Smt. Avtar Kaur vs Mrs. Zuleikha Karnik
2019 Latest Caselaw 1679 Del

$~11 & 27
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
+    CS(OS) 153/2018
     SMT. AVTAR KAUR                            ..... Plaintiff
                     Through: Mr. Sukhbir Singh, Adv.
                      versus
         MRS. ZULEIKHA KARNIK                            ..... Defendant
                          Through:    Mr. Tajinder Singh, Adv.
         CORAM:
         HON'BLE MR. JUSTICE SANJEEV NARULA
                      ORDER

%                     26.03.2019
SANJEEV NARULA, J.:

I.A. 921/2019 (delay)

1. For the reasons stated in the application, the delay in filing the application is condoned and the application is disposed of.

I.A. 4150/2019 (delay)

2. For the reasons stated in the application, the delay in re-filing the application is condoned and the application is disposed of.

I.A. 920/2019 (Application under Order XXXVII Rule 3 (5) read with Section 151 CPC)

3. The Plaintiff has approached this Court by invoking Order XXXVII of Code of Civil Procedure, 1908. The prayers made in the suit read as under;

" (i) To pass a decree for Rs.2,65,00,000/- (Rupees Two Crore & Sixty Five Lacs only), being the amount of bill of exchange, under Order XXXVII CPC, in favour of the plaintiff and against the defendant.

(ii) To pass a decree for a sum of liquidated damages for Rs.25,000,00/- (Rs. Twenty Five Lac only), under Order XXXVII CPC, in favour of the plaintiff and against the defendant.

(iii) To allow the cost of litigation, in favour of the plaintiff and against the defendant."

Brief facts

4. Before dealing with the grounds urged in the present application, it would be apposite to note relevant facts. The parties to the present suit entered into an agreement to Sale dated 01st April. 2015, whereby the Defendant agreed to sell 25% share of the agricultural farm land admeasuring 17 Bigha & 14 biswas, situated in the revenue estate of village Bijwasan, Mehrauli to the Plaintiff for a total sale consideration of Rs.3,00,000,00/-. The Plaintiff (vendee) paid to Defendant (vendor) a sum of Rs.1,00,00,000/- as advanced/earnest money at the time of execution of the Agreement to Sell. The Defendant agreed to execute the registered Sale Deed in respect of said property on or before 30th September, 2015, after obtaining NOC, from the other partners of the Defendant. Plaintiff expressed his willingness to complete the sale transaction but the Defendant did not agree and refused to receive the balance sale consideration and execute the Sale Deed.

5. A legal notice dated 16th June, 2016 was served on the Defendant calling upon him to complete the sale transaction. In this background, the parties then decided to settle the matter amicably. The Defendant agreed

to make payment of Rs.2,65,000,00/- (Rupees Two Crore & Sixty Five Lacs Only) to the Plaintiff. The terms of the settlement were recorded in a settlement cum MOU dated 30th June, 2016, which inter alia provided as under:

" 1. That in pursuance of this SETTLEMENT the first party has agreed, undertaken and offered to pay a total sum of Rs.2,65,00,000/- (Rupees Two Crore & Sixty Five Lacs only), in favour of the Second Party, voluntarily, against part sale consideration, which was received by first party from second party.

2. That the First party has issued Cheque bearing No.640046 for Rs. Rs.2,65,00,000/- (Rupees Two Crore & Sixty Five Lacs only),dated 30.09.2016, drawn at DCB Bank, New Delhi in favour of the Second Party, to discharge her above said liability and the Second party has received said cheques as such both the parties have amicably settled their matter.

3. That the first party shall not act in contravention to this Settlement cum Memorandum of Understanding, in any manner. The First Party has undertaken to maintain sufficient amount in her Bank. Account as to facilitate the clearance/encashment of above mentioned Cheuqe.

4. That the first party shall be liable to be prosecuted under Section 138 Negotiable Instruments Act, in case she failed to maintain sufficient amount in her Bank Account as to facilitate the clearance/encashment of above Cheque and First party also undertake to pay additional damages for a sum of Rs.25,00,000/- (Rs. Twenty Five Lacs only) to the Second party, besides the liability under Section 138 Negotiable Instruments Act, under such circumstances. The second party shall also be at liberty to take civil remedies against the First party, within the jurisdiction of Delhi Courts and the first party shall be liable to pay such loss, damages, sufferings as suffered by the second party for breach of this Settlement cum Memorandum of Understanding, for which First party undertakes to bear.

5. That this transaction has taken place at Delhi and as such Delhi Courts shall have exclusive jurisdiction any dispute arising out of or in any way touching to or concerning this Settlement cum Memorandum of Understanding. Both the parties undertake not to dispute the jurisdiction of Delhi Courts. Parties to this Settlement cum Memorandum of Understanding have executed this Settlement cum Memorandum of Understanding voluntarily, out of their free consent and without any threat, coercion or pressure from any corner and both the parties shall remain bound by the terms and conditions of this Settlement cum Memorandum of Understanding."

6. In accordance with the aforesaid terms, the cheque bearing No.640046 for Rs.2,65,00,000/- (Rupees Two Crore & Sixty Five Lacs Only) dated 30th June, 2016 drawn on DCB Bank, New Delhi was handed over to the Plaintiff. On presentation for encashment, the said cheque got dishonoured with the remarks "insufficient funds". Plaintiff then issued a demand notice dated 17th October, 2016 demanding the payment of the dishonoured cheque. The Defendant yet again failed to make the payment and predictably, the Plaintiff filed a complaint under Section 138 of Negotiable Instrument Act, 1881. During the pendency of the said complaint before the Court of Ld. Metropolitan Magistrate, the parties were referred to the Mediation Centre, Saket. In the mediation, the parties, once again arrived at a settlement. The terms of the said settlement have been recorded in the mediation report dated 08th August, 2017 which read as under;

"After due discussions, both parties have agreed to settle their disputes in full and final on the following terms and conditions:

(1) It is agreed between the parties that the second party, will pay an amount of Rs.2,00,00,000/- (Rupees two core only) to the first party, towards full and final amount against the cheque/s involved in the present complaint case. (2) It is also agreed between the parties that the settled amount of Rs. 2,00,00,000/- (Rupees two core only) will be paid by the second party to the first party within four months which will be counted from 02.08.2017 in this was the second party will pay the above-mentioned settled amount on or before 02.12.2017 by way of RTGS/DD/NEFT/Cash.

(3) It is agreed between the parties that in case of default in making the aforementioned payment by the second party within the above-mentioned period, the first party shall be liable to pursue against the second party as per law.

(4) It is also agreed between the parties that on receiving/realization of the entire settled amount, nothing shall remain due to the parties against each other in respect of the present complaint case and the first party shall withdraw/compound the present complaint by making statement before the learned referral court.

This settlement has been voluntarily arrived at between the parties with their own free will and without any force, pressure or coercion and both the parties are bound by the terms and conditions mentioned herein above."

7. In accordance with the aforesaid terms of the settlement, the Defendant was required to make a payment of Rs.2,00,000,00/- to the Plaintiff within a period of four months from 02nd August, 2017. The Defendant, however, did not adhere to the aforesaid condition and again requested for time to make the payment. The Plaintiff has since filed an application under Section 431 read with Section 421 Cr. PC. against the Defendant. The said proceedings are stated to be pending before the Court of Ld.

Metropolitan Magistrate, Saket.

Grounds for Leave to defend

8. The Defendant by way of this present application seeks unconditional leave to defend the present suit. On perusal of the affidavit filed along with the said application, it is noticed that the singular ground seeking leave to defend is that the Settlement Agreement dated 08th August, 2017 supersedes the terms and conditions of the previous MOU dated 30th June, 2016 and thus, the terms of the said MOU are no longer enforceable.

9. The learned counsel for the Defendant has laid much emphasis on the settlement arrived at between the parties in the Mediation Centre. He argues that the terms of the MOU dated 30th June, 2016 stand overridden by virtue of the settlement dated 8th August 2017. The affidavit demonstrates that Defendant does not deny the execution of the MOU dated 30th June, 2016. The terms contained in the said MOU therefore are beyond controversy. The only question that the Court is being called upon to examine is that as to whether the terms the settlement recorded before the Mediation Centre render the MOU ineffective.

10. It is crucial to note that the terms of settlement recorded in the mediation makes no reference in terms of the MOU. The proceedings before the Mediation Centre were pursuant to the criminal complaint filed by the Plaintiff on account of dishonour of the Cheque given under the MOU. No doubt, the amount of the dishonoured cheque of

Rs.2,65,000,000/- was agreed to be settled for Rs.2,00,000,00/-, however the settlement was arrived at in the criminal proceedings and more pertinently that settlement was conditional. The condition being that the Defendant had to make the payment of Rs.2,00,000,00/- within a period of four months from 02nd August, 2017 which expired on 02nd December, 2017. Concededly, the Defendant has failed to discharge the obligations recorded in the said settlement and make the payment within the aforesaid time period. The Defendant has only made a payment of Rs.10,000,00/- to the Plaintiff and the said payment cannot in any manner be considered as a complete discharge of the obligations recorded in the settlement terms before the Mediation Centre. It is further noteworthy that Clause 3 of the settlement term categorically records that in case of default in making the payment of Rs.2,00,000,00/- within the mentioned period, the first party would be free to pursue it's remedies against the second party as per the law. Therefore, the terms of the settlement recorded before the Mediation Centre, at the highest can be construed to be suspension of the obligations of the parties subject to the fulfilment of the terms of the settlement. The Defendant, not having complied with the said terms, cannot be permitted take benefit of the said settlement. The Plaintiff is thus entitled to pursue its remedy in terms of the MOU dated 30th June, 2016. The said agreement cannot be said to be unenforceable or superseded particularly in view of the default and breach committed by the Defendant.

11. The law with respect to grant of leave to defend has been well settled by a catena of judgements of the Supreme Court and this Court. The

Supreme Court in the case of Mechelec Engineers & Manufacturers vs. Basic Equipment Corporation AIR 1977 SC577 has succinctly defined the principles for deciding the question of grant of leave to defend in the following words:

"8. In Smt. Kiranmoyee Dassi and Anr. v. Dr. J. Chatterjee 49 C.W.N. 246 , Das. J., after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by order 17 C.P.C. in the form of the following propositions (at p. 253) :

(a) If the Defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the Defendant is entitled to unconditional leave to defend.

(b) 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.

(c) If the Defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he has a defence, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the Plaintiff is not entitled to judgment and the Defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security.

(d) If the Defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the Plaintiff is entitled to leave to sign judgment and the Defendant is not entitled to leave to defend.

(e) If the Defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the Plaintiff is entitled to leave to sign judgment, the Court may protect the Plaintiff by only allowing the defence to proceed if

the amount claimed is paid into Court or otherwise secured and give leave to the Defendant on such condition, and thereby show mercy to the Defendant by enabling him to try to prove a defence."

12. In V.K. Enterprises v. Shiva Steels, AIR 2010 SC the Apex Court has drawn up the parameters to be considered by the Court while dealing with the application for leave to defend. Relevant paras of the judgment reads as under:

"8. Order 37, C.P.C. has been included in the Code of Civil Procedure in order to allow a person, who has a clear and undisputed claim in respect of any monetary dues, to recover the dues quickly by a summary procedure instead of taking the long route of a regular suit. The Courts have consistently held that if the affidavit filed by the defendant discloses a triable issue that is at least plausible, leave should be granted, but when the defence raised appears to be moonshine and sham, unconditional leave to defend cannot be granted. What is required to be examined for grant of leave is whether the defence taken in the application under Order 37 Rule 3, C.P.C. makes out a case, which if established, would be a plausible defence in a regular suit. In matters relating to dishonour of cheques, the aforesaid principle becomes more relevant as the cheques are issued normally for liquidation of dues which are admitted. In the instant case, the defence would have been plausible had it not been for the fact that the allegations relating to the interpolation of the cheque is without substance and the ledger accounts relating to the dues, clearly demonstrated that such dues had been settled between the parties. Moreover, the issuance of the cheque had never been disputed on behalf of the Petitioner whose case was that the same had been given on account of security and not for presentation, but an attempt had been made to misuse the same by dishonest means.

9. Against such cogent evidence produced by the plaintiff/respondent, there is only an oral denial which is not supported by any corroborative evidence from the side of the Petitioner. On the other hand, the ledger book maintained by the Respondent and settled by the Petitioner had been produced on behalf of the Respondent in order to prove the transactions in respect of which the cheque in question had been issued by the Petitioner.

10. In our view, the defence raised by the Petitioner does not make out any triable issue and the High Court, has dealt with the matter correctly and has justifiably rejected the Petitioner's application under Order 37 Rule 3, C.P.C. and the same does not call for interference by this Court. The Special Leave Petition is, therefore, dismissed, but without any order as to costs." (emphasis supplied)

13. The Defence raised in the present case is clearly moonshine, sham, illusionary and raises no triable issue. The application is completely devoid of merit and is thus liable to be dismissed.

14. The terms of the settlement dated 30th June, 2016 being admitted, the only question that requires consideration is regarding the relief the Plaintiff is entitled to.

15. The liability recorded in the MOU is for a sum of Rs. 2,65,00,000/-. The cheque issued by the Defendant for discharge of obligations is also admitted. The dishonour of the said cheque is also an admitted position between the parties. The MOU held to be enforceable, the Plaintiff is consequently entitled to recover the said amount of Rs.2,65,00,000/-. The Plaintiff has claimed an additional amount of Rs.25,000,00/- as liquidated

damages. Clause- 4 of the agreement in question provides that in the event, the Defendant does not maintain sufficient amount in her bank account for clearance of the cheque would be liable to pay additional damages of an amount of Rs.25,000,00/- to the Plaintiff. This stipulation is in the nature of the ensuring enforcement of the obligations under the agreement. The amount of Rs. 25,000,00/- works out to be less than 10% of the amount agreed to be paid by the Defendant to the Plaintiff and is therefore reasonable.

16. Accordingly, suit is decreed in favour of the Plaintiff and against the defendant for recovery of an amount of Rs. 2,65,00,000/- (Rupees Two Crore & Sixty Five Lacs Only) as the principal amount due to Plaintiff in terms of the MOU dated 30th June 2016. A further decree is passed in favour of the Plaintiff for Rs. 25,00,000/- ( Rupees twenty five lacs only) towards damages and due to the Plaintiff as per MOU. An amount of Rs.10,000,00/- is stated to have been paid by the Defendant to the Plaintiff. The said amount would be adjusted against the said decretal amount.

17. The Suit is decreed in the above terms and all the pending applications are disposed of. The Plaintiff shall also be entitled to costs of this suit as per schedule. Decree sheet be drawn accordingly.

SANJEEV NARULA, J MARCH 26, 2019/Pallavi