M/S Innovative Textiles Pvt. Ltd. ... vs Sh. Hem Chand Sharma & Anr.
2014 Latest Caselaw 5176 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                               Judgment reserved on: 8th August, 2014
%                          Judgment pronounced on: 15th October , 2014

+                     I.A. No.611/2010 in CS(OS) No.1079/2009

       M/S INNOVATIVE TEXTILES PVT. LTD & ANR ..... Plaintiffs
                    Through Mr.Salar M. Khan, Adv.

                           versus

       SH. HEM CHAND SHARMA & ANR             ..... Defendants
                    Through Mr.S.S.Katyal, Adv. with
                            Mr.Sanjay Katyal, Adv.

       CORAM:
       HON'BLE MR.JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J.

1. By this order I propose to decide the pending application being I.A. No.611/2010 filed by the defendants, under Order VII Rules 10 & 11 read with Section 151 CPC.

2. The prayer made in the application is to reject the plaint, as the suit under Order XXXVII CPC is not maintainable and also to return the plaint for presentation in the Court of proper jurisdiction, as this Court has no jurisdiction.

3. Originally, the plaintiffs filed the suit against the defendants for recovery of a sum of Rs.2,20,50,000/- under Order XXXVII CPC. Brief facts of the matter are that in terms of agreement to sell dated 28th September, 2006, the plaintiff No.1 paid a sum of

Rs.2,20,50,000/- to defendant No.1 as earnest money towards the total sale consideration of Rs.7.35 crores qua the sale of the property, being 61 Bighas 5 Biswas of land situated at Village Baterh, Pargana Doon, Tehsil Kasauli, District Solan, Himachal Pradesh. The receipt with regard to the said amount was also executed by defendant No.1.

4. The suit as well as the interim application filed by the plaintiffs was listed first time before Court on 29th May, 2009. Summons in the main suit and notice in the application were issued to the defendants. An interim order was also passed against the defendants restraining them from selling, transferring, mortgaging, leasing out or creating third party interest in any manner whatsoever in the properties: (i) 5203, DLF, Phase-4, Gurgaon, Haryana, and (ii) Kothi No.13, Sector-7, Panchkula. After service of the summons, the defendants filed two applications; one under Order VII Rules 10 & 11 CPC being I.A. No.611/2010 (application under consideration), and another under Order XXXIX Rule 4 CPC being I.A. No.594/2010. An application being I.A. No.17564/2011 under Order XXXVII Rule 3(5) CPC for leave to defend was also filed by the defendants.

5. By order dated 16th July, 2013, the plaintiffs' interim application being I.A. No.7689/2009 and the defendants' application under Order XXXIX Rule 4 CPC being I.A. No.594/2010 were disposed of by confirming the ex parte ad-interim order dated 29th May, 2009. By the same order, the defendants' application being I.A.

No.17564/201 was also disposed of granting them the leave to defend.

6. After completion of the pleadings and admission/denial of the documents, the matter was placed before Court on 4th March, 2014 for framing of issues as well as hearing of pending application. On the said date, the following issues were framed:-

(i) Whether the Delhi court has the jurisdiction to try and decide the present suit? OPP.

       (ii)    Whether the suit is liable to be rejected under Order
               7 Rule 11(a) CPC?                         OPD

(iii) Whether the plaintiff is entitled to a decree of Rs.2,20,50,000/-? If so, to what effect? OPP.

(iv) Whether the plaintiff is entitled to compound interest at the rate of 18% per annum with effect from 28.09.2006? If so, on what amount and for what period? OPP.

(v) Relief.

7. After framing of the issues, the plaintiffs filed the list of witnesses as well as evidence by way of affidavit. The suit is now listed for the plaintiffs' evidence on 25th November, 2014.

8. When the matter was listed before Court on 8th August, 2014, the learned counsel for the defendants insisted for hearing of the present application. The suggestion was also made to the learned counsel for the defendants to expedite the trial instead of hearing of the present application. However, counsel was not agreeable for the same. He has also failed to give any explanation why at the time of framing of issues, he did not press his point to treat issues No.1 &

2 as preliminary issues. This Court is left with no option but to decide the present application in accordance with law.

9. Learned counsel for the defendants has submitted that this Court does not have the territorial jurisdiction in the present case, therefore, the plaint is liable to be rejected under Order VII Rule 10 CPC. As regards Order VII Rule 11 CPC, the defendants submit that the suit of the plaintiffs under Order XXXVII CPC is not maintainable, as there is no liability, debt or liquidated demand which the defendants owe to the plaintiffs. The refund of the earnest money was dependent upon various conditions as laid down in the agreement to sell dated 28th September, 2006. The plaintiffs are guilty of not fulfilling those conditions. Therefore, the summary suit is not maintainable, as the plaintiffs have failed to disclose any cause of action which would entitle them to file the present summary suit.

10. Learned counsel for the plaintiffs on the other hand states that admittedly, the defendants have received the earnest money for the sum of Rs.2,20,50,000/- from the plaintiffs. The suit property is also with the defendants. The present suit is filed for recovery of the said amount which was received by the defendant. As the receipt of the amount is the admitted position, therefore, the suit under Order XXXVII CPC is maintainable.

11. Various decisions were referred by both parties but I feel that each case has to be determined as per its own merit.

12. Having heard the learned counsel for both the parties, I am of the considered view that the present application is liable to be dismissed, for the following reasons:-

(a) Issues No.1 & 2 have already been framed which are raised by the defendants in the present application.

(b) The plaintiffs have invoked the jurisdiction of this Court in view of the specific statement made in para 21 of the plaint which reads as under:-

"21. That the Plaintiffs have their Registered offices at Delhi. Various meetings were also held by the parties prior to entering into the said Agreement to Sell dated 28.09.2006 at Delhi. The Plaintiff No.1 paid a sum of Rs. 2,20,50,000/- to the Defendant No.1 as earnest money towards the sale consideration of the said property on 28.09.2006 vide Cheque No.2907051 issued at Delhi, dated 28.09.2006 drawn on HDFC Bank Ltd., New Delhi. The Agreement dated 17.10.2006, by which it was agreed that in case of any eventuality of cancellation of "Agreement to Sell" and refund of Rs. 2,20,50,000/- from the Defendant No.1, the amount will be directly refunded to Plaintiff No.2 by Cheque/DEMAND DRAFT in their favour, was entered into between the Defendant No.1 and the Plaintiff No.1 at Delhi. Therefore, this Hon'ble Court has the territorial jurisdiction to entertain the present suit as filed by the Plaintiffs."

(c) It is the settled law that at the time of considering the application under Order VII Rules 10 & 11 CPC, the averments made in the plaint and documents filed alongwith the plaint have to be examined. No doubt, the defendants in their written statement have denied all the averments made in para 21 of the plaint, but

for the purpose of deciding this application, the contents of the written statement are irrelevant. The plaint cannot be returned at this stage. The issue of jurisdiction has already been framed on 4th March, 2014 and the evidence has been produced by the plaintiffs on this issue. Ultimately, if the Court will come to the conclusion that this Court shall have no jurisdiction, the suit of the plaintiffs would be dismissed for lack of jurisdiction. The said issue in any way has to be determined. Thus, the submissions of the defendants at this stage are rejected in view of specific statement made in the plaint.

(d) As far as the cause of action is concerned, the plaintiffs have made the specific statement in paras 18 to 20 of the plaint, which read as under:-

"18. That criminal proceedings have also been initiated against the Defendants in the aforementioned facts for offences committed by them under Section 420 of the Indian Penal Code and a First Information Report to that effect has been filed by the Plaintiffs in the Police Station Connaught Place on 25.02.2007.

19. In view of the failure of the Defendants to fulfil their obligations under the Agreement to Sell dated 28.09.2006 and the Agreement dated 17.10.2006 and to refund the amount of Rs.2,20,50,000/- received by them as earnest money as per terms and conditions agreed between the parties, the aforesaid "Agreement to Sell" stands cancelled and the Plaintiffs are left with no option but to approach this Hon'ble Court for recovery of the aforementioned amount. Hence, the present suit.

20. That the cause of action for filing the present suit for recovery arose on 28.09.2006 when the Plaintiff No.1 and the Defendant No.1 entered into the aforesaid Agreement to Sell and when pursuant thereto the Defendant No.1 received a sum of Rs. 2,20,50,000/- as earnest money. The cause of action further arose when the Plaintiff No.1 and the Defendant No.1 entered into a subsequent Agreement at Delhi on 17.10.2006 whereby it was agreed between the parties that instead of Plaintiff No.1, its sister concern, i.e. Plaintiff No.2 would be entitled to get the Sale Deed executed in its favour on the basis of the earlier Agreement to Sell dated 28.09.2006 entered into between the Plaintiff No.1 and the Defendant No.1. It further arose when the Plaintiffs came to know that the said property had been mortgaged to the State Bank of India by the Defendants against a loan obtained by them. It also arose on or about 30.01.2007, when the State Bank of India issued a Notice under the Securitization Act, 2002 against the said property, declaring the same to be a Non Performing Asset (NPA), as the total amount outstanding against the loan account of the Defendants was about Rs.12 Crores. It further arose when the Defendants denied the receipt of the aforesaid earnest money and when they said that the Agreement to Sell may be deemed to have been terminated on their part. Since the Defendants have made no payment, the cause of action is still subsisting and continuing."

(e) As already mentioned that the Court at this stage is required to look to the averments made in the plaint and not the defence set up by the defendants, the question whether the plaint discloses any cause of action is to be decided by looking at the averments contained in the plaint itself. The plaint cannot be

rejected in view of the statements made in the plaint and the documents filed along with the plaint. This Court is prima facie satisfied that the plaint discloses the cause of action. Whether the suit under Order XXXVII CPC is maintainable or not, the said aspect will also be decided at the time of final hearing of the suit.

(f) It is the admitted position that the leave to defend was granted to the defendants without any condition. The matter is already coming up for plaintiffs' evidence on 25th November, 2014. I am not inclined to allow the prayer made in this application in view of averment made in the plaint and facts in the matter.

13. Under these circumstances, the present application is dismissed.

CS(OS) No.1079/2009

List before the Joint Registrar on 25th November, 2014, the date already fixed.

(MANMOHAN SINGH) JUDGE OCTOBER 15, 2014