Delhi High Court
Appreciate Fincap Pvt Ltd vs Hkk Buidwell Pvt Ltd on 8 July, 2011
Author: G. S. Sistani
29.
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 1383/2010
% Judgment Delivered on: 08.07.2011
APPRECIATE FINCAP PVT LTD ..... Plaintiff
Through : Mr. Anil K. Kher, Sr. Adv. with Mr. D.R.
Bhatia, Mr. B.P. Lathwal, Mr. Kapil
Kher, Mr. Ankur Bansal and Mr.
Rajesh Pandit, Avs.
versus
HKK BUIDWELL PVT LTD ..... Defendant
Through : None.
CORAM:
HON'BLE MR. JUSTICE G.S.SISTANI
1. Whether the Reporters of local papers may be allowed to see the
judgment?
2. To be referred to Reporter or not?
3. Whether the judgment should be reported in the Digest?
G.S.SISTANI, J. (ORAL)
I.A.NO.14331/2010.
1. This is an application filed by defendant under Order XXXVII Rule 3
(5) of the Code of Civil Procedure for leave to defend.
2. Plaintiff has filed the present suit under the provisions of Order XXXVII
of CPC based on dishonor of nine cheques in the total sum of
Rs.2,26,85,000/-. As per the plaint, the plaintiff is a Private Limited
Company duly Registered with the Registrar of Companies, NCT of
Delhi & Haryana under the Companies Act, 1956, and is also a Non-
Banking Finance Company duly registered with the Reserve Bank of
India vide Registration No.B-14.01878 dated 17.8.2000. The suit has
been filed by Sh. Malam Chand Jain, who is the authorsied signatory and
is competent to file the present suit. The defendant has been described as
a Private Limited Company and is engaged in the business of real estate
development, construction of housing projects and is also a consultant
for execution of various development projects on turnkey basis.
3. Learned counsel for the plaintiff submits that around the month of
October, 2006, the defendant approached the plaintiff and requested for
a loan of Rs.2,26,85,000/- for the purposes of its business. The aforesaid
amount was disbursed to the defendant by means of six cheques, which
are detailed below:
S.No Cheque Date Encahsed on Amount (Rs.)
No.
1) 145433 10.10.2006 10.10.2006 42,00,000/-
2) 154334 10.10.2006 12.10.2006 80,60,000/-
3) 145435 11.10.2006 13.10.2006 82,95,000/-
4) 145436 13.10.2006 14.10.2006 6,30,000/-
TOTAL 2,11,85,000/-
All the above cheques were drawn on the South Indian Bank Ltd.
Greater Kailash-II, New Delhi and the following cheques were
drawn on South Indian Bank Ltd. Greater Kailash-II, New Delhi:
S.No Cheque Date Encahsed on Amount (Rs.)
No.
1) 242537 10.04.2007 10.04.2007 5,00,000/-
2) 242538 24.04.2007 24.04.2007 10,00,000/-
TOTAL : 15,00,000/-
4. Learned counsel for the plaintiff submits that defendant on receipt of the
aforesaid six cheques in the total sum of Rs.2,26,85,000/- encashed the
cheques and the receipt of the above said loan amount was confirmed
and acknowledged by the defendant as reflected in its audited balance
sheets for the financial years 2006-07, 2007-08 and 2008-09. Counsel
further submits that the defendant in order to repay the loan amount
handed over nine post-dated cheques drawn on Indian Overseas Bank,
Rajiv Chowk Branch, D-28, Connaught Place, New Delhi, to the
plaintiff. On presentation of four cheques bearing no.367009, 367010,
367011 and 367012 for payment to its banker on 25.10.2007,
27.10.2007, 29.10.2007 and 31.10.2007 respectively all the cheques
were returned by the bankers with the endorsement "Funds Insufficient".
Dishonour of the cheques was brought to the notice of the defendant
who assured the plaintiff that the remaining five cheques would be
cleared on presentation. However, despite the assurances given by the
defendant all the nine cheques were dishonoured. Details of the
dishonoured cheques are as under:
S.No. Cheque Dated Date of Reason for Amount
No. dishonour dishonour (Rs.)
of cheque
1. 367009 25.10.2007 26.10.07 Funds 25,00,000/-
Insufficient
2. 367010 27.10.2007 29.10.07 Funds 25,00,000/-
Insufficient
3. 367011 29.10.2007 29.10.07 Funds 25,00,000/-
Insufficient
4. 367012 31.10.2007 31.10.07 Funds 25,00,000/-
Insufficient
5. 367013 03.11.2007 05.11.07 Funds 25,00,000/-
Insufficient
6. 367014 06.11.2007 06.11.07 Funds 25,00,000/-
Insufficient
7. 367015 10.11.2007 12.11.07 Funds 25,00,000/-
Insufficient
8. 367016 14.11.2007 14.11.07 Funds 25,00,000/-
Insufficient
9. 367017 17.11.2007 19.11.07 Payment 26,85,000/-
stopped
Total 2,26,85,000/
10. Learned senior counsel for the plaintiff further contends that left with no
option the plaintiff issued two legal notices dated 7.11.2007 and
22.11.2007 under Sections 138 and 142 of Negotiable Instruments Act,
1881 to the defendants. The defendant despite service and receipt of
notices neither responded to the said notices nor cleared the outstanding
loan amount. The plaintiff was forced to file two separate criminal
complaints against the defendant and its Directors under Sections 138
and 142 of the Negotiable Instruments Act in the Court of Metropolitan
Magistrate, Patiala House, New Delhi. The aforesaid two complaints are
still pending adjudication. Counsel further submits that the plaintiff also
issued a notice dated 23.11.2007 under Sections 433 and 434 of the
Companies Act to the defendant. As no response was received, a
winding up petition, being CP No.86/2008, was also filed by the
plaintiff, which is also pending adjudication. Despite repeated requests
and reminders, the defendants have failed to make this payments.
Mr.Kher submits that the defendant has neglected to pay the loan
amount despite categorical admission in its balance sheet. By the present
suit, the plaintiff has also prayed for interest at the rate of 18 percent
being a commercial transaction w.e.f. October, 2006, on the amount of
Rs.2,26,85,000/- and w.e.f. April, 2007, on the amount of Rs.15.00
lakhs.
11. Summons were issued to the defendant in the prescribed format.
Defendant filed memo of appearance and thereafter the plaintiff filed an
application for summons for judgment. The defendant has filed the
present application for leave to defend.
12. Learned counsel for the defendant submits that present suit is not
maintainable under the provisions of Order XXXVII of the Code of Civil
Procedure as it does not satisfy the ingredients required for invoking the
jurisdiction under the said provision. Counsel further submits that the
present suit involves disputed questions of fact which would require
extensive trial and are not capable of being adjudicated in summary
proceedings under Order XXXVII of the Code of Civil Procedure.
Counsel also submits that the promoters of the plaintiff, more
particularly Mr. Harvinder Singh, has played fraud upon the defendant
and he is now misusing the cheques, which were obtained by
misrepresentation of facts by the plaintiff to the defendant. Counsel next
submits that M/s DD group of companies through one of its group
companies, namely, M/s DD Township Pvt. Ltd. was approached by Mr.
Harvinder Singh. The said Mr. Harvinder Singh offered to transfer
controlling shareholding and management in following seven companies
in favour of M/s DD Township Pvt. Ltd. and its nominees:
"i. Rangoli Infotech Part Ovet. Ltd.
ii. Rangoli Software Pvt. Ltd.
iii. Rangoli Projects Pvt. Ltd.
iv. Krishna Murari Infrastructure & Developers Pvt. Ltd.
v. Rising Infrastructure & Developers Pvt. LTd.
vi. Bindas Estates Pvt. Ltd.
vii. HKK Buildwell Pvt. LTd. (defendant herein)
13. Learned counsel for the defendant submits that Mr. Harvinder Singh, for
himself and on behalf of his family members and associates who were
majority shareholders and in control of management of abovementioned
seven companies, agreed to transfer all assets and management of the
said seven companies, which primarily owned lands in the district of
Sonepat, Haryana. The defendant believing the representation of Mr.
Harvinder Singh, his family members and associates, that all lands
owned by the said seven companies were free from all encumbrances
and litigations agreed to purchase the shareholding and entire assets of
the said seven companies.
14. Learned counsel for the defendant submits that after the shareholding
and management got transferred in favour of M/s DD Township Pvt.
Ltd. and its nominees in April, 2007, and new management took over the
charge of the said seven companies, the following facts surfaced which
came as a shock and surprise for M/s DD Township Pvt. Ltd. and its
promoters:
a) That seven suits were pending before the civil courts at Sonepat
with regard to the above mentioned land in Sonepat which were to
be claimed to be owned by Mr. Harvinder Singh.
b) That some of the above mentioned suits were filed by one, M/s
New Hind Enterprises Pvt. Ltd., based on prior agreements to sell
the said property to M/s New Hind Enterprises Pvt. Ltd.; in the
other suits M/s Krishnamurari Infrastructure and Developers Pvt.
Ltd. were impleaded as one of the defendants prior to the
transaction with M/s DD Township Pvt. Ltd, and the impleadment
of M/s Krishnamurari Infrastructre and Developers Pvt. Ltd. was
never brought to its knowledge.
c) That M/s DD Township Pvt. Ltd. took the ownership of M/s
Rangoli Project Pvt. Ltd. in the month of April 2007, and on
30.08.2008 received a notice by the Official Liquidator to submit
a statement of affairs on 08.09.2008. Further a company petition
titled as Bal Kishan Gupta v. M/s Rangoli Project Pvt. Ltd. C.P.
No.170/2006, was instituted, in which an order for winding up
was passed by this High Court.
d) That apart from the above mentioned notice from the office of the
Official Liquidator; the Defendant has received no other notice. In
response to the said notice from the Official Liquidator, M/s DD
Township Pvt. Ltd. filed application C.A.No. 970/2008 before the
Company Judge and secured a restraint order on 11.09.2008,
which was subject to deposit of Rs.25.00 Lakhs within 15 days
and deposit of another sum of Rs.25.00 Lakhs within 8 weeks
from the date of the order. It was important to note that the
counsel for the earlier management kept appearing in the said
winding up petition even after transfer of the management and
shareholding of M/s Rangoli Project Pvt. Ltd.
e) That subsequently M/s DD Township Pvt. Ltd. deposited Rs.50.00
Lakhs and entered into a settlement with the said Mr.Bal Kishan
Gupta to pay remaining amount of Rs.1,00,00,000/- (One Crore
only). Subsequently the new management got a release deposited
of Rs.50.00 Lakhs in favour of the Plaintiff in the said winding up
petition and further paid a sum of Rs.45 Lakhs with interest of
Rs.68,942/- as is noted in the order dated 10.02.2010 in CP
No.170/2006. The aforesaid was the liability of Mr. Harvinder
Singh and not of M/s DD Township Pvt. Ltd., and that M/s DD
Township Pvt. Ltd. is entitled to recover the same from
Mr.Harvinder Singh, and in turn from the plaintiff as the plaintiff
is a company in ownership and control of Mr.Harvinder Singh.
15. Another ground, which is urged by learned counsel for the defendant for
grant of unconditional leave, is that the cheques were given to the
plaintiff company, which is another company under the ownership and
control of Mr. Harvinder Singh, as sale consideration for the transfer of
shareholding/assets of the said seven companies and it was not given for
the purpose as mentioned by the counsel for the plaintiff. Counsel for the
defendant further submits that the cheques handed over were post dated
cheques as sale consideration for the transfer of shareholding / assets of
seven companies mentioned above. Counsel for the defendant further
submits that the land which was the subject matter of the transaction
with D.D. Township Pvt. LTd., was under dispute and the cheques
issued were, thus, without any consideration and not enforceable against
the defendants. Counsel next submits that M/s DD Township Pvt. Ltd.
and its promoters got cheques issued through one of the abovesaid seven
companies after taking over the management and purchase of
shareholding and assets of said seven companies. It is also submitted by
counsel for the defendant that the total value of the land owned by
aforesaid seven companies was Rs.7,25,72,451/- (approximately) and at
the time of purchasing of shareholding of said companies, said
companies had liability towards its investors who had booked the plots
in the township of Rs.5,15,12,793/-. It is submitted that defendant was
given the impression that Mr. Harvinder Singh and his associates had
decided to transfer shareholding and assets as they did not have expertise
and means to carry on with the said project.
16. Learned counsel for the defendant submits that the alleged land given by
the plaintiff to the defendant in the year 2006 is on the basis of a
concocted story and sham transactions as promoters of both the
companies were the same. It is denied by counsel for the defendant that
defendant company borrowed from the plaintiff a sum of
Rs.2,26,85,000/-. It is lastly contended that alleged cheques were
without any consideration and therefore not valid in law. Counsel also
disputes that legal notices were received by the defendant. On this
ground the defendant seeks unconditional leave to defend.
17. Learned senior counsel for the plaintiff submits that the defence, sought
to be raised by the defendant, is sham and moonshine. Counsel further
submits that defendant has failed to raise any triable issue, which would
entitle the defendant to unconditional leave. Counsel next submits that
the defence is neither honest nor bona fide and it cannot be said that the
defendant has been able to raise good defence, which would entitle the
defendant to unconditional leave to defend.
18. Learned senior counsel for the plaintiff has relied upon Mechelec
Engineers and Manufacturers v. Basic Equipment Corporation,
reported at 1977 AIR (SC) 577, more particularly para 8, which is
reproduced below:
8. In Kiranmoyee Dassi Smt v. Dr J. Chatterjee, (1945) 49 Cal
WN 246, 253, Das, J., after a comprehensive review of authorities
on the subject, stated the principles applicable to cases covered by
Order 17 CPC in the form of the following propositions (at p.
253):
"(a) If the defendant satisfies the court that he has a good
defence to the claim on its merits the plaintiff is not entitled
to leave to sign judgment and the defendant is entitled to
unconditional leave to defend.
(b) If the defendant raises a triable issue indicating that he
has a fair or bona fide or reasonable defence although not a
positively good defence the plaintiff is not entitled to sign
judgment and the defendant is entitled to unconditional
leave to defend.
(c) If the defendant discloses such facts as may be deemed
sufficient to entitle him to defend, that is to say, although
the affidavit does not positively and immediately make it
clear that he has a defence, yet, shews such a state of facts
as leads to the inference that at the trial of the action be may
be able to establish a defence to the plaintiff's claim the
plaintiff is not entitled to judgment and the defendant is
entitled to leave to defend but in such a case the court may
in its discretion impose conditions as to the time or mode of
trial but not as to payment into court or furnishing security.
(d) If the defendant has no defence or the defence set-up is
illusory or sham or practically moonshine then ordinarily
the plaintiff is entitled to leave to sign judgment and the
defendant is not entitled to leave to defend.
(e) 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."
19. Learned senior counsel for the plaintiff has also relied upon V.K.
Enterprises And Another v. Shiva Steels, reported at (2010) 9 Supreme
Court Cases 256, more particularly paras 10 and 11, in support of his
plea that the defendant has failed to place a single document on record to
support the defence, sought to be raised, while reliance has been placed
by the plaintiff on nine cheques issued by the defendant. Learned senior
counsel has placed heavy reliance upon three legal notices, which were
issued to the defendant, and submits that no reply has been received,
thereby the defendant admitted its liability. Learned counsel has further
relied upon copies of balance sheets, placed on record, for the financial
years 2006-2007, 2007-2008 and 2008-2009, wherein the defendant has
shown the plaintiff to be an unsecured creditor and the principle amount
is mentioned in the balance sheets. Learned senior counsel for the
plaintiff submits that having issued nine cheques to the plaintiff and
having shown the name of the plaintiff as an unsecured creditor in the
balance sheet would put the controversy between the parties at rest. It
would be useful to reproduce paras 10 and 11 in the case of V.K.
Enterprises & Another (supra):
10. Order 37 CPC has been included in the Code of Civil
Procedure in order to allow a person, who has a clear and
undisputed claim in respect of any monetary dues, to
recover the dues quickly by a summary procedure instead of
taking the long route of a regular suit. The courts have
consistently held that if the affidavit filed by the defendant
discloses a triable issue that is at least plausible, leave
should be granted, but when the defence raised appears to
be moonshine and sham, unconditional leave to defend
cannot be granted.
11. What is required to be examined for grant of leave is
whether the defence taken in the application under Order 37
Rule 3 CPC makes out a case, which if established, would
be a plausible defence in a regular suit. In matters relating
to dishonour of cheques, the aforesaid principle becomes
more relevant as the cheques are issued normally for
liquidation of dues which are admitted. In the instant case,
the defence would have been plausible had it not been for
the fact that the allegations relating to the interpolation of
the cheque is without substance and the ledger accounts
relating to the dues, clearly demonstrated that such dues had
been settled between the parties. Moreover, the issuance of
the cheque had never been disputed on behalf of the
petitioner whose case was that the same had been given on
account of security and not for presentation, but an attempt
had been made to misuse the same by dishonest means.
20. Learned senior counsel for the plaintiff has also relied upon a Division
Bench decision rendered in Bank of India and Anr. v. Madura Coats
Ltd., reported at 157 (2009) DLT 240 (DB), more particularly paras 18,
20 to 24:
18. It is settled law that in a summary suit, in order to entitle the
defendants for leave to defend, it would be incumbent upon them
to show that they have a substantial defence and triable issue to
raise and their defence is not frivolous or vexatious. AIR 1988
Delhi 308(310).
20. It is also well settled law that at the stage of granting leave to
defend, parties rely on affidavits in support of the rival
contentions. Assertions and counter-assertions made in affidavits
may not afford safe and acceptable evidence so as to arrive at an
affirmative conclusion one way or the other unless there is a
strong and prima facie material available to show that the facts
disclosed in the application filed by the applicant seeking leave to
defend were either frivolous, untenable or most unreasonable. No
hard and fast rule or strait-jacket formula can be laid down for
judging this question.
21. The Supreme Court in Defiance Knitting Industries Pvt. Ltd.
v. Jay Arts, (2006) 8 SCC 25, reiterated the abovesaid position
while holding that:
"While giving leave to defend in the suit the Court shall
observe the following principles:
„(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 for 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
defnce 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.‟"
22. In John Impex (P) Ltd. v. Surinder Singh and Others, (2003)
9 SCC 176 it was held:
"The submission on behalf of the respondent is that the
lease deed clearly confirms the title of the respondent. But
this again is a matter to be considered at trial not at this
stage i.e. leave to defend application. At this stage neither
evidence is to be weighed nor looked into. The purpose of
introducing a provision like leave to defend, is only to find
out frivolous, uncontestable cases at the initial stage, not to
eliminate other class of cases which require adjudication
after contest. In other words if there be no conceivable
contest possible the litigation has to be nipped in the bud."
23. In Raj Duggal v. Ramesh Kumar Ms. Prem Lata Bansal,
Adv., AIR 1990 SC 2218, it was observed as follows:
"Leave is declined where the Court is of the opinion that the
grant to 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 the leave it 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
the 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."
24. Learned Counsel for the plaintiff has referred to the case of
Hira Lal & Sons & Others v. Lakshmi Commercial Bank, 25
(1984) DLT 33 (SN) (DB) where the principles for granting or
refusal leave to defend are being laid down in the following
words:
"The principles on which Courts should grant or refuse leave to
defend the suit are not in doubt. Thus--
(a) If the defendant raises a triable issue indicating that he
has a fair or bona fide or reasonable defence although
not a positively good defence the plaintiff is not entitled
to sign judgment and the defendant is entitled to
unconditional leave to defend.
(b) If the defendant discloses such facts as may be
deemed sufficient to entitle him to defend that is to say,
although the affidavit does not positively and
immediately make it clear that he has a defence, yet
shows such a state of facts as leads to the inference that
at the trial of the action he may be able to establish a
defence to the plaintiff‟s claim the plaintiff is not entitled
to judgment and the defendant is entitled to leave to
defend but in such a case the Court may in its discretion
impose conditions as to the time or mode of „trial but not
as to payment into Court of furnishing security‟."
21. I have heard counsel for the parties and carefully perused the plaint,
application for summons of judgments, the applications for leave to
defend and the documents placed on record. The plaintiff is a company
duly registered with the Registrar of Companies and is a Non-Banking
Finance Company duly registered with the Reserve Bank of India. At the
request of the defendant, the plaintiff granted a loan to the defendant in
the sum of Rs.2,26,85,000/- and the loan was disbursed by means of six
cheques in favour of the defendant, details of which have been extracted
hereinabove. All the cheques issued by the plaintiff were duly received
by the defendants and were encashed by the defendant. The
acknowledgement of the loan is evident from the copies of the audited
balance sheet, which duly reflect the principle amount received by the
defendant from the plaintiff. The stand of the plaintiff is further fortified
from the fact that in order to repay the principle amount defendant
handed over nine post-dated cheques, all drawn of Indian Overseas
Bank, Rajiv Chowk Branch, Connaught Place, New Delhi, in favour of
the plaintiff. On presentation out of nine cheques, eight cheques were
returned unpaid on account of insufficient funds and for the last cheque
the payment was stopped by the defendant. The defence, sought to be
raised by the defendant, is vague, unfounded and without any basis in
view of the fact that from the date of grant of loan till the date of
presentation of the cheques in spite of three legal notices having been
issued by the plaintiff to the defendant the defendant did not clear its
stand by issuing a reply to any of the legal notices. Neither the defendant
issued any communication to the plaintiff that the loan granted was for
the purchase of a company in which there were various disputes and the
transaction was bad in law nor at any point of time the defendant
informed the bank to stop the payment except for one cheque. In case
there was any truth in the defence, which is sought to be raised, the
defendant at the first opportunity available would have written to the
plaintiff and brought out the facts, sought to be raised at this belated
stage. The defence raised by the defendant is also moonshine, sham and
dishonest in view of the fact that the defendant has reflected the name of
the plaintiff as an unsecured creditor in the balance sheet for three
consecutive years. In case the defendant had any grievance against the
plaintiff the name of the company would not have been shown in the
balance sheet. The facts of the case and the defence raised is to be
considered on the touchstone of the law laid down by the Apex Court in
its judgments, sought to be relied upon by counsel for the plaintiff.
22. In the case of Mechalec Engineers and Manufacturers (supra), the
Apex Court has held culled out five principles, which are to be
considered at the time of considering the application for leave to defend.
The Apex Court has held that if the defendant satisfies the Court that he
has a good defence to the claim on merits the plaintiff would not be
entitled to leave to sign the judgment and the defendant would be
entitled to unconditional leave to defend. Similarly if the defendant
raises triable issues including that he has fair and bona fide or reasonable
defence although in a positively good defence the defendant would still
be entitled to leave to defend. The Supreme Court has also observed that
in case the defendant discloses such facts, which may be deemed
sufficient to entitle him to defend, that is to say, although the affidavit
does not positively and immediately make it clear that he had a defence,
yet, shows such a state of facts as leads to the inference that at the trial
the action he may be able to establish a defence to the plaintiff‟s claim
the plaintiff is not entitled to judgment and the defendant is entitled to
leave to defend but in such a case the court may in its discretion impose
conditions as to the time or mode of trial but not as to payment into
Court or furnishing security. However, in case defendant has no defence
or the defence set up is illusory or sham or practically moonshine then
ordinarily the plaintiff is entitled to leave to sign the judgment and the
defendant is not entitled to leave the defend. 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 enable
him to try to prove a defence.
23. In the case of V.K. Enterprises And Another (supra) the Apex Court has
considered that where the defendant does not disclose the triable issue
and the defence appeared to be moonshine and sham, unconditional
leave to defend cannot be granted. The Apex court has stressed that in
the matters relating to dishonour of cheques the principles laid down by
it become more relevant as the cheques are issued normally for
liquidation of dues, which are admitted.
24. There is nothing on record to show that the cheques have either been
interpolated or the issuance of cheques have been denied except for a
bald oral denial, which is not supported by any corroborative evidence
and with regard to the cheques in favour of the plaintiff the legal notices
issued remain unrebutted and the balance sheets of the defendant, which
have indicated the name of the plaintiff to be an unsecured creditor the
amount being identical to the principle amount with respect to this
matter, I find the defence raised by the defendant to be practically
moonshine, sham, lacking bona fides and dishonest. I am of the view
that granting leave in the facts of the present case would only prolong
the litigation and since there is no conceivable defence and, thus, the
litigation is to be nipped in the bud. I may add that this matter was heard
in part on 7.7.2011 and adjourned for today to enable counsel for the
defendant to cite the law. The defendant has not chosen to appear today
despite the matter having been called on three occasions. Accordingly,
the application for leave to defend is dismissed. Plaintiff would be
entitled to a decree in the sum of Rs.3,78,63,375/-. The plaintiff would
be entitled to pendente lite and future interest at the rate of 8% per
annum from the date of filing of the present suit till the passing of the
decree and from the date of passing of the decree till realisation. Memo
of costs have been handed over in Court today, which has been taken on
record.
G.S.SISTANI,J
JULY 08, 2011
„msr‟
