Delhi District Court
Pawan Kumar Sharma vs Krishan Kumar Mehto on 13 April, 2015
IN THE COURT OF SH. RAJNISH BHATNAGAR; ADJ(CENTRAL)11,DELHI
Suit No. : 197/13
Pawan Kumar Sharma
......Plaintiff
vs.
Krishan Kumar Mehto
......Defendant
ORDER
1. By this order, I shall dispose of an application U/o 37 Rule 3 (5) of CPC seeking leave to defend.
2. The plaintiff has filed a suit for recovery of Rs. 7 Lakh. The summons of the suit in the prescribed form was sent to the defendant. After the service of the summons the defendant had put in his appearance and sought condonation of delay in filing the appearance. The delay was condoned by the Ld. predecessor and the plaintiff was directed to serve the summons for judgment upon the defendant.
3. The summons for judgment was served on the defendant and thereafter the defendant has filed his leave to defend application. The plaintiff thereafter filed reply to the leave to defend application.
4. Brief facts of the case of the plaintiff are that the plaintiff and the defendant are friends and known to each other. On 22-09-2012, the defendant alongwith his wife came to the plaintiff and requested for a loan of Rs. 15 Lakh and assured that the amount would be returned by December, 2012. Initially, the plaintiff denied as he was himself in Suit No. 197/13 Page no. 1/7 the need of money but on the repeated request of the defendant and his wife he gave a sum of Rs. 15 Lakh to the defendant on 28-09-2012 and 29-09-2012 in two separate installments as friendly loan without interest for getting his house released from the mortgage.
5. The defendant in order to discharge his liability issued 4 cheques for re-payment of loan amount of Rs. 15 Lakh and assured that the same would be honoured. But when the defendant presented 2 cheques bearing No. 313068 for a sum of Rs. 3 Lakh dated 26-01-2013, and second cheque bearing No. 313069 for a sum of Rs. 4 Lakh dated 26-01-2013, both drawn on Punjab National Bank Madhuban got dishonoured for the reasons "funds insufficient" vide return memo dated 14-3-2013.
6. The defendant in his leave to defend application has submitted that no loan was given by the plaintiff to the defendant. The plaintiff had promised to get bank loan for the defendant through his contacts and on that pretext he had taken 4 blank cheques from the defendant. The plaintiff was unable to arrange loan for the defendant and despite various demands by the defendant the plaintiff told that the cheques have been given to the bank and cannot be returned. It is further submitted by the defendant that in the application for issuance of summons for judgment the plaintiff had not verified the cause of action and the amount claimed in the suit. So the suit is liable to be dismissed.
7. The plaintiff has filed reply to the leave to defend application.
In reply it is denied that the plaintiff had promised to get loan for the defendant through his contacts and for that purpose 4 blank cheques were given by the defendant. It is denied that the defendant demanded back the cheques from the plaintiff. It is denied that the Suit No. 197/13 Page no. 2/7 cause of action has not been verified by the plaintiff or that the suit is liable to be dismissed. It is submitted that the defendant has failed to raise any triable issue.
8. The defendant has filed the rejoinder and reiterated and reaffirmed the contents of his leave to defend application.
9. I have heard the Ld. counsel for the parties, perused the application and its reply as well as other material placed on record. Order 37 Rule 3 (5) CPC reads as under : -
3. Procedure for the appearance of defendant.--
(5) The defendant may, at any time within ten days from the service of such summons for judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just:
Provided that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous or vexatious:
Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court.
10. Perusal of the Order 37 Rule 3(5) shows that if the defendant shows that defendant is entitled to leave to defend the suit if it raises substantial defence to contest the suit.
11. The counsels have argued on the lines of their pleadings.
It is urged by the counsel for the plaintiff that the defendant has no substantial defence and no triable issue has been raised. It is further urged by him that it is nowhere stated as to when he demanded the cheques back from the plaintiff. So the defendant is not believable and is only raising a sham defence.
12. On the other hand, it is argued by the counsel for the Suit No. 197/13 Page no. 3/7 defendant that no loan was given by the plaintiff and the cheques were handed over by the defendant to the plaintiff as the plaintiff assured the defendant to arrange loan for him from some bank. The counsel for the defendant has relied upon M/s Mechalec Engineers & Manufacturers Vs. M/s Basic Equipment Corporation AIR 1977 Supreme Court 577 and Hari Niwas Gupta Vs. Om Prakash (P) Ltd & Others 187 (2012) Delhi Law Times 285.
13. In Hari Niwas Gupta Vs. Om Prakash (P) Ltd & Others 187 (2012) Delhi Law Times 285 it was held as follows :
"(i) Civil Procedure Code, 1908 -
Order 37 Rule 3 (5) - Unconditional Leave to Defend - Suit for recovery of amount -
Defence raised by defendants is more plausible and reasonable than theory of plaintiff stated in plaint - Plaintiff has not made full disclosure of facts in plaint even though it is necessary under the law to disclose all true facts in summary proceedings - Issue raised by the defendants are triable."
14. The principal governing the leave to defend under Order 37 CPC in a similar suit have been laid down by The Hon'ble Supreme Court in M/s Mechalec Engineers & Manufacturers Vs. M/s Basic Equipment Corporation cited as AIR 1977 SC 577 the following principles had been evolved, after comprehensive review of the authorities on the subject:-
(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 do Suit No. 197/13 Page no. 4/7 defence.
(b) If the defendant raises a triable issue indicating that he has a fair or bonafide 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 that he had a defence, yet, shows 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.
15. The Hon'ble Supreme Court of India in M/s. Raj Duggal Vs. Ramesh Kumar Bansal AIR 1990 Suprema Court 2218 has held that: "Leave to defend where the court is of the opinion that the grant of leave would merely enable the defendant to prolong the litigation by raising untanable and frivolous differences. The test is to see whether the defence raises a real issue and not a sham one "
16. As far as the judgments relied upon by the counsel for the defendant, there is no dispute to the proposition of law laid down in them.
17. In view of the settled proposition of law I have examined the case put forth by both the parties.
18. The plaintiff has based his claim on the basis of two cheques Suit No. 197/13 Page no. 5/7 which according to the plaintiff were issued to him by the defendant for discharge of the liability towards the loan of Rs. 15 Lakh given by the plaintiff to the defendant. Both the cheques when presented got dishonoured for the reasons "funds insufficient". The plaintiff has also placed on record the legal notice which was issued to the defendant and in the entire leave to defend it is not denied that no legal notice dated 12-4-2013 was received by the defendant.
19. The defence of the defendant is that he has given the cheques to the plaintiff for getting bank loan through him but the plaintiff according to the defendant failed to arrange the loan. According to the defendant he demanded his cheques back but the plaintiff told him that the cheques could not be returned as the same are with the bank.
20. The plaintiff has filed the present suit mainly on the ground that he had given a loan of Rs. 15 Lakh to the defendant in cash and when he asked for his return the defendant gave 4 cheques to the plaintiff out of which two cheques on presentation bounced which resulted in the filing of the present suit. The plaintiff in the plaint has mentioned that when the defendant had asked for the money from him he was himself in the need of money for purchasing a house but on repeated requests of the defendant he gave Rs. 15 Lakh in cash to the defendant. It is pertinent to mention here that the plaintiff has not taken anything in writing from the defendant in regard to the advancing of loan. He has not obtained any receipt from the defendant nor he took any promissory note for the repayment nor he obtained postdated cheques from him as is normally done even when a friendly loan is given in cash.
21. The plaintiff has only deposited two cheques and is totally silent Suit No. 197/13 Page no. 6/7 as to what happened to the other cheques and why he is not claiming his entire Rs. 15 Lakh when he was also in need of the money for the purchase of the house at the time of advancing loan to the defendant.
22. But as per the defendant he had given 4 cheques to the plaintiff for arranging loan for him from some bank which the plaintiff has failed to arrange and he even did not return his cheques.
23. The defense raised by the defendant cannot be said to be moonshine and at this stage it appears to be more plausible and reasonable. Reliance can be placed upon Hari Niwas Gupta "supra). So in view of the facts and circumstances the defendant has raised triable issue which cannot be decided without affording an opportunity to both the parties to contest the suit on merit. Accordingly the application filed by the defendant U/o 37 Rule 3 (5) CPC is hereby allowed. The defendant is granted unconditional leave to defend the suit. Application is disposed off accordingly. Now put up for filing of WS by the defendant on 11-05-2015.
Announced in the open court (RAJNISH BHATNAGAR)
On the 13.04.2015 Additional District Judge
Delhi
Suit No. 197/13 Page no. 7/7