Delhi High Court
Sunil Alagh vs Shivraj Puri & Anr. on 16 May, 2017
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 16th May, 2017
+ CS(OS) No.556/2016
SUNIL ALAGH ..... Plaintiff
Through: Mr. Manav Gupta, Mr. Sahil Garg and
Ms. Ridhi Munjal, Advs.
Versus
SHIVRAJ PURI & ANR. ......Defendants
Through: Ms. Diviani Khanna and Ms. Upasana
Talwar and Mr.Vivek Singh , Advs.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
IA No.6002/2017 of the defendants under Order XXXVII Rule 3(5) of
the CPC).
1. The two defendants Shivraj Puri and Raghuraj Puri, in this suit under
Order XXXVII of the Code of Civil Procedure, 1908 (CPC) for recovery of
Rs.9,15,00,000/-, pursuant to service (stated to be on 3rd April, 2017) of the
summons for judgment, on 12th April, 2017 (re-filed on 12th May, 2017)
filed this application for leave to defend with affidavits in support thereof of
both the defendants.
2. The application though re-filed on 12th May, 2017 i.e. after more than
seven days of the original filing on 12th April, 2017 is not accompanied with
any application for condonation of delay in re-filing. Re-filing beyond seven
days, in law is a fresh filing. The application filed on 12 th May, 2017 is
clearly beyond the time of ten days prescribed in Order XXXVII Rule 3(5)
from stated date of service of the summons for judgment on 3rd April, 2017
and liable to be rejected on this ground alone. In fact on perusal of the office
CS(OS) No.556/2016 Page 1 of 26
file it is found that the summons for judgment were served, at the address
given in the Memo of Appearance, on the counsel for the defendants on 1 st
April, 2017. The first filing on 12th April, 2017 also was thus beyond time.
3. The application is liable to be dismissed on this ground alone.
However since during the hearing counsels have not addressed on the said
aspect and have been heard on merits, I refrain from doing so.
4. Though the application has come up today for the first time but having
gone through the same and being prima facie of the opinion that the
application does not disclose a ground for grant of leave to defend, the
counsel for the defendants has been heard at length and has after conclusion
of hearing been also permitted to hand over copies of the judgments relied
upon.
5. The plaintiff has instituted this suit pleading that (i) the plaintiff has
known defendant no.2 Raghuraj Puri for the past several years and the
defendant no.1 Shivraj Puri is the son of the defendant no.2; (ii) on 30 th
June, 2014 the defendant no.2 telephonically informed the plaintiff that the
property dealer contacted by the plaintiff for sale of the plaintiff‟s
"residential plot at DLF" had fraudulently sold the said plot to five different
persons and certain criminal cases for the offence of cheating had been
registered against the plaintiff and his wife and were pending in the Gurgaon
District Court and that the plaintiff and his wife were likely to be arrested at
any time; (iii) the defendant no.2 assured the plaintiff that his son the
defendant no.1 would clear up the cases and ensure that the plaintiff and his
wife do not get arrested but an amount of Rs.8,50,00,000/- was immediately
required therefor, for depositing Rs.6,50,00,000/- in the Courts at Gurgaon
CS(OS) No.556/2016 Page 2 of 26
and the balance for securing bail for the plaintiff and his wife; (vi) the
plaintiff sent the said money to the defendant no.2 through RTGS from his
bank account; (v) the defendants continued to inform the plaintiff of the
steps being taken by them on behalf of the plaintiff and continued to do so
till first week of August, 2014 and the plaintiff sent a total amount of
Rs.13,15,00,000/- to the defendants; (vi) when the defendants despite
repeated demands of the plaintiff and their assurances failed to supply even a
single document relating to the cases filed to the plaintiff, the plaintiff made
enquiries and learnt that there were no such criminal cases ever pending
against the plaintiff and his wife either in the Gurgaon District Court or the
Tis Hazari Courts; the plaintiff further learnt that the defendant no.1 is a
habitual criminal and had been convicted "in the Citibank fraud case" and
had cheated the said bank for an amount of more than Rs.300 crores; the
plaintiff thus confronted the defendant no.1 and the defendant no.1 issued
several current dated and post dated cheques in favour of the plaintiff
towards discharge of liability to return the entire amount of
Rs.13,15,00,000/-; (vii) all the cheques for the entire amount of
Rs.13,15,00,000/- were dishonoured on presentment; (viii) on 26th August,
2014, in pursuance to the criminal complaint dated 25th August, 2014 filed
by the plaintiff against the defendants, FIR No.98/2014 was registered
against the defendants at P.S. EOW under Sections 406, 420, 120B of the
Indian Penal Code, 1860 and both the defendants arrested; (ix) on 29th
September, 2014, both defendants entered into a written contract /
Memorandum of Settlement (MoS) dated 29th September, 2014 with the
plaintiff as under:-
CS(OS) No.556/2016 Page 3 of 26
"MEMORANDUM OF SETTLEMENT
This memorandum of settlement is made on this the 29th day of
September 2014
BETWEEN
Mr. Sunil Kumar Alagh , .s/o Mr. Kewal Krishan Alagh, r/o 12 C IL
Palazzo, Little Gibbs Road, Mumbai 400 006 hereinafter referred to as
the party of the first part, which expression unless repugnant to the
context and meaning thereof shall mean & include his legal heirs,
successors, legal representatives, nominees and assignees of the ONE
PART
AND
Shivraj Puri, s/o Raghuraj Puri & Raghuraj Puri, s/o Late Sh. S. P.
Puri, both r/o Flat.5A, Building 10, Magnolia Complex, DLF, Phase V,
Guragon, through Ms. Vandana Mandhana, w/o S hivraj Puri, r/o Flat
5A, Building 10, Magnolia Complex, DLF, Phase V, .Guragon
hereinafter referred to as the party of the second part, which
expression unless repugnant to the context and meaning thereofshall
mean & include their legal heirs, successors, legal representatives,
nominees and assignees of the OTHER PART
WHEREAS the first party had lodged a complaint against the second party
which led to registration of FIR No. 98/2014 , EoW, Mandir Marg,
New Delhi u/s 406 , 420, 120B IPC on 26/8/2014 , contents of which
are not reproduced as are not necessary
AND WHEREAS the parties of the, second part were arrested on
27/8/2014 and at first remanded to police custody and are at present lodged
in Tihar Jail, New Delhi by the order dated 10/9/2014 passed by Sh.
Sanjay Khanganwal , CMM, Patiala House Court , N·ew Delhi
AND WHEREAS without prejudice to the rights, contentions &
allegations; the second party hereto have of their own volition offered the
following settlement due to intervention of well wishers , friends, relatives
& lawyers, to which the first party has shown its acceptance.
AND WHEREAS Ms. Vandana Mandhana, w/o Shivraj Puri & daughter
in law of Raghuraj Puri has been authorized by them to sign and execute
CS(OS) No.556/2016 Page 4 of 26
the present settlement on their behalf. Shivraj Puri & Raguraj Puri shall
however, also sign the present agreement, with the permission of the
Hon'ble Court.
NOW THIS AGREEMENT WITNESSETH AS UNDER:
1. That the second party has offered to pay to the first party a total sum
of Rs. 13.15 Crores, in full and final settlement of all their
claims as per FIR 98/2014 .
2. That the settlement amount of Rs. 1 3.15 Crores shall be paid in
the following manner.
(i) At the first instance, the second party shall pay a sum of Rs. 4
Crores which amount shall be paid as under:
Rs. 3.38 Crores lying in the bank account of Normans Martin
Brokers Private Limited, with lNG Vysya Bank, Karol Bagh, New
Delhi be released unconditionally in favor of the first party.
Application for de-freezing the bank account shall be filed before
the competent court and the parties shall ensure full co-operation for
the same and would request the court for de-freezing the bank
account and release of the said amount.
Jewellery lying in the locker of Sh. Raghuraj Puri in HDFC Bank,
Galleria Market,DLF Phase IV, Gurgaon belonging to Ms. Vandana
gifted to her by Shivraj Puri at the time of their wedding. The said
locker having been sealed by the Investigation, Mr. Raghuraj Puri
shall move an· application for de-freezing of the said locker for
which the complainant shall ensure full .co-operation. After taking the
jewelry from the said account, the same shall be disposed off at the
best possible price and the sale proceeds shall be appropriated to the
credit of the complainant till such amount of Rs. 4 Crores is arrived
at, including the amount of Rs. 3.38 Crores as aforementioned. In
case of any shortfall, the same shall be made good for by Ms.
Vandana till the first party unconditionally gets paid a total sum of
Rs. 4 crores. Upon de-freezing of the locker, if any liquid cash is
found therein, the same shall also be handed over to the first party in
discharge of the liability of the second party to the first party. In the
event the sale proceeds of the jewelry and. handing over of any
CS(OS) No.556/2016 Page 5 of 26
liquid cash exceeds the total agreed amount of Rs. 4 Crores, then
the same shall also· be appropriated to .the account ·of the first party
in discharge of the liability of the second party towards the total
amount of Rs 13.15 crores. The complainant shall ensure full
cooperation for the aforesaid purpose.
3. Balance sum of Rs. 9.15 Crores due and outstanding after the discharge
of the initial liability of Rs.4 crores shall be paid by the second party to
the first party in the following manner:
(i) Rs. 1 Crore within 45 days from the date of release of the
Second party from custody , with a grace period of 10 days in favor
of the second party in paying the same.
(ii) Thereafter , the second party shall pay to the first party a sum
of Rs. 1 Crore every 35 days, with ·a grace period of 5 days in
payment of each instalment of an amount of Rs. 1 Crore. The
second party shall continue paying the first party such amounts
till the entire amount of Rs. 9.15 Crores is repaid by the second
party.
4. That as and when , the second party is in a position, to accumulate the
sum of Rs. 4 Crores , either in the bank account of Normans Martin
Brokers Private Limited, by sale of jewellery or by own funds , the
second party shall prefer an application u/s 437 CrPC for grant of
bail, for which the first party shall have no .objection once the sum of
Rs. 4 Crores shall be released in favor of the first party/complainant
simultaneously. Both parties undertake to make a statement to this
effect before the Ld. Court of CMM, New Delhi. Needless to
mention that bail shall initially be for a period of 45 + 10 day grace
period and thereafter extended for a period of 35 + 5 day grace
period on each occasion in terms of the payment plan hereinabove.
The bail shall stand confirmed on repayment of the entire amount
of Rs. 13.15 Crores. The first party has been informed that the
passports of Mr. Shivraj Puri and Mr. Raghuraj .Puri are lying with the
Gurgaon District Court and as such cannot be deposited before the
Competent Court in the present case. The second party however
undertakes to not travel abroad without the prior permission of the
Competent Court in the present case.
5. It is agreed between the parties that incase the second party
CS(OS) No.556/2016 Page 6 of 26
defaults in payment of any instalment till such time the entire
balance of Rs.9.15 Crores is repaid, the interim bail so granted shall
automatically come to an end. The amount already paid by the
second party shall not be refundable under any circumstances
whatsoever and second party shall not claim any right over the said
amount so paid except that in case of any recovery suit filed by the
first party, same shall be adjustable as per law against the liability of
the second party towards first party.
6. It is alsoli agreed between the parties that in the event the entire
.
amount (including any other amount which is payable by second· party
to first party; which is further liable to be settled upon release of the
party of the second part from custody) is repaid to the satisfaction of
the first party, the first party shall co-operate with the second party
in getting the FIR quashed from the court of competent jurisdiction.
The first party shall not refuse in signing the said joint petition for
quashing on the basis of full and final settlement.
7. That the second party shall indemnify the first party against any claim
of a third ·party in the misuse of original/photocopies of the
document of ownership of the first party‟s property at DLF,
Gurgaon, being property bearing No. A16/3 DLF., Phase I,
Gurgaon, which property the first party joint owns with his wife Ms.
Maya Alagh since a General Power of attorney and other allied
documents were in possession of the second party. Moreover, the
second party also indemnifies the first party against any misuse of
any letters; documents that were handed over to the second party in
trust.
8. That the second party undertakes to give no objection in favor of the
first party for release of whatever amount over and above Rs. 4
Crores is recovered by the investigation as part of case property. The
same shall be adjusted in payment of installments which are due to be
paid by the second party to the first party, if released by the court
unconditionally in favor of the first party.
9. That the first party is initiating· proceedings u/s 138 of the
Negotiable Instruments Act, against the ·second party in respect of
certain cheques issued by the second party in favor of the first
party. However, the said proceedings/cases if filed, shall be
CS(OS) No.556/2016 Page 7 of 26
withdrawn by the first party soon after the conditions of this
memorandum of settlement are attained. Furthermore, the first party
has issued a legal Notice dated 17.09.2014 to Karur Vysya Bank
and Mr. Shiv Raj Puri for non payment of Rs. 4.4 crores as
promised. However , if any legal proceedings/cases are filed
in continuation of the said legal Notice dated 17.09.2014, shall be
withdrawn by the first party soon after the conditions of this
memorandum of settlement are attained in its letter and spirit.
10. That this settlement shall be placed before the trial court and it is
for the said court's discretion to allow operation of the locker or
release the amount lying seized in the various bank accounts of the
second party and to grant bail to the second party as agreed to in this
memorandum of settlement.
11. That this present agreement has been voluntarily signed, executed by
both the parties without any force, fraud, undue influence or
coercion from any quarters. At no stage, will the second party
challenge the settlement on the ground that the settlement was arrived
at when they were in custody or that due to their being in custody ,
they were coerced to enter into this settlement agreement.
IN WITNESS WHEREOF the Parties to this memorandum of settlement
have signed on date mentioned above at New Delhi."
(x) in furtherance of the aforesaid MoS, the plaintiff has already received an
amount of Rs.4,00,00,000/- under the supervision of the Trial Court; (xi)
however the balance sum of Rs.9,15,00,000/- has not been paid by the
defendants to the plaintiff despite the defendants being on regular bail; and,
(xii) the learned Single Judge of this court in order dated 21st September,
2016 in Bail Application No.562/2016 and Criminal M.B. No.574/2016,
while releasing the defendant no.1 on bail has recorded the admission and
undertaking of the defendant no.2 to pay the remaining liability of
Rs.9,15,00,000/- in terms of MoS.
CS(OS) No.556/2016 Page 8 of 26
6. Summons for appearance and thereafter summons for judgment as
aforesaid were issued to the defendants.
7. The defendants seek leave to defend on the following grounds set-out
in the identical affidavits of the two defendants:-
(i) that the suit is frivolous, farfetched and gross abuse of
process of law; the plaintiff by an ingenious presentation has
created an illusion of a cause of action;
(ii) that the plaintiff has been known to the defendants for several
years and has regularly conducted business transactions with
the defendants and their company Normans Martin Brokers
Private Ltd.;
(iii) there are numerous e-mails exchanged between the plaintiff
and the defendants that clearly reflect regular payments of
huge sums of money made by the plaintiff for the purposes of
investment into the account of the defendants and which have
been returned from time to time to the plaintiff along with the
profit quotient earned on them;
(iv) the transactions subject matter of the present suit are also part
of these e-mails exchanged and are clearly reflected therein
and are admitted by the plaintiff and his counsels in the
criminal proceedings in the District Court;
(v) the story set up by the plaintiff is not believable by any
stretch of imagination, especially vis-à-vis the plaintiff who
is an extremely well read and well placed person;
CS(OS) No.556/2016 Page 9 of 26
(vi) "the plaintiff has sought to play fraud on the defendants by
misusing the document of settlement which has been signed
by the defendant no.1 while he was in custody in the above
mentioned FIR and had signed the said document under
duress";
(vii) an amount of Rs.4,00,00,000/- has been extracted by the
plaintiff from the defendants pursuant to the arrest of the
defendants "in consequence of the agreement which was
entered into by and between the parties dated 29.9.2014,
which was entered into without prejudice to the rights and
contentions of the parties at lis. The said Memorandum of
Settlement was outcome of undue pressure and coercion
exercised by the plaintiff on the defendants as at that time the
defendants were in custody and the plaintiff allured the
defendants that if the said Memorandum of Settlement is
signed, he will get the defendants bailed out. The plaintiff
therefore induced the defendants by making false promises
and pressurised them for execution of the Memorandum of
Settlement which is totally vague, false and non-negotiated
contract. This one sided agreement drafted by the plaintiff
was got signed from defendants by exercising extreme kind
of pressure by extending threat that if the same is not signed,
the defendants will continue to remain in custody. It was the
condition of the Memorandum of Settlement that plaintiff
will give no objection for bail of defendants and based on this
CS(OS) No.556/2016 Page 10 of 26
condition, the defendants and their family were induced to
execute the settlement. However, the said Memorandum of
Settlement became infructuous as the contingency of the
agreement being that the plaintiff would not oppose the bail
of defendants fell apart on 10.02.2015 when the plaintiff
showed his actual colors and resiled from the promise not to
oppose the bail. The plaintiff vehemently opposed the bail of
the defendants and by his own conduct withdrew from the
agreement and the same became null and void. Further, due
to the evil designs of the plaintiff, the defendants were
incarcerated since 27.08.2014 in the above mentioned FIR
and were only enlarged on bail on 21.09.2016 by the Hon‟ble
Delhi High Court";
(viii) that the criminal case is at the juncture of conclusion of the
prosecution evidence and the examination, cross-examination
of the plaintiff as complainant stands completed qua both the
defendants;
(ix) the present case has been filed only to prejudice the
defendants in the criminal trial;
(x) the plaintiff has admittedly remained CEO of a multinational
company „Britannia‟ and also participates in news debates /
political / social discussions on a daily basis on National
Television and it is unbelievable that the plaintiff would have
believed what the defendants are alleged to have represented
to the plaintiff;
CS(OS) No.556/2016 Page 11 of 26
(xi) that the story set-up by the plaintiff is a blatant lie on the face
of it;
(xii) the plaintiff and the defendant no.2 have known each other
for 40 years and have shared familial relations;
(xiii) the defendant no.1 having substantial knowledge of stock
options and stock market would routinely make investments,
for the benefit of self and for friends and family; the
investments made on behalf of friends and family were on
purely consultancy basis and profit / loss was on the
investor‟s account;
(xiv) all this was in the knowledge of the plaintiff who started
showing interest in making investments through the
defendant no.1;
(xv) it was clear understanding between the parties that the
plaintiff will make investment in stock market through
defendants, the plaintiff would be responsible for profit or
loss and the defendant no.1 will charge his consultancy fee;
(xvi) on account of close relations between the parties no written
understanding was arrived at; however the mode and manner
in which transactions have happened between the parties over
a considerable period of time itself is evidence of the fact that
the defendant no.1 acted as agent of the plaintiff for investing
plaintiff‟s funds in stock market and the profit / loss was to
the plaintiff‟s account;
CS(OS) No.556/2016 Page 12 of 26
(xvii) that the defendant no.1 operated in a manner wherein he
would accumulate the funds to be invested received from
various prospective investors in his bank accounts and further
route them into the stock broking accounts like Destimoney
Securities Private Limited, Globe Capital Market Limited and
Edelweiss Broking Limited;
(xviii) the said accumulated funds would be invested by the
defendant no.1 in the abovementioned stocks and options and
the principal amounts of investment along with the profits
accrued thereto would be returned to the respective investors
in the proportionate manner of their investments for a
commission payable to the defendant no.1;
(xix) the plaintiff was amply forewarned about the market risks
intricate in such investments;
(xx) it was always assumed, understood and agreed between the
parties that all the profits and losses will be borne by the
plaintiff and the defendant no.1 was merely a consultant who
would be entitled to commission;
(xxi) the plaintiff has raised the claims as an afterthought;
(xxii) since 2013, the plaintiff started transferring funds into the
defendant no.2‟s bank account through electronic transfer and
which funds would be further transferred into other bank
accounts like SP Puri HUF Account and be finally invested
into the accounts maintained with the stock broking
CS(OS) No.556/2016 Page 13 of 26
companies specifically Destimoney Securities Private
Limited and Globe Capital Market Limited;
(xxiii) that the defendant no.1 earned substantial amounts of profits
to the plaintiff which were regularly paid back to the plaintiff
along with principal amount invested;
(xxiv) due to volatile and unpredictable nature of the stock market,
some amount invested by the plaintiff bore no profit, rather
resulted in losses which is evident from the financial
statements of Destimoney Securities Pvt. Ltd. for the
financial year 2013-2014;
(xxv) the plaintiff forwarded monies to the defendants only for the
purposes of investments on his behalf, also referred to in the
order dated 27.11.2014 of the Additional Sessions Judge,
Patiala House Courts, New Delhi disposing of an application
under Section 439 CrPC in FIR No.98/2014;
(xxvi) the first tranche of Rs.85,00,000/- received by the defendants
from the plaintiff on 30th June, 2014 was much before the
telephone call claimed to have been received by the plaintiff
from the defendants;
(xxvii) the plaintiff, before the Sessions Courts on 21 st November,
2014 admitted the entire e-mail correspondence filed by the
defendants along with their bail application;
(xxviii) in one of the e-mails dated 8th August, 2014 the plaintiff has
stated that the "entire amount as covenanted in the complaint
plus some more amounts, plus interest, all totalling
CS(OS) No.556/2016 Page 14 of 26
Rs.20,00,00,000/- were receivable by the plaintiff from the
defendant no.1 along with a profit quotient, which very
clearly proves that the monies were in regard to investments
and not for the purpose as stated in the present suit";
(xxix) the Agreement dated 29th September, 2014 on the basis of
which this suit under Order XXXVII has been filed was
executed when the defendants were in judicial custody; the
MoS neither authenticated by the concerned MM / ASJ or the
Jail Superintendent and has no meaning in law;
(xxx) the defendants and their family members were induced to
sign the agreement by making false representation that the
plaintiff will not oppose the bail application of the
defendants;
(xxxi) the agreement was got drafted by the plaintiff and the
defendants were not even allowed to read it and their
signatures were taken by resorting to fraud,
misrepresentation, coercion and undue influence;
(xxxii) the plaintiff has extracted Rs.4,00,00,000/- from the
defendants by falsely representing that he will support the
defendants to be bailed out; however the plaintiff backed out
from the promise by opposing the bail;
(xxxiii) the agreement therefor became infructuous as the
contingency of the agreement was that the plaintiff will not
oppose the bail of the defendants;
CS(OS) No.556/2016 Page 15 of 26
(xxxiv) the agreement does not disclose as to how Rs.13,15,00,000/-
became due and payable;
(xxxv) the plaintiff has misused the cheques of the defendants and
banked the same with ulterior motives; the said cheques were
lying as security and the plaintiff could not have banked the
said cheques as there was no liability of the defendants
towards plaintiff in view of the plaintiff‟s money having lost
in the stock transactions;
(xxxvi) the MoS dated 29th September, 2014 is void and
unenforceable in law;
(xxxvii) this Court does not have territorial jurisdiction to entertain
the suit as the defendants do not carry on their business at
Delhi as alleged, the defendants at one point of time had their
office at Barakhamba Road, New Delhi but which has been
sold vide Agreement to Sell dated 11th March, 2013; and,
(xxxviii) no amount is payable by the defendants to the plaintiff.
8. On perusal of the aforesaid affidavits, it appeared that the defendants
are not disputing receipt through electronic transfer from the bank account of
the plaintiff of a sum of Rs.13,15,00,000/-. It further appeared that the
defendants had not made any averments in their affidavits to show a
relationship as between a stock broker and a client with the plaintiff. It is for
this reason that the need to call for reply to the application for leave to
defend was not felt and the counsel for the defendants was asked to address
arguments.
CS(OS) No.556/2016 Page 16 of 26
9. The counsel for the defendants during hearing also does not dispute
receipt by the defendants of a sum of Rs.13,15,00,000/- by electronic
transfer from the bank account of the plaintiff. The counsel for the
defendants, inspite of repeated questioning, whether not in terms of the
requirements of Stock Exchange and Securities and Exchange Board of
India (SEBI), the defendants were required to maintain proper accounts of
the investments in the stocks on behalf of the plaintiff, could not show
anything whatsoever.
10. The defendants, along with their application for leave to defend,
besides the MoS dated 29th September, 2014, FIR no.98/2014 of P.S. EOW
have filed (i) e-mails exchanged between the plaintiff and the defendant
no.1; (ii) charge sheet filed in FIR No.98/2014; (iii) order dated 27 th
November, 2014 of the Additional Sessions Judge, Patiala House Courts;
(iv) "documentary evidence obtained from the bank i.e. ING Vysya Bank of
the defendant no.2"; (v) "documents to show investment made by the
defendant no.1 on behalf of the plaintiff in stock and options"; (vi) order
dated 10th February, 2015 of this Court; and, (vii) evidence of the plaintiff
recorded in the Court of ACMM.
11. The counsel for the defendants however during the hearing has not
referred to a single document.
12. I have however examined the documents and with respect thereto find
(i) the e-mails exchanged are w.e.f. 13th October, 2013 to 20th August, 2014;
(ii) the e-mails from plaintiff are merely of confirmation of transfer effected
of the amounts through RTGS and of asking for return of the money; (iii) e-
CS(OS) No.556/2016 Page 17 of 26
mail dated 25th March, 2014 of the defendants to the plaintiff is of dispatch
of the cheques through courier to be deposited within two weeks‟ span and
which e-mail belies the plea of the defendants of the cheques having been
given as security with the understanding of the plaintiff not presenting the
same; (iv) in e-mail dated 24th June, 2014, Normans Consultancy Private
Limited gave payment schedule from 28th June, 2014 to 12th July, 2014 of
Rs.235 lacs to the plaintiff; (v) vide e-mail dated 7th May, 2014 the
defendants promised payment of Rs.1.10 crores against a principal of
Rs.78.5 lacs with a promise to explain the difference of Rs.31.5 lacs
personally - the plaintiff vide reply mail of 8th May, 2014 acknowledged
receipt of cheques of Rs.85,00,000/- only and complained about another
cheque mentioned in the e-mail of 7th May, 2014 of Rs.25,00,000/- having
not been received.
14. None of the e-mails show the relationship as claimed by the
defendants, of the defendants investing monies on behalf of the plaintiff at
the risk of the plaintiff. All that the e-mails show is, i) transfer of money by
the plaintiff to the defendants and the repeated reminders of the plaintiff to
the defendants to return the monies; ii) acknowledgements of the defendants
of receipt of money and promises by the defendants to dispatch monies to
the plaintiff. In none of the e-mails have the defendants rendered any
accounts of profit or loss on investments to the defendants or even refused
any payment demanded by the plaintiff.
15. In this suit by the plaintiff for recovery of monies paid to the
defendants, a) receipt of money is not disputed by the defendants; b) the
CS(OS) No.556/2016 Page 18 of 26
defendants in the written agreement admittedly executed by the defendants
have agreed to refund the said monies to the plaintiff; and, c) the defendants
have already refunded part of the money agreed to be refunded, to the
plaintiff.
16. The plea of the defendants is that the monies were not received from
the plaintiff for the reason and in the circumstances pleaded by the plaintiff.
It is further the plea of the defendants that a) the monies were received from
the plaintiff for investment in stocks and shares at the risk of the plaintiff; b)
the monies were so invested and have been lost; c) the defendants are thus
not liable to refund the same; and, d) the written agreement was got executed
from the defendants under duress; the plaintiff, by opposing bail, has
breached his part of agreement.
17. Once receipt of monies by the defendants from the plaintiff is not in
dispute, in my view, all that has to be seen is, whether the reason given by
the defendants for being not liable to return the same to the plaintiff raises
any triable issue.
18. In this suit, we are not to decide whether the version of the plaintiff of
the reason for advancing monies is correct or not. The entire emphasis in
the affidavits accompanying leave to defend is on the improbability of the
circumstances pleaded by the plaintiff for payment of the said monies to the
defendants and the defendants having been coerced to sign the MoS. The
said circumstances are subject matter of the prosecution of the defendants on
the complaint of the plaintiff. Even if the said circumstances are proved by
the defendants to be figment of plaintiff‟s imagination, the receipt of money
CS(OS) No.556/2016 Page 19 of 26
having not been disputed by the defendants, the defendants would still
remain liable to refund the same unless in their affidavits disclose defence to
raise to the suit i.e. that they are not liable to refund the monies received
from the plaintiff. Supreme Court in Bhagwati Prasad Vs. Chandramaul
AIR 1966 SC 735 held that the doctrine that if a party asks for a relief on a
clear and specific ground it would not be open to the said party to attempt to
sustain the same claim on a ground which is entirely new, cannot override
the legitimate considerations of substance. It was further held that if a plea is
not specifically made and yet it is covered by an issue by an implication then
the mere fact that the plea is not expressly taken in the pleadings would not
necessarily disentitle a party from relying upon it. Accordingly, decree for
possession, sought on the ground of the tenancy of the defendant having
been terminated but granted on the ground that though the defendant was not
proved to be a tenant of the plaintiff, had not been able to prove title set up
adversely to the plaintiff and was thus a licensee of the plaintiff and liable to
be dispossessed, was upheld.
19. I am afraid, the application of the defendants for leave to defend fails
on this count. The plea of the defendants in the leave to defend of having
received Rs.13,15,00,000/- from the plaintiff for investment in the stocks
and shares and having been so invested and having been lost is totally
unsubstantiated. I have during the hearing enquired from the counsel for the
defendants whether not receipts of such amounts in the bank account of the
defendants and investment thereafter thereof would have been reflected in
the books of accounts and Income Tax Returns of the defendants and with
respect whereto not only has not a single document been filed but there is no
CS(OS) No.556/2016 Page 20 of 26
whisper in the affidavits accompanying the application for leave to defend.
The only inference is that the defence raised of having received the money
on such count is not substantial. Not only so, if the understanding between
the parties was as averred, there was no question of the defendants giving
cheques to the plaintiff by way of security as has been pleaded by the
defendants and which plea also is falsified from the e-mails filed by the
defendants themselves of some of the cheques at least having been
forwarded in terms of schedule of payment. If the risk in the investments to
be made were to be of the plaintiff, the question of the defendants furnishing
any security did not arise. Security is furnished only when the monies
received are accompanied with a promise to repay the same to guarantee
such repayment.
20. Not only so, had there been any substance in the plea in the affidavits
accompanying the application for leave to defend, there would have been
regular accounts in the custody of the defendants of monies received from
the plaintiff, investments thereof, returns thereon and the present value of
the said investments. The plea of the said investments having suffered a loss
is itself unbelievable. Investments in stocks and shares would remain in the
form of stocks and shares though their value may have plummeted.
21. The documents under the title "Documents to show investment made
by the defendant no.1 on behalf of the plaintiff in stocks and options" filed
by the defendants are, (i) statements of accounts of SP Puri HUF with
Destimoney Securities Private Limited; (ii) statements of bank accounts of
the defendants and the same though again show regular transfer of monies
CS(OS) No.556/2016 Page 21 of 26
from the plaintiff to the defendants and from the defendants to the plaintiff,
do not show the relationship between the parties to be as pleaded by the
defendants.
22. As far as the contention, of the MoS aforesaid having been executed
under duress is concerned, the order dated 27th November, 2014 of the
Additional Sessions Judge, Patiala House Courts, Delhi relied upon by the
defendants though mentions the MoS aforesaid does not record any
contention of the defendants or their counsel of the same having been
executed under duress; rather in para 22 the contention of the counsel for the
defendants with respect thereto was that the same was not in relation to the
monies claimed by the plaintiff to have been paid in his complaint to the
defendants but for refund of the monies which the defendants owed to the
plaintiff and which again is admission of the liability of the defendants. In
fact the Sessions Judge in para 26 of the order has noted that "counsel for
the accused did not dispute that they owed money to the complainant and
submitted that it was for that reason that the accused had entered into such a
settlement, but without prejudice to their contentions on the merits of the
present matter". It is further recorded in para 27 that "the accused did not
dispute that the money was due and payable to the complainant but he
submitted that the payments were due on account of commercial transactions
and not on account of any fraud committed upon the complainant". The
observations of the learned Additional Sessions Judge to the effect that the
plaintiff seemed to have been regularly investing large sums of money with
the defendants in return of profits which he had been receiving from time to
time cannot be of any avail in this suit. As aforesaid, the defendants in the
CS(OS) No.556/2016 Page 22 of 26
said order also admitted their liability under the Agreement to the plaintiff.
The order dated 10th February, 2015 of this Court filed by the defendants
along with their application for leave to defend also does not record any plea
/ contention of the defendants of the agreement having been signed under
duress.
23. The counsel for the defendants has referred to Mechelec Engineers &
Manufacturers Vs. Basic Equipment Corporation AIR 1977 SC 577. I
have however drawn attention of the counsel for the parties to IDBI
Trusteeship Services Ltd. Vs. Hubtown Ltd. (2017) 1 SCC 568 holding that
pursuant to the amendment of Order XXXVII Rule 3 of the CPC, the
principles stated in Mechelec Engineers & Manufacturers supra stand
superseded qua summary suits instituted post 1976. It was further held that
leave to defend should be refused when the defendant has no substantial
defence and / or raise any genuine triable issues and the Court finds such
defence to be frivolous or vexatious. It was yet further held that when any
part of the amount claimed by the plaintiff is admitted by the defendant to be
due from him, leave to defend the suit, even if triable issue or substantial
defence is raised, shall not be granted unless the amount so admitted to be
due is deposited in the Court.
24. The present, in the facts and circumstances aforesaid, is not a case of
the defendants having raised triable issues or a substantial defence in the
application for leave to defend.
25. I may also notice that though a Single Judge of this Court in Texem
Engineering Vs. Texcomash Exports (2009) 162 DLT 444 held that a plaint
CS(OS) No.556/2016 Page 23 of 26
in a suit based on a contract, agreeing to make all possible statements in the
Court to ensure bail and to take steps for finishing the case is liable to be
rejected under Order VII Rule 11 of the CPC but the Division Bench in
appeal reported as Texem Engineering Vs. Texcomash Exports (2011) 179
DLT 693 restored the suit observing that when such a contract has been
made in pursuance to commercial or other dealings between the parties and
whereunder one of the parties has also agreed to payment in return of the
amounts due, the plaint cannot be rejected. Merely because an agreement is
signed by a person when in prison does not lead to any presumption of the
same being under coercion. Reference in this regard can also be made to
Aanchal Cement Limited Vs. Gimpex Limited 2013 SCC OnLine Mad 3875
It is however not deemed appropriate to comment further on the said aspect
as the counsel for the defendants has not urged the same.
26. The counsel for the defendants has also referred to (i) Madan Singh
Vs. Phoolwati 2016 SCC OnLine Del 2310 holding that acquittal or
conviction in a criminal case has no evidentiary value in a subsequent civil
litigation except for the limited purpose of showing that there was a trial
resulting in acquittal or conviction and that the findings of a criminal court
are inadmissible; (ii)Wishwa Mittar Bajaj & Sons Vs. UOI (2013) 137 DRJ
468 (DB) holding that standard form of „no claim certificate‟ has no sanctity
in law and the dispute raised with respect thereto is referable to arbitration;
and, (iii) Central Inland Water Transport Corporation Limited Vs. Brojo
Nath Ganguly (1986) 3 SCC 156 holding that a contract induced by undue
influence is voidable.
CS(OS) No.556/2016 Page 24 of 26
27. There can be no doubt with respect to the propositions enunciated in
the judgments aforesaid; however I fail to understand as to how the same are
applicable to the present controversy. Though undoubtedly the defendants
have raised a plea of contract on the basis whereof the suit has been
instituted having been executed under duress but the defendants at no point
prior hereto, for the last nearly two and a half years since when the contract
has been in existence, pleaded so and have rather throughout during the
course of their prosecution been contending that the same is in discharge of
the commercial liability owed by them to the plaintiff and not in admission
of the offence of which they are accused of. The defendants have thereby
admitted their liability within the meaning of IDBI Trusteeship Services
Ltd., disentitling them to leave to defend. Reference in this regard can also
be made to Rakesh Gupta Vs. Khoday India Ltd. 2013 (133) DRJ 39 and
Khoday India Ltd. Vs. Rakesh Gupta 2013 SCC OnLine Del 3110 (DB)
(SLPs No.25898-25899/2014 preferred whereagainst were dismissed in
limine on 23rd September, 2014).
28. The counsel for the plaintiff has referred to Premier Exports Vs.
Hindustan Cold Storage 2001 (89) DLT 212 which case is on the aspect of
territorial jurisdiction.
29. As far as the plea of the territorial jurisdiction is concerned admittedly
the MoS whereunder monies are claimed executed in Delhi and this Court
has territorial jurisdiction.
30. There is thus no merit in the application for leave to defend which is
dismissed.
CS(OS) No.556/2016 Page 25 of 26
CS(OS) No.556/2016 and IA No.6003/2017 (of the defendants for
exemption)
31. Consequent to the dismissal of the application for leave to defend, a
decree is passed in favour of the plaintiff and against the defendants, of
recovery of Rs.9,15,00,000/- with interest @10% per annum w.e.f. the
institution of the suit till realisation. The plaintiff shall also be entitled to
costs of this suit.
Decree sheet be prepared.
RAJIV SAHAI ENDLAW, J.
MAY 16, 2017 „pp‟..
(corrected & released on 29th May, 2017) CS(OS) No.556/2016 Page 26 of 26