Gujarat High Court
Posco Poggenamp Electrical Steel Pvt. ... vs Tbea Energy (India) Pvt. Ltd on 27 April, 2023
Author: Ashutosh Shastri
Bench: Ashutosh Shastri
C/SCA/301/2023 JUDGMENT DATED: 27/04/2023
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 301 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 1034 of 2023
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI
and
HONOURABLE MR. JUSTICE J. C. DOSHI
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1 Whether Reporters of Local Papers may be allowed YES
to see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy NO
of the judgment ?
4 Whether this case involves a substantial question NO
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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POSCO POGGENAMP ELECTRICAL STEEL PVT. LTD.
Versus
TBEA ENERGY (INDIA) PVT. LTD.
==========================================================
Appearance:
MR DEVEN PARIKH, SR. ADVOCATE for GANDHI LAW
ASSOCIATES(12275) for the Petitioner(s) No. 1
MR MEHUL S. SHAH, SR. ADVOCATE with UTSAV P PARIKH(8223) for the
Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE ASHUTOSH SHASTRI
and
HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 27/04/2023
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE J. C. DOSHI)
1. This common judgment governs the disposal of above Page 1 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 captioned Special Civil Applications as both the Special Civil Applications arise from selfsame order passed below Exh.20 passed in Commercial Civil Suit No.3 of 2021, whereby the learned Principal Senior Civil Judge, Karjan partly allowed the application for leave to defend filed by the Posco Poggenamp Electrical Steel Pvt. Ltd. (in short "Posco") and permitted to contest the civil suit on condition to deposit Rs.3 crore within a period of 8 weeks from the date of the order.
2. At the request of learned advocates for both the sides and in the facts and circumstances of the case, both the petitions are taken up for hearing.
3. The facts which is necessary to decide and dispose of both the petitions can be tersely narrated thus:-
3.1 TBEA Energy (India) Pvt. Ltd. (in short "TBEA"), the company registered under the Companies Act, 1958 engaged in the business of manufacturing transformer, lamination etc. It has commercial relationship with Posco. TBEA provides services to the Posco whenever Posco sells the steel to the TBEA. Posco provided services to the TBEA when TBEA sells steel to the Posco , the latter would offer its job work services and then resell the same material to the TBEA by adding margin of service charges. As some differences and disputes in business transaction arise between the Posco and TBEA, TBEA filed Commercial Civil Suit No.3 of 2021 before the learned Principal Senior Civil Judge, Karjan under Order 37 of the Civil Procedure Code, 1908 praying for a decree to the tune of Rs.35,59,47,194/-Page 2 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023
C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 against the Posco. 3.2 As per the provisions of Order 37 of the Civil Procedure
Code, 1908, summons was served to the Posco, consequently, it entered its appearance, TBEA filed summons for judgment, in response to the summons for judgment, the Posco filed application for leave to defend, which came to be exhibited as Exh.20. The learned trial Court having heard learned advocates for both the sides passed an order below application Exh.20 and permitted the Posco to raise defence albeit with the condition of depositing Rs.3 crore.
3.3 The Posco is aggrieved by the order of passing conditional leave to the defendant, whereas the TBEA is aggrieved by the order that in a conditional leave, the learned trial Court ordered to pay insufficient amount as a condition precedent for entering into the defence without considering the admitted amount, filed above captioned Special Civil Application.
4. The Posco filed Special Civil Application No.301 of 2023 under Article 227 of the Constitution of India seeking following relief:-
"(A) Your Lordship may be pleased to issue writ of certiorari or in the nature of certiorari and/or any other appropriate writ, order or direction quashing and setting aside the impugned order dated 21.10.2022 passed by the learned Principal Senior Civil Judge, Commercial Division, Karjan in Commercial Civil Suit No.3 of 2021 in the interest of justice.
(B) Pending admission, hearing and final disposal of the present petition, Your Lordships be pleased to stay the impugned order Page 3 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 dated 21.10.2022 passed by the earned Principal Senior Civil Judge, Commercial Division, Karjan in Commercial Civil Suit No.3 of 2021 in the interest of justice."
4.1 The TBEA filed Special Civil Application No.1034 of 2023 under Article 227 of the Constitution of India seeking following relief:-
"(B) Your Lordship may be pleased to setting aside the impugned order dated 21.10.2022 passed by the learned Principal Senior Civil Judge, Karjan below Exh.20 in Commercial Civil Suit No.3 of 2021 to the extent that it grants leave to defend to the respondent and may be pleased to reject application of the respondent seeking leave to defend the subject suit at Exh.20. (C) In the alternative, Your Lordship may be pleased to modify the impugned order dated 21.10.2022 passed by the learned Principal Senior Civil Judge, Karjan below Exh.20 in Commercial Civil Suit No.3 of 2021by directing the respondent to deposit admitted amount before the learned Court.
(D) Your Lordship may without prejudice to the above, be pleased to allow application at Exh.10 filed by the petitioner seeking summons for judgment in Commercial Civil Suit No.3 of 2021 on the ground urged in the present petition.
(E) Pending admission, hearing and final disposal of the present petition, Your Lordships be pleased to direct the respondent to deposit the admitted amount before the learned Court."
5. Heard learned Senior Advocate Mr. Deven Parikh for Gandhi Law Associates appearing for the Posco and learned Senior Advocate Mr. Mehul S. Shah assisted by learned advocate Mr. Utsav Parikh for the TBEA.
6. Learned Senior Advocate Mr. Deven Parikh having taken us through the pleadings made by the TBEA before the learned trial Court in Commercial Civil Suit No.3 of 2021 mainly raised Page 4 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 grievance that the TBEA, which is original plaintiff, has asked for the relief of interest in the plaint. He would further argue that when plaintiff asked for any such relief, it would take away the suit from the sweep of Order 37 of the Civil Procedure Code, 1908, in that event, even if, there is an element of admitted amount and even if there is an element that cheques were issued in favour of the plaintiff as per the pleadings of the TBEA in the suit and have been dishonoured, it would not take the case under Order 37 of the Civil Procedure Code, 1908 and since the case is not falling within the scope and ambit of Order 37 of the Civil Procedure Code, 1908, no question arises for deciding leave to defend.
6.1 Learned Senior Advocate Mr. Deven Parikh has precisely taken us through the relief claimed by the plaintiff and pointed out that the plaintiff has specifically asked for the grant of interest in absence of any written contract or even mutual agreement or for any condition as stated in the invoices. Therefore, considering this aspect, the learned trial Court ought to have considered that the suit was not falling within the scope and ambit of Order 37 of the Civil Procedure Code, 1908, yet the learned trial Court has erred in passing the order below Exh.20 in granting conditional leave.
6.2 Learned Senior Advocate Mr. Deven Parikh would further submit that since it is a clear case that claiming of interest at 5.4% per annum on the principal amount, which according to TBEA, is due under the invoices without being backed by any written contract, takes away the case out of the sweep of Order 37 of the Civil Procedure Code, 1908. The learned trial Court Page 5 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 ought to have appreciated this aspect while deciding application for leave to defend. He would further submit that the learned trial Court has totally failed to notice this aspect and the settled law on the subject and therefore, he would submit that the present petition filed by the Posco deserves consideration and requires to be allowed.
6.3 Learned Senior Counsel Mr. Parikh would further point out from the order that the learned trial Court has clearly held that there are some triable issues and since there are triable issues, the Posco being defendant of the Commercial Civil Suit should be given unconditional leave, but the learned trial Court erred in pasing the order of conditional leave. He would further argue that the learned trial Court has misread the certificate of the CA dated 21.12.2021 in context to the contents made in the leave to defend. He would further submit that in the certificate of the CA, the net amount of Rs.15,86,16,204/- mentioned as payable to the plaintiff, however, subject to some other contentions raised in the leave to defend, whereby, in para 16, it is specifically contended that no claim amount is due and outstanding from the Posco and the plaintiff i.e. TBEA cannot claim any amount from the defendant as admitted amount by the defendant. He would further submit that the learned trial Court while reading the certificate issued by the CA of the Posco, failed to read the explanation offered by the Posco in para 16 of leave to defend application, whereby it is clearly mentioned that after conciliation of accounts, the balance payable or receivable shall be adjusted against supplies of lamination and therefore, Page 6 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 there are triable issue, which is also believed by the learned trial Court and, yet the learned trial Court without assigning any reason passed a cryptic order for depositing an amount of Rs.3 crore as a condition precedent for granting leave to defend the suit, which is erroneous approach on the part of the learned trial Court.
6.4. Learned Senior Advocate Mr. Deven Parikh reiterates his principal submission that since the original plaintiff TBEA has claimed interest amount at 5.4% on the principal amount claimed in the plaint without having any written contract about paying interest, such relief takes away the suit from the scope and ambit of Order 37 of the Civil Procedure Code, 1908 and in that circumstances, the learned trial Court ought to have granted unconditional leave to defend the suit to the defendant i.e. Posco. The learned trial Court has materially erred in granting conditional leave to defend the suit to the defendant Posco on depositing Rs.3 crore. Therefore, he submits to correct the error committed by the learned trial Court by allowing his petition and urged to quash and set aside the impugned order and permit the Posco to defend the suit unconditionally.
6.5. To straighten his submission, learned Senior Advocate Mr. Deven Parikh has relied upon following judgments:-
1. Zonal Manager Vs. Akhilbhai B. Mehta reported in 2001 SCC Online Guj 562
2. Chlochem Ltd. Vs. Lifeline Industries rendered by this Page 7 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 Court in Special Civil Application No.13041 of 2012
3. Merchem Limited Vs. New India Acid Baroda Private Limited rendered by the Division Bench of this Court in Special Civil Application No.6350 of 2017.
7. On the other hand, learned Senior Advocate Mr. Mehul S. Shah assisted by learned advocate Mr. Utsav Parikh for the TBEA mainly submitted that considering the undisputed fact that the Posco had issued cheques of Rs.37,24,46,182/- towards payment due and which is not adhered to, it makes it clear that the TBEA owes the amount from the Posco. Therefore, TBEA has filed the suit under Order 37 of the Civil Procedure Code, 1908 claiming amount of Rs.35,59,47,194/-. He would further submit that the learned trial Court having considered this aspect as well as other issue though believed that there are triable issues, relying upon the admission coming from the certificate issued by the CA, passed an order for conditional leave to defend and therefore, no error is crept in the order as far as granting conditional leave. However, he vehemently submits that on perusal of the certificate issued by the CA, an amount of Rs.15,86,16,204/- has been shown outstanding in favour of the TBEA and is specifically mentioned by the CA of the Posco that after checking the books of account of the Posco, it emerges that the TBEA owes the amount of Rs.15,86,16,204/- and therefore, since that amount is admitted amount and certified by the CA of the Posco, the learned trial Court ought to have passed an order of depositing Rs.15,86,16,204/- while granting leave to defend.
7.1 Learned Senior Advocate Mr. Shah would further submit Page 8 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023
that the Civil Procedure Code has been amended in the year 1977 by the Act No.104 of 1976 w.e.f. 1.2.1977. He would further submit that as per second proviso of Sub Rule 5 of Rule 3 of Order 37 of the Civil Procedure Code, 1908, where 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. He would further submit that the learned trial Court has failed to read second proviso and has committed an error in passing the order of depositing Rs. 3 crore although the admitted amount is Rs.15,86,16,204/-.
7.2 In support of his submission, learned Senior Counsel Mr. Shah has relied upon the judgment of Hon'ble Apex Court in case of IDBI Trusteeship Services Limited Vs. Hubtown Limited reported in (2017) 1 SCC 568 and in case of B.L. Kashyap and sons Limited Vs. JMS Steels and Power Corporation reported in (2022) 3 SCC 294, whereupon, the principal ratio in case of IDBI (supra) has been reiterated. Para 33.2 of said judgment reads as under:-
"33.2. Thus, it could be seen that in the case of substantial defence, the defendant is entitled to unconditional leave; and even in the case of a triable issue on a fair and reasonable defence, the defendant is ordinarily entitled to unconditional leave to defend. In case of doubts about the intent of the defendant or genuineness of the triable issues as also the probability of defence, the leave could yet be granted but while imposing conditions as to the time or mode of trial or payment or furnishing security. Thus, even in such cases of doubts or Page 9 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 reservations, denial of leave to defend is not the rule; but appropriate conditions may be imposed while granting the leave. It is only in the case where the defendant is found to be having no substantial defence and/or raising no genuine triable issues coupled with the Court's view that the defence is frivolous or vexatious that the leave to defend is to be refused and the plaintiff is entitled to judgment forthwith. Of course, in the case where any part of the amount claimed by the plaintiff is admitted by the defendant, leave to defend is not to be granted unless the amount so admitted is deposited by the defendant in the Court."
7.3 Insofar as issue of interest claimed in the plaint is concerned, learned Senior Advocate Mr. Shah has taken us through section 2(b) of the Interest Act, 1978 and valiantly argued that Interest Act has granted current rate of interest in accordance with the direction of interest given or issued by the Reserve Bank of India under the Banking Regulation Act. He would further submit that since statute permits asking of current rate of interest, therefore, claiming of interest in the plaint which is statutorily available under the Interest Act would not take away the suit from the sweep of Order 37 of the Civil Procedure Code, 1908 and therefore, he submits that submission qua claiming of interest taking away suit from Order 37 of the Civil Procedure Code, 1908 is not sustainable.
7.4 Upon such submission, learned Senior Advocate Mr.Shah prays to allow Special Civil Application filed by the TBEA and to dismiss Special Civil Application filed by the Posco.
8. Having heard learned advocates for both the sides, at the Page 10 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 outset, short question pose for consideration that whether the suit filed by the TBEA falls within the scope and ambit of Order 37 of the Civil Procedure Code, 1908.
8.1 For the purpose of deciding the question, let straightaway go through the prayer clause made in the suit, which reads as under:-
"Pass a decree in favour of the plaintiff and against the defendant directing it to pay the plaintiff the principal amount due under the invoices i.e. INR 35,59,47,194/- along with interest being INR 3,01,71,154/- at the rate of 5.40% p.a. as on 15th October, 2021.
b. Direct the def to pay pendente lite and further interest upon the overdue amounts under each of the invoices at the rate of 5.40% p.a. from respective due dates of the invoices up until the date of realization;
c. Direct the defendants to pay the cost of the present suit to the plaintiff."
9. We may also refer some of the pleadings of the plaint, which is part of cause of action.
"22. That till the present date, despite the issuance of two demand notices, the Principle Amount has remained unpaid by Defendant, despite the fact that it has issued the Cheques in favour of the Plaintiff, thereby crystallizing this debt. Further, in light of the dishonor of the Cheques and the continued non- payment of the Principal Amount under the Invoices, interest is also payable on the outstanding amounts under each of the Invoices. The interest being charged, is at the rate of 5.40% per annum, in consonance with the interest rate prescribed under the Interest Act, 1978 (the rate of interest has been taken at the rate applicable to fixed deposits effectuated by the State Bank of India). The interest has been computed up until date 15 October 2021. A tabulation of the details of the Invoices, the lorry receipts corresponding to the delivery of the ERGO steel as per each corresponding Invoice, the amount due under each Invoice, aggregating to the Principal Amount, and the interest which had accrued on each Invoice as on 15th October, 2021, which aggregates to INR 3,01,71,154/- (in words three crore one lakh Page 11 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 seventy one thousand one hundred fifty four only in Indian Rupees) and the details of the same is calculated at above mentioned table.
25. That the present Suit is a summary suit, filed under Order XXXVII of the CPC, arising out the willful default of the Defendants on their admitted liability towards the Plaintiff under the Cheques, which are bills of exchange, in terms of Section 6 of the Negotiable Instruments Act, 1881. Further, the present suit has been filed for the recovery of a debt in money payable by the Defendants is INR 38,61,18,348/- (the Principal Amount of INR 35,59,47,194/- + an Interest amount of INR 3,01,71,154/- as on 15th October 2021), arising on a written contract, i.e., the Purchase Orders and Invoices.
26. That since the liability against the Cheques in question the Plaintiff seeks trial of the present Suit as per the summary procedure prescribed in Order XXXVIII of the CPC, and reliefs by way of recovery of the Principal Amount due under the Cheques / Invoices and the interest payable thereon. The Plaintiff does not claim any relief which does not fall within the ambit of Order XXXVII Rule 2 of the CPC."
10. Summary suit provided under Order 37 of the Civil Procedure Code, 1908 is a special remedy for recovery of the amount due from the defendant. Sub Rule 2 of Order 37 has categorized classes of the suit, which can be defined as a suit under the summary procedure. The suit either must be upon bill of exchange, hundis and promissory notes or the plaintiff seeks only to recover the debt or liquidated demand in money payable by the defendant with or without interest arising on a written contract or 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 or on a guarantee where claim against the principal is in respect of a debt or liquidated demand only or the suit for recovery of receivables instituted by any assignee of a receivable. Baring the above classes of the suit, no other suit or Page 12 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 recovery is maintainable under Order 37 of the Civil Procedure Code, 1908. Principally, only suit for liquidated demand is maintainable under summary procedure.
10.1 In Merchem Limited (supra), the Division Bench of this Court have referred the earlier judgment in case of Chlochem Limited (supra) as well as Akhilbhai B. Mehta (supra), it expound that if relief of interest is asked in absence of written contract, claim would not fall in category of liquidated demand, the suit would not come under purview of Order 37 of the Civil Procedure Code, 1908, in para 5.2 to 5.5 held following:-
"5.02. It an admitted position that as such there is no written contract between the parties more particularly with respect to interest on delayed payment on invoice bills. Though the plaintiff and even the learned Judge have considered the tri-parte agreement dated 17/7/2012 as contract between the parties, and more particularly with respect to interest on delayed payment, however it is required to be noted that as such the plaintiff has not claimed any relief on the basis of the tri-parte agreement dated 17/7/2012. On the contrary in para 8 of the Affidavit-in-reply of the application to leave to defend submitted by the defendants, the plaintiff has specifically stated that the said agreement is not binding and applicable here in this matter. It is further stated that the said agreement is tri-parte agreement and restricted only to supply of material / substance to the required persons / defendants as well as defendants and GNFC but not terms and conditions of the payment. It is further states that the said agreement was effective and continued only upto 13/4/2013. It is further averred that the defendant cannot raise plea of terms and conditions of the agreement executed on 17/7/2012 between the plaintiff, defendants and GNFC. It is further averred in para 12 of the reply that the plaintiff has claimed 15% interest per annum which is just and correct as per the commercial transaction between the plaintiff and the defendants. Therefore, the plaintiff has claimed interest not based on the tri-parte agreement dated 17/7/2012, but as per the commercial transaction. In para 15 also the same is reiterated and again it is reiterated that the plaintiff is not Page 13 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 claiming any benefit of the said agreement. Considering the facts and circumstances of the case, the learned Judge has materially erred in observing that the plaintiff is entitled to the interest on the delayed payment as per tri-parte agreement dated 17/7/2012. Thus, as such, there is no written contract between the parties with respect to interest on delayed payment. The Debit Notes issued by the plaintiff and/or Invoices issued subsequently after the goods came to be supplied and/or anything mentioned in the Delivery Note whether can be said to be contract between the parties more particularly with respect to interest on delayed payment can be said to be triable issue. At what rate the plaintiff is entitled to interest on delayed payment also can be said to be a triable issue. In light of the aforesaid facts and circumstances of the case, the following few decisions of this Court are required to be referred to :
5.03. In the case of The National Textile Corporation, Ahmedabad (supra), the plaintiff filed the suit to recovery a particular amount comprising price of goods sold and delivered as well as interest. The plaintiff claimed interest relying on custom of the Trade to charge interest and the learned trial court granted conditional leave, which came to be set aside by the learned Single Judge of this Court, after following decision of the Bombay High Court in the case of Keshavjee Versus The Indian Mercantile Insurance Co. Ltd. in Civil Revision Application No. 259 of 1956 decided on 5/11/1954, by observing that in order to succeed in getting the amount of interest, the plaintiff will have to prove his case by evidence and this cannot be permitted in summary suit.
5.04. In the case of Chlochem Limited (supra) while confirming the order passed by the learned trial court granting unconditional leave, in para 20 to 23, the learned Single Judge has observed and held as under :-
"20. If the prayer made in the plaint of the suit filed by the petitioner is perused, it is clear that the petitioner is claiming interest along with the amount due and further interest at the rate of 6% per annum over the total amount of Rs.75,73,512/-, which includes the principal claim, plus the interest.
21. In Zonal Manager v. Akhilbhai B.Mehta (supra), this Court has held as below:
"7. Having heard both the learned advocates and having gone through the facts of the case and record it will Page 14 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 have to be decided whether the present dispute as has been raised by the plaintiff is falling within the ambit of Order-37 Rule-1 of the Civil Procedure Code. It was urged that the suit is filed for liquidated amount of 24 days Earned Leave and therefore it falls within the ambit of Order-37. Perusing Order-37 Rule-1 Sub sec.
(2) it is clear that the dispute falls in none of the sub- clause of Sub-rule(2) of Rule-1 of Order-37. It is not the suit for recovery of liquidated amount but the amount of interest at the rate of 24% has also been sought to be recovered by the plaintiff respondent. The case is clearly covered by the unreported decision of this Court as reported in the matter of National Textile Corporation Ahmedabad vs. Shri Rajendra Sankalchand and Parikh, as reported in 1982 GLH (UJ)7 wherein the Court in unequivocal terms ruled that in order to succeed in getting the amount of interest the opponent-plaintiff will have to prove his case by evidence and this cannot be permitted in a Summary Suit and, therefore, in view of the claim of interest amount made by the plaintiff in the suit the suit cannot be said to be Summary Suit and consequently not triable as Summary Suit. Claiming of the amount in the present case at the rate of 24% takes out the dispute of the scope of Summary Suit and therefore the learned Judge committed a jurisdictional error to grant conditional leave. Not only that, neither the dispute can be termed as liquidated demand as envisaged by the Order-37 Rule 1(2) but the claim of interest is also a triable issue and takes the suit out of the ambit of the Summary Suit. On this ground alone this Revision Application is required to be allowed, irrespective of the fact that even if it is Summary Suit there were triable issues.
8. In this view of the matter, since the suit filed by the plaintiff is not falling within ambit of Summary Suit the order passed by the learned trial Judge to defend the suit on condition is without jurisdiction and erroneous and is required to be set aside. In this view of the matter, this Revision Application is allowed. The order impugned passed by the City Civil Court for issuing summons for judgment which is dated 17.12.1991 is set aside and consequently the order impugned which is dated 12.1.2000 granting conditional leave to defend is also set aside. Rule is made absolute. No order as to costs.
Page 15 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023C/SCA/301/2023 JUDGMENT DATED: 27/04/2023
22. The principles of law enunciated in the abovequoted judgment would squarely apply to the facts of the present case. Learned advocate for the petitioner has not chosen to distinguish this judgment or to make any submissions regarding the aspect regarding charging of interest. There is no denying the fact that not only has the petitioner claimed interest in the suit but the statement of account prepared by the petitioner, a copy of which is annexed to the petition, also clearly shows that interest claimed for late payment of interest has been debited to the account of the respondent and interest of Rs.7,07,904/- has been added to the principal claim of Rs.68,65,618/-. There is no material on record to show that there is an agreement between the parties regarding the claim of interest. Moreover, the claim for interest cannot be said to be a liquidated demand."
5.05. In the case of Akhilbhai B. Mehta (supra), in summary suit where the plaintiff claimed interest in absence of any contract between the parties with respect to interest, the learned Single Judge has observed and held that the interest on claim is triable issue and therefore, the defendant is entitled to unconditional leave."
11. Perusal of prayer clause made in suit, it indicates that plaintiff TBEA has also asked relief for interest beside principal amount. It is not the case of the TBEA that there is a written contract between the TBEA and the Posco regarding claim of interest. In fact, on perusal of the pleadings, it transpires that the TBEA on its own has calculated the interest of Rs.3,01,71,154/- on the principal amount. So, it never falls within the classes of liquidated demand. Whether plaintiff is entitled for such relief of interest or not is always a subject matter of regular recovery suit, but cannot be a subject matter of the suit being summary filed under Order 37 of the Civil Procedure Code, 1908. The plaintiff i.e. TBEA came out with two kind of assertion in the plaint; first it came out with the assertion that three cheques totalling to Rs.37,24,46,182/- are Page 16 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 issued by the Posco in favour of the TBEA and therefore, the TBEA owes debt from the defendant. The second assertion made by the TBEA is that invoices are also generated for the outstanding amount and the interest is payable thereof. This assertion is clearly visible from para 26. The plaintiff asserted that this claim of interest was arising on the written contract. However, no such written contract has been pointed out during the argument and rather shelter of Interest Act has been taken for saving the claim of interest under head of liquidated demand. Since, it is clear that the claim of interest is not falling within the classes of the suit, which is based upon the liquidated demand, the suit, which was filed by the plaintiff TBEA falls out of category of Order 37 of the Civil Procedure Code, 1908.
12. Learned Senior Advocate Mr. Shah would submit that as per the certificate issued by the CA of the Posco, it is an admitted position that the TBEA owes outstanding dues of Rs. 15,86,16,204/- and in view of the amendment in second proviso of sub rule 5 of Rule 3 of Order 37 the Civil Procedure Code, 1908, even if, there are other triable issues, the learned trial Court ought to have granted leave to defend upon deposit of admitted amount is concerned, however, since the suit filed by the plaintiff does not fall within the sweep of Order 37 of the Civil Procedure Code, 1908, this Court cannot apply the provisions of Order 37 of the Civil Procedure Code, 1908 and direct the defendant of the suit i.e. Posco to deposit the admitted amount. There are other recourse available under the Civil Procedure Code, 1908, which can be adopted if the part of the claim is admitted by the defendant. But, certainly, since the suit Page 17 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 is out of sweep of Order 37 of the Civil Procedure Code, 1908, this Court cannot apply provisions of Order 37 of the Civil Procedure Code, 1908 to direct the defendant to deposit the admitted amount.
13. Insofar as cheques of Rs.37,24,46,182/- issued in favour of TBEA by the Posco is concerned, it can be dealt during the trial of the regular suit by the concerned Court, but as held herein above, since provisions of Order 37 of the Civil Procedure Code, 1908 was not applicable to the suit on hand, it cannot be taken into consideration.
14. At this stage, it is required to be noted that if the plaintiff wants to institute a suit under Order 37 Rule 1 and 2 of the Civil Procedure Code, 1908, the plaintiff has to remain stuck mandatorily with the provisions of Order 37 Rule 1 and 2 of the Civil Procedure Code, 1908. Plaintiff shall have to contend further special/specific averment to the effect that the suit is filed under the said order and that no relief, which does not fall within the ambit of this rule, has been claimed in the plaint. In the present case, the second assertion is missing. Admittedly, the claim of interest in absence of the written contract does not allow the suit to be one under the provisions of Order 37 of the Civil Procedure Code, 1908.
15. The shelter of Interest Act taken by learned Senior advocate Mr. Shah as far as claiming interest along with the principal amount in summary suit is concerned, is totally misconceived. The Interest Act is special statute which allows the Court to its discretion that it can grant current rate of Page 18 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 interest if it found by the Court that grant of interest at 6%, which is available u/s 34 of the Civil Procedure Code, 1908 is insufficient. The Court by taking recourse of the Interest Act to grant higher rate of interest in given cases. In other words, it is power of the Court whether to allow grant of interest, but at the current rate issued by the RBI under the Banking Regulation Act. Section 3 of the Interest Act deals with power of Court to allow the interest. In section 3, the Legislature has issued word "court may if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim", makes it abundently clear that it is the power of the Court to allow interest upon the claim made by the plaintiff. Upon such power of the Court to allow interest provided in the Interest Act, 1978, the plaintiff cannot assert that he is allowed to claim interest in a summary suit as a liquidated demand. Reliance placed upon the Interest Act is totally not available to the plaintiff to sustain the suit with the sweep of Order 37 of the Civil Procedure Code, 1908 and therefore, that submission is negatived.
16. Insofar as, two decisions relied upon by learned Senior Advocate Mr. Shah is concerned, there is no doubt on the ratio laid down by the Hon'ble Apex Court in both the decision based upon amendment in the Civil Procedure Code, 1908, whereby it is held that even if, there is a case of triable issue, the Court has to pass an order of leave to defend if the amount due is admitted by the defendant. Since, the present case, as held herein above, does not fall within the sweep of Order 37 of the Civil Procedure Code, 1908, the judgment upon which reliance is placed by Page 19 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023 C/SCA/301/2023 JUDGMENT DATED: 27/04/2023 learned Senior Advocate Mr. Shah does not render any assistance to his submission.
17. In view of above, as the plaintiff has asked relief for interest without having written contract, the relief comes out from sweep of liquidated demand. Hence, Commercial Civil Suit No.3 of 2021 does not fall within the sweep of order 37 of the Civil Procedure Code, 1908. Axiomatically, this suit would become regular Commercial Civil Suit, whereupon, the defendant has indisputable right to enter into the defence. Learned Court below has failed to notice such aspect and as such has committed error much less serious but jurisdictional error in passing impugned order of granting conditional leave to Posco.
18. In view of above reasons, Special Civil Application No.301 of 2023 deserves consideration and is required to be allowed and accordingly, it is allowed. The order passed below Exh.20 in Commercial Civil Suit No.3 of 2021 is hereby quashed and set aside. The defendant of the suit i.e. Posco shall be at liberty to file written statement as per provision applicable to commercial civil suit.
19. Consequent thereto, Special Civil Application No.1034 of 2023 stands dismissed.
(ASHUTOSH SHASTRI, J) (J. C. DOSHI,J) SHEKHAR P. BARVE Page 20 of 20 Downloaded on : Sat Apr 29 20:40:46 IST 2023