Bombay High Court
S.P. Brothers, A Partnership Firm vs Biren Ramesh Kadakia on 27 March, 2008
Equivalent citations: AIR 2009 (NOC) 335 (BOM.) = 2008 (6) AIR BOM R 342 (DB), 2008 (6) AIR BOM R 342, 2009 A I H C 650, (2009) 3 BANKCAS 117, (2009) 1 CURCC 15, (2008) 4 ALLMR 379 (BOM), (2009) 1 BOM CR 453
Author: Swatanter Kumar
Bench: Swatanter Kumar, J.P. Devadhar
JUDGMENT Swatanter Kumar, C.J.
1. The plaintiff filed a suit under the provisions of Order 37 of the Code of Civil Procedure, 1908 (hereinafter the Code) against the defendant praying for a decree of Rs. 8,28,605.95 with future interest on the principal amount of Rs. 5,00,000/-at the rate of 15 per cent per annum from the date of institution of the suit till realisation. This decree was prayed by the plaintiff on the facts that the defendant is a partnership firm , carrying on the business at Narayan Dhru Street, Mumbai. The plaintiff being a non-resident Indian filed the suit through his father and power of attorney holder. According to the plaintiff, his father and the family of the defendant had good relations. Shri Sharad P. Kadakia, a partner of the defendant firm approached the plaintiff and took a loan of Rs. 5,00,000/-. This loan was paid by a cheque drawn on the Ahmedabad Mercantile Co-operative Bank Limited. There was an oral agreement between the parties that they would pay interest at the rate of 18 per cent per annum on the amount advanced. The defendant actually paid 18 per cent interest upto 31st March, 2001 and thereafter at the rate of 15 per cent per annum on the total sum of Rs. 5,00,000/-. The defendant also deducted Tax at Source and issued Form 16-A for such deductions. The interest was paid upto 26th September, 2003, whereafter only TDS certificates were issued, copies of which have been annexed to the plaint at Exhibits-A, A-1 to A-3. Thereafter, no amount was paid to the plaintiff as per the agreed terms,despite his repeated requests. The plaintiff had averred in the plaint that the defendants are liable to pay the principal sum of Rs. 5,00,000/-and interest at the rate of 15 per cent per annum from 1st April, 2002 upto 31st March, 2003, after reducing the TDS amount and thereafter 15 per cent interest upto the date of filing of the suit and even thereafter. The plaintiff, through his advocate, issued a notice to the defendant on 28th August, 2006 for payment of the amount in question which was duly served upon the defendant. Despite such notice, the defendant has failed to pay the amount resulting in institution of the present suit. In paragraph 13 of the plaint, the plaintiff had claimed that the suit had been filed under the provisions of Order 37, Rule 2 of the Code on the basis of the debt due to the plaintiff and no relief had been claimed beyond the ambit of the said rule.
2. Upon service of the plaint, appearance was filed by the defendant. The plaintiff took out Summons for Judgment to which an application for leave to defend was filed by the defendant supported by an affidavit. In the affidavit, a preliminary objection was taken that the suit of the plaintiff is barred by law of limitation. It was stated that family members of the defendant and the plaintiff are partners of the firm known as M/s. S.R. N. Engineering Industries and the claim of the plaintiff was false. Other detailed facts have been given in the reply denying the liability to pay any amount to the plaintiff. It is averred that the plaintiff had not lent any amount to the defendant. In fact, the amount of Rs. 2,00,000/-paid by the plaintiff was paid to the Defendants under arrangement and the amounts if at all payable are to the extent of 50 per cent and that too they will be payable to Ramesh C. Kadakia, Mr. Biren R. Kadakia or Mrs. Taru R. Kadakia. The amount lying to the defendant is part of investment to be maintained by M/s. P.S. Parekh & Co., with the defendant towards business jointly done by M/s. Parekh & Co., and the defendant with one Mr. Lalit of Lalit Profile & Steel (India) Limited and the amount can be returned to the plaintiff only upon receipt of amount from the said Mr. Lalit. On the basis of the averments made in the plaint, the defendant also took up an objection that the plaintiff could not have lent money. He is not entitled to claim the amount as he does not possess any licence under the Bombay Moneylenders Act, 1946 and the suit is not maintainable.
3. The learned single Judge while considering the merits of the application for leave to defend came to the conclusion that the defendant would be entitled to grant of conditional leave vide order dated 16th July, 2007. The learned Judge thus granted conditional leave on the following terms.
13...In such circumstances, this is a fit case where conditional leave should be granted to the defendant to defend the suit. Hence, following order:
(a) Upon defendants depositing in this Court principal sum of Rs. 5 lakhs within twelve weeks from today, conditional leave to defend the suit is granted. In that event, the suit shall stand transferred to the list of commercial causes with usual directions to file written statement and discovery and inspection.
(b) If the amount as directed is not deposited within the stipulated time plaintiff would be entitled to apply for judgement in his favour.
(c) On deposit the said amount shall be invested in any nationalised bank initially for a period of three years and to be renewed thereafter from time to time.
(d) Summons for judgment is disposed of with the aforesaid directions.
(e) It will be open for plaintiff to apply for withdrawal of the amount, if any application in that behalf is made the same should be considered on its own merits and in accordance with law.
4. The contention raised on behalf of the appellant is that the present suit is not maintainable under the provisions of Order 37 of the Code, inasmuch as the TDS certificates at Exhibits-A to A-3 to the plaint cannot in law constitute a written contract between the parties. The plaint, as framed, does not bring the suit of the plaintiff within the ambit and scope of Order 37 of the Code. While relying upon the Full Bench judgment of this Court in the case of Jyotsna K. Valia v. T.S. Parekh and Company, decided on 26th April, 2007 in Summons for Judgment No. 1117 of 2003 in Summary Suit No. 1551 of 2003, it is also contended by the appellant that the TDS certificates could not be treated as an acknowledgement in writing of the debt due. Reliance was placed on paragraph 30 of the said judgment which reads as under.
In so far as acknowledgements writing or receipt are concerned, considering the various judgments adverted to earlier on behalf of the plaintiffs and defendants and the discussion, it is not possible to lay down any precise test as to when a Summary Suit would lie on an acknowledgement writing or receipt. That would depend firstly on the document itself, the practice, usage and customs of the trade as also the facts of each case.
5. It is also contended that the complexity of facts stated in the written statement, seen in light of the relationship between the parties, raises triable issues entitling the appellant for grant of unconditional leave. Lastly, it was argued that the claim of the respondent in the appeal was barred by time.
6. However, the learned Counsel appearing for the respondent argued that no such ground had been raised in the application for leave to defend and as such the appellant was estopped from raising this issue before this Court. The suit as framed would be maintainable under Order 37 of the Code as the TDS certificate is even an acknowledgement and reflects a written contract between the parties.
7. As already noticed, the learned single Judge while granting conditional leave to the appellant found that the Full Bench judgment was not applicable as issuance of the certificates or deduction of interest was not in dispute. The learned single Judge also found that the certificates in question referred to are nothing else but a liability to pay interest on the loan which had been taken.
8. The first and foremost we would like to consider whether suit of the plaintiff is covered under the provisions of Order 37 of the Code, as determination of this question would render other ancillary grounds inconsequential, in the facts and circumstances of the present case. In the plaint instituted by the respondent in appeal, no reference has been made to any written contract. On the contrary, it is averred that a friendly loan was given and the payment was made by a cheque. It is not even pleaded nor is case of the respondent that any written contract was executed between the parties. The entire reliance has been placed upon Exhibits-A to A-3 to the plaint, copies of the TDS certificates issued by the plaintiff from 31st May, 2000 to 26th September, 2003. The suit was instituted in September, 2006. Certainly, an averment has been made in paragraph 13 of the plaint that the suit is within the provisions of Order 37 and no relief falls outside the ambit of the said provision. We may even usefully refer to the notice dated 28th August, 2006 which was served by the respondent upon the appellant. Even in the notice dated 28th August, 2006, no reference was made to any agreement or contract between the parties. The claim was raised in the notice for claiming the interest at the rate of 15 per cent upto 31st March, 2003 (minus TDS paid) and thereafter at the rate of 15 per cent per anum. Objection in regard to maintainability of the suit has been taken by the appellant and argued before the learned single Judge with some emphasis. This contention has been noticed in the impugned judgment. We are unable to find any merit in the contention of the counsel for the respondent that the appellant cannot be permitted to argue this issue because specific objection in that regard was not taken in the application for leave to defend. Firstly, the application for leave to defend does show averment that the suit of the plaintiff is not maintainable and should be dismissed. Secondly, this is a question of law and it is obligatory upon the respondent to show that on the bare reading of the plaint, the suit under the provisions of Order 37 of the Code would be maintainable. The issuance of TDS certificates does not amount to an acknowledgement of defendant within the meaning of Section 25 of the Indian Evidence Act and the Full Bench judgment of this Court in the case of Jyotsna (supra) puts the matter beyond doubt. The TDS certificate is primarily to acknowledge the deduction of tax at source. The certificate does not refer to any amount of loan or even the rate of interest which is payable on the said principal amount. It does not refer to any contract between the parties and even a transaction. When a written contract is produced before the Court, its contents are the best evidence. The bare reading of Order 37 Rule 2 shows that these provisions have a restricted aplication and the order applies only to the class of suits specifically mentioned in the rule. A suit based upon bill of exchange, hundi, promissory note to recover a debt or liquidated demand payable by the plaintiff to the defendant with or without interest but arising from a written contract, or an enactment, or a guarantee where the claim against the principal is in respect of a debt or liquidated demand only. We are unable to accept the contentions raised on behalf of the respondent that issuance of certificate for tax deduction at source would be a document which will fall in any of the clauses stated under Order 37 Rule 2. As already noticed, a written contract between the parties has neither been pleaded nor any document to that effect placed on record. It is not a debt due on an enactment as understood in legal parlance or a guarantee. Admittedly, the loan was advanced as a friendly loan to which serious dispute has been raised. The dispute raised by the defendant relates to questions of law as well as facts.
9. It is a settled principle of law that before a plaintiff can bring a suit to be tried under the special summary procedure provided under Order 37 of the Code, it is obligatory on the part of the plaintiff to satisfy the Court that the suit as framed is not only maintainable under the provisions of Order 37 of the Code but no relief whatsoever have been claimed in the suit that are falling outside the ambit and scope of the said provision. Wherever such an objection is taken, which in fact has been taken in the present case, the law requires the plaintiff in a suit to show that taking the averments made in the plaint to be correct, the suit satisfies the ingredients of the special provisions. If the ingredients of Order 37 on the plain reading of the plaint are not satisfied, then plaintiff cannot claim any benefit of the summary procedure. Even on the plea of demur, the appellant is unable to demonstrate in the present case that suit squarely falls within the ambit of Order 37 and the reliefs claimed therein including the interest claim falls within the ambit and scope of the said provision.
10. For the reasons aforestated, we allow this appeal, set aside the impugned order dated 16th July, 2007 under appeal. We further direct that the suit shall proceed as an ordinary suit and not as a summary suit under the provisions of Order 37 of the Code. No order as to costs.