Delhi High Court
Ge Capital Services India vs May Flower Healthcare Pvt Ltd &Ors on 31 August, 2012
Author: Valmiki J. Mehta
Bench: Valmiki J.Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 2859/2011
% 31st August, 2012
+ CS(OS) 2859/2011
GE CAPITAL SERVICES INDIA ..... Plaintiff
Through: Ms. Deepika V.Marwah, Adv. and Mr.
Vaibhav Ashana, Adv.
versus
MAY FLOWER HEALTHCARE PVT LTD &ORS ..... Defendants
Through: Ms. Neha Rastogi, Adv. for Ms. Navdip
Kaur, Adv.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not? YES
VALMIKI J. MEHTA, J (ORAL)
I.A.No. 8330/2012 (U/o 37 R 3 and 5 r/w 151 CPC on behalf of defendants for grant of leave to defend the suit)
1. I am recently having a spate of cases where all types of suits for recovery of monies under an agreement are being filed under Order 37 CPC. The provision of Order 37 Rule 1 CPC is clear that the suits can be filed under Order 37 CPC for contractual matters in basically two categories. One is that there is a dishonoured negotiable instrument and the second is that there is an agreement in CS(OS) 2859/2011 Page 1 of 8 writing containing the liquidated demand claimed in the suit, with or without interest arising. The object of Order 37 CPC, which provides a summary procedure, is that there is quite clearly an admitted liability as claimed in the plaint and therefore special procedure is provided for.
2. The subject suit is filed on the basis of a loan granted on 25.6.2002. The suit is filed much later in November, 2011. The amount of loan originally granted was ` 34,30,000/-. Interest was also payable by the defendant no.1. Defendants no.2 and 3 are guarantors. Admittedly, as per the plaint thereafter various installments were paid but some of the installments were not paid, resulting in the subject suit having been filed.
3. I put it to counsel for the plaintiff that in the suits such as the present, where the amount due effectively arises from the balance due at the foot of the account, it cannot be said to be a liquidated amount arising from a written agreement. The suit amount has to be the liquidated amount arising from the written agreement and in cases where the balance due at the foot of account is claimed the same automatically does not become a part of original loan document which contains a totally different amount. On the pleaded basis the suit is not maintainable under Order 37 CPC. I have so held in two judgments, one in the case of M/s K & K Health Care Pvt. Ltd. Vs. M/s Pehachan Advertising in RFA 202/2011 decided on 23.1.2012 and another in M/s Associates India Financial CS(OS) 2859/2011 Page 2 of 8 Services (P) Ltd. Vs. M/s Atwal and Associates & ors in CS(OS) No.2109/2002 and I.As therein for leave to defend decided on 9.8.2012. I have also observed that there is a gross wastage of judicial time where plaintiffs unnecessarily file suits under Order 37 CPC although quite clearly the same are not maintainable under Order 37 CPC because there is no such category in Order 37 CPC where suit can be filed on amounts stated in an agreement entered into long back but the suit amount is wholly different and is the balance due at the foot of the account.
4. Paras 4 to 6 of the judgment in the case of M/s Associates India Financial Services (P) Ltd. are relevant and which read as under:-
"4. Admittedly, there is no other averment in the plaint as to how the amount claimed in the suit of ` 44,83,209/- arises from a particular written agreement. In an Order 37 suit the amount claimed in the suit may be the principal amount plus interest arising therefrom, however, once again the plaint makes no reference to a specific particular principal amount which has been stated as a liquidated amount in a written agreement payable to the plaintiff, and the balance claimed in the suit is only interest arising thereafter.
5. The object of an Order 37 CPC suit is that on the basis of the documents specified therein the liability towards the plaintiff is admitted. Only when the liability which is admitted in the dishonoured instrument or in the written document containing a liquidated demand as payable to the plaintiff, suits can be filed under Order 37 CPC. Those suits claiming amounts which are only balances due at the foot of account cannot be treated as falling under Order 37 CPC because the suit claim is based on the account and the amount claimed is not a liquidated amount arising/payable to the plaintiff on an instrument on the limited types which are the subject matter of Order 37 CPC. Entries and statements of account have necessarily to be proved as per Section 34 of the Evidence Act,1872 for the balance at the foot of the account to be arrived at. The present suit plaint also makes no mention of any CS(OS) 2859/2011 Page 3 of 8 written acknowledgment of debt, which may have amounted to a written agreement containing the liquidated demand with interest arising.
6. I have had an occasion to examine the aspect as to whether a suit such as the present can be said to be one under Order 37 CPC in the judgment of M/s K&K Health Care Pvt. Ltd. Vs. M/s Pehachan Advertising, RFA 202/2011 decided on 23.1.2012, in which, I have observed that such type of suit cannot be filed under Order 37 CPC. Paras 2 to 5 of that judgment are relevant and which read as under:-
2. The subject suit for recovery of money was filed by the respondent/plaintiff for recovery of monies on the cause of action of non-payment of bills by the appellant/defendant. The bills were raised by the respondent/plaintiff on the appellant/defendant on account of advertisements issued in newspapers by the respondent/plaintiff on behalf of the appellant/defendant. The suit which was filed under Order 37 CPC, claimed the amounts due under the bills which were stated to be „written contracts containing liquidated demand‟, though simultaneously admitting that after the bills were raised various payments were made towards the bills. The details of bills and payments made, when first filed by the respondent/plaintiff, were as under:-
"Accounts Statement of M/s K & K Health Care Pvt. Ltd. from 01.07.2005 to 15.11.2005 Date Particulars Amount (Dr) Amount Balance (Dr) (Cr) 15.06.2005 Balance B/F 32,372.25 30.07.2005 Bill No.07/020 290,652.00 11.08.2005 Bill No.08/010 66,376.00 13.08.2005 Bill No.08/019 72,127.00 18.08.2005 Bill No.08/022 72,127.00 25.08.2005 Bill No.08/035 288,609.00
05.09.2005 Bill No.09/003 72,127.00 08.09.2005 Bill No.09/005 99,418.00 08.09.2005 Bill No.09/008 5,254.00 07.11.2005 Ch. No.527736 87,652.00 10.11.2005 Ch. No.527738 254,453.00 Total 999,062.25 342,105.00 6,56,957.25"
CS(OS) 2859/2011 Page 4 of 8
3. Subsequently, on the appellant/defendant stating and detailing other payments, a fresh statement of account was filed by the respondent/plaintiff reflecting the position of bills and payments as under:-
" M/s K & K Health Care Pvt.
Ltd.
Ledger Account from 01.04.2005 to
7.11.2005
Date Particulars Debit Credit Balance
01.04.2005 Dr Opening 9,54,722.81 9,54,722.81
Balance
11.04.2005 Cr Ch. No.860348 100,000.00 2,112,065.25
30.05.2005 Cr Ch. No.474952 200,000.00 1,912,065.25
06.06.2005 Dr Bill No.06/015 72,126.91 1,098,976.63
09.06.2005 Cr Ch.No.474974 100,000.00 1,812,065.25
16.06.2005 Dr Bill No.06/018 73,199.07 1,72,175.70
23.06.2005 Dr Bill No.06/031 72,126.91 1,026,849.72
29.06.2005 Cr Ch. No.464018 100,000.00 1,712,065.25
30.06.2005 Cr Ch. No.464025 100,000.00 1,612,065.25
30.06.2005 Dr Bill No.06/059 73,199.07 1,245,374.77
22.07.2005 Cr Ch.No.464062 100,000.00 1,512,065.25
30.07.2005 Dr Bill No.07/020 290,651.96 1,536,026.73
05.08.2005 Cr Ch. No.464078 64,313.00 1,447,752.25
06.08.2005 Cr Ch. No.464079 65,183.00 1,318,256.25
08.08.2005 Dr Bill No.08/010 66,376.25 1,674,529.89
13.08.2005 Dr Bill No.08/019 72,126.91 1,608,153.64
18.08.2005 Dr Bill No.08/022 72,126.91 1,746,656.80
25.08.2005 Dr Bill No.08/035 288,609.18 2,035,265.98
26.08.2005 Cr Ch. No.464160 64,313.00 1,383,439.25
29.08.2005 Cr Ch. No.464161 65,268.00 1,252,988.25
09.09.2005 Cr Bill No.09/003 72,126.91 2,107,392.89
09.09.2005 Cr Bill No.09/005 99,418.18 2,206,811.07
09.09.2005 Dr Bill No.09/008 5,254.18 2,212,065.25
21.10.2005 Cr Ch.No.527737 4,632.00 1,248,356.25
24.10.2005 Cr Ch.No.527732 58,521.00 1,189,835.25
27.10.2005 Cr Ch.No.527734 63,591.00 1,126,244.25
27.10.2005 Cr Ch.No.522233 63,591.00 1,062,653.25
30.10.2005 Cr Ch.No.527735 63,591.00 999,062.25
07.11.2005 Cr Ch.No.527736 87,652.00 911,410.25
10.11.2005 Cr Ch.No.527738 254,453.00 656,957.25
Total Outstanding ` 656,957.25"
CS(OS) 2859/2011 Page 5 of 8
This latter statement of account is a part of the statement of account running into a total number of eight pages. This second statement of account, in addition to the two payments reflected in the first statement of account, admitted and reflected as many as five other payments. The fact that payments have been made as reflected in aforesaid two statements of account is not in dispute between the parties. The suit really therefore is a suit for the balance due at the foot of the account and is not one which is only and only on the basis of the amounts contained in the bills. The suit thus could not have been filed under Order 37 CPC as the amount claimed in the suit was not the amount as mentioned in the bills which are stated to be written contracts containing the liquidated demands of moneys payable.
4. Learned counsel for the respondent relies upon a decision of learned Single Judge of this Court in the case of M/s. Lohmann Rausher Gmbh. Vs. M/s. Medisphere Marketing Pvt. Ltd.; 2005 II AD (Delhi) 604 to argue that the suit on the basis of invoices is maintainable under Order 37 CPC. Of course, I am bound by the decision of the learned Single Judge and therefore a suit on the basis of invoices can be said to be maintainable under Order 37 CPC, however, in the present case the suit is not based on the invoices only but the amount claimed in the suit is the balance due at the foot of a running account i.e. after giving adjustment/credit for certain payments made for the invoices/bills. The suit is therefore definitely not only on the basis of invoice amounts alone for the same to be covered under Order 37 CPC. Also, in my opinion, in an appropriate case this issue will have to be examined whether a suit under Order 37 CPC can be filed on the basis of invoices alleging the same to be „written contracts containing a debt or liquidated demand‟- the necessary requirement of Order 37 CPC. The whole purpose of the provision of Order 37 Rule 1 CPC entitling filing of the suit on a debt or liquidated demand was that there is an agreement showing that there is an admitted liability and a liquidated liability or debt which is claimed in an Order 37 suit. When an Order 37 suit is filed on bills, the bills only reflect goods supplied and therefore I feel that it cannot be said that bills should be taken as agreements containing liquidated demands or an CS(OS) 2859/2011 Page 6 of 8 acknowledgment or promise to pay or an admitted liability or such other factor so as to bring the claim as "claim for debt or liquidated demand arising on a written contract" as found in Order 37 CPC.
5. In view of the above, I need not go into the merits of the matter inasmuch as the plaintiff cannot arm-twist a defendant by filing a suit under Order 37 CPC, and argue in the trial Court and also before this Court, that it has a prima facie strong case on merits and therefore the impugned order granting conditional leave to defend must be sustained. Merely because a plaintiff/respondent feels it has a strong case on merits cannot mean that the suit can be filed under Order 37 unless the mandatory requirement of basing the suit on one of the four requirements of Order 37 Rule 1 sub Rule 2 is complied with. If the suit is not maintainable under Order 37, there does not arise an issue of any conditional leave to defend as was granted by the trial Court. (underlining added)
5. Counsel for the plaintiff has failed to point out any written agreement containing the specific amount claimed in the suit and which is the liquidated amount and which is stated in the written agreement. Merely because there is a written agreement way back of the year 2002, cannot mean that the suit amount which is not stated in the said agreement would also become a liquidated amount in the suit filed under Order 37 CPC.
6. During the course of hearing, I put it to the counsel for the plaintiff as to whether in the light of facts which have emerged should the suit at all be pressed as one under Order 37 CPC, and the counsel insists that the suit lies under Order 37 CPC.CS(OS) 2859/2011 Page 7 of 8
In view of above, and considering the fact that unnecessarily judicial time is being wasted by the plaintiff who insists on filing suits under Order 37 CPC which cannot be filed under Order 37 CPC which cannot be filed under Order 37 CPC, I allow the application for leave to defend with costs of ` 25,000/-. The defendants are granted unconditional leave to defend.
7. Let the written statement now be filed within a period of four weeks.
Replication, if any, be filed within four weeks thereafter. Parties to file documents in their power and possession alongwith pleadings.
8. List before the Joint Registrar for admission/denial on 16th November, 2012.
AUGUST 31, 2012 VALMIKI J. MEHTA, J.
ib
CS(OS) 2859/2011 Page 8 of 8