Suyog Happy Homes vs Sujeet Ramesh Patil
2022 Latest Caselaw 9912 Bom

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                                                                               Santosh
                           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                 ORDINARY ORIGINAL CIVIL JURISDICTION
                                         IN ITS COMMERCIAL DIVISION


                            SUMMONS FOR JUDGMENT (L) NO. 13852 OF 2021
SANTOSH                                      IN
SUBHASH
KULKARNI                        COMM SUMMARY SUIT NO. 51 OF 2021
Digitally signed by
SANTOSH SUBHASH
KULKARNI
Date: 2022.09.28
                      Suyog Happy Homes                                    ...Plaintiff
                                       Versus
19:01:44 +0530



                      Sujeet Ramesh Patil                                ...Defendant

                      Mr. Girish Godbole, i/b Kaustubh Thipsay, for the Plaintiff.
                      Dr. Birendra Saraf, Senior Advocate, a/w Mr. Kunal Mehta,
                            i/b Vesta Legal, for the Defendant.

                                                   CORAM: N. J. JAMADAR, J.

RESERVED ON : 8th September, 2022 PRONOUNCED ON: 28th September, 2022 ORDER:-

1. This commercial division summary suit is instituted for

recovery of a sum of Rs.7,24,94,348/- along with further

interest at the rate of 15% p.a. from the month of November,

2020 till payment and/or realization.

2. Shorn of unnecessary details, the background facts can be

stated as under:

(a) The plaintiff is a registered partnership firm. The

plaintiff developed a project "Jade Gardens" at Gandhi Nagar,

Bandra East, Mumbai. The defendant evinced interest to

purchase a flat in 'M' Wing of the said project. An agreement for

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sale came to be executed between the plaintiff and defendant

and Middle Income Group III Co-operative Housing Society, as a

confirming party, whereunder the defendant agreed to purchase

Flat No.403 'M' Wing, Jade Gardens ("the suit flat") for a

consideration of Rs.8,01,00,000/-. An earnest amount of

Rs.60,00,000/- was already paid by the defendant. Under the

said agreement, the defendant agreed to pay the balance

consideration in three installments. First two of

Rs.2,50,00,000/- and Rs.8,01,000/- payable on or before 31 st

December, 2017, and last of Rs.4,82,99,000/- on or before 31 st

January, 2018. It was further provided that in the event of

delay or default in making the payment of installments, the

plaintiff would be entitled to charge interest at the rate of 15%

p.a.

(b) The plaintiff asserts the defendant did not pay the

amount in accordance with the schedule stipulated in the

Agreement for Sale. By 31st March, 2018, the defendant paid a

sum of Rs.2,58,01,000/-, only towards the balance

consideration. As the partners of the plaintiff had cordial

relations with Mr. Amit Patil, the brother of the defendant,

pursuant to repeated request of the defendant, the plaintiff

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delivered possession of the suit flat to the defendant around the

month of February/Mach, 2018.

(c) The defendant sought time to pay the balance

consideration on one or the other pretext. Eventually on 5 th

October, 2018, the plaintiff addressed a letter to the defendant

calling upon the defendant to pay the balance consideration

along with interest. In response thereto, Mr. Amit Patil

addressed an e-mail and assured the plaintiff that there was no

need to resort to legal proceedings. However, the defendant

failed to pay the balance consideration and instead started

paying maintenance directly to the society. Having realized the

design of the defendant, the plaintiff claimed to have addressed

a legal notice on 17th February, 2020 calling upon the defendant

to pay the balance consideration along with accrued interest

thereon. Despite service of notice, the defendant neither

complied with the demand nor gave reply thereto. Hence, this

suit.

3. The writ of summons was served on the defendant. Upon

the defendant entering appearance, the plaintiff took out the

Summons for Judgment.

4. An affidavit-in-reply is filed on behalf of the defendant

seeking an unconditional leave to defend the suit. The defendant

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contends that the suit is mala fide and suffers from the vice of

suggestio falsi and suppressio veri. It has been instituted with a

view to wreck vengeance on account of the disputes, which

arose between Mr. Jayant Shah, one of the partners of the

plaintiff, and Mr. Amit Patil, the brother of the defendant, who

had multiple financial dealings. The defendant assailed the

tenability of the summary suit on the ground that the suit is

essentially for specific performance and does not fall within the

ambit of Order XXXVII of the Code.

5. The substance of the resistance put forth by the defendant

is that the transaction between the parties is not the one which

is apparently evidenced by the Agreement for Sale dated 5 th

October, 2017. The defendant contends that the real

consideration for the suit flat was of Rs.5 Crore only. The said

flat was conveyed to the defendant as a part of a financial

dealing between Mr. Jayant Shah and Mr. Amit Patil. Apart from

the consideration of Rs.3,18,01,000/-, which the plaintiff admits

to have received, a sum of Rs.1,70,00,000/- was paid to Mr.

Jayant Shah, during May and June, 2017, followed by another

sum of Rs.20,00,000/- to Mr. Naresh Chheda, another partner

of the plaintiff. The plaintiff has thus received the entire

consideration, as agreed, between the parties, and only

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thereupon the possession of the suit flat was handed over to the

defendant.

6. Adverting to the terms of the Agreement for Sale, wherein

the parties expressly agreed that not only the title to the subject

flat would pass to the defendant but also possession thereof

would be delivered to the defendant only upon the payment of

the entire consideration as agreed, the defendant contends, the

averments in the plaint that on account of "relation of trust" the

possession of the suit flat was handed over to the defendant

despite non-receipt of the balance consideration of

Rs.4,82,99,000/- is unworthy of credence. On these, amongst

other, grounds, the defendant has prayed for an unconditional

leave to defend the suit as number of triable issues allegedly

arise.

7. An affidavit-in-rejoinder is filed on behalf of the plaintiff.

The defences sought to be raised on behalf of the defendant are

stated to be dishonest and moonshine defences warranting no

leave to defend the suit.

8. In the wake of the aforesaid pleadings, I have heard Mr.

Godbole, the learned Counsel for the plaintiff and Dr. Saraf, the

learned Senior Counsel for the defendant, at some length. With

the assistance of the learned Counsels for the parties, I have

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perused the averments in the plaint, documents annexed

thereto, affidavit-in-reply seeking leave to defend the suit and

rejoinder thereto.

9. Mr. Godbole strenuously submitted that the case at hand

does not warrant grant of leave to defend the suit as it is a open

and shut case. Since the execution of the Agreement for Sale,

dated 5th October, 2017, and delivery of possession of the suit

flat under terms of the said agreement are incontrovertible, the

liability to pay the consideration agreed thereunder can hardly

be contested. Mr. Godbole would urge that a half baked attempt

to demonstrate that the consideration agreed to be paid was less

than the one shown in the Agreement for Sale can under no

circumstances be said to be a fair and bona fide defence,

especially in the face of a registered Agreement for Sale. It was

further urged that the payment of a sum of Rs.8,01,000/-

towards TDS, by the defendant, belied the contention that

consideration was less than Rs.8,01,00,000/-. Nor the defence

that further amount of Rs.1,90,00,000/- was paid to Mr. Jayant

Shah and Mr. Naresh Chheda, the partners of plaintiff no.1, in

the absence of any documentary evidence to substantiate the

same, can be stated to be a fair and bona fide defence.

Therefore, a decree must follow.

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10. Dr. Saraf joined the issue by canvassing a submission that

the real nature of the transaction is required to be gathered

from attendant circumstances and not merely on the basis of

the covenants in the Agreement for Sale. Dr. Saraf would urge

that it would be naive to accept the case of the plaintiff that,

in a city like Mumbai, where possession is more than nine

points in law, a developer would have delivered possession of

the flat when almost 2/3 of the consideration was yet to be paid.

Taking the Court through the covenants in the Agreement for

Sale, especially as regards the passing of title and delivery of

possession of the suit flat only upon the payment of entire

consideration, Dr. Saraf submitted that the very fact that the

defendant was put in possession of the suit flat indicates that

the real transaction between the parties is different than the one

the apparent tenor of the Agreement for Sale shows.

11. Dr. Saraf also assailed the tenability of the suit under

Order XXXVII of the Code by putting forth a submission that

the suit is essentially one for specific performance of the

contract. In any event, since the plaintiff put hindrances in the

defendant becoming a member of the housing society and

paying the maintenance charges to the society and service

providers directly, it implies that the plaintiff reckons that title

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in the suit flat has yet not passed to the defendant. And the

claim for balance consideration thus surely falls within the

ambit of equitable relief of specific performance.

12. Lastly, it was submitted that it defies common sense that

the plaintiff would have put the defendant in possession of the

suit flat, when a sum in the range of Rs.5 Crore was still

outstanding. In this backdrop, the circumstances in which the

defendant was put in possession of the suit flat, about which

the defendant has furnished a competing version, according to

Dr. Saraf, raises triable issues. Therefore, the defendant

deserves an unconditional leave to defend the suit.

13. To begin with, the challenge to the suit on the ground of

its tenability under Order XXXVII of the Code. The submission

that the suit does not fall within the ambit of Sub-rule (2) of

Rule 1 of Order XXXVII was principally rested on the premise

that the suit is essentially in the nature of a claim for specific

performance. Though there is a contract in writing between the

parties yet, according to the defendant, the said Agreement for

Sale is amenable to the relief of specific performance alone and

cannot sustain an action under Order XXXVII.

14. Sub-rule (2) of Rule 1 of Order XXXVII reads as under:

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"(2) Subject to the provisions of sub-rule (1), the Order applies to the following classes of suits, namely:-

(a) suits upon bills of exchange, hundies and Promissory notes:

(b) suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising,-

(i) on a written contract, or

(ii) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or

(iii) on a guarantee, Where the claim against the principal is in respect of a debt or liquidated demand only. [(iv) Suit for recovery of receivables instituted by any assignee of a receivable.]"

15. The case at hand would be governed by Clause (b). The

primary requirement under Clause (b) is an action to recover a

debt or liquidated demand in money. Secondly, such an action

should arise out of or based on; (i) a written contract; (ii) an

enactment; (iii) a guarantee or (iv) assignment.

16. Again, in the facts of the case, it has to be seen whether

the claim at hand is one for recovery of a debt or liquidated

demand on a written contract. Dr. Saraf endeavoured to impress

upon the Court that existence of a written contract itself is not

sufficient but the nature of the relief which such contract

affords is also required to be seen. I am afraid, the plain

construction of clause (b)(i) of Sub-rule (2) of Rule 1 of Order

XXXVII does not envisage such an inquiry.

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17. A Full Bench of this Court in the case of Jyotsna K. Valia

vs. T. S. Parekh & Co1 postulated the following requirements in

the context of a suit based on a written contract;

      (i)     there must be a concluded contract;

      (ii)    the contract must be in writing;

(iii) the contract must contain an express or implied

promise to pay.

18. If the aforesaid postulates are found to exist in an action

based, on a written contract, in my view, the aspect of the relief

which such contract affords is of no consequence. This is for

the reason that the primary emphasis under clause (b) of Sub-

rule (2) of Rule 1 of Order XXXVII is on the nature of the action

i.e. recovery of a debt or liquidated demand of money. Once this

requirement is fulfilled, the fact that the written contract which

gives rise to such an action for recovery of debt or liquidated

demand of money is capable of enforcement by instituting a suit

for any other relief including that of specific performance, does

not constitute an impediment for an action under Order XXXVII.

19. This propels me to the nature and quality of the defence

sought to be pressed into service on behalf of the defendant to

seek an unconditional leave. Execution of the Agreement for

1 (2007) 4 Mh.L.J. 517.

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Sale is incontestible. Nor the fact that the defendant has been

put in possession of the subject flat is in dispute. Precise time of

delivery of possession and the circumstances in which the

defendant was inducted into the suit flat are, however, put in

contest. Nonetheless, it is imperative to note that the defendant

has not endeavoured to establish a transaction of a different

character than the one the Agreement for Sale represents.

20. What is sought to be essentially contested is the quantum

of consideration. For the defendant, the consideration was Rs.5

Crore only and the Agreement for Sale recording a consideration

of Rs.8,10,00,000/- was executed having regard to the business

relations between Mr. Jayant Shaha and Mr. Amit Patil, the

brother of the defendant. Secondly, the defendant claims that a

further amount of Rs.1,90,00,000/- was paid to the plaintiff

towards the said consideration, in addition to the sum of

Rs.3,18,01,000/-.

21. Evidently, the aforesaid defence is in teeth of the contract

in writing, which is of dispositive nature. To add to this, at this

stage, at least, the defendant has not endeavoured to

demonstrate that the alleged payment of Rs.1,90,00,000/- is

evidenced by any document.

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22. Dr. Saraf impressed upon the Court to draw upon

experience of common course of transactions in a metropolis

like Mumbai to readily not believe the claim of the plaintiff that

the defendant was put in possession of the suit flat despite non

payment of a sum of Rs.5 Crore. Undoubtedly, in the

Agreement for Sale there are covenants to the effect that no

interest in the subject flat shall pass to the purchaser until the

full payment of the purchase price and the possession of the

subject flat would be delivered to the purchaser only against

payment of the balance consideration and all other amounts

mentioned therein. Yet, the delivery of the possession of the

property without receiving balance consideration does not

vitiate the transaction of sale. Under Section 54 of the Transfer

of Property Act, sale is a transfer of ownership in exchange for a

price paid or promised or part paid or part promised.

23. In the case at hand, the defendant wants the Court to

draw an inference that the fact that possession is delivered to

the defendant implies that the price has already been paid and

only thereafter the defendant has been put in possession

thereof. Interestingly, the defendant relies upon the very

covenants of the Agreement for Sale which are conditioned upon

the payment of consideration as stipulated therein.

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24. The Court, however, finds an element of commonality

between the plaintiffs case and defendants defence, namely, the

relations which the partner(s) of the plaintiff shared with Mr.

Amit Patil, the brother of the defendant. It is on account of the

said relationship, the plaintiff claimed to have inducted the

defendant into the suit flat without payment of balance

consideration and the defendant alleges to have executed the

agreement showing a consideration far in excess of the agreed

consideration. To what extent this relationship influenced the

delivery of possession of the suit flat to the defendant and the

attendant circumstances connected with the delivery of

possession raise a triable issue. However, this by itself, would

not warrant grant of an unconditional leave to defend the suit.

25. Mr. Godbole invited the attention of the Court to a recent

pronouncement of the Supreme Court in the case of B. L.

Kashyap and Sons Limited vs. JMS Steels and Power

Corporation and another2, wherein the Supreme Court after

adverting to the previous pronouncements in the case of

Mechalec Engineers & Manufacturers vs. Basic Equipment

2 (2022) 3 Supreme Court Cases 294.

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Corporation3 and IDBI Trusteeship Services Ltd vs. Hubtown

Ltd.4, expounded the law as under:

"33. It is at once clear that even though in the case of IDBI Trusteeship, this Court has observed that the principles stated in paragraph 8 of Mechelec Engineers' case shall stand superseded in the wake of amendment of Rule 3 of Order XXXVII but, on the core theme, the principles remain the same that grant of leave to defend (with or without conditions) is the ordinary rule; and denial of leave to defend is an exception. Putting it in other words, generally, the prayer for leave to defend is to be denied in such cases where the defendant has practically no defence and is unable to give out even a semblance of triable issues before the Court.

33.1 As noticed, if the defendant satisfies the Court that he has substantial defence, i.e., a defence which is likely to succeed, he is entitled to unconditional leave to defend. In the second eventuality, where the defendant raises triable issues indicating a fair or bonafide or reasonable defence, albeit not a positively good defence, he would be ordinarily entitled to unconditional leave to defend. In the third eventuality, where the defendant raises triable issues, but it remains doubtful if the defendant is raising the same in good faith or about genuineness of the issues, the Trial Court is expected to balance the requirements of expeditious disposal of commercial causes on one hand and of not shutting out triable issues by unduly severe orders on the other. Therefore, the Trial Court may impose conditions both as to time or mode of trial as well as payment into the Court or furnishing security. In the fourth eventuality, where the proposed defence appear to be plausible but improbable, heightened conditions may be imposed as to the time or mode of trial as also of payment into the Court or furnishing security or both, which may extend to the entire principal sum together with just and requisite interest. 33.2 Thus, it could be seen that in the case of substantial defence, the defendant is entitled to unconditional leave;

and even in the case of a triable issue on a fair and reasonable defence, the defendant is ordinarily entitled to unconditional leave to defend. In case of doubts about the intent of the defendant or genuineness of the triable issues as also the probability of defence, the leave could yet be granted but while imposing conditions as to the time or mode of trial or payment or furnishing security. Thus, even in such cases of doubts or reservations, denial of leave to

3 (1976) 4 SCC 687.

4 (2017) 1 SCC 568.

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defend is not the rule; but appropriate conditions may be imposed while granting the leave. It is only in the case where the defendant is found to be having no substantial defence and/or raising no genuine triable issues coupled with the Court's view that the defence is frivolous or vexatious that the leave to defend is to be refused and the plaintiff is entitled to judgment forthwith. Of course, in the case where any part of the amount claimed by the plaintiff is admitted by the defendant, leave to defend is not to be granted unless the amount so admitted is deposited by the defendant in the Court.

33.3 Therefore, while dealing with an application seeking leave to defend, it would not be a correct approach to proceed as if denying the leave is the rule or that the leave to defend is to be granted only in exceptional cases or only in cases where the defence would appear to be a meritorious one. Even in the case of raising of triable issues, with the defendant indicating his having a fair or reasonable defence, he is ordinarily entitled to unconditional leave to defend unless there be any strong reason to deny the leave. It gets perforce reiterated that even if there remains a reasonable doubt about the probability of defence, sterner or higher conditions as stated above could be imposed while granting leave but, denying the leave would be ordinarily countenanced only in such cases where the defendant fails to show any genuine triable issue and the Court finds the defence to be frivolous or vexatious."

26. The Supreme Court has enunciated in clear terms that the

prayer for leave to defend is to be denied in such cases where

the defendant has practically no defence and is unable to come

up with a semblance of triable issue before the Court. Even if

there remains a reasonable doubt about the probability of

defence, sterner conditions could be imposed while granting

leave but refusal to grant leave to defend would be justified only

in such cases where the defendant fails to show any genuine

triable issue and conversely, the defence appears frivolous or

vexatious.

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27. On the aforesaid touchstone, reverting to the facts of the

case, in my view, in the totality of the circumstances, the

defence raised by the defendant, especially in the backdrop of

common thread which permeates the plaintiff's claim and

defendant's defence cannot be stated to be frivolous or

vexatious. However, in the face of the registered Agreement for

Sale, which records the liability to pay the balance

consideration, the defendant does not deserve an unconditional

leave. Hence, I am persuaded to grant conditional leave to

defend the suit.

28. Hence, the following order;

:ORDER:

(i) Leave is granted to the defendant to defend the suit

subject to the defendant depositing in this Court a sum of

Rs.4,82,99,000/- within a period of six weeks from today.

(ii) If the aforesaid deposit is made within the stipulated

period, this suit shall be transferred to the list of

Commercial Causes and the defendant shall file its written

statement within a period of four weeks from the date of

deposit;

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(iii) If this conditional order of deposit is not complied

with within the stipulated period as mentioned earlier, the

plaintiff shall be entitled to apply for an ex-parte decree

against the defendant after obtaining a non-deposit

certificate from the Prothonotary and Senior Master of this

Court.

The summonses for judgment stands accordingly

disposed of.

[N. J. JAMADAR, J.]