Delhi District Court
Juhi Matreja vs M/S S. B. Packaging Ltd. & Anr on 17 April, 2013
1
IN THE COURT OF SHRI MAN MOHAN SHARMA
ADDITIONAL DISTRICT JUDGE (CENTRAL) 1
TIS HAZARI COURTS, DELHI.
CS No. 42/2011
Juhi Matreja
...Plaintiff
Versus
M/s S. B. Packaging Ltd. & Anr.
...Defendant
Application for Leave to Defend
ORDER
In this suit for recovery of Rs. 6,40,000/ instituted by the plaintiff under summary procedure an application of leave to defend of defendant has been presented by the defendants, which is being considered vide this order.
2. I have heard the arguments as advanced by Sh.Maqsood Hussain, ld. counsel for plaintiff and Sh. Narander Kalra, ld. counsel for the defendants.
3. Sh. Narander Kalra, ld. counsel for defendants has submitted that the plaintiff was the erstwhile employee of the company viz. the defendant no.1. The defendant no. 1 being a company is governed by CS 42/2011 Juhi Materja vs. S. B. Packaging Ltd.& Anr. Page 1 of 8 2 its rule and regulations. There can be no question of extending any friendly loan to defendant no.1 or execution of any documents as alleged in the plaint. The position is that a person who is acting on behalf of the company must be so authorized by a resolution passed by the Board which is conspicuous by absence in the present case. Therefore, the documents alleged to have been executed for and on behalf of the defendant no. 1 are not binding upon it, even if executed by defendant no. 2 albeit the execution of documents as such has been denied by defendants.
4. It has further been submitted that in fact, the plaint shows the earlier rate of interest to be 1.8% per mensum and which is later on stated to have been risen to @ 24% per annum w.e.f. 01.12.2005. No such written agreement is on record or pleaded. Surprisingly, it is stated that the interest was paid in cash, however no receipt has been propounded. A company cannot be supposed to be paying in cash. In fact, the plea of cash payment has been made only with a purpose to bring the suit within limitation which is otherwise barred by time.
5. Ld. Counsel for the defendants further submits that the figures as in para 7 of the plaint as regards the interest does not tally with the foregoing averments of the plaint. The amount mentioned in para 8, 13 and title of the suit as well as prayer clause A is shifting between Rs. CS 42/2011 Juhi Materja vs. S. B. Packaging Ltd.& Anr. Page 2 of 8 3 40,000/ to Rs. 1,40,000/ without any explanation. It is prayed that the defendants are entitled to the unconditional leave to defend.
6. Sh. Maqsud Hussain, ld. counsel for the plaintiff submits that the defendant no. 2 is the signatory of the Receipt and the Promissory Note, which is subject matter of the present suit. The defence taken by defendant no. 2 is hit by Section 92 of the Indian Evidence Act as the defendant no. 2 has not denied his signatures on the above documents. The defendant has not disclosed as to for what purpose the cheque in question (i.e. cheque mentioned in para 3 of the plaint viz. by which the transaction in loan has been made in March 2003) had been given to defendants. The defendant has also not mentioned as to for what purpose the cheque of Rs.8980/ was issued by it to plaintiff in the month of May, 2006. The notice sent by registered post has been deliberately avoided by the defendants, though it was sent at the correct address by the plaintiff. Para 8 clarifies the position of amount of Rs. 40,000/ and Rs.1,40,000 and wherever the amount of Rs. 40,000/ has been stated it is due to a typographical error. It is prayed that no triable issues have been made in the leave to defend application and it be dismissed and the suit decreed.
7. I have considered the rival submissions and the material on record.
CS 42/2011 Juhi Materja vs. S. B. Packaging Ltd.& Anr. Page 3 of 8 4
8. In a summary suit, contest to the suit is not a matter of right. It has to be sought by the defendant by pleading the grounds on which it is so sought. The Court on consideration of the facts set up in the leave to defend application may grant the same unconditionally/conditionally or may refuse the same.
9. The basic criteria for allowing such an application is that if the defendant by his leave to contest application is able to show certain facts which if proved can nonsuit the plaintiff, he is entitled to leave to defend. At this stage, the truth or otherwise of the facts is not to be ventured into. However the facts as set up in the leave to defend application are not to be read out of context without reference to the facts pleaded in the plaint. The facts on which the leave to defend has been claimed are to be weighed and not to be counted.
10. The defendants have denied the taking of the loan but has not denied the factum of cheque no.535712 dated 21.03.2003. There is complete silence on the part of the defendants on this aspect. It has also not stated on what other count the said cheque has been received by the defendant no. 1, if the same has been in the transaction of loan as propounded by the plaintiff.
11. There is abject silence on the part of the defendants as they have not about the payment made by it in the sum of Rs.8,980/ through a CS 42/2011 Juhi Materja vs. S. B. Packaging Ltd.& Anr. Page 4 of 8 5 cheque to the plaintiff which the plaintiff has claimed on account of payment of interest.
12. Though, it has propounded in the leave to defend application that the plaintiff was the employee of the defendant no. 1 from May, 2001 to June, 2006. This fact has not been taken further. In fact a blank has been after making this particular submission. Thus it is a bald fact. It is not the case of the defendant no.1 that it has not received any payment of Rs.5,00,000/ through cheque no. 535712 dated 21.03.2003 and there has been some manipulation or forgery on the part of the plaintiff being an employee of the defendant no. 1 by abuse of the said position.
13. The defendant no.1 is a body corporate which has no living existence. It has to necessarily work through some human agency. As far as the Memorandum of Association of a company is concerned, the same is in the public domain. However the same is not the case as to how the internal affairs of a company are carried out. Such acts are done behind closed doors of a company and are not in the public domain. Thus the doctrine of indoor management is part and parcel of corporate law jurisprudence. Whether the defendant no.2 was authorized to act on behalf of defendant no.1 i.e. the company is a question within the special knowledge of defendant nos. 1 and 2. It is CS 42/2011 Juhi Materja vs. S. B. Packaging Ltd.& Anr. Page 5 of 8 6 to be seen whether the transaction in question is vitiated or not by the absence of any resolution authorising defendant no.2 to act for and on behalf of defendant no.1. A question of lifting of corporate veil may also arise. Thus this aspect may raise a technical issue.
14. In so many words, the defendant no.2 has not denied his signatures on the promissory note but has made allegations of forgery or alterations in the promissory note. It is also stated in the leave to defend application that the writing on the Promissory Note has not been filled in on behalf of defendant no.1.
15. Whether the suit is barred by limitation is a question of fact or a mixed question of law and facts.
16. On the other hand, no reply to the legal demand notice has been propounded and the address of defendants on the postal covers has not been denied. The leave to defend application is silent on this aspect.
17. Thus if the facts narrated in the leave to defend application are appreciated in totality and considered visàvis the averments of the plaint in a meaningful manner what emerges is that the defendants have raised technical aspects of limitation or authority to execute the documents like Promissory Note or the Receipt on behalf of the defendant no. 1 by the defendant no. 1. Ostensibly, the transaction of passing of money from the plaintiff to the defendant no. 1 has not been CS 42/2011 Juhi Materja vs. S. B. Packaging Ltd.& Anr. Page 6 of 8 7 disputed. The averments regarding the plaintiff being an exemployee of the defendant or documents being not filled in by the defendant no. 1 are with loose ends and bald facts.
18. Thus taking a collective assessment of the facts pleaded in the leave to defend application, no case for grant of unconditional leave to defend is made out. However it cannot ruledout that the technical defences raised by the defendants may ultimately succeed if the defendants are given a right to contest the suit.
19. Under these facts and circumstances, at the most the defendants have been able to make a case of grant of conditional leave to defend.
20. It is the duty of the Court to balance the rights of both the parties before it. The instant suit was instituted on 02.08.2007 and more than six years have elapsed thereafter. The defendants had earlier filed an application for stay of proceedings under Section 22 of the SICA, which has been dismissed on 29.10.2011 vide a detailed order. Thereafter the defendants had filed a review against the same, which was dismissed on 02.07.2012. Thus the case albeit instituted as a summary suit has attained an age of 6 years plus.
21. Taking a collective and overall assessment of the averments made in leave to defend application in view of the above discussion the application of defendants for leave to defend is allowed, subject to CS 42/2011 Juhi Materja vs. S. B. Packaging Ltd.& Anr. Page 7 of 8 8 defendants depositing a sum of Rs.5,00,000/ (Rupees Five Lakhs Only) within 30 (thirty) days of the passing of this order by way of an FDR in the name of the Court and the said FDR having maturity period of 2 years. The same would remain on record till and its disposal and its release to the entitled party shall be subject to the final outcome of the suit.
22. The above terms shall be condition precedent to the grant of leave to defend to the defendants.
23. Nothing stated herein shall tantamount to an expression of opinion on the merits of the case.
24. The leave to defend application stands disposed of in these terms.
Announced in the Open Court On this 17th day of April 2013 (MAN MOHAN SHARMA) ADJ (Central)1, Delhi CS 42/2011 Juhi Materja vs. S. B. Packaging Ltd.& Anr. Page 8 of 8