Delhi High Court
Goyal Tax Feb. Pvt. Ltd. vs Anil Kapoor Proprietor Supriya Fashion on 11 April, 2001
Equivalent citations: 2001IVAD(DELHI)741, AIR2001DELHI341, 91(2001)DLT616, AIR 2001 DELHI 341, (2002) 2 BANKCLR 583, (2002) 2 CIVLJ 302, (2002) 1 ICC 862, (2001) 3 PUN LR 38, (2002) 1 RECCIVR 194, (2001) 91 DLT 616
Author: A.K.Sikri
Bench: A.K. Sikri
ORDER A.K.Sikri,J.
1. Plaintiff has filed the Suit for recovery of Rs.5,78,931/-under order xxxvII of the Code of Civil Procedure. It is mentioned that the Suit is based on cheques by the defendants to the plaintiff. Some of these cheques on presentation were dishonoured and some of the cheques were not presented at all. On summons of judgment having served upon the defendant the defendant moved this IA seeking unconditional leave to defend.
2. In the Suit it is mentioned that defendant who is the sole proprietor of Supriya Fashion used to purchase the fabrics from the plaintiff-Company against the receipt thereof and during the course of such transaction defendants purchased cloth worth several lakhs of rupees from the plaintiff-Company and made certain payments against the same. As on 20th January, 1999 a sum of Rs.560059/- became due and against this payment defendant issued number of cheques. The goods in question against which this sum became due are covered by challans dated 12th June, 1997, 22nd August, 1997, 5th September, 1997, 17th September, 1997, 1st November, 1997, 3rd November,1997, 12th November, 1997, 29th November, 1997, 18th June, 1998 20th november, 1998, 4th December, 1998, 20th January, 1999 and 30th January, 1999. These goods were received by the defendant against receipt thereof and to cover up this liability the defendant issued the following cheques:-
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S.No. CHEQUE NO. DATED AMOUNT (in Rs.)
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1. 503253 05.06.98 40,000
2. 503254 10.06.98 45,000
3. 503830 15.06.98 48,144
4. 503831 15.06.98 40,000
5. 503832 26.06.98 42,987
6. 503833 25.06.98 42,000
7. 503834 30.06.98 51,338
8. 503835 30.0698 50,000
9. 503836 10.07.98 30,000
10. 503837 10.07.98 37,000
11. 503838 10.07.98 33,000
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TOTAL : 4,59,469
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(All drawn on Indian Bank, Janakpuri Branch, New Delhi.)
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3. However when these cheques were presented for encashment, the same were returned unpaid to the plaintiff. Inspite of various visits and reminders to the defendant, when the defendant did not make the payment present Suit for recovery was filed seeking a sum of Rs.4,59,469/- representing these cheques and Rs.1,19,462/- towards agreed interest @ 24% per annum on this principal amount.
4. The defendant in leave to defend application, has denied any liability though it is admitted that there were dealings between the parties. The grounds on which the leave to defend is prayed for can be summarised as under:-
1. The Suit is not maintainable under order xxxvII of the code of Civil Procedure. It was submitted that the defendant had presented only four cheques, out of the aforesaid 11 cheques for payment. As other cheques were neither presented nor dishonoured Suit could not be filed on the basis of these cheques under order xxxvII of the Code of Civil Procedure. Reliance was placed on Suri and Suri Private Limited versus Ram Swarup Arora and Company reported in Vol.24 (83) DLT (SN) 3 in support of this contention.
2. Suit for claiming interest was also not maintainable under the provisions of Order xxxvII of the Code of Civil Procedure more particularly when there was no clause for payment of interest in the agreement/contract between the parties nor was it mentioned in the bills.
3. On merits it was submitted that the cheques in question were without consideration. The defendant had given post-dated 11 cheques but no goods were supplied against these cheques. This would be clear from the fact that cheques related to the period 5th July, 1998 to 10th July, 1998 whereas as per the own statement of account of the plaintiff the dealing started on 12th June, 1997 and the last transaction was on 30th January, 1998. A perusal of the statement of account would show that after 5th June, 1998 the plaintiff received the payment of Rs.45,000/- on 17th June, 1998, Rs.50,000/- on 19th November, 1998 Rs.30,000/- on 3rd December, 1998. These payments were made by cheques drawn on Bank of Madura Limited. The statement of account world also reveal that a sum of Rs.13,700/- on 5th December, 1998, Rs.18,500/- on 15th January, 1999 and Rs.21,500/- on 20th January, 1999 was given in cash. This clearly indicates that there was no question of issuance of cheques for consideration.
4. No goods were received through the bill no.14 dated 12.6.97 for Rs.1,12,956/-, bill number 334 dated 20th January, 1999 for Rs.18,264/-, bill number 349 dated 30th January, 1999 for 17,213/.
5. Most of the goods were defective and the plaintiff himself settled with the defendant by receiving the cash payment of Rs.40,000/- in January 1999. The plaintiff never issued any receipt for the amount so received from the defendant.
5. According to the defendant, the Suit was therefore false.
6. In reply to application for leave to defend the plaintiff has contended that four cheques were presented for payment which were returned by the defendants banker with remarks "not sufficient funds". Since all the cheques were drawn on Indian Bank, Janakpuri Branch, New Delhi not once or twice but 12 times there was no logic or purpose in presenting the balance cheques. It is also contended that the interest is claimed in the plaint by way of consequential relief which arises because of non-payment of due amount against the defendant. The rate of interest is claimed on the basis of oral mutual agreement between the parties and prevalent market rate. Plaintiff has further denied that no goods were received by the defendant or there were any defective goods through Bill nos. 14, 334 and 339 dated 12th June, 1997, 20th January, 1999 and 30th January, 1999 as alleged in the application for leave to defend. The plaintiff has admitted payment of Rs.40,000/- in the month of January, 1999 by way of cash and has stated that it is duly accounted for in the statement of account filed by the plaintiff Along with the plaint.
7. The principles on which application for leave to defend has to be examined are laid down in the celebrated judgment of the Apex Court in the case of Mechalec Engineering and Manufacturer versus Basic Equipment Corporation . Following principles were laid down in this case:-
(a) If the defendant satisfies 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 to defend.
(b) If the defendant raises a friable issue indicating that he has a fair or bona fide 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 he has 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 ti 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.
8. Coming to the facts of the present case, it cannot be said that the defense taken by the defendant in leave to defend application is totally sham. There are certain circumstances, couples with certain acts on the part of the plaintiff which may prima facie raise some doubt the credibility of its version and may lend some credence to the defense taken by the defendant that the cheques in question were without consideration. Although as the plaintiff, four cheques were presented to the banker and each time they were dishonoured, not a single letter was written by the plaintiff to the defendant about the return of these cheques as unpaid. Further to the pointed query from the Court, learned counsel for the plaintiff made candid admission to the effect that no notice was served on the defendant before filing the present Suit. Why plaintiff would not send notice of dishonour of the cheque when plaintiff could even file proceedings under Section 138 of the Negotiable Instruments Act, or why plaintiff would not write a single letter or serve notice upon the defendant for payment of the alleged outstanding amount before filing the Suit is baffling to the mind. Now let us examine this aspect further in the context of the submissions made by the defendant on the basis of statement of account filed by the plaintiff itself. As per the statement of account the case of the plaintiff is that the cheques were given against supply of goods by specific bill/challan numbers, particulars whereof are given in para 5 of the plaint. If the Cheques in question were against the supplies made vide these challan, how the plaintiff was receiving payments through cheques as well as in cash also particularly after 5th June, 1998 the details whereof are given in para 2 of the plaint. It is not explained by the plaintiff as to on what account these payments were received if they were in addition to the payments received by means of these cheques against the challan mentioned in para 5 of the plaint. Thus the defendant has raided good defense and friable issue indicating that he has fair and bonafide defense.
9. Moreover, this Court in the case of Suri and Suri Private Limited (supra) has held that when the Suit is filed on the basis of several dishonoured cheques not presented at all for encashment, relief claimed would be outside the scope of Order xxxvII and Suit would not be maintainable under Order xxxvII of the Code of Civil Procedure. In that case plaint will have to be dealt with in ordinary way. Nodoubt there may be some justification in the stand taken by the plaintiff that when four cheques on presentation by the plaintiff several times were dishonoured on the ground of insufficient fund in the account of the defendant, and plaintiff therefore did not present remaining cheques. But for filing the Suit under order xxxvII of the Code of Civil Procedure it was still necessary for the plaintiff to present these cheques to the Bank. Admittedly, 7 cheques out of 11 cheques given by the defendant were not presented for payment. Therefore, the Suit under Order xxxvII would not be maintainable.
10. For all these reasons I am the opinion that defendant would be entitled to unconditional leave to defend. This IA is accordingly allowed. Defendant is allowed unconditional leave to defend the Suit.
S.No.1802/9911. Let written statement be filed within four weeks. Replication, if any, within four weeks thereafter. Both the parties may file documents, if any, within eight weeks from today.
12. List before Joint Registrar for admission and denial of documents on 6th September, 2001.
13. List before Court for framing of issues on 18th September, 2001.
14. The aforesaid schedule shall be strictly adhered to.