S. RAVINDRA BHAT, J.

(1) THE plaintiff sues the defendant for recovery of Rs. 23,10,000/- with 18% interest per annum till realization.

(2) THE suit averments are that the plaintiff a highly successful company, at the relevant time engaged in manufacture and export of footwear as well as leather products had announced a public issue for fully convertible debentures aggregating to Rs. 349,93,75,200/ -. It inter alia appointed SBI Capital Markets ltd. (hereafter referred to as "sbi Caps"") as lead Manager to the public issue. The latter introduced the defendant to the plaintiff company as a strategy to marketing the public issue and the defendant represented that it was a broker, assuring firm commitment for procurement of applications. The plaintiff alleges that it had to pay consideration and in addition it was agreed that incentive would be paid to the defendant on procurement of the applications, payable at allotment. It is claimed that the plaintiff entered into the firm commitment with the defendant whereby latter undertook to procure subscription to the extent of Rs. 31 crores. In terms of this arrangement, it is averred the plaintiff released 50% of the incentive amount totaling Rs. 15 lakhs to the defendant through two cheques for Rs. 7. 5 lakhs each on 30. 1. 1995 and 7. 2. 1995.

(3) THE plaintiff alleges that the defendant failed to secure the subscription it had committed for. It also alleges that all the relevant statutory provisions concerning the public issue had been complied with. The defendants were paid advances and were provided the prospectus and all requisite forms. It is alleged that the defendant failed to perform its obligation which resulted in the plaintiff's loss of Rs. 416 crores being the aggregate value of the committed amount. The plaintiff, therefore, alleges that the defendants falsely represented about the nature of their services and wrongfully assured that they would procure subscription to the amount i. e. Rs. 31 crores. Therefore, the plaintiff seeks decree for return of its amount paid as advance towards such incentive being Rs. 15 lakhs and also claims interest at 18% from 18. 4. 1996 till the date of the suit i. e. Rs. 8,10,000/ -.

(4) THE defendant in its written statement objects to the maintainability of the suit and contends that it is time barred. It is further alleged that the issue in question was opened for public subscription on 14th February, 1995 and was notified to be so open for 10 days i. e. 24th February, 1995; yet it was closed on 18th February, 1995--a fact which published in all the leading newspapers. The defendant denies that it gave any firm commitment for procurement of the subscription; it also denies the agreement with the SBI Caps, or with the plaintiff to the commitment alleged. It, however, does not deny receiving two cheques aggregating Rs. 15 lakhs. The defendant further denies that any manner of liability or its failure to get any procurement, since the public issue itself closed on 18. 2. 1995 i. e. the earliest closing date. According to it, the subscription list had to be kept open 10 days from the date of opening. It is further alleged that only if the issue is fully subscribed would the subscription list be closed on an earlier date. Thus, it is contended premature closure of the subscription list is indicative of the over-subscription of the plaintiff's issue.

(5) THE defendant further alleges that in March 1995 Securities Exchange board of India (SEBI) noticed various lapses and deficiencies by the plaintiff and withdrew its approval to the issue and decided to launch of prosecution against the plaintiff. According to the defendant, the plaintiff had failed to disclose in any of its offer document that it is prevalent market price "cr basis"". As a result SEBI directed the plaintiff to refund the application money to successful allottees opting to withdraw their money along the interest till date. The defendant denies having made any assurance in regard to the subscription to the issue as alleged by the plaintiff.

(6) IN support of its case, the plaintiff has produced documentary evidence being Ex. PW-1/1 to Ex. PW-1/9. Ex. PW-1/1 is a resolution authorizing filing of the suit; Ex. PW-1/2 is the prospectus in relation to the public issue, Ex. PW-1/3 is a letter written by the plaintiff to the SBI dated 23. 1. 1995 indicative of the incentive plan, Ex. PW-1/4 is a FAX message of the defendant stating that it would secure subscription to the extent of Rs. 31 crores, dated 31. 5. 1995, Ex. PW-1/5 is seeks to prove payment of the sum of Rs. 15 laks, Ex. PW-1/6 is statement of accounts of the defendant reflected in the plaintiff"s books; Ex. PW-1/7 is a statement/report of Mass Services (P) Ltd. disclosing the actual procurement by defendant and others, Ex. PW-1/8 is a FAX message by general Manager of SBI Capital for Mr. Pawan Sachdeva, CMD, MS Shoes East Ltd. , and PW-1/9 is a letter written by SEBI to the General Manager, SBI Capital markets Ltd.

(7) THE plaintiff has examined five witnesses including its Managing director, Sh. Pavan Sachdeva. The defendant has examined two witnesses i. e. its proprietor Sh. R. K. Singh. In addition, it relied upon three documents Ex. DW-1/1 to DW-1/3. The Court had framed the following issues for consideration on 6. 9. 2002:

i) Whether the plaintiff is entitled to the suit amount on the grounds mentioned in the plaint" OPP ii) Whether the plaintiff is entitled to interest" If so, at what rate and for what period" OPP iii)Whether the suit is within limitation" OPP iv) Relief. Issue No. 3: Limitation

(8) THE court proposes to first consider this issue, since it goes to the root of maintainability of this suit. In this case, the plaintiff contends that the agreement with the defendant was finalized sometime in January 1995 after which it issued two cheques , one on 30th January, 1995 and the other, on 7th february, 1995. These two concerned services to be rendered by the defendant in relation to the public issue announced by the plaintiff, in February, 1995. The suit averments show that the issue was to be open from 14th to 24th February, 1995; in fact it opened on 14-2-1995 and closed on 18th February, 1995. According to the allegations, the defendant had committed to securing applications worth Rs. 31 crores, and consequently, would have been able to claim an incentive of 1%; half the amount, i. e Rs. 15 lakhs was paid, by 7th february, 1995. The plaintiff alleges that the defendant did not fulfil its commitments and consequently it is entitled to return or refund of the said amount with interest @ 18 % per annum.

(9) ARTICLE 47 of the Schedule to the Limitation Act, 1963 prescribes the period of limitation in respect of suits for recovery of money paid upon an existing consideration which afterwards fails. It reads as follows:

Description of suit Period of Time from which limitation period begins to run Limitation 47. For money paid upon The date of the failure an existing consideration Three years which afterwards fails

(10) THE period of limitation thus, is three years from the date of the failure of consideration upon which the money was paid. The amounts were paid by the plaintiff to the defendant on 30th January, 1995 and 7th February, 1995. The performance of the services was in relation to the public issue which opened on 14th February, 1995, that was to close on 24th February, 1995. It actually closed on 18th February, 1995. According to the plaintiff, the defendant failed in living up to its contractual commitment, and had therefore, to return or refund the amount received as advance. This clearly shows that the claim is for failure of consideration, which became ascertainable latest on or after 25th february, 1995. The cause of action therefore, first arose on 25th February, 1995. The plaintiff filed this suit on 18th April, 1995. The plaintiff blandly avers that the cause of action arose on 18th April, 1995 when the minimum commitment had to be obtained by the defendant. No material in support of the averment has been produced; on the other hand, the material averments and the payments made show that the cause of action - for the claim of refund or return of money, arose on 25th February, 1995. The suit therefore, was filed beyond the period prescribed, i. e three years. It is clearly time barred. The suit would be time barred, even if it is held that the residuary article of that class, ie. Article 55 of the Limitation Act, applied; there, too, the period is three years, from the first time when the cause of action arises. This issue, is accordingly answered against the plaintiff; the suit is time barred. Issue Nos 1 and 2

(11) THE center of the controversy is whether, in addition to underwriting the issue (which the defendant does not deny) the parties had entered into a separate agreement whereby the defendant agreed to procure subscriptions to the extent of 31 crore, for which an additional incentive of 1% was payable, of which Rs. 15 lakhs was paid. The defendant does not deny receiving this amount; it however states that the sum was part of the advances receivable by it towards the service of underwriting; according to it, the extent of underwriting was Rs. 49 lakhs; it claims having successfully ensured subscription of the plaintiff"s issue to the extent of Rs. 75 lakhs.

(12) THE plaintiff has averred to the arrangement about the incentive. It relies on Ex. PW-1/3, the letter written to SBI Caps on 23rd January, 1995 detailing the incentive plan. In terms of the letter, the scale of commission/ incentive payable was 1% for commitments above Rs. 30 crores. The plaintiff relies on the fax message addressed by the defendant, to it, on 31-1-1995, whereby it increased the commitment to Rs. 31 crores. That document has been admitted by the defendant; it is marked in evidence as Ex. PW1/4. The plaintiff also relies on the copies of its books of account extracts, being Ex. PW-1/5. The plaintiff witness, PW-5, in his cross examination spoke of the arrangement and stated that the defendant had assured him to procure a specified number of shares. The commitment was, according to him, made by the defendant in writing, before issuance of the first cheque of Rs. 7. 5 lakhs and later the defendant sent a fax increasing the commitment to Rs. 31 crores. According to PW-5, the incentive scheme for procurement of shares meant that a specified number of shares had to be procured for which special incentives were given and that is why 50% advance payment was made, to the defendant.

(13) THE plaintiff also relies on PW-1/7, an admitted list of debentures allotted. The defendant's name figures at Sl. No. 216; against the column "no. of debentures underwritten" the defendant's commitment is shown to be 25121 debentures; against the column "no. of debentures applied for through underwriters" the figure 39600 is entered; the defendant is shown as having applied for surplus 14, 479 debentures. Further reliance is placed on two letters- Ex. PW-1/8 and PW-1/9, both dated 21-4-1995, by the SEBI to SBI Caps, and by the latter to the plaintiff, stating that since only 39% of the issue had been subscribed, and also that 90% of the minimum subscription could not be received within 60 days of closure of issue, full refund had to be made to all applicants to the issue.

(14) THE defendant examined Shri R. K. Singh as DW-1. He denied the arrangement alleged by the plaintiff, about the incentive scheme. According to him, the amount of Rs. 15 lakh received by the defendant was towards the cost of mailing and other expenses, prior to public issue. He stated that the case is false and that the plaintiff did not keep the issue open for the full 10 days, but wrongly closed it on an earlier date. He further alleged that the SEBI determined lapses by the plaintiff, and decided to prosecute it. According to the witness, the price of shares was artificially propped up by the plaintiff, who misled the general public and indulged in unlawful practices. He confirmed to the statements made in the affidavit, in his cross examination, and also stated that as against the underwritten extent of Rs. 49 lakhs, the defendant had secured subscriptions for the plaintiff in excess of Rs. 75 lakhs. He denied the suggestion about an arrangement of commitment, and having received Rs. 15 lakhs towards incentive alleged by the plaintiff.

(15) FROM the evidence, and the pleadings, particularly the plaint averments, it is clear that the defendant agreed to underwrite the issue to an extent of about Rs. 49 lakhs. Up to that stage, there is no dispute between the parties. The question however, is whether the amount of Rs. 15 lakhs, received by the defendant, was towards an additional commitment, for procuring Rs. 31 crores, in respect of which the plaintiff paid 50% consideration.

(16) THE plaintiff relies to a great extent on the letter written to SBI caps on 23 January, 1995 (Ex. PW-1/3). It sets out, inter alia, a scheme whereby if the debentures in excess of Rs. 30 crore value were procured, 1 % incentive was payable. The last sentence of that letter reads as follows:

"deviation of 10% allowed. For deviation beyond -10% the said incentive percentage of the confirmed slab will be deducted from the percentage payable as per scheme 1 above."

Earlier, the letter had outlined procurement rate commission payable on allotment; for allotments above Rs. 25 crores procured, 2. 5% was held out to be payable. (Though the letter does not explicitly mention it, presumably this is the Scheme 1 mentioned later at the end of the document). The letter went on to say that a kitty of Rs. 1 crore was to be shared proportionately amongst the top40 brokers in the issue. 16. The plaintiff's version about the agreement has been denied by the defendant, as is evident from the above discussion. The mainstays of the plaintiff's claim are PW-1/3 (letter written to SBI Caps) and PW-1/4, the fax addressed by the defendant. To prove that debentures worth the committed Rs. 31 crores were not procured, the plaintiff relies on PW-1/7 statement. There is no written document executed between the parties, evidencing the terms of the contract, the relative commitments made by the contracting parties or even when it was entered into. The plaintiff is a public limited company. It has also not averred who entered into such an agreement on its behalf. The document primarily relied on, PW-1/3 outlining the details of the scheme- is written to SBI Caps. Even facially, it is not addressed to the defendant. Although the standard of pleadings in implied or oral contracts is not very high (See Order VI Rule 12, cpc) yet, at the stage of trial the onus of proving such contract, through conversations, letters, or series of circumstances is squarely upon the plaintiff. All that the plaintiff has to support its allegations is a letter outlining the scheme written by it to a third party (SBI Caps); even that parties evidence has not been adduced. As far as the defendant is concerned, it does not deny Ex. PW-1/4, a fax which states about its agreement to commit to procuring Rs. 31 crores worth subscription. Yet, that fax also adverts to a commitment letter by it to the plaintiff. The plaintiff's witness PW-5, also alluded to such a letter. However, that has not been produced. In the circumstances, all that the court is left with - or rather, invited to find, is that such letter by the defendant admits its commitment, and therefore, its having received Rs. 15 lakhs for the purpose. The plaintiff further suggests that since the defendant was unable to procure subscription for Rs. 31 crores, the contract failed and it has to refund the amount.

(17) SECTION 101 of the Evidence Act enacts

"whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. ""

Therefore, the burden is initially upon the plaintiff, who, in this case has to prove that the contract alleged by it, was entered into with the defendant and that in its terms, upon failure of the latter to procure applications worth Rs. 31 crores, the amount of Rs. 15 lakhs was to be refunded. The materials, i. e Ex. PW-1/3 and PW-1/4 do not prove the contract and the attendant circumstances, relating to the transaction alleged by the plaintiff. No doubt, PW-1/4 suggests some dealing concerning procurement of applications I excess of Rs. 30 crores. That evidence is fragmentary at best; in fact it also reveals that some letter was written by the defendant in that regard. This is also supported by the plaintiff's evidence - PW-5 mentions about such a document. Nevertheless, for reasons best known, the plaintiff has chosen not to produce that letter. If indeed the transaction is as alleged by the plaintiff, the document would support it. Its withholding amounts to, in the opinion of the court, withholding of a material piece of evidence.

(18) AS far as Ex. PW-1/7 is concerned, in the light of the above observations, that does not advance the plaintiff's case in any manner; in fact it supports the defendant's version that it procured subscription in excess of the underwritten amount. Similarly, Ex. PW-1/8 and Ex. PW-1//9 do not relate to the defendant; they are directions to the plaintiff, to refund subscription amounts to applicants, since the minimum subscription prescribed had not been obtained.

(19) IN view of the above reasons, it is held that the plaintiff has been unable to establish that it is entitled to the amounts claimed in the suit, or interest. It has been unable to discharge the burden of proving a contract relating to incentive scheme, payments made to the defendant pursuant to it, and that it is entitled to its refund or return with interest.

(20) IN view of the above finding, Issues 1,2 and 4 are answered in the negative, against the plaintiff. The suit, therefore, fails and is dismissed, with costs payable to the defendant, quantified at Rs. 35,000/ -.