Raj Sakhuja vs Rakesh Sood
2001 Latest Caselaw 1468 Del

JUDGMENT

V.S. Aggarwal, J.

1. Mrs. Raj Sakhuja, plaintiff has filed the present suit for recovery of Rs. 7,27,000/- invoking Order 37 of the Code of Civil Procedure.

2. The facts alleged are that defendant had approached plaintiff to loan certain amount to him for the promotion and enhancement of his business. He had promised that he would pay interest of 18% p.a. On the inducement of the defendant plaintiff gave a loan of Rs. 3,60,000/- in cash, namely Rs. 60,000/- on 25th November, 1992 and Rs. 3,00,000/- on 17th April, 1993. The loan was for commercial/business purposes. The defendant and had failed to pay the amount within the stipulated time. On continuous follow up with the defendant in discharge of his liability he issued two cheques drawn on Bombay Mercantile Cooperative Bank Ltd., Daryaganj i.e. cheque dated 29th December, 1995 for Rs. 60,000/- and another of 30th December, 1995 for Rs. 3,00,000/- lakhs. The plaintiff presented those cheques for collection to the bank but they were dishonoured with the remarks "funds insufficient". The defendant when informed expressed his regrets and requested the plaintiff to re-present the said cheques which were again dishonoured. It is asserted that the amount claimed has not been paid and the suit has been filed calculating the interest at the rate of 18% p.a. on the above said amount.

3. On the notice having been served the defendant has preferred an application under Order 37 of the Code of Civil Procedure for grant of leave to defend and contest the suit. It has been asserted that plaintiff has been intimate with the defendant. Both have been deeply involved in unlawful business of betting. The betting was done usually non cricket and various other events. The defendant was introduced by one of the friends of the plaintiff, namely Sanjay. Defendant has been visiting the plaintiff who had carried on illegal and unlawful business of money lending contrary to the provision of Money Lending act. During one of those moments the plaintiff insisted that defendant should secure the amount which may become due from the defendant in case he looses high stake bets. In order to create false case against the defendant blank cheques were taken and were filled up by the plaintiff. In fact the cheques had been given in 1992 while the plaintiff had filled them up in 1995.

4. Reply has been filed by the plaintiff and the assertions of the defendant have been controverter. It is denied that the plaint does not disclose any cause of action or that the plaintiff had not given the loan of Rs.3,60,000/-. It is insisted that defendant has signed the receipts and taken the money. Plaintiff gave the loan amount to the defendant hoping to get the same back at the time of the marriage of her daughter but the defendant became dishonest. It is denied that there was any betting involved or that the blanks cheques which were undated had been given.

5. The short question in face of these circumstances that comes up for consideration is as to if the defendant is entitled to contest in terms of Order 37 of the Code of Civil Procedure or not.The defendant in order to get the necessary leave must prove that there are friable issues drawn and there is a bona fide defense. The Supreme Court in the case of Santosh Kumar v. Bhai Mool Singh has considered the said question. The Supreme Court while dealing with this question firstly held:

"... All that we need say about them is that if the Court is of opinion that the defense is not bona fide, then it can impose conditions and is not tied down to refusing leave to defend....."

6. And thereupon went on to conclude:

"The learned Judge has failed to see that the stage of proof can only come after the defendant has been allowed to enter an appearance and defend the suit, and that the nature of the defense has to be determined at the time when the affidavit is put in. At that stage all that the Court has to determine is whether" if the facts alleged by the defendant are duly proved" they will afford a goods, or even a plausible, answer to the plaintiff's claim. Once the Court is satisfied about that, leave cannot be withheld and no question about imposing conditions can arise; and once leave is granted the normal procedure of a suit, so far as evidence and proof go, obtains."

7. Subsequently the Supreme Court again in the case of M/s Mechalec Engineers and Manufacturers vs. M/s Basic Equipment Corporation took into consideration the said question as to under what circumstances permission to contest the suit has to be granted or not. While drawing the guide-lines it was further held that even if the defense of the defendant does not appear to be very genuine the court can still grant permission by enabling him to try to prove a defense but the court may protect the plaintiff by imposing conditions or that the amount should be paid into the court.

8. More recently in the case of Sunil Enterprises & Anr. vs. SBI Commercial and International Bank & Ltd. 1998 IV AD (SC) 271, the Supreme Court once again referred to the earlier precedents and held on the facts that matter required examination and that it could not be stated that defense raised was totally defenseless or moonshine or illusionary.

9. Reverting back to the facts of the present case as referred to above it is not being disputed that the cheques had been issued by the defendant to the plaintiff. However, the plea offered is that the plaintiff was indulging in betting pertaining to certain cricket matches and with the help of the defendant this was being so done. The defendant was made to give two blank cheques which were undated. Learned counsel for the defendant insisted that cheques had been given in the year 1992 and further that in fact no loan had been taken. The defense so offered does not appear to be very genuine but it cannot be stated that defense is totally defenseless or the defense offered is illusionary or moonshine. In these circumstances taking note of the ratio of the decision in the case of Mechalec Engineers (supra) and the ratio of the decision in the case of Sunil Enterprises (supra), the defendant should be given permission to contest but by imposing conditions. It is directed that leave to defend is granted on the defendants furnishing a security to the tune of Rs.7 lakh to the satisfaction of Registrar of this court. Security should be furnished within three weeks. Written statement should be filed within the next three weeks thereto in case security as stated above is furnished.

10. List on 20th December, 2001.