Bombay High Court
Vinod Kumar Saboo vs Sudarshan Vishwanath Malpani And ... on 3 April, 2017
Bench: Anoop V. Mohta
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 972 OF 2005
IN
SUMMONS FOR JUDGMENT NO. 1008 OF 2003
IN
SUMMARY SUIT NO. 2624 OF 2003
WITH
NOTICE OF MOTION NO. 1402 OF 2010
IN
APPEAL NO. 972 OF 2005
IN
SUMMONS FOR JUDGMENT NO. 1008 OF 2003
IN
SUMMARY SUIT NO. 2624 OF 2003
Vinod Kumar Saboo
An adult Indian inhabitant
Having his office at flat No.A/302,
Jeevan Vihar 3rd floor,
Manav Mandir, Bombay-40006. .....Appellant.
(Orig. Defendant)
Vs.
1 Sudarshan Vishwanath Malpani
an adult Indian inhabitant of Bombay,
residing at 43 Brijkutir, 4th Floor,
68, Nepean Sea Road, Mumbai-400006.
2 Vivek Vishawanath Malpani
R/at 39, Vascon Paradise,
Baner Road, Pune-411045. .....Respondents.
(Orig. Plaintiff Nos. 1 and 2)
Mr. Pratek Seksaria along with Mr. Simil Purohit, Mr. Nivit Srivastava,
1/14
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Mr. Harsh Behany & Mr. Pratik Amin i/by Maniar Srivastava &
Associates for the Appellant.
Mr. Kishor D. Shah for the Respondents.
CORAM : ANOOP V. MOHTA AND
P.R. BORA, JJ.
RESERVED ON: 24 JANUARY 2017.
PRONOUNCED ON: 3 APRIL 2017.
JUDGMENT (PER ANOOP V. MOHTA, J.):-
The Appellant-Original Defendant has filed the Appeal and
prayed to quash and set aside impugned Judgment/order dated 16
August 2005 passed by the learned Single Judge in Summons for
Judgment No.1008 of 2003 in Summary Suit No. 2624 of 2003.
2 The Appellant and the Respondents formed and signed a
partnership deed and purchased a membership card of NSEI Limited
in the name of partnership firm i.e. "Money Mint".
3 During the year 1998-1999, disputes and differences arose
between them. On 2 August 2000, they signed an arrangement. The
claim and counter-claim made through the correspondences. On 1
August 2004, the Respondents filed the Suit for recovery/claim of Rs.
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40 lakhs and has taken out Summons for Judgment. In the month of
October 2004, the Appellant has taken out Notice of Motion No. 3021
of 2004 and raised the question of jurisdiction. On 22 December
2004, the Respondents filed reply in the Notice of Motion. On 18
June 2005, the Appellant filed his affidavit in reply of Summons for
Judgment. On 16 August 2005, the learned Single Judge passed the
impugned order and thereby directed to deposit full amount of Rs.40
lakhs. Being aggrieved, the Appellant has filed the present Appeal.
4 The learned counsel appearing for the Appellant read and
referred the following Judgments in support of his contentions.
a) Emkay Exports, Mumbai & Anr. Vs. Madhusudan
Shrikrishna;1
b) Siri Krishan Bhardwaj Vs. Manohar Lal Gupta &
Anr.2
c) Lucky Electrical Stores, by Partner Mahendra Kumar
Shah & Anr. Vs. Ramesh Steel House by Partner
Babulal3
d) Nandipati Rami Reddy Vs. Nandipati Padma Reddy &
1 2008 (4) Mh. L. J. 843
2 ILR (1977) Delhi 436
3 (1988) 1 MLJ 187
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Ors.4
e) Vareed Jacob Vs. Sosamma Geevarghese & Ors.5
f) IDBI Trusteeship Services Ltd. Vs. Hubtown Ltd.6
5 This Court (Coram:- Anoop V. Mohta,) in IAL Logistics
India [A Division of IAL Container Line (India) Ltd. Vs. Quantum
International7, while dealing with the scheme and object of Order 37
of the Code of Civil Procedure 1908, (CPC), has observed in
paragraph No.10 that:-
"10. The scheme and purpose of Order XXXVII of the
Code of Civil Procedure (CPC) can be summarised as
under:-
The purpose and the basic of summary suit:-
(a) A plaintiff, if chooses to invoke the provisions of
Order XXXVII for recovery of amount, the basic
obligations and elements as required need to be
fulfilled. The summary suit so filed must fall within
the four corner of Order XXXVII for getting
judgment/decree summarily.
(b) As per Rule 227 of the Bombay High Court
(Original Side) Rules, 1980, the plaintiff must take
out an appropriate proceeding within six months
once such Suit is instituted, though it is subject to
condonation of delay, if case is made out.
(c) The object of Order XXXVII is to recover the
crystallised dues, liquidated, admitted,
4 1977 SCC OnLine AP 13=AIR 1978 AP 30
5 (2004) 6 SCC 378
6 (2017) 1 SCC 568
7 2011 (5) Mh.L.J. 931
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acknowledged debt/monetary claim by a summary
procedure, without long trial, principally based
upon a written document executed in the course of
business, in accordance with law. It is a supportive
measure for recovery of unpaid debt/amount
covering all the negotiable instruments as
contemplated under the Negotiable Instruments Act,
apart from a valid, written
contract/receipt/acknowledgment. It may be an
express term or an implied term, based upon facts
and circumstances of the case, considering the
practice, trade and usage of the commerce and the
trade. This also covers apart from principal amount,
express or implied terms of the interest.
The plaintiff's and defendant's respective obligations:
(d) A plaintiff having once instituted a summary suit is
under obligation firstly, to serve the defendant, a
summons for appearance by providing copy of
plaint and annexures. The defendant, upon such
service, needs to appear within 10 days from the
date of the service either in person or through an
Advocate. If the appearance is made, either in
person or through the Advocate, the plaintiff is
required to serve the summons for judgment on the
given address.
(e) The defendant is entitled to file a reply and/or an
application for grant of leave to defend the Suit,
within 10 days of service of summons with the
averments and the supporting documents entitling
him leave to defend the Suit. Such application or
affidavit reply shall be supported by an affidavit.
(f) If the defendant fail to enter appearance in spite of
the service, the plaintiff's averments/allegation, if
supported by due documents/ material, shall be
deemed to be admitted and entitled for a
judgment/decree for the amount so prayed. The
defendant though filed appearance but failed to file
reply or defence or remained absent in spite of filing
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of service, the Court may pass judgment/decree as
prayed in accordance with law.
The Court needs to exercise the discretion judicially:
(g) Though basic burden lies upon the plaintiff to prove
and satisfy the Court that the claim so raised and
prayed for decree falls within the ambit and scope of
the summary procedure in question. Once the Court
comes to a conclusion that plaintiff has made out a
case for summons for judgment or the defendant has
made out a case for unconditional or conditional
leave, after considering the facts and circumstances
of the case, need to exercise discretion in either way
based upon the settled position of law.
(h) The defendant is able to demonstrate through the
affidavit in defence and/or averments made in
application/affidavit for leave to defend that the
plaintiff has not made out a bona fide and clear
case and on the contrary the defence so raised is
bona fide reasonable and good defence and raises
the plausible/triable issues the defendant is entitled
to unconditional leave to defend.
(i) But, after the defence so raised by the defendant and
the Court is satisfied that the defendant may at the
trial able to establish a defence and/or there is
material placed on record, though not fully
supportive, the Court may grant conditional leave,
directing the defendant to deposit the amount in the
Court in full and/or in part and/or to furnish the
security by possible permitted modes pending the
trial.
The grant of Decree or Summons for Judgment with
agreed interest:
(j) The Court, if, comes to a conclusion that there is no
defence and/or it is sham, bogus, illusory and
moonshine, the Court may refuse to grant leave to
defend and pass/grant summons for judgment or
decree as prayed by the plaintiff.
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The Interest:
(k) The Court needs to consider the aspect of agreed
rate of interest on the principal amount so claimed
and the future interest also. The condition should be
reasonable, practicable and not be onerous or
burdensome:
The condition should be reasonable, practicable and not
be onerous or burdensome:-
(l) It is also necessary for the Court while exercising a
jurisdiction to see that while granting leave to
defend, contention should not be unduly onerous
that results into depriving and/or unable to defend
the defence so raised. The Court, therefore, needs to
exercise discretion cautiously and carefully while
passing the conditional or any such order in
summary suits."
6 The Apex Court, recently in IDBI Trusteeship Services Ltd.
(Supra), has observed in paragraph No. 17 that:-
"17. Accordingly, the principles stated in
paragraph 8 of Mechelec's case will now stand
superseded, given the amendment of Order 37 Rule 3 and
the binding decision of four judges in Milkhiram's case,
as follows:
17.1. 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.
17.2 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.
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17.3 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.
17.4 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.
17.5 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.
17.6 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."
7 The Apex Court in, State Bank of Hyderabad Vs. Rabo Bank 8
in paragraphs 17 and 18 has recorded as under, while granting
unconditional leave to defend:-
8 (2015) 10 SCC 521
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"17. An analysis of the above principles makes it clear
that in cases where the defendant has raised a triable
issue or a reasonable defence, the defendant is entitled to
unconditional leave to defend. Leave is granted to defend
even in cases where the defendant upon disclosing a fact,
though lacks the defence but makes a positive impression
that at the trial the defence would be established to the
plaintiff's claim. Only in the cases where the defence set
up is illusory or sham or practically moonshine, is the
plaintiff entitled to leave to sign judgment.
18. Insofar as the question of maintainability of the
suit in question under Order 37 CPC is concerned, this
Court has in Neebha Kapoori v. Jayantilal Khandwala 9
observed that where the applicability of Order 37 itself is
in question, grant of leave to defend may be permissible.
The court before passing a decree is entitled to take into
consideration the consequences therefor. The courts
dealing with summary trials should act very carefully
taking note of the interests of both the parties. Merely on
the ground that the defendant may resort to prolonged
litigation by putting forth untenable and frivolous
defences, grant of leave to defend cannot be declined. At
the same time, the court must ensure that the defendant
raises a real issue and not a sham one. The court cannot
reject the defence on the ground of implausibility or
inconsistency. Before recording a finding of granting
leave to defend, the Court should assess the facts and
come to the conclusion that if the facts alleged by the
defendant in the affidavit are established, there would be
a good or even a plausible defence on those facts."
8 The above Judgments itself make position very clear that
while exercising the jurisdiction and dealing with the rival contentions
in such Summary Suits, the Court is required to consider, apart from
9 (2008) 3 SCC 770 : (2008) 1 SCC (Civ) 929
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the law so referred above, the facts and circumstances of the case, as
that should be the base for passing conditional or unconditional order.
Therefore, we are proceeding to deal with the merits of the matter, by
keeping in mind the above position of law.
9 Admittedly, the contract is based upon a stated agreement
dated 2 August 2000. It was necessary to comply with certain
reciprocal obligations with clear terms that "the retirement is complete
only after full payment is received". The payment needs to be made in
two months from 2 August 2000. There was no clarification sought at
any point of time. The Appellant, on non-compliance, for whatever
may be the reason, has not acquired 100% control/ownership over the
firm "Money Mint". The Respondents, therefore, could not have
retired as partners in the partnership firm. The Appellant, admittedly,
not paid the amount therefore, to say that 2 August 2000 document is
admitted document and/or document sufficient to grant decree based
upon the same, in our view, is unacceptable. The law, in this regard, is
very clear basically in view of the scheme, purpose and object of the
Summary Suit, as referred in the above Judgments.
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10 It is necessary to note that even the important aspect of
limitation, which is missing from the reasonings so given by the
learned Single Judge while passing the conditional order. The
Respondents/parties have not followed the conditions/respective
obligations, therefore, ordering to deposit Rs.40 lakhs, can be stated
to be admitted and/or crystalized amount for the purpose of Summary
Suit, as contemplated under the law. The triable issues have been
raised and the defence, in no way, can be stated to be sham and
bogus, and therefore, no case is made out of passing such conditional
order of depositing Rs.40 lakhs. There were no other liabilities and/or
admitted claims, except and other than the claims revolving around
the stated conditional document dated 2 August 2000.
11 There is a force in the contention that in clause 22 of the
Deed of Reconstitution of Partnership agreement, there is a arbitration
clause. The disputes and liabilities between the parties need to be
adjudicated, based upon the partnership deed. Therefore, the
arbitration clause in agreement dated 25 May 1994, ought to have
been invoked and/or taken note of, to resolve the dispute between the
parties.
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12 Agreement dated 2 August 2000, makes the position very
clear that subject to payment/compliances of the respective
obligations, the settlement would be given effect to. This was,
admittedly, not done and recorded even by the Division Bench of this
Court on 19 November 2005, while staying the Judgment and order.
The Judgments so cited are on law, need no further discussions. We
are dealing with the facts in hand.
13 The willingness of one party after the lapse of period so
prescribed, that itself, cannot be the reason to accept that settlement
agreement dated 2 August 2000, is revived and/or still in existence.
The Summary Suit, therefore so filed, based upon the agreement,
cannot be stated to be the document and/or acknowledgement to pass
such conditional order. It is wrong to observe that settlement
agreement dated 2 August 2000, provides for liquidated sum, as due
and payable by the original-Defendant to the original-Plaintiff. The
Appellant has raised triable issues and therefore, required to be
granted full opportunity in accordance with law, before passing such
order to deposit the liquidated amount of Rs.40 lakhs. The Plaintiffs-
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Respondents are not entitled to obtain decree for non-deposit. The
Appellant has made out a case to interfere with the impugned portion
of the order of directing to deposit the amount. The case is made out
to grant unconditional leave to defend. The defence so raised by the
Appellant, cannot be stated to be sham, bogus and/or false and/or
with intent to delay the payment and/or to avoid the payment.
14 Resultantly, the Appellant is entitled for unconditional
leave to defend the Suit. The Appellant-original Defendant to file
written statement within thirty days from the date of receipt of copy
of this order. The Summons for Judgment is disposed of accordingly.
15 Hence the following order:-
ORDER
a) Appeal is allowed.
b) Impugned order dated 16 August 2005, is quashed
and set aside to the extent of direction to deposit
an amount of Rs.40 lakhs within a period of four
weeks.
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c) Appellant is entitled for unconditional leave to
defend the Suit.
d) The Appellant-Original Defendant, if required, to
file written statement within thirty days from the
receipt of copy of this order. Affidavit, list of
documents to be filed within four weeks, thereafter.
Inspection be made within four weeks, thereafter.
e) The Suit, if pending, be placed on the board of
learned Judge, who is taking the commercial causes
suits, as the same is transferred to the list of
commercial causes.
f) In view of disposal of the Appeal itself nothing
survives in the Notice of Motion and the same is
also disposed of.
g) No costs.
16 This Judgment shall not take effect for six weeks from
today, in the interest of justice.
(P.R. BORA, J.) (ANOOP V. MOHTA, J.)
