M/S Delhi Structures vs M/S Gulati Hospitality And Ors
2015 Latest Caselaw 3666 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                       CS(OS) 3184/2011

                                               Decided on: 06.05.2015

IN THE MATTER OF:
M/S DELHI STRUCTURES                               ..... Plaintiff
                   Through: Mr. Parveen Kumar Aggarwal, Advocate

                        versus

M/S GULATI HOSPITALITY AND ORS                   ..... Defendants
                    Through: Mr. Anshul Garg and Mr. Abhishek
                    Goyal, Advocates with D-2 in person.

CORAM
HON'BLE MS.JUSTICE HIMA KOHLI


HIMA KOHLI, J.(Oral)


I.A. 11737/2012 (by the defendant No.1 & 2 u/O XXXVII R3(5)
CPC)

1.

The present leave to defend application has been filed by the

defendants in a summary suit instituted by the plaintiff for recovery of

a sum of `54,45,000/-, being the value of three cheques issued in its

favour by the defendant No.1, towards payment of construction work

with material that was undertaken by it for the defendants.

2. As per the averments made in the plaint, the plaintiff/firm is a

building contractor and has undertaken a number of projects in and

outside Delhi. The defendant No.1 is a private limited company and

the defendant No.2 is a Director of the defendant No.1.

3. The plaintiff claims that in the month of March, 2008, the

defendants had approached it for undertaking construction of a hotel

on a plot of land owned by them and situated at Gurgaon and had

asked for a quotation for the said work. The plaintiff had forwarded its

quotation on 01.03.2008 and it had quoted the rate of `600/- per

square feet for the actual slab casted area. On 07.06.2008, the

defendants had executed a work order in favour of the plaintiff for

undertaking construction of the hotel building @ `600/- per square

feet, including steel and the plaintiff had successfully constructed the

hotel which is presently being run under the name, "Hotel Tulip Inn".

4. After the plaintiff had concluded the construction work, it raised

a bill on the defendants that was duly certified and verified on

29.01.2009, by Mr. Vimal Bajaj, an Architect and Interior Designer

appointed for the project by the defendants. In support of the said

submission, learned counsel for the plaintiff has drawn the attention of

the Court to page 8 of the documents filed under index dated

15.12.2011, which shows that a sum of `2,73,50,950/- had been

certified by the Architect on 29.1.2009 for being released in favour of

the plaintiff. Further, vide letter dated 05.12.2009, the Architect had

informed the defendants that the total extra items executed by the

plaintiff had been verified for a sum of `95,41,080/-.

5. Though it has not been so averred in the plaint, learned counsel

for the plaintiff submits that the defendants had released the amounts

payable in terms of the bills raised and certified by their Architect on

29.01.2009 and 05.12.2009, except for an amount of `85 lacs. Out of

the said outstanding amount of `85 lacs, the following three cheques

totalling to a sum of `54,45,000/- had been issued by the defendants :

 S.No.     Cheque No.   Drawn on           Date          Amount
 1.        603087       UCO Bank, Civil 24.06.2010 `19,80,000/-
                        Lines, Gurgaon.
 2.        603088       UCO Bank, Civil 24.06.2010 `19,80,000/-
                        Lines, Gurgaon.
 3.        603089       UCO Bank, Civil 24.06.2010 `14,85,000/-
                        Lines, Gurgaon.
                            Total                  `54,45,000/-

6. Counsel for the plaintiff submits that when the aforesaid cheques

were presented by the plaintiff to its banker for encashment, they

were returned vide memo dated 02.07.2010 with the remarks, "effect

not cleared, present again". When the plaintiff had re-presented the

said cheques, the defendants' banker had returned them vide memo

dated 06.10.2010, with the remarks, "payment stopped by the

drawer".

7. Aggrieved by the dishonour of the three cheques, the plaintiff

had served a legal notice dated 16.11.2011 on the defendant. Despite

receiving the aforesaid notice, the defendants had failed to respond,

thus compelling the plaintiff to institute the present summary suit,

based on the three cheques. Counsel for the plaintiff states that over

and above the value of the three cheques totalling to `54,45,000/-,

the plaintiff has also claimed interest on the said amount @ 18% per

annum, from the date of issuance of the said cheques, till realization.

8. In the leave to defend application filed by the defendants, they

have raised a defence to the effect that while undertaking the

construction of the hotel, the plaintiff had used poor quality of material

and had caused the death of a labourer at the site, due to which, a

case was registered against it. It has been further stated that the

construction of the project had got delayed on account of the plaintiff

and the hotel could not be completed before the Commonwealth

Games had commenced due to which the defendants had suffered

monetary losses.

9. The defendants have denied that the plaintiff had executed any

extra work at the site or that any amount was payable to it for the

same. As for the certification of the plaintiff's bills by Mr. Vimal Bajaj,

Architect and Interior Designer appointed the defendants for the

project, they have baldly denied the said certification, but have not

denied the authority vested in the said Architect to certify the bills

raised by the plaintiff. Nor have the defendants stated anywhere that

the bills, though certified by their Architect, had been disputed by

them and returned to the plaintiff.

10. Coming to the three cheques that were issued by the

defendants, they have stated that at the time when the said cheques

were handed over to the plaintiff, they were blank and were given only

to gain the plaintiff's confidence and that the plaintiff had not been

authorised to deposit the said cheques for encashment. Learned

counsel for the defendant contends that the plaintiff has misused the

cheques to cause wrongful gain to itself and wrongful loss to the

defendant No.1. He argues that the plaintiff has failed to demonstrate

as to how would a sum of `85 lacs or even a sum of `54,45,000/-,

being the value of the three cheques, be payable by the defendants.

11. It is pertinent to note that though no such plea was taken by the

defendants in their leave to defend application, learned counsel for the

defendants had orally submitted before the Court on 19.12.2014 that

the three cheques in question were issued by the defendants in the

year 2008 as security amount and they had been misused by the

plaintiff in the year 2010 in order to file the present suit. To

substantiate the said submission, he had sought time to obtain a

certificate from the defendants' banker to the effect that the particular

cheque book containing the disputed cheques at Sr.No. 60387 to

60389, had actually been issued in the year 2008.

12. At the request of the counsel for the defendants, the case was

adjourned to enable him to produce a certificate from the defendant's

Bank but the said certificate was not filed by the next date of hearing,

i.e., 10.02.2015. On 10.02.2015, counsel for the defendants had

expressed the defendants' inability to produce certificate on the

ground that his clients had misplaced the cheque book in question.

This Court had then observed that assuming that the defendants had

misplaced the cheque book in question, they could still approach their

banker for obtaining a certificate with regard to utilization of the said

cheque book. Accordingly, the defendants were granted another

opportunity to file a certificate issued by UCO Bank, Civil Lines,

Gurgaon in respect of the utilization of the cheque book in question.

13. The aforesaid certificate has not been filed. However, counsel

for the defendants states that he had filed some documents on

02.05.2015 but they are lying under objections. A copy of the

documents have been handed over across the board with a copy to the

other side and taken on record. A perusal of the details of the cheques

issued between 16.6.2010 to 18.6.2010 from the defendant's account

and enclosed by the defendants under index dated 02.05.2015 reveals

that the cheque book in question was not issued by the defendants'

banker in the year 2008 as claimed by the counsel for the defendants.

The cheque book starting from Sr.No.603083 and ending at

Sr.No.6038100 which includes the three cheques in question was

apparently issued by the Bank in the month of June, 2010. Pertinently,

the three cheques, subject matter of the present suit , bearing

Sr.No.603087, 603088 and 603089 are all dated 24.06.2010. The

statement of the defendants' Bank account as filed by them reflects

that the cheque at Sr.No.603083 which is three leaves before the

cheque at Sr.No. 603087, was issued by the defendants on

16.06.2010 and the cheque at Sr.No.603090 which is one after the

cheque at Sr. No.603089, was issued on 19.06.2010.

14. It is manifest from the above that the defendants' banker had

not issued the cheque book in question in the year 2008 as had been

urged by the counsel for the defendants. Rather, the said cheque

book was issued in the year 2010 and was utilized by the defendants

in the very same year. Further, a perusal of the statement of account

maintained by the defendants with UCO Bank, Civil Lines Branch,

Gurgaon for the period w.e.f. 15.06.2010 to 16.08.2010 reveals that

most of the cheques out of the aforesaid cheque book had been duly

encashed on being presented. In fact, one of the cheques at

Sr.No.603098 happens to be a self drawn cheque for a sum of

`50,000/- that was duly encashed by the defendants. Thus the entire

edifice sought to be raised by the defendants to justify the dishonour

of the three cheques crumbles to the ground, being a sham defence.

15. The law on the subject is well settled and has been duly

explained by the Supreme Court in several cases, including, the

decisions in the cases, Santosh Kumar vs. Bhai Mool Singh, (1958) 1

SCR 1211; Milkhiram (India) Pvt. Ltd & Ors. vs. Chamanlal Bros., AIR

1965 SC 1698; M/s Sunil Enterprises & Anr. vs. SBI Commercial &

International Bank Ltd., AIR 1998 SC 2317 and Mechelec Engineers

& Manufacturers vs. Basis Equipment Corporation, (1977) 1 SCR

1060, wherein it has been held that the question of granting leave to

defence has to be considered in the light of the following principles:

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

condition 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 set up 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.

16. In the case of Raj Duggal vs. Ramesh Kumar Bansal, reported at

AIR 1990 SC 2218, the Supreme Court had added a word of caution

and observed that if there is a triable issue, in the sense that there is

a fair dispute to be tried as to the meaning of a document on which

the claim is based or an uncertainty as to the amount actually due or

where the alleged facts are of such a nature that would entitle the

defendant to interrogate the plaintiff or to cross-examine his

witnesses, leave should not be denied. Thus, summary judgment

under Order XXXVII CPC ought not to be granted where there is a

serious conflict as to the matter of facts or where any defence or

issues relating to law arise, nor should the court reject the defence of

the defendant only on account of the inherent implausibility or its

inconsistency.

17. Coming to the defence raised by the defendants in the instant

case, it may be noted that they have not denied the fact that they had

issued three cheques in favour of the plaintiff, nor have they denied

the fact that when the said cheques were presented by the plaintiff for

encashment, they had directed their banker to stop the payment of

the said cheques and at that point in time, they do not deny that they

had insufficient funds in their account.

18. The plea of the defendants that they had handed over the said

cheques to the plaintiff only to gain their confidence and the plaintiff

was not authorized to deposit the said cheqeus for encashment, rings

hollow. It is unheard of that a holder of a negotiable instrument

issued in due course, is prohibited from presenting it for encashment,

unless and until there is a clear stipulation of this nature in the

contract governing the parties. So, the defendants' version that they

had issued the cheques in favour of the plaintiff for gaining their

confidence, is found to be rather implausible particularly when they

had already issued a work order for the project in favour of the

plaintiff. In a contract of this nature, where a contractor has agreed to

undertake construction work for the owner of the land, the question of

the owner offering any security by issuing cheques in favour of the

contractor as a confidence building measure for him to undertake the

work at the site, is unheard of. The said defence is complete

moonshine.

19. The second plea taken by the defendants that the plaintiff had

used poor quality of material and had caused the death of a labourer

at the site due to which, a case was registered against it, is also not of

any assistance to the defendants since it does not raise a triable issue,

as it is an undisputed position that the incident of death of a labourer

at the site had occurred much prior to the completion of the project.

Further, the defendants have not filed any document to demonstrate

that they had returned the bills raised by the plaintiff for the work

undertaken and had refused to make the payment on the ground that

inferior material had been used in the construction work; nor can the

delay in completion of the project be a plausible defence for the

defendants for seeking leave to defend the suit, particularly, when

they have failed to demonstrate from the contract executed between

the parties that there was any such stipulation imposed on the plaintiff

that the hotel project had to be completed before the inauguration of

the Commonwealth Games.

20. Lastly, having regard to the bald denial made by the defendants

in respect of the certification of the plaintiff's bills undertaken by their

own Architect, without disputing his authority to do so and in the

absence of taking a plea that the bills certified by their Architect had

been returned for any plausible reason, their stand that they have

raised triable issues, is devoid of merits. The defence raised by the

defendants is chimerical and delusive.

21. Even at this stage, learned counsel for the defendants has been

requested to obtain instructions from Mr. Manmohan Singh Gulati, the

Director of the defendant No.1/company if they are ready and willing

to offer a FDR/bank guarantee or the title deed of an immovable

property as security, for the Court to consider granting them

conditional leave to defend. He, however, expresses his unwillingness

to offer any such security. It is also relevant to note here that it was

at the request of the counsel for the defendants that the parties had

been referred to mediation vide order dated 01.11.2012, but the

matter was returned as unsettled.

22. For the reasons stated above, this Court is of the opinion that

the defendants have not raised any triable issue. Resultantly, the

leave to defend application filed by them has to be rejected. The

application is accordingly dismissed.

CS(OS) 3184/2011

1. At the outset, counsel for the plaintiff states that the defendant

No.3 has been wrongly impleaded as a party in the suit and requests

that the suit may be confined to the defendants No.1 and 2 alone.

2. For the reasons recorded in the order passed in I.A.

11737/2012, the leave to defend application filed by the defendant

No.1 & 2 has been dismissed. In view of the aforesaid submissions

made by the counsel for the plaintiff, defendant no.3 is permitted to

be deleted from the memo of parties.

3. The present suit is decreed against the defendant No.1 & 2 and

the plaintiff is held entitled to recover a sum of `54,45,000/- from

them w.e.f. the date of issuance of the cheques in question, i.e.,

24.06.2010, alongwith pendente lite and future interest payable @

10% per annum. If the defendant No.1 & 2 pay the decreetal amount

to the plaintiff within three months from today, then the interest

payable on the principal amount will be maintained @ 10% p.a.,

failing which the interest on the principal amount shall be raised to

12% per annum, till realization. The plaintiff is also awarded costs of

the suit.

4. Decree sheet be drawn accordingly.

5. The suit is disposed of.

                                                     (HIMA KOHLI)
MAY 06, 2015                                            JUDGE
rkb/sk/mk