Sarr Freights Corporation & Ors. vs Surya Enterprises Pvt. Ltd.
2009 Latest Caselaw 3725 Del

*           IN THE HIGH COURT OF DELHI AT NEW DELHI
                         RFA NO. 65 OF 2005


                            Judgment reserved on:       8th September,2009
                              Judgment delivered on:   14th September,2009


#     SARR FREIGHTS CORPORATION & ORS.            ....Appellants
!                           Through: Mr. Pawan Mathur, Advocate

                               Versus

$     SURYA ENTERPRISE PVT. LTD.                   .... Respondent
!                            Through:Ms.Beenashaw N.Soni,Advocate

      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 by the unsuccessful defendants whose application for

leave to defend the suit under Order XXXVII of the Code of Civil

Procedure, 1908 (for short 'CPC') filed against them by the respondent-

plainitff has been rejected by the Court of Additional District Judge vide

order dated 03/11/2007 and a decree for a sum of Rs. 7,70,000/- with

pendente lite and future interest thereon @ 18% p.a. has been passed.

2. The relevant facts for the purpose of the present appeal are that

the respondent herein (which shall hereinafter be referred to as 'the

plaintiff') doing the business of financing had on 27/06/2003 given a loan

of Rs. 5,00,000/- to appellant no. 1, which was arrayed as defendant no.1

in the suit and shall be referred to, as such in this judgment also, vide

cheque dated 27/06/2003. The loan was given for two months and was

repayable with interest @ 18% p.a. The defendants paid interest on the

loan amount upto 27/08/03 vide cheque dated 01/07/03. However, the

period of return of the loan amount was extended by the plaintiff for a

further period of two months and the defendants paid interest for the

extended period vide cheque dated 01/09/03 and once again the period

of re-payment of the loan was extended for another three months. The

last extension given by the plaintiff was upto 31st January,2004 and for

that period also the payment of interest was made by defendants in

advance vide cheque dated 03/11/03 and after the expiry of the loan re-

payment period the defendant no.1 gave to the plaintiff one cheque no.

476217 dated 31/01/2004 for Rs.5,00,000/- being the principal loan

amount. That cheque was presented to the defendant's bank for

encashment but the same was not honoured as the defendant no.1 had

issued 'stop payment' instructions to its bank. Thereafter, the defendant

no.1 and two of its partners Sunil Kapoor and S.M.Kapoor were called

upon by the plaintiff to make the payment of the dishonoured cheque by

serving upon them a demand notice dated 29/02/2004 though an

advocate but neither they made any payment nor sent any reply to that

notice and consequently the plaintiff filed the suit under Order XXXVII

CPC for recovery of Rs. 7,70,000/- which included a sum of Rs.5,00,000/-

as the principal loan amount and Rs. 2,70,000/- on account of interest. In

the suit the plaintiff impleaded the partnership firm i.e. defendant no.1

and three other persons as its partners, namely, Sunil Kapoor(as

defendant no.2), S.M.Kapoor(as defendant no.3) and Smt. Swaran Lata

Kapoor(as defendant no.4). The suit was instituted on 31/01/07.

3. On being served with the summons of the suit defendants entered

appearance in the trial Court and in due course they also sought leave to

defend the plaintiff's suit as required under Order XXXVII Rule 3(5) CPC by

filing an application supported by an affidavit of defendant no.2.

Defendant no.3 also moved an application under Order 1 Rule 10(2) CPC

for striking off his name as he was not the partner of defendant no.1

Firm. That application was allowed by the trial Court vide order dated

03/11/07.

4. In the affidavit filed by defendant no.2 in support of the application

for leave to defend it was admitted that the plaintiff had given a loan of

Rs.5,00,000/- to defendant no.1 as claimed in the suit. It was also

admitted that interest @ 18% p.a. was payable. It was claimed that in

May, 2003 at the request of the plaintiff Company payment of

Rs.5,00,000/- vide cheque no. 458147 had been made to the plaintiff's

sister concern and then in June, 2003 the plaintiff gave a loan of

Rs.5,00,000/- to defendant no.1. Then again at the request of the

plaintiff the defendant no.1 vide cheque no. 470287 dated 30/09/03

made another payment of 5,00,000/- and at that time it was represented

by the plaintiff that that payment to its sister concern shall be treated as

the re-payment of the loan which had been given to the defendants in

June,2003 but the plaintiff did not honour that understanding and the

defendants also under bona fide mistake kept on paying interest to the

plaintiff. In fact, the plaintiff should have treated the payment of

Rs.5,00,000/- made by it to defendant no.1 in June, 2003 as re-payment

of the money which the defendant no.1 had paid to the plaintiff's sister

concern in May, 2003. Regarding the issuance of the dishonoured cheque

in question the defendants claimed in October/November 2003 on false

representation made by the plaintiff the defendant no.1 was constrained

to issue a post dated cheque dated 31st January, 2003 even though the

loan in question had already been re-paid by defendant no.1 and the

understanding between the parties at that time was this cheque was

given as a part of security and was to be returned back to the defendant

no.1. In respect of the dishonouring of the cheque dated 31st

January,2004 the plea taken by the defendants was that after certain

irregularities were noticed in the business of defendant no. 1 after the

issuance of that cheque in October/November,2003, instructions were

issued to its bank not to honour any cheque which might have been

issued by it including the aforesaid cheque for Rs.5,00,000/- which had

been issued in advance in favour of the plaintiff and plaintiff was also

telephonically requested not to present that cheque but despite that

request the cheque was presented and the same got dishonoured. It was

also pleaded in the affidavit that the deponent had initially protested

against such kind of transaction but he was assured that there was

nothing wrong in such kind of transactions particularly when the

payments were being made to the sister concern of the plaintiff. Thus,

according to the defendants the dishonoured cheque in question was

without consideration.

5. The plaintiff in its reply to the defendants' application for leave to

defend while not denying the alleged payments to its sister concern by

the defendants denied the allegation that it had asked the defendants to

make any payment to its sister concern towards re-payment of the loan

given by the plaintiff to the defendants in June,2003. It was pleaded that

the defendants had independent dealings with the plaintiff's sister

concern also and the payments made to the sister concern were towards

discharge of the defendants' liability towards the plaintiff's sister concern

and so the payments made to that concern could not be considered as

the payments to the plaintiff towards re-payment of the loan advanced

by it.

6. The learned trial Judge dismissed the application of the defendants

for leave to defend the suit and consequently the suit was decreed in

favour of the plaintiff vide order dated 03/11/2007. It was observed by

the trial Court that the plea taken by the defendants that on the

instructions of the plaintiff they had made the payment of the loan

amount to M/s Surya Finlease Pvt. Ltd., a sister concern of the plaintiff

cannot be believed because it was a commercial transaction and without

any written instructions from the plaintiff the payment ought to have

been made to the plaintiff and not to any other party. The plaintiff firm

sent a legal notice dated 29/02/2004 to the defendants, but the

defendants had not given any reply to that notice.

7. The defendants felt aggrieved by the order of dismissal of their

application for leave to defend and so preferred the present appeal

questioning the correctness of the trial Court's decision.

8. Learned counsel for the appellants urged two points during the

course of hearing of the appeal. The first point raised is with regard to

the limitation. The learned counsel for the appellant submitted that the

suit of the plaintiff was barred by limitation since the plaintiff is relying

upon the issuance of cheque dated 31st January, 2004 as the payment

towards the principal amount and is seeking the benefit of Section 19 of

the Limitation Act but that cheque admittedly got dishonoured and,

therefore, there was no payment made by the defendants to entitle the

plaintiff the benefit of Section 19 of the Limitation Act. In support of this

argument learned counsel cited one judgment of Patna High Court

reported as AIR 1971 Patna 278 and one judgment of Bombay High Court

reported as 1956 Bombay 553. These two judgments do not help the

appellants even though it has been held therein that when the cheque

given by a debtor towards payment of the principal amount or interest

gets dishonoured fresh period of limitation would not start from the date

of that cheque. Learned counsel for the respondent, on the other hand,

had cited two judgments of this Court reported as 136 (2007) DLT 223

and AIR 1998 Delhi 80 wherein this Court had held that even if the

cheque given by a debtor towards payment of the principal or interest is

dishonoured on presentation to the bank the creditor would still get the

benefit of commencement of fresh period of limitation as provided under

Section 19 of the Limitation Act. In view of these two judgments of this

Court the argument of the counsel for the appellants that the suit was

time barred cannot be accepted. The defendants had admittedly given a

cheque dated 31st January, 2004 to the plaintiff towards payment of the

principal loan amount and, therefore, fresh period of limitation

commenced from 31st January, 2004 as provided under Section 19 of the

Limitation Act. The suit having been filed on 31st January, 2007 was,

therefore, not time barred.

9. Even on the merits of the defence plea of repayment of the loan

amount by the defendants as claimed by them in their application for

leave to defend I am not inclined to accept that plea to be a bona fide

plea entitling them to get the leave to defend. I am in full agreement

with the decision of the learned trial Court that the plea that loan was

repaid by the defendants by making payment to the plaintiff's sister

concern is without any substance and has been raised only to prolong the

litigation.

10. I, therefore, do not find any merit in this appeal which is

accordingly dismissed.

P.K.BHASIN,J

SEPTEMBER 14, 2009 sh