Arun Duggal And Anr. vs D.N. Talwar
2009 Latest Caselaw 4074 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI


+                     RFA NO. 177 OF 2009



                             Judgment reserved on : 23rd September,2009
                                      Date of Decision: 9th October, 2009



#     Arun Duggal and anr.                                  ..... Appellants
!                              Through: Mr. N.N.Aggarwal, Mr. Kapil
                                        Gupta with Mr. Rohit Gandhi,
                                        Advocates

                    versus

$     D.N.Talwar                                           ..... Respondent
^                              Through: Mr. Rajat Aneja and
                                        Mr. Gurmeet Singh, Advocates


      CORAM:
*     HON'BLE MR. JUSTICE P.K.BHASIN

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 in the digest? (No)


                         JUDGMENT

P.K.BHASIN, J

This appeal is against the judgment of the learned Additional

District Judge passed on 09/02/09 in Suit No. 75 of 2006 filed by the

respondent herein under Order XXXVII of the Code of Civil Procedure,

1908 ('CPC' in short) whereby a decree for a sum of Rs.8,80,000/- with

pendente lite and future interest thereon @ 12% p.a. has been passed

against the two appellants-defendants after rejection of their separate

applications for leave to defend the suit.

2. The relevant facts are that the respondent herein, who shall

hereinafter be referred to as 'the plaintiff', filed a suit under Order XXXII

CPC for recovery of Rs.8,80,000/- against the two appellants-defendants,

who shall hereinafter be referred to as 'the defendants', on the allegation

that on 31/05/05 he had advanced a loan of Rs.8,00,000/- to the

defendants for a period of four months. The defendants had agreed to re-

pay the loan alongwith interest @ 12% p.a. It was averred in the plaint

that at the time of taking the loan on 31/05/05 the defendants had

executed an undertaking, based on which the suit was filed under Order

XXXVII CPC, to repay the loan amount within four months alongwith

interest. However, they did not honour their commitment and so a legal

notice dated 09/03/06 was served upon them requiring them to re-pay

the loan amount as per the undertaking executed by them. The

defendants replied to that notice denying that they had taken any loan

from the plaintiff. Regarding the alleged undertaking referred to in the

notice they asked the plaintiff to give them a copy of that undertaking so

that they could take civil and criminal action against him. On the refusal of

the defendants to re-pay the loan amount to the plaintiff he filed the suit

for recovery and the suit amount included a sum of Rs.8,00,000/- on

account of the principal loan amount and Rs.80,000/- as interest thereon

accrued upto the date of the institution of the suit.

3. The defendants filed separate affidavits as required under Order

XXXVII Rule 3(5) CPC disclosing facts which according to them entitled

them to get leave to defend the suit. As far as defendant no.1 (appellant

no.2) Atul Duggal is concerned, he had sought leave to defend the suit on

the ground that he had neither taken any loan from the plaintiff nor had

he signed any undertaking as was being claimed by the plaintiff and thus

the suit qua him was liable to be dismissed. Defendant no.2 (Appellant

no.1) Arun Duggal in his affidavit although admitted that the document

purporting to be an undertaking and being relied upon by the plaintiff in

support of his claim bore his signatures but he denied having taken any

loan from the plaintiff. Elaborating further his stand, it was pleaded by

defendant no. 2 Arun Duggal that he alongwith his brother, had entered

into a property transaction with the plaintiff regarding the sale of 2nd and

3rd floors of property no. 8/18, Ramesh Nagar, New Delhi for a total sale

consideration of Rs. 22,30,000/- and some earnest money had also been

received from them by him vide two receipts dated 31/05/05 (which date

in the rejoinder, the defendant clarified to be 31/03/05 and not 31/05/05)

and copies of which are placed on record. Later on it had transpired that

the plaintiff had misrepresented himself to be the owner of the said

property and actually he was not the owner but his wife owned it. So

another agreement to sell was got executed by the plaintiff between his

wife and defendant no. 1, Atul Duggal and his uncle, defendant no.2, Arun

Duggal on 30/05/05 for a sum of Rs.9 lacs and that agreement showed

payment of Rs.20,000/- as earnest money and Rs.8,80,000/- received from

defendant's banker by pay order and sale deed was executed on

08/06/05, copy of which was placed on record. It was also pleaded that

sale in respect of 3rd floor sale deed could not be executed although

defendant no.2 and his brother had paid the plaintiff and his wife

Rs.20,80,000/-. Since sale deed in respect of 3rd floor could not be

executed the balance sale consideration of Rs.1,50,000/- could not be

demanded by the plaintiff from the defendant no.2 and his brother and

not only that the defendant no.2 and his brother became entitled to the

refund of excess money received from them by the plaintiff and that this

suit was filed to pressurize the defendants to not to ask for the refund of

the excess amount. In these circumstances, there was no occasion for the

defendant to take loan from the plaintiff. Regarding the alleged

Undertaking it was pleaded by the defendant that the stamp paper on

which the Undertaking was drawn out was actually signed by defendant

no.2 and one other person (who in the memorandum of appeal is stated

to be Dalip Duggal, the brother of Arun Duggal) for the loan transaction

with the ICICI Bank, on a blank stamp paper but the agent of the said bank

seemed to have colluded with the plaintiff and the plaintiff allowed him

to convert that blank stamp paper having the signature of the defendant

no. 2 into an Undertaking of the said defendant acknowledging the receipt

of Rs.8,00,000/- as loan from the plaintiff.

4. In reply-affidavit, in respect of the property transaction, the plaintiff

had pleaded that defendant no. 2 Arun Duggal had in fact entered into

agreement for the purchase of only the 2nd floor of the property no. 8/18,

Ramesh Nagar, New Delhi, with his wife Smt. Kanta Rani and that property

transaction did not have anything to do with the loan taken by the

defendants from him and the averments relating to the property

transaction had been made to mislead the court. He denied that the

Undertaking was not signed by defendant no.1 and claimed that he was a

necessary party. He reiterated his stand taken in the plaint that the

defendants had taken the loan from him and had also signed the

Undertaking.

5. In the rejoinder to the plaintiff's reply the defendants averred that

they had not given the stamp paper, which is being used as an

Undertaking, to the plaintiff and the same was procured by the plaintiff

from the agent of ICICI Bank.

6. The learned Additional District Judge rejected the application of the

defendants for leave to defend by the impugned order of two paragraphs

only. The relevant lines from that order are re-produced below: -

"..............Admittedly, the defendant has not made any complaint to any quarter regarding the signature taken on certain blank documents either with the police or to any other civil authority. Defendant cannot be heard to say at this stage that he has signed the document as blank and he is not liable to pay any amount to the plaintiff and no complaint has been made to any quarter or any other authority regarding the signatures taken on blank paper which was subsequently converted into an undertaking of the defendant.

2. Under the circumstances I am of the considered view that defendant is not entitled to any relief prayed in application for leave to

defend. Accordingly, application seeking leave to defend is dismissed.................."

7. It was contended by the learned counsel for the appellants-

defendants that the defence raised by them before the trial Court

certainly raised triable issues and so they were entitled to leave to defend

the suit. On the other hand learned counsel for the respondent-plaintiff

argued that the trial Court had rightly refused leave to defend to the

defendants.

8. After giving my thoughtful consideration to the rival submissions

made with reference to the facts stated by the defendants in their

affidavits filed before the trial Court in support of their application for

leave to defend as well as the reply affidavit of the plaintiff and the

averments made in the plaint and the documents placed on record by the

defendants, I have come to the conclusion that the defendants should

have been given leave to defend the suit. In the facts and circumstances of

the case where the plaintiff is not claiming that he was a financier or that

he knew the defendants it required something to be stated by him in his

plaint as to under what circumstances the defendants came to approach

him for loan of lacs of rupees and he obliged them by giving them loan of

Rs. eight lacs. Nothing was, however, said in the plaint in that regard.

From the facts disclosed by the defendants in their affidavits and the reply

affidavit of the plaintiff, however, it has become clear that the plaintiff is a

property dealer of Ramesh Nagar and there was in fact a property deal

entered into between defendant no.2 Arun Duggal and his brother Dalip

Duggal on the one hand and the plaintiff and his wife on the other. That

deal was in respect of 2nd and 3rd floors of house no.8/18, Ramesh Nagar.

According to the case of the defendants, second floor was agreed to be

sold to Dalip Duggal and the 3rd floor to defendant no.2 Arun Duggal by

the plaintiff on 31/03/2005, representing himself to be the owner of both

the floors and the total sale consideration for the two floors was agreed to

be Rs.22,30,000/- out of which a sum of Rs.20,80,000/- had allegedly been

received by the plaintiff. The defendants had placed on record copies of

two documents purporting to be 'bayana' receipts signed by the plaintiff.

After a couple of months an agreement to sell was entered into in respect

of 2nd floor with terrace/roof rights between the two defendants, the

appellants herein, as purchasers and the wife of the plaintiff on 30/05/05

as the seller whereby she had agreed to sell to the defendant no.1, Atul

Duggal, who happens to be the son of defendant no.2's brother Dalip

Duggal (who was to be earlier the purchaser of the 3rd Floor) and

defendant no.2 Arun Duggal the "second floor with roof/terrace rights"

claiming herself to be the owner thereof. The sale consideration in that

agreement, copy of which was placed on record by the defendants, was

shown to be Rs.9,00,000/-. On 08/06/05 the wife of the plaintiff executed

the sale deed also in favour of the two defendants and copy of that sale

deed was also placed on record by the defendants. The plaintiff in his

reply to the leave to defend application had not categorically refuted

these factual averments made by the defendants regarding the property

deal between the parties as also the averments that some loan had been

taken from ICICI Bank for purchase of the property and Rs.8,80,000/- had

been paid by this bank directly to the plaintiff's wife. During the course of

arguments in this appeal also learned counsel for the plaintiff had not

raised any serious dispute regarding the genuineness of the documents

relating to the said property deal which had been placed on record of the

trial Court by the defendants in support of their application for leave to

defend as also about the factual averments relating to the property deal

made by the defendants in their affidavits in support of the leave to

defend application. During the course of arguments it was also claimed by

the counsel for the appellants that in fact the plaintiff had some dealings

with the bank as an Estate Agent and he had represented to the

defendants that he could arrange the loan also for them from ICICI Bank

and he was instrumental in getting the loan from the bank. In this

situation the stand taken by defendant no. 2 Arun Duggal that he had

signed on some blank papers meant for obtaining bank loan and had been

handed over to the bank's agent who in turn appeared to have handed

over one of those blank signed papers to the plaintiff for being converted

into a loan document/undertaking between the defendants and the

plaintiff cannot be, at least at this stage, said to be improbable or

implausible and the one requiring no trial at all.

9. There are some other circumstances also which lend support to the

probability of the defence taken by the defendants at least for the

purposes of consideration of their prayer for granting them leave to

defend the suit. Perusal of the original Undertaking relied upon by the

plaintiff shows that the stamp paper on which the Undertaking is written

was infact purchased for the execution of some indemnity bond. There is

no explanation coming forth from the plaintiff as to under what

circumstances the said stamp paper came to be purchased for the

execution of indemnity bond and in what connection somebody was to be

give indemnity. This document also shows that defendant no. 2, Arun

Duggal's signature appear on the same as a partner of one M/s Duggal

Motor Centre and the stamp of that Firm is also affixed. The document is

also signed by one Dalip Duggal, reference to whom has also been made

earlier. The stand of defendant no. 1, Atul Duggal is that he has not signed

this document. Apparently this stand appears to be correct. During the

course of arguments counsel for plaintiff was asked by me to point out the

signature of Atul Duggal on this document to falsify his contention.

However, the counsel could not point out the signature of Atul Duggal on

the Undertaking.

10. In the aforesaid circumstances as far as appellant- defendant Atul

Duggal is concerned he is entitled to get unconditional leave to defend.

However, as far as the other defendant, Arun Duggal is concerned,

considering the fact that he has admitted his signature on the Undertaking

relied upon by the plaintiff from which it is clear that this defendant had

taken loan of rupees eight lacs from the plaintiff, he is entitled to

conditional leave only. For this view I find support from a Division Bench

decision of this Court reported as 129 (2006) DLT 92, "Rajesh Kumar

Aggarwal v. Punjab and Sind Bank and Ors.", wherein also one of the

defendants had while admitting his signature on the agreement relied by

the plaintiff had claimed that he had signed on blank papers and accepting

that defence conditional leave was granted.

11. In the light of the fore-going conclusions, this appeal is allowed and

the impugned judgment and decree passed against the appellants are set

aside. Appellant no. 2 Atul Duggal is granted unconditional leave to

defend the suit while appellant no. 1 Arun Duggal is granted leave to

defend conditional upon his furnishing either bank guarantee for a sum of

Rs. 8,80,000/- or security of an immovable property to the satisfaction of

the trial Court. The case is remanded back to the trial Court and the

parties are directed to appear there on 22nd October, 2009 at 2 p.m. on

which date the appellant no. 1 Arun Duggal shall furnish the security as

well as his written statement and appellant no. 2 Atul Duggal shall file his

written statement.

P.K. BHASIN,J

OCTOBER 09, 2009