Delhi High Court
Ramesh Kumar Bansal vs M/S Om Prakash Naresh Kumar & Anr on 27 January, 2012
Author: G.S.Sistani
Bench: G.S.Sistani
8
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 701/2010
% Judgment Delivered on: 27.01.2012
RAMESH KUMAR BANSAL ..... Plaintiff
Through: Mr.P.D. Gupta, Mr.Kamal Gupta
and Mr.Abhishek Gupta, Advocate
versus
M/S OM PRAKASH NARESH KUMAR & ANR..... Defendants
Through: Mr.Rakesh Tiku, Sr. Advocate with
Mr.Kapil Singhal, Advocate
CORAM:
HON'BLE MR. JUSTICE G.S.SISTANI
G.S.SISTANI, J (ORAL)
I.A. Nos.16789/2010 (filed by defendants No.1 and 3 for leave to defend) & 16790/2010 (filed by defendant No.2 for leave to defend)
1. Plaintiff has filed the present suit under the provisions of Order XXXVII of the Code of Civil Procedure, seeking recovery of Rs.35,41,150/- against the defendants. The suit is based on dishonor of two cheques bearing No.057044 & 057045 both dated 23.12.2008 in the sum of Rs.20,00,000/- & Rs.11,29,023.52 totaling Rs.31,29,023.52. As per the plaint, the plaintiff is carrying on its business of sale of rice, food-grains, pulses etc. as merchants and commission agents. The plaintiff is a sole proprietorship concern. Defendants No.2 and 3 represented to the plaintiff that they are partners of defendant no.1 and are carrying on business of sale of pulses and allied articles at Jammu. The defendants no.2 and 3 have been purchasing pulses and allied articles from the CS(OS) 701/2010 Page 1 of 13 plaintiff at Delhi on credit basis in the name of their partnership concern. Similarly the defendants had also been purchasing the pulses and allied articles from other traders of Naya Bazar, Delhi and Lawrence Road, Delhi for which the plaintiff had been giving /extending oral assurance / guarantee for payment by the defendants to such other traders. As per the plaint towards the payment of dues of such other traders of Delhi, the defendants issued certain cheques and handed over the same to the plaintiff for onward delivery thereof to such other traders only after receiving instructions from the defendants. It is the case of the plaintiff that subsequently defendants informed the plaintiff that on account of financial constraint, they would not be able to encash the cheques and requested the plaintiff to make the payments on their behalf to other traders from their own accounts and on behalf of the defendants. The plaintiff acting upon the instructions of the defendants and also with a view to maintain business ethics and reputation and with a view to honour their commitments, made the payments from their own accounts to such other traders on behalf of the defendants. For settling the amount of Rs.31,29,023.52 including interest upto the 22.12.2008, due and payable by the defendants to the plaintiff, the above said two cheques were issued by the defendants to the plaintiff. These cheques were duly signed by the defendants No.2 and 3 as partners of defendant no.1. The aforesaid cheques were dishonored on presentation with the remarks „Funds Insufficient‟. Copies of the return memos dated 26.12.2008 have been placed on record.
2. Counsel for the plaintiff had also relied upon a legal notice dated 06.01.2009 issued to the defendants, which was duly served upon them. As no reply to the legal notice was received, the plaintiff filed a complaint bearing No.306/01/09 against the defendants under Sections 138/141/142 CS(OS) 701/2010 Page 2 of 13 of the Negotiable Instruments Act, which is stated to be pending disposal. Strong reliance is placed by counsel for the plaintiff on the communication dated 23.02.2009 wherein according to the plaint the defendants admitted their liability to pay a sum of Rs.31,29,023.52, as demanded by the plaintiff, however, the defendants pleaded that since they were passing through financial hardship and it was not practically possible for them to make the payments at once, but agreed to make the payments slowly and gradually. As per the promise, the defendants paid a sum of Rs.1,65,000/- in the following manner:
Sl.No. Amount (Rs.) Dated
1. 25,000/- 03.02.2009
2. 25,000/- 04.04.2009
3. 15,000/- 16.05.2009
4. 25,000/- 24.07.2009
5. 25,000/- 29.08.2009
6. 25,000/- 14.10.2009
7. 25,000/- 14.10.2009
TOTAL 1,65,000/-
3. In the above circumstances, the plaintiff prays that the application filed by the defendant seeking leave to defend be dismissed and the present suit may be decreed.
4. The defendants have filed applications (I.A. No.16789/2010 & I.A. No.16790/2010) for leave to defend. As per the defendants, no amount is due and payable to the plaintiffs and it is prayed that unconditional leave to contest the suit may be granted to the defendants.
5. Mr.Tikku, learned senior counsel for the defendants submits that on the one hand there is no contract between the plaintiff and the defendants, or between the other traders of Delhi and the defendants on the other. There is also no contract for payment of any interest. It is submitted by counsel CS(OS) 701/2010 Page 3 of 13 for the defendants that there is not a single document placed on record by the plaintiff to show that defendants ever authorized or instructed the plaintiff to act on their behalf or to make any payments on their behalf to any traders, as alleged. It is also submitted that the stand of the plaintiff is completely dishonest and the cheques in question have been misused by the plaintiff. The defendants have also disputed issuance of any letter, much less letter dated 23.02.2009 and the signatures on this letter are disputed. It is further submitted that this letter is a forged and fabricated document, which is evident from the fact that the rubber stamp affixed on this communication shows the defendant as a partnership, whereas the defendant no.1 is a sole proprietorship concern of which defendant no.3 is the sole proprietor. Reliance is placed on a certificate issued by the Jammu & Kashmir Bank Ltd., dated 03.10.2009, copy of which has been placed on record. According to which, M/s.Om Prakash Naresh Kumar is a proprietorship concern of Mr.Naresh Kumar. This certificate also mentions the account No.CD-623. Counsel for the defendants, applicants submit that the cheques sought to be relied upon by the plaintiff are issued from the same very bank that issued the certificate that the defendant is a proprietorship concern.
6. Elaborating his arguments further, Mr.Tikku, learned senior counsel for the defendants, submit that the signatures on the letter i.e. letter dated 23.02.2009 do not tally, or match with the signatures of the two defendants, which is evident by the naked eye and further that the defendant no.3 is in fact the proprietor of defendant no.1. With regard to the statement of account which has been placed on record by the plaintiff, counsel for the applicants, defendants submits that the cheques issued by the plaintiff to various traders by itself cannot be treated as monies paid by the plaintiff on behalf of the defendants. It is submitted that the CS(OS) 701/2010 Page 4 of 13 statement of account by itself is not proof that payments were made by the plaintiff on behalf of the defendants. It is submitted that the defendants have no concern / relationship with Adarsh Food Products, Jindal Dal Mills Pvt. Ltd, Tirupati Food Industries, Yad Ram Raghunath Sahai, Sharat Chand Suresh Chand and others, whose names have been mentioned in the statement of account filed by the plaintiff. It is also submitted that assuming that the payments were made by the plaintiff on behalf of the defendants, the bills on the basis of which the payments were made, are barred by time then in such a case the plaintiff could not have made the payments to the aforesaid traders.
7. Counsel for the defendants also submits that the material was supplied by the plaintiff to the defendant under Bill No.2606 dated 30.05.2005 for Rs.33,000/-, Bill No.2614 dated 01.06.2005 for Rs.1,46,894.40, Bill No.2670 dated 22.06.2005 for Rs.87,500/-, in total amounting to Rs.2,67,394.40. Counsel for the defendants also submits that the goods supplied were pest damaged, which fact was brought to the notice to the plaintiff verbally and the plaintiff had requested defendants to sell the pest damaged goods at lower price for which adequate compensation would be paid. It is the case of the defendant that the damaged goods could not be sold and it caused huge financial loss to the defendants, including loss of profit, goodwill and reputation.
8. It is submitted that even though no amount was due and payable as a gesture of goodwill to put a quietus to the matter, it was agreed that payment of total amount of Rs.1.65 lacs in full and final settlement would be made. Counsel for the defendants also submits that two blank cheques were handed over to the plaintiff, the amounts in the cheques were unfilled and the cheques were dateless. The plaintiff has mis-used the aforesaid cheques and filled the amounts and dates, hence, the cheques CS(OS) 701/2010 Page 5 of 13 cannot be relied upon as the same, are without any consideration and have been misused by the plaintiff.
9. Mr.Gupta, counsel for the plaintiff in response to the submissions made by counsel for the defendant, submits that the defence raised by the defendant is sham and moonshine and dishonest. Mr.Gupta also submits that had there been any merit in the submissions made by counsel for the defendant or any truth in the defence sought to be raised, the defendants would have certainly replied to the legal notices issued by the plaintiff and refuted the allegations made therein, but contrary to the same, the defendants issued the communication dated 23.02.2009. Counsel for the defendants submits that merely by denying the communication, the defendants cannot gain any advantage more so when the defendants had acted upon the contents of the communication which is evident from the statement of account placed on record, which shows that part payments were made by the defendants to the plaintiff in response to the legal notice and as per the promise made by them in this letter. Counsel for the plaintiff also submits that this fact is duly admitted by the defendant in their leave to defend wherein it has been stated that the sum of Rs.1.65 lacs was paid as a goodwill gesture, although bills were dated 30.05.2005, 01.06.2005 and 23.06.2005. It has been admitted that the defendants would pay small instalments of Rs.25,000/- per month. Counsel also submits that in case no amount is due and payable, as stated by the defendants, then there was no occasion for the defendants to pay any amounts much less Rs.25,000/- per month in instalments.
10. Attention of this court is drawn to the averments made in para 14 of the leave to defend wherein the defendant goes on to state that he would try to increase the amount of money to be paid. Mr.Gupta, counsel for the plaintiff submits that issuance of two cheques is also not denied by the CS(OS) 701/2010 Page 6 of 13 defendant. It is also submitted by Mr.Gupta that mala fides of the defendants are writ large on the face of the record, which are evident from the fact that even after the plaintiff filed complaints under Section 138 of the Negotiable Instruments Act against the defendants, the defendants made the aforesaid payment in the sum of Rs.1.65 lac. In case there was any merit or truth in the defence, the defendants would not have made any payments after the filing of the criminal complaint.
11. I have heard counsel for the parties and have carefully perused the documents. Before dealing with the rival submissions of counsel for the parties, it would be useful to re-visit the law laid down by the Apex Court with regard to dealing with an application for leave to defend. The Apex Court in the case of M/s.Mechalee Engineers & Manufacturers Vs. M/s.Basic Equipment Corporation AIR 1977 SC 577 has drawn up the parameters to be considered by the court while dealing with the application for leave to defend. Relevant paras of the judgment reads as under:
"8. In Smt. Kiranmoyee Dassi and Anr. v. Dr. J. Chatterjee 49 C.W.N. 246 , Das. J., after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by order 37 C.P.C. in the form of the following propositions (at p.
253):
(a) If the Defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the Defendant is entitled to unconditional leave to defend.
(b) If the Defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the Defendant is entitled to unconditional leave to defend.
(c) If the Defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear CS(OS) 701/2010 Page 7 of 13 that he has a defence, yet, shews such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the Plaintiff is not entitled to judgment and the Defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security.
(d) If the Defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the Plaintiff is entitled to leave to sign judgment and the Defendant is not entitled to leave to defend.
(e) If the Defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the Plaintiff is entitled to leave to sign judgment, the Court may protect the Plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the Defendant on such condition, and thereby show mercy to the Defendant by enabling him to try to prove a defence."
12. It would also be useful to refer to the case of V.K. Enterprises Vs. Shiva Steels III (2010) Banking Cases 718 (SC) wherein the Supreme Court had, a matter with somewhat similar facts, upheld the order passed by the trial court where leave was rejected. Paragraphs 3,4 and 8 to 10 of the judgment read as under:
"3. In the said application for leave to defend the suit, the Petitioner contended that the cheque in question had been handed over by the Petitioner to the Respondent-firm by way of security only and not for presentation. Furthermore, the said cheque was issued by the Petitioner on 11th October, 2000, but the date of the cheque was, thereafter, interpolated and altered from 11.10.2000 to 11.10.2006, and presented to the Bank. It was also indicated that apart from the signature on the face of the cheque and the date mentioned therein, the rest of the cheque was blank and an attempt was made by the Respondent to misuse the same with the intention of withdrawing or misappropriating the amount subsequently inserted in the cheque. A specific allegation was also made to CS(OS) 701/2010 Page 8 of 13 the effect that the date of the cheque issued on behalf of the Petitioner firm for the month of October was always written with the Roman numerical 'X', which was altered and shown in ordinary numericals, which clearly establish the fact that the cheque in question had been doctored to obtain the benefit thereof six years after the same had been issued.
4. In the said application, it was also denied that any cheque of such a large amount had been issued to the Respondent after 1992 in order to bolster the case of the Petitioner that the cheque in question had been forged. It was ultimately stated in the complaint that the Respondent had concocted the story and the Bills placed on record by the Respondent were also forged as the Petitioner had neither purchased any material nor counter-signed the last 4 bills as per the details provided.
8. Order XXXVII C.P.C. has been included in the Code of Civil Procedure in order to allow a person, who has a clear and undisputed claim in respect of any monetary dues, to recover the dues quickly by a summary procedure instead of taking the long route of a regular suit. The Courts have consistently held that if the affidavit filed by the defendant discloses a triable issue that is at least plausible, leave should be granted, but when the defence raised appears to be moonshine and sham, unconditional leave to defend cannot be granted. What is required to be examined for grant of leave is whether the defence taken in the application under Order XXXVII Rule 3 C.P.C. makes out a case, which if established, would be a plausible defence in a regular suit. In matters relating to dishonour of cheques, the aforesaid principle becomes more relevant as the cheques are issued normally for liquidation of dues which are admitted. In the instant case, the defence would have been plausible had it not been for the fact that the allegations relating to the interpolation of the cheque is without substance and the ledger accounts relating to the dues, clearly demonstrated that such dues had been settled between the parties. Moreover, the issuance of the cheque had never been disputed on behalf of the Petitioner whose case was that the same had been given on account of security and not for presentation, but an attempt had been made to misuse the same by dishonest means.CS(OS) 701/2010 Page 9 of 13
9. Against such cogent evidence produced by the plaintiff/respondent, there is only an oral denial which is not supported by any corroborative evidence from the side of the Petitioner. On the other hand, the ledger book maintained by the Respondent and settled by the Petitioner had been produced on behalf of the Respondent in order to prove the transactions in respect of which the cheque in question had been issued by the Petitioner.
10. In our view, the defence raised by the Petitioner does not make out any triable issue and the High Court, has dealt with the matter correctly and has justifiably rejected the Petitioner's application under Order XXXVII Rule 3 C.P.C. and the same does not call for interference by this Court. The Special Leave Petition is, therefore, dismissed, but without any order as to costs."
13. The short point which comes up for consideration in the present case would be whether the defendants are entitled to unconditional leave to defend the suit or whether the defendants should be put to terms.
14. Counsel for the plaintiff has however, strongly urged that on account of the fact that the defendants have failed to raise any plausible defence, the applications for leave to defend should be rejected.
15. The second leg of argument of Mr.Gupta, counsel for the plaintiff is that if for any reason the court comes to the conclusion that the application for leave to defend is to be considered favourably, in which case the defendants should be directed to deposit the amount in court and conditional leave should be granted.
16. Mr.Tikku, learned senior counsel for the defendants on the other hand strongly urged before this court that it is a fit case for grant of unconditional leave to defend.
17. As per the plaint, the defendants had approached the plaintiff for purchase of pulses and other allied articles. Being a commission agent, the defendants had also requested the plaintiff to permit them credit for goods CS(OS) 701/2010 Page 10 of 13 to be purchased by them from other shopkeepers of Naya Bazar and Lawrence Road, Delhi. According to Mr.Gupta, this is a practice which is prevalent in the Walled City and the defendants are well aware of the same. It is submitted that the payments were made by the plaintiff to various traders by cheques. But for the payments made, no supporting documents have been filed along with the plaint. To seek unconditional leave the defendants must satisfy the principles laid down in paragraphs 8
(b) and (c) of M/s.Mechalee Engineers (Supra), the defendant must satisfy the court that he has fair or bona fide or reasonable defence. The court goes on to observe that even if the defence may not be positively good defence, yet the applicant would be entitled to unconditional leave to defend. As per 8 (c) another option is available to the court in case the applicant is able to show and establish a defence the court may in its discretion impose a condition as to the time or mode of trial, but not as to payment into court or furnishing security. The defence sought to be raised by the defendant appears to be sham for the following reasons: (i) Two cheques were handed over to the plaintiff which fact has been admitted, but the defendant at no point of time called upon the plaintiff to return the cheques in case according to the defendant the amounts stood settled for a sum of Rs.1.65 lac. (ii) There is no denial or any response to the legal notices issued by the plaintiff to the defendant except a communication dated 23.02.2009, relied upon by the plaintiff. (iii) Mere denial of this communication by the defendant cannot be treated as a denial in the eyes of law, more so, when the communications sought to be denied, has been acted upon, which is evident from the fact that the defendants made payments to the plaintiff after issuance of the legal notice and after filing of a complaint under Section 138 of the Negotiable Instruments Act. There is no justification rendered by the defendants as CS(OS) 701/2010 Page 11 of 13 to why at no point of time the defendant did not ask for payment to be stopped of the cheques. There is not a single document placed on record by the defendants that any goods supplied by the plaintiff to the defendants were either damaged or the plaintiff had assured for deduction in payments. On the other hand, there is also no document placed on record by the plaintiff to show that the plaintiff made payment on behalf of the defendants to various traders although statement of account has been filed and it is contended that these payments were made by means of cheques. I am of the view that persons to whom payments have been made would be required to give evidence and state on oath as to whether they supplied goods to the defendants and as to whether they received payments from the plaintiff on behalf of the defendants, which can only happen in case leave to defend is granted to the defendant and the matter is set down for trial.
18. To balance the equities and having regard to the settled position of law the case of the defendants would fall in category 8(c) as set out in the case M/s.Mechalee Engineers (Supra). Accordingly, I direct the defendants to deposit 50% of the suit amount in court and give security to the satisfaction of the Registrar General of this court for balance 50% of the suit amount within two months from today. In case the order is not complied with, within two months, the applications for leave to defend will be considered as dismissed and the decree shall follow with interest @ 6% from the date of the filing of the suit, till realization. CS(OS) 701/2010
19. Let the written statement be filed within 30 days. Replication be filed within 30 days thereafter. Parties will file documents within the same period. List the matter before Joint Registrar on 20.04.2012 for admission/denial of documents.
CS(OS) 701/2010 Page 12 of 1320. List the matter before court on 23.05.2012 for framing of issues. Parties will bring suggested issues to court on the next date of hearing.
G.S.SISTANI, J JANUARY 27, 2012 ssn [PDF] CS(OS) 701/2010 Page 13 of 13