Capt Vijender Singh Chauhan vs M/S Parsvnath Developers Ltd
2014 Latest Caselaw 3901 Del

$~ 58
*       IN THE HIGH COURT OF DELHI AT NEW DELHI
+       CS(OS) 1323/2013 & I.A.14980/2013
%                                  Date of decision : 25th August, 2014

CAPT VIJENDER SINGH CHAUHAN                ..... Plaintiff
              Through: Mr.M.B. Singh, Adv.

                           versus

M/S PARSVNATH DEVELOPERS LTD.            ..... Defendant
             Through: Mr.Vijay Nair and Mr.Rajat Joneja, Advs.


        CORAM:
              HON'BLE MR. JUSTICE G.S.SISTANI
G.S.SISTANI, J. (ORAL)

I.A. 19635/2013 (Leave to defend)

1. This is an application filed by the defendant seeking unconditional leave to defend. The plaintiff seeks recovery of Rs.58,76,000/- being arrears of salary. The suit is based on an agreement being the letter offering employment to the plaintiff. As per the plaint the plaintiff was offered employment by the defendant by an offer letter dated 7.3.2008. He was appointed as Senior General Manager-Projects on 28.3.2008. He worked at the said post till he was made to tender his resignation dated 10.9.2012 sent on 10.10.2012.

2. As per the appointment letter, plaintiff was given emoluments of Rs.1,92,333/- per month i.e. Basic Rs.1,28,000/- and HRA Rs.64,333/- per month besides other benefits including medical allowances etc. The plaintiff found that in the month of November, 2008, the defendant company arbitrarily and unilaterally decreased the salary from Rs.2,08,329/- per month to

Rs.1,56,247/- per month. The amount was deposited directly in the account of the plaintiff. The plaintiff had no option but to accept the same under coercion and compulsion as the salary for 3-4 months was always kept in arrears. Plaintiff was also not given an increment despite repeated requests.

3. Learned counsel for the defendant seeks unconditional leave to defend, firstly on the ground that the suit is not maintainable under Order 37 CPC as the terms of the agreement were renegotiated and the salary of the plaintiff and many other employees was reduced. Counsel for defendant submits that since the plaintiff accepted the reduced salary without any protest and demur, the terms of the agreement were modified by the parties and thus the reliance placed on the offer letter as the basis of filing the present suit under Order 37 CPC is misplaced. Counsel further submits that the plaintiff has not approached this Court with clean hands and he has suppressed material facts including the fact that plaintiff had filed a petition under Sections 433-434 of the Companies Act for winding up of the defendant company which was dismissed and this fact was brought to the notice of the plaintiff by the Court who incidentally was also the Company Judge at the relevant point of time and only thereafter the order of the Company Court was filed by the plaintiff.

4. Mr.Nair, learned counsel for the defendant submits that the defendant has raised a plausible defence and has a fair chance of success and the defence raised can only be proved upon evidence. Counsel for the defendant also relies upon various communications addressed to large number of employees informing them their salaries to reduce copies of which have been

placed on record. Counsel further submits that the present suit for demand of arrears of his salary has been filed only after the plaintiff resigned. He also relies upon the observations made by the Company Court in its order dated 15.3.2013 which reads as under:

"9. Reliance was next placed by Mr.Chandra on the decision of the Supreme Court in Madhusudan Gordhandas and Co. v. Madhu Woollen Industries Pvt. Ltd. 1972 (42) Company Cases 125. In the above decision, the Supreme Court explained what would constitute inability of a company to pay its debts and observed as under:

"Two rules are well settled. First, if the debt is bona fide disputed and the defence is a substantial one, the court will not wind up the company. The court has dismissed a petition for winding up where the creditor claimed a sum for goods sold to the company and the company contended that no price had been agreed upon and the sum demanded by the creditor was unreasonable. (See In re London and Paris Banking Corporation [1874 L.R. 19 Eq. 444). Again, a petition for winding up by a creditor who claimed payment of an agreed sum for work done for the company when the company contended that the work had not been done properly was not allowed. (See In re Brighton Club and Norfolk Hotel Co. Ltd. [1865] 35 Beav. 204).

Where the debt is undisputed the court will not act upon a defence that the company has the ability to pay the debt but the company chooses not to pay that particular debt. (See In re A Company [1894] 94 S.J. 369). Where, however, there is no doubt that the company owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the court will make a winding up order without requiring the creditor to quantify the debt precisely. (See In re Tweeds Garages Ltd.

[1962] Ch. 406). The principles on which the court acts are first that the defence of the company is in good faith and one of substance, secondly, the defence is likely to succeed in point of law, and, thirdly, the company adduces prima facie proof of the facts on which the defence depends".

10. In the present case it is not possible to conclude at this stage and in the facts noted hereinbefore that the debt as claimed by the Petitioner is "undisputed". It is also not possible to come to the conclusion at this stage without any further examination of evidence that the defence of PDL is not in good faith and without substance. The submission of Mr.Chandra that even at this stage the burden is on PDL to show that its defence is likely to succeed in a point of law and that it has to prima facie prove the facts on which its defence depends, is not acceptable. That stage would arrive after the Petitioner is able to satisfy the Court, even prima facie, that the debt is undisputed and that the Respondent is unable to pay the debt."

5. I have heard the learned counsel for the parties and considered

their rival submissions.

6. The Apex Court in the case of M/s.Mechalee Engineers & Manufacturers Vs. M/s.Basic Equipment Corporation AIR 1977 SC 577 has drawn up the parameters to be considered by the court while dealing with the application for leave to defend. Relevant praras of the judgment reads as under:

"8. 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 37 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. While it is the case of the plaintiff that the plaintiff is entitled to a decree based on the written agreement which is admitted by the defendant wherein the defendant had agreed to pay salary in the sum of Rs.2,08,329/- per month to the plaintiff while it is the case

of the defendant that the salary was reduced with the knowledge and consent of the plaintiff. The plaintiff accepted the reduced salary for more than one year without any protest and demur and it is only when he tendered his resignation he opposed the reduction of his salary. It is submitted that the defendant has raised a plausible defence, a defence which is bona fide and can only be proved on evidence. Thus the defendant seeks unconditional leave to defend. Counsel for the plaintiff submits that the plaintiff did protest even during the course of his employment.

8. It is not in dispute that the plaintiff was employed by the defendant. An offer letter dated 7.3.2008 was issued giving the terms of employment. As per the letter dated 28.3.2008, the salary of the plaintiff was fixed at Rs.1,92,333/- per month. From November, 2008 the salary of the plaintiff was reduced which was accepted by the plaintiff. Defendant has placed documents on record to show that the salary of not only the plaintiff but various employees was reduced. It would be useful to reproduce letter dated 12.8.2010 addressed by the plaintiff to the defendant.

"I joined the Company in March 2008 at a Gross Salary of Rs.2,08,329- per month + company vehicle.

The monthly Gross Salary was reduced to Rs.1,56,247/- with effect from 1st November, 2008, when I was becoming eligible for my increment. Sir, since then I have been working on a lesser salary than what I was getting in my previous Organization, without any increment in last two years.

I would request you to please revoke the role back and grant annual increment as per Company rule."

9. Reading of the letter would show that the plaintiff admits the reduction of his salary since 1 November, 2008 and he has requested for a role back to the original salary and also requested for an increment.

10. The defendant has made a categorical assertion in the application for leave to defend supported by an affidavit that due to the prevailing economic situation in this company, salary of the employees with the rank of the plaintiff was reduced.

11. Matter was also heard by the Company Judge, the relevant part of the order has been extracted above which shows that the Court reached a conclusion that the debt was not undisputed.

12. In my view, the defendant has been able to raise the bona fide defence which is evident from the fact that the plaintiff kept accepting the reduced salary and moreover the documents have been placed on record by the defendant to show the salay of other employees was also reduced and the plaintiff was not singled out. It cannot be said that the defence raised by the defendant is illusory or moonshine or not bona fide. I may also add that in a suit under Order 37 CPC, the plaintiff must place all material documents on record. The plaintiff, it seems, has wilfully concealed the facts of the company petition and the order so passed for which there is no explanation. The case of the plaintiff falls in exceptions (a) & (b) in the case of M/s.Mechalee Engineers & Manufacturers Vs. M/s.Basic Equipment

Corporation AIR 1977 SC 577. The application is allowed. The defendant is entitled to unconditional leave.

13. Written statement be filed within 30 days. Replication be filed within 30 days thereafter. Documents be filed within the same period.

14. List the matter before the Joint Registrar for admission/denial of documents on 25.9.2014.

15. List the matter before Court on 30.10.2014 for framing of issues.

Parties shall bring suggested issues to Court on the next date of hearing.

16. Application stands disposed of.

G.S.SISTANI, J AUGUST 25, 2014 ns/pdf