Kuldeep Sobti vs Pahwa Buildtech Pvt Ltd & Anr
2015 Latest Caselaw 3513 Del

$~
*IN THE HIGH COURT OF DELHI AT NEW DELHI
                                             Date of Reserve:20.04 2015
                                             Date of Decision:30.04.2015

+     CS(OS) 1429/2013

      KULDEEP SOBTI                                  ..... Plaintiff
                          Through         Mr. Arun Khosla and
                                          Mr.Shreeanka
                                          Kakkar, Advocates.

                          versus

      PAHWA BUILDTECH PVT LTD & ANR ..... Defendants
                  Through  Mr.Dinesh Garg, Ms.Rachna
                           Agrawal and Ms.Uditi Khattar,
                           Advocates for D-1 & 2.

      CORAM:
      HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J.

IA No. 3268/2014 (leave to defend)

1. This is an application under Order 37 Rule 3 (5) CPC for grant of unconditional leave to defend the suit.

2. The accompanying suit is filed for recovery of a sum of Rs.22,02,65,740/- jointly and severally against the defendant. As per the plaint the defendant companies jointly entered into an Agreement to Sell dated 6.3.2011 with Dr. Jawahar Lal Chakravarthy in respect of property No.38/61 West Punjabi Bagh, New Delhi comprising of plot measuring

666.66 sq.yds with superstructure for a total consideration of Rs.28 crores. By 15.6.2011 the defendants had paid to the vendors, namely, Dr. Jawahar Lal Chakravarthy Rs.12 crores. At that stage, the defendants entered into an Agreement with the plaintiff on 18.6.2011. The defendants agreed to further sell to the plaintiff half undivided portion of the said property for a consideration of Rs.14 crores. Plaintiff paid to the defendants an advance of Rs.6 crores at that time.

3. Subsequently, it transpired that the vendors did not honour their commitment. The defendants filed a civil suit for specific performance of the Agreement dated 6.3.2011 in this Court being CS(OS)1878/2011. At that time it is stated that certain interim orders were passed by the Court whereby the defendants were to deposit a sum of Rs.16 crores in the Court in order to make up the total consideration of Rs.28 crores. The plaintiffs and defendants entered into another agreement dated 25.8.2011 whereby the plaintiff was obliged to pay half portion of the total consideration of the property, his share being Rs.14 crores. As the plaintiff had already paid Rs.6 crores, he paid another sum of Rs.8 crores to the defendant. Pursuant to the payment by the plaintiff, defendant deposited Rs.16 crores in Court.

4. Subsequently, the plaintiff learnt that the defendants had agreed to compromise the suit with the vendors without any alleged loss or gain accruing to them by the refund of the said sum of Rs.12 crores received by the vendors from the defendant and a refund of Rs.16 crores with accumulated interest which was lying deposited in this Court. The plaintiffs on learning about the settlement between the vendors and the defendants, moved an intervention application in the said suit filed by the

defendants against the vendors. Later on the plaintiffs withdrew the application and the suit was settled by the defendants. Plaintiffs have now filed the present suit. The basis for claiming Rs.22,02,65,740/-is on account of refund of Rs.6 crores paid pursuant to the first Agreement dated 18.6.2011, Rs.8 crores paid pursuant to the second agreement dated 25.8.2011 and Rs. 6 crores in terms of the stipulations in the Agreement dated 18.6.2011 which stipulated that in case the defendant failed to transfer half portion of the property in favour of the plaintiff, the plaintiff would be entitled to refund of double of the amount received by the defendant i.e. double of Rs.6 crores paid pursuant to agreement dated 18.06.2011.

5. In addition, a sum of Rs. 2,02,65,740/- was claimed on account of the interest received by the defendants with the money deposited in Court. The defendants had received about Rs.2,30,00,000/- as interest on the sum of Rs.16 crores that was deposited in Court. The plaintiff claims that out of the 16 crores deposited in Court Rs.14 crores was the sum paid by the plaintiffs. Hence, it is urged that from the interest of approximately Rs.2.30 crores received, the plaintiff would be entitled to interest in the same proportion i.e. 14/16.

6. The defendants have filed the leave to defend application. In the said leave to defend application the defendants have taken the following defence:-

(i) It is urged that the plaint is liable to be dismissed on account of non verification of the plaint. The plaintiff has signed the plaint but has not verified the same as per the requirement of Order VI Rule 15 CPC. Reliance is placed on Uday Shankar Triyar vs. Ram Kalewar Prasad

Singh and Anr, 2006 1 SCC 75 and Civcon Engineers vs. Shri Puran Singh Sethi 105(2003) DLT 202 to contend that the suit is liable to be dismissed.

(ii) It is next urged that the application filed by the plaintiffs for issuance of summons of judgment i.e. IA No.19774/2013 has been signed by one Deepak Malhotra purported to be the power of attorney holder. He has also signed an affidavit in respect of the application. It is urged that the power of attorney which is placed on record is defective as it is not on any stamp paper and cannot be construed to be a power of attorney. It is urged that the affidavit is also of no value as the alleged power of attorney holder is not aware of any facts of the case. Reliance is placed on Janki Vashdeo Bhojwani and Anr. vs. Indusind Bank Ltd. and Ors, AIR 2005 SC 439; and Man Kaur (dead) by LRS. vs. Hartar Singh Sangha, (2010) 10 SCC 512 to contend that the affidavit in support of the application has no value. It is urged that because of this defect there is no application for summons for judgment on record.

(iii) It is next urged that the claim of the plaintiff for Rs.6 crores on the ground that the defendant has failed to adhere to the terms of the agreement dated 18.6.2011 is misplaced. Admittedly, the Agreement dated 18.6.2011 has a clause whereby in case the defendants failed to execute the sale deed in favour of the plaintiffs as envisaged, the plaintiff would be entitled to refund of double the earnest money. However, it is urged that this Agreement dated 18.6.2011 was superceded by the second agreement dated 25.8.2011. The second agreement dated 25.8.2011 has no such clause imposing penalty on the defendant. Hence, it is urged that the claim for Rs.6 crores is misplaced.

(iv) It is further urged that the contention of the plaintiff seeking a decree jointly and severally against the defendant is a misconceived stand. It is pointed out that pursuant to the Agreement dated 18.6.2011 and 25.8.2011 the plaintiff has paid Rs.7 crores to defendant No.1 and Rs.7 crore to defendant No.2 being a total of Rs.14 crores. Hence, equal payment has been paid to defendants No.1 and 2 respectively. It is the respective defendants who would be liable to repay the plaintiffs the amount that has been so received. The Agreement does not envisage any joint and several liability, as is being argued by the plaintiff.

(v) It is lastly urged that no decree can be passed under Order 37 CPC based on an admission. Reliance is placed on Juki Singapore Pte Ltd. vs. Jay Cee Enterprises Pvt. Ltd. & Anr.,157(2009) DLT 580.

7. Learned counsel for the defendant has submitted that as far as defendant No.1 is concerned, for the purpose of sorting out the matter the said defendant is ready to pay its share of Rs.7 crores within a short period of 2-3 weeks alongwith a sum of Rs.1.15 crores being 50% of the interest recevied from the Court on deposit of Rs.16 crores in the suit filed against the vendors. He submits that this offer has been made on several occasions to the plaintiff with the request that on receipt of the said amount defendant No.1 be dropped from the proceedings. It is stated that plaintiffs have refused to agree to the said suggestion and have been insisting on the decree to be joint and several. It is stated that the plaintiff is also not willing to give up the claim for Rs.6 crores based on alleged defaults by the defendants pursuant to the first Areement dated 18.6.2011.

8. Learned counsel appearing for the plaintiff has reiterated the contentions in the plaint. He has relied upon documents, namely, the

Agreement dated 18.6.2011 and 25.8.2011 to contend that these documents unequivocally demonstrate his dues as claimed by the plaintiff. Reliance is also placed on the order dated 12.4.2013 passed by this Court on the application for intervention filed by the plaintiff in CS(OS)1878/2011 (suit filed by defendants against the vendors). In the said order the submission of counsel for defendants has been recorded that the defendants are willing to pay to the intervenor (plaintiff herein) Rs.14 crores with 50% of the interest accured on the Rs.16 crores deposited in Court.

9. I will now deal with the submissions of the defendant. Coming to the first submission about non verficiation of the plaint. A perusal of the plaint shows that it is signed by the plaintiff. However, after the verification the plaintiff has not affixed any signatures. Order 6 Rule 15 (1) CPC reads as follows:-

"15. Verification of pleadings.- (1) Save as otherwise provided by any law for the time being in force, every pleading shall be verified at the foot by the party or by one of the parties pleading or by some other person proved to the satisfaction of the court to be acquainted with the facts of the case."

10. In Uday Shankar Triyar vs. Ram Kalewar (supra) the Supreme Court held as follows:-

"17. Non-compliance with any procedural requirement relating to a pleading, memorandum of appeal or application or petition for relief should not entail automatic dismissal or rejection, unless the relevant statute or rule so mandates. Procedural defects and irregularities which are curable should not be allowed to defeat substantive rights or to cause injustice. Procedure, a hand-maiden to justice, should never be made a tool to deny justice or

perpetuate injustice, by any oppressive or punitive use. The well recognized exceptions to this principle are :

i) where the Statute prescribing the procedure, also prescribes specifically the consequence of non-compliance.

ii) where the procedural defect is not rectified even after it is pointed out and due opportunity is given for rectifying it;

iii) where the non-compliance or violation is proved to be deliberate or mischievous;

iv) where the rectification of defect would affect the case on merits or will affect the jurisdiction of the court.

v) in case of Memorandum of Appeal, there is complete absence of authority and the appeal is presented without the knowledge, consent and authority of the appellant;"

11. Similarly, this Court in Civcon Engineers vs. Shri Puran Singh Sethi (supra) held that on account of non compliance with mandatory legal provisions leave to defend the suit ought to be granted.

12. There is prima facie merit in the contention of the defendant. The defect of the plaint being without verification has been pointed out to the plaintiff on several occasions. The plaintiff has failed to take steps to remedy the defect. Though it may not be appropriate to reject the plaint on this ground, at this stage, this would be an important ground to consider whether to grant leave to defend to the defendants.

13. As far as the second contention is concerned, in my opinion merely because the application for issuance of summons for judgment is signed by a power of attorney holder and is supported by an affidavit of power of attorney holder would not be sufficient ground to per se grant leave to defend to the defendant. In this case the original plaint itself has been

supported by an affidavit of the plaintiff. Hence, there would be no merit in the present contention.

14. Coming to the third contention regarding supercession of the first agreement dated 18.6.2011 by Agreement dated 25.8.2011. The Agreement dated 25.8.2011 spells out the terms and conditions agreed between the parties. It refers to the earlier agreement dated 18.6.2011 between the parties as Bayana Agreement. It notes that the plaintiff has paid Rs.14 crores to the defendants. The details of payments received by the defendants are mentioned which includes the sum of Rs.6 crores paid by the plaintiff pursuant to the first agreement dated 18.6.2011. Prima facie, it is implicit in this Agreement that it supercedes the terms and conditions of the first agreement dated 18.6.2011 which has been described as a bayana agreement. That can be the only explanation why the second agreement was executed. The second agreement does not have any stipulation which warrants payment of any penalty amount by the defendants in case they are unable to transfer 50% undivided rights in the property in question to the plaintiffs unlike the earlier agreement i.e. bayana agreement. Accordingly, there are enough reasons to permit the defendants to defend the claim of the plaintiffs claiming Rs.6 crores as damages/penalty pursuant to Agreement dated 18.6.2011.

15. I will now deal with the fourth submission of the defendant, namely, that the liability of the respective defendants is not joint and several. A perusal of the agreement dated 25.8.2011 between the parties shows that the plaintiff has paid about equal amounts to the different defendants. Nowhere does the agreement stipulate that the liability of the defendants is joint and several. The plaintiff has also been unable to

explain as to how the agreement dated 25.8.2011 can be construed to imply that the liability of the defendants is joint and several. In the absence of any explanation, in my opinion, prima facie, there is merit in the contention of the defendants that the liability is of the individual defendants in equal proportion.

16. Based on the above, to decide as to whether leave to defend is to be given and on what terms the same has to be given if so given reference may be had to the judgment of the Supreme Court in M/s Mechalec Engineers & Manufacturers v. M/s Basic Equipment Corporation AIR 1977 SC 577 in para 8, the Hon'ble Supreme Court has held as follows:

"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 17 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 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."

17. Before I decide what relief is to be given, if any, in my opinion, in the facts of the present case it is necessary to first look at order dated 12.4.2013 in CS(OS)1878/2011, namely, the suit filed by the defendants against the vendor. The relevant portion of the order reads as follows:-

"5.The counsel for the plaintiffs on instructions states that the plaintiffs are willing to pay to the intervenor Rs.14 crores together with 50% of the interest accrued on entire Rs.16 crores after withdrawal thereof from the Court. It is further stated that the intervenor had earlier agreed to the settlement and whereafter only statement before the JR was made on 9th April, 2013 and has now had an afterthought."

18. The plaintiff did not accept the above offer as made by the defendants in CS(OS)1878/2011. The reason apparently was that according to the plaintiff it was entitled to a further sum of Rs.6 crores as provided in the first agreement dated 18.6.2011. In addition, he was entitled to receive a higher proportion of the interest that was payable on the sum deposited in Court in the said suit. Hence, the plaintiff has filed the present suit seeking Rs.22,02,65,740/-. From the submissions of learned counsel for the parties it appears that now defendant No.2 is having some financial difficulty and in case a decree is passed against defendant No.1 and defendant No.2 separately, it appears that the plaintiff may have difficulty in recovering the decreed amount from defendant No.2. Hence the claim that liability is joint and several.

19. In Court, learned counsel appering for the defendants has on behalf of the defendant No.1 already repeated his submissions that he is willing to pay Rs.7 crores as the share of defendant No.1 plus a sum of Rs.1,15,00,000/- being share of the plaintiff from the interest received in CS(OS)1878/2011 provided the plaintiff on receipt of the said sum from defendant No.1 drops defendant No.1 from the array of proceedings. Plaintiffs have not accepted the said offer of defendant No.1.

20. I have already held above that prima facie the plaintiff may not have any merits in his claim for a sum of Rs.6 crores based on the alleged default by the defendants pursuant to first Agreement dated 18.6.2011 or on the second contention of the plaintiff regarding the liability being joint and several. In view of my said prima facie findings and in view of the statement made by the defendants in order dated 12.4.2013 in

CS(OS)1878/2011, I grant conditional leave to the defendants to defend the suit subject to deposit of Rs.7 crores each i.e. Rs.7 crore by defendant No.1 and Rs.7 crores by defendant No.2 within six weeks from today in Court. The said amount may be deposited by the defendants respectively within six weeks from today. After deposit of the amount, the defendants may file written statement within four weeks thereafter. CS(OS)1429/2013

21. List on before the Joint Registrar on 27.07.2015.

(JAYANT NATH) JUDGE APRIL 30, 2015