Delhi District Court
By This Order I Shall Dispose Off The ... vs Arjun Som Dutt & on 19 January, 2018
IN THE COURT OF SH. SANJAY KUMAR: ADDL.
DISTRICT JUDGE, (WEST)-02, TIS HAZARI
COURTS:DELHI.
C.S. No. 105/17/16
New No. 613843/16
1. M/s Tek Ram Sat Narayan, Commission Agent
Shop No. 14, New Grain Market,
Pillukhera, Jind, Haryana
Through Sh. Sawan Kumar
S/o Late Sh. Sat Narain One of the
LR of its proprietor late Sh. Sat Narain
Sole proprietor.
2. Sh. Sawan Kumar S/o Late Sh. Sat Narain
One of LR of late Sh. Sat Narain
Proprietor of M/s Tek Ram Sat Narayan
Commission Agent, Shop No. 14, New Grain
Market, Pillukhera, Jind, Haryana
. . . Plaintif
Versus
Shri Shyamji Agrico Exports Pvt. Ltd.
Through its Directors
Having its registered office at:-
39-B, Tyagi Colony, Rajendra Park, Nangloi,
New Delhi-10041.
Corporate office at:-
Rice Mill Shonkra Road, Taraori,
District Karnal, Haryana
Also at:-
Sh. Surender Kumar, H. NO. 394,
Sector-14, Karnal, Haryana . . . Defendant
ORDER
19.01.2018
1. By this order I shall dispose off the application filed by the defendant under Order 37 Rule 3 Sub-Clause 5 CPC for grant of leave to defend the present suit.
CS No. 105/17/16 (New No.613843/16) 1/15
2. The plaintiff M/s Tek Ram Sat Narayan filed the present suit through the LRs of deceased sole proprietor late Sh. Sat Narayan for recovery of Rs. 98,31,074/- alongwith interest @ 20.4% per annum. The present suit has been filed on the basis of cheques given by the defendant bearing No. 414782 dated 06.1.2015 for Rs. 5,33,691/-, 414784 dated 07.1.2015 for Rs. 1,74,445/-; 414786 dated 1.11.2015 for Rs. 3,10,168/-; 414787 dated 12.1.2015 for Rs. 4,67,836/-; 414762 dated 05.1.2015 for Rs. 5,00,000/-; 414763 dated 10.11.2015 for Rs. 5,00,000/-; 577918 dated 13.1.2015 for Rs. 19,45,142; 577919 dated 14.1.2015 for Rs. 3,36,330/-; 639950 dated 20.02.2016 for Rs. 25,00,000/-; and cheque bearing No. 639951 dated 20.02.2016 for Rs. 14,97,730/- remained unpaid. With the application for leave to defend, the defendant has filed supporting affidavit of Sh. Surender Kumar, Director.
3. It is stated that the defendant is in the business of selling of rice and used to purchase paddy from farmers. The plaintiff No. 2 was commission agent or commercial agent. The plaintiffs have not placed on record any document for the alleged purchase of paddy. It is further stated that on the death of sole proprietor, his LR do not become automatically partner of the old firm and suit has been instituted in old name of the firm of LR as partner.
4. The plaintiff No. 2 has no locus standi to file the present suit. The invoices filed on record are not acknowledged by the defendant. The defendant never agreed to pay interest @ 20.4% per annum.
CS No. 105/17/16 (New No.613843/16) 2/15
5. It is stated that plaintiff No. 2 has cheated and breached the trust of the defendant and became successfully taking the cheques from the Munsi of the defendant. The plaintiff No. 2 has kept the security cheques and failed to return on demand by the Munsi but produced before the bank. The plaintiff No. 2 also taken a cheque of Rs. 25,00,000/- unauthorizedly from the Munsi and misused the same. The defendant has also contesting the false cheque bounce case filed by the plaintiff. It is stated that triable issues pressed in the application, therefore, leave to defend may kindly be granted.
6. Detailed reply filed by the plaintiff. In the preliminary objection it is stated by the plaintiff that the present application is liable to be dismissed as not maintainable in the eyes of law. The defendant/ applicant has been manufactured concocted, false and baseless story. All averments made in the affidavit by the defendant denied by the plaintiff. It is stated that the plaintiff had purchased paddy from the grain market, Pillu Khera, Jind, Haryana and sold to the defendant. The certified copy of Secretary of the Market Committee, Tarawari has filed on record. The defendant had admitted all the invoices which were filed on record. The plaintiff is entitled interest @ 20.04% per annum as per business practice. The defendant issued the cheques to discharge the liability of Rs. 2,91,17,497/- towards the purchase of paddy but now defendant has intention to cheat the plaintiff. It is stated that the defendant had issued all the cheques on account of purchase of paddy but same were not paid. It is stated that the application is liable to be dismissed and suit may be decreed.
CS No. 105/17/16 (New No.613843/16) 3/15
7. I have heard Counsel for the plaintiff Sh. I.S. Deswal, Counsel for the plaintiff. Opportunity granted to defendant to file written arguments and accordingly, defendant has filed written arguments. I have gone through the written arguments filed on behalf of the defendant.
8. The defendant in the written arguments submitted that the plaintiff is claiming the suit amount and interest from the defendant through filing summary suit basing on the following contentions:
(a). That the defendant no.2 is one of the legal heir and the power of attorney holder of other legal heirs of late Sh.Sat Narain, who was the proprietor of M/s. Tek Ram Sat Narayan (a Proprietorship Firm) and competent to file the present suit.
(b). That the plaintiff no.1 has purchased the paddy and sold the same to the defendant as a commission agent.
(c). That the plaintiff based his case on the documents like alleged ledger of the plaintiff (created by the plaintiff), Tax invoice (created by the plaintiff) and some Form LI (which is a photocopy and not acknowledge by the defendant).
(d). That the defendant has issued various cheque in favour of the plaintiff no.1.
(e). That plaintiff is entitled for an interest @ 20.4% as per the alleged tradition and business practice.
CS No. 105/17/16 (New No.613843/16) 4/15 So far as the Point No.1, it is submitted that the plaintiff no.1 (deceased proprietor) and plaintiff no.2 are not entitled to file the present suit against the defendants. The plaintiff no.2 has not filed the Legal Heir certificate with the present suit to show that he has been duly authorized by all the legal heirs of late Sh. Sat Narain (Proprietor of plaintiff no.1) who had allegedly been given the GPA. The plaintiff no.2 has not filed/shown any document that the business of the proprietorship has been devolved on him as one of the partner with all other legal heirs, who take over the business of the proprietorship business or alternatively has also not proved that he is the legal representative of the proprietorship business on the basis of any Will or any other documents. Ld. Counsel for the defendant referred judgments of 'Raghu Lakshminarayanan v. Fine Tubes' (2007) 5 SCC 103 and 'M/s. Ashok Transport Agency v. Awadhesh Kumar and another' (1998) 5 SCC 567.
So far as the Point No.2, it is submitted that the plaintiff has not filed any documents with the present suit to show that he has purchased the paddy from the farmers. The plaintiff has not filed any document of sale of paddy which has been countered signed by the defendant. The photocopy of the some L1 form CS No. 105/17/16 (New No.613843/16) 5/15 has no legal sanctity and more over there are gaps on the said documents which have not been duly filled. This is not a reliable document and it needs trial. As per his admission, the plaintiff is only a commission agent and not the principal for which it cannot file the present suit against the defendant.
So far as the Point No. 3, it is submitted that it is a trite law that the Summary suit based on the long ledger account is not maintainable. He relied on judgments delivered by Hon'ble Delhi High Court : (i). 'Krishan Kumar Wadhwa & Ors. vs. Arjun Som Dutt & Ors.' in CS (OS) No. 3316/2015 dated 04.11.2015; (ii). 'Vinod Kumar Abbey vs. Mountain Fall India Pvt. Ltd. & Ors.' in CS (OS) No. 1369/2015 dated 16.11.2015 and (iii). 'GE Capital Services India vs. Dr. K.M. Veerappa Reddy & Ors.' in CS (OS) No. 2552/2011 dated 16.10.2015.
So far as the Point No. 4, it is submitted that the cheque amount and the cheque has been vehemently disputed by the defendant. It is the contention of the defendant that amount has already been paid and the security cheques have been misused by the plaintiff. It is a trite law that though presumptions of execution of the cheque arises under Section 138 & 139 of the NI Act buy the same is rebuttable. Ld. Counsel relied on judgment titled CS No. 105/17/16 (New No.613843/16) 6/15 'International Computers.... vs. Home Computers Services (P) Ltd.' 68 (1997) DLT 407. So far as the Point No. 5, it is submitted that the summary suit of the plaintiff is totally based on Order XXXVII Rule (2) (a) and not on 2 (b). There is no written contract between the plaintiff and the defendant that the rate of interest shall be charged @ 20.4% per annum. The whole claim of the plaintiff is falsified as the same has been calculated keeping the element and component of interest @ 20.4% per annum.
It is submitted that it is clear that the defendant has raised triable issue and it should be granted unconditional leave to defend when the suit is filed for such colossal amount. Ld. Counsel also relied on judgment 'Smt. Kiranmoyee Dassi vs. Dr. J. Chhatterjee' AIR 1949 Cal 479.
It is submitted that if the defendant raised a triable issue indicating that he has a fair or bonafide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say although the affidavit does not positively and immediately made it clear that he has a defence, yet, shows such a stage of facts as leads to the inference CS No. 105/17/16 (New No.613843/16) 7/15 that at the trial of the action he may be able to establish a defence to the plaintiff's claim, the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the court may in its discretion impose conditions as to the time or mode of trial but not as to payment into court or furnishing security.
Ld. Counsel submitted that the law as enunciated above, has been followed by the courts in several cases: Santosh Kumar vs. Bhai Mool Singh, AIR 1958 SC 321; Milkhiram (India) (P) Ltd. vs. Chamanlal Bros, AIR 1965 SC 1698;
Mechelec Engineers & Manufacturers vs. Basic Equipment Corpn., (1976) 4 SCC 687;
and Sunil Enterprises & Anr. vs. SBI
commercial & International Bank Ltd.
(1998) 5 SCC 354.
9. In order to to appreciate the contentions of both the parties, let us peruse the principle of law for grant of leave to defend as laid down by Hon'ble Apex Court in the recent judgment IDBI Trusteeship Services Limited vs. Hubtown Limited, (2017) I SCC 568. It was held as under:
"14. We may hasten to add that Mechelec case has since been followed in a series of judgments of this court - MCD v. Suresh Chandra Jaipuria at para 11; Sunil Enterprises v. SBI Commercial & International Bank Ltd. At para 4; State Bank of Saurashtra v. Ashit Shipping Services (P) Ltd. At para 10; Uma Shankar Kamal Narain v. M.D. Overseas Ltd. At paras 8 and 9; SIFY Ltd. v. First Flight Couriers CS No. 105/17/16 (New No.613843/16) 8/15 Ltd. At para 10; Wada Arun Asbestos (P) Ltd. v. Gujarat Water Supply & Sewerage Board at para 19; R. Saravana Prabhu v. Videocon Leasing & Industrial Finance Ltd. At para 4; and State Bank of Hyderabad v. Rabo Bank at para 16.
15. However, there are two judgments of this Court which directly deal with the amendment made to Order 37 and the efect thereof on the ration contained in Mechelec case:
15.1. In Defiance Knitting Industries (P) Ltd. v.
Jay Arts, this Court, after setting out the amended Order 37 and after referring to Mechelec case, laid down the following principles: (Jay Arts case, SCC po. 31, para13) "While giving leave to defend the suit the court shall observe the following principles:
(a) If the court is of the opinion that the case raises a triable issue then leave to defend should ordinarily be granted unconditionally.
See Milkhiram (India) (P) Ltd. v. Chaman Bros. The question whether the defence raises a triable issue or not has to be ascertained by the court from the pleadings before it and the affidavits of parties.
(b) If 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 it may refuse leave to defend altogether. Kiranmoyee Dassi v. J. Chatterjee (noted and approved in Mechelec case).
(c) In cases where the court entertains a genuine doubt on the question as to whether the defence is genuine or sham or whether it raises a triable issue or not, the court may impose conditions in granting leave to defend."
15.2. In Southern Sales & Services v.
Sauermilch Design & Handels SmbH, this Court was squarely asked to render its decision on whether the judgment in Mechelec case was to a large extent rendered inefective in view of CS No. 105/17/16 (New No.613843/16) 9/15 the amended Order 37. this Court found:
(sauermilch case, SCC p. 462, para 15) "15.Having considered the submissions made on behalf of the respective parties and the decisions cited, there appears to be force in Mr Sharma's submissions regarding the object intended to be achieved by the introduction of sub-rules (4), (5) and (6) in rule 3, Order 37 of the code. Whereas in the unamended provisions of Rule 3, there was no compulsion for making any deposit as a condition precedent to grant of leave to defend a suit by virtue of the second proviso to sub-rule (5), the said provision was altered to the extent that the depot of any admitted amount is now a condition precedent for grant of leave to defend a suit filed under Order 37 of the code.
A distinction has been made in respect of any part of the claim, which ia admitted. The second proviso to sub-rule (5) of Rule 3 makes it very clear that leave to defend a suit shall not be granted unless the amount as admitted to be due by the defendant is deposited in court".
16. It is thus clear that Order 37 has sufered a change in 1976, and that change has made a diference in the law laid down. First and foremost, it is important to remember that Milkhiram case is a direct authority on the amended Order 37 provision, as the amended provision in Order 37 Rule 3 is the same as the Bombay amendment which this Court was considering in the aforesaid judgment. We must hasten to add that the two provisos to sub-rule (3) were not, however, there in the Bombay amendment. These are new, and the efect to be given to them is something that we will have to decide. The position in law now is that the trial Judge is vested with a discretion which has to result injustice being done on the facts of each case. But Justice, like Equality, another cardinal constitutional value, on the one hand, and arbitrariness on the other, are sworn enemies. The discretion that a Judge exercises under Order 37 to refuse leave to defend or to grant conditional or unconditional leave to defend is a discretion akin to Joseph's multi-coloured coat - a large number of baffling CS No. 105/17/16 (New No.613843/16) 10/15 alternatives present themselves. The life of the law not being logic but the experience of the trial Judge, is what comes to the rescue in these cases; but at the same time informed by guidelines or principles that we propose to lay down to obviate exercise of judicial discretion in an arbitrary manner. At one end of the spectrum is unconditional leave to defend, granted in all cases which present a substantial defence. At the other end of the spectrum are frivolous or vexatious defences, leading to refusal of leave to defend. In between these two extremes are various kinds of defences raised which yield conditional leave to defend in most cases. It is these defences that have to be guided by board principles which are ultimately applied by the trial Judge so that justice is done on the facts of each given case.
17. Accordingly, the principles stated in para 8 of Mechelec case will now stand superseded, given the amendment of Order 37 Rule 3 and the binding decision of four Judges in Milkhiram case as follows:
17.1 If the defendant satisfies the court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintif is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit.
17.2 If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintif is not entitled to sign judgment, and the defendant is ordinarily entitled to unconditional leave to defend.
17.3 Even if the defendant raises triable issues, if a doubt is left with the trial Judge about the defendant's good faith, or the genuineness of the triable issues, the trial Judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated.
Care must also be taken to see that such triable issues are not shut out by unduly severe orders CS No. 105/17/16 (New No.613843/16) 11/15 as to deposit or security.
17.4 If the defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires.
17.5 If the defendant has no substantial defence and/or raise no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintif is entitled to judgment forthwith.
17.6 If any part of the amount claimed by the plaintif is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court."
10. Now coming to the case in hand. The first contention raised by the defendant is that present suit is not filed by authorized legal heir of sole proprietor of late Sat Naryan of plaintiff M/s. Tek Ram Sat Narayan Commission Agent. There is specific pleading in the plaint that Sat Narayan died on 10.07.2016 leaving behind Sawan Kumar and Sohan, the two sons and Smt. Rani Devi, the wife. Sh. Sawan Kumar is well conversant with the facts of the case and is aware of day to day affairs including transaction of the present suit and there is Power of Attorney in his favour. In my opinion, Sh. Sawan Kumar one of the LRs is competent to institute the present suit against the defendant. I find no merit in the contention of the defendant. The Judgments relied upon in 'Raghu Lakshminarayanan' (supra) and 'M/s. Ashok CS No. 105/17/16 (New No.613843/16) 12/15 Transport Agency' (supra) are distinguishable.
11. The second contention raised by the defendant is that no document has been filed by the plaintiff for purchase of paddy and L1 document has no legal sanctity. I have gone through the record. All transactions are supported by specific bills and the books of accounts maintained in day to day course of business. The statement of account has also been filed on record duly supported with certificate under Section 65-B of Indian Evidence Act. The defendant has not disputed any of the transactions specifically. Therefore, there is no substance in this contention.
12. Now coming to the third contention that present suit is based on ledger account. It is misreading by the defendant. The plaintiff has specifically pleaded about the dishonour of cheques issued by the defendant and original cheques have been filed on record, which were remained unpaid when present to the Bank. So present suit is based on the cheques issued by the defendant which were never encashed and remained unpaid. I find no merit in this contention. The Judgments in cases of 'Krishan Kumar Wadhwa & Ors.'; 'Vinod Kumar Abbey and 'GE Capital Services India (supra) are distinguishable in the facts of the case.
13. Now coming to the fourth contention. The cheque amount has been disputed and a defence is taken that defendant has already paid the amount due and these are security cheques. However, there is no iota of CS No. 105/17/16 (New No.613843/16) 13/15 documents to support this contention. The present suit is based upon unpaid cheques as detailed hereinabove. The Judgment relied by the defendant in the case of 'International Computers.... vs. Home Computers Services (P) Ltd. (supra) is distinguishable in the present case.
14. Now coming to the fifth contention that there is no written agreement to charge 20.4%. The plaintiff has specifically issued legal notice to the defendant wherein rate of interest demanded is 20.4% per annum. There is nothing on record that legal notice replied by the defendant dispute the rate of interest. It is not the plea which require triable issue. It is pertinent to mention here that defendant has put up a defence that plaintiff had taken security cheques from the Mosi of the defendant probably in connivance and it was lateron realized by the defendant. In substance he has not disputed issuance of cheques to the plaintiff. However, a vague and sham defence has been put up by naming Mosi. No full particulars of said Mosi have been furnished by the defendant. In my opinion, all the contentions taken by the defendant do not raise any triable issue. The defendant has not raised any plea with regard to the issuance of cheques and on presentation in the bank, said cheques remained unpaid. Not only this, despite legal notice there is no response by the defendant. Applying the principles of law laid down in the case of IDBI Trusteeship Services Limited vs. Hubtown Limited (supra), no substantial contention has been raised by the defendant. The defence intended to be put up by the defendant put up by the CS No. 105/17/16 (New No.613843/16) 14/15 defendant is frivolous, vexatious and sham. The contentions put up by the defendant do not raise any triable issue.
15. On the basis of above observations and discussions, the application for leave to defend is dismissed. The suit of the plaintiff is decreed for a sum of Rs.98,31,074/- (Rupees ninety eight lacs thirty one thousand and seventy four only) with interest at the rate of 20.4% per annum and the costs equivalent to the Court fees paid by the plaintiff. Decree sheet be prepared accordingly.
File be consigned to Record Room.
Announced in the open court on 19th day of January, 2018 (Sanjay Kumar) Addl. District Judge-02 (West) Tis Hazari Courts,Delhi CS No. 105/17/16 (New No.613843/16) 15/15