Jammu & Kashmir High Court - Srinagar Bench
Abdul Rehman Paul vs Ashiq Hussain Langoo on 5 August, 2024
Author: Sanjay Dhar
Bench: Sanjay Dhar
S. No.1
Regular List
IN THE HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT SRINAGAR
CM(M) No.272/2024
ABDUL REHMAN PAUL ... Petitionere(s)
Through: - Mr. Adil Parray, Advocate.
Vs.
ASHIQ HUSSAIN LANGOO ...Respondent(s)
Through: - None
CORAM:
HON'BLE MR. JUSTICE SANJAY DHAR, JUDGE
JUDGMENT
Dt:05.08.2024
1) The petitioner has challenged order dated 24.06.2024, passed by learned Principal District Judge, Srinagar, in a suit filed by the petitioner against the respondent under Order 37 of the Civil Procedure Code, whereby application of the respondent for leave to defend the suit in terms of Order 37 Rule 3(5) of the CPC has been allowed and he has been granted unconditional leave to defend the suit.
2) Heard learned counsel for the petitioner and perused the record of the case.
3) It appears that the petitioner has filed a suit for recovery of an amount of Rs.21.00 lacs alongwith interest @18% per annum against the respondent/defendant before the Court of learned Principal District Judge, Srinagar (hereafter referred to as "the trial Court"). The suit is based upon promissory note dated 22.11.2022, alleged to have been executed by the respondent/defendant in favour of the petitioner/plaintiff. According to the petitioner/plaintiff he had extended financial help of Rs.21.00 lacs to the defendant, who had promised to return the said amount by April, 2023 and, in this regard he had executed promissory note dated 22.11.2022. It has been averred in the plaint that when the respondent/defendant failed to pay the amount, a notice of demand dated 04.09.2023 was served upon the respondent/defendant through registered post, but in-spite of receipt of the same, the respondent/defendant failed to liquidate the outstanding amount.
4) It appears that after service of summons for judgment upon the respondent/defendant, he filed an application for leave to defend the suit in terms of sub-rule (5) of Rule 3 of Order 37 CPC within the stipulated time. In the said application, respondent/defendant denied having borrowed the amount of Rs.21.00 lacs from the petitioner/plaintiff. He claimed that the plaintiff has not placed on record details of any bank transactions or any cheques etc through the medium of which the plaintiff had claimed transfer of said amount of Rs.21.00 lacs to the bank account of the defendant/respondent. It was also contended by the respondent/defendant that he has not executed the promissory note in question and that the said document is totally false and baseless. It was specifically claimed by the defendant that the promissory note is forged, as the same does not bear his signature or thumb impression.
CM(M) No.272/2024 P a g e | 2 of 7 5) The learned trial Court after hearing the parties and after taking
note of the contentions raised by the learned counsels appearing for the parties, including the case law on the subject, passed a detailed order dated 24.06.2024, whereby the application of respondent/defendant seeking leave to defend the suit has been allowed and respondent/defendant has been permitted to defend the suit unconditionally without insisting upon any security etc.
6) The petitioner/plaintiff has challenged the impugned order on the grounds that in terms of Section 122 of the Negotiable Instruments Act, an indorser of a negotiable instrument cannot be permitted to deny the signature or capacity to contract of any prior party to the instrument. It has also been contended that the respondent/defendant has not raised any triable or substantial defence, as such, it was not open to the learned trial Court to grant him unconditional leave to defend the suit. It has been further contended that the learned trial Court has failed to appreciate that the respondent/defendant did not place any documentary evidence in support of his contentions.
7) So far as the argument of the learned counsel for the petitioner based upon the provisions contained in Section 122 of Negotiable Instruments Act is concerned, the same is misconceived for the reason that estoppel against denying signature or capacity to contract of any prior party operates against the indorser of a negotiable instrument in a CM(M) No.272/2024 P a g e | 3 of 7 suit filed by the subsequent holder of said instrument. In the present case the hundi on the basis of which the petitioner/plaintiff has filed his suit before the trial Court, has not been indorsed by the respondent/defendant and it is not a case where the suit has been filed by a subsequent holder of the promissory note alleged to have been executed by the respondent/defendant. The principle contained in Section 122 of the Negotiable Instruments Act is, therefore, not attracted to the present case.
8) The respondent/defendant in his application has specifically denied having received any amount from the plaintiff/petitioner. He has specifically pleaded that the plaintiff has not produced any document to show that he has advanced the money to the defendant through bank transaction, as has been claimed by him. It is the defence of the respondent/defendant that he has not executed the promissory note, inasmuch as, the same does not bear his signature or thumb impression. In-fact the respondent/defendant has termed the promissory note as a forged document. In the face of this type of defence set up by the defendant, the learned trial Court was right in holding that defence set up by the defendant/respondent in his application for leave to defend is good enough to entitle him to leave to defend the suit.
CM(M) No.272/2024 P a g e | 4 of 7 9) The grant of leave to defend in a summary suit filed under Order
37 of the CPC is governed by the principles as enumerated by the Supreme Court in the case of IDBI Trusteeship Services Limited vs. Hubtown Limited, (2017) 1 SCC 568. Para (17) of the said judgment is relevant to the context and the same is reproduced as under:
17. Accordingly, the principles stated in para 8 of Mechele's case will now stand superseded, given the amendment of Order 37 Rule 3 and the binding decision of four Judges in Milkhiram case as follows:
i. 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.
ii. 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, and the defendant is ordinarily entitled to unconditional leave to defend.
iii. 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.
iv. 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.
CM(M) No.272/2024 P a g e | 5 of 7 V. 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.
vi. 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."
10) As is clear from clause (i) and (ii) of the afore quoted judgment, if the defendant satisfies the Court that he has a substantial defence or if the defendant raises triable issues indicating that he has a fair or reasonable defence, the defendant is entitled to unconditional leave to defend the suit.
11) In the instant case, as already stated, the defence put up by the respondent in his application for leave to defend the suit not only raised the triable issues but it also constitutes a substantial defence to the suit of the plaintiff. The contention of the petitioner/plaintiff that the defendant has not placed on record any document in support of his defence is absolutely meritless for the reason that it is for the plaintiff to prove his case in the first instance and it is only if the plaintiff establishes his case against the defendant that the defendant can be called upon to prove his defence.
12) Learned counsel for the plaintiff has contended that the promissory note in question is genuine and this can be established by CM(M) No.272/2024 P a g e | 6 of 7 sending promissory note for its examination by the FSL at this stage itself. I am afraid it is not open to this Court to hold a mini trial in the present case at this stage nor was it permissible to the trial Court to hold a trial for determining the genuineness of the promissory note at the stage of considering the application for leave to defend the suit.
The argument raised by learned counsel for the plaintiff is without any merit.
13) The power of the High Court under Article 227 of the Constitution is in the nature of supervisory jurisdiction which has to be exercised with great care and caution. This power can be exercised only when there is any flagrant abuse of fundamental principles of law and justice and not otherwise. It is only if there is a gross error of law which has resulted in manifest failure of justice that this Court would be justified in correcting such error of law. In the instant case, I do not find any error, much less a gross error, in the impugned order passed by learned District Judge. The same does not call for any interference by this Court in exercise of its supervisory jurisdiction.
14) For the foregoing reasons the petition is dismissed.
(SANJAY DHAR) JUDGE SRINAGAR 05.08.2024 Sarveeda Nissar Whether the order is speaking: Yes/No Whether the order is reportable: Yes/No CM(M) No.272/2024 P a g e | 7 of 7 Sarveeda Nissar I attest to the accuracy and authenticity of this document every page at bottom left side 07.08.2024 14:28