Delhi High Court

Ravi Bagai vs Clintus Network Ltd on 2 May, 2012

Author: Valmiki J. Mehta

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                              RFA No.815/2010

%                                                            2nd May, 2012

         RAVI BAGAI                                   ..... Appellant
                               Through:   Mr. Niraj Mishra with
                                          Ms. Neha Gupta, Advs.

                      versus


         CLINTUS NETWORK LTD                         ..... Respondent

                      Through:            Mr. Sanjay Mishra, Adv.


CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA

    To be referred to the Reporter or not?


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 dated 4.9.2010 granting conditional leave to defend to

the appellant and to the consequential order dated 21.10.2010 decreeing the

suit on account of failure to comply with the condition of payment of

`2,50,000/-.

2. The present appeal lies in view of the judgment of the

Supreme Court in the case of Wada Arun Asbestos (P) Ltd. vs. Gujarat

Water Supply & Sewerage Board, AIR 2009 SC 1027, which holds that

once an application for leave to defend is dismissed, and a consequential

decree is passed, appeal will have to be filed against the final judgment. In

the present case, final judgment has been passed, and which is a

consequential judgment decreeing the suit of the respondent/plaintiff on

21.10.2010 and hence the present appeal.

3. The facts of the case are that the respondent/plaintiff filed the

present suit for recovery of `4,77,819/- against the appellant/defendant

with respect to the claim of balance transportation charges for transporting

the goods of the appellant/defendant from London to New Delhi. The

respondent/plaintiff claimed to have issued invoices totaling to

Rs.6,77,819/-, and it is claimed that subject suit is filed for the balance

amount due as per invoices i.e. `4,77,819/-. The subject suit was filed

under Order 37 CPC.

4. A suit can be filed under Order 37 CPC on the basis of a

negotiable instrument or a written contract containing a liquidated amount

with interest arising, or on a written contract of guarantee. In the present

case, there is no averment in the plaint as to how the suit is maintainable

under Order 37 CPC. I put it to counsel for the respondent/plaintiff to

show me any averment in the plaint as to how the suit has been filed under

Order 37 CPC, but the counsel for the respondent/plaintiff has not been

able to show me any averment in the plaint as to how the suit is filed and

maintainable under Order 37 CPC. The suit is not on the basis of either a

negotiable instrument or a liquidated demand arising from a written

contract or from a written contract of guarantee. It is today orally argued

that the suit was filed under Order 37 CPC on the basis of invoices which

are written contracts.

5. In my opinion, the subject suit was not maintainable under

Order 37 CPC and leave to defend was bound to be granted for various

reasons. Firstly, the plaint itself does not mention as to how the suit falls

under Order 37 CPC, and therefore orally it is not permissible to add to the

averments of the plaint to bring the suit within Order 37 CPC. Secondly,

the suit does not lie under Order 37 CPC, even assuming if the same is

based on the invoices, inasmuch as, the parties are governed by a specific

written contract dated 18.8.2000 and as per which a specific price has been

mentioned by the respondent/plaintiff for the contract of transportation as

under:-

"Price (as per quotation); `2,40,000/- + 3 & ½ % insurance charges"

Once there is a written contract containing the consideration, it

is not possible to agree that the consideration was not that which is

mentioned in the written contract. Counsel for the respondent/plaintiff

sought to contend that below the aforesaid line it is written that there is

possible extra costs as per quotation and therefore the respondent/plaintiff

was entitled to claim additional charges, however, in my opinion, prima

facie this argument cannot be accepted inasmuch as it is necessary that

there has to be an amount which is agreed to between the parties for the

possible extra costs, and admittedly there is no other written agreement

between the parties or consent by the appellant/defendant for raising of the

invoices for amounts in excess of `2,40,000/- + 3 & ½ % insurance charges

and that too for a hugely different/higher amount of `6,77,819/-. Thirdly,

the present is not a case where the amount which is claimed arises only and

directly from the written contract dated 18.8.2000, or assuming that the suit

can be considered on the basis of invoices only for the amount of invoices,

inasmuch as, amount of `2,00,000/- has already been paid by the

appellant/defendant to the respondent/plaintiff and thus there is no written

contract for the alleged liquidated amount of `4,77,819/- which is claimed

in this suit. The aforesaid fact shows that not only the suit was not

maintainable under Order 37 CPC, but in fact the appellant/defendant had

raised enough grounds to allow unconditional leave to defend. Surely,

claiming an exorbitant amount of `6,77,819/- when the admitted contract is

only for `2,40,000/- + 3 & ½ % insurance charges i.e. at best a total of

`2,47,500/-, is an arm twisting tactic to say the least. As already stated

above, with respect to the invoices which have been issued the same are of

figures/amounts which is not the suit amount. Further, I must note that the

respondent/plaintiff in order to pressurize the appellant/defendant has after

releasing almost the entire goods, withheld one Piano instrument and which

it is refusing to release, allegedly because the appellant/defendant is not

paying the dues.

6. The principles with respect to grant of leave to defend are well

settled and are contained in the judgment of the Supreme Court in the case

of M/s. Mechelec Engineeers & Manufacturers vs. M/s. Basic Equipment

Corporation, AIR 1977 SC 577. Para 8 of the judgment is relevant and

which reads as under:

"8. In Smt. Kiranmoyee Dassi and Anr. v. Dr. J.

Chatterjee, Das. J.,after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by order 17 C.P.C. 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 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.

(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."

7. In the present case, in my opinion, the appellant/defendant is

entitled to unconditional leave to defend in view of the principles (a), (b) &

(c) inasmuch as not only the suit was not maintainable under Order 37

CPC, but also in view of the fact that there is no contract for the huge

amount of `6,77,819/-, but only for `2,47,500/-, and out of which amount

of `2,00,000/- has already been paid. The appellant/defendant therefore is

entitled to unconditional leave to defend in the facts of the present case.

8. In the facts of the present case, considering that the

appellant/defendant has unnecessarily been forced to file this appeal in a

suit which is not maintainable under Order 37 CPC, and with respect to

invoices which are way beyond the contractual amount of `2,47,500/-, I

deem it fit that the appeal be allowed with costs of `20,000/-. Costs be

paid within a period of four weeks from today.

9. I may note that the Supreme Court in the judgment in the case

of Ramrameshwari Devi and Others v. Nirmala Devi and Others, (2011)

8 SCC 249, has held that it is high time that actual costs be imposed. I am

also empowered to impose actual costs in terms of Volume V of the Punjab

High Court Rules and Orders (as applicable to Delhi) Chapter VI Part I

Rule 15.