M/S. K&K Health Care Pvt. Ltd. vs M/S. Pehachan Advertising
2012 Latest Caselaw 443 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                              RFA No.202/2011

%                                                   23rd January, 2012

M/S. K&K HEALTH CARE PVT. LTD.              ..... Appellant
                  Through:  Mr. Manmeet Singh, Advocate.

                      versus

M/S. PEHACHAN ADVERTISING                   ..... Respondent

Through: Mr. Naresh C. Sharma, Advocate with Mr. Puneet Singh, Advocate.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not? Yes

VALMIKI J. MEHTA, J (ORAL)

1. The challenge by means of this Regular First Appeal filed under

Section 96 of the Code of Civil Procedure, 1908 (CPC) is to the impugned

judgment of the trial Court dated 3.3.2011 decreeing the suit against the

appellant/defendant on account of the appellant failing to comply with the

order of furnishing a bank guarantee, the condition imposed while granting

leave to defend in an Order 37 suit. This appeal was entertained in view of

the judgment of the Supreme Court in the case of Wada Arun Asbestos Pvt.

Ltd. Vs. Gujarat Water Supply and Sewerage Board (2009) 2 SCC 432, and

as per which judgment, the order by which leave to defend is granted can be

questioned in an appeal against the final judgment and decree.

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 (Cr) Balance (Dr) 15.06.2005 Balance B/F 32,372.25 30.07.2005 Bill 290,652.00 No.07/020 11.08.2005 Bill 66,376.00 No.08/010 13.08.2005 Bill 72,127.00 No.08/019 18.08.2005 Bill 72,127.00 No.08/022 25.08.2005 Bill 288,609.00 No.08/035 05.09.2005 Bill 72,127.00 No.09/003

08.09.2005 Bill 99,418.00 No.09/005 08.09.2005 Bill 5,254.00 No.09/008 07.11.2005 Ch. 87,652.00 No.527736 10.11.2005 Ch. 254,453.00 No.527738 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 Balance 9,54,722.81 9,54,722.81 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.

6. In view of the above, appeal is accepted. Impugned order dated

3.3.2011 is set aside. The order dated 25.5.2010 granting conditional leave to

defend is also set aside. The appellant/defendant will be entitled to

unconditional leave to defend. Appeal is allowed and disposed of

accordingly, leaving the parties to bear their own costs.

VALMIKI J. MEHTA, J JANUARY 23, 2012 Ne