Delhi District Court
Susheel Rungta (Huf) vs M/S Jagat Overseas on 8 July, 2022
IN THE COURT OF ADDITIONAL DISTRICT JUDGE - 02,
NORTH, ROHINI COURT COMPLEX, DELHI
CS DJ 424/17
CNR No. DLNT01-005655-2017
Susheel Rungta (HUF)
Through Karat Susheel Rungta,
R/o E-70, New Saraswati Society,
Sector-9, Rohini, Delhi-110085 ...........Plaintiff
VERSUS
1. M/s Jagat Overseas
5586, 3rd Floor, Lahori Gate,
Naya Bazar, Delhi-110001.
2. Mr. Sant Lal Aggarwal (Partner)
D-31, Pushpanjali Enclave,
Pitampura, Delhi-110034.
3. Mrs. Rajni Goel (Partner)
D-31, Pushpanjali Enclave,
Pitampura, Delhi-110034.
4. Mr. Satish Kumar Pawa (Partner)
D-842, New Friends Colony,
Delhi-110065.
5. Mrs. Sudha Pawa (Partner)
D-842, New Friends Colony,
Delhi-110065. ........Defendants
Date of Institution :05.05.2017
Date of Conclusion of Argument :31.05.2022
Date of Order :08.07.2022
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ORDER
1. This common order shall dispose of two applications filed by defendant no. 2 and 3 on the one hand and defendant no. 4 and 5 on the other hand, both under Order XXXVII Rule 3(5) CPC seeking leave to defend the suit filed by plaintiff under Order XXXVII CPC for recovery of an amount of Rs 10,00,000/-.
2. Briefly stated, plaintiff which is an HUF being represented through Karta Susheel Rungta filed suit for recovery of Rs. 10 lacs along with interest u/o XXXVII CPC stating therein that defendant no. 1 M/s Jagat Overseas is a partnership concern of defendants no. 2-5 and plaintiff was having family and friendly relations with the defendants. Defendants had been taking friendly loan from plaintiff and plaintiff's family members, which loan amount defendant no. 1 had been returning along with interest to the plaintiff and plaintiff's family members as per their promise after deducting TDS on interest amount. Defendants had taken loan of Rs. 10 lacs from plaintiff on 27.06.2014 at the rate of 1.2 per cent per month interest which the defendants were supposed to return in four months time. Plaintiff advanced the said sum of Rs. 10 lacs through RTGS from Indian Overseas Bank, Rohini Delhi, to the defendant no. 1. After lapse of four months, defendants did not return the loan but issued a confirmation of the account admitting outstanding of the said amount. Plaintiff, thereafter, issued legal notice calling upon defendants to repay the said amount but the same was not replied to CS DJ 424/17 Susheel Rungta (HUF) Vs. M/s Jagat Overseas & Ors DoJ: 08.07.2022 Page No. 2 of 15 and as such plaintiff was constrained to file present suit for recovery of aforesaid amount of Rs. 10 lacs u/o XXXVII CPC.
3. Pursuant to appearance having been put in by defendant, plaintiff served them with summons for judgement. Upon service of summons for judgement upon defendants, no leave to defend application was filed for and on behalf of defendant no. 1, though defendant no. 2 and 3 on the one hand and defendants no. 4 and 5 on the other hand have filed separate applications u/o XXXVII Rule 3(5) CPC seeking leave to defend the present suit.
4. In the application u/o XXXVII Rule 3(5) CPC and accompanying affidavit thereto, defendants no. 2 and 3 raised plea that they were entitled to defend the present suit as they had not received the summons as per prescribed format but they filed the present leave to defend application unconditionally. It has been stated that suit has been falsely instituted against the defendants/applicants by abusing the process of law; that suit of the plaintiff did not comply with the mandatory provisions of Order XXXVII CPC as plaintiff has sought relief beyond the ambit of Order XXXVII of CPC; that plaintiff did not comply with the mandatory provision of Order VI and Order VII of CPC; and that plaintiff was guilty of suppression of the material facts from the court. On merits, it was stated that defendants had not taken any loan and the alleged confirmation of accounts signed and executed by authorized signatory of defendant no. 1 was forged and fabricated. It was stated that although plaintiff claimed that loan of CS DJ 424/17 Susheel Rungta (HUF) Vs. M/s Jagat Overseas & Ors DoJ: 08.07.2022 Page No. 3 of 15 Rs. 10 lacs was given to defendant no. 1 through RTGS on 24.06.2014 but perusal of the confirmation of account shows that opening balance of Rs. 10 lacs as on 27.06.2014 but there was no allegation about any prior transaction which goes to show that confirmation of account was forged and fabricated. It was further stated that defendants No. 4 and 5 had misappropriated funds of the defendant no. 1 and had misused several blank signed cheques as well as the papers of the defendants No. 2 and 3 and only for these reasons as on date lots of litigations were pending between the defendants. Defendants no. 2 and 3 apprehended that plaintiff colluded with defendants no. 4 and 5 and had forged documents upon which plaintiff had relied. It was further stated that only when an opportunity to lead evidence was given to the applicant that applicant would be able to show collusion between plaintiff and defendants no. 4 and 5. It was further stated that defendants no. 2 and 3 were in possession of sufficient materials and circumstantial evidences by which defendants no. 2 and 3 could successfully rebut the presumption in favour of the plaintiff as to alleged confirmation of account. Hence, on aforesaid grounds, defendants No. 2 and 3 have sought grant of unconditionally leave to defend the present suit.
5. In the application u/o XXXVII Rule 3(5) CPC and the application u/o XXXVII CPC and accompanying affidavit thereto, defendants no. 4 and 5 stated that plaintiff had not approached the court with clean hands and had concealed, misrepresented, and mislead the CS DJ 424/17 Susheel Rungta (HUF) Vs. M/s Jagat Overseas & Ors DoJ: 08.07.2022 Page No. 4 of 15 court. It was further stated that suit of the plaintiff was liable to be dismissed as the same was not maintainable in view of the Section 3 of the Punjab Registration of Moneylenders Act, 1938 as there was no license in favour of plaintiff for doing the business of money lending. It was further stated that application filed by the plaintiff u/o XXXVII Rule 3 CPC for issuance of summons for judgment was defective, and therefore, defendants No. 4 and 5 were entitled to defend the suit. It was further stated that no loan was ever taken by defendant no. 1 or by defendants no. 4 and 5 as alleged. It was further stated that present suit was filed by the plaintiff in collusion with defendant no. 2 in order to achieve their malafide intention. It was stated as per information of the defendants No. 4 and 5, the amount of Rs. 10 lacs was transferred through RTGS in the name of defendant No. 1 in order to clear its liability towards the defendant no. 1 for the rice received by the plaintiff from defendant no. 1. It was further stated that defendant no. 2 had been working against the interest of the defendant no. 1 and plaintiff acting in collusion with defendant no. 2 must have taken confirmation of accounts showing the amount of Rs. 10 lacs as loan whereas no loan was actually taken by the defendant no. 1 or the defendants no. 4 and 5. It was further stated that defendant no. 5 was not active partner and defendant no. 3 had already retired vide deed of dissolution dated 16.03.2015. Hence, on the aforesaid grounds, defendants no. 4 and 5 sought leave to defend the present suit.
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6. Plaintiffs in reply to the respective applications have denied the allegations contained in the respective application for leave to defend and reiterated the contents of the plaint.
7. Ld. counsels for plaintiff arguing on the lines of contents of the plaint submitted that defendants had failed to raise any triable issues in their respective applications. Hence, he has prayed that suit may be decreed. On the contrary, Ld. Counsels for respective set of defendants had argued on the lines of their respective stand in the respective applications u/o XXXVII Rule 3(5) CPC.
8. Having heard rival submissions and having perused the record, court is reminded of the principle governing grant or non grant of leave to defend the suit filed u/o XXXVII CPC as enumerated in following judgements.
9. In Mechalec Engineers & Manufacturers v. Basic Equipment Corporation, 1977 AIR 577 the following principles were evolved by Hon'ble Supreme Court:-
"(a) If the defendant satisfied the Court that he has a good defense to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave do defend.
(b) If the defendant raises a friable issue indicating that he has a fair or bonafide or reasonable defense although not a positively good defense the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend.
(c) If 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 make it clear that CS DJ 424/17 Susheel Rungta (HUF) Vs. M/s Jagat Overseas & Ors DoJ: 08.07.2022 Page No. 6 of 15 he had a defense, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defense 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.
(d) If the defendant has no defense or the defense set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend.
(e) If the defendant has no defense or the defense is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the Court may protect the plaintiff by only allowing the defense to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the defendant on such condition and thereby show mercy to the defendant by enabling him to try to prove a defense."
10. In the case of IDBI Trusteeship Services Ltd. v. Hubtown Ltd.
(2017) 1 SCC 568, Hon'ble Supreme Court modulated the aforementioned principles and laid down as follows: -
"17. Accordingly, the principles stated in para 8 of Mechelec case [Mechelec Engineers & Manufacturers v. Basic Equipment Corpn., (1976) 4 SCC 687] will now stand superseded, given the amendment of Order 37 Rule 3 and the binding decision of four Judges in Milkhiram case [Milkhiram (India) (P) Ltd. v. Chamanlal Bros., AIR 1965 SC 1698 : (1966) 68 Bom LR 36] , 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 plaintiff 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 plaintiff is not entitled to sign judgment, CS DJ 424/17 Susheel Rungta (HUF) Vs. M/s Jagat Overseas & Ors DoJ: 08.07.2022 Page No. 7 of 15 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 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 raises 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 plaintiff is entitled to judgment forthwith.
17.6. 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, (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."
11. In B. L. Kashyap and Sons Ltd v. M/s JMS Steel and Power Corporation & Ors. bearing SLP (C) No. 19413/2018 decided on 18.01.2022 Hon'ble Supreme Court held as under:-
17. It is at once clear that even though in the case of IDBI Trusteeship, this Court has observed that the principles stated in paragraph 8 of Mechelec Engineers' case shall stand superseded in the wake of amendment of Rule 3 of Order XXXVII but, on the core theme, the principles remain the same that grant of leave to defend (with or without conditions) is the ordinary rule; and denial of leave to defend is an exception. Putting it in other CS DJ 424/17 Susheel Rungta (HUF) Vs. M/s Jagat Overseas & Ors DoJ: 08.07.2022 Page No. 8 of 15 words, generally, the prayer for leave to defend is to be denied in such cases where the defendant has practically no defence and is unable to give out even a semblance of triable issues before the Court.
17.1. As noticed, if the defendant satisfies the Court that he has substantial defence, i.e., a defence which is likely to succeed, he is entitled to unconditional leave to defend. In the second eventuality, where the defendant raises triable issues indicating a fair or bonafide or reasonable defence, albeit not a positively good defence, he would be ordinarily entitled to unconditional leave to defend. In the third eventuality, where the defendant raises triable issues, but it remains doubtful if the defendant is raising the same in good faith or about genuineness of the issues, the Trial Court is expected to balance the requirements of expeditious disposal of commercial causes on one hand and of not shutting out triable issues by unduly severe orders on the other. Therefore, the Trial Court may impose conditions both as to time or mode of trial as well as payment into the Court or furnishing security. In the fourth eventuality, where the proposed defence appear to be plausible but improbable, heightened conditions may be imposed as to the time or mode of trial as also of payment into the Court or furnishing security or both, which may extend to the entire principal sum together with just and requisite interest.
17.2. 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 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 CS DJ 424/17 Susheel Rungta (HUF) Vs. M/s Jagat Overseas & Ors DoJ: 08.07.2022 Page No. 9 of 15 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.
17.3. Therefore, while dealing with an application seeking leave to defend, it would not be a correct approach to proceed as if denying the leave is the rule or that the leave to defend is to be granted only in exceptional cases or only in cases where the defence would appear to be a meritorious one. Even in the case of raising of triable issues, with the defendant indicating his having a fair or reasonable defence, he is ordinarily entitled to unconditional leave to defend unless there be any strong reason to deny the leave. It gets perforce reiterated that even if there remains a reasonable doubt about the probability of defence, sterner or higher conditions as stated above could be imposed while granting leave but, denying the leave would be ordinarily countenanced only in such cases where the defendant fails to show any genuine triable issue and the Court finds the defence to be frivolous or vexatious."
12. Keeping the aforesaid principles in mind as laid down in aforesaid three rulingss of the Hon'ble Supreme Court, it has got to be seen whether both set of defendants have set forth ground for grant of conditional/unconditional leave to defendant the suit or have failed to do so.
13. It is found that defendants no. 2 and 3 though stated that no loan has been taken but has not taken any specific stand qua the sum of Rs. 10 lacs transferred to defendant no. 1 by way of RTGS whose primary evidence in the form of statement of bank accounts is already on record. Defendants no. 4 and 5 though admitting of receipt of sum of Rs. 10 lacs from plaintiff but submits that same was payment from plaintiff for the rice supplied by defendant no. 1, CS DJ 424/17 Susheel Rungta (HUF) Vs. M/s Jagat Overseas & Ors DoJ: 08.07.2022 Page No. 10 of 15 that is to say, defendants no. 4 and 5 have submitted that aforesaid payment of Rs. 10 lacs by plaintiff was in fact discharged of liability of plaintiff towards defendant no. 1 for the rice received by plaintiff and supplied by defendant No.1. Thus, there is a contradiction between stand of defendants no. 2 and 3 on the one hand and defendants 4 and 5 on the other hand qua the receipt of amount of Rs. 10 lacs from plaintiff. In their application, defendants no. 2 and 3 have alleged that suit has been filed by plaintiff in collusion with defendants no. 4 and 5 whereas defendants no. 4 and 5 have alleged that suit has been filed in collusion with defendant no. 2. Inter-se dispute, between defendants no. 2 and 3 on the one hand and defendants no. 4 and 5 on the other hand would not give rise to any triable issue so far as plaintiff's suit for recovery of friendly loan amount is concerned. Silence of defendants no. 2 and 3 qua the transfer of amount of Rs. 10 lacs by way of RTGS to defendant no. 1 and the stand of defendants no. 4 and 5 that aforesaid amount was in discharge of liability of the plaintiff against the supply of rice, undisputedly shows receipt of amount of Rs. 10 lacs by way of RTGS from plaintiff to defendant no. 1. Prima facie onus then shifts upon defendants to account for the said amount. Defendants no. 4 and 5 have stated that aforesaid amount was paid by plaintiff for the rice supplied by defendant no. 1 to plaintiff but nothing has been placed on record showing that any such order was placed by plaintiff or that goods were supplied or delivered to plaintiff. No bills/invoice nor any GR receipts nor any other accounts have been placed on record to showing squaring up of the account between CS DJ 424/17 Susheel Rungta (HUF) Vs. M/s Jagat Overseas & Ors DoJ: 08.07.2022 Page No. 11 of 15 plaintiff and defendant no. 1. In Sasumorov Enterprises Pvt. Ltd. v. Odeon Builders Pvt. Ltd. 2018 SCC OnLine Del 12509, it was held that once the defendant does not dispute the transaction, amount due whereunder is claimed by the plaintiff, it is incumbent on the defendant to produce its statement of account to disprove the claim of the plaintiff and to show the status of the said transactions in the books of the defendant statutorily required to be maintained. Without documentary support, mere oral claim that aforesaid amount was paid by plaintiff towards discharge of its liability against supply of rice, is not sufficient to give rise to any triable issue. Hence, defendants no. 4 and 5 have failed to raise any triable issue.
14. So far as defendants no. 2 and 3 are concerned, they have not been able to justify as to why the sum of Rs. 10 lacs was received by way of RTGS from plaintiff. Though, they have stated that they had not taken any loan but there is no justification or explanation as to on what account aforesaid amount of Rs. 10 lacs was received by defendant No.1 from plaintiff. Mere assertion that they are in possession of some evidence which would show collusion between plaintiff and defendants no. 4 and 5, without explaining as to how and what facts would reflect collusion between the two, is not sufficient to give rise to any triable issues. Therefore, defendant no. 2 and 3 have also not been able to raise any triable issue in their application for leave to defend.
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15. So far as plea of defendants no. 4 and 5 regarding the no license of money lending is concerned, it is sufficient enough to say that license under the said Act is required for doing the business of money lending and not for lending money to friends and family even on interest. In a friendly loan also, one could charge interest to compensate for the loss of interest or other profit which lender would earn if he keep the said money in bank or put to his beneficial use. It is not the case of the defendants No. 4 and 5 that plaintiff is engaged in the business of money ending without license under the said Act. Hence, the objection under Section 3 of the Punjab Registration Moneylenders Act, 1938 does not entitle the applicants for grant of leave to defend.
16. As far as alleged procedural lapses under Order XXXVII on the part of the plaintiff is concerned, suffice it to say that afore procedure has been formulated to ensure that defendant is not prejudiced in putting forth his version before the court. In the present case the alleged procedural lapses on the part of plaintiff in complying with provision of Order XXXVII have not at all prejudiced the defendants as they are not being denied opportunity of hearing for grant of leave to defend.
17. So far as issue of defendant No.3 being inactive partner and defendants No.3 and 5 having retired from partnership is concerned, CS DJ 424/17 Susheel Rungta (HUF) Vs. M/s Jagat Overseas & Ors DoJ: 08.07.2022 Page No. 13 of 15 suffice it say that nothing has been placed on record to suggest that intimation regarding retiring of defendant No.3 and 5 was ever given to plaintiffs or to the public at large nor has anything been placed on record to suggest what modalities were inter-se settled regarding the liabilities of third party. Liability of retiring partner towards third party continues even after retirement if no intimation regarding retirement is given to all and surviving partner discharge the retiring partner of his liability while accepting liability upon themselves. Hence, aforesaid fact does not give rise to any triable issue.
18. Thus, defendants No. 2 and 3 on the one hand and defendant No. 4 and 5 on the other hand have failed to raise any triable issue and therefore, their respective applications under Order XXXVII Rule 3(5) CPC for grant of leave to defendant, are hereby dismissed. As a result plaintiff is entitled for decree for recovery of a sum of Rs. 10 lacs. Plaintiff has also claimed interest at the rate of 1.2 percent per month but there is nothing on record to suggest agreement between plaintiff and defendant to this effect making case of the plaintiff for interest within the four corners of Order 37 CPC but certainly plaintiff is entitled to interest pendete-lite and future as per CPC.
19. Hence, in view of the above discussions and reasoning decree for recovery of Rs. 10 lacs (Rupees Ten Lacs) is hereby passed in favour of the plaintiff and against the defendants along with interest CS DJ 424/17 Susheel Rungta (HUF) Vs. M/s Jagat Overseas & Ors DoJ: 08.07.2022 Page No. 14 of 15 @ 4% per annum from the date of institution of the present suit till realization. Cost of the suit is also awarded in favour of plaintiff.
20. Decree sheet be drawn accordingly, after payment of deficient court fees, if any, on quantum of interest component.
21. File be consigned to Record Room after necessary compliance.
Digitally signed by HARISH HARISH KUMAR
KUMAR Date: 2022.07.08
16:44:42 +0530
(Harish Kumar)
Announced in Open Court. ADJ-02/ North/ Rohini Court
(Order contains 15 pages) Delhi/08.07.2022
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