Sh. Raj Kumar vs Sh. Harjit Singh
2009 Latest Caselaw 2758 Del

*          HIGH COURT OF DELHI : NEW DELHI

+          IA No.12001/2007 in CS[OS] No.1282/2007

                                Reserved on: 9th July, 2009

%                               Decided on:     22nd July, 2009

Sh. Raj Kumar                               ...Plaintiff
                       Through : Mr. Ravi Gupta, Adv. with Mr. Ankit
                                 Jain, Adv.

                       Versus

Sh. Harjit Singh                          ....Defendant
                       Through : Mr. Shahid Ali, Adv. with
                                 Mr. Ghufran Ahmed, Adv.
Coram:

HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                                   No

2. To be referred to Reporter or not?                                Yes

3. Whether the judgment should be reported                           No
   in the Digest?

MANMOHAN SINGH, J.

1. By this order I propose to decide the I.A No. 12001/2007

filed by the defendant under the provisions of Order 37 Rule 3[5] of the

CPC thereby seeking leave to defend the suit filed by the plaintiff.

2. The brief facts of the matter are that M/s Charanji Lal

Constructions, of which the plaintiff is the proprietor, is engaged in the

business of engineers and contractors and M/s Johit Builders, of which

the defendant is the proprietor, is engaged in the business of

construction of buildings.

3. The defendant approached the plaintiff around September-

October 1999 for getting the construction and development work of

additional floors done at a commercial complex at 301/2, Delhi Road,

Gurgaon, Haryana.

4. After due deliberation and negotiations, the work for the

construction of above project was awarded to the plaintiff vide

communication dated 25.10.1999 and 18.12.1999 on the terms and

conditions mutually agreed upon between the parties and the plaintiff

started the said project work. Both the parties were required to fulfil

their respective obligations as per the terms of the Agreement.

5. It is mentioned in the plaint that initially, only civil work was

assigned to the plaintiff and other electrical/sanitary and fire fighting

work was to be assigned by the defendant to other agencies but as the

defendant failed to decide upon such agencies, it requested the plaintiff

to take up the said electrical and sanitary work also.

6. From 04.1.2000 the plaintiff started raising bills on the

defendant but on account of non-release of funds by the defendant and

for want of requisite clarification with regard to stability of structural

design and defaults for the upper floors from the Architects, the said

work had to be temporarily closed down in February 2000.

Consequently, the labour deployed for execution of the work remained

idle during this period causing financial stress on the plaintiff. A

communication dated 18.1.2000 was also sent by the plaintiff to the

defendant apprising him of the state of affairs.

7. The plaintiff submits that around May 2002 the defendant

requested the plaintiff to restart the work and also to carry out

demolitions of certain areas and to close certain walls in the basement as

the same were required for obtaining clearance from HUDA.

8. Thereafter, the plaintiff again raised bills on the defendant,

the details of which have been mentioned in para-10 of the plaint but the

defendant failed to release the payments due to the plaintiff in spite of

the assurance given by the defendant.

9. The plaintiff, therefore, sent several

communications/reminders at regular intervals demanding the payment

of his dues and on receipt of one such communication dated 17.5.2004,

the defendant issued a cheque of the sum of Rs.25,00,000/- towards

partial discharge of his aforesaid liability with further assurance that the

remaining dues would be paid within 15 days. The said cheque issued

by the defendant was dishonoured on presentation and returned to the

plaintiff with the remarks "refer to drawer".

10. As per plaint, after serving the defendant with a statutory

legal notice the plaintiff initiated criminal proceedings under the

Negotiable Instruments Act, which proceedings are pending in the Court

of M.M., New Delhi.

11. Thereafter the plaintiff again sent a communication dated

01.03.2005 demanding a sum of Rs.50,19,490/- which the defendant

again failed to pay.

12. The plaintiff averred that in accordance with the arbitration

clause between the parties, it sent a notice for appointment of an

Arbitrator as per law but the defendant again failed to act on the same

and therefore, the plaintiff filed an Arbitration Petition bearing

Arb.P.No.88/2006 in which petition this court on 25.07.2006 passed an

order in terms of which the plaintiff has filed the present recovery suit

against the defendant to the tune of Rs.25,00,000/-.

13. It is alleged that the plaintiff even sent a legal notice dated

18.6.2007 asking the defendant to make the payment of the aforesaid

cheque, which notice stands duly served on the defendant, but the

defendant has not come forward to pay the said cheque amount despite

service of the said notice and hence, the present suit for recovery of

Rs.25,00,000/- has been filed by the plaintiff.

14. The present application has been filed by the defendant

seeking leave of this court to defend the suit filed by the plaintiff. The

grounds to defend the suit have been mentioned in the affidavit filed

along with this application. The main defences/grounds taken by the

defendant are that :-

a] the plaintiff has already received full and final amount in

2000 and no balance was left towards the defendant or against the

owners of the property/site where the plaintiff had done

constructions work.

b] the suit is hopeless barred by time as per the averments made

in para-23 of the plaint itself wherein the plaintiff has alleged that

the cause of action firstly arose on 25.10.1999 when the

agreement for construction of additional floor was executed

between the parties and further arose when the cheque of Rs. 25

lac was handed over to the plaintiff on 13.07.2004. The defendant

submits that it issued a blank undated signed cheque to the

plaintiff as security for the construction work.

c] the annexures no. 1, 2 and 3 submitted by the plaintiff along

with the plaint, i.e. communications by defendant dated

25.10.1999 and 18.12.1999, communication by plaintiff dated

18.01.2000 and copies of five bills raised by the plaintiff with the

details of the payments received respectively do not concern the

defendant as it has signed none of these bills or communications.

In view of this submission, the said annexures cannot be termed

agreements. Further, even if they are termed so, as per clause no.

4 of communication dated 25.10.1999 the plaintiff was to

complete the work on or before 17.02.2000. The factum of three

bills raised by the plaintiff after this stipulated period (admitted in

para-10 of the plaint) was due to his own wrongdoing and hence

he should not be allowed to take advantage of the same.

d] the plaintiff's submissions are contradictory as in para-4 of

the plaint he asserts that the letters dated 25.10.1999 and

18.12.1999 are communications whereas in para-5 thereof he

claims them to be agreements.

e] since the last running bill on 28.06.2002 was for an amount

of Rs. 21,18,354/-, it is inconceivable as to how the plaintiff

received the cheque of Rs. 25 lac on which the present suit is

based. Further, in the plaintiff's letter dated 17.05.2004 wherein

the balance to be paid by the defendant is stated to be Rs.

46,54,690/-, the plaintiff has himself asserted that the defendant's

payment has been due for more than four years.

f] the plaintiff has intentionally raised the last three payments

in bill dated 28.06.2002 as by doing so he is attempting to extend

the period of limitation as regards the present suit. However, in

order to come within the purview of Section 19 of the Limitation

Act, 1963 the plaintiff has also to show that payment of a part of

the bill was received under the hand writing of the payer. In this

case, such hand writing/ endorsement has only been shown by the

plaintiff on their own bills and therefore, their authenticity in

view of Section 19 is suspect.

g] the plaintiff has filed the present suit after expiration of the

limitation period and has not shown any ground for exemption

and hence the plaintiff's suit must be barred under Order VII Rule

6 CPC.

15. The defendant states that it has submitted numerous triable

issues which cannot be decided without leading evidences of the parties

and therefore, he should be allowed unconditional leave of this court to

defend the present suit.

16. The plaintiff in its reply to this application of the defendant

submits, among other things, that keeping in view that the defendant has

admitted issuing the cheque of Rs. 25 lac, no leave should be granted to

him until and unless the amount admitted to be due is deposited by him

in this court.

17. On a bare perusal of the defendant's application, I find that

there is no admission as regards issuance of the said cheque of Rs. 25

lac. On the contrary, the defendant has stated that the plaintiff has

received full and final payment in 2002 and nothing further is due.

Therefore, as regards the last alleged running bill on 28.06.2002 for an

amount of Rs. 21,18,354/- and it is inconceivable as to how the plaintiff

received the cheque of Rs. 25 lac on which the present suit is based and

in fact there was an undated cheque which was given to the plaintiff by

the defendant as security for the construction work.

18. Therefore prima facie the statements of the defendant in the

affidavit do inspire much confidence, at least at the present stage of

proceedings. Hence, this court feels the matter requires trial as per

defence raised by the defendant.

19. In Defiance Knitting Industries (P) Ltd. v. Jay Arts (2006)

8 SCC 25 the Hon'ble Apex Court referred to its judgment in Mechelec

Engineers & Manufacturers v. Basic Equipment Corporation AIR

1977 SC 577 wherein it laid down several principles which ought to be

followed by a court while granting/declining leave to defend under

Order 37 Rule 3. These principles are as follows:

(a) If the court is of the opinion that the case raises a

triable issue then leave to defend should ordinarily be

granted unconditionally. The question whether the defence

raises a triable issue or not has to be ascertained by the court

from the pleadings before it and the affidavits of parties.

(b) If the court is satisfied that the facts disclosed by

the defendant do not indicate that he has a substantial

defence to raise or that the defence intended to be put up by

the defendant is frivolous or vexatious it may refuse leave to

defend altogether.

(c) In cases where the court entertains a genuine

doubt on the question as to whether the defence is genuine

or sham or whether it raises a triable issue or not, the court

may impose conditions in granting leave to defend.

20. In Raj Duggal v. Ramesh Kumar Bansal AIR 1990 SC

2218 it was held as follows:

"3. Leave is declined where the court is of the opinion that the grant of leave would merely enable the defendant to prolong the litigation by raising untenable and frivolous defences. The test is to see whether the defence raises a real issue and not a sham one, in the sense that if the facts alleged by the defendant are established there would be a good or even a plausible defence on those facts. If the court is satisfied about that leave must be given. If there is a triable issue in the sense that there is a fair dispute to be tried as to the meaning of a document on which the claim is based or uncertainty as to the amount actually due or where the alleged facts are of such a nature as to entitle the defendant to interrogate the plaintiff or to cross-examine his witnesses leave should not be denied. Where also, the defendant shows that even on a fair probability he has a bona fide defence, he ought to have leave. Summary judgments under Order 37 should not be granted where serious conflict as to matter of fact or where any difficulty on issues as to law arises. The court should not reject the defence of the defendant merely because of its inherent implausibility or its inconsistency."

21. The other aspect of the matter is that the plaintiff filed a

criminal complaint against the defendant on the basis of the alleged

dishonour of the cheque of Rs. 25 lac under Section 138 of Negotiable

Instruments Act as CC No. 184/1 in the court of Ms. Geetanjali Goel,

MM, New Delhi and that the said complaint has been dismissed after

recording of evidence and decided on merit.

22. In the said criminal proceedings, it was held that "in the

instant case there is nothing to show that the liability was an admitted

one or same was acknowledges such that it would come within the

period of limitation." It was further held as follows:

"23. It is thus seen that though the notice must be presumed to have been served on the accused the complainant has otherwise failed to prove that the cheque was issued in discharge of legally enforceable debt or other liability. In view of the above discussion the complainant has failed to prove his case against the accused beyond reasonable doubt. Accordingly the complaint for the offence under Section 138 Negotiable Instruments Act filed by the complainant is dismissed."

23. Learned counsel for the plaintiff has contended that the

above-mentioned finding does not apply to the present proceedings as

the findings of a criminal court do not apply on related civil

proceedings. Further, it is argued that an appeal against the order is

pending. Learned Counsel has referred to decisions in two cases, inter

alia, Krishan Murari Gupta v. Hemant Kumar Sethi 1997 VI AD

(Delhi) 655 and Ganga Roller Flour Mills Pvt. Ltd. v. A.B Industries

(Baba Bread) 2002 (61) DRJ 537. Both these judgments do not support

the contention of the plaintiff as the former pertains to a case where

proceedings in the criminal court were pending but in the present case,

the proceedings in the criminal court were concluded and determined

and the plaintiff's complaint had been dismissed after recording of the

evidence of the parties and in the latter, the facts and circumstances are

completely different from the present ones.

24. Without getting into the dispute as to whether or not the

findings given in the criminal complaint are binding in these

proceedings, while examining the question of granting leave to the

defendant, this court is of the opinion that as per the defenses raised by

the defendant, this court considers that the defendant is entitled to the

grant of leave to defend.

25. In view of the afore-mentioned principles and the facts and

circumstances of the case, as well as the defendant's affidavit, I am of

the view that the defense raised by the defendant is a triable issue and

therefore the defendant is entitled to grant of leave to defend in the

present case without any condition.

26. The defendant is granted four weeks time to file the written

statement with an advance copy of the same to the plaintiff who may

file a replication, if any, within four weeks thereafter.

27. List this matter before the Joint Registrar on 22nd September,

2009 for admission/denial of documents and before the court on 15th

October, 2009 for framing of issues.

The I.A is disposed of accordingly.

MANMOHAN SINGH, J JULY 22, 2009 SD