Karnataka High Court
Metro Cash And Carry India Pvt Ltd vs Arambhan Hospitality Services Ltd on 7 April, 2022
C.R.P.No.123/2021
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 7TH DAY OF APRIL 2022
BEFORE
THE HON'BLE MRS. JUSTICE K.S.MUDAGAL R
CIVIL REVISION PETITION NO.123/2021 (IO)
BETWEEN:
METRO CASH & CARRY INDIA PVT. LTD.
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT
SY. NO.26/3, A BLOCK, WARD NO.9
INDUSTRIAL SUBURBS
SUBRAMANYANAGAR, BENGALURU - 560 005
RE.BY ITS HEAD FINANCE & CONTROLLING
MR.BADARI PRASAD T.S. ...PETITIONER
(BY SRI MRINAL SHANKAR, ADVOCATE FOR
SRI DHARMENDRA CHATUR, ADVOCATE)
AND:
ARAMBHAN HOSPITALITY SERVICES LTD.
(FORMERLY KNOWN AS CAWASJI BEHRAMJI
CATERING SERVICES LTD.)
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT
NO.201/202 BENSTON, B WING
SHERLY RAJAN ROAD
BANDRA (W), MUMBAI - 400 050
ALSO AT NO.17, BAHUBALI BUILDING
CAWASJI PATEL STREET, FORT
MUMBAI - 400 001
REP.BY ITS MANAGING DIRECTOR ...RESPONDENT
(BY SRI SIDDHARTH B MUCHANDI, ADVOCATE
SRI RAMESH R.M., ADVOCATE &
SRI HITESH D, ADVOCATE (ABSENT))
C.R.P.No.123/2021
2
THIS CIVIL REVISION PETITION IS FILED UNDER
SECTION 115 OF CPC PRAYING TO SET ASIDE THE ORDER
DATED 06.04.2021 PASSED BY THE XX ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE, BENGALURU ON I.A.II AND I.A.III IN
O.S.NO.3213/2017 ALLOWING I.A.NO.II FILED UNDER ORDER
XXXVII RULE 3 (5) READ WITH SECTION 151 OF CPC AND
I.A.NO.III FILED UNDER ORDER XXXVII R/W SECTION 151 OF
CPC
THIS CIVIL REVISION PETITION COMING ON FOR
FURTHER HEARING THIS DAY, THE COURT THROUGH VIDEO
CONFERENCE MADE THE FOLLOWING:
ORDER
None appears for the respondent. Though learned Counsel for the respondent filed retirement memo, the postal acknowledgment in proof of service of notice of retirement is not furnished. Therefore retirement memo is rejected.
2. Heard the petitioner's Counsel.
3. Aggrieved by the order of the trial Court granting leave to the respondent to defend the suit as regular suit, the plaintiff in OS No.3213/2017 on the file of XX-Additional City Civil and Sessions Judge, Bengaluru has preferred this petition.
4. The petitioner filed O.S.No.3213/2017 against the respondent as a summary suit seeking recovery of Rs.49,56,840/-. For the purpose of convenience, the C.R.P.No.123/2021 3 parties will be referred to henceforth according to their ranks before the trial Court.
5. The plaintiff's case in brief is as follows:
The plaintiff and the defendant had regular business transactions towards supply of goods to the defendant.
The supply of goods was based on running Bills of exchange by way of Invoices. The plaintiff supplied goods worth Rs.38,37,952/- to the defendant under 106 Invoices between 28.05.2015 to 01.06.2015 and those Bills were outstanding. Therefore the plaintiff claimed Rs.37,77,606/-
towards principal due and Rs.11,79,234/- as interest on the same.
6. The defendant on its appearance filed I.A.No.2 under Order XXXVII Rule 3(5) read with Section 151 of CPC seeking leave to defend the suit and I.A.No.3 under Order XXXVII read with Section 151 of CPC to try the suit as a regular suit.
7. In the affidavits filed in support of the said applications, the defendant claimed that the transactions were based on several documents which were not C.R.P.No.123/2021 4 produced by the plaintiff and the suit does not lie in the category of the summary suits.
8. The defendant in its additional affidavit admitted the supply of the goods under the Bills of exchange and claimed that out of the claim of the plaintiff, it has paid Rs.1,87,295/-. The defendant also produced the Bank statement to support its contention of payment of Rs.1,87,295/-. The defendant claimed that E-mail produced by the plaintiff was created one and plaintiff is required to produce the original document etc.,
9. The plaintiff contested the applications. The trial court on hearing the parties by the impugned order allowed the applications and treated the suit as a regular suit and granted leave to the defendant to defend the suit by filing the written statement.
10. The trial Court arrived at such conclusion on the following two grounds:
(i) The summary procedure in trial of the suit is permissible only in the case involving Negotiable Instruments and Contracts.C.R.P.No.123/2021 5
(ii) The case of the plaintiff is based on Invoices.
The invoices are not contract.
11. Sri.Mrinal Shankar, learned Counsel for the plaintiff assails the impugned order on the ground that Invoices are contracts/bills of exchange and the trial Court overlooked the admission of the defendant in the affidavit. He further submits that in granting unconditional leave, the trial Court has acted contrary to Order XXXVII Rule 3(5) CPC.
12. In support of his submission he relies upon the following judgments:
i. Circutor Energy Management India Pvt.Ltd V.s Cipsa Tec India Pvt.Ltd and another1 ii. IDBI Trusteeship Services Limited V.s Hubtown Limited2 iii. M/s Panjab Pen House V.s M/s Samrat Bicycle Ltd3 iv. Bharat Forge Ltd V.s Onil Gulati4 v. Arambhan Hospitality Services Limited V.s Metro Cash & Carry India Private Limited5 1 CRP No.98/2015 2 (2017) 1 SCC 568 3 ILR 1990 (2) 549 4 2005 (83) DRJ 140 5 W.P.No.5164/2020 (GM-CPC) C.R.P.No.123/2021 6
13. The trial Court itself extracted the order XXXVII Rule 1(2) of CPC which reads as follows:
"(2) Subject to the provisions of sub-rule (1), the Order applies to the following classes of suits, namely:-
(a) suits upon bills of exchange, hundies and Promissory notes:
(b) suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising,-
(i) on a written contract, or
(ii) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty;
(iii) on a guarantee, Where the claim against the principal is in respect of a debt or liquidated demand only; or
(iv) suit for recovery of receivables instituted by any assignee of a receivable".
14. The reading of the above provision shows that summary procedure under Order XXXVII Rule 1 of CPC applies to the suits based on bills of exchange, promissory notes or written contracts. Order XXXVII Rule 2(b)(i) of CPC specifically deals with the case involving the written contract.
15. The defendant in its affidavit filed in support of I.A.Nos.2 and 3 as well as additional affidavit C.R.P.No.123/2021 7 unequivocally admitted that it bought the Goods from the plaintiff on the sales Bills discounting facility based on the invoices of the parties. The defendant itself admitted in the affidavit that out of the amount covering such invoices, Rs.1,87,295/- was paid to the plaintiff. Therefore there was a clear admission that the transactions were based on the Invoices.
16. In the judgments in M/S Panjab Pen House and Bharat Forge Ltd's cases referred to supra it was held that the invoices containing the terms of supply, the other requisite terms and price for effecting the sale of goods are the written contracts between the parties. Therefore invoices are the documents of the contract.
17. In this case, the defendant itself admitted the terms and conditions of invoices, supply of goods and payment of part consideration. Therefore those documents attracted the terms "written contract" contemplated in Order XXXVII Rule 1(2)(b)(i) of CPC. Therefore the finding of the trial Court that the invoice is neither bills of exchange nor contract, therefore the suit does not fall under the class of summary of the suit is erroneous. C.R.P.No.123/2021 8
18. The grievance of the plaintiff is that such leave should not have been unconditional, that too in the light of the admission of the defendant in the additional affidavit.
19. Order XXXVII Rule 3(5) of CPC which is relevant for the purpose of this case reads as follows:
3. Procedure for the appearance of defendant.- .........................................................
(5) The defendant may, at any time within ten days from the service of such summons for judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just:
Provided that leave to defend shall not be refused unless 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:
Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court.
20. The second proviso to Order XXXVII Rule 3(5) of CPC says that, if the defendant admits the claim, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in C.R.P.No.123/2021 9 Court. Whether there is such admission on the part of the defendant is the question. In that regard, learned Counsel for the plaintiff relies on para Nos.11 and 14 of the affidavit of the defendant filed in support of I.A.No.2 and para Nos.6 and 7 of the additional affidavit filed by the defendant on 11.07.2018.
21. In para Nos.11 and 14 of the affidavit filed in support of I.A.No.2, the defendant admitted that there was supply of goods based on the invoices raised by the defendant. The material admission with regard to the suit claim is in para Nos.6 and 7 of the additional affidavit which reads as follows:
6. I state that the plaintiff has claimed a sum of Rs.37,77,606/- on BOE dating from 28/05/14 to 01/06/15 out of which the defendant has paid Rs.1,87,295/- but the same has not been shown by the plaintiff. A statement showing the details of claim and payment made in this regard is herewith produced as Document No.1.
7. Thus, a total of Rs.1,87,295/- (Rupees One Lakh Eighty Seven Thousand Two Hundred and Ninety Five only) has been paid by the defendant and the plaintiff has not stated the said facts before this Hon'ble Court.
The bank statements evidencing the payments are herewith produced as Document.No.2. The amounts claimed by the plaintiff and the payments made by defendant is shown in a tabular form as below:
Sl. Period Amount claimed Amount paid No. by plaintiff by defendant 1 28/05/14 Rs.37,77,606/- Rs.1,87,295/-
to 01/06/15 C.R.P.No.123/2021 10
22. Reading of the above paragraph shows that the defendant admitted the transaction and claimed to have paid part of the amount out of the suit claim. The plaintiff filed another suit before the Commercial Court against the defendant in COM.O.S.No.3211/2017. In that case also similar application was filed. Treating such statements as admission, the trial Court granted leave to defend the case subject to deposit of a sum of Rs.3 Crores where the suit claim was Rs.6,40,97,104/-.
23. The defendant challenged that order before this Court in W.P.No.5164/2020 (GM-CPC). This Court by order dated 28.04.2020 dismissed the Writ Petition. The defendant challenged that order before Hon'ble Supreme Court in Spl. Leave Petition(C) No.8115/2020. The Hon'ble Supreme Court by the order dated 15.07.2020 dismissed the said Spl. Leave Petition.
24. The Hon'ble Supreme Court In IDBI Trusteeship Services Limited case referred to supra in para No.17.6 of the judgment held that if any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, C.R.P.No.123/2021 11 shall not be granted unless the amount so admitted to be due is deposited by the defendant in the Court is triable issue.
25. In the light of the above facts and circumstance and judgments of the Hon'ble Supreme Court, the trial Court committed jurisdictional error in granting leave unconditionally. Therefore the petition is partly allowed.
I.A.Nos.2 and 3 filed by the defendant/respondent to grant leave to defend the suit as regular suit is granted subject to deposit of Rs.3,00,000/- before the trial Court within four months from the date of receipt of copy of this order.
Sd/-
JUDGE PKN