Delhi High Court
Sri Balaji Financer vs Suraj Prakash on 4 March, 2014
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw
*IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 4th March, 2014
+ CS(OS) No.977/2010
SRI BALAJI FINANCER ..... Plaintiff
Through: Mr. Anish Shrestha with Mr. Sudhir
Kumar, Mr. Ajay Kumar & Mr. Vikas
K. Jha, Advs.
Versus
SURAJ PRAKASH ..... Defendant
Through: Mr. Maninder Jeet Singh, Adv.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
RAJIV SAHAI ENDLAW, J
IA No.13973/2010 (of the plaintiff for issuance of summons for
judgment)
1. Summons for judgment already stand issued and leave to defend
application filed.
2. This application is accordingly disposed of.
IA No.1959/2011 (of the plaintiff for issuance of notice of the application
for summons for judgment)
3. This application also has become infructuous and is disposed of.
IA No.8712/2011 (of the defendant for leave to defend)
CS(OS) No.977/2010 Page 1 of 12
4. The plaintiff has instituted this suit under Order 37 of the Code of
Civil Procedure, 1908 (CPC) for recovery of Rs.33,24,000/- with interest at
the rate of 24% per annum, pendente lite and future, pleading:
(i) that the plaintiff advanced a loan of Rs.18,00,000/- to the
defendant on various dates in the year 2007 vide account payee
cheques issued to the credit of the account
No.532202010002767 of the bank of the defendant and amount
of which cheques was credited to the bank account of the
defendant;
(ii) that the defendant agreed to pay a compound interest at the rate
of 24% per annum with monthly rests;
(iii) that as on 31.12.2009, a sum of Rs.15,23,764/- was due towards
interest and thus the defendant as on that date owed a total sum
of Rs.33,24,000/- to the plaintiff;
(iv) the defendant also executed demand promissory notes in favour
of the plaintiff in lieu of the said loan;
(v) that the defendant towards part payment of interest, issued 26
cheques to the plaintiff for a total sum of Rs.4,80,000/- and
particulars of which cheques are given in the plaint;
CS(OS) No.977/2010 Page 2 of 12
(vi) that all the aforesaid cheques were however returned
dishonoured on account of insufficiency of funds in the bank
account of the defendant and complaints of offence under
Section 138 of the Negotiable Instruments Act, 1881 have been
filed; and,
(vii) that the plaintiff inspite of demand vide legal notice, has neither
replied nor re-paid the money.
5. The plaintiff along with the suit has filed Form-A & Form-B issued by
the Registrar of Firms, Delhi, 19 original Promissory Notes all dated
14.12.2009 on the basis of which the suit has been filed and copy of the legal
notice issued prior to the institution of the suit along with proof of delivery
thereof.
6. The defendant seeks leave to defend on the grounds:
(a) that the Promissory Notes on which the suit is based are forged
and fabricated documents, which do not bear the signatures of
the defendant;
(b) that there was never any agreement between the plaintiff and
the defendant for payment of any interest, much less compound
interest or at 24% per annum or with monthly rests;
CS(OS) No.977/2010 Page 3 of 12
(c) that the Promissory Notes on which the suit is based are without
any consideration;
(d) that the application filed by the plaintiff under Order 37 Rule
3(4) of the CPC for issuance of the summons for judgment does
not confer to or meet the basic mandatory requirement of law;
the leave to defend is however filed without prejudice to the
said objection.
7. The plaintiff has filed reply to the application for leave to defend and
to which a rejoinder has been filed by the defendant. However need is not
felt to advert thereto as the plaintiff in its reply has merely reiterated the
contents of the plaint and the defendant in the rejoinder has not stated any
new fact and the counsels also have not in the hearing referred thereto.
8. The counsels have been heard.
9. The counsel for the applicant / defendant has argued:
(I) that once the defendant, in the leave to defend application,
has disputed his signatures, leave to defend has
axiomatically to be granted. Reliance in this regard is
placed on Gurbachan Singh, Maksudanlal Vs. Sudershan
Trading Co. 1980 Rajdhani Law Reporter (Note) 68;
CS(OS) No.977/2010 Page 4 of 12
(II) that all the 19 pro-notes on which the suit is based are of the
same date i.e. 14.12.2009 and no reasonable person would
on the same day execute as many as 19 pro-notes and a
prudent person would have executed a single pro-note for
the entire amount due;
(III) that the suit filed in the year 2010 is barred by time; in this
regard, attention is invited to the bank statement filed by the
plaintiff subsequent to the filing of the suit and which was
permitted to be taken on record with the consent of the
defendant vide order dated 12.09.2013, to show that the
cheques issued by the plaintiff in favour of the defendant
were of the year 2007 and the suit has been filed after three
years therefrom;
(IV) attention is invited to the application filed by the plaintiff for
issuance of summons for judgment to show that the plaintiff
therein has not verified the cause of action as is mandatorily
required to be done; reliance in this regard is placed on Shri
Satish Kumar Vs. Prism Ceme Ltd. 107 (2003) DLT 36.
CS(OS) No.977/2010 Page 5 of 12
10. Per contra, the counsel for the plaintiff has argued that the defendant
has not denied receipt of Rs.18,00,000/- from the plaintiff and issuance of
cheques in December, 2009 as pleaded in the plaint for Rs.4,80,000/- in
favour of the plaintiff in part payment of interest owed by the defendant to
the plaintiff and both of which are an admission of the liability of the
defendant and the defendant is thus not entitled to leave to defend.
11. The counsel for the defendant in rejoinder has argued that the cheques
for a total sum of Rs.4,80,000/- were issued for a separate transaction and
the plaintiff has filed a separate suit for recovery of the said amount of
Rs.4,80,000/-. However the counsel for the defendant admits that no such
plea has been taken in the leave to defend. No cognizance thereof can thus
be taken. The counsel for the defendant has also generally referred to
Mechalec Engineers & Manufacturers Vs. M/s. Basic Equipment
Corporation AIR 1977 SC 577.
12. I have weighed the rival contentions.
13. In my view, no case for grant of leave to defend is made out for the
following reasons:
(a) As rightly contended by the counsel for the plaintiff, in the
entire application for leave to defend, the defendant has not
CS(OS) No.977/2010 Page 6 of 12
controverted the plea in the plaint of the plaintiff, in the year
2007, having advanced a loan of Rs.18,00,000/- to the
defendant by issuing cheques to the credit of the bank account
of the defendant. The defendant has also not disputed the
account number pleaded in the plaint and to the credit of which
the cheques were issued by the plaintiff and in which the
monies under the said cheques was received.
(b) The defendant has not given any other explanation for the
receipt of Rs.18,00,000/- in his bank account by cheques drawn
by the plaintiff and has not pleaded refund thereof.
(c) Rather, the counsel for the defendant, during the hearing, in
support of his contention that the suit claim is barred by time,
referred to the bank statements which were taken on record with
the consent of the counsel for the defendant, which show credit
from the account of the plaintiff to the account of the defendant
in the year 2007 of the aforesaid sum of Rs.18,00,000/-.
(d) Though the plaintiff has in the plaint expressly pleaded that the
26 cheques for a total amount of Rs.4,80,000/- were issued by
the defendant in favour of the plaintiff towards part payment of
CS(OS) No.977/2010 Page 7 of 12
the interest on the aforesaid loan amount of Rs.18,00,000/- but
the said fact has also not been controverted by the defendant in
the application for leave to defend and no other explanation for
issuance of the said cheques been furnished.
(e) Order 37 Rule 3 (6)(a) of the CPC provides that if the defendant
has not applied for leave to defend, the plaintiff shall be entitled
to judgment forthwith. The defendant, by not controverting the
material averments in the plaint of grant of loan by the plaintiff
to the defendant and issuance of cheques by the defendant in
part payment of the interest on the said loan, is deemed to have
admitted the said facts and to have no defence thereto.
(f) Once the defendant has admitted the transaction of loan, the
onus is on the defendant to show that such loan amount has
been repaid or is otherwise not due. The defendant in the
present case has not stated anything whatsoever in this regard
also.
(g) In the aforesaid state of affairs, the bare denial by the defendant
of the pro-notes for a total sum of Rs.33,24,000/- is found to be
frivolous and vexatious. A comparison with the naked eye, of
CS(OS) No.977/2010 Page 8 of 12
the signatures of the defendant on the application and affidavit
for leave to defend and on the said pro-notes and receipts, show
the same to be identical.
(h) The argument of the defendant, of execution of 19 different
pro-notes on one day instead of a consolidated pro-note for the
entire amount being contrary to the normal course of human
conduct and being suspicious, is also not found to have any
merit. The amount of Rs.18,00,000/- advanced by the plaintiff
to the defendant, also was on different dates and the different
pro-notes have been made for each of such transaction and with
interest computed separately on each transaction.
(i) The judgment of this Court in Gurbachan Singh, Maksudanlal
(supra) in the circumstances aforesaid has no application. In
fact, the said judgment also holds that notwithstanding the
denial of execution of a document, leave can be refused if the
denial is found to be mala fide. The denial by the plaintiff of
the signatures on the pro-notes and receipts, on which the suit is
based, for the reasons aforesaid is indeed mala fide.
CS(OS) No.977/2010 Page 9 of 12
(j) The argument raised during the hearing, of the suit claim being
barred by time has no basis in the pleadings in the application
for leave to defend. Else, on the averments in the plaint and the
documents, the suit claim is found to be within time.
(k) I also do not find any merit in the argument of the counsel for
the defendant, of the defendant being entitled to leave to defend
for the reason of the application for issuance of summons for
judgment being not in strict compliance with the language of
Order 37 of the CPC. Though undoubtedly, this Court in Shri
Satish Kumar (supra) held the application for issuance of
summons for judgment to be defective if does not verify the
cause of action, but in the context of a proceeding under Order
37 Rule 4 of the CPC where the plea of the defendant was of
being not served with the summons for judgment in accordance
with law and being thus not able to apply for leave to defend.
On the contrary, here, even if it were to be held that the
application for issuance of summons for judgment filed by the
plaintiff was defective, the fact remains that summons for
judgment were issued and served and the defendant in response
CS(OS) No.977/2010 Page 10 of 12
thereto has sought leave to defend, though without prejudice to
his plea of the application for issuance of summons for
judgment being defective. Inspite of my repeated asking, the
counsel for the defendant has been unable to tell as to what
prejudice has been caused to the defendant by the defect even if
any in the application for issuance of summons for judgment. I
have during the hearing in fact also put to the counsel for the
defendant that even if a finding in this regard were to be
returned in his favour, the same would still not entitle the
defendant to leave to defend and the only consequence thereof
would be, directing the plaintiff to file a fresh application for
issuance of summons for judgment and issuance of fresh
summons for judgment to the defendant. The counsel for the
defendant has not been able to tell as to what other defences /
grounds need to be taken by the defendant, if given an
opportunity to apply afresh for summons for judgment.
14. The application for leave to defend is accordingly dismissed.
CS(OS) 977/2010
15. Axiomatically, the plaintiff has become entitled to a decree forthwith.
CS(OS) No.977/2010 Page 11 of 12
16. The suit is decreed in favour of the plaintiff and against the defendant,
for recovery of Rs.33,24,000/-. As far as interest, pendente lite and future is
concerned, though the counsel for the plaintiff has contended that the
plaintiff is entitled to interest for the said period also at the agreed rate as
mentioned in the pro-notes but it is deemed appropriate to award interest,
pendente lite and future at the rate of 12% per annum.
17. The plaintiff is also entitled to costs of the suit.
Decree sheet be prepared.
RAJIV SAHAI ENDLAW, J.
MARCH 04, 2014 'gsr'..
CS(OS) No.977/2010 Page 12 of 12