Sachin Kumar vs Kartar Singh
2013 Latest Caselaw 4972 Del

          *IN THE HIGH COURT OF DELHI AT NEW DELHI

                                        Date of decision: 29th October, 2013

+      RFA 319/2013 & CM No.10483/2013 (for filing addl. documents).
       SACHIN KUMAR                                  ..... Appellant
                      Through: Mr. Shiv Charan Garg & Mr.
                                Shashank Mittal, Advs.

                                    Versus
       KARTAR SINGH                                         .... Respondent
                   Through:             Mr. Shantanu Bhardwaj, Dr. H.S.
                                        Chaudhary & Mr. K.S. Goswami,
                                        Advs.
                                        Dr. L.S. Chaudhary for Mr. Shantanu
                                        Bhardwaj, Adv.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

1. The appeal impugns the judgment and decree (dated 23 rd February,

2013 of the Court of Addl. District Judge, East District, Karkardooma

Courts, Delhi in Civil Suit No.342/2011 filed by the respondent/plaintiff) of

recovery of Rs.4 lacs with interest @ 8% per annum from the date of

institution of the suit till realization against the appellant pursuant to

dismissal of the application filed by the appellant for leave to defend the suit

under Order XXXVII of the CPC filed by the respondent.

2. Notice of the appeal was issued and subject to the appellant depositing

the decretal amount in this Court, execution stayed. The appellant/defendant

did not deposit the decretal amount; resultantly the interim order was

vacated, the Trial Court record requisitioned and the appeal posted for

hearing for today.

3. The counsels have been heard and the Trial Court record perused.

4. The respondent/plaintiff instituted the suit from which this appeal

arises pleading that he had advanced a sum of Rs.4 lacs as a friendly loan to

the appellant/defendant in July, 2010, to be repaid in a year's time; that the

appellant/defendant failed to repay the amount and after much persuasion

issued a cheque dated 9th August, 2011 for Rs.4 lacs in repayment of the said

loan; however the said cheque was dishonoured.

5. The suit was entertained under Order XXXVII of the CPC and

summons for appearance and thereafter summons for judgment issued;

6. The appellant/defendant sought leave to defend on the grounds:-

(a). that he had on 2nd March, 2010 purchased a Innova car from the

respondent/plaintiff for a consideration of Rs.6,77,400/- out of

which Rs.2 lacs was paid immediately in cash and the balance

sale consideration was payable in 36 monthly instalments of

Rs.13,261/-;

(b). that the appellant/defendant had given the cheque on the basis

of which the suit is filed to the respondent/plaintiff on 2nd

March, 2010 by way of security though this fact was not

mentioned in the document executed on that date;

(c). that the appellant/defendant subsequently learnt that the vehicle

so sold by the respondent/plaintiff to the appellant/defendant

was hypothecated with the ICICI Bank and which fact had been

concealed by the respondent/plaintiff at the time of sale;

(d). that the respondent/plaintiff inspite of repeated reminders did

not clear the outstandings of ICICI Bank and owing whereto the

appellant/defendant was facing difficulty in plying the said

vehicle;

(e). that the appellant/defendant paid the instalments of the vehicle

till May, 2011 and thereafter in August, 2011 returned over the

vehicle to the respondent/plaintiff; and,

(f). that though the respondent/plaintiff was to return the said

cheque taken by way of security but did not do so and has

misused the same for filing the suit.

7. The respondent/plaintiff filed a reply to the leave to defend

application, not controverting the transaction of sale/purchase and return of

the vehicle by the appellant/defendant, but controverting that the

respondent/plaintiff had concealed the factum of the car being hypothecated

with the ICICI Bank and contending that the dues of the ICICI Bank were

cleared in October, 2010 itself and that since the appellant/defendant was

unable to pay further instalments, the respondent/plaintiff was forced to take

back the car.

8. It was thus the case of the respondent/plaintiff, that the loan

transaction was independent from the transaction of sale of vehicle.

9. The learned Addl. District Judge dismissed the application of the

appellant/defendant for leave to defend and consequently decreed the suit,

reasoning (i) that had the cheque on the basis of which the suit was filed

been given by way of security in the sale/purchase transaction, the same

would have found mention in the document prepared of the sale/purchase

transaction; (ii) that if the cheque had been given by way of security for the

sale/purchase transaction, the appellant/defendant would not have delivered

back possession of the vehicle without taking back the cheque; and lastly,

(iii) drawing adverse inference from the appellant/defendant having not

responded to the legal notice preceding the suit.

10. I have enquired from the counsel for the respondent/plaintiff as to

how the loan amount of Rs.4 lacs was given and whether any document of

the loan transaction was prepared.

11. The counsel for the respondent/plaintiff has stated that the loan of

Rs.4 lacs was given in cash and no document was executed because of the

good relations between the parties, the parties having already entered into an

agreement for sale/purchase of a car prior to the loan transaction.

12. I have further enquired from the counsel for the respondent/plaintiff

whether the respondent/plaintiff has taken any action against the

appellant/defendant for non-fulfilment of the sale/purchase transaction and

whether anything is outstanding from the appellant/defendant to the

respondent/plaintiff towards the sale purchase transaction as it cannot be

lost sight of that the appellant/defendant was admittedly in custody of the car

since 2nd March, 2010 till August, 2011.

13. The counsel for the respondent/plaintiff states that nothing is due from

the appellant/defendant to the respondent/plaintiff towards the sale/purchase

transaction as the appellant/defendant returned the vehicle and thus there

was no need for taking any action in that regard.

14. On further enquiry, it is stated that at the time of return of the vehicle

no document was signed and no full & final receipt issued.

15. On yet further enquiry, it is informed that the vehicle inspite of

remaining in the custody of the appellant/defendant as purchaser from 2 nd

March, 2010 to August, 2011 was not transferred in the name of the

appellant/defendant; the reason given is of the same being hypothecated with

the ICICI Bank.

16. In the aforesaid state of affairs, I am of the opinion that though it may

not be a case for grant of unconditional leave to defend, especially

considering that the appellant/defendant did not even comply with the

condition imposed while granting stay of the decree in this appeal, but the

pleas urged by the appellant/defendant in the leave to defend application

cannot be said to be a sham or which are so improbable and farfetched

which need not be put to trial.

17. I am unable to agree with the reasoning of the learned Addl. District

Judge of, the defence of the appellant/defendant being unbelievable for the

reason of the giving of the cheque as security being not mentioned in the

sale/purchase document or for the reason of the appellant/defendant having

returned the vehicle without insisting on return of cheque. It cannot be

forgotten that it is the case of the respondent/plaintiff himself that the

relations between the parties were cordial and for which reason the

respondent/plaintiff gave loan in cash without writing. It is not the case that

the cheque was given at the time of advancement of loan, as security for

repayment thereof. On the same parity of reasoning, the appellant/defendant

also could have given the cheque by way of security in sale/purchase

transaction, without the same being mentioned in the document. Similarly, it

being the case of the respondent/plaintiff that he was forced to take back

possession of the vehicle upon the appellant/defendant being unable to pay

installments thereof, there could be no occasion for the appellant/defendant

insisting on return of cheque at the time of such forcible taking back

possession of the vehicle. Admittedly no writing was made at the said time;

had there been any writing of full and final settlement, the position would

have been otherwise. As far as the adverse inference from not responding to

legal notice is concerned, the same alone cannot be a ground, though along

with other factors may have some value.

18. I am also inclined to find the grounds, on which leave to defend is

sought, to be plausible for the reasons, (i) of the loan in repayment of which

cheque is claimed to have been given, being in cash and without any writing;

(ii) there being nothing to show that there was a loan transaction; (iii) when

the parties executed a document of sale/purchase of vehicle, they, in the

ordinary course would have a document of loan also; (v) the approximity of

the amount of Rs.4 lacs to the balance amount due in the sale/purchase

transaction; (v) there being no document of closure of sale/purchase

transaction; and (vi) there being no claim of respondent/plaintiff against

appellant/defendant with respect to sale/purchase transaction though

appellant/defendant is stated to be in breach thereof also.

19. The impugned judgment and decree is thus set aside. The

appellant/defendant is granted leave to defend subject to deposit of the sum

of Rs.4 lacs with the Trial Court within ten weeks of today.

20. The counsel for the appellant/defendant states that the

appellant/defendant be permitted to furnish a Bank Guarantee to the Trial

Court in the sum of Rs.4 lacs and the said Bank Guarantee shall be kept

alive till two months after the decision of the suit by the Trial Court.

21. The aforesaid is found to be acceptable. The appellant/defendant is

granted leave to defend the suit subject to furnishing the Bank Guarantee to

the satisfaction of the learned Addl. District Judge in the sum of Rs.4 lacs

within ten weeks as sought from today.

22. The parties to appear before the District Judge, East District,

Karkardooma Courts on 17th January, 2014 for further proceedings.

23. It is made clear that if the Bank Guarantee is not furnished within ten

weeks, the leave to defend shall stand refused.

24. The Trial Court record be returned forthwith to the District Judge,

East District.

25. No costs.

Decree sheet be drawn up.

RAJIV SAHAI ENDLAW, J OCTOBER 29, 2013/pp..