Delhi High Court
Dr Niaz Ahmed vs M/S Indcap Enterprieses ,Llp on 30 April, 2019
$~24
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Judgment: 30th April, 2019
+ RFA(OS) 82/2018 & C.M.49857/2018
DR NIAZ AHMED ..... Appellant
Through: Mr.Sanjay Kr.Chhetry and Mr.Shiv
B.Chhetry, Advocates
versus
M/S INDCAP ENTERPRIESES ,LLP ..... Respondent
Through: Mr.P.S.Bindra, Mr.Vinayak Marwah,
Mr.G.S.Patwalia and Mr.Bhubneshwar
Tyagi, Advocates
CORAM:
HON'BLE MR. JUSTICE G.S.SISTANI
HON'BLE MS. JUSTICE JYOTI SINGH
G.S. SISTANI, J. (ORAL)
1. This is a regular first appeal filed under Section 96 of the Code of
Civil Procedure (CPC) read with Order XLI CPC read with Section 10 of the
Delhi High Court Rules. The prayer made in this appeal is to set aside the
judgment and decree dated 13.09.2018 and order dated 03.10.2018 passed in
a suit filed by the respondent under the provisions of order XXXVII of the
CPC.
2. Learned counsel for the appellant submits that the parties had entered
into an agreement dated 29.10.2007 where, besides the appellant, his wife,
Mr. Arindom Ganguly and Integrity Geosciences Private Limited were also
parties. The appellant, his wife and the Company had sought investment of
Rs.3,24,54,000/- from the respondent, to be invested with the appellant and
his Company. It is submitted that although reliance is placed by the
respondent on agreements dated 12.04.2010, 31.03.2011 and 23.08.2012,
however, the agreement dated 23.08.2012 was signed by the appellant under
coercion, pressure, undue influence, force and threat of filing criminal
proceedings. It is also contended that the learned Single Judge has dismissed
the application seeking leave to defend and passed a decree without taking
note of the settled law that the appellant-defendant raised triable issues and
thus, the appellant was entitled to unconditional leave to defend. It is further
submitted that the amount was invested with the Company and thus, the
appellant alone could not have been held responsible for making the
payments. Accordingly, the defence raised by the appellant in the
application seeking leave to defend is reasonable and plausible and the
appellant was entitled to unconditional leave. It is contended that in fact, the
appellant has no liability at all. Moreover, the name of the respondent firm
was previously known as Ind Cap Finance Services Pvt. Ltd. Subsequently,
as the name changed, this too would be a triable issue. It is further submitted
that it is only upon evidence would the appellant be able to prove his case
and the trial could not have been cut short by rejecting the application
seeking leave to defend. Learned counsel for the appellant has also
contended that the recoveries which are sought to be made against the
appellant are itself a form of extortion and thus, the relief claimed in this
appeal should be allowed. Learned counsel submits that the appellant had
sought quashing of the proceedings initiated by the respondent under the
provisions of Section 138 of the Negotiable Instruments Act, being illegal
and in furtherance to the acts of the respondent of coercion, undue influence
and pressure, which would show that he had taken steps to move the State
machinery by filing such a petition. It is also the stand of the appellant that
the issuance of legal notice by the respondent to the appellant would show
that he was put under extreme pressure to pay, though no amount was due
and payable by the appellant to the respondent.
3. Mr. Bindra, learned counsel appearing for the respondent submits that
there is no infirmity in the order passed by the Single Judge. The appellant-
defendant in the suit has failed to raise a plausible defence. The defence
sought to be raised is not bonafide. It is sham and moonshine. It is further
contended that the appellant was a signatory to the first agreement dated
29.10.2007, where the amount invested by the respondent to the tune of
Rs.3,24,54,000/- stands duly admitted. The appellant was also a signatory to
the second agreement dated 12.04.2010, pursuant to which while
acknowledging the debt, 13 post-dated cheques amounting to
Rs.3,24,54,000/- were handed over to the respondent, details of which are
given below:
SI. No. Cheque No. Cheque Amount
1. 320351 Rs.25,00,000/-
2. 320352 Rs.25,00,000/-
3. 320353 Rs.25,00,000/-
4. 320354 Rs.25,00,000/-
5. 320355 Rs.25,00,000/-
6. 320356 Rs.25,00,000/-
7. 320357 Rs.25,00,000/-
8. 320358 Rs.25,00,000/-
9. 320359 Rs.25,00,000/-
10. 320360 Rs.25,00,000/-
11. 320361 Rs.25,00,000/-
12. 320362 Rs.25,00,000/-
13. 320363 Rs.24,54,000/-
TOTAL Rs.3,24,54,000/- .
4. Additionally, it is relevant that the aforesaid 13 cheques were given,
post the signing of the second agreement. In fact, Rs.1 crore was paid by the
appellant, which is reflected in the third agreement dated 31.03.2011, styled
as Memorandum of Understanding (MOU). The sum of Rs. 1 crore was
divided in two parts, viz. Rs. 50 lacs was paid to M/s. Indcap Financial
Services Pvt. Ltd. & Rs. 50 lacs was paid to Ms. Sonia Chand. The payment
was made by four cheques, two in favour of each. Since Rs. 1 Crore had
been paid, the MOU reflected a debt of Rs. 2,24,54,000/-. Under the said
MOU, 10 post dated cheques were handed over to the respondent and it was
mentioned in the MOU that the amounts due would be honoured and in case
of default, the appellant would be liable to pay interest @ 18% p.a. The
details of the 10 post dated cheques as reflected in the MOU are as under:
Date Chq. No. Amount
30/07/2011 798300 25,00,000/-
30/07/2011 79299 25,00,000/-
30/08/2011 798302 25,00,000/-
30/08/2011 798301 25,00,000/-
30/09/2011 798307 25,00,000/-
30/09/2011 798306 25,00,000/-
30/10/2011 798308 25,00,000/-
30/10/2011 798309 25,00,000/-
30/11/2011 798310 24,00,000/-
30/11/2011 798312 54,000/-
Total ______________
Rs. 2,24,54,000/-
5. Mr.Bindra contends that the appellant again failed to honour his
commitments and except for the last cheque of Rs. 54,000/-, all the
remaining 9 cheques were dishonoured with the remarks, "funds
insufficient". A notice was accordingly issued by the respondent on
12.12.2011 demanding payment of Rs. 2.24 Crores and upon failure to make
payment, the respondent filed proceedings under Section 138 of the NIA.
During the pendency of the said proceedings, another Memorandum of
Settlement was entered on 23.08.2012 by which the appellant undertook to
clear the outstandings as per the following schedule.
Instalment By (date) Amount (in Rs.)
First 11.09.12 50,00,000/-
Second 11.01.13 50,00,000/-
Third 11.04.13 40,00,000/-
Fourth 11.07.13 40,00,000/-
Fifth and Final 11.10.13 44,00,000/-
TOTAL 2, 24,00,000/-
6. Mr. Bindra points out that the schedule drawn up between the parties
was also not completely honoured by the appellant and only first instalment
of Rs. 50 Lacs was paid.
7. It is thus, the contention of the learned counsel for the respondent that
the conduct of the appellant in his consistent acknowledgments in writing;
acknowledgments having been acted upon; handing over post dated cheques;
part payments having been made, can lead to only one conclusion that the
appellant owed money to the respondent and admitted his liability and
resultantly, the defence sought to be raised is completely sham and
moonshine. He submits that the defence sought being raised by the appellant
in this Court of coercion, pressure, undue influence and force is completely
bogus as no threat, coercion or force can last for a period of 8 years during
which four agreements have been signed between the parties.
8. Mr. Bindra, learned counsel for the respondent further submits that
though the appellant has extensively raised the defence of signing the
agreements under extreme coercion, pressure, undue influence and force, and
has reserved his right to take legal action against the respondent, in fact, no
legal action has ever been initiated against the respondent.
9. It is also the stand of the respondent that his case is fully covered by a
recent decision by the Apex Court in the case of IDBI Trusteeship Services
Limited vs. Hubtown Limited 2017 (1) SCC 568, more particularly, reliance
is placed on para 17, which is reproduced hereinbelow:
"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."
10. We have heard learned counsel for the parties and considered their
rival submissions.
11. The submission of learned counsel for the appellant can be
summarised as under:
(i) The amount was invested by the respondent with M/s. Integrity
Geosciences Pvt. Ltd.
(ii) The appellant is not liable to make any payment;
(iii) The name of the respondent company has undergone a change
more than once;
(iv) The agreement dated 23.08.2012 has been signed under
coercion, pressure, undue influence and under threat of false
cases being filed against the appellant;
(v) The appellant had moved a petition under Section 482 Cr.P.C.
seeking quashing of proceedings under Section 138 of the
Negotiable Instruments Act, wherein liberty has been granted to
the appellant to raise all these grounds at the time of hearing of
the petition under Section 138 of the Negotiable Instruments
Act.
(vi) The defence raised by the appellant is plausible, reasonable and
the appellant has every likelihood of success. Accordingly,
unconditional leave should be granted and the matter be decided
after evidence is led.
(vii) The amounts due to the respondent have not been proved by the
respondent.
12. The submissions of Mr. Bindra can be summarised as under:
(i) There is no infirmity in the order of the learned Single Judge.
(ii) The defence raised by the appellant is sham and moonshine.
(iii) The appellant has made successive acknowledgments of debt,
which are evident upon reading of the four agreements dated
29.10.2007, 12.04.2010, 31.03.2011 and 23.08.2012.
(iv) In support of the terms of the agreement, post dated cheques
were handed over which were dishonoured, upon presentation.
(v) Part payments to the tune of Rs. 1 Crore 50 Lacs have been paid
upon signing of agreement.
(vi) The ground of threat, coercion and pressure is bogus and till
date, no criminal proceedings have been initiated by the
appellant.
13. A short question which arises for our consideration is whether the
defence raised by the appellant is bonafide and probable; has the appellant
been able to raise a triable issue or whether the defence of the appellant is
moonshine, sham, bogus and malafide.
14. The suit instituted by the respondent is based on a document which
has been styled as a Memorandum of settlement. The said document is duly
signed by the appellant. The signatures are not denied and nor is the
execution of the document.
15. The following terms of this agreement would be relevant for
appreciating the arguments of learned counsel for the parties:
"1. Dr. Niaz admits that as on date he owes to Indcap a
principal sum of Rs. 2,24,00,000/- (Rupees Two Crore Twenty
Four Lakh). Dr. Niaz also admits that in case of default in
payment as per the schedule agreed in this settlement he (Dr.
Niaz) shall be liable to pay interest @ 18% per annum on the
above amount of Rs. 2.24 Crore from the date of receipt of the
loan (29.10.07) till all the amounts (principal + interest +
costs) are paid to Indcap.
2. That now Dr. Niaz has offered to pay the aforesaid entire
principal amount of Rs. 2.24 Crore, by 11.10.13, in instalments
as per the following schedule:-
Instalment By (date) Amount (in Rs.)
First 11.09.12 50,00,000/-
Second 11.01.13 50,00,000/-
Third 11.04.13 40,00,000/-
Fourth 11.07.13 40,00,000/-
Fifth and Final 11.10.13 44,00,000/-
TOTAL 2, 24,00,000/-
xxx xxx xxx
11. That the parties hereto confirm that the above settlement
has been arrived at by the parties out of their free will and
volition and without any force, coercion, influence, inducement,
etc."
16. It is relevant to note that in the preamble of this agreement, the
background has been given with regard to the appellant and one Shri
Arindom Ganguly, having approached the respondent, M/s. Indcap Financial
Services Pvt. Ltd. for financial assistance. The preamble also reflects that
this company stands amalgamated as M/s. Indcap Enterprises LLP. The
preamble also reflects that a sum of Rs. 3,24,54,000/- was invested with M/s.
Integrity Geo Sciences Pvt. Ltd. and an agreement dated 29.10.2007 was
signed between the parties. Subsequent agreement takes note of the fact that
a sum of Rs.1 Crore stands paid leaving a balance of Rs. 2,24,54,000/- which
incidentally is the suit amount.
17. We have, in the paragraphs aforegoing, referred to the earlier 3
agreements executed between the parties dated 29.10.2007, 12.04.2010 and
31.03.2011. What is relevant to notice is that consistently in all the
agreements, the appellant has been a signatory. Another important factor is
that the first agreement refers to the financial assistance to the tune of
Rs.3,24,54,000/-. The second agreement styled as Memorandum of
Understanding dated 12.04.2010 as well as the third agreement dated
31.03.2011 and the last agreement dated 23.08.2012, all reflect that there
were transactions between the parties and the amounts were outstanding to
the respondent and that there had been part payments.
18. To say that the agreement dated 23.08.2012 has been signed under
coercion, pressure and threat, in our view, is a completely sham and
moonshine defence as it cannot be expected that a person would be
threatened for a long period from 29.10.2007 to the signing of the last
agreement on 23.08.2012. Nowhere between this span of so many years has
the appellant ever approached any court of law or ever filed a police
complaint. Neither it is the case of the appellant that the case was not
registered on his making efforts to do so nor it is the case of the appellant
that he was prevented in any manner from taking recourse to the provisions
of Section 156(3) Cr.P.C.
19. A reading of the leave to defend application, more particularly,
paragraph 6, which has been extracted by the learned Single Judge in detail,
would show that the appellant had consistently taken a stand that he would
be taking action against the respondent for the illegal acts committed but no
such action has been initiated. The signatures on the agreement are not
disputed. Handing over of cheques and part payments made during this
period are clearly indicative of the acknowledgement of debt and liability by
the appellant. Another factor which cannot be ignored is that to clear the
debt, the appellant had also sought permission of the respondent to involve
overseas investors, which was obviously an act by the appellant to clear his
debt.
20. In response to the stand taken by the respondent that no criminal
complaint had been filed, counsel for the appellant submits that he had filed
a petition under Section 482 Cr.P.C. for quashing of the proceedings under
Section 138 of the Negotiable Instruments Act. He submits that he had
agitated this question before the learned Single Judge of this Court and the
Court granted liberty to raise the grounds before the concerned court.
According to us, this cannot be a plausible defence available to the appellant
to oppose the suit filed by the respondent. Para 17.5 in the case of IDBI
Trusteeship Services Limited (supra) would squarely apply to the facts of
this case. i.e. "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."
21. In our view thus, the learned Single Judge has rightly dismissed the
application of the appellant seeking leave to defend. There is no merit in the
appeal and the same is accordingly dismissed.
G.S. SISTANI, J
JYOTI SINGH, J
APRIL 30, 2019
rb/rd
