Delhi High Court
Ge Capital Services India vs May Flower Healthcare Pvt Ltd &Ors on 31 August, 2012
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 2859/2011
% 31st August, 2012
+ CS(OS) 2859/2011
GE CAPITAL SERVICES INDIA ..... Plaintiff
Through: Ms. Deepika V.Marwah, Adv. and Mr.
Vaibhav Ashana, Adv.
versus
MAY FLOWER HEALTHCARE PVT LTD &ORS ..... Defendants
Through: Ms. Neha Rastogi, Adv. for Ms. Navdip
Kaur, Adv.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not? YES
VALMIKI J. MEHTA, J (ORAL)
I.A.No. 8330/2012 (U/o 37 R 3 and 5 r/w 151 CPC on behalf of defendants for
grant of leave to defend the suit)
1. I am recently having a spate of cases where all types of suits for
recovery of monies under an agreement are being filed under Order 37 CPC. The
provision of Order 37 Rule 1 CPC is clear that the suits can be filed under Order 37
CPC for contractual matters in basically two categories. One is that there is a
dishonoured negotiable instrument and the second is that there is an agreement in
CS(OS) 2859/2011 Page 1 of 8
writing containing the liquidated demand claimed in the suit, with or without
interest arising. The object of Order 37 CPC, which provides a summary
procedure, is that there is quite clearly an admitted liability as claimed in the plaint
and therefore special procedure is provided for.
2. The subject suit is filed on the basis of a loan granted on 25.6.2002.
The suit is filed much later in November, 2011. The amount of loan originally
granted was ` 34,30,000/-. Interest was also payable by the defendant no.1.
Defendants no.2 and 3 are guarantors. Admittedly, as per the plaint thereafter
various installments were paid but some of the installments were not paid, resulting
in the subject suit having been filed.
3. I put it to counsel for the plaintiff that in the suits such as the present,
where the amount due effectively arises from the balance due at the foot of the
account, it cannot be said to be a liquidated amount arising from a written
agreement. The suit amount has to be the liquidated amount arising from the
written agreement and in cases where the balance due at the foot of account is
claimed the same automatically does not become a part of original loan document
which contains a totally different amount. On the pleaded basis the suit is not
maintainable under Order 37 CPC. I have so held in two judgments, one in the
case of M/s K & K Health Care Pvt. Ltd. Vs. M/s Pehachan Advertising in RFA
202/2011 decided on 23.1.2012 and another in M/s Associates India Financial
CS(OS) 2859/2011 Page 2 of 8
Services (P) Ltd. Vs. M/s Atwal and Associates & ors in CS(OS) No.2109/2002
and I.As therein for leave to defend decided on 9.8.2012. I have also observed that
there is a gross wastage of judicial time where plaintiffs unnecessarily file suits
under Order 37 CPC although quite clearly the same are not maintainable under
Order 37 CPC because there is no such category in Order 37 CPC where suit can
be filed on amounts stated in an agreement entered into long back but the suit
amount is wholly different and is the balance due at the foot of the account.
4. Paras 4 to 6 of the judgment in the case of M/s Associates India
Financial Services (P) Ltd. are relevant and which read as under:-
"4. Admittedly, there is no other averment in the plaint as to how the
amount claimed in the suit of ` 44,83,209/- arises from a particular
written agreement. In an Order 37 suit the amount claimed in the suit
may be the principal amount plus interest arising therefrom, however,
once again the plaint makes no reference to a specific particular
principal amount which has been stated as a liquidated amount in a
written agreement payable to the plaintiff, and the balance claimed in
the suit is only interest arising thereafter.
5. The object of an Order 37 CPC suit is that on the basis of the
documents specified therein the liability towards the plaintiff is
admitted. Only when the liability which is admitted in the dishonoured
instrument or in the written document containing a liquidated demand
as payable to the plaintiff, suits can be filed under Order 37 CPC.
Those suits claiming amounts which are only balances due at the foot of
account cannot be treated as falling under Order 37 CPC because the
suit claim is based on the account and the amount claimed is not a
liquidated amount arising/payable to the plaintiff on an instrument on
the limited types which are the subject matter of Order 37 CPC. Entries
and statements of account have necessarily to be proved as per Section
34 of the Evidence Act,1872 for the balance at the foot of the account to
be arrived at. The present suit plaint also makes no mention of any
CS(OS) 2859/2011 Page 3 of 8
written acknowledgment of debt, which may have amounted to a
written agreement containing the liquidated demand with interest
arising.
6. I have had an occasion to examine the aspect as to whether a suit
such as the present can be said to be one under Order 37 CPC in the
judgment of M/s K&K Health Care Pvt. Ltd. Vs. M/s Pehachan
Advertising, RFA 202/2011 decided on 23.1.2012, in which, I have
observed that such type of suit cannot be filed under Order 37 CPC.
Paras 2 to 5 of that judgment are relevant and which read as under:-
2. The subject suit for recovery of money was filed by the
respondent/plaintiff for recovery of monies on the cause of action
of non-payment of bills by the appellant/defendant. The bills
were raised by the respondent/plaintiff on the appellant/defendant
on account of advertisements issued in newspapers by the
respondent/plaintiff on behalf of the appellant/defendant. The
suit which was filed under Order 37 CPC, claimed the amounts
due under the bills which were stated to be „written contracts
containing liquidated demand‟, though simultaneously admitting
that after the bills were raised various payments were made
towards the bills. The details of bills and payments made, when
first filed by the respondent/plaintiff, were as under:-
"Accounts Statement of M/s K & K Health Care Pvt. Ltd. from
01.07.2005 to 15.11.2005
Date Particulars Amount (Dr) Amount Balance (Dr)
(Cr)
15.06.2005 Balance B/F 32,372.25
30.07.2005 Bill No.07/020 290,652.00
11.08.2005 Bill No.08/010 66,376.00
13.08.2005 Bill No.08/019 72,127.00
18.08.2005 Bill No.08/022 72,127.00
25.08.2005 Bill No.08/035 288,609.00
05.09.2005 Bill No.09/003 72,127.00
08.09.2005 Bill No.09/005 99,418.00
08.09.2005 Bill No.09/008 5,254.00
07.11.2005 Ch. No.527736 87,652.00
10.11.2005 Ch. No.527738 254,453.00
Total 999,062.25 342,105.00 6,56,957.25"
3. Subsequently, on the appellant/defendant stating and
detailing other payments, a fresh statement of account was filed
by the respondent/plaintiff reflecting the position of bills and
payments as under:-
" M/s K & K Health Care Pvt.
Ltd.
Ledger Account from 01.04.2005 to
7.11.2005
Date Particulars Debit Credit Balance
01.04.2005 Dr Opening 9,54,722.81 9,54,722.81
Balance
11.04.2005 Cr Ch. No.860348 100,000.00 2,112,065.25
30.05.2005 Cr Ch. No.474952 200,000.00 1,912,065.25
06.06.2005 Dr Bill No.06/015 72,126.91 1,098,976.63
09.06.2005 Cr Ch.No.474974 100,000.00 1,812,065.25
16.06.2005 Dr Bill No.06/018 73,199.07 1,72,175.70
23.06.2005 Dr Bill No.06/031 72,126.91 1,026,849.72
29.06.2005 Cr Ch. No.464018 100,000.00 1,712,065.25
30.06.2005 Cr Ch. No.464025 100,000.00 1,612,065.25
30.06.2005 Dr Bill No.06/059 73,199.07 1,245,374.77
22.07.2005 Cr Ch.No.464062 100,000.00 1,512,065.25
30.07.2005 Dr Bill No.07/020 290,651.96 1,536,026.73
05.08.2005 Cr Ch. No.464078 64,313.00 1,447,752.25
06.08.2005 Cr Ch. No.464079 65,183.00 1,318,256.25
08.08.2005 Dr Bill No.08/010 66,376.25 1,674,529.89
13.08.2005 Dr Bill No.08/019 72,126.91 1,608,153.64
18.08.2005 Dr Bill No.08/022 72,126.91 1,746,656.80
25.08.2005 Dr Bill No.08/035 288,609.18 2,035,265.98
26.08.2005 Cr Ch. No.464160 64,313.00 1,383,439.25
29.08.2005 Cr Ch. No.464161 65,268.00 1,252,988.25
09.09.2005 Cr Bill No.09/003 72,126.91 2,107,392.89
09.09.2005 Cr Bill No.09/005 99,418.18 2,206,811.07
09.09.2005 Dr Bill No.09/008 5,254.18 2,212,065.25
21.10.2005 Cr Ch.No.527737 4,632.00 1,248,356.25
24.10.2005 Cr Ch.No.527732 58,521.00 1,189,835.25
27.10.2005 Cr Ch.No.527734 63,591.00 1,126,244.25
27.10.2005 Cr Ch.No.522233 63,591.00 1,062,653.25
30.10.2005 Cr Ch.No.527735 63,591.00 999,062.25
07.11.2005 Cr Ch.No.527736 87,652.00 911,410.25
10.11.2005 Cr Ch.No.527738 254,453.00 656,957.25
Total Outstanding ` 656,957.25"
This latter statement of account is a part of the statement
of account running into a total number of eight pages. This
second statement of account, in addition to the two payments
reflected in the first statement of account, admitted and reflected
as many as five other payments. The fact that payments have
been made as reflected in aforesaid two statements of account is
not in dispute between the parties. The suit really therefore is a
suit for the balance due at the foot of the account and is not one
which is only and only on the basis of the amounts contained in
the bills. The suit thus could not have been filed under Order 37
CPC as the amount claimed in the suit was not the amount as
mentioned in the bills which are stated to be written contracts
containing the liquidated demands of moneys payable.
4. Learned counsel for the respondent relies upon a
decision of learned Single Judge of this Court in the case of M/s.
Lohmann Rausher Gmbh. Vs. M/s. Medisphere Marketing Pvt.
Ltd.; 2005 II AD (Delhi) 604 to argue that the suit on the basis of
invoices is maintainable under Order 37 CPC. Of course, I am
bound by the decision of the learned Single Judge and therefore a
suit on the basis of invoices can be said to be maintainable under
Order 37 CPC, however, in the present case the suit is not based
on the invoices only but the amount claimed in the suit is the
balance due at the foot of a running account i.e. after giving
adjustment/credit for certain payments made for the
invoices/bills. The suit is therefore definitely not only on the
basis of invoice amounts alone for the same to be covered under
Order 37 CPC. Also, in my opinion, in an appropriate case this
issue will have to be examined whether a suit under Order 37
CPC can be filed on the basis of invoices alleging the same to be
„written contracts containing a debt or liquidated demand‟- the
necessary requirement of Order 37 CPC. The whole purpose of
the provision of Order 37 Rule 1 CPC entitling filing of the suit
on a debt or liquidated demand was that there is an agreement
showing that there is an admitted liability and a liquidated
liability or debt which is claimed in an Order 37 suit. When an
Order 37 suit is filed on bills, the bills only reflect goods supplied
and therefore I feel that it cannot be said that bills should be
taken as agreements containing liquidated demands or an
acknowledgment or promise to pay or an admitted liability or
such other factor so as to bring the claim as "claim for debt or
liquidated demand arising on a written contract" as found in
Order 37 CPC.
5. In view of the above, I need not go into the merits of the
matter inasmuch as the plaintiff cannot arm-twist a defendant by
filing a suit under Order 37 CPC, and argue in the trial Court and
also before this Court, that it has a prima facie strong case on
merits and therefore the impugned order granting conditional
leave to defend must be sustained. Merely because a
plaintiff/respondent feels it has a strong case on merits cannot
mean that the suit can be filed under Order 37 unless the
mandatory requirement of basing the suit on one of the four
requirements of Order 37 Rule 1 sub Rule 2 is complied with. If
the suit is not maintainable under Order 37, there does not arise
an issue of any conditional leave to defend as was granted by the
trial Court. (underlining added)
5. Counsel for the plaintiff has failed to point out any written agreement
containing the specific amount claimed in the suit and which is the liquidated
amount and which is stated in the written agreement. Merely because there is a
written agreement way back of the year 2002, cannot mean that the suit amount
which is not stated in the said agreement would also become a liquidated amount
in the suit filed under Order 37 CPC.
6. During the course of hearing, I put it to the counsel for the plaintiff as
to whether in the light of facts which have emerged should the suit at all be pressed
as one under Order 37 CPC, and the counsel insists that the suit lies under Order 37
CPC.
In view of above, and considering the fact that unnecessarily judicial
time is being wasted by the plaintiff who insists on filing suits under Order 37 CPC
which cannot be filed under Order 37 CPC which cannot be filed under Order 37
CPC, I allow the application for leave to defend with costs of ` 25,000/-. The
defendants are granted unconditional leave to defend.
7. Let the written statement now be filed within a period of four weeks.
Replication, if any, be filed within four weeks thereafter. Parties to file documents
in their power and possession alongwith pleadings.
8. List before the Joint Registrar for admission/denial on 16th November,
2012.
AUGUST 31, 2012 VALMIKI J. MEHTA, J.
ib
