Delhi High Court
Spicejet Ltd. vs Arun Kumar on 10 November, 2017
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 10th November, 2017
+ CM(M) 1269/2017
SPICEJET LTD. ..... Petitioner
Through: Mr. Kapil Sankhla and Mr. Shiv B.
Chetry, Advs.
Versus
ARUN KUMAR ..... Respondent
Through: None.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
CMs No.40407/2017 & 40408/2017 (both for exemption)
1. Allowed, subject to just exceptions.
2. The application is disposed of.
CM(M) 1269/2017 & CM No.40406/2017 (for stay)
3. This petition under Article 227 of the Constitution of India
impugns the order [dated 15th July, 2017 in CS No.15562/2016 (Old
No.230/2016) of the Court of Additional District Judge (ADJ)-04 (South
West), Dwarka Courts, New Delhi] granting unconditional leave to the
respondent/defendant to defend the suit filed by the petitioner/plaintiff
under Order XXXVII of the Code of Civil Procedure, 1908 (CPC) for
recovery of Rs.10 lakhs, on the basis of cheques issued by the
respondent/defendant in favour of the petitioner/plaintiff and an
agreement entered into between the respondent/defendant and the
petitioner/plaintiff, who had an employer and employee relationship.
4. The contention of the counsel for the petitioner/plaintiff is not that
the leave to defend application should have been dismissed but that
conditional leave to defend should have been granted. However, the
counsel for the petitioner/plaintiff at this stage states that his first
contention is that the leave to defend application should have been
dismissed.
5. I have enquired from the counsel for the petitioner/plaintiff, as to
how a petition under Article 227 of the Constitution of India is
maintainable with respect to the aforesaid grievance. The grievance is
redressable under the CPC by preferring a Revision Petition under
Section 115 of CPC.
6. The counsel for the petitioner/plaintiff, instead of replying on the
basis of law, states that he has filed several other petitions against similar
orders and for this reason he has filed this petition under Article 227 of
the Constitution of India and states that there are judgments in this
regard. The counsel is however neither carrying the said judgments nor
is able to show whether this aspect has been discussed therein. It is a
typical case of cut, copy and paste arguments.
7. The law in this regard is well settled. Against an order of grant of
leave to defend and for the grievance of the leave to defend application
having not been dismissed, a Revision Petition under Section 115 of CPC
lies. Mechelec Engineers & Manufacturers Vs. Basic Equipment
Corporation (1976) 4 SCC 687 was also a case arising from exercise of
jurisdiction under Section 115 of the CPC by this Court. Supreme Court
held that this Court erred in interfering with the discretionary order and it
is only in cases where the defence is patently dishonest or so
unreasonable that could not be reasonably be expected to succeed that the
exercise of discretion by the Trial Court to grant leave unconditionally
may be questioned. Reference may also be made to Siri Krishan
Bhardwaj Vs. Manohar Lal Gupta AIR 1977 Delhi 226 (DB). It has
been held by the Supreme Court in Sadhana Lodh Vs. National
Insurance Co. Ltd. (2003) 3 SCC 524 that if a remedy under CPC is
available, a petition under Article 227 of the Constitution of India, does
not lie.
8. Be that as it may, having spent time on the matter, it is deemed
appropriate to deal with the matter on merits on the parameters of Section
115 of CPC.
9. Inspite of the challenge being to the order of grant of unconditional
leave to defend, no copy of the plaint has been annexed to the paper
book. The counsel for the petitioner/plaintiff, on enquiry, has handed
over a copy of the plaint and which is taken on record and a perusal
whereof shows the petitioner/plaintiff to have instituted the suit, pleading
(i) that the respondent/defendant was working with the petitioner/plaintiff
as a Transition Captain in the Flight Operations Department; (ii) that
during the course of his employment, the respondent/defendant was sent
for a training program as Transition Captain on Bombardier DHC-8
Series 400 (Q 400); (iii) that the respondent/defendant had executed an
Indemnity Bond-cum-Service Undertaking dated 21st November, 2011 in
this regard in favour of the petitioner/plaintiff; (iv) that the aforesaid
training was conducted at Toronto and the petitioner/plaintiff had
incurred all expenses in this regard on the representation of the
respondent/defendant that he shall work with the petitioner/plaintiff for a
minimum period of three years in such functions as may be assigned to
him by the petitioner/plaintiff; (v) that the respondent/defendant had also
deposited five cheques of Rs.2 lakhs each with the petitioner/plaintiff to
cover up the tangible and other intangible costs of the training, in the
event of the respondent/defendant leaving the employment of the
petitioner/plaintiff before completing minimum period of three years; (vi)
that the respondent/defendant attended the abovementioned training;
however, his performance was assessed below standard by the Pilot
Review Board; this performance analysis amounted to violation of the
terms of the Letter of Appointment and his services were terminated by a
termination order dated 21st June, 2012; (vii) therefore, the
respondent/defendant became liable to reimburse the training costs
incurred by the petitioner/plaintiff and the petitioner/plaintiff presented
the cheques for payment and which have been dishonoured.
10. The counsel for the petitioner/plaintiff has drawn attention to the
agreement, on the basis of which the suit was filed and copy whereof is
filed at page 106 of the paper book and which is titled as "Indemnity
Bond-Cum-Service Undertaking" and attention is invited to the following
clauses thereof:
"A. SpiceJet Limited is sending me for training to assume pilot's
responsibility as rated Transition Captain on Bombardier
DHC-8, Series 400 (Q 400) (hereinafter referred to as the
Type Rating Training).
B. The above training costs are fully borne by SpiceJet Limited.
C. I have deposited 05 undated cheques of Rs. 10 Lac (Rupees
Ten Lacs Only) (amount to be arrived by dividing total cost
by 2 Lacs each)], as a security to cover the tangible and
other intangible costs of the above. In the event of my
leaving employment with SpiceJet Limited before completing
minimum period of Three (3) years, the same will be
encashed by the company. Otherwise, on completion of 3
years of employment with the company, there cheques will
be returned to me.
Now in consideration of SpiceJet Limited arranging the Type
Rating Training at considerable costs; I, which expression shall
include my heirs, agents, relatives and assigns, irrevocably
undertake and covenant as follows:
1. I shall work for a minimum period of 3 years with SpiceJet
Limited in such functions as may be assigned to me by the
management from time to time. The three (3) years period shall
commence from the date of my joining the SpiceJet Ltd.
However, cessation of my services before completion of 3 years
as above under Clause 16 & 17 of Appointment letter dated 21-
Nov-11 reference number SJ/HR/011/11/151 shall not preclude
SpiceJet Ltd. from encashing the cheques given as security for
the above training costs. Such early departure of mine shall
amount to my leaving services of the SpiceJet Ltd. before
completion of the minimum period of 3 (Three) years.
2. .....
3. .....
4. .....
5. I shall indemnify SpiceJet Limited and bind myself, my heirs,
agents, relatives and assigns to pay all claims, charges,
costs, damages, demands, expenses, and losses, which
SpiceJet Limited may sustain, incur in connection with this
Indemnity bond cum Undertaking.
6. .....
7. .....
8. In the event I am terminated as a result of non-conformance
with DGCA and other relevant government and company
regulations for flight crew, I have no objection to SpiceJet
Limited encashing the cheques outlined above."
11. What the respondent/defendant had undertaken in the aforesaid
Indemnity Bond-cum-Service Undertaking, was to serve the
petitioner/plaintiff for a period of three years and to indemnify the
petitioner/plaintiff against all costs, damages, demands, expenditures and
losses which the petitioner/plaintiff may suffer and to, in the event of
termination as a result of non-conformance with DGCA and other
relevant government and company regulations for flight crew or on
account of leaving the services of the petitioner/plaintiff before
completion of the minimum period of three years not object to the
petitioner/plaintiff encashing the cheques mentioned in the Indemnity
Bond-cum-Service Undertaking.
12. Though in the plaint reference was also made to the Service
Undertaking and to the Appointment Letter but the counsel for the
petitioner/plaintiff states that the suit was filed only on the basis of the
Indemnity Bond-Cum-Service Undertaking aforesaid and the cheques
and on no other document.
13. The case of the petitioner/plaintiff in the plaint is not of the
respondent/defendant having left the employment prior to expiry of three
years. The claim of the petitioner/plaintiff can at best be said to be
covered by Clause 8 supra which provides for termination as a result of
non-conformance with DGCA and other government and company
regulations.
14. I have enquired from the counsel for the petitioner/plaintiff, what
is the document to show that the performance of the
respondent/defendant was assessed below standard by the Pilot Review
Board.
15. The counsel for the petitioner/plaintiff has argued that there is no
document on record in this respect and it is the plea of the
petitioner/plaintiff in the plaint and the said fact is not disputed.
16. Without knowing which is the Pilot Review Board which found the
performance of the respondent/defendant to be below standard, who had
constituted the same and what is the report thereof and for what reasons,
it is not understandable, as to how the suit in the first instance was
maintainable under Order XXXVII of CPC.
17. The suit was essentially for recovery of losses with which the
respondent/defendant had agreed to compensate the petitioner/plaintiff in
certain situations and such a suit does not lie within the ambit of Order
XXXVII of CPC.
18. Supreme Court in State Bank of Saurashtra Vs. Ashit Shipping
Services (P) Ltd. (2002) 4 SCC 736 held that in cases of indemnities, the
question of making good the loss arises only when there is proof that loss
is suffered. It was held that Order XXXVII does not provide for a claim
based on indemnity bond, because the loss would have to be proved and
summary procedure cannot be adopted in such cases.
19. The counsel for the petitioner/plaintiff has drawn attention to
Ashwani Bahl Vs. AIR India Ltd. 2014 SCC OnLine Del 275 and to
Mahanagar Telephone Nigam Ltd. Vs. Haryana Telecom Ltd. 2010
SCC OnLine Del 1220.
20. The first case was a case of dismissal of objections to an arbitral
award finding the appellant therein to be liable to the respondent therein
AIR India Ltd. for the breach of his service agreement and while dealing
wherewith, a Co-ordinate Bench of this Court held that when the parties
have, before entering into the agreement, estimated the losses which will
be suffered by breach thereof, the party in breach is liable for such
estimate. The aforesaid was held relying on Oil & Natural Gas Corporation Ltd. Vs.
Saw Pipes Ltd. (2003) 5 SCC 705, the reasoning wherein was that for public losses, there
is no measure. Moreover, in Saw Pipes Ltd., the Court on the basis of
evidence had arrived at a finding of the parties having genuinely arrived
at a pre-estimate of damages. It is for this reason only that a view
different from otherwise settled position of law in Union of India Vs.
Raman India Foundry (1974) 2 SCC 231 was taken. Moreover, it was a
case, after full trial, and not a case of grant of leave to defend.
21. The second of the aforesaid judgments was again a case of
objections to the arbitral award.
22. I may in this context notice that entirely different set of law applies
to interference under Section 34 of the Arbitration and Conciliation Act,
1996 with the arbitral awards and merely because the Court has found no
case for interference, cannot be a precedent for same analogy to be
followed in a civil suit.
23. There is another aspect of the matter. I entertain doubt, whether
there can be a claim under the Indemnity Bond, without evidence, on the
basis of assessment of performance and which can be a variable factor. It
was for the petitioner/plaintiff to assess its employees who would be able
to justify the training or to reap returns to the petitioner/plaintiff
commensurate with the costs incurred by the petitioner/plaintiff and if the
petitioner/plaintiff chooses a person who is not able to deliver with the
expectations of the petitioner/plaintiff, the petitioner/plaintiff itself is to
blame therefor and cannot prima facie be held to be entitled to damages.
24. Though the suit was also based on cheques but since the cheques
were for consideration mentioned in the Agreement aforesaid, it cannot
be treated as a suit only on the basis of cheques to, on account of
dishonour thereof, hold a case for dismissal of the application for leave to
defend the suit being made out.
25. The main argument of the counsel for the petitioner/plaintiff is that
though the reasoning given by the learned ADJ is in favour of the
petitioner/plaintiff but the outcome is against the petitioner/plaintiff.
26. I have for reasons hereinabove stated, entertained doubts about the
very maintainability of the suit under Order XXXVII of CPC, on the
basis of pleading in the plaint. Even if the petitioner/plaintiff were to be
held to be entitled to the claim on account of below standard
performance, the petitioner/plaintiff will have to prove the same.
27. The plaint is also absolutely silent as to for how much time the
respondent/defendant served the petitioner/plaintiff, after the training.
From the petitioner/plaintiff taking five cheques of Rs.2 lakhs each
instead of one cheque for Rs.10 lakhs, it also appears that the purport of
the Agreement was to, depending upon the loss, present the cheques for
that much amount only. The petitioner/plaintiff however, without giving
any reason, has presented all the cheques and without even disclosing the
full facts or making even a whisper of the loss, if any suffered by it.
28. The counsel for the petitioner/plaintiff has at this stage stated (a)
that the learned ADJ, though has relied on M/s Mechelec Engineers and
Manufacturers supra but has not followed the same; (b) that a suit under
Order XXXVII of CPC on the basis of Indemnity Bond and Undertaking
Agreement is maintainable; and, (c) that I should record that the learned
ADJ has returned findings in favour of the petitioner/plaintiff.
29. As far as M/s Mechelec Engineers and Manufacturers supra is
concerned, the reliance thereon is misconceived in view of the
subsequent judgment in IDBI Trusteeship Services Limited Vs.
Hubtown Limited (2017) 1 SCC 568.
30. What I have held is not that a suit under Order XXXVII of CPC
can never lie on the basis of an Indemnity Bond and Undertaking but that
on the basis of the language and terms of the Indemnity Bond and
Undertaking in the present case and the pleadings of the
petitioner/plaintiff, the suit was not maintainable under Order XXXVII of
CPC. An illuminating discussion on the subject is to be found in Smita
Conductors Ltd. Vs. Prabhudas Liladhar Pvt. Ltd.
MANU/MH/0952/2009. Reference may also be made to Varun Gauba
Vs. Punjab & Sind Bank 2012 SCC OnLine Del 3486.
31. As far as the last argument is concerned, it is surprising that the
petitioner/plaintiff, instead of making out a case on the basis of its
document and its averments in the plaint, is wanting to make out a case
on the basis of the contents of the order which is under challenge.
Moreover, the observations in the order, in view of what I have recorded
above, are of no avail.
32. Thus, though for reasons different from that given by the learned
ADJ, no merit is found in the petition.
33. Dismissed.
34. No costs.
RAJIV SAHAI ENDLAW, J.
NOVEMBER 10, 2017
„bs‟
(corrected & released on 28th December, 2017)
