamed Bilal, Assistant Manager of the plaintiff has been examined as PW1 and marked Ex.P1 to Ex.P43. The defendants were set exparte on 05.01.2024.4) Heard Ms.V.Nithyasri, learned counsel appearing for M/s.S.Ramasubramaniam and Associates, learned counsel appearing for plaintiff.3/13 https://www.mhc.tn.gov.in/judis C.S.No.136 of 20205) Ms. V. Nithyasri, learned counsel appearing for the plaintiff, submits that the plaintiff company is incorporated under the Companies Act, 1956, and is engaged in the manufacture of agricultural tractors and farm equipment. She further submits that the plaintiff company is the second-largest tractor manufacturer in India, holding a market share of 25% with annual sales of over 1,50,000 tractors. She also submits that the plaintiff company has around 700 dealers across the country who directly sell their products to consumers. Additionally, she submits that the relationship between the dealer and the company is that of principal to principal and not that of principal-agent. 6) She submits that the plaintiff and the first defendant entered into a dealership agreement which was marked as Ex.P5. The plaintiff and the defendants have maintained the dealership since 01.10.2002. She further submits that upon the demise of one of the three partners, the deceased partner's wife was inducted as a partner, and after her resignation, the fourth defendant was inducted as a new partner as per the partnership deed dated 01.04.2016, marked as Ex.P6. 7) She submits that the defendants' performance during the initial stages of 4/13 https://www.mhc.tn.gov.in/judis C.S.No.136 of 2020the dealership was reasonably satisfactory. However, subsequently, the sale of tractors by the defendants declined from September 2017 onwards. She further contends that the plaintiff company sent emails highlighting the decline in sales and requesting settlement of the outstanding dues on various dates. These email correspondences were marked as Ex.P7. She submits that the defendant replied on 19.12.2017, admitting the outstanding dues and expressing their efforts to clear them, under Ex.P8. She further contends that several discussions were held between January 2018 and September 2019, during which the defendants admitted their liability and assured the clearance of the overdue amounts. In particular, on 10.03.2018, the plaintiff wrote a letter to the first defendant pointing out that a sum of Rs. 393.61 lakhs was due and payable by the defendants. This letter was marked as Ex.P11.8) She further submits that during the negotiation process, the dealership agreement was further extended for six months from 01.01.2018 to 30.06.2018 by a letter dated 19.03.2018, under the genuine belief that the defendants would clear the outstanding dues. This letter was marked as Ex.P12. Subsequently, in December 2018, the first defendant sent a letter promising to clear all outstanding dues, marked as Ex.P18. She contends that upon expiry of the renewal period, the plaintiff was not inclined to renew the dealership further. 5/13 https://www.mhc.tn.gov.in/judis C.S.No.136 of 2020However, the defendants continued purchasing tractors from the plaintiff and reselling them in the same manner as during the agreement period until September 2019.9) She further submits that in the meantime, several discussions took place between the parties, and minutes of the meetings were recorded, but they did not yield any positive outcome during April 2019. Subsequently, the first defendant issued six post-dated cheques on different dates, which were not presented in good faith as the plaintiff genuinely believed that the defendants would settle the outstanding dues. These letters and cheques were marked as Ex.P29 to Ex.P34. She contends that even during the meeting on 10.09.2019, the defendants failed to indicate their intention to wind up operations and instead made a false commitment to sell 80 tractors in September 2019 and 70 tractors in October 2019. During that time, the first defendant gave an undertaking to clear the outstanding dues of Rs. 124.84 lakhs. The minutes of the meeting were marked as Ex.P37.10) She contends that despite repeated requests from the plaintiff over a considerable period, the defendants failed to clear the liabilities owed to the plaintiff company. She further submits that the suit amount remains due and 6/13 https://www.mhc.tn.gov.in/judis C.S.No.136 of 2020payable to date. Upon inquiry, the plaintiff discovered that the third defendant had invested in the competitor’s products instead of settling the dues owed to the plaintiff, which constitutes a violation of Clause 16(s) of the Dealership Agreement. She further submits that since the first defendant is a partnership firm and the other defendants are partners, they are jointly and severally liable to pay the suit amount, which they have admitted. Hence, she prays for a decree in favor of the plaintiff.11) I have considered the submission of the learned counsel for the plaintiff and perused the materials available on record. 12)The defendants have been appointed as the dealer of the plaintiff. Many documents have been placed on record to substantiate the said dealership and the continuous transactions between the plaintiffs and the defendants under Ex.P7, which is the minutes of the meeting of the distributorship between the plaintiffs and the defendants. According to the plaintiffs, the defendants had failed to clear its liabilities and hence, they have filed the present suit. The defendants having being served the summons in the suit had failed to enter appearance and they were set ex-parte as early as on 05.01.2024. 7/13 https://www.mhc.tn.gov.in/judis C.S.No.136 of 202013) This Court has perused the materials placed before this Court and various documents filed in support of the deposition of PW1 representing the plaintiff stands proved. Under document Ex.P37, the defendants 2 to 4 are the partner of the first defendant had categorically admitted to the outstanding due to a sum of Rs.124.84 lakhs. The present suit has been filed for recovery of a sum of Rs.1,69,77,038.82 which represents the outstanding due as on date of Ex.P.37 along with interest thereon. 14) In fine, the suit is decreed as prayed for. The defendants shall pay the plaintiffs a sum of Rs.1,69,77,038.82 together with interest at the rate of 9% per annum within a period of three (3) months from the date of receipt of a copy of this judgment. However, there shall be no order as to costs.23.06.2025Index : Yes / NoInternet:Yes / NoGba8/13 https://www.mhc.tn.gov.in/judis C.S.No.136 of 2020Plaintiff's witness:P.W.1 – Mr.P.R.Mohamed BilalDocuments exhibited by the petitioners: ExhibitsDocumentsEx.P1The authorisation letter dated 13.06.2024Ex.P2The Office copy of the letter of Intent dated 26.07.2001Ex.P3The photocopy of the Letter of Acceptance sent by 1st defendant firm to plaintiff dated 16.08.2001.Ex.P4The Office copy of the plaintiff's letter to the 1st defendant firm dated 18.07.2007Ex.P5The Photocopy of the Dealer Agreement dated 01.01.2015Ex.P6The office copy of the deed of retirement of One Partner and Admission of One New Partner (Deed of Partnership) of the 1st Defendant's firm dated 01.04.2016.Ex.P7The printout of the E-mail correspondence exchanged between the plaintiff and the 1st defendant's firm from 07.12.2017 to 06.01.2018. Ex.P8The photocopy of the 1st defendant's letter to the plaintiff dated 19.12.2017.Ex.P9The photocopy of the Minutes of Meeting dated 16.01.2018.Ex.P10The photocopy of the Minutes of Meeting dated 09.02.2018.Ex.P11The Office copy of the plaintiff's letter to the 1st defendant firm dated 10.03.2018Ex.P12The Office copy of the Dealership Renewal Letter dated 19.03.2018Ex.P13The photocopy of the Minutes of Meeting dated 04.06.2018.Ex.P14The photocopy of the Minutes of Meeting dated 07.07.2018.9/13 https://www.mhc.tn.gov.in/judis C.S.No.136 of 2020ExhibitsDocumentsEx.P15The photocopy of the Minutes of Meeting dated 22.09.2018.Ex.P16The photocopy of the Minutes of Meeting dated 05.11.2018.Ex.P17The photocopy of the Minutes of Meeting dated 26.11.2018.Ex.P18The photocopy of the 1st defendants letter to plaintiff December, 2018Ex.P19The Office copy of the plaintiff's letter to the 1st defendant firm dated 28.01.2019Ex.P20The photocopy of the Minutes of Meeting dated 13.02.2019.Ex.P21The photocopy of the Minutes of Meeting dated 27.02.2019.Ex.P22The printout of the E-mail sent by the Plaintiff to the 1st defendant firm dated 08.03.2019Ex.P23The Office copy of the plaintiff's letter to the 1st defendant firm dated 16.03.2019Ex.P24The printout of the E-mail sent by the plaintiff to the 1st defendant firm dated 06.04.2019Ex.P25The photocopy of the Minutes of Meeting dated 15.04.2019.Ex.P26The Office copy of the plaintiff's letter to the 1st defendant firm dated 16.04.2019Ex.P27The photocopy of the Minutes of Meeting dated 04.05.2019.Ex.P28The photocopy of the Minutes of Meeting dated 23.05.2019.Ex.P29The photocopy of the Letter sent by the 1st defendant firm enclosing cheque dated 30.06.2019 issued in favour of the Plaintiff dated 27.05.2019Ex.P30The photocopy of the Letter sent by the 1st defendant firm enclosing cheque dated 30.06.2019 issued in favour of the Plaintiff dated 29.05.2019Ex.P31The photocopy of the Letter sent by the 1st defendant firm 10/13 https://www.mhc.tn.gov.in/judis C.S.No.136 of 2020ExhibitsDocumentsenclosing cheque dated 15.06.2019 issued in favour of the Plaintiff dated 11.06.2019Ex.P32The photocopy of the Letter sent by the 1st defendant firm enclosing cheque dated 30.06.2019 issued in favour of the Plaintiff dated 18.06.2019Ex.P33The photocopy of the Letter sent by the 1st defendant firm enclosing cheque dated 30.06.2019 issued in favour of the Plaintiff dated 24.06.2019Ex.P34The photocopy of the Letter sent by the 1st defendant firm enclosing cheque dated 30.07.2019 issued in favour of the Plaintiff dated 29.06.2019Ex.P35The photocopy of the Minutes of Meeting dated 16.07.2019.Ex.P36The photocopy of the Minutes of Meeting dated 14.08.2019.Ex.P37The photocopy of the Minutes of Meeting dated 10.09.2019.Ex.P38The printout of the Statement of Accounts of 1st Defendant's firm for the period 01.04.2019 to 31.01.2020 dated 02.03.2020.Ex.P39The printout of the Ledger Account of the 1st defendant firm for the period 01.04.2019 to 06.12.2019Ex.P40The office copy of the Title document in respect of the 1st defendant's showroom.Ex.P41The office copy of the Bank Statement of the 1st defendant firm for the period 01.07.2019 to 14.10.2019Ex.P42The office copy of the Letter of Intent issued in favour of the 1st Defendant firm by a direct competitor of the plaintiff dated 26.08.2019Ex.P43The photocopy of the Photographs of the First Defendant's 11/13 https://www.mhc.tn.gov.in/judis C.S.No.136 of 2020ExhibitsDocumentsshowroomDefendant's witness:NILDocuments exhibited by the Respondent: NIL23.06.2025Gba12/13 https://www.mhc.tn.gov.in/judis C.S.No.136 of 2020K.KUMARESH BABU.J.,Gba Pre-delivery Order inC.S.No.136 of 202023.06.202513/13