M/S Civitech Builders(India) Pvt ... vs Raman Vihar Coop.Group Housing ...
2017 Latest Caselaw 6178 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                          Reserved on: 1st November, 2017
                                           Decided on: 6th November, 2017
+                    CS(COMM) 1478/2016
      M/S CIVITECH BUILDERS(INDIA) PVT LTD           ..... Plaintiff
                    Represented by: Mr. Praveen Mahajan with Ms.
                                    Ruchi Mahajan, Advocates.
                    versus

    RAMAN VIHAR COOP.GROUP HOUSING
    SOCIETY LTD & ORS                             ..... Defendants
                  Represented by: Mr. Apar Gupta with Ms.
                                  Garima Jain and Ms. Disha
                                  Gupta, Advocates.
                                  Mr. Anil Kumar in person/
                                  intervenor in I.A. No.
                                  12755/2017.
CORAM:
HON'BLE MS. JUSTICE MUKTA GUPTA
I.A. No.2878/2011 (under Order XXXVII Rule 3(v) CPC by defendants)
1.

Plaintiff has filed the present summary suit under Order XXXVII CPC against the defendant No.1, which is a Group Housing Society, defendant Nos. 2 and 3 its President and Secretary, for recovery of a sum of ₹2,07,90,000 (Rupees Two Crores Seven Lakhs Ninety Thousand only) with pendente lite and future interest.

2. Case of the plaintiff is that the plaintiff is involved in constructional activities and defendant No.1 which is a registered society registered under the Societies Registration Act was allotted a group housing Plot No.5-A, Sector-11, Dwarka, New Delhi from Delhi Development Authority (in short 'DDA') wherein defendant No.1 wanted to construct 69 dwelling units upto 11 storeyed residential apartments for its members. Thus plaintiff and

defendant No.1 through the then President and Secretary entered into an agreement dated 8th October, 2000 for construction of said 69 dwelling units. After the execution of the agreement, the plaintiff started construction work however, vide letter dated 3rd October, 2002 the defendant informed that the dwelling units had to be reduced from 69 to 64. Despite plaintiff carrying out the construction activities, defendants failed to keep their commitment of making the timely payment to the plaintiff company, thus restraining the plaintiff company to continue with the further construction activities at the site. In a joint meeting held on 4th July, 2008 defendants agreed to settle the accounts of the plaintiff company and it was agreed that the defendant No. 1 will be liable to pay the Vat charges to the extent of 8.5% out of the total Vat and a sum of ₹1.75 crores was agreed to be paid to the plaintiff in full and final settlement of the remaining bills. For the works done the plaintiff company had already received a total sum of ₹2,60,98,400/- from defendants on which they agreed to give Vat amount also as per the settlement. Thus a Settlement Deed/Memorandum of Understanding dated 4th July, 2008 was entered into and plaintiff company was promised to be paid a sum of ₹1.75 crores with interest @12% p.a. on delayed payment. Plaintiff was also given four cheques, two for a sum of ₹10 lakhs and other for ₹30 lakhs. On presentation one cheque for a sum of ₹10 lakhs was encashed however, the second one got dishonoured and the plaintiff company did not present the third cheque for a sum of ₹30 lakhs. On the basis of this Memorandum of Understanding plaintiff claims the outstanding amount of ₹1.65 crores with interest @12% p.a. w.e.f. 4th July, 2008 to 3rd September, 2010 , that is, ₹42.90 lakhs totaling to ₹2,07,90,000/-.

3. In the leave to defend application the pleas taken by the defendants are that the plaintiff was to complete the construction within three years from 4th October, 2000 as per agreement dated 4th October, 2000 however, the construction work was not completed even till 12 th December, 2000. The quality of construction was so poor that it risked the lives of the future occupants of the defendant No.1 and hence independent contractors had to be employed for strengthening the structure with additional cost. It is further claimed that the documents, records, statements of the payments and communication etc. of the plaintiff were seized by the CBI. Further the erstwhile Secretary of the defendant No.1 Anil Solanki lodged a FIR being FIR No. 1077 dated 7th November, 2007 at PS Dwarka under Section 380 IPC stating that the records of the Society have been stolen. Thus taking advantage of all these facts, plaintiff filed the false statement of accounts in the meeting held between the parties on 8 th August, 2008. As the construction carried out was only 42-46%, it was revealed that the plaintiff had to return ₹5 lakhs to the defendants as they had already paid a sum of ₹3,97,68,452/- to the plaintiff. Further a cheque of ₹15 lakhs was issued through K.N. Consultants for discharging the liability of the defendants which has not been reflected by the plaintiff in its statement of accounts. Reply to the legal notice sent by the counsel for the defendants reveal that the Memorandum of Understanding dated 4th July, 2008 was cancelled on 9th August, 2008 and in fact the plaintiff has to return money to the defendants. Original Memorandum of Understanding filed along with the plaint shows manipulation as is evident from the copy of the documents filed by the defendants.

4. Based on these facts learned counsel for the defendants further submits that after the filing of the present application in view of the complete records not being available and substantial manipulation being found in the accounts, defendant No.1 has filed a complaint with the Economic Offences Wing, Delhi Police against the then President and Secretary of the defendant No.1. The connivance of the plaintiff and the then President and Secretary is not ruled out. The Memorandum of Understanding relied upon by the plaintiff is witnessed by the plaintiff's authorized representative Subhash who has admitted that there is no liability of the defendants to pay. Learned counsel for the defendants further states that a bare perusal of the Memorandum of Understanding would reveal that the same was tentative and was required to be registered but not registered.

5. Rebutting the arguments of learned counsel for defendants, learned counsel for plaintiff submits that admittedly the plaintiff received a sum of ₹15 lakhs from the defendants which is not reflected in the statement of accounts however, the said fact is not sufficient to grant leave to defend to the defendants. Merely because complaint has been filed by the present President/Secretary of the defendant No.1 against the erstwhile office bearers and the statement of accounts of the defendants are not available is no ground to grant leave to defend to the defendants. Subhash was never an authorized representative of the plaintiff. The defences raised are moonshine and hence leave to defend be declined.

6. The law has been settled in regard to the grant of leave to defend by the Supreme Court in the decision reported as 2017 (1) SCC 568 IDBI Trusteeship Services Limited vs. Hubtown Limited as under:

17. Accordingly, the principles stated in para 8 of Mechelec case [Mechelec Engineers & Manufacturers v. Basic Equipment Corpn., (1976) 4 SCC 687] will now stand superseded, given the amendment of Order 37 Rule 3 and the binding decision of four Judges in Milkhiram case [Milkhiram (India) (P) Ltd. v. Chamanlal Bros., AIR 1965 SC 1698: (1966) 68 Bom LR 36], as follows:

17.1. If the defendant satisfies the court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit.

17.2. If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign judgment, and the defendant is ordinarily entitled to unconditional leave to defend.

17.3. Even if the defendant raises triable issues, if a doubt is left with the trial Judge about the defendant's good faith, or the genuineness of the triable issues, the trial Judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security.

17.4. If the defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires.

17.5. If the defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintiff is entitled to judgment forthwith.

17.6. If any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court.

7. A perusal of the record reveals that there are certain additions in the copy of the Memorandum of Understanding in hand filed by the plaintiff which are not there in the copy of the Memorandum of Understanding dated 4th July, 2008 filed by the defendants. Further the said agreement is witnessed by one Subhash qua whom a prima facie evidence has been placed on record by the defendants to show that he was working with the plaintiff and has acknowledged payments received from the defendant No.1 on behalf of the plaintiff by said Subhash. Defendants have also placed on record an additional affidavit along with an admission of said Subhash who received payments on behalf of the plaintiff that the plaintiff has been overpaid ₹5 lakhs which will be returned to the defendants and that the settlement dated 4th July, 2008 was already cancelled. There are allegations of connivance between the then President and Secretary of the defendant No.1 with the plaintiff company.

8. From the facts of the case as noted above, it is evident that not only the defendants have made out triable issues for the reason there is a prima facie acknowledgment of a representative of the plaintiff acknowledging over payments to the plaintiff, there are prima facie allegations of fraud and

connivance between the plaintiff and the erstwhile President and Secretary of the defendant No.1 and the defendants' accounts/documents have been allegedly misplaced in which regard a FIR has been registered. Hence unconditional leave to defend is required to be granted to the defendant.

9. Application is disposed of granting the defendants unconditional leave to defend.

(MUKTA GUPTA) JUDGE NOVEMBER 06, 2017 'vn'