Shobhraj Motwani vs Bmr Lease & Credit Ltd.
2012 Latest Caselaw 3882 Del

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*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                     Judgment delivered on 04.07.2012

+      RFA 256/2012


SHOBHRAJ MOTWANI                                         ...     Appellant

                                   Versus

BMR LEASE & CREDIT LTD.                                    ...Respondent


Advocates who appeared in this case:
For the Appellant    :      Mr. Rajat Aneja
For the Respondent   :      None.

CORAM:
HON'BLE MR. JUSTICE V.K.JAIN

                         JUDGMENT

HON'BLE MR. JUSTICE V.K.JAIN(ORAL)

RFA 256/2012 & CM 11001/2012(stay)

1. This appeal is directed against the order dated 29.02.2012 whereby an

application filed by the appellant for grant of leave to contest was dismissed and

consequently a decree for recovery of Rs.11,27,862/- with costs as well as pendente

lite and future interest at the rate of 10% per annum was passed against the

appellant.

2. A suit for recovery of Rs.11,27,862/- under the provisions of Order 37 of the

Code of Civil Procedure was filed by the respondent against the appellant. The

respondent which is a financial institution had granted a loan of Rs.7.5 lakhs to the

appellant on 28.12.2006. The loan was to be re-paid in equated monthly

instalment, along with interest at the rate of 24% per annum. Alleging default in

repayment, the abovereferred suit was filed by the respondent.

3. The impugned judgment and decree has been assailed on these grounds. The

first ground taken by the appellant is that there was an arbitration clause between

the parties and, therefore, the matter was required to be referred to the Arbitrator

for adjudication. The second plea which was also taken in the application for leave

to contest is that the entire principal sum claimed in the suit had been paid to the

respondent in cash and the third plea is that the claim is barred by limitation.

4. As regards the first plea, a perusal of the impugned judgment would show

that in the application for leave to contest, no such plea was taken by the appellant.

Section 8 of the Arbitration & Conciliation Act, to the extent it is relevant provides

that a judicial authority before which an action is brought in a matter which is the

subject of an arbitration agreement shall, if a party so applies not later than when

submitting his first statement on the substance of the dispute, refer the parties to

arbitration.

5. A careful analysis of Section 8 of Arbitration and Conciliation Act, 1996

would show that the following conditions are required to be fulfilled before the

Court can refer the matter to arbitration;

(a) the dispute between the parties should be subject matter of an arbitration

agreement;

(b) one of the parties to the suit should apply for referring the parties to

arbitration;

(c) the application should be filed on or before submitting first statement on

the substance of the dispute and;

(d) the application should be accompanied by the original arbitration

agreement or its certified copy.

6. The application for leave to contest being the first statement on the substance

of the dispute between the parties, it was incumbent upon the applicant to make a

request either in the application for leave to contest or by way of a separate

application under Section 8 of Arbitration & Conciliation Act, to refer to parties to

arbitration. No such plea having been taken either by way of an independent

application or in the application for leave to contest the suit, it is not open to the

appellant to say that the dispute between the parties should be referred to

arbitration.

7. If the Court accepts the contention that an application under Section 8 of the

Act can be filed even after the first statement on substance of the dispute between

the parties has already been filed, this would not only be contrary to the express

provisions of law but, would also defeat the very purpose behind stipulating that

such an application needs to be filed not later than submitting the first statement on

the substance of the dispute. If such an application is entertained after filing of the

first statement, it would be possible for a party to the suit to first allow the trial to

proceed by not filing the application by the stage stipulated in the Act and then

come to the Court at a much later stage when the trial is substantially complete and

seek reference of the dispute to arbitration.

8. As regards limitation, it has been averred in para 4 of the plaint that the

appellant had last paid, to the respondent, Rs.45,000/- vide cheque No. 841416.

Though the learned counsel for the appellant verbally stated that no payment in

writing was made prior to 18.11.2010, he fairly conceded that no such plea had

been taken in the application for leave to contest. Since the respondent had alleged

that the last payment was made by way of cheque on 18.11.2010 and a specific

reference to that payment was made in the plaint, it was incumbent upon the

appellant in case no payment in writing was made within three years from the date

of drawal of loan to specifically plead so in his application for leave to contest the

suit. During the course of arguments, I specifically asked the learned counsel for

the appellant as to whether the appellant was ready to file an affidavit stating that

no payment in writing was made by the appellant within three years from the

drawal of loan. The learned counsel for the appellant, however, expressed his

inability to file any such application. I also find that no plea had been taken in the

application for leave to contest claiming the suit was barred by limitation.

Therefore, I find no merit in the second ground taken by the appellant.

9. As regards the alleged cash payments, I find that in the application for leave

to defend, no particulars of the alleged cash payment have been pleaded. In case

any cash payment was made by the appellant, he ought to have given necessary

particulars such as the date and amount of the payment alleged to have been made

in cash. In the absence of any particulars of the alleged cash payment, it is not

possible for the Court to investigate into such allegations, even if the matter goes

for trial. In my view, a bald allegation of cash payment without giving any details

of the alleged payments, does not raise a triable issue and cannot be said to be a

plausible defence.

10. For the reasons stated hereinabove, I find no merit in the contentions of the

learned counsel for the appellant. During the course of arguments, the learned

counsel for the appellant stated that a sum of Rs.60,000/- was made by the

appellant, on 14.06.2011. Adjustment for that amount would be given to the

appellant while calculating the decretal amount.

11. For the reasons stated hereinabove, the appeal is dismissed. There shall be

no order as to costs. TCR be sent back.

V.K.JAIN, J JULY 04, 2012 'sn'