Atul Kumar Jain vs N.K. Jain
2013 Latest Caselaw 5200 Del

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*     IN THE HIGH COURT OF DELHI AT NEW DELHI

                                 Judgment Reserved on : 26.08.2013
                                 Judgment Pronounced on: 13.11.2013

+     IA No. 3498/2012 (leave to defend) in CS(OS) 2617/2011
      ATUL KUMAR JAIN                             ..... Plaintiff
                   Through             Mr.Sanjay Poddar, Senior Advocate
                                       with Mr.Govind Kumar and Ms
                                       Navlin Swain, Advocates
                   versus
      N.K. JAIN                                   ..... Defendant
                            Through    Mr.Vivek Singh and Mr.Manish
                                       Kaushik, Advocates
      CORAM:
      HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J.

IA No.3498/2012 (leave to defend)

1. This is an application filed by the defendant under Order 37 Rule 3(5) CPC seeking leave to defend the suit. The present plaint is filed for recovery of a sum of Rs. 25 lacs. The plaintiff states that he is an Engineer from IIT Kanpur and he has vast knowledge of property valuation. It is stated that the defendant is a Chartered Accountant and approached the plaintiff for evaluation/assessment of certain properties during the year 2010-2011.

2. The plaintiff at the request of the defendant evaluated/ made assessment in respect of various properties. In lieu of the services rendered by him during the year 2010-2011, on 01.04.2011 he raised a bill for a sum of Rs. 27 lacs. It is stated that the bill was received by the defendant under his signatures and in discharge of his liability, the defendant is stated to

have issued seven post dated cheques to the plaintiff payable between 07.06.2011 to 07.12.2011. It is averred that the said cheques were issued in discharge of the admitted liability of the defendant.

3. However, it is further stated that before the plaintiff could present the first cheque for the month of June 2011, the defendant approached and requested him not to present the first cheque for Rs.3 lacs. He, however, paid Rs. 2 lacs in cash as part payment of the said liability. The plaintiff claims to have issued proper receipt.

4. It is stated that the defendant did not fulfill his commitment and failed to make payment of balance of Rs. 1 lac payable from the first cheque. On 07.07.2011, the second cheque for Rs. 4 lacs became due and was presented to the banker of the defendant on 14.07.2011. The cheque was, however, dishonored on account of insufficient funds. The plaintiff is stated to have issued a notice on 03.08.2011 to the defendant. The third cheque for Rs. 4 lacs dated 07.08.2011 when presented was returned with remarks " drawer has stopped payment". The plaintiff also received a reply dated 18.08.2011 to the legal notice sent on 03.08.2011. In the meantime, it appears that the defendant filed in this Court a suit being CS(OS) 2242/2011 denying the liability and stating that the cheques in question were given on account of booking of some flats.

5. It is further averred that the defendant had dishonest intention from the beginning and this is apparent from the fact that on 01.04.2011, the defendant took the entire material/records and reports from the plaintiff under his acknowledgement and took an undertaking from the plaintiff that he will not retain the record. Hence, it is stated that the plaintiff has no records about the valuation/assessments conducted by the plaintiff. It is

stated that having taken the records from the plaintiff, the defendant has in his suit sought production of these records. Hence, the present suit is filed.

6. The defendant in this application for leave to defend states that the plaintiff has indulged in manipulation, concoction and forgery of the documents and has misused the documents and instruments which were given in good faith. The defendant denies any receipt of services from the plaintiff for valuation of the properties. It is denied that at any time the services of the plaintiff were engaged. It is averred that the plaintiff was well known to the defendant. The wife of the plaintiff also worked in the office of the defendant in year 2005-2006 and 2006-2007 and was paid a salary of Rs.13,000/- per month. It is averred that some time in 2010 the plaintiff represented that he has considerable expertise in the immovable property projects where there were huge opportunities of investment. Based on these representations, he induced the defendant to make investment on the plaintiffs advice. Terms and conditions were agreed upon whereby the plaintiff would take 33% of the profit earned from such investments. It is averred that the plaintiff projected certain sound investments which could be made but insisted that the investment would be made in the name of the plaintiff. Earlier blank cheques were returned and fresh cheques were issued to the plaintiff on the representation that he will invest for about next six months and rotate the money and pay 70% of the profit earned from the investments made. Hence, seven cheques were handed over to the plaintiff, one for Rs. 3 lacs and the balance cheques for Rs. 4 lacs each favouring the plaintiff.

7. These cheques it is stated were handed over to the plaintiff in utmost faith and trust. It is averred that defendant was totally aghast and taken

aback when he received a legal notice dated 03.08.2011 by virtue of which the plaintiff raised a false claim about alleged obligation of Rs. 27 lacs.

8. It is stated that it was on account of these acts of the plaintiff that the defendant in September 2011 filed a suit for declaration, permanent injunction and cancellation of the cheques before this High Court being CS(OS) 2242/2011. The matter came up for hearing before this Court on 14.09.2011 when an interim order was passed by this Court directing the plaintiff herein not to deposit any cheque or deal with any document on which the plaintiff claims to have obtained signatures of the defendant herein. A direction was also issued to produce on record full documentation with regard to the request for valuation allegedly made by the defendant herein. On the basis of the above, it is averred that the unconditional leave to defendant should be granted.

9. I have heard the learned counsel for the parties.

10. Learned counsel for the plaintiff has vehemently submitted that the suit filed by the defendant is nothing but a counter blast. It is averred that all the details of the cheques have been dully filled in by the defendant. Reliance is placed on the bill dated 01.04.2011 where the defendant has made an endorsement "received and cleared bill". On the rear side of the bill cheques numbers, dates and amounts are also mentioned and the defendant has signed the said statement. It is strongly urged that these cheques have been issued by the defendant were not blank cheques and were duly executed in favour of the plaintiff. Reliance is placed on the judgments in the case of V.K. Enterprises and Anr. vs. Shiva Steels, (2010) 9 SCC 256, Bharat Forge Ltd. Vs. ONIL Gulati, 121(2005) DLT 357, Narender Gupta vs. Reliance Polycrete Ltd. & Ors., 178 (2011) DLT 196, National

Horticulture Board vs. Global Industries Ltd. in IA No.11691/2002 [u/O 37 R 3(5) CPC] in CS(OS) 411/2012 dated 28.03.2012, M/s Pradyuman Overseas Ltd. vs. Sanjeev Jindal in IA No. 3483/2012 (leave to defend) in CS(OS) 2168/2010 dated 23.05.2013 and Indian Bank vs. Maharashtra State Cooperative Marketing Federation Ltd., (1998) 5 SCC 69 to contend that on account of dishonor of cheques, leave to defend ought not to be granted and the present suit should be decreed.

11. Learned counsel appearing for the defendant has vehemently argued that the present suit, on the face of it, is bogus. There are absolutely no details of the work that has been done and simply a hand written invoice is produced to claim payment of Rs. 27 lacs.

12. It is argued that there are no details of what properties have been evaluated. The bill which is a hand written bill is not on a letter head. There is no service tax number mentioned on the bill. It is further argued that the defendant had first filed the suit seeking a declaration that the cheques in question issued by the defendant herein are null and void, without consideration and are liable to be cancelled. Reliance is placed on the orders passed by this Court on 14.09.2011 in CS(OS) 2242/2011 filed by the defendant. It is further submitted that the plaintiff herein had filed an IA No.17028/2011 under Order 39 Rule 4 CPC in the suit filed by the defendant being CS(OS) 2242/2011 which was also dismissed by the Court on 16.01.2012

13. It is stated that despite directions in CS(OS) 2242/2011, the plaintiff herein has not been able to file on record any document to show the details of the valuation, assessment of the properties, etc. as directed by the Court vide order dated 14.09.2011.

14. Reliance is placed on the judgment of this High Court in the case of Goyal Tax Fab. Pvt. Ltd. vs. Anil Kapoor in IA No. 11583/2010 in CS(OS) 1802/1999 dated 11.04.2011 to submit that leave to defend should be granted.

15. In the context of grant of leave to defend, the principles of law applicable are well known. The basic judgment in this regard, namely, M/s Mechalec Engineers & Manufacturers v. M/s Basic Equipment Corporation AIR 1977 SC 577, may be looked into for the said purpose. In para 8, the Hon'ble Supreme Court has held as follows:

"In Smt. Kiranmoyee Dassi and Anr. v. Dr. J. Chatterjee 49 C.W.N. 246 , 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."

In Mrs. Raj Duggal v. Ramesh Kumar Bansal, AIR 1990 SC 2218 it was held:

"3. Leave is declined where the Court is of the opinion that the grant of 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 that leave 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 judgment under Order 37 should not be granted where serious conflict as to 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."

In the light of the above, I may now consider the submissions of the defendant.

16. The present suit is based on an invoice stated to have been raised by the plaintiff dated 01.04.2011 and 7 cheques stated to have been issued by the defendant in favour of the plaintiff totaling Rs. 27 lacs.

17. A perusal of the invoice dated 01.04.2011 would show that it is hand written and is completely bereft of details. It is strange that a bill of Rs. 27 lacs is raised without giving any details whatsoever of the nature of work done by the plaintiff, the rate at which charges are being affected, the date when the work was done. It is also true that though service tax is charged, no service tax number is stated on the bill. Even in the plaint filed, there is no reference to any document whatsoever stating the nature of work done by the plaintiff, the details of the properties that were evaluated by the plaintiff and the rate at which payments are being demanded by the plaintiff.

It is further surprising that the bill in question has not been raised on a letter head. The plaintiff claims that besides other business, he also evaluates and makes assessments of properties on the request of his various clients.

Hence as per the averment of the plaintiff, he is in the regular business of making assessment of properties. It is surprising given the fact that this is the regular business of the plaintiff that an invoice is sought to be raised for a figure of Rs. 25 lacs on a mere sheet of paper without even being typed that too not on a letter head.

18. Further it is stated in the plaint that the defendant had approached the plaintiff for evaluation/assessment of certain properties during the year 2010-2011 so that the defendant could advise his clients. Even the invoice dated 01.04.2011 states that the fee is being charged for survey of properties and their valuation at market rate.

19. Presumably such surveys/valuation of properties would be in writing and would not be an oral affair. The plaintiff has admittedly failed to place on record any written document giving details of the survey/valuation that was allegedly done at the behest of the defendant. The plaintiff has tried to explain this gap and has made an averment in the Plaint that on 1.4.2011 the defendant took the entire material/records and reports of the plaintiff. It is alleged that the defendant also took an undertaking from the plaintiff that he shall not retain any record of the valuation done. It is stated that this was done under the garb of maintaining secrecy and confidentiality of the valuation/assessment conducted by the plaintiff for the clients of the defendant. The explanation given for absence of documents to show that the plaintiff has performed any duties as claimed in the bill prima facie does not inspire any confidence. Even if for a moment it is assumed that the contention of the plaintiff is correct and the documents have been taken

away by the defendant, yet it is difficult to believe that the plaintiff is unable to give any details of the properties that were evaluated by him. In most offices today, assessments/surveys of the nature that are mentioned by the plaintiff would be typed on a computer and would normally be communicated to the clients over e-mail. Records of such assessments made would be available in the computers of the plaintiff. It is prima facie not possible to believe the version given by the plaintiff.

20. It is also a matter of fact that the present suit is filed on or around 18.10.2011. The defendant had on or around 12.09.2011 filed a suit first i.e., CS(OS)2242/2011 seeking a declaration that the cheques in question be declared void. The prayer of the said suit read as follows:-

a. "Pass a decree of declaration thereby declaring that cheque bearing No. 111125 for Rs. 3.00 lacs and cheque Nos. 111126, 111127, 111128, 111129, 111130, 111131 for Rs. 4.00 lacs each drawn on Punjab National Bank, Lajpat Nagar, New Delhi, issued by the plaintiff in favour of the defendant as well as blank forms and documents signed by plaintiff and handed over to defendant, are null and void, without consideration and are liable to be cancelled.

b. Pass a decree of permanent injunction, restraining the defendant from presenting for encashment, the cheque bearing No. 111125 for Rs. 3.00 lacs and cheque Nos. 111127, 111128, 111129, 111130, 111131 for Rs. 4.00 lacs each drawn on Punjab National Bank, Lajpat Nagar, New Delhi, Issued by the plaintiff in favour of the defendant or misusing or caused to be misused the blank forms and papers signed by the plaintiff which are in possession of the defendant. c. Any other order which this Court deems fit in the interest of justice be passed."

21. The said suit is stated to be pending adjudication. On 14 th

September, 2011 an Order was passed directing the plaintiff herein not to deposit any cheque or deal with any document on which signatures have been obtained by the defendant herein. A direction was also given to the plaintiff to produce on record full documentation with regard to the request for valuation allegedly made by the plaintiff under Negotiable Instruments Act.

22. Admittedly, the direction to place on record the documents given to the plaintiff herein with regard to the valuations done by the plaintiff have not been followed by the plaintiff. The defendant has filed its suit first seeking declaration that the seven cheques are null and void. Prima facie, it is difficult to accept the contentions of the plaintiff.

23. It is true that Section 139 of the Negotiable Instruments Act provides that it shall be presumed unless the contrary is proved that the holder of the cheque has received a cheque for discharge in whole or in part of any debt or any other liability. This is a rebuttable presumption. Prima facie the defendant has been able to show that the cheque in question has not been issued on account of any debt or any liability of the defendant. The entire transaction as stated by the plaintiff lacks material and vital details. The transaction also is not supported by material and vital documents which ought to have been in power and possession of the plaintiff and ought to have been placed on record. In the absence of these documents and details, it cannot be said that the defence raised by the defendant is moonshine or without merits.

24. The judgments relied upon by the learned counsel for the plaintiff would have no application to the facts of the case.

25. In V.K. Enterprises and Anr. vs. Shiva Steels, (supra) the Hon'ble Supreme Court stated that cheques are issued normally for liquidation of dues which are admitted. It was further held that 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 summary procedure. The Hon'ble Court did not believe the contention and allegations of the defendant therein which were held to be without any foundation. The Judgment is based on the facts of that case.

26. The case of Bharat Forge Ltd. Vs. ONIL Gulati, 121 (supra), also pertained to a case where in the facts of the case the Court held that the defendants in that case while claiming an Agreement was reached for credit to be given on account of return of goods to a sister concern have not produced any documentation in respect of the Agreement. The defendant failed to specify the extent and value of goods except giving a bald figure in the application for leave to contest. On the facts the Court came to conclusion that leave to defend would be given only after securing and protecting the interest of the plaintiff therein.

27. No purpose would be served in dealing with each of the other cases relied upon by the learned counsel for the plaintiff in view of the facts of the present case as narrated above.

28. In view of the above, I allow the present application and grant

unconditional leave to defend the present Suit.

Suit No. 2617/2011 The defendant may file written statement within 30 days from today. List before Joint Registrar on 09.01.2014 for completion of pleadings and admission/denial of documents.

JAYANT NATH, J.

NOVEMBER 13, 2013 rb/n