Sh. Joginder Singh vs Sh. Kuldip Singh And Anr.
2002 Latest Caselaw 505 Del

JUDGMENT

Mahmood Ali Khan, J.

1. This civil revision petition is filed by the petitioner, who is defendant No. 1 in the suit, under Section 115 of the CPC assailing the order of an Additional District Judge dated 31.8.1998 by which he had dismissed an application filed by the petitioner for grant of leave to defend the suit filed by the defendant No. 1 against him for recovery of Rs. 30,000/- under the summary procedure of Order 37 CPC.

2. The facts of the case are peculiar. The respondent No. 1 Mr. Kuldeep Singh and respondent No. 2 Sardar Mr. Udham Singh are brothers. Their father owned property No. 1/210/4, Sardar Bazar, Delhi Cantt, Delhi. The electricity meter was installed in the name of Sardar Amrik Singh which provided electricity to the premises. Sardar Amrik Singh sold one half of this property in favor of his grandson Sardar Indermohan Singh, who is a son of the respondent No. 2 by a registered sale deed dated 10.5.1995. Portion of the property which was purchased by Sardar Indermohan Singh was given separate number 1/210/4A. Sardar Indermohan Singh lived in the portion of the property purchased by him. The remaining half of the property continued to be in occupation and use of respondent No. 1 Sardar Kuldeep Singh and his brother sardar Harmit Singh. The electricity in both the portions continued to be used from a common electricity meter bearing No. MN-212-1260153-M-434-DL/D1. Sardar Indermohan Singh became liable to pay electricity consumption charges from the date of purchase of half of the property by him i.e. 10.5.1995. The electricity bill dated 9.5.1996 was received for an amount of Rs. 1,16,703/- besides a later fee of Rs. 2,2001/-. It was not paid. A sum of Rs. 30,000/- was paid by Sardar Indermohan Singh in order to avoid disconnection of the electricity but since the entire bill was not paid the electricity supply was discontinued by the DESU (now DVB) on 12.12.1996. A dispute arose between the defendant No. 1 on the one hand and Sardar Indermohan Singh on the other hand regarding sharing of the electricity bill and for restoration of electricity connection.

3. On 9.7.1996 it appears, the two respondents Sardar Kuldip Singh and Sardar Udham Singh agreed to settle the amount of electricity bill by referring it to an arbitrator. As an assurance that the dispute would be settled by him the respondent No. 1 Sardar Kuldip Singh deposited a sum of Rs. 30,000/- with the petitioner. Both the respondents then made a writing which is annexure A to the petition. The writing made by the respondent No. 2 stated that the petitioner was to be appointed to settle the dispute between him and Sardar Kuldip Singh and that he would abide by his (arbitrator's) decision. Sardar Kuldip Singh on the other hand made the following writing in the Hindi script which when translated into English read as under:-

"I Kuldip Singh, s/o Amrik Singh, r/o.1/210/4, Sadar Bazar, Delhi Chawni-10.

In the dispute with Sardar Udham Singh in respect of the electricity I an depositing a sum of Rs. 30,000/- with Sardar Joginder Singh. After the electricity bill is cleared I will take back Rs. 30,000/- deposit. After the electricity bill of DESU is paid, it will be shown to Joginder Singh. Whatever settlement is made by Joginder Singh regarding electricity it will be acceptable to both the parties"

4. After that Sardar Joginder Singh made a note that he would put his signature about the receipt of the money after he had actually received it. Below this note is another note written by him about receipt of Rs. 15,000/- in cash and Rs. 15,000/- by cheque.

5. The respondent No. 1 did not pay his share of the electricity bill to the DESU. But he applied for a new electricity connection in his name in his portion of the property. This led to the filing of a civil suit by Sardar Indermohan Singh against him and the DESU for restraining the DESU from giving new connection to the premises in occupation of respondent No. 1 until the electricity dues were cleared by the parties. The suit is still pending.

6. The respondent No. 1 Sardar Kuldip Singh on 15.9.1997 filed a civil suit against the petitioner for recovery of Rs. 35,400/- towards the amount of Rs. 30,000/- deposited with him along with interest at the rate of 18% per annum. He also claimed pendete lite and future interest at the same rate of interest. It was stated the respondent No. 2 Sardar Udham Singh was being imp leaded as a formal party.

7. In the plaint of the civil suit filed by the respondent No. 1 it was alleged that the plaintiff (respondent No. 1 herein) had entered into an agreement with the petitioner (defendant No. 1) and respondent No. 2 (defendant No. 2) in pursuance to which a sum of Rs. 30,000/- was deposited by him with the petitioner (defendant No. 1) on 9.7.1996. The petitioner issued a receipt for the money delivered to him. The petitioner had agreed to refund the amount as and when the dispute about the electricity between the petitioner and the defendant No. 2 (respondent No. 2 herein) was settled. The dispute was about the electric meter which was installed in the premises No. 1/210/4A which property was owned by Sardar Indermohan Singh. Sardar Indermohan Singh filed a civil suit against the DESU and others in the court of the Commercial Civil Judge in which the respondent No. 1, plaintiff was one of the defendants. Sardar Indermohan Singh admitted his liability to pay all the electricity dues in respect of the said electricity connection, therefore, the plaintiff was no more liable to pay any amount. The plaintiff demanded the amount of Rs. 30,000/- from the petitioner. He also served a notice of demand on the petitioner but he had failed to pay the amount so the plaintiff was entitled to recover a sum of Rs. 30,000/- as the principal amount and Rs. 5,400/- as the amount of interest from 9.7.1996 to 31.7.1997 under the summary procedure prescribed under Order 37 CPC.

8. On being noticed the petitioner/defendant No. 1 applied for leave to defend in accordance with Order 37 Rule 3(5) of the CPC.

9. In the leave application the petitioner/defendant No. 1 pleaded that he was appointed as an arbitrator to settle the dispute between the two respondents and a sum of Rs. 30,000/- was deposited with him on the condition that the respondent No. 1 would settle the dispute in respect of the electricity bill and thereafter would take back the amount. A sum of Rs. 15,000/- was given by him in cash and the remaining Rs. 15,000/- was deposited by cheque which had been encashed by him, therefore, a civil suit under Order 37 Rule 3(5) CPC cannot be filed on the basis of an encashed cheque. The respondent No. 1 did not comply with the terms of the settlement made by him while making the deposit of the amount. For settling the dispute between the two respondents he served notice on the respondent No. 1. Whereas the respondent No. 2 participated in the proceeding before him, the respondent No. 1 chose not to appear and join the settlement proceedings. He decided the dispute in favor of respondent No. 2 and in accordance with the decision he delivered the amount of Rs. 30,000/- to the respondent No. 2. There was no contract entered into between him and the respondent No. 1. He was appointed only an arbitrator to settle the dispute between the two respondents amicably. He prayed for grant of leave to defend the suit.

10. In the reply to this application the respondent No. 1 contended that the application for leave to defend did not disclose a defense or raise a friable issue, therefore, the leave application was liable to be dismissed. He further submitted that there was a dispute between him and the respondent No. 2 regarding payment of electricity bill. He was called by the SHO and he was pressurised to make a writing and deposit a sum of Rs. 30,000/- with the petitioner. The petitioner is under obligation to refund the amount to him. There was no question of settlement of the dispute between the parties as the matter was subjudice in a suit before a Civil Judge. The petitioner had no right to give the amount deposited with him to the respondent No. 2 even if the dispute was not settled as agreed to by him.

11. The learned Civil Judge by the impugned order dated 31.8.1999 held that the suit was maintainable under Order 37 CPC. The petitioner had admitted the deposit of Rs. 30,000/- with him. He had no right to hand it over to the respondent No. 2. The petitioner as arbitrator has not determined the extent of the liability of the two respondents towards payment of electricity dues. No friable issue has arisen, therefore, the petitioner was not entitled to the leave prayed for. Moreover the petitioner was not appointed as arbitrator in accordance with law. If he was the arbitrator he had not made and published any award which was required to be made rule of the court in accordance with law. As a corollary to the above finding he dismissed the application of the petitioner and decreed the suit for recovery of Rs. 30,000/- with cost and interest at the rate of 12% per annum from 10.8.1997 to the date of realisation.

12. The petitioner is aggrieved and has filed this revision petition.

13. From the facts disclosed in the petition and the pleadings it appears that there was dispute between the two respondents regarding sharing the arrears of the electricity bill. Both the respondents reposing confidence in the petitioner referred to the dispute to the petitioner for settlement. Respondent No. 1 deposited a sum of Rs. 30,000/- with the petitioner undertaking to pay the amount of the electricity bill to the extent of his share. The amount of Rs. 30,000/- was to be returned to him after he had paid his share in the electricity bill. Respondent No. 1 did not join the settlement proceedings therefore, the petitioner gave his decision in favor of respondent No. 2 and also gave the amount of Rs. 30,000/- to respondent No. 2. A copy of the decision given by him in the dispute between the two respondent is on the file. It appears to have been sent to both the respondents under the certificate of posting. The respondent No. 1 on the other hand denied that the writing which is at serial No. 1 of the list of documents filed by him was made by him voluntarily. His allegation was that he was called to the police station and was coerced into writing a statement which is dated 9.7.1996. but in the plaint the respondent No. 1 did not dispute his entering into an agreement with the respondent No. 2 and the reference of the dispute in respect of the electricity bill for settlement to the petitioner. As per this writing he could have taken back the amount of Rs. 30,000/- after he had cleared the electricity dues and has shown the bill to the petitioner.

14. The first question that arises for decision is whether the suit under Order 37 CPC was maintainable. Sub Rule (2) of Rule 1 of Order 37 provides as under:-

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

a) suits upon bills of exchange, hundis 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"

It is clear from Sub-clause (b) of Sub-clause (2) of this rule that the suit for recovery of a liquidated demand in money from the defendant arising "on a written contract" could be filed under Order 37 CPC. The agreement between the two respondents dated 9.7.1996 is in the form of the statement of these two respondent which show that the dispute between them in respect of the electricity bill was referred to the petitioner for settlement and that after the respondent No. 1 had shown the paid electricity bill to the petitioner the amount of Rs. 30,000/- was to be returned to him by the petitioner. Though the petitioner has not signed these two statements but below these statements he had singed acknowledging the receipt of Rs. 30,000/- from the respondent No. 1. As such he is also a party to the agreement between the respondent No. 1 and respondent No. 2. This contract between them is in writing. So the provision of Order 37 CPC can be invoked by the respondent No. 1 for recovery of the liquidated amount of Rs. 30,000/- from the petitioner. The suit under Order 37 CPC is maintainable. This plea doe snot give rise to a friable issue for which the petitioner could be granted leave to defend the suit.

15. The petitioner has admitted the receipt of the amount of Rs. 30,000/-. His defense, however, is that he was appointed arbitrator for setting the dispute regarding electricity bill and he called the respondent No. 1 (plaintiff) to join the settlement proceeding but he failed to attend the proceeding. On the other hand the respondent No. 2 joined the proceeding. He gave his verdict in favor of respondent No. 2 and found him entitled to the amount. Accordingly, he gave the money also to him.

16. The respondent No. 1, conversely, contended that the electricity meter was installed in the part of the property which was owned by Sardar Indermohan Singh and Sardar Indermohan Singh filed a civil suit against the DESU in which he is also a party for restraining the installation of a new electricity connection in the portion of the property which was in occupation of the respondent No. 1. He alleged that after the civil suit the dispute about the payment of electricity bill was sub judice as there being no dispute about the electricity any more the petitioner had no right to give the money to the respondent No. 2. It was further submitted that he was called by the SHO and was pressurised in making the writing dated 9.7.1996. The writing dated 9.7.1996 ostensible showed that the respondent No. 1 had agreed to abide by the decision given by the petitioner. The amount of Rs. 30,000/- was also to be refunded to him after he had cleared the electricity bill. The documents on record show that the petitioner had entered into the arbitration proceeding and had given his verdict and in pursuant thereto he had delivered the amount of Rs. 30,000/- to the respondent No. 2. It is not disputed that the amount of Rs. 30,000/- had been deposited by the respondent No. 2 towards the electricity dues of the same electricity meter. The electricity meter no doubt was installed in the portion of the property which was owned by Sardar Indermohan Singh, s/o respondent No. 2 but it was supplying electricity to the whole of the premises. It has not been disputed by the respondent No. 1 that till the electricity meter was disconnected he was also using the electricity from the same meter. It has not been disputed and it appears from the writing also that he was liable to pay his share in the electricity bill of the said meter. His grivenance is that while Sardar Indermohan has obtained a new meter for supply the electricity to the portion of the property owned by him he himself had not been granted electricity connection and he did not have any electricity in the portion of the property which is in his occupation. He has still not paid his share in the electricity bill. The suit filed by Sardar Indermohan Singh is an injunction suit for restraining the DESU (now DVB) from giving the new electricity connection to the respondent No. 1 without the electricity bill having been cleared by the parties. From the writing made by the petitioner on 9.7.1996 it appears that the petitioner Sardar Joginder Singh was to settle the dispute between the two respondents and the respondent No. 1 had undertaken to abide by that decision. The petitioner has stated that he has already given his decision. Whether he has given this decision in accordance with the contract dated 9.7.1996 between the two respondents or was he justified in delivering the amount of Rs. 30,000/- to the respondent No. 2 certainly gives rise to a friable issue. His defense in no way can be said to be sham, bogus and illusory disentitling him from contesting the suit.

17. After taking into consideration the law which has been explained in some other judgments, the Supreme Court in Sunil Enterprises and Anr. v. SBI Commercial & International Bank Ltd., summarised the proposition of law on the question of leave to defend the suit under Order 37 CPC as follows :-

(a) If the defendant satisfies the court that he has a good defense to the claim on merits, the defendant is entitled to unconditional leave to defend.

(b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defense, although not a possible good defense, the defendant is entitled to unconditional leave to defend.

(c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is, if the affidavit discloses that at the trial he may be able to establish a defense to the plaintiff's claim, the court may impose conditions at the time of granting leave to defend - the conditions being as to time of trial or mode of trial but not as to payment into court for furnishing security.

(d) If the defendant has no defense, or if the defense is sham or illusory or practically moonshine, the defendant is not entitled to leave to defend.

(e) If the defendant has no defense or the defense is illusory or sham or practically moonshine, the court may show mercy to the defendant by enabling him to try to prove a defense but at the same time protect the plaintiff imposing the condition that the amount claimed should be paid into court or otherwise secured".

18. It is clear from this proposition of law that at the time of grant of leave to defend the court was required to examine whether there was a real or a sham plea by the respondent in the application or whether the allegations made by the respondent, if established, would be a good defense. The court should not go into the question whether the facts alleged were true or not and that situation would arise only after the leave was granted and at the trial. The petitioner in this case has a fair or bonafide or reasonable defense to the claim of the respondent No. 1 (plaintiff), therefore, he is entitled to an unconditional leave to defend the suit. His defense cannot be said to be sham or illusory or practically moonshine. It is not a case where it could be held on the basis of facts pleaded that the petitioner had no defense at all.

19. For the reasons stated above it must be held that the learned Civil Judge has committed error of jurisdiction, illegality and material irregularity in the exercise of jurisdiction warranting interference by this court. Accordingly, the petition is allowed. The impugned order of the learned Civil Judge dated 31.8.1999 is set aside. The leave application is granted and the petitioner is allowed to file written statement. The written statement shall be filed by the petitioner before the learned Civil Judge within four weeks positively. The parties shall appear before the trial court on 15.5.2002. The record of the case may be sent back to the trial court immediately.