Bombay High Court
Kavita G. Rajani vs Samir N. Bhojwani on 9 November, 2022
Bench: N. J. Jamadar
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SUMMONS FOR JUDGMENT NO.12 OF 2021
IN
COMMERCIAL SUMMARY SUIT NO.205 OF 2020
WITH
INTERIM APPLICATION NO.251 OF 2022
Kavita G. Rajani ...Plaintiff
vs.
Samir N. Bhojwani ...Defendant
WITH
SUMMONS FOR JUDGMENT NO.14 OF 2021
IN
COMMERCIAL SUMMARY SUIT NO.211 OF 2020
WITH
INTERIM APPLICATION NO.261 OF 2022
Gautam G. Rajani ...Plaintiff
vs.
Samir N. Bhojwani ...Defendant
Mr. Karl Tamboly a/w. Ms. Shaheda Madraswala and Ms. Zahra
Padamsee i/b. Vashi and Vashi, for the Plaintiff.
Mr. Cherag Balsara a/w. Mr. D.U. Deokar, Mr. D. Parikh i/b. Parimal
K. Shroff & Co., for the Defendant.
CORAM : N.J. JAMADAR, J.
RESERVED ON : AUGUST 22, 2022
PRONOUNCED ON : NOVEMBER 9, 2022
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JUDGMENT:
1. These Commercial Division Summary Suits are instituted by a
mother-son duo against a common defendant. Since identical factual
and legal issues arise for consideration in both the suits, the
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Summons for Judgments and Interim Applications in both the suits
are decided by this common order.
Suit No. 205 of 2020 :-
2. The material averments in the plaint can be summarized as
under:-
The defendant is a developer and builder. In the month of
January, 2017 the defendant had approached the plaintiff for a loan
of Rs. 62 lakhs. Pursuant to the representation of the defendant, the
plaintiff had advanced an amount of Rs. 62 lakhs vide cheque 18 th
January 2017 drawn on HDFC Bank, Worli Branch against a bill of
exchange dated 18th January, 2017 drawn for the said amount by
the defendant. Initially the defendant paid interest on the said
amount at varied rate ranging from 14.40% p.a. to 12 % p.a. for the
varying periods commencing from 18th January, 2017 to 7th May,
2018. Eventually, the defendant repaid a sum of Rs. 60 lakhs and
only an amount of Rs. 2 lakhs remained outstanding towards the
principal amount.
3. In the month of October, 2017 the defendant had again availed
a second tranche of loan of Rs. 4,09,000/- against a bill of exchange.
Interest was paid on the second tranche of loan @ 12% p.a.
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4. As the defendant failed and neglected to pay the outstanding
principal amount of Rs. 2 lakhs of the first tranche of loan and the
entire principal amount of Rs. 1,09,00,000/- of the second tranche
and interest thereon, the plaintiff addressed legal notice on 13 th
December, 2019 calling upon the defendant to pay the due amount
along with accrued interest thereon. Despite service of the notice,
the defendant failed and neglected to pay the outstanding amount.
Hence, the suit for recovery of the principal amount of Rs.
1,11,00,000/- along with interest thereon @ 12% p.a. till the date of
the suit and future interest at the said rate.
Suit No. 211 of 2020 :-
5. Gautam, who is the son of Kavita (the plaintiff in Suit No. 205
of 2011) claimed to have advanced money to the defendant in three
tranches. First, a sum of Rs. 50 lakhs was advanced in the month of
November, 2015 against a bill of exchange drawn by the defendant.
Second, a sum of Rs. 60 lakhs in the month of February, 2017 again
against a bill of exchange dated 9 th February, 2017 drawn by the
defendant. And the third, a sum of Rs. 70 lakhs in the month of
February, 2017 itself against a bill of exchange dated 10 th February,
2017 drawn by the defendant. The plaintiff claims that against each
of the aforesaid tranches of loan, the defendant paid interest for
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various periods in the range of 14% p.a. to 12% p.a. Eventually,
when the defendant committed default in repayment of the
principal amount and interest accrued thereon, the plaintiff claimed
to have addressed a legal notice on 13th December, 2019 calling upon
the defendant to repay the principal loan amount of all three
tranches along with interest accrued thereon @ 12% p.a. The
defendant paid no heed despite service of the legal notices. Hence,
the suit for recovery of principal loan amount of Rs. 1,80,00,000/-
along with interest @ 12% p.a.
6. It would be contextually relevant to note that the suits were
decreed by an order dated 15th January, 2021. On 3rd February,
2021 the defendant took out Interim Applications (Interim
Application (L) Nos. 3301 of 2021 and 3302 of 2021) seeking
setting aside of the decrees. By orders dated 18th February, 2021 the
decrees were set aside subject to the defendant depositing of Rs.
1.11 Crore and Rs. 1.80 Crore, respectively, with the Prothonotary
and Senior Master of this Court. The defendant has made the said
deposit.
7. The plaintiffs have thereupon taken out the Summons for
Judgment.
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8. An affidavit in reply is filed by the defendant seeking an
unconditional leave to defend each of the suits by raising defences
which are, in a sense, integral to both the claims.
9. The defendant calls in question the tenability of the suit under
Order XXXVII of the Code primarily on the ground that the
plaintiffs are guilty of suggestio falsi and suppressio veri. The
defendant contends plaintiffs have been the investors in the projects
developed by the defendant and there have been multiple
transactions between the parties. Therefore, the summary suits
would not be tenable.
10. The defendant further contends that on 18 th February, 2018
the plaintiff entered into an agreement with the defendant that the
amount of Rs. 1,80,00,000/- due and payable to Gautam and the
amount of Rs. 1,11,00,000/- due and payable to Kavita would be
adjusted against the mutually agreed consideration of Rs. 3 Crores
for purchase of Flat No. 801, 8th Floor, Rachana-A, Rachana
Cooperative Housing Society Limited situated at Hill Road, Bandra,
Mumbai (Flat No. 801). It was further agreed that the defendant
would not be liable to pay interest on the said amount of Rs.
2,91,00,000/- from 18th April, 2018. The defendant contends
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suppressing the said understanding and by taking undue advantage
of the situation which arose out of the dispute between the
defendant and Rachana Cooperative Housing Society and Covid 19
pandemic, the plaintiffs instituted the instant suit. In fact, the
defendant is still willing to convey the flat in favour of the plaintiffs
and the plaintiffs are, in turn, bound to complete the transaction in
accordance with the agreement between the parties. Therefore, the
defendant is entitled to an unconditional leave to defend the suit.
11. In any event, since the defendant has already made the
deposit of the principal amount, in both the suits, no further
condition is required to be imposed in the event the Court is inclined
to grant conditional leave to defend the suit.
12. Affidavits in rejoinder are also filed by the plaintiffs
controverting the contentions especially the alleged agreement to
adjust the amount advanced by the plaintiffs towards consideration
for Flat No. 801.
13. The plaintiffs have also taken out Interim Application Nos.
251 of 2022 and 261 of 2022 seeking a decree to the extent of the
principal amount of Rs. 1,11,00,000/- and 1,80,00,000/-
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respectively.
14. In the wake of aforesaid pleadings, I have heard Mr. Karl
Tamboly, learned counsel for the plaintiffs, and Mr. Cherag Balsara,
learned counsel for the defendant at some length. With the
assistance of the learned counsel for the parties, I have perused the
material on record.
15. Before adverting to note the submissions on behalf of the
parties, it may be appropriate to note uncontroverted facts.
16. In both the suits, the primary issue of advance of sums of Rs.
1,11,00,000/- by Kavita and Rs. 1,80,00,000/- by Gautam to the
defendant is incontestible. It is not in dispute that the defendant did
pay interest on the said amount to the respective plaintiff for
various periods of time and at varying rates as well. Indisputably,
the said advances were against the bills of exchange drawn by the
defendant. The fact that in December, 2019 the plaintiffs called upon
the defendant to pay the principal amount along with interest @ 12%
p.a. is by and large indisputable. In the light o the aforesaid un-
controverted facts, the suits based on the bill of exchange for
recovery of the liquidated debt clearly fall within the ambit of Order
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XXXVII of the Code of Civil Procedure, 1908.
17. Mr. Balsara, learned counsel for the defendant, would however
assail the tenability of the suit on the ground that the suits are
based on a running account and therefore beyond the purview of
Order XXXVII of the Code. Mr. Balsara took the Court through the
pleadings to bolster up the case that series of transactions between
the plaintiff and the defendant lead to an irresistible inference of a
running account.
18. In contrast, Mr. Tamboly, learned counsel for the plaintiff
would urge that the defence of running account now sought to be
raised has not at all been pleaded in the affidavit in reply seeking
leave to defend the suit. Such a submission without any foundation
in facts does not deserve any countenance, urged Mr. Tamboly.
19. Indeed the affidavit in reply does not contain a categorical
assertion that the suits are based on running accounts. In the
affidavit in reply, the defendant contends that the plaintiffs have
been the investors in the projects developed by the defendant for
past several years and there have been transactions between the
parties since the year 2005. The affidavit in reply stops at that. It is
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not the case that the parties maintained ledger accounts and there
were series of transactions between the parties reflecting reciprocal
demands and the balance was settled and carried forward at
periodical intervals.
20. In Black's Law Dictionary, Eighth Edition a "Running
account" is defined as
'An open, unsettled account that exhibits
the reciprocal demands between the
parties'.
In P Ramanatha Aiyar's Advanced Law Lexicon, 3 rd Edition a
"Running Account" is defined as
'An account with a bank for money loaned,
checks paid, etc., which during the time
makes monthly statements, striking the
balance due each month, which is carried
forwarded and charged, constitutes a
"running account" and is in effect but one
transaction'.
21. In the case at hand, neither there is pleading nor material to
show that the transactions in question, have any of the aforesaid
features of a "running account". At best, there are series of
transactions. The mere fact that money was advanced by the
plaintiff to the defendant in tranches, by itself, is not sufficient to
draw an inference of a "running account".
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22. Reliance placed by Mr. Balsara on an order of the Division
Bench dated 11th August, 1986 in Appeal No. 712 of 1986 in
Summons for Judgment No. 274 of 1986 in Summary Suit No. 2506
of 1985 does not seem to advance the cause of the defence. In the
said order, the Division Bench had, inter alia, observed as under :-
"Mr. Tulzapurkar, on behalf of the appellants,
has urged that, apart from several contentions
on merits, the suit on the item of a Bill
Discounting facility in respect of which there
was an account maintained by the Bank, could
not be filed as a Summary Suit. This is a
substantial defence and not one which can be
stated to be rejected or brushed aside as lacking
in bona fides. Prima facie the defence seems to
be one which would be required to be accepted
at least at this stage.
It is to be made clear that the observations
which we are making pertains to the frame of
suit as a summary suit and we are not required
to go into other contentions on the merits. We
are satisfied that it is difficult to accept the suit
as Summary Suit. The order for conditional
deposit is, therefore, required to be set aside."
23. Evidently, the aforesaid observations were made in the
context of peculiar facts of the said case. The transaction arose out
of a bill discounting facility in respect of which there was an account
maintained by the bank. In that context, the Division Bench
observed that the suit to enforce liability incurred thereunder could
not have been filed as a summary suit. I am afraid, the aforesaid
observations govern the facts of the case even remotely.
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24. Mr. Balsara would urge that the claim of the defendant that
the parties had entered into an agreement for purchase of Flat No.
801 for a consideration of Rs. 3 Crores and that the sum of Rs.
2,91,00,000/-, which the defendant owed to the plaintiffs, was to be
adjusted towards the said consideration, constitutes a substantial
defence. An endevour was made by Mr. Balsara to demonstrate that
post the said agreement in the month of April, 2018, the defendant
stopped paying interest and that is a pointer to the said agreement.
25. Mr. Tamboly, learned counsel for the plaintiff, on the other
hand, would urge that the said defence is totally moonshine and
sham. There is not a shred of material which would lend a
semblance of credence to such a gratuitous defence, urged Mr.
Tamboly.
26. Evidently, it is not the case of the defendant that there is a
document to evidence the alleged agreement between the parties.
The defendant wants the Court to believe that it was an oral
agreement. It is imperative to note that no contemporaneous
conduct and/or circumstances are pressed into service to
substantiate such arrangement. It does not appeal to human
credulity that in a Metropolis like Mumbai, where property
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commands premium, the parties would be comfortable arriving at
an oral agreement to convey the property without making any
record thereof. It would be legitimate to examine as to whether the
defendant had the opportunity to assert that there was such an
understanding between the parties, before the institution of the suit.
Service of the legal notice upon the defendant, indeed provided such
an opportunity to the defendant. The existence of such an oral
agreement did not see the light of the day till the defendant filed
affidavit in these suits. Time lag of almost two years in between the
said alleged arrangement and the institution of the suit cannot be
said to be immaterial and inconsequential. In the interevening
period, had there been such an arrangement, either party must
have taken initiative to either enforce such agreement or resile
therefrom.
27. Another factor which runs counter to the defendant's claim
is that in the financial year 2018-19, in Form No. 26 AS, the
defendant had booked payment of TDS qua the plaintiffs towards the
interest from 1st April, 2018 to 31st March, 2019. This militates
against the claim of the defendant that based on the alleged
agreement for purchase of the flat, the defendant was not liable to
pay interest on the loan amount.
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28. Mr. Balsara attempted to salvage the position by canvassing
a submission that TDS does not constitute an admission of liability.
This submission is required to be appreciated in the light of the fact
that admittedly the defendant paid interest on the outstanding
amount since the day of advance till April, 2018 and the TDS, in the
least, reflects that the said state of affairs continued even after
April, 2018.
29. In the totality of the circumstances, the defence of existence of
a verbal agreement between the parties to adjust the loan amount
towards consideration for purchase of the flat does not appear to be
either reasonable or fair defence.
30. Mr. Balsara would submit that in the absence of any
agreement to pay interest, coupled with the fact that interest has
been paid at varying rates, the entitlement to claim interest
becomes a triable issue. It is true that the plaintiffs have not
approached the Court with a case that interest was agreed to be
paid at a definite rate. It is also true that the material on record
indicates that interest has indeed been paid till the year 2018 at
varying rates. However, the submission on behalf of the defendant
that the plaintiff would not be entitled to claim interest at all, does
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not deserve acceptance unreservedly. We have noted that the
amounts were advanced against bills of exchange. In the absence of
any stipulation as to rate of interest in the Negotiable Instruments,
section 80 of the Negotiable Instruments Act, 1881, may govern the
aspect of entitlement to interest. However, the question as to at
what rate the plaintiff would be entitled to interest and whether, in
fact, the parties had agreed that interest shall not be chargeable
from 12th April, 2018 are the questions which would warrant
adjudication. To this extent, a triable issue qua the liability to pay
interest can be said to have risen.
31. The conspectus of aforesaid consideration is that to the extent
of the principal amount of loan, in both the suits, the liability is
rather indubitable. The twin defence of the transactions being in the
nature of a "running account" and there being an agreement
between the parties to adjust the principal amount of Rs.
2,91,00,000/- towards the consideration for Flat No. 801, are not of
such quality as to warrant the leave to defend the suit. However, to
the extent of liability to pay interest on the said principal amount,
triable issues may rise.
32. It is trite that at the hearing of the Summons for Judgment,
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the Court would be justified in passing a decree for the part of the
claim and also grant conditional or unconditional leave to defend
the suit in respect of rest of the claim. A profitable reference can be
made to a Full Bench judgment of this Court in the case of SICOM
Limited vs. Prashant S. Tanna and Others1 wherein the full Bench
enunciated the principles as under:-
28} In the circumstances, we summarize the
answer to the reference as follows:
(1) .......
(2) In a summary suit filed under Order
XXXVII of the Civil Procedure Code, the
plaintiff is entitled at any time to abandon or
give-up a part of the claim unilaterally. This, the
plaintiff may do by making a statement to be
recorded by the Court and without the
necessity of the plaintiff making a formal
application for the same by withdrawing the
summons for judgment, amending the plaint
and thereafter taking out a fresh summons for
judgment or otherwise.
(3) At the hearing of the summons for
judgment, it will be open to the Court to pass a
decree for a part of the claim and grant
unconditional leave to defend the suit in respect
of rest of the claim.
(4) At the hearing of the summons for
judgment, it is open to the Court to grant
conditional leave to defend in respect of a part
of the claim and unconditional leave to defend
for the remaining part of the claim. In such an
order it would follow that in the event of the
defendant failing to comply with the condition,
he would suffer the consequences mentioned in
Order XXXVII qua only that part of the claim
for which conditional leave to defend has been
granted and not in respect of that part of the
claim for which unconditional leave has been
1 2004 (2) Mh.L.J. 292.
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granted.
(5) There may be further options available to
the Court while passing an order on the
summons for judgment. Our judgment does not
exhaustively set out the options. Obviously,
judicial discretion has to be exercised in
consonance with the settled legal principles
governing grant of leave to defend in summary
suits.
33. In my view, in the present case, the Court would be justified in
passing a decree for the indisputable principal amounts in both suits
and grant unconditional leave to the defendant to defend the suit in
respect of interest component only.
Hence, the following order.
ORDER
Commercial Summary Suit No. 205 OF 2020 :-
a] The Summons for Judgment stands partly allowed.
b] The suit stands decreed to the extent of the principal amount
of Rs. 1,11,00,000/-.
c] The defendant do pay the sum of Rs. 1,11,00,000/- to the
plaintiff. The sum of Rs. 1,11,00,000/- deposited by the defendant be
paid to the plaintiff and the interest accrued thereon be refunded to
the defendant.
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e] The defendant is granted unconditional leave to defend the
suit in respect of interest component.
f] The defendant shall file written statement within a period of
thirty days from today.
g] The defendant do pay the proportionate costs of the suit to the
plaintiff.
h] Decree be drawn accordingly.
i] In view of disposal of the Summons for Judgment in the
aforesaid terms, the Interim Application No. 251 of 2022 also
stands disposed.
Commercial Summary Suit No. 211 OF 2020 :-
a] The Summons for Judgment stands partly allowed.
b] The suit stands decreed to the extent of the principal amount
of Rs. 1,80,00,000/-.
c] The defendant do pay Rs. 1,80,00,000/- to the plaintiff.
d] The sum of Rs. 1,80,00,000/- deposited by the defendant be
paid to the plaintiff and the interest accrued thereon be refunded to
the defendant.
e] The defendant is granted unconditional leave to defend the
suit in respect of interest component.
f] The defendant shall file written statement within a period of
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thirty days from today.
g] The defendant do pay the proportionate costs of the suit to the
plaintiff.
h] Decree be drawn accordingly.
i] In view of disposal of the Summons for Judgment in the
aforesaid terms, the Interim Application No. 261 of 2022 also
stands disposed.
(N. J. JAMADAR, J.)
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