Delhi High Court
M/S Housing Development Finance ... vs Vikas Garg on 20 May, 2014
Author: G. S. Sistani
$~ 14
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 217/2011
% Judgment dated 20.05.2014
M/S HOUSING DEVELOPMENT FINANCE
CORPORATION LTD ..... Plaintiff
Through: Mr.Ajit Kumar Singh, Advocate
versus
VIKAS GARG ..... Defendant
Through: Mr.Jinendra Jain and Mr.B.N.
Gaur, Advocates
CORAM:
HON'BLE MR. JUSTICE G.S.SISTANI
G.S.SISTANI, J (ORAL)
IA. No.1704/2013
1. This is an application seeking condonation of 13 days‟ delay in re-filing
the application for summons for judgment.
2. Heard. For the reasons stated in the application, the application is
allowed. Delay in re-filing the application for summons for judgment is
condoned.
3. Application stands disposed of.
IA. No.1703/2013
4. This is an application for summons for judgment. Since the leave to
defend application has already been filed, the present application stands
disposed of.
IA. No.5765/2013
CS(OS) 217/2011 Page 1 of 12
5. This is an application for condonation of 22 days‟ delay in filing the
application for leave to defend.
6. Heard. For the reasons stated in the application, the application is
allowed. Delay in filing the leave to defend application is condoned.
7. Application stands disposed of.
IA. No.5764/2013
8. Plaintiff has filed the present suit under the provisions of Order 37 CPC
and the application, IA. No.5764/2013, has been filed by the defendant
seeking leave to defend.
9. Before the rival submissions of the counsel for the parties can be
considered, it would be useful to notice the facts of the case as set out in
the plaint. As per the plaint, the defendant approached the plaintiff for
grant of a „home equity loan‟ in the sum of Rs.1.50 crores against the
property i.e., Ground floor, Plot bearing No.N-202, Greater Kailash-I,
New Delhi. It has further been averred that after the due verification of
all the property papers, as well as papers concerning repayment capacity
of defendant i.e. ITR, Bank Statement and business activities of
defendant, the loan amount of Rs1.50 crores was sanctioned. The
defendant signed sanction letter in token of acceptance of the terms and
conditions contained therein. The defendant also signed a loan agreement
dated 11.9.2009 in favour of the plaintiff. It is also the case of the
plaintiff that subsequently it was learnt that the property did not belong to
defendant, but in fact belonged to one Mr.Ajay Chopra. It is also averred
in the plaint that Mrs.Seema Malhotra, sister of Mr.Ajay Chopra, forged
and fabricated a Power of Attorney dated 29.9.2008 in her own name and
the defendant in connivance with Mrs.Seema Malhotra got a fake sale
deed registered in his name from Mrs.Seema Malhotra, on the basis of the
alleged forged Power of Attorney. The plaintiff has also lodged a
CS(OS) 217/2011 Page 2 of 12
criminal complaint to the Economic Offence Wing of the Delhi Police,
against the defendant and Mrs.Seema Malhotra and the same is still
pending and a FIR has been registered.
10. As per the terms of the loan agreement, the defendant was to re-pay the
loan amount along with interest by way of equated monthly instalment,
spread over 180 months. The loan was to carry an interest @ 12.75% per
annum and as per clause 2.7(b) of the loan agreement, in case of default or
delay in repayment of interest, penal interest @18% was to be paid.
11. The loan amount was disbursed to the defendant through cheque bearing
No.977732 dated 11.9.2009 in the sum of Rs.1.50 crores in favour of the
defendant, which was credited in the account of the defendant bearing
No.30852926674 with the State Bank of India.
12. It is also the case of the plaintiff that the initial three instalments were
paid by the defendant to the plaintiff and the defendant defaulted in
making payment thereafter.
13. It is also the case of the plaintiff that despite repeated requests and
reminders including legal notice dated 16.4.2010 issued by Registered AD
post, the defendant failed to pay the outstanding dues. The suit is based
on a written loan agreement and a promissory note, originals of which
have been placed on record.
14. The defendant has filed the present application [IA. No.5764/2013] for
leave to defend. The defendant seeks unconditional leave to defend on
the ground that the suit has not been filed by a duly authorized person; no
verification of the documents was carried out; the plaintiff has suppressed
and withheld material facts from the court; the officers of the plaintiff
were in active connivance with each other and they have forged and
fabricated the signatures of the defendant; and with a view to harass the
defendant, all the alleged documents containing the said forged signatures
CS(OS) 217/2011 Page 3 of 12
have been filed by the plaintiff.
15. According to the defendant the suit has been filed in sheer violation of the
rule of law, as no cause of action has arisen in favour of the plaintiff. It
has also been argued that the officials of the plaintiff got the blank
performa documents signed from the defendant by exercising
misrepresentation, commercial duress and coercion and without giving an
opportunity to the defendant to read the papers. The defendant was made
to sign the blank papers and particulars were filled in subsequently. It is
also submitted that the documents relied upon by the plaintiff are
fabricated and manufactured documents and the defendant would be able
to demonstrate during trial that the said documents are false and
fabricated.
16. It has also been alleged that the suit is barred by limitation and the
plaintiff cannot be allowed to take benefit of its own wrong. It is also
submitted that there is no liquidated debt due to the plaintiff.
17. In support of his submission counsel for the defendant has placed reliance
on M/s.K.K. Health Care Pvt. Ltd. Vs. M/s. Pehachan Advertising [RFA
202/2011 decided on 23.1.2012] and on GE Capital Services India. Vs.
May Flower Healthcare Pvt. Ltd. & Ors. [CS(OS)No.2859/2011 decided
on 31.8.2012].
18. The application is opposed by counsel for the plaintiff, non-applicant. At
the very outset counsel for the plaintiff submits that the defendant has not
disputed that a sum of Rs.1.50 crores as a loan was granted in his favour
by the plaintiff. It has also not been disputed that this amount was
credited to the bank account of the defendant bearing No.30852926674
with State Bank of India.
19. It is further submitted that three instalments were paid by the defendant
which would show that the defendant was well aware of the terms of the
CS(OS) 217/2011 Page 4 of 12
agreement and since 2009, till date at no point of time did the defendant
ever raise the objection of fabrication of documents or that he signed
some blank documents or that the plaintiff did not grant loan to the
defendant. It is submitted that the objections which are being raised are
vague, stereotype and are liable to be rejected as the defendant has not
been able to raise a plausible and a bonafide defence. The defence of the
defendant is imaginary, sham and moonshine and thus the plaintiff, is
entitled to a decree and the application for leave to defend is liable to be
dismissed.
20. I have heard counsel for the parties and considered their rival submissions
and also perused the loan agreement and the pro-note, which has been
signed by the defendant.
21. Learned counsel for the defendant has relied upon M/s Mechelec
Engineers & Manufacturers v. M/s Basic Equipment Corporation,
reported at AIR 1977 SC 577, more particularly para 8 in support of his
argument that since the defendant has raised triable issues, the defendant
should be granted unconditional leave to defend.
22. Before dealing with the rival submissions of counsel for the parties, it
would be useful to re-visit the law laid down by the Apex Court with
regard to dealing with an application for leave to defend. The Apex Court
in the case of M/s.Mechelec 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 paras of the judgment read 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
CS(OS) 217/2011 Page 5 of 12
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."
23. It would also be useful to refer to the case of V.K. Enterprises Vs. Shiva
Steels (2010) 9 SCC 256,wherein the Supreme Court had, in a matter with
CS(OS) 217/2011 Page 6 of 12
somewhat similar facts, upheld the order passed by the trial court where
leave was rejected. Paragraphs 8 to 10 of the judgment read as under:
"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."
24. A careful reading of the application for leave to defend would show that
the defendant has not disputed that loan in the sum of Rs.1.50 crores was
sanctioned by the plaintiff; and the amount was deposited in the account
of the defendant. It has also not been disputed that three instalments were
paid by the defendant to the plaintiff towards repayment of the loan
amount. The signatures on the loan document have not been disputed,
although a submission has been made that the documents were filled in
later and thus they are forged and fabricated. This submission of counsel
for the defendant is unacceptable, as the documents were signed in the
year 2009 and till date there is not a single document placed on record to
show that any objection was raised by the defendant before the plaintiff
with respect to any of the document being filed upon or that any
complaint was made to the police that the plaintiff coerced and forced the
defendant to sign the document or that the defendant‟s signatures were
obtained on the basis of any misrepresentation, as alleged in the
application for leave to defend.
25. Counsel for the plaintiff has also submitted that post dated cheques were
handed over to the plaintiff, all of which were dishonoured and
proceedings under Section 138 of the Negotiable Instruments Act are also
pending, in which defendant has been declared as a Proclaimed Offender.
26. Counsel for the defendant has placed strong reliance on the case of
M/s.K.K. Health Care (Supra) and on GE Capital Services India
(Supra), in support of his argument that the present suit is not
maintainable under the provisions of Order XXXVII of the Code of Civil
Procedure in the absence of a liquidated debt. This submission of counsel
for the defendant / applicant is without any force, as the judgments sought
to be relied upon by the counsel are not applicable to the facts of this case.
In the case of M/s.K.K. Health Care (Supra), a learned Single Judge of
this Court observed that the suit could not have been filed under order
XXXVII of the Code of Civil Procedure, as the amount claimed in the suit
was not the amount, as mentioned in the bills which was stated to be
written contracts containing the liquidated demands of money payable. In
the case of GE Capital Services India (Supra) the earlier judgment in the
case M/s.K.K. Health Care (Supra) was followed by the learned Single
Judge. In the present case the suit is not based on invoices and the suit is
based on a written contract, which is home equity loan agreement together
with a promissory note. This loan agreement is an exhaustive document
and contains various terms and conditions including, with regard to
payment of interest, the schedule of payments, receipts evidencing loan
disbursed by the plaintiff to the defendant. The defendant has neither
denied receipt of the loan nor it is the case of the defendant that the
plaintiff has not truly reflected the number of instalments paid by them,
but a stereo-typed defence has been raised that the documents were blank
and collusion between officers of the plaintiff, which are without any
substance. Against the cogent evidence produced by the plaintiff, there is
only oral denial which is not supported by any corroborative evidence by
the defendant.
27. Having regard to the loan agreement which has been placed on record and
the promissory note, I am satisfied that this suit is maintainable under the
provisions of Order 37 CPC, and the defence of the defendant is sham and
moonshine as no triable issue has been raised.
28. It would be useful to refer to a recent judgment rendered by another
Single Judge of this Court, where a similar plea as raised in the present
suit i.e. "Suit for a balance amount due on a loan account does not fall
under Order XXXVII of CPC" was raised. Following observations were
made by the Court in the case of Jindal Steel & Power Limited v. N.S.
Atwal, CS(OS) 713/2010:
"13. As far as the plea of the maintainability of the
suit under Order 37 of the CPC is concerned, though
undoubtedly there is no document on the basis
whereof, the defendant can be said to have admitted
the liability in the balance principal amount of Rs.
2,98,39,060/- towards the plaintiff but in my opinion,
in view of the subsequent admission by the defendant
of the liability in the principal amount claimed in the
suit, the same pales into insignificance. This Court, if
were to, inspite of such admission by the defendant,
go into technicalities as to the maintainability of the
suit under Order 37 of the CPC, would be lending
credence to the perception "the law is an ass - an
idiot" echoed by Mr. Bumble in Charles Dickens
'Oliver Twist'. Justice cannot be frustrated by
legalistics. It is the duty of every court to prevent its
machinery from being made a sham, thereby running
down the rule of law itself as an object of public
ridicule. It will and must prove any stratagem self
defeating if a party indulges in making the law a
laughing stock, for the court will call him to order.
Justice Krishna Iyer in Bushing Schmitz Private
Limited v. P.T. Menghani (1977) 3 SCR 312 quoted
with approval Lord Erskine "there is no branch of the
jurisdiction of this Court more delicate than that,
which goes to restrain the exercise of a legal right".
He further held "But the principle of
unconscionability clothes the court with the power to
prevent its process being rendered a parody". Once it
is clear that there is no dispute of the sum of Rs.
2,98,39,060/- being due from the defendant to the
plaintiff in the loan account, the Court will not enter
into an academic exercise and pronounce on
technicalities. The Supreme Court in T.
Arvindandam Vs. T.V. Satyapal, AIR 1977 SC 2421,
Liverpool & London S.P. & I Association Ltd. Vs.
M.V. Sea Success I (2004) 9 SCC 512 and ITC
Limited Vs. Debts Recovery Appellant Tribunal,
(1998) 2 SCC 70 has held that the Courts are not to
prolong litigations, the fate whereof is otherwise
clear and at the expense of other cases requiring
adjudication. Even if not under Order 37of the CPC,
the plaintiff under Order 12 Rule 6 CPC or under
Order 15 is entitled to a decree in the principal sum
of Rs. 2,98,39,060/-. Recently also, in Krishna Devi
Malchand Kamathia v. Bombay Environmental
Action Group, (2011) 3 SCC 363, the Supreme Court
observed that justice is only blind or blindfolded to
the extent necessary to hold its scales evenly; it is
not, and must never be allowed, to become blind to
the reality of the situation, lamentable though that
situation may be."
29. In the present case neither the defendant has disputed the receipt of the
loan amount in the sum of Rs.1.50 crores, which was deposited by the
plaintiff in the defendant‟s account nor deposit of the three instalments
paid by the defendant in part repayment/discharge of the loan amount
have been disputed. Moreover, even the signatures on the loan agreement
have not been disputed by the defendant. In view of the above, such
technical pleas of non-maintainability of the suit under Order XXXVII
CPC cannot be entertained by this Court.
30. Having regard to the fact of the case, written agreement, the pronote
signed by the defendant and taking into consideration the fact that no
triable issue has been raised by the defendant, the present leave to defend
application filed by the defendant is dismissed.
CS(OS) 217/2011
31. The suit is decreed as per the statement of accounts filed by the plaintiff
with the reply to the leave to defend application, with pendente lite and
future interest @8% per annum. Decree-sheet be drawn up accordingly.
G.S.SISTANI, J
MAY 20, 2014
ssn
