Mukesh Jain vs Akash Gupta
2014 Latest Caselaw 1267 Del

$~ 16
*       IN THE HIGH COURT OF DELHI AT NEW DELHI
+       CS(OS) 332/2012 & I.A. 5196/2012

%                                               Judgment dated 10.03.2014

        MUKESH JAIN                           ..... Plaintiff
                Through:            Mr.Vishwender Verma, Adv

                           versus

        AKASH GUPTA                             ..... Defendant
                Through:            Mr.Rishi Pal Singh, Adv

        CORAM:
           HON'BLE MR. JUSTICE G.S.SISTANI

G.S.SISTANI, J (ORAL)

I.A. 5196/2012

1.      This is an application under Order 37 Rule 2 & 3 CPC filed by the
        defendant for entering appearance.
2.      Since the defendant has entered appearance through counsel, the present
        application stands disposed of.
IA.No.4062/2013
3.      Previous costs imposed have not been paid. The same stands waived of as
        prayed.
4.      Plaintiff has filed the present suit under the provisions of Order XXXVII
        of the Code of Civil Procedure, 1908. Memo of appearance was filed and
        thereafter the plaintiff has filed an application for summons for judgment.
        Defendant has filed the present application for leave to defend.
5.      According to the plaint, the plaintiff was desirous of selling gold weighing
        2010 grams and he wanted to raise money from the same. The defendant


CS(OS) 332/2012                                                   Page 1 of 8
       approached the plaintiff. Accordingly on 17.2.2010 the entire gold worth
      Rs.20,10,000/- was purchased by the defendant from the plaintiff and a
      sum of Rs.45,000/- was paid in cash to the plaintiff and it was agreed that
      the balance amount of Rs.19,65,000/- would be paid within a period of
      three months along with interest to the tune of Rs.35,000/-, thereon,
      amounting to a total of Rs.20.00 lakhs. A post-dated cheque bearing
      No.695198 dated 17.5.2010 drawn on Indian Overseas Bank, Shalimar
      Bagh, Delhi, in the sum of Rs.20.00 lakhs was handed over to the
      plaintiff.
6.    Upon deposit of the aforesaid cheque by the plaintiff, the same was
      returned with the endorsement "Funds Insufficient" vide cheque return
      memo dated 19.5.2010.       The plaintiff contacted the defendant, upon
      which he was asked to re-present the cheque and on presentation the
      cheque was again dishonoured for the same reason by a return memo
      dated 16.7.2010. The plaintiff also issued a legal notice dated 3.8.2010 to
      the defendant both by the registered AD post and the UPC, however, no
      response was received. Counsel for the plaintiff submits that the present
      suit is based on dishonour of the above mentioned cheque.
7.    Counsel for the defendant has sought leave to defend the suit on the
      ground that the suit is based on a false and fabricated document and there
      is no liability of the defendant towards the plaintiff. It is also submitted
      that the defendant had never approached the plaintiff for purchase of his
      gold; the cash memo dated 17.2.2010 filed along with the suit is a false
      and fabricated document.      It is also submitted by counsel for the
      defendant that the memo does not give details of the cheque, if any, which
      was handed over by the defendant to the plaintiff. Counsel next contends
      that the plaintiff has not placed on record the receipt for the alleged cash
      amount of Rs.45,000/- paid to him.        Moverover, there is no written

CS(OS) 332/2012                                                Page 2 of 8
       contract between the parties to show that there was any debt of
      Rs.19,65,000/-, nor is there any justification for payment of interest of
      Rs.35,000/-.
8.    Another defence which has been raised by the defendant is that the gold
      could not have been purchased by the defendant at the rate of Rs.10,000/-
      per 10 grams, when during the appropriate period, the market rate was
      Rs.19,000/- per 10 grams. It is also submitted that the cheque in question
      was not handed over to the plaintiff by the defendant but the same was
      handed over to one Karamvir with respect to purchase and development
      of some property, which has been misused by the plaintiff in collusion
      with the said Mr.Karamvir. It is submitted that the cheque was presented
      without any mandate from the defendant to the bank and based on a false
      and fabricated story the present suit has been instituted. It is also the case
      of the defendant that he was falsely implicated in 15 FIRs registered at
      Police Station Shalimar Bagh; and on account of these FIRs he was in
      judicial custody on more than 5 occasions and thus he could not look after
      his day-to-day business. Hence, the defendant prays for unconditional
      leave in the matter.
9.    In response to the submission made by counsel for the defendant, counsel
      for the plaintiff submits that the plaintiff had agreed to sell gold
      ornaments to the defendant and it was not pure gold which would have
      fetched the market price fixed for gold and thus, it cannot be said that the
      ornaments sold were underpriced. Counsel for the plaintiff also submits
      that no dates, as to when the defendant was in judicial custody, have been
      given in the application for leave to defend in support of his argument that
      the defendant was in judicial custody, nor have any such documents been
      placed on record.
10.   I have heard counsel for the parties and considered their rival

CS(OS) 332/2012                                                 Page 3 of 8
       submissions.      The principles to be considered by the Court while
      considering an application for leave to defend are well settled. The Apex
      Court in the case of M/s. Mechalee Engineers & Manufacturers v. 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 paras 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, shows 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


CS(OS) 332/2012                                                   Page 4 of 8
                   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."


11.   It would also be useful to refer to the case of V.K. Enterprises Vs. Shiva
      Steels III (2010) Banking Cases 718 (SC). Paragraphs 3,4 and 8 to 10 of
      the judgment read as under:

                  "3. In the said application for leave to defend the suit, the
                  Petitioner contended that the cheque in question had been
                  handed over by the Petitioner to the Respondent-firm by way

of security only and not for presentation. Furthermore, the said cheque was issued by the Petitioner on 11th October, 2000, but the date of the cheque was, thereafter, interpolated and altered from 11.10.2000 to 11.10.2006, and presented to the Bank. It was also indicated that apart from the signature on the face of the cheque and the date mentioned therein, the rest of the cheque was blank and an attempt was made by the Respondent to misuse the same with the intention of withdrawing or misappropriating the amount subsequently inserted in the cheque. A specific allegation was also made to the effect that the date of the cheque issued on behalf of the Petitioner firm for the month of October was always written with the Roman numerical 'X', which was altered and shown in ordinary numericals, which clearly establish the fact that the cheque in question had been doctored to obtain the benefit thereof six years after the same had been issued.

4. In the said application, it was also denied that any cheque of such a large amount had been issued to the Respondent after 1992 in order to bolster the case of the Petitioner that the cheque in question had been forged. It was ultimately stated in the complaint that the Respondent had concocted

the story and the Bills placed on record by the Respondent were also forged as the Petitioner had neither purchased any material nor counter-signed the last 4 bills as per the details provided.

8. Order XXXVII C.P.C. 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 a summary procedure instead of taking the long route of a regular suit. The Courts have consistently held that if the affidavit filed by the defendant discloses a triable issue that is at least plausible, leave should be granted, but when the defence raised appears to be moonshine and sham, unconditional leave to defend cannot be granted. What is required to be examined for grant of leave is whether the defence taken in the application under Order XXXVII Rule 3 C.P.C. makes out a case, which if established, would be a plausible defence in a regular suit. In matters relating to dishonour of cheques, the aforesaid principle becomes more relevant as the cheques are issued normally for liquidation of dues which are admitted. In the instant case, the defence would have been plausible had it not been for the fact that the allegations relating to the interpolation of the cheque is without substance and the ledger accounts relating to the dues, clearly demonstrated that such dues had been settled between the parties. Moreover, the issuance of the cheque had never been disputed on behalf of the Petitioner whose case was that the same had been given on account of security and not for presentation, but an attempt had been made to misuse the same by dishonest means.

9. Against such cogent evidence produced by the plaintiff/respondent, there is only an oral denial which is not supported by any corroborative evidence from the side of the Petitioner. On the other hand, the ledger book maintained by the Respondent and settled by the Petitioner had been produced on behalf of the Respondent in order to prove the transactions in respect of which the cheque in question had been issued by the Petitioner.

10. In our view, the defence raised by the Petitioner does not make out any triable issue and the High Court, has dealt with

the matter correctly and has justifiably rejected the Petitioner's application under Order XXXVII Rule 3 C.P.C. and the same does not call for interference by this Court. The Special Leave Petition is, therefore, dismissed, but without any order as to costs."

12. The application for leave to defend filed by the defendant is to be decided on the touch stone of the law laid down by the Apex Court. In order to succeed the defendant must raise a triable issue. The application must disclose a good, fair, bonafide or reasonable defence.

13. The present suit is based on dishonour of cheque in the sum of Rs.20,00,000/. The basic submission of counsel for the defendant while seeking unconditional leave is that the cheque in question was not handed over to the plaintiff by him, in fact the defendant had handed over the cheque to one Karamvir. This submission made by the counsel for the defendant is without any basis as the defendant did not respond to the legal notice issued by the plaintiff which was duly served on the defendant which is evident from the postal receipts and AD card. In case there was any merit in the stand of the defendant he would have raised an objection at the first opportunity available. But the defendant decided to remain silent, which can lead only to a single conclusion that this defence is sham and moonshine. Another factor which cannot be ignored is that the cheque in question was returned by the bankers of the defendant not once but twice and on both the occasions information would have been sent by the banker of the defendant to the defendant. In case there was truth in the stand of the defendant or in case his defence was bonafide, he would have immediately called upon Karamvir to explain as to why he presented the cheque without his permission.

14. A bald statement without any documentary support or relevant dates can

be of no help to the defendant in claiming that he was in Judicial Custody with respect to the FIRs details of which have been given in the leave to defend application. Another triable issue sought to be raised by the defendant is that the cash memo/bill is a fabricated document. In my view this defence is also moonshine and sham. Except for a general assertion that the cash memo is a forged and fabricated document, nothing has been placed on record to show that the cash memo bill relied upon by the plaintiff is not a part of the bill book of the defendant. In case the defendant was serious about his defence, the original bill book would have been produced on record to buttress his argument that the cash memo / bill bearing No.07780321016 is a fake document and no such number exists in the bill book of the defendant.

15. In my view the defendant has been unable to satisfy this Court that he has a good defence or that he has been able to raise a triable issue or even a reasonable defence if not a positively good defence. In my view the defence set up by the defendant in the leave to defend application is illusory, sham and practically moonshine, and in case such an application is considered, the same would defeat the very purpose of introducing Order XXXVII in the CPC. In view of above I.A.4062/2013 for leave to defend is dismissed.

CS(OS) 332/2012

16. As the leave to defend application stands dismissed, the suit is decreed in favour of the plaintiff and against the defendant, along with pendent lite and future interest @ 8% per annum.

G.S.SISTANI, J MARCH 10, 2014 ssn