Andhra HC (Pre-Telangana)
Manepalli Udaya Bhaskara Rao vs Kanuboyina Dharmaraju on 8 December, 2003
Equivalent citations: 2004(1)ALD269, 2004(4)ALT600, II(2004)BC323
JUDGMENT B. Prakash Rao, J.
1. In this revision, the case has been referred to the Division Bench by one of us (BPR, J) for an authoritative pronouncement on the question as to whether the non-issuance of a reply notice to the prior notice by the defendant in a summary suit would amount to an admission and bars the defendant to seek leave to defend under Sub-rule(5) of Rule 3 of Order 37 of the Code of Civil Procedure.
2. Briefly stating, the facts in the case are that the respondent herein has filed a summary suit for recovery of a sum of Rs. 25,780/- with future interest from the date of the suit, on the allegation that the defendant for his necessity borrowed a sum of Rs. 15,000/- on 16.6.1999 agreeing to repay the same with interest at 2% per month and executed a promissory note. In spite of the demands made and issuance of a registered notice on 20.4.2002, the defendant did not pay the amount. Hence the suit.
3. On appearance, the petitioner-defendant had filed the present application in LA. No. 895 of 2002 in O.S. No. 177 of 2002 on the file of the Principal Junior Civil Judge, Narsapur under Order 37, Rule 3(5) of CPC, seeking leave to defend the suit on the allegations that he never borrowed the amount nor executed the promissory note. In fact, he does not know the plaintiff nor had any acquaintance with him. Further he pointed out that he borrowed a sum of Rs. 10,000/- from one Marine Dorayya, who is the attestor of the suit promissory note and who obtained his signature on a blank promissory note by affixing a revenue stamp. However, later the petitioner had paid the said principal amount and also the interest thereon in June 2001 in full and final settlement, but the said promissory note was neither returned to him nor destroyed on the ground that the same is not immediately traceable and it will be delivered to him as and when it is traced. Therefore, the petitioner did not insist for return of the said promissory note immediately. It is only after receipt of the notice from the respondent-plaintiff, he approached the said M. Dorayya and on enquiry he was informed that on the amount borrowed from him, the interest was calculated at 18% per annum, but not at 24% per annum as agreed to and therefore, the difference of amount towards the interest has to be paid. Whereupon, the petitioner agreed to repay the same to said M. Dorayya and therefore, he did not give any reply. However, surprisingly, the said M. Dorayya got the present suit filed by the respondent-plaintiff. It is also his case that the petitioner being an agriculturist, the interest as claimed is wholly unsustainable and he is entitled to the benefit of the Debt Relief Laws. Thus there are triable issues. Hence the leave petition. The respondent-plaintiff contested the application denying the allegations.
4. On hearing both sides, the Court below dismissed the application principally on the ground that the petitioner did not give any reply to the notice issued by the respondent-plaintiff and therefore, as per the principles laid down by this Court in Thota Kanakadurga Varaprasad Rao v. Madapati Chandra Sekhara Reddi, , the petitioner is not entitled to the leave.
5. Heard Sri A. v. Sesha Sai, the learned Counsel appearing for the petitioner. Though served, none appeared for the respondent. Sri N, Vijay, the learned Counsel, who has been appointed as amicus curiae, was heard.
It is relevant to note the provision of Sub-rule (5) Rule 3 of Order 37 of Code of Civil Procedure, which reads as follows:
(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 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 that suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court.
6. On a bare reading of the aforesaid provision, which is part of Order 37 of C.P.C., it contemplates there a defendant can seek leave to defend which has to be granted either unconditionally or on such terms as may appear to the Court just. However, the first proviso therein disables a defendant to seek such leave if the facts disclosed by the defendant do not indicate substantial defence or the defence as put up appears frivolous or vexatious. That apart, if a part of amount is admitted, it shall also be a factor for refusal of such leave, subject to deposit of the admitted amount. The suit as contemplated under Order 37 being a summary in its nature, deviate substantially from the normal procedure in an ordinary suit and no right exists in favour of defendant to defend the suit in general terms and necessarily he has to seek leave making out valid and substantial grounds in defence. The object apparently is to narrow down the delays and avoid vexatious defences put forward by defendant. The summary procedure as provided thereunder made applicable only to suits for money on the foot of bills of exchange or other contracts as provided under Sub-rule (2) of Rule 1 thereof. Therefore, it is only on the prima facie satisfaction as to existence of the sufficient grounds or on valid defence, the leave has to be granted. Except the same, no other bars or restrictions are contemplated under the said provision. Therefore, it has to be seen on the totality of the circumstances and especially by taking into the facts and circumstances in defence as urged by the defendant, the grant of leave has to be availed. Having regard to the nature and scope as contemplated by the legislature, it may not be permissible to add any further restrictions or circumstances creating a fresh ground for refusal of leave.
7. In Thota Kanakadurga Varaprasad Rao's case (supra) which has been relied on by the Court below, a learned Single Judge of this Court while dealing with the similar application seeking leave to defend the case, at the instance of the defendant which was refused by the Court below, considering the said provision and having found that the defendant has not been able to make out any substantial defence and taking into account the circumstance that when a notice was issued and the same was not replied it was held that it amounts to admission on the part of the defendant. It was specifically found therein that the Court below formed an opinion that the defendant did not raise any substantial defence and therefore, it cannot be interfered by this Court in revisional jurisdiction. Thus, on the facts and circumstances of the case therein, this Court refused to interfere with the finding arrived at by the Court below as to the defendant's not making out any substantial defence for entitling him to the leave. No doubt, while considering so, the absence of reply was also taken as one of the criteria to such conclusion. Therefore, it cannot be said that this Court had solely made it a ground for refusal to grant leave to defend for mere non-issuance of a reply notice. It is also to be noticed that this Court had no opportunity to consider the principles on the "admissions", to lay down that mere non-issuance of reply notice would constitute an admission.
8. As regards admissions, the same is provided for under Sections 17 to 21 of the Indian Evidence Act. Sections 18 to 20 define what states are admissions. Section 17 of the Evidence Act defines an admission that a statement oral or documentary, which suggests an inference as to any fact in issue or relevant fact. The admission as defined should be a statement in oral, documentary or electronic form. The word 'statement' is not defined in the Evidence Act though used in a number of provisions i.e., Sections, 17 to 21, 32, 39, 145 and 157. In Bhogilal Chunilal v. State of Bombay , the meaning of 'statement' was considered and it was held at para 7 as follows:
"The first group of sections in the Act in which the work 'statement' occurs, are Sections 17 to 21, which deal with admission. Section 17 defines the word admission. Sections 18 to 20 lay down what statements are admissions, and Section 21 deals with the proof of admissions against persons making them. The words used in Sections 18 to 21 in this connection are 'statements made by'. It is not disputed that statements made by persons, may be used as admissions against them even though they may not have been communicated to any other person. For example, statements in the account books of a person showing that he was indebted to another person are admissions which can be used against him even though these statements were never communicated to any other person. Illustration (b) of Section 21 also shows that the word 'statement' used in these sections does not necessarily imply that they must have been communicated to any other person. In the illustration in question entries made in the book kept by a ship's captain in the ordinary course of business are called statements, though these entries are not communicated to any other person. An examination, therefore, of these sections show that this part of the Act the work 'statement' has been used in its primary meaning namely "something that is stated" and communicated is not necessary in order that it may be a statement."
9. Silence or non-issuance of reply notice cannot be termed to be admission under Section 17 of Evidence Act since Section 17 contemplates of a statement in oral, documentary or electronic form. There is no provision in Evidence Act including Section 114 under which admission can be presumed.
In AIR 1955 NUC (Mad.) 3939, it was held as under:
"The law in the Republic of India will not oblige the man who receives an absurd and vexatious notice to reply to it, and will not conclude from the mere fact of non-reply an admission of the truth of the allegation that he had by instructing his advocate to put questions to a witness defaming the sender of the notice."
In it was held at para 7 as under:
"It was pointed out that the plaintiff given notice to the defendant claiming rent at the rate of Rs. 4/- per ton per month and there was no protest on behalf of the defendant and, therefore, it must be taken that there was an implied agreement between the parties that rent would be paid at that rate i.e., at the rate of Rs. 2,400/- p.m. We do not think there is any warrant for this submission. Merely because the plaintiff had claimed storage charges at the rate of Rs. 4/-per ton per month and there was silence on the part of defendant, it cannot be deemed that there was acquiescence on the part of the defendant and there was an implied undertaking on his part to pay godown rent at that rate."
10. Even the Queen Bench of England in 1891 (2) Q.B. 534 between Wiedemann v. Walpole held at 537 as under:
"The question for us is whether, according to law, the fact of the defendant not answering the letters could be taken as any evidence of corroborating required by the statute."
At page 538 it was held as under:
"A man might day by day write such letter, which, if they are not answered would be brought forward as evidence of the truth of the charges made in them. The ordinary and wise practice is not to answer them to take no notice of them. Unless it is made out to be ordinary practice of mankind to answer. I cannot seen that not answering is any evidence that the person who receives such letters admits the truth of the statements contained in them. I have, therefore, no doubt that the mere fact of not answering a letter stating that the person to whom it is written has made a promise of marriage is no evidence whatever of any admission and that he did make the promise and therefore no evidence in corroboration of the promises."
Then again at page 539 it was held as under:
"It would be a monstrous thing if the mere fact of not answering a letter which charges a man with some misconduct was held to be evidence of an admission by him that he had been guilty of it."
11. From the above discussion, it makes clear that the admission has to be spelled out only from the positive acts on the part of the party, but cannot be culled out or cannot be based on any presumptions. The exchange of notices would only at the most constitute a demand and refusal in writing, but the absence thereof would not either way constitute an admission. Even failure to issue a notice cannot be said to be an absence of demand nor the failure to reply to such notice would amount to an admission of the claim made in the notice. Such omission would not amount to a tacit consent in respect of the demanded liability. Even otherwise, on a reading of the defence as set up in this case, it amply shows that there is a valid defence leading to a triable issue which has to be appreciated and considered only after giving opportunity to both sides to substantiate their respective pleas. In fact, it is the case of the petitioner herein that the respondent-plaintiff is totally stranger to him and whatever loan transaction which he had, was with one M. Dorayya and the same was already discharged, but the document was not returned and the said M. Dorayya, got filed the present suit through the respondent-plaintiff by making use of the signature obtained by him on a blank promissory note at the time of obtaining loan from him. In the circumstances, the only conclusion which can be arrived at on the facts and circumstances of the case is that there is a clear cut triable issue on the basis of the substantial defence as urged by the petitioner. Thus, in view of the aforesaid principles, it cannot be said that mere non-issuance of a reply notice would constitute an admission on the part of the defendant and in the circumstances, we are not prepared to accept the principle as laid down by the Single Judge of this Court in Thota Kanakadurga Varaprasad Rao's case (supra).
12. We place on record gratitude for the assistance rendered by Sri N. Vijay, the learned Counsel, who was appointed as amicus curiae.
13. Accordingly, the reference is answered in positive. The office is directed to post the matter before the learned Single Judge for hearing.