Delhi High Court
Raj Narain And Ors vs Hbn Housing Finance Ltd on 25 September, 2013
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 25th September, 2013
+ RFA 341/2012
RAJ NARAIN AND ORS ..... Appellants
Through: Mr. Amrit Pal Singh, Advocate.
Versus
HBN HOUSING FINANCE LTD ..... Respondent
Through: Mr. Shyam Babu, Advocate.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
RAJIV SAHAI ENDLAW J.
1. The appeal impugns the money decree dated 25 th February, 2012
against the appellants/defendants pursuant to the order of the same day of
dismissal of the application filed by the three appellants/defendants for
leave to defendant Suit No.1405/11/10 filed by the respondent/plaintiff
under Order 37 of the Civil Procedure Code (CPC), 1908.
2. The appeal was accompanied with an application for condonation of
40 days delay in preferring the appeal. Notice of the appeal as well as of the
application for condonation of delay was issued. The counsel for the
respondent/plaintiff on 2nd July, 2013, without filing the reply opposed the
application for condonation of delay. Vide order of the same day, subject to
RFA No.341/2012 Page 1 of 12
the appellants/defendants paying costs of Rs.15,000/- to the counsel for the
respondent/plaintiff as a condition for condonation of delay in preferring the
appeal, the appeal as well as the application for condonation of delay were
listed for hearing.
3. The counsel for the appellants/defendants has today paid the costs
imposed vide order dated 2nd July, 2013 and in view thereof, the delay in
preferring the appeal is condoned. After the counsel for the
appellants/defendants has been heard for about ten minutes, the counsel
appearing for the respondent/plaintiff states that he is not the arguing
counsel and the matter be adjourned. For the failure of the counsel for the
respondent/plaintiff to argue the appeal, the costs of Rs.15,000/- which was
paid today by the counsel for the appellants/defendants to the counsel for
the respondent/plaintiff has been got returned to the counsel for the
appellants/defendants. The counsel for the appellants/defendants has been
heard and the Trial Court record has been perused to see whether any need
for hearing the counsel for the respondent/plaintiff arises.
4. The respondent/plaintiff instituted the suit, from which this appeal
arises, under Order 37 of the CPC, pleading:
(i) that the appellant/defendant No.1 on 25th July, 2006
RFA No.341/2012 Page 2 of 12
approached the respondent/plaintiff for extending loan facility of Rs.5
lakhs and the appellants/defendants No.2 & 3 agreed to be the
guarantors;
(ii) that the respondent/plaintiff after considering the requirement
of the appellant/defendant No.1 sanctioned the loan of Rs.5 lakhs on
27th July, 2006 at fixed rate of interest of 14% per annum for a period
of 180 months repayable in Equitable Monthly Installment (EMI) of
Rs.7,778/- against the property;
(iii) that the three appellants/defendants executed
Sanction/Approval letter dated 27th July, 2006, Home Loan
Agreement dated 25th July, 2006, Power of Attorney dated 27th July,
2006, Guarantee Agreement dated 27 th July, 2006, Demand
Promissory Note and Letter of Continuity dated 27 th July, 2006,
Memorandum of Entry dated 27th June, 2006, Unregistered Equitable
Mortgage in respect of property No.A-2, Khasra No.151, Village-
Mukundpur, Janta Vihar, New Delhi by deposit of title deeds, all in
favour of the respondent/plaintiff;
(iv) that at the request of the appellants/defendants, additional loan
was further extended for a sum of Rs.50,000/- with EMI of Rs.2400/-;
RFA No.341/2012 Page 3 of 12
(v) that thus the total loan sanctioned/granted to the
appellant/defendant No.1 as on 1st August, 2007 was Rs.5,50,000/-;
(vi) that on 20th October, 2008, a legal notice under Section 138 of
the Negotiable Instruments Act, 1881 for cheque dated 1st October,
2008 for Rs.7,778/- and for recovery of overdue EMIs of
Rs.1,06,670/- as on 1st October, 2008 was issued and thereafter a
complaint of offence under Section 138 of Negotiable Instruments
Act also filed but which was dismissed as withdrawn for the reason of
the payment of the dishonoured cheque having been made on 5 th
October, 2009 and which was duly reflected and adjusted in the
statement of account;
(vii) that several other cheques against the EMIs issued by the
appellant/defendant No.1 also bounced;
(viii) that as on 31st January, 2010, an amount of Rs.7,04,542/- was
due against the aforesaid loan, jointly and severally from the
appellants/defendants.
Accordingly, the suit on the basis of the aforesaid documents
for recovery of the said amount was filed.
5. Summons for appearance and thereafter summons for judgment were
RFA No.341/2012 Page 4 of 12
issued and in response whereto the appellants/defendants filed a joint
application for leave to defendant, though accompanied by affidavit of each
of the three appellants/defendants.
6. The counsel for the appellants/defendants states that the contents of
all the three affidavits are the same. The appellants/defendants sought leave
to defend on the grounds:
(a) that though the appellant/defendant No.1 had taken a loan of
Rs.5 lakhs and Rs.50,000/- from the respondent/plaintiff repayable in
180 installments and time for repayment of all of which installments
had not yet expired, yet recovery proceedings had been initiated;
(b) that the appellant/defendant No.1 was regularly paying
installments "except for some installments";
(c) that the appellant/defendant No.1 had paid Rs.2500/- on 28th
August, 2006 and again Rs.2500/- each on 26th September, 2006 and
26th October, 2006 and Rs.3500/- on 7th December, 2006 and again
Rs.3500/- on 28th December, 2006 and seven Installments with the
amount of Rs.7,778/- were paid till August, 2007 and afterwards
again paid Rs.2400/-, Rs.10,000/-, Rs.2400/- and Rs.10,000/- each
upto 20th February, 2009;
RFA No.341/2012 Page 5 of 12
(d) that subsequently also the appellant/defendant No.1 paid
Rs.1000/-, Rs.2400/-, Rs.2400/- till 20th November, 2009 and
Rs.2400/- on 26th April, 2009 and Rs.10,000/- on 3rd May, 2010 "and
many more Installments were paid to the bank which were not
accounted for by the respondent/plaintiff";
(e) that at the time of taking the housing loan, the
appellant/defendant No.1 signed on certain blank papers and at the
time of sanctioning of the loan "half of the amount was taken back by
the agent of the manager of the said bank, on the pretext that the loan
was sanctioned on this condition only. So, the respondent/plaintiff
was left with only Rs.2,50,000/-".
Though certain other pleas were also taken but since the
counsel for the appellants/defendants has not addressed thereon, need
is not felt to reproduce the same here.
7. Needless to state that the respondent/plaintiff filed a reply to the leave
to defend application denying that blank papers were signed or that half of
the loan amount was taken back by the agent of the manager of the
respondent/plaintiff or that the loan was sanctioned on the said condition.
8. Neither any rejoinder to the aforesaid reply was filed by the
RFA No.341/2012 Page 6 of 12
appellants/defendants nor did the counsel for the appellants/defendants
argue on the leave to defend application when the same was listed for
hearing.
9. The learned Additional District Judge (ADJ) has vide the impugned
order/judgment held:
(I) that the execution of the documents on which the suit was
based (and which are found in original on the Trail Court record) had
not been denied by the appellants/defendants;
(II) that the plea of the appellants/defendants of having signed the
documents in blank was not convincing; reliance in this regard is
placed on Vinod Kumar Vs. Keshav Anand 96 (2002) DLT 424;
(III) that the sanctioning and grant of loan of total amount of
Rs.5,50,000/- was not in dispute;
(IV) that the factum of the appellants/defendants No.2 & 3 standing
as guarantors for repayment of the said loan amount was also not in
dispute;
(V) that the plea of the appellants/defendants of having made any
payments and the statement of account filed by the
respondent/plaintiff along with the plaint being not correct, did not
RFA No.341/2012 Page 7 of 12
raise any triable issue.
10. The counsel for the appellants/defendants relying on certain passages
of Santosh Kumar Vs. Bhai Mool Singh 1958 SCR 1211 as reproduced in
Wada Arun Asbestos (P) Ltd. Vs. Gujarat Water Supply & Sewerage
Board AIR 2009 SC 1027 has contended:
(A) that the appellants/defendants in the leave to defend application
were not required to plead any proof and the pleas of the
appellants/defendants in the leave to defend application, of they
having been made to part with half of the loan amount to the agent of
the manager of the respondent/plaintiff as a condition of sanction,
and, of having made certain other payments towards repayment of
loan are such which require an opportunity to be given to the
appellants/defendants to lead evidence;
(B) that only in cross-examination of the appellants/defendants and
their witnesses can it be determined whether the aforesaid pleas of the
appellants/defendants are true or not;
(C) that no harm will be caused to the respondent/plaintiff if the
matter is put down to trial;
(D) that the trial can be made time bound;
RFA No.341/2012 Page 8 of 12
(E) that it is well nigh possible that the appellants/defendants may
prove payment of half of the loan amount to the agent of the manager
of the respondent/plaintiff by some credible evidence, say a video
recording;
(F) that no notice was given by the respondent/plaintiff to the
appellants/defendants prior to the institution of the suit;
(G) that the pleas aforesaid of the appellants/defendants are
plausible.
11. On enquiry, whether the appellants/defendants have made a video
recording, the counsel for the appellants/defendants states that not in the
present case. On further enquiry, whether under any law or agreement
entered into by the appellants/defendants with the respondent/plaintiff, there
was any requirement to give notice, the counsel for the
appellants/defendants admits that though there is no such requirement but
contends that it is always prudent to give a notice prior to the institution of
the suit. On yet further enquiry, as to whether the appellants/defendants
have suffered any prejudice from non-service of such notice inasmuch as the
suit, from which this appeal arises, was filed nearly three years ago in
October, 2010, the counsel for the appellants/defendants states that the
RFA No.341/2012 Page 9 of 12
appellants/defendants could have lodged a complaint against the manager of
the respondent/plaintiff who had taken back 50% of the loan amount. On
yet further enquiry, whether in the last three years any such complaint has
been made, the counsel states that not till now.
12. The plea of the appellants/defendants is of return of half of the loan
amount to the agent of the manager of the respondent/plaintiff. Neither is
the said agent named nor is a date given as to when the said amount was
returned back; there is no plea of how the loan was disbursed; ordinarily, the
loan in such cases is disbursed by making payment directly in the name of
the seller of the house which the loanee is buying with finance from the
institutions as the respondent/plaintiff; there are no particulars whatsoever.
Rather, at this stage, the counsel for the appellants/defendants interjects and
states that the loan was disbursed in four Installments; if that is so, the plea
should have been of payment of 50% of the loan disbursed on different
occasions to the agent of the manager of the respondent/plaintiff. Moreover,
it is not the case of the appellants/defendants that there was any condition in
writing in the documents of such payment. Even if it were to be believed
that the appellants/defendants have paid half of the loan amount to some
agent of some manager of the respondent/plaintiff, though both of them
RFA No.341/2012 Page 10 of 12
are not named, the appellants/defendants, for the reason thereof, would not
be entitled to offset the said amount from the loan repayable to the
respondent/plaintiff. The transaction if any of the appellants/defendants
with the agent of the manager of the respondent/plaintiff is distinct from the
transaction of the appellants/defendants with the respondent/plaintiff. Thus,
no case of putting the suit to trial for this reason is made out.
13. As far as the other plea, of having made certain other payments
towards repayment of loan is concerned, though the respondent/plaintiff
along with the suit filed a statement of account but it is not the plea that the
payments made are not reflected in the statement of account. Rather, no
discrepancy whatsoever in the statement of account on the Trial Court
record is pointed out. Rather, the Trial Court record is found to contain
twelve cheques issued by the appellant/defendant No.1 in favour of the
respondent/plaintiff and which were dishonoured on presentation. Nothing
has been said, whether the payments, particulars of which have been given
in the affidavits accompanying the leave to defend application are the
payments by cheques which have been dishonoured.
14. Not only so, had any payment been made, receipts therefor would
have been issued. No receipts or any other document in support of the
RFA No.341/2012 Page 11 of 12
payments allegedly made have been filed. The counsel for the
appellants/defendants again argues that the filing of the leave to defend
application is not the stage for filing of the documents and the
appellants/defendants upon leave being granted will file the documents in
the form of receipts issued by the respondent/plaintiff of the said payments.
No receipts have been brought to the Court today also.
15. I am unable to agree with the contentions aforesaid of the counsel for
the appellants/defendants. If such unsubstantiated and vague pleas were to
be entitled to grant of leave to defend, I fail to fathom as to in which cases
leave can be refused and if such an interpretation is to be taken, the same
would render the provision of Order 37 of the CPC nugatory.
16. No error is thus found in the order/judgment of the learned ADJ.
17. No other argument has been raised.
18. There is no merit in the appeal, which is dismissed. However, the
counsel for the respondent/plaintiff having not argued, no order as to costs.
Decree sheet be drawn up.
RAJIV SAHAI ENDLAW, J.
SEPTEMBER 25, 2013 bs..
RFA No.341/2012 Page 12 of 12