Rajesh Ahuja vs Manoj Mittal And Anr.
1995 Latest Caselaw 706 Del

JUDGMENT

S.D. Pandit, J.

(1) This petition is filed by the defendants in S.309/93 under the provisions of Order xxxvii Rule 3(5) of the Code of Civil Procedure. There was delay on the part of the petitioner to file this application and they had filed IA.5112/93 under Order xxxvii Rule 3(7) of the Code of Civil Procedure read with Section 5 of the Limitation Act to condone the delay. That petition is allowed by me. I, therefore, proceed to consider this petition on merits.

(2) Suit No.309/93 is filed by Rajesh Ahuja son of Shri A.L. Ahuja against two defendants, viz. Manoj Mittal son of Shri D.D. Mittal and defendant No.2 M/s.Cosmos Builders and Promoters. Plaintiff Rajesh Ahuja is having business in real estate and he was formerly Managing Director of Cosmos Builders and Promoters Pvt. Ltd. He had entered into a contract with Methodist Church in India on 26.1.1986 on behalf of Cosmos Builders and Promoters Pvt.Ltd. for raising some houses. At that time wife of Rajesh Ahuja was the principal shareholder Along with Rajesh Ahuja of the said Cosmos Builders and Promoters Pvt.Ltd. Plaintiff had also devoted himself totally towards the success of his Battery Lane Project and he had suffered certain losses in the business of the said Cosmos Builders and Promoters Pvt.Ltd. Therefore, in July 1990 he had taken one Ashok Verma and his wife Ms. Meenakshi Verma as directors in the said Cosmos Builders and Promoters Pvt.Ltd. and had sold a large number of his shares in their favor but he had kept with him 15 per cent of the shares.

(3) Defendant No.1, Manoj Mittal, his father and other members of his family had acquired the remaining 85 per cent shares of the said Cosmos Builders and Promoters Pvt.Ltd. in August 1991. They wanted plaintiff's 15 per cent shares and, therefore, negotiations were taking place. It is the claim of the plaintiff that ultimately in April 1992 it was agreed between the parties that the 15 per cent shares which he was holding should be sold to defendant No.1 for a price of Rs.19,00,000.00 . An agreement to that effect was executed between the parties and two cheques, viz. (1) bearing No.825453 dated 10.10.1992 for Rs.17,95,150.00 and (2) Cheque No.012277 dated 11.4.1992 for Rs.l,04,850.00 were issued. But, as the defendant No.1 could not arrange for the funds for realisation of Cheque No.825453 dated 10.10.1992 for Rs.17,95,150.00 he requested the plaintiff to return that cheque to him in consideration of issuing two fresh cheques for the said amount. Accordingly, plaintiff returned the original cheque No.825453 for Rs.17,95,150.00 to defendant No.1 and defendant No.1 gave two cheques, viz. (1) Cheque dated 24.4.1992 for Rs.1,01,282.35 and (2) Cheque dated 10.10.1992 for Rs.16,93,867.70p.

(4) It is the further case of the plaintiff that cheque dated 11.4.1992 for Rs.1,04,850.00 and cheque dated 24.4.1992 for Rs.1,01,282.35 were duly encashed and he received the sum of both the cheques. But when he presented cheque bearing No.825456 for Rs.16,93,867.70p. the same was not encashed by the bank for insufficient funds and the same has been returned to him. Thereafter, he has Filed the present suit under the provisions of Order xxxvii to get a money decree for a total sum of Rs. 19,64,868.00 by ciaiming, besides the amount of cheque of Rs.l6,93,867.70p., 24 per cent interest thereon.

(5) By the present application it is contended by the defendants that the plaintiff has not come before the Court with clean hands and the suit is not at all tenable under the provisions of Order xxxvii of the Code of Civil Procedure. It is contended by them that the very fact that the plaintiff is not producing the original cheque for the amount of Rs.17,95,150.00 shows that he has not come before the Court with clean hands. They contended that plaintiff had agreed to sell his 13,860 shares of denomination of RS.1O.00 for an amount of only Rs.1,04,850.00 and that amount is accordingly paid to him by cheque and defendant had never issued the cheque dated 10.10.1992 for Rs.17,95,150/. They further contended that the plaintiff has claimed in the suit a total amount of Rs.19,64,862.00. Thus, besides the amount of the alleged cheque for Rs.16,93,867.70p. plaintiff has also made a claim for interest and a claim for interest could not fall within the purview of Order xxxvii Rule 2 of the Code of Civil Procedure and, therefore, the plaintiffs suit under the said provision is not tenable in law. It is their further contention that as a matter of fact there was an agreement between the plaintiff and the defendant and the plaintiff had agreed to supply 1,00,000 sq.ft. of marble at the rate of RS.1O.00 per sq.ft. and towards the security of the said transaction the defendant had given the cheque for Rs.16,93,867.70p. and the plaintiff has failed to fulfill his part of the contract and that they have filed a suit against the plaintiff in the district court to claim a decree for Rs.5,00,000.00 towards the damages for breach of the said contract and, therefore, plaintiff has brought this false and vexatious suit against them and, hence, they should be granted leave to contest the claim of the plaintiff. Thus, it is contended by the defendants that there are friable issues in this suit and, therefore, leave to defend should be granted to them to contest the present suit by filing written statement.

(6) It is an admitted fact that the plaintiff has claimed in all Rs.19,64,862.00 in this suit and out of that amount the amount of Rs.2,70,994.30p. is by way of interest @24 per cent and the remaining amount is covered by the cheque in question. It is the contention of the learned counsel for the defendants that as the plaintiff has claimed in the suit the amount of interest the suit does not fall within the purview of Rule 2 of Order Xxx Vii and, consequently, the leave to defend will have to be granted in this case. In support of that submission he has cited before 4110 two decisions of our High Court. The first decision is of the unreported case of M. Asan Das Talreja and Ors. Vs. Shree Satnam Motor Roadways and another decided on 18.7.1989. If the facts of the said case are read then it would be quite clear that the said case does not have any bearing on the facts before me. In the second paragraph of the said Judgment it has been observed as under: "HOWEVER,it is admitted that the claim made in para 3 of the plaint with regard to traveling expenses of Rs.10,535.00 is not based on any written contract. It is also admitted that the claim of interest of 21 per cent per annum with effect from 1.7.1984 amount to Rs.33,500.00 is not on the basis of any written contract ''

(7) Then it has been further observed in the same Judgment that as regards the remaining claim there was no written document executed between the parties pertaining to the carriage of goods by the plaintiff. Therefore, in that case, in view of the admitted facts before the Division Bench of our High Court the amounts claimed in the suit were not based on any written contract between the parties and. therefore, in the circumstances, it was held that the suit filed under the provisions of Order xxxvii was not tenable in law and, consequently, the refusal to grant leave to defend by the Court was held to be not justified.

(8) The second case on which the learned counsel for the defendants is relying is of Corporation Bank Vs. Monotona International & Ors. . Learned counsel has put reliance on the following observations of the learned Single Judge of our High Court in para 6 of the Judgment:    "ACCORDING to the defendant there is no agreement to pay interest. In fact, claim of interest is not based on any agreement since the question of payment of interest is a dispute in itself. Therefore, to my mind it is also a friable issue. The plaintiff has not based his claim on any written agreement. In the absence of the same prima facie it cannot be said that the claim of interest is covered under Order xxxvii of the Code of Civil Procedure."  

(9) At the outset it must be staled that those observations made by the court are on the basis of the facts prevailing in .that proceeding. Plaintiff had brought the suit on the written contract on the basis of bills of consignment. It was one of the contentions of the defendant that the documents of the alleged bills of consignment were forged documents and there was no agreement to pay interest between the parties. Therefore, this case is also not applicable on facts to the facts of the case before me.  

(10) The case before me is based on a negotiable instrument and if the provisions of Section 79 and 80 of the Negotiable Instruments Act are seen then it would be quite. clear that every negotiable instrument is subject to payment of interest. The interest claimed by the plaintiff in this case is claimed on the amount of the cheque given by the defendant. The said claim of him is governed by Section 80 of the Negotiable Instruments Act, 1881. Consequently, the claim of interest made by the plaintiff is a claim of interest under an enactment. Therefore, the said claim of money is covered by the provisions of Sub-rule (2)(h)(ii) of Rule 1 of Order xxxvii of the Code of Civil Procedure, Therefore, in view of the provisions of Section 80 of the Negotiable Instruments Act and Sub-rule (2)(b)(ii) of Rule I of Order xxxvii, the contention of the learned counsel for the defendants that as the plaintiff has made a claim of interest the suit will not fall within the provisions of Order xxxvii is not tenable. The view which I have taken to the effect that the claim of interest is covered by the provisions of Sub-rule (2)(b)(ii) of Rule I of Order xxxvii of the code of Civil Procedure is supported by the earlier decision of this Court in Mrs. Sushila Mchta Vs. Bansi LalArora [1982 (1) Indian Law Reports (Delhi) 320]. His Lordship A.B. Rohtagi, J. has observed on page 328 in para 16 as under:    "16.Fourthly, counsel submitted that assuming that the plaintiff is entitled to sue for recovery of Rs. 1,00,000 on a written contract, she is not entitled to join the claim for Rs.36,000 which, he said, is a claim in the nature of damages. I do not agree. It is a claim for interest. Whether she is entitled to interest or not is another question. Order xxxvii Rule I says that the plaintiff can "recover a debtor liquidated demand in money payable by the defendant, with or without interest, arising on a written contract."  

The claim For interest can be joined with a claim for money under Order xxxvII. rule 1 (2)(b)(i) CPC. This is clear from the statute.   

(11) The same view is also taken by the Division Bench of the Madras high Court in the case of Venkatachalapalhi Nidhi Vs. nanjappa [AIR 1933 Madras 299], the head-note of which reads as under:    "ORDERxxxvII Rule 2 of the Code of Civil Procedure makes Section 79 and Section 80 of the Negotiable Instruments Act specifically applicable to a case Filed under Order xxxvII. Hence, in suits on hundis Filed under Order xxxvii, where there is no agreement to pay interest in the document, statutory interest can be allowed under Section 80 of the Negotiable Instruments Act and the admission of the allegations in the plaint under Order xxxvii Rule 2 cannot refer to the award of interest which is specifically provided in Clause (a)"  

(12) Thus, I am unable to accept the contention of the learned counsel for the defendants that the present suit is not governed by the provisions of Order xxxvii because the plaintiff has made a claim of interest. No doubt the plaintiff has claimed interest @24% but under Section 80 of the Negotiable Instruments Act he is entitled to claim interest only @18%,but merely because of the same the suit filed by the plaintiff could not be said to be not tenable, as has been held in the case of Venkalachalapathi Nidhi Vs. nanjappa [AIR 1933 Madras 299]. In that case the plaintiff had claimed interest @33.1/3% 'but under Section 80 of the Negotiable Instruments Act he was entitled to claim interest only @6% as Section 80 was standing in 1933 and interest on that rate was allowed to him but it was held that the suit was within the purview of Order xxxvII. That would be clear from the following observations in the said case: "IT is argued on behalf of the appellant that he is entitled to 33.1/3 per cent which he has claimed in the plaint. He contends that 0.37. Civil P.O., supports him having regard to the language of R.2, namely, "the allegations in the plaint shall be deemed to be admitted." We are not able to. accept this contention. No authority in support of the plea has been. cited. On the other hand it appears to us that that interpretation cannot be accepted, because in R.(a), Cl.(2) special provision for interest is made to the effect that S.79 or S.80, negotiable Instruments Act, will apply as the case may be. therefore, the admissions of the allegations in the plaint relied upon by the appellant under Cl.(2) cannot refer to the award of interest which is specifically provided for in Cl.(a). We would, therefore, allow the appeal and award interest at the rate of 6 per cent from the date of the hundis to the date of the decree and subsequent interest also at the same rate thereafter. The plaintiff will get his costs in this appeal on the amount which we have decreed to him."

(13) After coming to the conclusion that the suit is falling within the purview of Order xxxvii of the Code of .Civil Procedure, I proceed to consider as to whether the defendants have made out a case for grant of leave to defend the present suit. Plaintiff has averred in his plaint that the 15% shares of defendant No.2 Cosmos Builders and Promoters were held by him and the defendant No. 1 wanted to get the said 15 per cent shares and it was agreed to sell those 15 per cent shares to him for an amount of Rs. 19,00,000.00 towards the said amount of Rs. 19,00,000.00 two cheques bearing No.825453 for Rs.17,95,150.00 and another cheque bearing No.122770 for Rs.1,04,850.00 were given to him. The defendants have accepted purchasing from plaintiff 15% shares and the giving of the cheque for Rs.1,04,850.00 and they have denied the first cheque bearing No.825453 for the amount of Rs.17,95,150.00 . It is the claim of the plaintiff that he had handed over the said cheque to the defendants as requested by them and in lieu of the said cheque he was given two more cheques bearing No.825456 for the amount ofRs.16,93,867.70p. and No.825455 for Rs.1,01,282.35. The defendants have accepted giving of these two subsequent cheques and they have only denied the first cheque bearing No.825453 for Rs.17,95,150.00 . But it is very pertinent to note that all these three cheques are coming serially from one and the same cheque book. It is also very pertinent to note that it is not the claim of the defendants that cheque No.825453 was issued by them for some other person or firm and that it . was not of the amount of Rs.17,95,150.00 . They have only contended that the original cheque is not produced by the plaintiff and, there fore, the claim of the plaintiff for having given that cheque is false. But plaintiff has already explained the non-production of the original cheque by saying that the said original cheque was returned to the defendant and in lieu of the said cheque the two cheques bearing Nos.825455 and 825456 were given to him. The defendants are insisting to draw adverse inference against the plaintiff for non- production of the original cheque but when the original cheque is in their possession and custody one cannot expect the plaintiff to produce the same. The plaintiff has produced the xerox copy of the original cheque and if the said xerox copy produced by the plaintiff is seen then it would be quite clear that the original cheque is signed by defendant No.1. The xerox copy shows that there was some overwriting over the original cheque and that overwriting is also bearing the signatures of defendant No.1. The production of the xerox copy of the original cheque coupled with the non- contention by the defendants that the original cheque.of that number was given to somebody else clearly shows that they had not issued that cheque is false one.

(14) The plaintiff has also produced Along with the xerox copy the document under which defendant had agreed to pay the amount of Rs.19,00,000.00 . That document is dated 11.4.1992 and that document is also mentioning the said cheque No.825453 for the amount of Rs.17,95,150.00 and the said agreement is also bearing the signature of defendant No.1.

(15) As per the case of the plaintiff out of the two cheques No.825455 and 825456 for Rs.1,01,282.3.5p. and Rs.16,93,867.70p. respectively, cheque No.825455 for Rs.1,01,282.35p. has been encashed and plaintiff has received the amount. As stated earlier, it is an admitted fact that earlier cheque of Rs.1,04,850.00 bearing No.012177 dated 11.4.1992 has also been encashed by the plaintiff and he has received the amount of the same. As per the contention of the defendants, the price of the shares of the plaintiff was only Rs.1,04,850.00 . If that was the case, then there is no explanation by the defendants as to why they had paid the additional amount of Rs.1,01,282.35p. The payment of this amount by the cheque which is having serial number prior to the cheque in question clearly shows that the claim made by the plaintiff must be true and correct one and defense raised by the defendants is false and vexatious.

(16) .PLAINTIFF has averred in his plaint that when he presented cheque No.825456 dated 10.10.1992 for the amount of Rs.16,93,867.70p. to the bank, the said cheque was returned on account of insufficient funds. Plaintiff has also produced the intimation received by him from the bank showing that the cheque was not encashed for insufficient funds. The defendants have tried to explain this cheque by saying that he had agreed to purchase 1,00,000 sq.ft. of marble from the plaintiff and towards the said transaction he had given this cheque in question by way of advance payment or part payment. It is his further claim that as the plaintiff had not supplied him the agreed quantity of marble he has filed a suit for damages of Rs.5,00,000.00 in the District Court, Delhi against the plaintiff. This contention of the defendants that they had a transaction with the plaintiff for purchase of 1,00,000 sq.ft. of marble is vehemently denied by the plaintiff. The circumstances on record also falsify this claim and show that the said contention is vexatious. If at all there was any transaction, as claimed by the defendants, then the cheque which was by way of advance payment would have been in a round Figure. There could not be a cheque as the cheque in question. Why should there be such an odd figure of Rs.16,93,867.70p. in a cheque which is by way of advance payment towards an alleged transaction? It is not probable that for such a transaction involving lakhs of rupees no document of agreement is got executed. It must be further mentioned here that it is not the claim of the defendants that as the plaintiff failed to deliver the goods, as agreed by him, they had stopped payment of that cheque. It seems that after learning that plaintiff is going to take action on account of dishonouring of cheque the defendants have concocted this story of a transaction for purchase of marble from the plaintiff and straightway filed a suit for damages. Therefore, I hold that the contention raised by the defendants regarding the cheque in question is not at all probable and believable and that no friable issue is involved in this case. Contentions raised by the defendants are frivilous.

(17) Thus, in my opinion, there is no defense for the defendants and in these circumstances, no leave could be granted in favor of the defendants. Thus, I order that IA.5113/93 in S.309/93 stands rejected with costs.