Modipon Limited vs M/S. Singhal Transport Corpn
2011 Latest Caselaw 4223 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+     FAO(OS) No.128/2011 and CM Nos.4995/11, 7013/11

Modipon Limited                     ...Appellant through
                                    Mr. Alok Krishan Agarwal,
                                    Mr. Mayank Bughani &
                                    Mr. Naveen Chawla, Advs.

                      versus

M/s. Singhal Transport Corpn.       ...Respondent through
                                    Mr. Manish Kaushik, Adv.

                               Date of Hearing : July 26, 2011

%                              Date of Decision: August 30, 2011

      CORAM:
*     HON'BLE MR. JUSTICE VIKRAMAJIT SEN
      HON'BLE MR. JUSTICE SIDDHARTH MRIDUL

      1. Whether reporters of local papers may be
         allowed to see the Judgment?                 No
      2. To be referred to the Reporter or not?       Yes
      3. Whether the Judgment should be reported
         in the Digest?                               Yes

VIKRAMAJIT SEN, J.

1. The present Appeal assails the Order of the learned Single

Judge dated 27.1.2011 passed in IA No.1502/2009 in CS(OS)

No.940/1009 granting the Appellant conditional leave to defend

the Suit, subject to deposit of the Suit amount of ` 95,08,324/-

with the UCO Bank, Delhi High Court Branch, New Delhi.

2. The Suit filed by the Respondent/Plaintiff is one for

recovery of money under Order XXXVII of the Code of Civil

Procedure, 1908 (CPC for short). It is not disputed by the

Appellant/Defendant that the Respondent/Plaintiff invested a

sum of ` 70,00,000/- in the Fixed Deposit Scheme of Modipan

Limited. As against this investment, twelve Fixed Deposit

Receipts (FDRs) were issued to the Respondent/Plaintiff each

mentioning an interest of fourteen per cent per annum. These

facts are not disputed.

3. The cause of action is stated to have arisen when the

Appellant/Defendant failed to pay interest with effect from

2006/2007. It was then, by letter dated 18.8.2008, that the

Plaintiff/Respondent demanded the redemption of these FDRs

along with the interest that had accrued thereon.

4. The learned Single Judge has repulsed the contention of

the Appellant/Defendant pertaining to the absence of territorial

jurisdiction of the High Court of Delhi. The relevant pleadings in

the Suit are to the following effect:-

14. That this Hon'ble Court has jurisdiction to entertain the present Suit as the cause of action arose within the territorial jurisdiction of the Hon'ble Court. The applications for FDRs were deposited at Delhi. The payment of the interest was paid at Delhi, the payment of FDRs and interest is payable at Delhi, the Defendant at the relevant time had its Corporate office at Delhi. This Hon'ble Court, therefore, has jurisdiction to entertain and try the present suit.

5. To the contrary, the Appellant/Defendant has asseverated

as follows:-

A. JURISDICTION: That no cause of action, if any, has arisen in Delhi because the Defendants are having registered office at Modinagar; the FDRs, as alleged, were made and issued from Modinagar; the amounts of the FDRs were allegedly deposited at Modinagar; and even the memo of parties and the documents filed by the Plaintiff on record show the registered office of the Defendant at Modinagar. The entire cause of action has arisen at Modinagar and the Plaintiff also has its office at Ahmedabad. No cause of action has arisen at Delhi, as such, this Hon'ble Court has no territorial jurisdiction to try and entertain the present suit. However, without prejudice to these submissions it is stated that assuming for the sake of arguments but not admitting that some part of cause of action has arisen at Delhi, the same is trivial. The actual site of cause of action is Modinagar. The Plaint is liable to be returned to the Plaintiff under Order VII Rule 10 of the Code of Civil Procedure for present in proper court.

6. In ABC Laminart -vs- A.P. Agencies, AIR 1989 SC 1239,

the Hon'ble Supreme Court has clarified that a party may

exclude all jurisdictions by restricting the determination of

disputes to one place only, provided that place enjoys

jurisdiction. In the present instance, the Plaintiff has pleaded

that it has an office at Roshnara Road, Delhi from where the

subject transactions were completed with the

Appellant/Defendant at its principal office in Delhi; and that

interest as well as the TDS certificates were paid in Delhi,

and the initial sum of ` 70,00,000/- was also deposited with

the Appellant/Defendant in their Principal Office located in

Delhi. No part of cause of action, therefore, has arisen in

Modinagar, Uttar Pradesh. Merely because the Registered

Office of the Defendant is located in that town is not sufficient

to clothe that place with jurisdiction and to oust all other

jurisdictions. Assuming that the Appellant had forwarded the

sum of ` 70,00,000/- from its Delhi Office to its Registered

Office, courts in Modi Nagar cannot get vested with jurisdiction

because it is the Appellant's unilateral action. The Plaintiff can

successfully assert that since no part of cause of action had

arisen in Modinagar, courts located in that territorial

jurisdiction do not enjoy jurisdiction. These technical objections

are raised because there is apparently no defence on the merits.

7. No cogent documentary proof has been placed on record

for the Court to arrive at the conclusion that the cause of action

did not arise in Delhi. On the contrary, it is the case of the

Appellant/Defendant that only a trivial cause of action had

arisen in Delhi. In view of the pleadings that the monies were

deposited with the Defendant in Delhi, interest was paid in Delhi

and all the payments were payable at Delhi, the learned Single

Judge cannot be faulted for dismissing the objections regarding

territorial jurisdiction of this Court.

8. We are also in agreement with the conclusion arrived at

by the learned Single Judge that since interest was paid by the

Appellant/Defendant to the Plaintiff/Respondent till 2006-2007

and the redemption of FDRs was asked for by the Plaintiff on

19.8.2008, the Suit was not barred by limitation.

9. The Appellant/Defendant admits that a sum of

` 70,00,000/- was invested with it by the Plaintiff/Respondent in

twelve separate FDRs. It is further not disputed that interest on

these FDRs was paid upto the period 2006-2007. The defence

that is put forward is that these FDRs had not been renewed

and the Defendant/Applicant had converted the FDRs amount

into Unsecured Loan. This is palpably a moonshine defence as a

unilateral action taken by the Appellant is not only dishonest but

is certainly not binding on the Plaintiff.

10. Despite the fact that the learned Single Judge found the

defence of the Appellant as illusory, sham and moonshine, the

Suit was not decreed and instead conditional leave to defend

was granted. The Appellant/Defendant has been directed to

deposit the amount in terms of Mechelec Engineers and

Manufacturers -vs- Basic Equipment Corporations, AIR 1977 SC

577 which has recently been followed in Wada Arun Asbestos

Private Limited -vs- Gujarat Water Supply and Sewerage Board,

(2009) 2 SCC 432 where Their Lordships have held that - "If the

defendant has no defence or the defence is illusory or sham or

practically moonshine then although ordinarily the plaintiff is

entitled to leave to sign judgment, the court may protect the

plaintiff by only allowing the defence to proceed if the amount

claimed is paid into court or otherwise secured and give leave to

the defendant on such condition, and thereby show mercy to the

defendant by enabling him to try to prove a defence". By

adopting this course, the learned Single Judge has protected the

position of the Defendant in the unlikely event that it succeeds

in establishing its defence at the Trial. We would not have been

surprised if the Plaintiff had filed an appeal with the grievance

that having found that the Defendant's defence was illusory,

sham and moonshine, the Suit itself ought to have been

decreed. Faced with an admission of debt (the Defendant has

pleaded that the amounts claimed by the Plaintiff have been

converted by it into Unsecured Loan), the Suit could have been

decreed under Order XII Rule 6 of the CPC. This is invariably an

important factor to be kept in mind even when dealing with a

summary suit. Once the Court is satisfied that the claim falls

within the actions envisaged under Order XXXVII of the CPC, if

admission of liability is ignored, the very purpose of Order

XXXVII of the CPC will be rendered nugatory.

11. In our view, the Order passed by the learned Single Judge

calls for no interference. The Appeal is devoid of any merit and

is dismissed. Pending applications also stand dismissed.

( VIKRAMAJIT SEN ) JUDGE

( SIDDHARTH MRIDUL ) JUDGE August 30, 2011 tp