Sahibabad Knitting & Finishing ... vs Sensation And Ors.
2001 Latest Caselaw 1412 Del

JUDGMENT

V.S. Aggarwal, J.

1. A civil suit has been filed by M/s Sahibabad Knitting and Finishing Mills Pvt. Ltd. for recovery of Rs. 6,06,706.00 with interest and costs. The plaintiff has invoked Order 37 of the Code of Civil Procedure.

2. It has been alleged that defendant No. 1 is a partnership firm of which Arvind Kumar Mehta, Mukesh Jain, Naresh Jain and Gopal Singh (defendants 2 to 5) are the partners. During the period from 15th April, 1992 to 4th July, 1992 the plaintiff supplied to the defendants hosiery fabrics consisting of vellore, cotton/polyster fleece and rib, etc. It was received by the defendants as per the challans. The plaintiff had raised the invoices against the defendants in the name of defendant No. 1. 24% interest had been agreed as such mentioned in the invoices. It is asserted that Rs. 3,60,550.45 is due as the balance and Rs. 2,46,155.55 is due as interest. Notice of the same had been issued and the defendants have filed an application seeking permission to contest.

3. The defendant 1 to 5 have filed an application IA 4769/96 seeking leave to defend the suit. It is asserted that the plaintiff has based the suit on basis of invoices and the statement of account. It is neither based on bills of exchanges nor on hundies and therefore Order 37 of the Code of Civil Procedure is not applicable. Plea has further been raised that defendants 2 to 4 were never partners of defendant No. 1 and suit qua them is not maintainable. Defendant No. 2561 proprietor of defendant No. 1 in the Indian Overseas Bank. The cheques were also issued to defendant No. 1. Defendant No. 5 alone was the authorised signatory to operate the account. An order to supply fabrics from M/s Akanksha Creations who in turn was to export the shipment had been received. The answering defendant were the new entrants in the trade. It approached the plaintiff and the deal was struck. All the orders were placed in the name of M/s Kanodia Hosiery Mills, another concern of the plaintiff. Subsequently for the reasons known to the plaintiff it was told that supply of goods would be made by the plaintiff from its own company. Since the defendants were concerned with the delivery of goods therefore, no objection was raised. Last four deliveries of the goods vide bills No. 38, 39, 41 and 42 were beyond the schedule. The supplies otherwise were stated to be defective.

4. Reply had been filed and assertions of the defendants in this regard have not been accepted. It is insisted that Order 37 of the Code of Civil Procedure is applicable. It is also denied that defendants 2 to 4 were not partners of defendant No. 1. It is insisted that the amount claimed as such is due.

5. The circumstances under which leave to defend has to be granted or to be refused are not subject matter of controversy. The Supreme Court in the leading case of Mechalec Engineers and Manufacturers v. Basic Equipment Corporation had laid the following principles of law.

"We need not dilate on the well established principles repeatedly laid down by this Court which govern jurisdiction of the High Courts under Section 115, C.P.C. We think that these principles were ignored by the learned Judge of the High Court in interfering with the discretionary order after a very detailed discussion of the facts of the case by the learned Judge of the High Court who had differed on a pure question of fact - whether the defenses could be honest and bona fide. Any decision on such a question, even before evidence has been led by the two sides, is generally hazardous. We do not think that it is fair to pronounce a categorical opinion on such a matter before the evidence of the parties is taken so that its effects could be examined. In the case before us, the defendant had denied inter alia, liability to pay anything to the plaintiff for an alleged supply of goods. It is only in cases where the defense is patently dishonest or so unreasonable that it could not reasonably be expected to succeed that the exercise of discretion by the trial court to grant leave unconditionally may be questioned. In the judgment of the High Court we are unable to find a ground of interference covered by Section 115 CPC."

6. It is in this backdrop that one has to see if friable issues are drawn are not and whether the defense offered by the defendant is a moonshine or offered by the defendant is merely a moonshine or baseless. Only if the defense offered is illusionary, sham of practically non-existant the permission to contest would be refused.

7. Perusal of the nature of the assertions made clearly show that there is a friable issue. If defendants 2 to 4 are the partners of defendant No. 1 and whether four invoices sent by the plaintiff were returned. There is in fact no clear admission that the amount as such would be deemed to be admitted to be due. Therefore, it is patent that friable issues are drawn. For these reasons IA 4769/96 under consideration is allowed. The defendants are granted permission to contest. Written statement should be filed within four weeks. Rejoinder, if any, be filed within three weeks.

Suit No. 1295/95

8. List it before the JR(O) on 6th December, 2001 for admission/denial of documents.