Delhi High Court
M/S Paras Fab vs M/S Sukh Sagar Silk And Saree on 27 January, 2022
$~28 (2022 Cause List)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 27th January, 2022
+ CM(M) 87/2022
M/S PARAS FAB ..... Petitioner
Through: Mr. Sunil Choudhary, Advocate
for Petitioner-Defendant.
versus
M/S SUKH SAGAR SILK AND SAREE ..... Respondent
Through: Mr. Parveen Kumar Aggarwal,
Advocate for Respondent-
Plaintiff (9873935534).
CORAM:
HON'BLE MR. JUSTICE PRATEEK JALAN
PRATEEK JALAN, J. (ORAL)
%
The proceedings in the matter have been conducted through
video conferencing.
CM APPL. 4619/2022 (exemption for filing certified copies of
annexures).
Exemption allowed, subject to all just exceptions.
The application stands disposed of.
CM(M) 87/2022 & CM APPL. 4618/2022 (stay)
1. Issue notice. Mr. Parveen Kumar Aggarwal, learned counsel,
accepts notice on behalf of respondent-plaintiff. The petition is taken
up for hearing with the consent of learned counsel for the parties.
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:31.01.2022
2. The petitioner-defendant assails an order dated 11.11.2021
passed by the learned District Judge, Commercial Court-02, South
District, Saket Courts, New Delhi in CS (COMM) 431/2020, whereby
the Trial Court has granted leave to defend under Order XXXVII of
the Code of Civil Procedure, 1908 ["CPC"], conditional upon deposit
of the principal amount claimed of Rs.33,02,192/-.
3. Parties will be referred to by their status in the Trial Court.
4. The plaintiff has filed the suit before the Trial Court under
Order XXXVII of the CPC. The suit arises out of a claim for payment
under various invoices issued by the plaintiff for supply of goods to
the defendant. The plaintiff seeks recovery of an amount of
Rs.40,44,452/- along with further interest @ 24% per annum from
08.11.2020 until realisation.
5. A list of invoices is contained in paragraph 4 of the plaint (at
page 33 of the petition), wherein the plaintiff claims that goods worth
Rs.52,88,145/- were supplied to the defendant. The copies of the
invoices have been annexed to the present petition [Annexure P-9 to
Annexure P-20] and have also been filed before the Trial Court. In
paragraph 6 of the plaint, the plaintiff has averred that the defendant
made part payments amounting to Rs.17,69,062/-. The plaintiff has
claimed the principal amount of Rs.33,02,192/- on this basis, and has
also claimed interest @ 24% from the respective dates of sale. The
pre-suit interest has thus been calculated as Rs.7,42,260/- and a further
claim for interest has been included in prayer clause (i) of the plaint.
6. In paragraph 11 of the plaint, the plaintiff has averred that a
legal notice dated 07.09.2020 was served upon the defendant claiming
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:31.01.2022
an amount of Rs.43,34,674/- on the aforesaid account, against which
the defendant made part payment of an amount of Rs.4,50,000/-. The
defendant also replied to the legal notice through counsel on
13.10.2020.
7. After receipt of summons, the defendant applied for leave to
defend the suit. The defendant has taken various defences regarding
maintainability of the suit on the ground that the plaintiff has not filed
the complete bills as alleged by it in the plaint, that the bills do not
bear acknowledgement by the defendant, that proof of actual delivery
of material has not been filed, and that a suit under Order XXXVII of
the CPC cannot lie in respect of pre-suit interest.
8. The Trial Court, by the impugned order, has recorded the
aforesaid contentions and granted leave to defend upon deposit of the
principal outstanding amount claimed by the plaintiff. In reaching this
conclusion, the Trial Court has cited several decisions of the Supreme
Court including those in Santosh Kumar vs. Bhai Mool Singh1,
Milkhiram (India) Private Ltd. and Other vs. Chamanlal Bros.2 and
Mechelec Engineers and Manufacturers vs. Basic Equipment
Corporation3.
9. Applying the principles laid down therein, the Trial Court has
held that the averments in the plaint regarding the invoices, the
purchases and the payments, have not been specifically denied in the
defendant's application for leave to defend. At this stage, the Trial
Court has not found the defence of payment having been made for the
(1958) SCR 1211
AIR 1965 SC 1698
AIR 1977 SC 577
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:31.01.2022
materials received sufficient to accord unconditional leave to defend.
On the question of interest, however, the Trial Court has found in
favour of the defendant that the interest rate is not mentioned on all
the bills placed by the plaintiff and has, therefore, limited the deposit
required to the principal amount claimed.
10. I have heard Mr. Sunil Choudhary, learned counsel for the
petitioner-defendant and Mr. Parveen Kumar Aggarwal, learned
counsel for the respondent-plaintiff.
11. The principles governing grant of leave to defend under Order
XXXVII of the CPC have recently been elaborated by the Supreme
Court in B.L. Kashyap and Sons Ltd. vs. JMS Steels and Power
Corporation and Another4. The judgments in Milkhiram5 and
Mechelec Engineers6 referred to in the impugned order of the Trial
Court, have also been dealt with in the aforesaid judgment. It may be
mentioned that, in the intervening judgment in IDBI Trusteeship
Services Limited vs. Hubtown Limited7, the Supreme Court had held
that the principles laid down in Mechelec Engineers8 had been
superseded by the amendment to Order XXXVII Rule 3 of the CPC.
In B.L. Kashyap9 however, the Court has synthesised the principles
laid down in Mechelec Engineers10 and IDBI Trusteeship11 in the
following terms:-
2022 SCC OnLine SC 59
Supra (note 2)
Supra (note 3)
(2017) 1 SCC 568
Supra (note 3)
Supra (note 4)
Supra (note 3)
Supra (note 7)
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:31.01.2022
"40. It is at once clear that even though in the case of
IDBI Trusteeship, this Court has observed that the
principles stated in paragraph 8 of Mechelec Engineers'
case shall stand superseded in the wake of amendment of
Rule 3 of Order XXXVII but, on the core theme, the
principles remain the same that grant of leave to defend
(with or without conditions) is the ordinary rule; and
denial of leave to defend is an exception. Putting it in
other words, generally, the prayer for leave to defend is
to be denied in such cases where the defendant has
practically no defence and is unable to give out even a
semblance of triable issues before the Court.
41. As noticed, if the defendant satisfies the Court that
he has substantial defence, i.e., a defence which is likely
to succeed, he is entitled to unconditional leave to
defend. In the second eventuality, where the defendant
raises triable issues indicating a fair or bonafide or
reasonable defence, albeit not a positively good defence,
he would be ordinarily entitled to unconditional leave to
defend. In the third eventuality, where the defendant
raises triable issues, but it remains doubtful if the
defendant is raising the same in good faith or about
genuineness of the issues, the Trial Court is expected to
balance the requirements of expeditious disposal of
commercial causes on one hand and of not shutting out
triable issues by unduly severe orders on the other.
Therefore, the Trial Court may impose conditions both
as to time or mode of trial as well as payment into the
Court or furnishing security. In the fourth eventuality,
where the proposed defence appear to be plausible but
improbable, heightened conditions may be imposed as to
the time or mode of trial as also of payment into the
Court or furnishing security or both, which may extend
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Digitally Signed By:SHITU
NAGPAL
Signing Date:31.01.2022
to the entire principal sum together with just and
requisite interest.
42. Thus, it could be seen that in the case of substantial
defence, the defendant is entitled to unconditional leave;
and even in the case of a triable issue on a fair and
reasonable defence, the defendant is ordinarily entitled to
unconditional leave to defend. In case of doubts about
the intent of the defendant or genuineness of the triable
issues as also the probability of defence, the leave could
yet be granted but while imposing conditions as to the
time or mode of trial or payment or furnishing security.
Thus, even in such cases of doubts or reservations, denial
of leave to defend is not the rule; but appropriate
conditions may be imposed while granting the leave. It is
only in the case where the defendant is found to be having
no substantial defence and/or raising no genuine triable
issues coupled with the Court's view that the defence is
frivolous or vexatious that the leave to defend is to be
refused and the plaintiff is entitled to judgment forthwith.
Of course, in the case where any part of the amount
claimed by the plaintiff is admitted by the defendant,
leave to defend is not to be granted unless the amount so
admitted is deposited by the defendant in the Court.
43. Therefore, while dealing with an application seeking
leave to defend, it would not be a correct approach to
proceed as if denying the leave is the rule or that the
leave to defend is to be granted only in exceptional cases
or only in cases where the defence would appear to be a
meritorious one. Even in the case of raising of triable
issues, with the defendant indicating his having a fair or
reasonable defence, he is ordinarily entitled to
unconditional leave to defend unless there be any strong
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:31.01.2022
reason to deny the leave. It gets perforce reiterated that
even if there remains a reasonable doubt about the
probability of defence, sterner or higher conditions as
stated above could be imposed while granting leave but,
denying the leave would be ordinarily countenanced only
in such cases where the defendant fails to show any
genuine triable issue and the Court finds the defence to
be frivolous or vexatious."12
12. In the present case, the plaintiff has raised a claim on the basis
of unpaid invoices for material supplied. Copies of the invoices have
also been placed on record. Many of the invoices bear the signature of
the representative of the defendant also. The question as to whether
the defence raised by the defendant at this stage entitles it to leave to
defend, has been decided in its favour by the Trial Court. As far as the
condition imposed is concerned, the Trial Court has found that the
specific averments contained in the plaint with regard to the quantum
of supply and the quantum of payment, have not been specifically
denied in the application for leave to defend. Although the averments
in the plaint have been traversed by bare denials, the defendant has not
offered any particulars as to the amount of material supplied and the
quantum of payment made, so as to controvert the allegations of the
plaintiff.
13. On the question of pre-suit interest, the Trial Court has held that
the issue is required to be decided upon trial. The amount of deposit
has been adjusted accordingly. It may be mentioned that out of twelve
invoices filed by the plaintiff, in at least five invoices, the rate of
Emphasis supplied
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:31.01.2022
interest is in fact mentioned on the face of the invoice itself, and the
invoices have been accepted by the defendant in acknowledgement
whereof the representative of the defendant has also signed the same.
14. Having regard to the judgment in B.L. Kashyap13, I am of the
view that the Trial Court has not exercised the jurisdiction vested in it
arbitrarily or capriciously, so as to warrant the intervention of this
Court under Article 227 of the Constitution. In the light of the
pleadings and the factual situation outlined above, the defendant has
raised triable issues, which can at best be characterised as implausible.
The genuineness of the defence will have to be adjudicated at trial, but
for the present, there does appear to be serious doubt on this score.
The defendant certainly cannot be said to have such a defence as to
entitle it to unconditional leave to defend.
15. In such a case, the interference of this Court would be called for
only if the order of the Trial Court demonstrates any such error of
jurisdiction or perversity. The limits of the scope of Article 227 of the
Constitution have recently been reiterated by the Supreme Court in
Garment Craft vs. Prakash Chand Goel14. The defendant has failed to
make out a case to this high standard.
16. On the amount of deposit, Mr. Aggarwal concedes that the
amount may be reduced by the sum of Rs.4,50,000/-, which was
admittedly paid by the defendant to the plaintiff after the issuance of
the legal notice dated 07.09.2020. Although it is the plaintiff's case
that the aforesaid payment has been adjusted against interest in
Supra (note 4)
2022 SCC OnLine SC 29 [paragraph 18]
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:31.01.2022
accordance with law, Mr. Aggarwal concedes that, at this stage, the
amount may be reduced from the amount of deposit.
17. Finding no error of jurisdiction or perversity in the order of the
Trial Court, the impugned order is therefore not liable to interference,
except to the extent that the amount of deposit is reduced by
Rs.4,50,000/-, i.e. the defendant is granted leave to defend, conditional
upon the deposit of a sum of Rs. 28,52,192/- before the Trial Court.
The amount be deposited before the Trial Court within two weeks.
Subject to such deposit, the written statement filed by the defendant
will be taken on record.
18. Mr. Aggarwal seeks release of the amount deposited in favour
of the plaintiff. He may file an application before the Trial Court,
which may be considered by the Trial Court in accordance with law.
19. The petition, alongwith the pending application, stands disposed
of with these directions.
PRATEEK JALAN, J
JANUARY 27, 2022
"Bp"
Signature Not Verified
Digitally Signed By:SHITU
NAGPAL
Signing Date:31.01.2022
