Delhi High Court

Sri Balaji Financer vs Suraj Prakash on 4 March, 2014

Author: Rajiv Sahai Endlaw

          *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                         Date of decision: 4th March, 2014

+                               CS(OS) No.977/2010

       SRI BALAJI FINANCER                              ..... Plaintiff
                     Through:          Mr. Anish Shrestha with Mr. Sudhir
                                       Kumar, Mr. Ajay Kumar & Mr. Vikas
                                       K. Jha, Advs.

                                   Versus
    SURAJ PRAKASH                            ..... Defendant
                  Through: Mr. Maninder Jeet Singh, Adv.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
RAJIV SAHAI ENDLAW, J

IA No.13973/2010 (of the plaintiff for issuance of summons for
judgment)

1.

Summons for judgment already stand issued and leave to defend

application filed.

2. This application is accordingly disposed of.

IA No.1959/2011 (of the plaintiff for issuance of notice of the application for summons for judgment)

3. This application also has become infructuous and is disposed of.

IA No.8712/2011 (of the defendant for leave to defend)

4. The plaintiff has instituted this suit under Order 37 of the Code of

Civil Procedure, 1908 (CPC) for recovery of Rs.33,24,000/- with interest at

the rate of 24% per annum, pendente lite and future, pleading:

(i) that the plaintiff advanced a loan of Rs.18,00,000/- to the

defendant on various dates in the year 2007 vide account payee

cheques issued to the credit of the account

No.532202010002767 of the bank of the defendant and amount

of which cheques was credited to the bank account of the

defendant;

(ii) that the defendant agreed to pay a compound interest at the rate

of 24% per annum with monthly rests;

(iii) that as on 31.12.2009, a sum of Rs.15,23,764/- was due towards

interest and thus the defendant as on that date owed a total sum

of Rs.33,24,000/- to the plaintiff;

(iv) the defendant also executed demand promissory notes in favour

of the plaintiff in lieu of the said loan;

(v) that the defendant towards part payment of interest, issued 26

cheques to the plaintiff for a total sum of Rs.4,80,000/- and

particulars of which cheques are given in the plaint;

(vi) that all the aforesaid cheques were however returned

dishonoured on account of insufficiency of funds in the bank

account of the defendant and complaints of offence under

Section 138 of the Negotiable Instruments Act, 1881 have been

filed; and,

(vii) that the plaintiff inspite of demand vide legal notice, has neither

replied nor re-paid the money.

5. The plaintiff along with the suit has filed Form-A & Form-B issued by

the Registrar of Firms, Delhi, 19 original Promissory Notes all dated

14.12.2009 on the basis of which the suit has been filed and copy of the legal

notice issued prior to the institution of the suit along with proof of delivery

thereof.

6. The defendant seeks leave to defend on the grounds:

(a) that the Promissory Notes on which the suit is based are forged

and fabricated documents, which do not bear the signatures of

the defendant;

(b) that there was never any agreement between the plaintiff and

the defendant for payment of any interest, much less compound

interest or at 24% per annum or with monthly rests;

(c) that the Promissory Notes on which the suit is based are without

any consideration;

(d) that the application filed by the plaintiff under Order 37 Rule

3(4) of the CPC for issuance of the summons for judgment does

not confer to or meet the basic mandatory requirement of law;

the leave to defend is however filed without prejudice to the

said objection.

7. The plaintiff has filed reply to the application for leave to defend and

to which a rejoinder has been filed by the defendant. However need is not

felt to advert thereto as the plaintiff in its reply has merely reiterated the

contents of the plaint and the defendant in the rejoinder has not stated any

new fact and the counsels also have not in the hearing referred thereto.

8. The counsels have been heard.

9. The counsel for the applicant / defendant has argued:

(I) that once the defendant, in the leave to defend application,

has disputed his signatures, leave to defend has

axiomatically to be granted. Reliance in this regard is

placed on Gurbachan Singh, Maksudanlal Vs. Sudershan

Trading Co. 1980 Rajdhani Law Reporter (Note) 68;

(II) that all the 19 pro-notes on which the suit is based are of the

same date i.e. 14.12.2009 and no reasonable person would

on the same day execute as many as 19 pro-notes and a

prudent person would have executed a single pro-note for

the entire amount due;

(III) that the suit filed in the year 2010 is barred by time; in this

regard, attention is invited to the bank statement filed by the

plaintiff subsequent to the filing of the suit and which was

permitted to be taken on record with the consent of the

defendant vide order dated 12.09.2013, to show that the

cheques issued by the plaintiff in favour of the defendant

were of the year 2007 and the suit has been filed after three

years therefrom;

(IV) attention is invited to the application filed by the plaintiff for

issuance of summons for judgment to show that the plaintiff

therein has not verified the cause of action as is mandatorily

required to be done; reliance in this regard is placed on Shri

Satish Kumar Vs. Prism Ceme Ltd. 107 (2003) DLT 36.

10. Per contra, the counsel for the plaintiff has argued that the defendant

has not denied receipt of Rs.18,00,000/- from the plaintiff and issuance of

cheques in December, 2009 as pleaded in the plaint for Rs.4,80,000/- in

favour of the plaintiff in part payment of interest owed by the defendant to

the plaintiff and both of which are an admission of the liability of the

defendant and the defendant is thus not entitled to leave to defend.

11. The counsel for the defendant in rejoinder has argued that the cheques

for a total sum of Rs.4,80,000/- were issued for a separate transaction and

the plaintiff has filed a separate suit for recovery of the said amount of

Rs.4,80,000/-. However the counsel for the defendant admits that no such

plea has been taken in the leave to defend. No cognizance thereof can thus

be taken. The counsel for the defendant has also generally referred to

Mechalec Engineers & Manufacturers Vs. M/s. Basic Equipment

Corporation AIR 1977 SC 577.

12. I have weighed the rival contentions.

13. In my view, no case for grant of leave to defend is made out for the

following reasons:

(a) As rightly contended by the counsel for the plaintiff, in the

entire application for leave to defend, the defendant has not

controverted the plea in the plaint of the plaintiff, in the year

2007, having advanced a loan of Rs.18,00,000/- to the

defendant by issuing cheques to the credit of the bank account

of the defendant. The defendant has also not disputed the

account number pleaded in the plaint and to the credit of which

the cheques were issued by the plaintiff and in which the

monies under the said cheques was received.

(b) The defendant has not given any other explanation for the

receipt of Rs.18,00,000/- in his bank account by cheques drawn

by the plaintiff and has not pleaded refund thereof.

(c) Rather, the counsel for the defendant, during the hearing, in

support of his contention that the suit claim is barred by time,

referred to the bank statements which were taken on record with

the consent of the counsel for the defendant, which show credit

from the account of the plaintiff to the account of the defendant

in the year 2007 of the aforesaid sum of Rs.18,00,000/-.

(d) Though the plaintiff has in the plaint expressly pleaded that the

26 cheques for a total amount of Rs.4,80,000/- were issued by

the defendant in favour of the plaintiff towards part payment of

the interest on the aforesaid loan amount of Rs.18,00,000/- but

the said fact has also not been controverted by the defendant in

the application for leave to defend and no other explanation for

issuance of the said cheques been furnished.

(e) Order 37 Rule 3 (6)(a) of the CPC provides that if the defendant

has not applied for leave to defend, the plaintiff shall be entitled

to judgment forthwith. The defendant, by not controverting the

material averments in the plaint of grant of loan by the plaintiff

to the defendant and issuance of cheques by the defendant in

part payment of the interest on the said loan, is deemed to have

admitted the said facts and to have no defence thereto.

(f) Once the defendant has admitted the transaction of loan, the

onus is on the defendant to show that such loan amount has

been repaid or is otherwise not due. The defendant in the

present case has not stated anything whatsoever in this regard

also.

(g) In the aforesaid state of affairs, the bare denial by the defendant

of the pro-notes for a total sum of Rs.33,24,000/- is found to be

frivolous and vexatious. A comparison with the naked eye, of

the signatures of the defendant on the application and affidavit

for leave to defend and on the said pro-notes and receipts, show

the same to be identical.

(h) The argument of the defendant, of execution of 19 different

pro-notes on one day instead of a consolidated pro-note for the

entire amount being contrary to the normal course of human

conduct and being suspicious, is also not found to have any

merit. The amount of Rs.18,00,000/- advanced by the plaintiff

to the defendant, also was on different dates and the different

pro-notes have been made for each of such transaction and with

interest computed separately on each transaction.

(i) The judgment of this Court in Gurbachan Singh, Maksudanlal

(supra) in the circumstances aforesaid has no application. In

fact, the said judgment also holds that notwithstanding the

denial of execution of a document, leave can be refused if the

denial is found to be mala fide. The denial by the plaintiff of

the signatures on the pro-notes and receipts, on which the suit is

based, for the reasons aforesaid is indeed mala fide.

(j) The argument raised during the hearing, of the suit claim being

barred by time has no basis in the pleadings in the application

for leave to defend. Else, on the averments in the plaint and the

documents, the suit claim is found to be within time.

(k) I also do not find any merit in the argument of the counsel for

the defendant, of the defendant being entitled to leave to defend

for the reason of the application for issuance of summons for

judgment being not in strict compliance with the language of

Order 37 of the CPC. Though undoubtedly, this Court in Shri

Satish Kumar (supra) held the application for issuance of

summons for judgment to be defective if does not verify the

cause of action, but in the context of a proceeding under Order

37 Rule 4 of the CPC where the plea of the defendant was of

being not served with the summons for judgment in accordance

with law and being thus not able to apply for leave to defend.

On the contrary, here, even if it were to be held that the

application for issuance of summons for judgment filed by the

plaintiff was defective, the fact remains that summons for

judgment were issued and served and the defendant in response

thereto has sought leave to defend, though without prejudice to

his plea of the application for issuance of summons for

judgment being defective. Inspite of my repeated asking, the

counsel for the defendant has been unable to tell as to what

prejudice has been caused to the defendant by the defect even if

any in the application for issuance of summons for judgment. I

have during the hearing in fact also put to the counsel for the

defendant that even if a finding in this regard were to be

returned in his favour, the same would still not entitle the

defendant to leave to defend and the only consequence thereof

would be, directing the plaintiff to file a fresh application for

issuance of summons for judgment and issuance of fresh

summons for judgment to the defendant. The counsel for the

defendant has not been able to tell as to what other defences /

grounds need to be taken by the defendant, if given an

opportunity to apply afresh for summons for judgment.