Delhi High Court
M/S Arihant Engineering ... vs M/S Leo Ispat Ltd. & Anr. on 24 April, 2019
$~1, 2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Judgment: 24th April, 2019
+ FAO(OS) (COMM) 75/2019 & CM.APPL 15888/2019
M/S ARIHANT ENGINEERING INDUSTRIES & ORS.
..... Appellants
Through Mr. K.G. Sharma, Advocate
versus
M/S LEO ISPAT LTD. & ANR. ..... Respondents
Through Mr. Shakeel Sarwar Wani, Advocate
for respondent no.1.
+ FAO(OS) (COMM) 76/2019 & CM.APPL 15909/2019
M/S ARIHANT ENGINEERING INDUSTRIES & ORS .....Appellant
Through Mr. K.G. Sharma, Advocate
versus
M/S LEO INFRACAPITAL LTD. & ANR. ..... Respondents
Through Mr. Shakeel Sarwar Wani, Advocate
for respondent no.1.
CORAM:
HON'BLE MR. JUSTICE G.S. SISTANI
HON'BLE MS. JUSTICE JYOTI SINGH
G.S. SISTANI, J. (ORAL)
1. Challenge in these appeals is to the order dated 30.01.2019 by which
two separate applications filed in two separate suits seeking leave to
defend have been allowed in part. The respondents/plaintiffs had
instituted two suits for recovery. The learned Single Judge has
granted conditional leave to defend subject to deposit of a sum of
Rs.1,16,98,138/- with interest @ 10% per annum from 30.04.2013 till
the date of deposit within eight weeks from the date of the order. The
reasons for grant of leave to defend find mentioned in paras 5 to 9 of
the order 30.01.2019 passed in CS(OS).650/2016, which read as
under:
"5. The counsel for the defendants has argued that the
entire transaction took place at Faridabad, Haryana and this
Court does not have territorial jurisdiction to entertain the
suit. Attention in this regard is drawn to page 37 of Part-III
file of CS(COMM) No.650/2016 being the purchase order
dated 27th August, 2011 placed by the defendant No.1 on the
plaintiff. Therefrom, it is shown that the address of the
defendant No.1 as well as the plaintiff is of Faridabad and the
purchase order on behalf of the defendant No.1 was issued by
Ajay Nahata who was then an employee of the defendant
No.1 and who is now no longer any employee of the
defendant No.1. It is argued that the said purchase order and
other purchase order for recovery of amounts with respect
whereto this suit is filed, were never issued.
6. I have already in the order dated 28th January, 2019
observed that the admitted factum of the defendants, in spite
of pendency of complaint of offence under Section 138 of the
Negotiable Instruments Act, 1881 issuing cheques in the total
sum of Rs.1,16,98,138/-, at least at this stage shows that the
said cheques were given for consideration. The version set up
by the defendants, of the said cheques having been given as
security for fresh supplies to be made by the plaintiff, does
not inspire confidence. When the disputes have already arisen
between parties and cases are pending, it is unbelievable that
cheques by way of security for payment of price of goods to
be supplied in future, would be given, that too without any
writing.
7. As far as the challenge to the territorial jurisdiction
of this Court is concerned, admittedly the registered office of
the plaintiff at all times has been at Delhi, within the
territorial jurisdiction of this Court. The invoices raised by the
plaintiff on the defendant No.1 also contain a clause "subject
to New Delhi jurisdiction". It is not as if, in spite of the
plaintiff having registered office at Delhi, no part of the cause
of action would accrue within the territory of Delhi. The
Courts at Delhi would have territorial jurisdiction, also on the
principle of „debtor must seek the creditor‟. Moreover the
territorial jurisdiction clause on the invoices under which the
goods are claimed to be supplied would be determinative.
Reference in this regard may be made to Shradha Wassan Vs.
Anil Goel 2009 SCC OnLine Del 1285 and IUP Jindal Metals
& Alloys Ltd. Vs. Conee Chains Private Ltd. 2013 SCC
OnLine Del 1454.
8. However, as far as the claim of the plaintiff for
balance principal amount, on account of interest @ 4% per
mensem is concerned, at least at this stage such claim appears
to be unconscionable and neither can be decreed nor security
can be directed to be furnished therefor.
9. Accordingly, leave to defend is granted to the
defendants No.1, 3 & 4, subject to the defendants No.1, 3 & 4
depositing in this Court a sum of Rs.1,16,98,138/- together
with interest therein @ 10% per annum from 30 th April, 2013
till the date of deposit, within eight weeks of today, as
sought."
2. The learned Single Judge further observed that the reasons which
prevailed in the order on leave to defend in CS(COMM).650/2016
would apply to the present suit as well. Thus, leave to defend was
granted to the defendants no.1, 3 and 4, subject to the defendants no.1,
3 and 4 depositing in Court a sum of Rs.45,80,406/- with interest @
10% per annum from 30.11.2013 till the date of deposit within eight
weeks from the date of the order in the second suit. The only
submission made before us by the learned counsel for the appellants is
that the order is extremely harsh in nature. The learned counsel
submits that the financial condition of the appellants is such that they
are unable to deposit the amount and resultantly, the purpose of
granting leave to defend would be lost. Counsel seeks modification of
the order as far as it relates to deposit of the amounts with interest.
3. Learned counsel for the respondent no.1 submits that he is the
contesting party and has been pursuing the matters for recovery of
money. He submits that complaints pertaining to Section 138 of the
N.I. Act were filed in the year 2012 and the civil suits were filed in the
year 2016 and till date he has not received any amount.
4. We have heard the learned counsels for the parties. Having regard to
the financial condition of the appellants and to meet the ends of
justice, we deem it appropriate to modify the order of the learned
Single Judge as far as it relates to deposit subject to the defendants
no.1, 3 and 4 depositing in Court 50% of the principal amount in both
the suits and a bank guarantee for the remaining amount. Subject to
the above modification, leave to contest is granted as directed by the
learned Single Judge. The order be complied with within six weeks
from today, failing which the consequences will follow.
5. It is made clear that the order will apply to the present appellants alone
and would not apply to defendant no.2 in the suit as no appeal has
been filed by him.
6. With these directions, both the appeals are disposed of.
7. All pending applications also stand disposed of.
G.S.SISTANI, J.
JYOTI SINGH, J.
APRIL 24, 2019
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