Inventa Cleantec Pvt. Ltd vs Amit Mudgal
2016 Latest Caselaw 5974 Del

          *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                    Date of decision: 15th September, 2016

+                                RFA No.605/2015

       INVENTA CLEANTEC PVT. LTD.                 ... Appellant
                   Through: Mr. Ashim Vaccher, Adv.

                                 Versus

       AMIT MUDGAL                                        ..... Respondent

                          Through:      Mr. Manu Nayar and Ms. Meenakshi
                                        Chopra, Advs.
CORAM:-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1. This first appeal under Section 96 of the Code of Civil Procedure, 1908

(CPC) impugns a decree dated 30th May, 2015 of the Court of the Additional

District Judge (ADJ)-03(Central), Tis Hazari Courts, Delhi for recovery of

Rs.4,79,371/- along with interest at 12% per annum from the date of filing of

the suit i.e. from 13th October, 2014 till realisation in Suit No.290/2014 under

Order 37 of the CPC filed by the respondent, for recovery of Rs.5,49,678/- with

pendente lite and future interest @ 24% per annum, as a consequence of

dismissal of the application filed by the appellant for leave to defend.

2. Notice of the appeal was issued and subject to the appellant depositing a

sum of Rs.3,18,183/- with this Court and which is reported to have been

deposited, execution stayed. Vide subsequent order dated 22nd February, 2016

the Trial Court record was requisitioned, the ad interim order made absolute

and the appeal admitted for hearing and considering the fact that in the event of

the appeal being allowed the matter will have to be remanded the appeal posted

for hearing on 11th May, 2016.

3. The counsels were heard on 11th May, 2016. However certain proposals

for settlement were also exchanged on that date; hence the matter adjourned to

16th May, 2016. No settlement could be arrived at between the parties and on

16th May, 2016 judgment was reserved.

4. The respondent instituted the suit from which this appeal arises, for

recovery of Rs.5,49,678/-, as aforesaid under Order 37 of the CPC pleading (i)

that the respondent/plaintiff is in the business of stainless steel pipes, pipe

fittings and industrial valves and the appellant/defendant had been placing

orders on the respondent/plaintiff from time to time and the respondent/plaintiff

supplying the said goods to the appellant/defendant as per the orders placed; (ii)

that a sum of Rs.4,79,371/- was outstanding from the appellant/defendant as per

bills/invoices/ledger accounts maintained by the respondent/plaintiff; (iii) that

in lieu of the aforesaid outstanding and for discharge of his legal liability, the

appellant/defendant issued cheques for Rs.1,50,000/-, Rs.68,183.20p and

Rs.1,00,000/- in favour of the respondent/plaintiff; (iv) that the

respondent/plaintiff presented the said cheques for clearance but the same were

returned unpaid for the reason "payment stopped by the drawer"; (v) though the

appellant/defendant had been meting out assurances to make payment but had

not paid; and, (vi) that besides the principal amount of Rs.4,79,371/-, a sum of

Rs.70,307/- was also due from the appellant/defendant to the

respondent/plaintiff towards interest at 24% per annum w.e.f. 21 st February,

2014 till filing of the suit.

5. The appellant/defendant entered appearance in the suit and thereafter

applied for leave to defend pleading (i) that the respondent/plaintiff was the

regular supplier of stainless steel raw material and pipes to the

appellant/defendant and payment was done on account basis; (ii) dispute arose

when the goods supplied by the respondent/plaintiff to the appellant/defendant

were rejected by the appellant/defendant due to their inferior quality; (iii) the

rejected material was negotiated to be returned to the respondent/plaintiff with

a Debit Note which was accepted by the respondent/plaintiff; (iv) the balance

amount was paid through two cheques which were dishonoured by the

appellant/defendant‟s banker as the balance material supplied by the

respondent/plaintiff was also rejected and the payment of the cheques stopped;

(v) that the suit was not maintainable under Order 37 of the CPC; (vi) the

Courts at Delhi had no territorial jurisdiction; and, (vii) that the plaint does not

conform to the requirements of Order 37 of the CPC.

6. Though a reply of the respondent/plaintiff to the application of the

appellant/defendant for leave to defend as well as the rejoinder of the

appellant/defendant thereto are on the record of the Trial Court but neither did

the counsels during the hearing refer thereto nor is any need felt to refer thereto.

7. The learned ADJ dismissed the application of the appellant/defendant for

leave to defend and axiomatically decreed the suit finding/observing/holding (i)

that the claim of the respondent/plaintiff in the suit was for outstanding price of

the goods sold; (ii) the appellant/defendant had neither disputed the placing of

the purchase order nor the receipt of the goods nor the issuance of the cheques

in discharge of the liabilities and had also admitted stopping payment of the

said cheques; (iii) the statement of account placed on record and the invoices

signed on behalf of the appellant/defendant were not disputed; (iv) it had not

been shown that there was a condition or stipulation in the contract that the

payments would be subject to rejection or approval of the goods that were

delivered; (v) a perusal of the documents filed by the respondent/plaintiff show

the invoices raised by the respondent/plaintiff to have been signed by both the

parties; (vi) such invoices have been held by the Courts to be written contract

between the parties; (vii) as per the term of the invoices they were subject to

Delhi Courts jurisdiction; (viii) the suit was very well within the ambit of Order

37 of the CPC; (ix) the claim in the suit was for outstanding amount that

remained payable against the goods admittedly received by the

appellant/defendant and against which payments were also released through

cheques; (x) the plea that the payment of the cheque was stopped because the

goods were rejected is not tenable; (xi) thus no triable issue arises; (xii) "in a

suit filed under summary procedure, filing of the statement of account along

with the negotiable instruments admittedly issued by the defendant is sufficient

to establish the claim, particularly when the signatures on such cheques are not

disputed and stopping payment for the cheques is admitted"; and, (xiii) though

the respondent/plaintiff had claimed interest at 24% per annum but award of

interest at 12% per annum appeared appropriate.

8. The counsel for the appellant/defendant has argued that of the three

cheques, the cheque for Rs.1,50,000/- was not even presented by the

respondent/plaintiff for payment.

9. On enquiry it was informed (i) that no proceedings under Section 138

of the Negotiable Instruments Act, 1881 also were taken out by the

respondent/plaintiff; (ii) that the learned ADJ has proceeded on the

erroneous premise that the suit was for recovery of the entire amount of the

cheques; (iii) that the cheques were of a total value of Rs.3,18,183/- only

while the principal amount claimed in the suit was of Rs.4,79,371/-; (iv) that

the learned ADJ has not considered that the suit was not even maintainable

under Order 37 of the CPC; and, (v) that the suit in fact was for recovery of

the balance due at the foot of the account and which has been held by this

Court in GE Capital Services India Vs. Dr. K.M. Veerappa Reddy 224

(2015) DLT 1 and in judgment dated 23rd January, 2012 in RFA

No.202/2011 titled M/s. K.&K Health Care Pvt. Ltd. Vs. M/s. Pehachan

Advertising to be not maintainable under Order 37 of the CPC. (I may add

that the same Hon‟ble Judge has further expounded on the subject in IFCI

Factors Ltd. Vs. Maven Industries Ltd. 225 (2015) DLT 32).

10. Per contra the counsel for the respondent/plaintiff has drawn attention to

the documents filed by the respondent/plaintiff on the Trial Court record and

comprising of invoices raised by the respondent/plaintiff on the

appellant/defendant and the account of the appellant/defendant maintained in

the ledger of the respondent/plaintiff showing a sum of Rs.4,79,371/- to be

outstanding after adjusting the payments made by the appellant/defendant from

time to time against the amount of the invoices raised by the

respondent/plaintiff on the appellant/defendant. Reliance is placed on (i) M/s.

Fiitjee Ltd. Vs. Dr. Kanwal Sujit (2012) 191 DLT 408; (ii) SICOM Ltd. Vs.

Prashant S. Tanna AIR 2004 (Bom) 186; and, (iii) Krishan Lal Arora Vs.

Gurbachan Singh 2015 Supreme (Del) 2160.

11. As would be obvious from the above, before addressing the question

whether the plea of the appellant/defendant of rejection of the goods constitutes

a triable issue, the first question to be adjudicated is the maintainability of the

suit under Order 37 of the CPC. If the suit were to be held to be not

maintainable under Order 37 of the CPC, the question of whether the plea of

rejection of the goods raises a triable issue will not arise as in that case the suit

will have to be tried as an ordinary suit.

12. The counsel for the appellant/defendant is found to be correct in his

contention that the learned ADJ has not really addressed the issue of

maintainability of the suit though a lip service has been paid thereto. A reading

of the order of dismissal of the application for leave to defend indicates that the

learned ADJ proceeded on the premise that the cheques issued were for the

entire amount claimed in the suit. The fact that the cheques issued were for a

lesser amount than claimed as principal amount due in the suit appears to have

been glossed over.

13. To be fair to the counsel for the respondent/plaintiff, he also sought to

justify the maintainability of the suit as for recovery of balance amount due of

the invoices raised and not as based on the dishonoured cheques. Though the

invoices are not bearing the signatures of the appellant/defendant at the places

earmarked thereon for "Customer‟s Signatures" but it was stated that the

signatures otherwise appearing on five of the nine invoices of one Mr. Murari

Lal are on behalf of the appellant/defendant and that the appellant/defendant in

any case had not disputed the said invoices or receipt of the goods thereunder.

In response to a Court query, it was stated that once a suit under Order 37 lies

for recovery of such invoice amount, there was no reason why it should not lie

for the balance of the total amount of the invoices after adjusting the payments

made from time to time.

14. Though the plaintiff is found to have filed the invoices along with the

plaint but the plaint is conspicuously silent with respect thereto. In the plaint,

neither the dates of the invoices nor the amount of the invoices is pleaded.

What is pleaded is the dates and amounts and other particulars of the cheques

and the return memos of the cheques and the impression sought to be conveyed

is, of the suit under Order 37 being on the basis of the said cheques and which

impression indeed prevailed with the learned ADJ. Ordinarily if a suit claim

under Order 37 of the CPC would be made on the basis of the amount of the

invoices constituting a written contract, the particulars of the invoice would be

pleaded in the plaint. Though the summons of a summary suit as also of other

suits are also required to be accompanied with the documents filed therewith

but in the absence of any particulars of the written contract on the basis

whereof claim under Order 37 of the CPC is made, a defendant while applying

leave to defend may not be sufficiently cautioned to respond with respect

thereto.

15. Rather, the plaint expressly pleads " The present suit of the plaintiff is

based on Bills/Invoices/Ledger Accounts between both the parties", "That a

sum of Rs.4,79,371/- (Four Lakh Seventy Nine Thousand Three Hundred

Seventy One Rupees only) is outstanding against the defendant as per

Bills/Invoices, Ledger Accounts maintained by the plaintiff, and defendant is

liable to pay the same". The respondent/plaintiff does not unequivocally plead

the suit to be based on invoices and has sued also on Ledger Account. The

respondent/plaintiff does not plead that the invoices bear the signature of the

appellant/defendant and constitute a written contract. It is also not pleaded that

the appellant/defendant signed the ledger in acknowledgment of correctness of

entries therein or in admission of liability for the amount shown outstanding

therein. Thus, from a reading of the plaint, the suit cannot be said to be falling

in any of the categories prescribed in Order XXXVII Rule 1 (2) and summons

under Order XXXVII ought not to have been issued. If the suit, on a reading of

the plaint, is found to be not maintainable under Order XXXVII, it cannot

become maintainable on a reading of the application filed for leave to defend.

The admission in the application for leave to defend though may entitle a

plaintiff to a decree on admission is otherwise incapable of converting a suit

which on averments in plaint is not maintainable under Order XXXVIII,

maintainable thereunder.

16. The respondent/plaintiff here, is found to have sued for balance price,

as outstanding in the account of the appellant/defendant in the ledger of the

respondent/plaintiff, of the goods sold, supplied and delivered and such a

suit does not fall in Order XXXVII Rule 1(2), to be maintainable thereunder.

It was so held by this Court in Dentsply India Pvt. Ltd. Vs. Excel

International 92 (2001) DLT 145 and by me in Mahinder Kumar Vs. Anil

Kumar MANU/DE/1331/2009.

17. Once it is found that the suit is not based on invoices for the reason of

the respondent/plaintiff having not chosen to plead the invoices as forming

the basis of the claim, the need to go into the question, whether the

appellant/defendant is entitled to leave to defend or not, as aforesaid, does

not arise. I may however record that I have in TTK Prestige Vs. India Bulls

Retail Services Ltd. 2013 (136) DRJ 217 held a suit under Order XXXVII

on the basis of invoices to be maintainable for a lesser amount than of the

invoices, after adjusting the payments made to be maintainable. To the same

effect is the judgment of this Court in Bharat Forge Ltd. Vs. Onil Gulati

2005 (83) DRJ 140 and Dura-Line India Pvt. Ltd. Vs. BPL Broadband

Network Pvt. Ltd. AIR 2004 Delhi 186. In the latter judgment it was also

held that merely because the plaintiff, in the plaint, besides referring to the

invoices on the basis of which suit had been filed also averred it maintains a

running account, would not change the nature of the suit to one based on a

running account. This judgment was recently followed in Bijender Chauhan

Vs. Financial Eyes (India) Ltd. MANU/DE/2138/2013. However in the

present case the plaintiff as aforesaid has not mentioned the invoices at all.

18. The order of the learned ADJ dismissing the application for leave to

defend and consequently the money decree can thus not be sustained.

19. The appeal succeeds and is allowed. The impugned order dismissing the

application of the appellant/defendant for leave to defend and the consequently

the money decree are set aside. The suit is remanded and ordered to be treated

as an ordinary suit.

20. The parties to bear their own costs.

21. Decree sheet be prepared.

22. The Trial Court file requisitioned in this Court be sent back forthwith.

23. The appellant/defendant to file written statement within 30 days of today

with advance copy to the counsel for the respondent/plaintiff.

24. The parties to appear before the Court of the Additional District Judge

(Central) 03, Tis Hazari Courts, Delhi on 19th October, 2016.

25. The amount deposited by the appellant/defendant in this Court with

interest accrued thereon be refunded to the appellant/defendant.

RAJIV SAHAI ENDLAW, J

SEPTEMBER 15, 2016 „pp‟..