Mrs Shradha Wassan & Others vs Mr Anil Goel & Another
2009 Latest Caselaw 1869 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                     IA.No.3832/2008 in CS(OS) 2045/2007

%                                      Date of decision: 5th May, 2009

MRS SHRADHA WASSAN & OTHERS .......                                    Plaintiffs
                             Through: Mr. Vinod Tyagi, Advocate

                                      Versus

MR ANIL GOEL & ANOTHER                                 ....... Defendants
                             Through: Mr Ratan K Singh. Advocate


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.     Whether reporters of Local papers may
       be allowed to see the judgment?       No

2.     To be referred to the reporter or not?             No

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


RAJIV SAHAI ENDLAW, J.

1. The application of the defendants for leave to defend the suit

filed under Order 37 of the CPC for recovery of Rs 48,28,500/-

inclusive of interest at 6% per annum till the date of institution of

the suit in accordance with the agreement and with future interest at

15% from the date of institution of the suit till realization, is for

consideration.

2. The plaintiff No.1 as now proprietor and earlier partner of the

plaintiff No.3 M/s Om Prakash Satyapal has instituted this suit inter

alia on the ground that she and her late husband Mr Naresh Wassan

were carrying on business in partnership in the name and style of

plaintiff No.3; that the said Naresh Wassan died leaving the plaintiff

No.1 and his minor daughter plaintiff No.2 as his only legal heirs and

representatives; that the plaintiff No.3 firm was carrying on business

as civil engineers and steel stockists at Chattisgarh; that the

defendant No.2 of which the defendant No.1 is the sole proprietor

was having an account in the books of accounts of the plaintiff No.3

regularly maintained in the normal course of business; that the

defendant No.2 through the defendant No.1 had borrowed monies

from the plaintiff No.3 to the tune of Rs 12 lacs on 15th January,

2003, Rs 3 lacs on 18th January, 2003 and Rs 5 lacs on 27th January,

2003, repayable on demand with interest at 6% per annum; that the

defendant No.2 had been acknowledging the said debt due to the

plaintiff No.3 together with interest due thereon from time to time;

that the defendant No.2 had its principal office at 28/42 Punjabi

Bagh, New Delhi which property is stated to be owned by the

defendant No.1 upon the demise of his father; that the defendants

are also stated to have branch office at Jabalpur and works at

Chattisgarh; that the defendants had been delivering the

confirmation of account in writing to the plaintiff No.3 from time to

time and had been seeking confirmation of account from the plaintiff

also from time to time; that the defendant no.2 was also deducting

tax at source from the interest aforesaid payable to the plaintiff and

the said tax was deducted at Delhi and TDS certificate dated 30th

April, 2004 was issued by the defendants to the plaintiff from Delhi;

that the defendants had thereafter been borrowing monies from the

plaintiff from time to time and as on 31st March, 2005 a sum of Rs

42,04,385/- was shown due from the defendant No.2 to the plaintiff

No.3 as per the statement of accounts of the defendant No.2 which

was sent to the plaintiffs for confirmation; that as, on the date of the

institution of the suit, the aforesaid amount was due from the

defendants to the plaintiff which the defendants had failed to pay

inspite of demand of the plaintiff.

3. The defendants, on being served with the summons for

appearance, entered appearance after the prescribed time.

However, this court vide order dated 11th March, 2008 condoned the

delay in entering appearance by the defendants. The plaintiff

thereafter served summons for judgment on the defendants and the

defendants have sought leave to defend.

4. The counsel for the defendants has argued for leave to defend

under the three heads. Firstly under the head of this court not

having territorial jurisdiction to entertain the suit and secondly

under the head of the claim in suit being barred by time. Lastly it is

argued that the claim in suit is barred by the Madhya Pradesh

Money Lenders Act.

5. With respect to first of the aforesaid pleas, it is contended that

upon the defendants satisfying this court that this court does not

have jurisdiction either the plaint ought to be returned/rejected or at

least the defendants are entitled to leave to defend on this ground.

It is contended that both the parties are resident of erstwhile

Madhya Pradesh and now Chattisgarh and were carrying on their

business therein; that mere deduction of tax at source at Delhi would

not form part of the cause of action for the suit available to the

plaintiff so as to enable the plaintiff to invoke the territorial

jurisdiction of this court. It is further argued that since the

defendants are the resident of outside the jurisdiction of this court

and are carrying on business outside the jurisdiction of this court

and further since admittedly the entire transaction of loan between

the parties took place outside Delhi, mere deduction of tax at source,

would not vest this court with the territorial jurisdiction to entertain

the present suit. Similarly, it is contended that merely because the

defendant No.1 had his ancestral house at Delhi and which too has

since been sold would not give this court jurisdiction. Reliance is

placed on Mannalal v. Paneychand AIR 1959 RAJ. 166, Rashtriya

Mahila Kosh Vs The Dale View MANU/DEL/7478/2007, M.S.M.

Buhari v. S.M. Buhari AIR 1971 Mad 363 and Rattan Singh

Associates (P). Ltd. Vs. Gill Power Generation Co. Pvt. Ltd 136

(2007) DLT 629.

6. Qua the aspect of limitation, it is urged that according to the

plaint itself the monies were advanced by the plaintiffs to the

defendants in January, 2003 and April, 2004, and the suit had been

filed on 4th October, 2007; that the suit ought to have been filed

within three years of advancing the monies and having not been so

filed is barred by time. It is further urged that the reliance by the

plaintiff on confirmation of accounts by the defendants is

misconceived and in any case of 29th June, 2004 i.e., three years

prior to the institution of the suit and thus of no avail.

7. Per contra, the counsel for the plaintiff has argued that the

application for leave to defend of the defendants does not controvert

or deal with the categorical averments in the plaint of the defendants

having head office at Delhi and owing to non-contravention the same

are to be deemed to have been admitted by the defendants. Qua

limitation it is argued that the defendants themselves have filed the

statements of accounts from its ledger and which match with those

filed by the plaintiff and which are till 31st March, 2006 and on the

basis whereof the suit instituted in October, 2007 is within time. It is

further contended that the defendants have also acknowledged the

debt by payment / credit of interest to the account of the plaintiffs

and thus Section 19 of the Limitation Act is also applicable. Vis-à-vis

the plea of Money Lenders Act, the counsel for the plaintiff has

relied upon Gajnan v. Seth Brindaban (1970) 2 SCC 360, Raja

Rajaram Bhiwaniwala Vs Nand Kishore 1975 JLJ 475,

Parmanand Jain Vs Firm Babu Lal Rajender Kumar AIR 1976

M.P. 187 (DB) as well as the provisions of the Money Lenders Act

itself to urge that the said Act is applicable only when the plaintiff is

engaged in the business of money lending and which is not the case

here; the loan transaction between the plaintiffs and the defendants

was a friendly loan as is evident from the low rate of interest of 6%

per annum.

8. The counsel for the defendant in rejoinder has drawn attention

to the rejoinder filed by the defendants to the reply to the application

for leave to defend and wherein it is denied that the principal office

of the defendants is at Delhi. It is further argued that the passport

and election card of the defendant No.1 is at the address of Jabalpur

only and the plaintiff has not filed any documents whatsoever

showing that the defendants have any business at Delhi.

9. I had, during the course of hearing, asked the counsel for the

defendants as to whether this court would not have the territorial

jurisdiction to entertain the suit on the principle of "debtor must

seek the creditor", since the demands prior to the institution of the

suit were issued on behalf of the plaintiff from Delhi. The counsel for

the defendants has after the conclusion of hearing mentioned the

matter and relied upon M Ramaliniga Iyer Vs T.K. Jayalakshmi

AIR 1941 Mad 695 and Escorts Limited Vs M/s G.K. Automobile

2006(1) RAJ 423 (Del) in this regard.

10. The submissions recorded as aforesaid would show that the

defendants have not contested the money claim of the plaintiff and

which, in view of the provisions of Order 37, shall be deemed to have

been admitted by the defendants. The claim is sought to be defeated

on technical pleas aforesaid.

11. However, a perusal of the leave to defend application shows

that besides the grounds aforesaid it is also mentioned therein that

the power of attorney holder of the defendants, namely, Shri Mulkraj

Dua had borrowed money from plaintiff No.3 through its partner Shri

Naresh Wassan and his wife plaintiff No.1; that Shri Mulkraj Dua

was never authorized by the defendants to borrow money for and on

their behalf by virtue of the power of attorney; thus the entire

transaction made by Mulkraj Dua on behalf of the defendants is null

and void; that the said Shri Mulkraj Dua had cheated the defendants

in collusion with plaintiff No.3 and for which reason the defendants

have suffered huge losses in their business. Though the said plea

has been taken in the application for leave to defend, the defendants

alongwith the rejoinder and in support of their plea of the

transaction between the parties having taken place outside the

jurisdiction of this court, filed as annexure thereto, the copies of its

ledger containing the account of plaintiff No.3 for the period 1st

April, 2002 to 31st March, 2006. The said ledger shows the amount

outstanding in the books of the defendants to the account of the

plaintiff No.3. It is perhaps by this reason that the counsel for the

defendants did not during the course of hearing raise the said plea.

The ledger filed by the defendants, negates the plea of the loan

having been taken by the attorney of the defendants without the

authority of the defendants. It now stands admitted from the

documents of the defendants themselves that the amount is shown in

the books of account of the defendants as due to the plaintiffs. Had

no money been due, the question of showing the same as due to the

plaintiffs would not have arisen.

12. In fact, the aforesaid ledger of the defendants also takes care

of the plea raised by the defendant of limitation. From the

documents on record it is now clearly borne out that as on 31st

March, 2006 i.e., about one year prior to the institution of the suit,

the defendants have acknowledged their liability to the plaintiff.

Once the liability is so shown to have been acknowledged, the

provisions of Section 19 of the Limitation Act shall come into play

and the question of the claim in suit being barred by time does not

arise.

13. As far as the defence of the Money Lenders Act is concerned,

in view of the judgments aforesaid cited by the counsel for the

plaintiff, no ground for leave to defend is made out. It is not the plea

in the leave to defend application also that the plaintiff was engaged

in the business on money lending.

14. That leaves the aspect of territorial jurisdiction only.

Undoubtedly, the Madras High Court in M Ramalinga Iyer (supra)

cited by the counsel for the defendant has held that the common law

rule of "Debtor must seek the Creditor" cannot always be applied in

India where there is no express stipulation with regard to the place

of payment or no appointment of a place under Section 49 of the

Contract Act. However, the judgment in that case also turned on the

finding that the defendant therein was not a debtor of the plaintiff.

As far as the judgment of this court in Escorts Limited (supra)

relied upon by the counsel for the defendant is concerned, that

judgment was not concerned with the said principle. It was held

therein relying upon A.B.C. Laminart Pvt Ltd Vs A.P. Agencies,

AIR 1989 SC 1239 that a part of cause of action arises where money

is expressly or impliedly payable under a contract; it was, however

held that acceptance of payment at a place other than that agreed

does not constitute a waiver of the liability to make payment at the

place agreed.

15. I find that this court in Milkfood Ltd Vs Union Bank of

India MANU/DE/8271/2007 has held that even if it is assumed that

Delhi was not the expressly contracted place of payment, Delhi

would still be a presumed place of payment because of the general

rule that in the absence of a contract to the contrary, a debtor is

bound to find the creditor for making the payment - the place of

payment is where the creditor resides.

16. In this regard it may be noticed that in this case the legal

notice demanding the payment, preceding the suit was sent from

Delhi and demanding the payment at Delhi. The principle of debtor

must seeks the creditor was held to be applicable.

17. Reference in this regard be also made to L.N. Gupta v. Smt.

Tara Mani AIR 1984 Delhi 49 where also after a review of the entire

case law including the judgments of the other courts it was held that

the principle of "Debtor must seek creditor' is applicable to India.

However, an exception was carved out with respect to the

promissory notes. Another thing which is relevant is that the plea of

territorial jurisdiction in this case is raised in an application for leave

to defend. The criteria for determining the said plea in an application

for leave to defend would be different from the criteria when such a

plea is raised otherwise. While considering the leave to defend

application, wherein the leave is sought merely on the ground by

challenging the territorial jurisdiction of the court, unless a clear

case of ouster of jurisdiction is made out, leave ought not to be

granted on such a plea. In the present case on the applicability of

the general doctrine aforesaid, no case for granting leave to defend

is made out.

18. No ground is thus disclosed for granting leave to defend. The

amounts claimed are not disputed. There is no dispute as to the

contractual rate of interest. The plaintiff has claimed interest

pendente lite and future interest @ 15% per annum. The transaction

between the parties being admittedly a commercial transaction, the

claim of interest at such rate is not found to be unreasonable

specially when the defendant in spite of opportunity failed to pay the

amounts in spite of the same being admitted and compelled the

plaintiff to institute the present suit. The application is dismissed.

Consequently, the suit is decreed as prayed. The plaintiff shall also

be entitled to costs of the suit from the defendant. Counsels fee

assessed at Rs 35,000/-. The decree sheet be drawn up.

RAJIV SAHAI ENDLAW (JUDGE) May 05, 2009 M