Sarabjit Singh Chadha vs Dinesh Sehgal
2019 Latest Caselaw 1912 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                           Date of decision: 8th April, 2019

+                          CS(OS) 610/2018

       SARABJIT SINGH CHADHA                     ..... Plaintiff
                    Through: Mr. Inderbir Singh Alag, Sr. Adv.
                             with Mr. Sumit Ghelot & Mr.
                             Anirudh Sharma.

                                   Versus
    DINESH SEHGAL                              .....Defendant
                  Through: Ms. Sonal Sarda, Adv.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.

The question for adjudication is the maintainability of the suit under Order XXXVII of the CPC.

2. Though the Joint Registrar, on 29th November, 2018, treating the suit labeled as under Order XXXVII of the CPC, as one under Order XXXVII of the CPC, ordered summons for appearance to be issued and the defendant has entered appearance but when the plaintiff applied for issuance of summons for judgment, the Joint Registrar ordered the suit to be listed before the bench and the suit came up before this Court on 20th February, 2019 when the counsel for the plaintiff was unable to satisfy this Court of maintainability of the suit under Order XXXVII of the CPC and on his request, the suit was posted for hearing on the said aspect today subject to plaintiff paying costs of Rs.10,000/- to the defendant.

3. The counsel for the defendant states that costs have not been paid. The senior counsel for the plaintiff states that costs will be paid during the course of the day.

4. The senior counsel for the plaintiff has been heard.

5. The plaintiff has pleaded that, (i) the plaintiff agreed to enter into an agreement with the defendant to the effect "that the plaintiff would provide the raw gold to the defendant for the job of making jewellery and thereafter a majority portion of the jewellery would be given back to the plaintiff and some items will be kept at the store of the defendant for display and sale, out of which the plaintiff would be entitled to a part of the profits and cost of his raw gold"; (ii) on 17th October, 2017, vide Voucher No.01/17-18 signed by the plaintiff and the defendant, the plaintiff handed over 20 Kgs. pure raw gold to the defendant; (iii) in addition to the aforesaid Voucher, the defendant also signed an Order dated 17th October, 2017 which bears the complete list / description of the gold given by the plaintiff and the description of the jewellery to be made by the defendant; (iv) as per the terms and conditions agreed between the plaintiff and the defendant, the defendant assured and undertook to make and deliver the jewellery / articles to the plaintiff by 17th November, 2017; (v) the defendant also issued a receipt dated 17th October, 2017 acknowledging receipt of gold; (vi) the defendant, in addition to the aforesaid receipt, also handed over a post dated cheque in favour of the plaintiff dated 17th January, 2018 for an amount of Rs.6 crores as a Performance Guarantee; (vii) the defendant failed to deliver the jewellery / articles to the plaintiff on 17th November, 2017 or thereafter inspite of repeated requests and follow up of the plaintiff; (viii) after

waiting for more than a month, the plaintiff asked the defendant to return the raw gold and already made jewellery articles but the defendant refused;

(ix) on 18th December, 2017, the plaintiff lodged a criminal complaint against the defendant of the offence of cheating before the Economic Offences Wing of Delhi Police; (ix) on 11th April, 2018, the plaintiff, "in order to recover some amount from the defendant" presented the cheque for Rs.6 crores "given by the defendant as an assurance / performance guarantee to the plaintiff" but the said cheque was dishonoured with the endorsement "payment stopped by drawer"; (x) the value of the gold out of which the jewellery / articles were to be made by the defendant was approximately Rs.5,98,40,000/- as per the prevailing rate of gold in the open market on the date of delivery of gold; however, the defendant has categorically admitted his debt to the tune of Rs.5 crores in his application for anticipatory bail; (xi) "from the application made by the defendant before the Hon‟ble Sessions Court it is evident that the defendant is liable to pay at least at sum of Rs.5,00,00,000/- (Rupees Five Crores Only) which the defendant is avoiding to pay"; (xii) further, the defendant is liable to pay a total of Rs.6,00,00,000/- (Rupees Six Crores Only); and, (xiii) "the plaintiff has approached this Hon‟ble Court for a decree in favour of the plaintiff and against the defendant thereby directing the defendant to pay a sum of Rs.5,98,40,000/- (Rupees Five Crores Ninety Eight Lacs and Forty Thousand Only) to the plaintiff along with interest at the rate of 10% per annum from 17.10.2017. However, as per the admission of the defendant before the Hon‟ble Sessions Court, the defendant is liable to pay a total sum of Rs.5,00,00,000/- to the plaintiff as admitted liability. The plaintiff is also

entitled to a decree of pendente and future interest at the rate of 10% per annum till the date the amount is paid by the defendant".

6. The plaintiff, on the basis of aforesaid averments has instituted this suit under Order XXXVII of the CPC for recovery of Rs.5,98,40,000/- with interest pendente lite and future and costs.

7. The senior counsel for the plaintiff has handed over copies of two other FIRs lodged by others against the defendant, but which are of no relevance to today‟s hearing.

8. The senior counsel for the plaintiff has next drawn attention to the Gold Issue Voucher as under:

Order for Issue Voucher as under:

and Receipt dated 17th October, 2017 as under:

and contended that the aforesaid documents signed by the plaintiff as well as the defendant constitute an agreement in writing and on the basis thereof the suit is maintainable under Order XXXVII of the CPC.

9. Reliance is placed on (i) Rajinder Kumar Khanna Vs. The Oriental Insurance Co. AIR 1990 Del 278; (ii) Chandeep Singh Bhatia Vs. Dinesh Sehgal 2016 SCC OnLine Del 5963 and to order dated 21st February, 2017 in RFA (OS) No.2/2017 titled Dinesh Sehgal Vs. Chandeep Singh Bhatia

preferred thereagainst; and, (iii) Park Side Ltd. Vs. Blues Luxury Impex Pvt. Ltd. 2013 SCC OnLine Del 4174 and to order dated 5th February, 2014 of the Division Bench of this Court in RFA (OS) No.148/2013 titled Blues Luxury Implex Pvt. Ltd. Vs. Parkside Ltd. preferred thereagainst.

10. I first choose to deal with the judgments cited above inasmuch as if the matter in issue is covered by any of the said judgments, I would be bound thereby.

11. In Rajinder Kumar Khanna supra the suit under Order XXXVII of the CPC was filed against the Insurance Company on the basis of a report of an assessor appointed by the Insurance Company. The senior counsel for the plaintiff agrees that the facts of the said case cannot be compared with the factual position in the present suit. He however states that he is relying upon the said judgment for explaining what is meant by "liquidated demand". It was held in the said judgment that the amount claimed to be due is "liquidated demand" within statute authorizing summary judgments if it is susceptible of being made certain in amount by mathematical calculation from factors which are or ought to be in possession or knowledge of party to be charged. It was held in the facts of that case that since the surveyor appointed by the Insurance Company itself had assessed the insured damage suffered and rejection thereof by the Insurance Company was based upon misapprehension of the Rules for Construction of Policy of Marine Insurance, the suit was maintainable under Order XXXVII of the CPC.

12. In Chandeep Singh Bhatia supra the suit under Order XXXVII of the CPC was based on Agreement in writing executed by the defendants of

purchase of jewellery items mentioned therein from the plaintiff and agreeing to pay the agreed price thereof to the plaintiff within a stipulated period along with interest at the stipulated rate. Though it was the contention of the defendants therein that the suit was not maintainable under Order XXXVII of the CPC but the facts of the said case again are nowhere near the facts of the present case. Here, there is no agreement of sale of gold by the plaintiff to the defendant or agreement of the defendant to pay price thereof to the plaintiff.

13. In Park Side Ltd. supra the suit under Order XXXVII was based on invoices of sale of goods and the suit was for recovery of the amount of the invoices. Again, there is no similarity between the facts of the said case and of the present case.

14. Order XXXVII, per Rule 1(2) thereof applies to:

"(a) Suits upon bills of exchange, hundies and promissory notes;

(b) suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising -

              (i)     on a written contract; or

              (ii)    on an enactment, where the sum sought to be recovered is a fixed

sum of money or in the nature of a debt other than a penalty; or

(iii) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only.

(iv) suit for recovery of receivables instituted by any assignee of a receivable."

15. The suit is admittedly not upon any bills of exchange, hundis or promissory notes.

16. Though the plaintiff in the plaint has not pleaded the class, out of the aforesaid classes of suits, in which the present suit falls but as per the contentions aforesaid of the senior counsel for the plaintiff, the suit is for recovery of "liquidated demand" in money payable by the defendant on a written contract.

17. Undoubtedly, the Gold Issue Voucher as well as the Order for Issue Voucher purporting to be signed by the parties and as reproduced herein above constitute a written contract between the parties but only to the effect of the plaintiff having handed over and the defendant having received 20 Kgs. of gold and the defendant having agreed to manufacture jewellery of the description contained in Order for Issue Voucher, and no more. Neither in the Gold Issue Voucher or the receipt nor in the Order for Issue Voucher is the value of the gold handed over by plaintiff to the defendant and / or of the jewellery to be made by the defendant and handed over to the plaintiff, stated. Rather, in the Gold Issue Voucher, the price of gold is shown as „0‟. The said documents do not contain any contract by the defendant to, in the event of not delivering the jewellery for making whereof gold was handed over by the plaintiff to the defendant, to pay to the plaintiff the value of or an amount equal to the value of the gold on the date of taking delivery of gold and for recovery of which the present suit has been filed. In my opinion the written contract reflected by the documents do not show any liquidated demand in money payable by the defendant to the plaintiff, for the suit to lie under Order XXXVII of the CPC. The contract on the basis

whereof a suit under Order XXXVII of CPC can lie must create a liability in the defendant to pay an ascertained amount. On the contrary, the contract on the basis of which this suit is filed, is a performance contract under which the defendant was to make jewellery from the gold received from plaintiff.

18. I had in the order dated 20th February, 2019 also recorded and reiterated that though on the basis of the cheque for Rs.6 crores a suit under Order XXXVII of the CPC would lie, but it is the own case of the plaintiff that the amount payable by the defendant to the plaintiff was to be the value of the gold on the date of delivery thereof and not the amount of the cheque which the plaintiff pleads to have been given by way of performance guarantee. It is also not the plea of the plaintiff that the suit under Order XXXVII of the CPC is based on the cheque aforesaid. In fact, the suit claim is for an amount lesser than the amount of the cheque.

19. The suit thus in my opinion does not lie under Order XXXVII of the CPC and is ordered to be treated as an ordinary suit.

20. The defendant to file written statement within the prescribed period.

21. The plaintiff to file replication within 30 days thereof.

22. The parties to file affidavits of admission / denial of each others‟ documents before the next date of hearing.

23. List for framing of issues, if any on 16th September, 2019.

RAJIV SAHAI ENDLAW, J.

APRIL 08, 2019/„gsr‟..

(corrected & released on 19th April, 2019)