Delhi High Court
Delhi Book Store vs Shri K.S. Subramaniam, Sole ... on 11 August, 2005
Equivalent citations: AIR2006DELHI206, AIR 2006 DELHI 206
Author: Swatanter Kumar
Bench: Swatanter Kumar
JUDGMENT Swatanter Kumar, J.
1. IA No. 7418/2002 is an application filed by the defendant under Order 37 Rule 3, sub-rule 5 read with Section 151 of the Code of Civil Procedure (for short 'CPC') praying for grant of unconditional leave to defend the suit. The plaintiff is a registered partnership concern with its office at 5, Ansari Road, Darya Ganj, Delhi. The firm is engaged in the business of marketing and printing books. It also is an importer of printed books. Mr. Vijay Ahuja is one of the registered partners of the partnership concern and has signed and verified the plaint and instituted the present suit on behalf of the partnership firm.
2. The defendant had approached the plaintiff on 6th May, 1998 for purchase of printed books on credit-basis. After negotiations, the plaintiff agreed to supply the printed books to the defendant on credit-basis. An agreement dated 8th May, 1998 was executed between the parties. As per the agreement the defendant was to issue post-dated cheques in respect of various purchases, which were to be honoured on presentation. The purchase, issuance of cheques and the liability of the defendant had been stated by the plaintiff in paragraph 5 of the plaint, which reads as under:-
That the defendant purchased the printed books vide invoice no. 020248 dated 9-5-98 amounting Rs. 5,00,000/- and also purchased books vide invoice no. 20269 dated 19-5-98 amounting Rs. 18,24,000/-. The copies of invoices are filed herewith and marked as Annexure A-2 & 3. The defendant at the time of purchasing the printed books in respect of invoices bearing no. 020248 and no 20269 has issued the following post dated cheques Cheque no. Date Amount 014228 20-07-98 1,00,000/-
014229 30-07-98 1,00,000/- 014230 15-08-98 1,00,000/- 014231 30-08-98 1,00,000/- 014232 30-09-98 1,00,000/- 153096 15-09-98 1,00,000/- 153097 15-10-98 1,00,000/- 014233 30-10-98 1,50,000/- 153098 15-11-98 1,00,000/- 14234 30-11-98 1,50,000/- 153099 15-12-98 1,00,000/- 014235 30-12-98 1,50,000/- 153100 15-01-99 1,00,000/- 14236 30-01-99 1,50,000/- 570558 15-02-99 1,24,000/- 014239 17-02-99 1,50,000/- 014328 30-03-99 1,50,000/- 014240 30-04-99 1,00,000/- 014241 30-05-99 1,00,000/- 014242 30-06-99 1,00,000/-
The defendant at the time of handing over the aforesaid cheques assured the plaintiff that all the above cheques drawn on State Bank of Travancore shall be honoured on presentation. The plaintiff firm has been maintaining a proper account in respect of purchase as made by the defendant. The payments made by the defendant were duly shown in the statement of account as maintained by the plaintiff firm. A true and correct statement of defendant as maintained by the plaintiff firm is filed herewith and may be read as part of the plaint. The same is marked as an Annexure A-4.
3. It is further pleaded case of the plaintiff that as per the accounts, a sum of Rs. 20,24,000/- was outstanding against the defendant which amount, the defendant failed to liquidate despite repeated requests. As per the terms and conditions for the supply of material, the defendant was also liable to pay interest @ 18% per annum on the overdue amount. The prevalent market rate of interest as also the amount paid by the defendant within the credit period is also 18% p.a. On this ground the plaintiff is stated to be entitled to receive a sum of Rs. 3,64,320/- on account of interest. On this premise, the plaintiff has filed the suit for recovery of Rs. 23,88,320/-. The defendant vide their letter dated 25th June, 1998 agreed to make the payment within a week, but despite that assurance, no payment was received and the plaintiff again requested the defendant vide their letter dated 6th November, 1998 to clear the cheques which were due. This was replied by the defendants vide their letter dated 13th November, 1998, requesting therein not to present the cheques, as the cheques received from the defendant from its parties were received back dishonoured. Vide letter dated 4th December, 1998 and 22nd December, 1998 the plaintiff had requested the defendants to clear the dues. The only reply that was received from the end of the defendant was in the letter dated 23rd December, 1998, stating that the cheques issued by various parties to the defendant were dishonoured and as such the defendant was unable to make the payment. The letters exchanged between the plaintiff and the defendant have been placed on record. The plaintiff on receipt of the dishonoured cheques i.e. cheque no. 014238 dt. 3-3-98, 014240 dt. 30-4-99, 014241 dt. 30-5-99 & 014242 dt. 30-6-99 had even sent a legal notice to the defendant on 4th October, 1999 through their counsel which was duly received by the defendant. It is stated that inadvertently a sum of Rs. 17,24,000/- was mentioned in the notice, which was corrected by a supplement notice dated 18th September, 1999. A reply was received from the defendant dated 18th September, 1999 stating that he had only purchased books worth Rs. 5 lacs out of which Rs. 3 lacs had already been paid, and it was specifically denied by the defendant that the sum of Rs. 20,24,000/- was still outstanding and due to the plaintiff from the defendant. In these circumstances, the plaintiff has filed the present suit under the provisions of Order 37 of the Code of Civil Procedure based on a written contract and the dishonoured cheques, stating that no relief claimed in the suit is beyond the scope of the said provisions.
4. The defendant having been served with the summons in the suit filed the application for leave to defend. In the application for leave to defend the defendant claims to be the sole proprietor of M/s. Coimbatore Books Store and being familiar with the facts and circumstances of the case, has filed the application stating that the summary suit under Order 37 of the CPC is not maintainable as the summons were served on the defendant and the documents on which the plaintiff relies upon were not supplied, as such the summary suit is not maintainable. It is also denied that plaintiff is a registered partnership concern and Mr. Vijay Ahuja is the registered partner empowered to institute the present suit on behalf of the partnership concern. The defendant while referring to its reply dated 22nd October, 1999 stated that there was no written agreement dated 8th May, 1998 purported to have been signed by the defendant. In ground 'E' of its leave to defend, the defendant has stated that out of the alleged two invoices in relation to supply of books worth Rs. 5 lacs and Rs. 18,24,000/- respectively the defendant had received and purchased the books only worth Rs. 5 lacs out of which Rs. 3 lacs have already been paid and it is denied that the books worth Rs. 18,24,000/- were ever received by the defendant from the plaintiff. The defendant puts the plaintiff to a strict rule of delivery of such books and invoice no. 20269 dated 19th May, 1998, is stated to be false and fabricated. The allegations made in the plaint are denied specifically that any amount, much less an amount of Rs. 20,24,000/- is due on account of principal and interest. Another specific ground taken for leave to defend is that no custom usage or the written agreement, was there between the parties to pay 18% interest. In fact, the plaintiff is not entitled to any interest for any period. According to the defendant, all these grounds raise friable issues, thus, the defendant is entitled to an unconditional leave to defend.
5. The pleadings of the parties afore-noticed indicate that the defendant has not in its entirety disputed the case of the plaintiff. The transaction between the parties is admitted and even the printed books worth Rs. 5 lacs is admitted, while there is denial of receipt of material for a sum of Rs. 18,24,000/-. Out of the admitted amount of Rs. 5 lacs, the defendant has stated that a sum of Rs. 3 lacs was paid to the plaintiff, which it may be noticed, is also admitted by the plaintiff, thus, leaving an admitted balance of more than Rs. 2 lacs. This is in relation to the invoice no. 020248 dated 9th May, 1998 and the cheques which were issued by the defendant and have been noticed on the same invoice and were for the period 20th July, 1998 to 30th September, 1998. The real dispute is with regard to invoice dated 19th May, 1998 for a sum of Rs. 18,24,000/-. This invoice not only acknowledges the material received, but also mentions the 15 cheques which were issued. The agreement dated 8th May, 1998 has been placed on record which is signed by the plaintiff and the defendant. Of course, the defendant has disputed the signatures on this agreement. To the bare naked eye, if these signatures are compared with the signatures on the affidavit filed with the leave to defend except with its normal variations, they appear to be of the same person. Another letter dated 25th June, 1998 has been placed on record, signed by the defendant which reads as under:-
Dear Mr. Vijai Ahuja, I am very sorry for the delay in sending the payment to you.
As informed I have yet to realize the payment from the party. Hope the matter will be settled within a week.
I am sending the photocopy of the cheques.
With Good Wishes, Yours faithfully, C.K. S. Subramaniam
6. The parties had meetings, which were held at Delhi, in regard to the outstanding amounts for settling their disputes, the record of which has also been placed on record. In addition to the above letter, which remains totally unexplained in the leave to defend application filed by the defendant, there is another letter dated 23rd December, 1998 which again reads as under:-
Coimbatore 23/12/98 Dear Vijay Ahuja, Keeping fine. Hope all are fine at Delhi.
Sorry VIJAY I was not in a position to sent the payment immediately.
There are 3 cheques worth Rs. 7 lakhs was returned form my customer. (copy enclosed) Please kindly wait for another 15 days. I am sure I can arrange few payments for you.
Since we know each other for a long time, I am sure you will co-operate with me for this genuine reason.
With Good Wishes & HAPPY NEW YEAR' Yours faithfully (K.S. Subramanian)"
7. If the case of the defendant is true that he had purchased materials worth Rs. 5 lacs only, then where is the question of issuing cheques of Rs. 7 lacs, as stated in the said letter. This letter completely falsify the stand taken in the application under consideration. The inability to make the payment, reason being that the defendant was to receive his bulk payment from Trichi was also recorded in addition to the above letter, in letter dated 4th September, 1999 written by the defendant to the plaintiff. The letter dated 13th November, 1998 written by the Manager of the defendant refers to a meeting held at Delhi and the fact that the cheques of the defendant worth Rs. 10 lacs were returned by the customers and as such they could not clear the payment. It was assured to the plaintiff that the defendant would abide by the commitment for making payment, of course, there may be delay. The plaintiff had served the notice dated 4th October, 1999 upon the defendant claiming the amount due. The plaintiff has also placed on record 15 cheques amounting to Rs.18,24,000/-, which had been dishonoured by the bank upon presentation. In all this correspondence, there is not even a whisper that the materials in question worth Rs. 23 lacs were not received by the defendant from the plaintiff. The stand taken in the application for leave to defend is apparently an after-thought and stand which completely lacks bonafides. The defendant has argued the case, which is in complete contradiction to his own letters which have not been disputed in the reply filed. The onus was on the defendant to explain why had he issued the cheques in access of Rs. 5 lacs, if no material was supplied to him, as claimed by the defendant. The defense of the defendant ex facie is a sham one.
8. The learned counsel appearing for the plaintiff while relying upon the judgment in the case of M/s. Aganall Traders Ltd. v. Shyam Ahuja and Messrs. Tailors Priya, a firm v. Messrs. Gulabchand Danraj, a firm argued that a decree should be passed in favor of the plaintiff and against the defendant as the defendant has not made out any friable issue. On the other hand, the learned counsel appearing for the defendant relied upon the case of Dentsply India Pvt. Ltd. v. Excel International and Ors , Goyal Tax Fab Pvt. Ltd. v. Anil Kapoor , Corporation Bank v. M/s. Montana International and Ors. 1995 1 AD (Delhi) 629, International Computers Consultants v. Home Computers Services (P) Ltd. (DB), Kasim Ali v. M.L. Wadhawan and Anr. , Chandradhar Goswami and Ors. v. Gauhati Bank Ltd. and M/s. Mechalec Engineers and Manufacturers v. M/s. Basic Equipment Corporation to contend that the defendant/applicant would be entitled to unconditional leave to defend. It is a settled principle of law that the defendant should be able to establish his bonafides and friable issue on the basis of the defense taken by him in the application for leave to defend. In the case of M/s. Mechalec Engineers and Manufacturers (supra) the Supreme Court itself spelled out the principles which will govern exercise of discretion under the provisions of Order 37 of the Code of Civil Procedure. The case of the present defendant would squarely fall in the set of cases which has been indicated by the Supreme Court in the said judgment in Clause 'D'. In a recent judgment of this Court in CS(OS) No. 630/2004, Car-O-Liner AB v. TTC Laser Machines Pvt. Ltd. decided on 4th August, 2005, the court held as under:
In the present case the defense of the Defendant in the application for leave to defend may not be a moonshine but certainly is not a defense which in its entirety is bonafide and would give rise to friable issues on all aspects of the issues taken up by the Defendant/applicant in the application for leave to defend.
In the case relied upon by the Defendants the Trial Court had granted leave to defend which was interfered by the High Court in granting unconditional leave to defend. In that case the Plaintiff had denied the liability in its entirety and in fact had even denied the receipt of the goods. The Trial Court had in that case formulated 7 issues which require consideration. The facts of the case has no application to the present case. The friable issues that would arise in the present case would be limited to the question of interest and the defective material. Rest claims of the Plaintiff in regard to receipt of the goods and its price and commission being regulated by a written contract between the parties even in view of the stand taken by the Defendant would not be open to much doubt. In accordance with the principle enunciated in the case cited by the Defendant itself, it will be a fit case where the Defendant should not be granted unconditional leave to defend. The case of the Defendant squarely falls in the category where the affidavit does not make out positively and immediately a case for grant of unconditional leave. Court shows such a state of fact has led to the inference that a trial of action may be able to establish a defense partly to the claim of the Plaintiff. In that case the Plaintiff may not be entitled to the judgment and Defendant would be entitled to leave to defend subject to conditions. Such principles are well enunciated, reference can be made to the Judgment of this Court in the case of Harprasad v. Allahabad Bank, and in the case of Kiranmoyee Dassi v. J. Chatterjee AIR 1949 Calcutta 479. For grant of unconditional leave to defend, it is necessary for the applicant to show that the defense taken by him is not sham but is bonafide. Reference can also be made to the judgment of the Supreme Court in the case of M/s. Gujarat Lease Financing Ltd. v. M/s. Abdulla Akbarali and CO. and Ors., where the Court held that even if the injunction was operating against the Defendant from transferring shares of the Company, it would be no ground for grant of unconditional leave. The applicant should show friable issues which would fairly demand a trial and must not appear to be a mere pretence of a friable issue.
The learned Counsel for the Plaintiff has not been able to show as to on what written contract or term of the invoices the Plaintiff claims the interest. This amount claimed by the Plaintiff in absence of such specific stipulation may not even fall under the category of the claim which could be raised strictly within the ambit of Order 37 of the CPC prior to the institution of the Suit. To this extent the Defendant could be entitled to leave to defend unconditionally.
In view of my above discussion the application for leave to defend of the Defendant is allowed, subject to the Defendant furnishing security to the extent of principal amount claimed by the Plaintiff in the Suit.
The application is accordingly disposed of in the above terms.
All the three IAs No. 4644/2004, 5720/2005 and IA ___/2004 stands disposed of.
9. When the above settled principles are applied to the facts of the present case, there can hardly be any doubt that the defense taken by the defendant is not only illusory but is in apparent contradiction to its own documents which have not been denied in the reply, except the agreement dated 8th May, 1998.
10. Another submission vehemently made on behalf of the defendant is with regard to the service of the summons upon the defendant in accordance with the provisions of Order 37 of the CPC. It is contended that the documents were not given to the defendant along with the plaint and the service of the summons was not proper. The copy of the summons which were served upon the defendant indicates that they were duly received by the defendant and nothing was recorded on the said summons that the documents annexed to the plaint have not been served upon the defendant. Even after the summons were received and prior to filing the application for leave to defend, there is nothing on record which could indicate that the defendant had written to the plaintiff or placed any document on the court file at the time of putting in appearance that the requisite documents were not supplied to the defendant. This again appears to be an after-thought on the part of the defendant.
11. In the written contract dated 8th May, 1998, there is no stipulation that in the event of default the plaintiff would be entitled to any interest. The plaintiff had received the post-dated cheques in terms of clause 'F' of the agreement. The parties, at the time of entering into the contract, had clearly stipulated that no interest would be payable to the plaintiff. The plaintiff cannot be permitted to argue or take a stand in contradiction to the agreement dated 8th May, 1998 which is the very foundation of his claim. Even on the invoices dated 9th May, 1998 and 19th May, 1998 nothing is indicated in regard to interest. The plaintiff also in the various letters written by the plaintiff to the defendant never claimed interest. Despite the fact that it is stated to be a commercial transaction, the element of interest cannot be introduced by inference, while dealing with the suit under Order 37 of the Code of Civil Procedure. In the notice dated 4th October, 1999, the plaintiff again claimed no interest. In these circumstances, and in absence of any written contract, the plaintiff cannot claim any interest as it would be beyond the purview and scope of the provisions of Order 37.
12. In view of my above discussion, I dismiss the application of the defendant for leave to defend and decree the suit of the plaintiff for a sum of Rs. 20,24,000/-. The claim of the plaintiff for interest is rejected. In the circumstances of the case, the parties are left to bear their own costs.