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Delhi District Court

Sh. Akil vs Sh. Rajesh Gupta on 11 February, 2020

                                                   RCA No. 08/2019

        IN THE COURT OF MS. SMITA GARG,
ADDITIONAL DISTRICT JUDGE ­2, SHAHDARA DISTRICT,
         KARKARDOOMA COURTS, DELHI.

RCA No. 08/2019
CNR No. DLSH01­000257­2019

In re:

     Sh. Akil
     S/o Sh. Ijajudin,
     R/o H. No. 3219, Gali No. 22,
     Mustafabad, Delhi­110094                       .........Appellant


                                     Versus
     Sh. Rajesh Gupta
     S/o Late Sh. D.C. Gupta,
     R/o H. No. F­7/1, Gali No. 5,
     East Jyoti Nagar, Shahdara,
     Delhi­110093                                   .......Respondent

              Date of institution of appeal           : 11.01.2019
              Date of conclusion of arguments         : 27.01.2020
              Date of pronouncement of judgment       : 11.02.2020


JUDGMENT:

1. This regular civil appeal under Section 96 of Code of Civil Akil v. Rajesh Gupta Page No.1/8 RCA No. 08/2019 Procedure impugns the judgment and decree dated 13.12.2018 passed by the Ld. Senior Civil Judge, Shahdara whereby the application under Order 37 Rule 3(5) CPC preferred by the appellant/defendant seeking leave to defend was dismissed and a decree for recovery of Rs. 2,00,000/­ alongwith interest @ 9% per annum was passed against him.

2. The brief background relevant for the disposal of the appeal is that the respondent/plaintiff instituted the suit for recovery of Rs. 2,00,000/­ alongwith interest @ 24% per annum against the appellant/defendant under Order 37 CPC on 01.06.2018. The respondent averred that in the first week of September, 2017, the appellant approached him for a friendly loan of Rs. 2,00,000/­ for a period of three months; that he gave Rs. 2,00,000/­ in cash to the appellant on 19.09.2017 in the presence of witnesses; that a duly notarised mutual agreement was executed between them and the appellant assured to repay the loan on or before 18.12.2017; that on 05.01.2018, the appellant sought further time of three months to repay the loan; that on 20.04.2018, when he again asked the appellant to repay the loan, the appellant refused to do so; and that on being served with legal notice dated 01.05.2018, the appellant sent a false and Akil v. Rajesh Gupta Page No.2/8 RCA No. 08/2019 frivolous reply dated 08.05.2018 but did not repay the money. Averring that the appellant was liable to repay the loan amount with interest @ 24% per annum, the respondent instituted the suit. Alongwith the plaint, the respondent placed on record the mutual agreement dated 19.09.2017 executed between the parties, copy of legal notice dated 28.04.2018 alongwith postal receipt and reply dated 08.05.2018 to the legal notice received from the appellant.

On being served with summons for judgment, the appellant filed the application under Order 37 Rule 3 (5) CPC seeking leave to defend the suit. In the application, the appellant merely denied the averments of the plaint. Observing that the appellant had failed to raise any triable issue, the trial court dismissed the application preferred by the appellant and decreed the suit of the respondent.

Aggrieved therefrom, the appellant is before this court.

3. I have heard the counsel for both the parties. Trial court record has also been perused.

4. The counsel for the appellant has assailed the judgment and decree dated 13.12.2018 by contending that while dismissing the application seeking leave to defend, the trial court failed to appreciate that the appellant had denied the borrowing of friendly loan of Rs. 2,00,000/­ from the respondent and had not accepted that he had signed or affixed his thumb impression on the agreement dated 19.09.2017. He submitted that the trial court not only ignored that the respondent had not produced any receipt of payment but also lost sight of the fact that as per law, the loan of Rs. 2,00,000/­ could not have been advanced in cash by the respondent. On the above grounds, it has been sought that the judgment and decree dated 13.12.2018 passed by the trial court be set aside.

On the other hand, the counsel for the respondent has argued that there is no illegality or infirmity in the order passed by the trial court and thus, no interference is called for. He submitted that since the appellant did not raise any triable issue and had also admitted his signature and photograph on the mutual agreement on being shown the same during the course of arguments, the trial court rightly declined to grant leave to defend to the appellant.

5. Order 37 CPC prescribes the summary procedure for the suits based on bills of exchange, hundis and promissory notes or the ones in which a plaintiff seeks only to recover a debt or liquidated demand in money payable on a written contract, an enactment, where the sum to be recovered is a fixed sum of money, or in the nature of any debt except penalty. The benefit of Order 37 is that unless the defendant is able to demonstrate that he has a substantial defence in his case, the plaintiff is entitled to a judgment immediately. The guiding principles for dealing with an application for leave to defend were laid down by the Hon'ble Supreme Court in landmark case of M/s Mechalac Engineers & Manufactures Vs. M/s Basic Equipment Corporation AIR 1977 SC 577 as under:

(a) If the Defendant satisfies the Court that he has a good defence 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 triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence 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 defence, 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 defence to the plaintiff's claim the Plaintiff is not entitled to judgment and the Akil v. Rajesh Gupta Page No.5/8 RCA No. 08/2019 Defendant is entitled to leave to defend but in such as 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 defence or the defence 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 defence or the defence 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 defence 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 prove a defence."

6. A perusal of the trial court record shows that in his application seeking leave to defend, the appellant had merely denied the case of the respondent and had not raised any plea whatsoever in his defence. It is also the matter of record that prior to the institution of the suit, the respondent had sent a legal notice dated 28.04.2018 to the appellant making specific averments regarding the advancement of loan of Rs. 2,00,000/­, execution of mutual agreement dated 19.09.2017 and non payment of loan amount by the appellant. From the reply dated 08.05.2018 sent to the said legal notice by the appellant, it is seen that even in the said reply the stand of the appellant was of general denial. Mere denial of the case of the respondent without raising any Akil v. Rajesh Gupta Page No.6/8 RCA No. 08/2019 defence was not sufficient for grant of leave to defend to the appellant.

7. In the memorandum of appeal, it has been stated that due to lack of knowledge, the counsel for the appellant could not raise any plea in leave to defend application and only para wise denial was made. It does not lie in the mouth of the appellant to allege that the counsel engaged by him lacked the legal expertise especially when the same advocate, who had replied to the legal notice dated 28.04.2018 and had drafted and filed the application for leave to defend on behalf of the appellant, has been retained by him to prefer the present appeal. Further, besides the fact that the pleas raised in the appeal for the first time were not pleaded before the trial court, the said pleas are without any substance. It is seen from the trial court record that during the course of arguments, the trial court had put the mutual agreement dated 19.09.2017 to the appellant. In the order dated 12.12.2018, it has been specifically observed by the trial court that the appellant had neither disputed his photograph nor his signature on the agreement. Once he did not challenge the same before the trial court, his assertion in appeal that he had not accepted his signature and thumb impression on the Akil v. Rajesh Gupta Page No.7/8 RCA No. 08/2019 agreement, while maintaining silence with regard to the photograph on the agreement, is clearly an after thought. As far as the plea of the appellant that the respondent could not have advanced Rs. 2,00,000/­ in cash in view of the provisions of Income Tax Act is concerned, needless to say that violation of Section 269 SS of the Act, if any, by the respondent may invite penalty under the Act but it does not absolve the appellant of his liability to repay the loan amount to the respondent.

8. In the light of above discussion, the appeal is without any merits and is, accordingly, dismissed. No order as to costs is made. Decree sheet be prepared accordingly.

Appeal file be consigned to record room.

                                       SMITA          by SMITA GARG
                                                      Date:
                                       GARG           2020.02.11
                                                      17:14:03 +0530
Announced in the open court                  (Smita Garg)
on 11.02.2020                             Addl. District Judge­2,
                                     Shahdara, Karkardooma Courts,
                                                Delhi.




Akil v. Rajesh Gupta                                            Page No.8/8