Dunlop India Limited. vs N. Kishore & Co. And Ors.
1992 Latest Caselaw 651 Del

JUDGMENT

S.C. Jain, J.

(1) M/S Dunlop India Ltd has filed this suit for recovery of Rs. 1,09,054.13 against the defendants under Order 37 Rule 2 Cpc, 1908, as amended, on the allegations that the defendants entered into an agreement with the plaintiff company and on the basis of that agreement the defendants were appointed as stockiest/dealer of the plaintiffs adhesive products and thereafter at all material times the defendants placed various orders in the office of the plaintiff at Delhi for supply of products on the terms and conditions that the defendant No.1 from time to time would pay various amounts of the agreed purchase price of the said products of the plaintiff. During the period 26.11.1986 to 23.1.1987 the defendants purchased the goods worth Rs. 20629.24 from the plaintiff as per the details given in Annexure-B. The defendants issued cheques of various dates towards payment of the price of the goods so purchased but these cheques remained dishonourerd. The detail of the cheques issued which were dishonoured has been given in Annexure-C attached with the plaint and the total value of the dishonoured cheques comes to Rs. 90384.57. Out of this amount the plaintiff gaye credit of Rs 279.99 against the credit note issued in favor of the plaintiff and made demand of the balance amount of Rs. 90107.58 by sending legal notice but defendant did not pay any amount. Interest at the rate of 18% p.a. on this amount has also been claimed by the plaintiff in this suit totaling Rs.1 ,

(2) Summons under form Iv of Appendix B under the provisions of Order 37 Cpc were issued against the defendants and they made appearance through their counsel and filed an application under Order 37 Rule 5 Civil Procedure Code seeking leave to defend the suit within the statutory period. One of the pleas taken by the defendant is that the suit is for recovery of Rs 90384.57 and is below the pecuniary jurisdiction of this court. The suit should have been filed before the District Judge. The other plea taken by the defendant is that the suit under Order 37 Civil Procedure Code does not lie because it is a matter for rendition of account between the parties and unless the accounts are settled and definite amount is arrived at, this suit under Order 37 Civil Procedure Code is not maintainable. In the affidavit filed by defendant No.2 as partner of defendant No,l, various preliminary objections have been taken regarding the maintainability of the suit under Order 37 CPC. However, it is admitted that the defendant firm being the stockiest/dealer of the plaintiff placed orders for the supply of various goods on the plaintiff firm and also made payment on the assurance of the plaintiff that credit which is due to the defendant would be given and the accounts would be settled later on and on the assurance so given these cheques as mentioned in Annexure B were issued. Neither any credit was given nor accounts were settled and the cheques issued were not presented in time. These cheques, as mentioned in Annexure-C, were dishonoured in or about January, 1987 and no responsibility can be cast on the defendant for delayed presentation and bouncing of the cheques. It is further alleged that the bank guarantee for Rs. 1 lakh was valid and enforceable till 27.2.87 and if any amount was due from the defendants to the plaintiff, the plaintiff should have invoked the bank guarantee but it was not done. As per the terms and conditions of appointment of defendant No.1 as stockists, they were to get, besides commission on the sales made by them, overriding commission on the orders placed through defendant No.1. They were to be given Rs.80,000.00 on various items as overriding commission. The defendant has paid Rs.53,000.00 in cash to Mr. Vimal company an official of the plaintiff when he visited in February, 1987 but no credit has been given for the amount paid to company. This fact was brought to the notice of the Sales Director of the plaintiff claiming credit of this amount but to no effect.

(3) In the counter affidavit filed by K.S. Krishnan constituted attorney and principal officer of the plaintiff company, the averments made by the defendant in the affidavit have been denied and the averments made in the plaint have been reiterated. The affidavit of Mr company has also been filed denying the averments made by the defendants against him.

(4) On the basis of the averments made in the application seeking leave to defend, it is to be seen whether the defendants are entitled to leave to contest the suit or not?

(5) It is settled principle of law that if the Judge is of the opinion that the defense raises a friable issue, leave should ordinarily be granted unconditionally. On the other hand, if he is of opinion that the defense raised is frivolous, false or sham he should refuse leave to defend altogether. But where the Judge entertains a genuine doubt whether the defense is genuine or sham or whether it raises a friable issue or not the discretion is left to the Judge to grant leave on certain conditions. Care, however, is to be taken that the object of the rule to assist the expeditious disposal of the commercial causes is not defeated and at the same time real and genuine friable issues are not shut out.

(6) In this case the defendants have not denied the receipt of the goods supplied by the plaintiff as detailed in Annexure-B attached to the plaint. Issuance of cheques as mentioned in Annexure-C has not been denied. It is also not in dispute that the cheques were dishonoured on their presentation. The case taken by the defendants in the affidavit filed by the defendant seeking leave to defend is that sub standard and unwarranted material was supplied resulting in loss to the defendant. No credit was given to the defendant for that loss and also that the plaintiff did not settle the account, though promised. The cheques were issued on the assurance of the officials of the plaintiff that the account would be settled and due credit would be given. The condition on the basis of which these cheques were issued was not fulfillled. Credit of the amount of Rs 53,000.00 paid by the defendant to company, an official of the plaintiff has not been given. The cheques issued were presented late.

(7) This defense has been taken by the defendants in their reply dated 23.9.87 to the legal notice of the-plaintiff. Earlier to it the defendant never took this plea. rather in letter dated 10.4.87, the defendants regretted about the dis-honorment of the cheques for Rs 46192.00 issued by the defendants and it was mentioned that due to unforseen circumstances the said cheques were not encashed on due dates and it was assured that these cheques would be clear by 30.5.87. Again, letter dated 30.4.87, written by defendant No.2, N.K. Jain as partner of defendant No. I to the plaintiff company shows that this defense was not taken. Rather, it was regretted that he could not pay even Rs I lakh to the plaintiff on account of huge financial loss suffered by the defendant in export contract. He assured that he would deposit the said amount in the office of the plaintiff very shortly. It is for the first time that this plea was taken on 28.9.87 in reply to the legal notice of the plaintiff and thereafter in the affidavit filed along with the application seeking leave to defend. This defense seems to be afterthought and cannot be genuine and does not deserve leave to defend on the pleas now taken by the defendants.

(8) The other plea of maintainability of the suit under Order 37 Civil Procedure Code in this court does not raise any friable issue. A perusal of the plaint shows that the plaintiff has claimed Rs 1,09,054.13 as the liquidated amount from the defendants on the basis of dishonoured cheques admittedly issued by the defendants from time to time. The suit for recovery of more than Rs. I lakh are to be filed in the High Court. There is no dispute about it. The plea of the defendants that bank guarantee for Rs I lakh was valid and the plaintiff could get it encashed does not give rise to any friable issue. It was for the plaintiff to either invoke the bank guarantee or to file a suit for recovery on the basis of dishonoured cheques.As the suit is based on dishonoured cheques, it is maintainable under Order 37 CPC. As the defense raised by- the defendant is not genuine and is sham, therefore, the defendant is not entitled to leave to contest the suit. I, therefore, dismiss this application for leave to defend.

(9) Admitting the averments made by the plaintiff in the plaint, I hereby pass a decree under Order 37 Civil Procedure Code for recovery of Rs 1,09,054.13 with costs in favor of the plaintiff and against the defendants. The plaintiff shall also be entitled to pendente lite and future interest at the rate of 18% p.a. as claimed by the plaintiff. Decree sheet be prepared accordingly.