Ritambhra Chawla vs M/S Vayam Technologies Ltd.
2019 Latest Caselaw 2933 Del

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*       IN THE HIGH COURT OF DELHI AT NEW DELHI

                                             Reserved on: 22nd May, 2019
                                           Pronounced on: 01st July, 2019
+       C.R.P. 281/2018 & CM Appl. 892/2019

        RITAMBHRA CHAWLA                       ..... Petitioner
                Through: Mr. Adab Singh Kapoor, Advocate.

                                  versus

        M/S VAYAM TECHNOLOGIES LTD.          ..... Respondents
                Through: Mr. Jeewesh Prakash, Advocate.


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CORAM:
HON'BLE MR. JUSTICE PRATEEK JALAN

                            JUDGMENT

1. The revisionist is the plaintiff in Civil Suit No. 423/2018, filed under Order XXXVII of the Code of Civil Procedure, 1908 (CPC), pending before the Additional District Judge-05, Patiala House Courts, New Delhi. She assails an order dated 13.11.2018, by which the defendant (respondent herein) was granted unconditional leave to defend the suit.

2. The plaintiff is a former employee of the defendant, having been employed as an IT Consultant from 09.08.2010, until she resigned on 28.10.2015. The suit was filed for recovery of unpaid dues

of ₹3,91,641/- which, according to the plaintiff, was admitted by the defendant, alongwith interest thereupon.

3. The case of the plaintiff is that she resigned on account of non- payment of her salary for a period of six months. By an e-mail dated 21.01.2016, she sought a certificate of full and final settlement and a statement of accounts. She received a response dated 22.01.2016 from one Shankar Jha to which a statement titled "Full and Final Settlement" was attached. The said statement contained a purported calculation of the salary for the month of October, 2015, as well as addition of an amount of ₹2,00,646/- towards "Pending Salary - June14, July14, Aug14 & Sep15" and an amount of ₹1,15,500/- towards leave encashment. After making various adjustments, it disclosed a "Net Payable" of ₹3,91,641/-.

4. The plaintiff sent a further e-mail on 27.06.2016 to said Shankar Jha and one Rajkumar Arora (another official of the defendant) in which she mentioned the outstanding amount as per the above statement, and requested for at least a partial release of her dues. Further reminders dated 20.02.2017 (to Rajkumar Arora and Ashok Tiwari - the Managing Director of the defendant), 05.04.2017 and 20.09.2017 (both to Vishnu Bhardwaj, Rajkumar Arora and Ashok Tiwari) were sent.

5. The only response placed on record was from Vishnu Bhardwaj, Deputy General Manager - HR of the defendant, by an e-mail dated 21.02.2017, stating that the company was working on cases of February, 2014 and her case was of October, 2015. She was therefore

informed that it would take further time and was requested to wait until approached by the defendant.

6. The plaintiff, through counsel, addressed a legal notice dated 08.01.2018 to the defendant, to which a response was sent on 11.04.2018 by one Apoorva Jain, on behalf of the defendant. It was inter alia stated therein as follows:-

"3. That the company has been facing serious financial hardships for the last 3 years due to cancellation of many government projects and also due to excessive delays in payments by it's customers. This has resulted in non-payment of salaries and other dues to it's staff.

4. That the management of the company has made a liquidation plan to settle outstanding dues of its ex- employees in installments of per month depending upon the funds availability.

5. That management of the company is not running away from its liability but it is constrained to adopt arrangements of this nature to meet its obligations.

6. That management and its officials has all the bonafide intentions to settle outstanding dues of every ex- employee of the company but due to financial hardships we are unable to pay dues in one go.

7. That management of the company is willing to settle your client's dues in monthly installments and this is the best possible manner by which we can settle your client's dues in the present financial crisis which is being faced by the company."

It appears that the plaintiff has also instituted criminal proceedings in respect of which the defendant has addressed a similar communication to the concerned police station.

7. The application of the defendant for leave to defend the suit was also signed by the said Apoorva Jain, and she has affirmed an affidavit dated 22.10.2018 in support thereof. The defence raised is principally that the full and final settlement statement relied upon by the defendant does not carry the signature of the duly authorized officials, and is, thus, disputed. The defendant's liability has been denied on the basis that the facts disclose collusion between the plaintiff and the said Shankar Jha who had issued the full and final settlement statement. It has also been contended that the plaintiff's claims are, at least partially, barred by limitation.

8. In the arguments advanced before this Court, as well as the written submissions filed, learned counsel for the revisionist has relied upon extracts, in respect of the defendant company, available on the website of Ministry of Corporate Affairs, to contend that the said Shankar Jha is a director of the company, and to meet the respondent's case regarding financial hardship. In view of the fact that these documents were not part of the Trial Court record, I do not consider it proper to take the same into account for the purposes of deciding this petition. However, it is open to the revisionist to make an appropriate application to the Trial Court, in this regard, if so advised.

9. The Trial Court has granted unconditional leave to defend on the following reasoning:-

"7. I have gone through the file. In its leave to defend application, defendant has nowhere denied that the plaintiff was not its employee or no dues are payable to the plaintiff by the defendant on account of her salaries. However, the FFS on which the plaintiff is relying for its claim has been disputed by the defendant. Defendant has averred that the same has been obtained in collusion with the employee of the defendant company. I have gone through the said document. The same does not bear the signature of any person. Plaintiff sent an email for the issuance of FFS on 21.1.2016 and on the very next day, the FFS has been sent to the plaintiff. Neither in its reply dated 11.4.2018 sent in response to the legal notice dated 8.1.2018 of the plaintiff, defendant admitted that the Rs.3,91,641/- is due to the plaintiff nor in the letter to the police the said amount has been admitted by the defendant to be payable to the plaintiff. What has been averred is that the company is facing serious financial hardships and is willing to settle the dues of the plaintiff in monthly installments. The defendant has also urged that the claim of the plaintiff is barred by law of limitation. Though not referred to or relied upon, it has been held in judgment - M/s Mechalec Engineers Vs. M/s Basic Equipments Corpn, AIR 1977 SC 577 that if the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend.

8. In these circumstances and for the aforesaid reasons, I am of the considered opinion that defendant is entitled to unconditional grant of leave to defend the suit. Whether the email sent on behalf of the defendant was

actually sent by a duly authorized person or not or whether the same is a forged and fabricated document can be adjudicated only after the conclusion of the trial. Hence, the application seeking leave to defend filed on behalf of the defendant company is allowed. Defendant is granted unconditional leave to defend the suit. However, nothing in this order shall tantamount to an expression of opinion on the merits of the case during trial. The application stands disposed of."

10. It may be noticed, at the outset, that the Trial Court has relied upon the judgment of the Supreme Court in Mechalec Engineers & Manufacturers vs. Basic Equipment Corporation AIR 1977 SC 577, without noticing that the tests laid down therein have been superseded by the subsequent judgment of the Supreme Court in IDBI Trusteeship Services Limited vs. Hubtown Limited, (2017) 1 SCC 568. Paragraph 17 of the judgment in IDBI reads as follows:

"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."

11. Although the respondent, in its written submission, has taken the plea that the Supreme Court in IDBI (supra) could not have overruled the judgment of the three Judge Bench in Mechalec (supra),

I do not consider an argument of that nature to be available to the parties before this Court. A later judgment of the Supreme Court, considering, explaining and distinguishing an earlier judgment, is undoubtedly binding upon me. In any event, the judgment in IDBI (supra) turns on an amendment to Order XXXVII Rule 3, which brings it in line with the provisions considered in the earlier judgment of a four-Judge Bench in Milkhiram (India) Private Ltd v. Chamanlal Bros., AIR 1965 SC 1698. The contention of the respondent on this score is, therefore, rejected.

12. In the present case, the Trial Court has noticed that the full and final settlement sent to the plaintiff does not bear any signature. However, the Trial Court appears to have missed the subsequent exchange of e-mails - addressed not just to Shankar Jha, but also to other officials of the defendant - wherein the plaintiff has reiterated the amount and the fact that she had received the full and final statement from the defendant. Nothing has been placed on record to show that the liability or amount was contemporaneously disputed. The Trial Court has further observed that the amount of ₹3,91,641/- was not admitted in the communication dated 11.04.2018 sent by the defendant to the counsel for the plaintiff and the police. However, it is also apparent that in the legal notice dated 08.01.2018, as well in the complaint dated 05.03.2018, there was a clear reference to the full and final settlement, and of the said amount. The defendant's communications dated 11.04.2018 did not contain any express denial.

13. In these circumstances, I am of the view that the grant of unconditional leave to defend in favour of the defendant cannot be sustained, in view of paragraph 17.1 and 17.2 of IDBI (supra). The case is one where the Court is, at the very least, left with some doubt about the defendant's good faith or the genuineness of the triable issues raised, as set out in paragraph 17.3 thereof. The defendant must, therefore, be put to terms, failing which it would not be entitled to leave to defend.

14. Keeping in mind the observations of the Supreme Court in paragraph 17.3 of IDBI (supra), and the nature of defences raised by the defendant, including the defence of limitation, the defendant is directed to deposit a sum of ₹2,00,000/- with the Trial Court in two installments. The sum of ₹1,00,000/- may be deposited within three weeks from today, and the balance sum of ₹1,00,000/- within three weeks thereafter. The failure of the defendant to deposit either of the installments as directed shall disentitle it from leave to defend. The parties shall appear before the Trial Court on 29.07.2019 for further proceedings. If the first installment of ₹1,00,000/- has been deposited by that date, the Trial Court shall proceed with the suit, subject to deposit of the second installment of ₹1,00,000/- within the time directed above. If the first installment has not been deposited in terms of the directions contained herein, the defendant's application for leave to defend will stand dismissed, and the Trial Court shall proceed accordingly.

15. The revision petition is partly allowed in the terms aforesaid. However, the observations contained in this judgment will not prejudice the rights and contentions of the parties in the trial of the suit. The pending applications also stands disposed of.

PRATEEK JALAN, J.

JULY 01, 2019