Dhirajbhai Narshibhai Patel vs M/S. Umiya Steel Industries ...
2021 Latest Caselaw 13800 Guj

     C/SCA/512/2019                             JUDGMENT DATED: 13/09/2021



            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

               R/SPECIAL CIVIL APPLICATION NO. 512 of 2019


FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE B.N. KARIA                                   Sd/-
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1     Whether Reporters of Local Papers may be allowed                No
      to see the judgment ?

2     To be referred to the Reporter or not ?                         No

3     Whether their Lordships wish to see the fair copy               No
      of the judgment ?

4     Whether this case involves a substantial question               No
      of law as to the interpretation of the Constitution
      of India or any order made thereunder ?

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                   DHIRAJBHAI NARSHIBHAI PATEL
                               Versus
     M/S. UMIYA STEEL INDUSTRIES THROUGH BABUBHAI JAMNADAS
                              PATEL
================================================================
Appearance:
MR NV GANDHI(1693) for the Petitioner(s) No. 1
MR VIRENDRA R PATEL(3681) for the Petitioner(s) No. 1
MR KEYUR A VYAS(3247) for the Respondent(s) No. 1
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    CORAM:HONOURABLE MR. JUSTICE B.N. KARIA

                            Date : 13/09/2021
                            ORAL JUDGMENT

Rule returnable forthwith. Mr. Keyur Vyas, learned

advocate has waived service of notice of rule for the

respondent.

2. By way of present petition, the petitioner - original

defendant has prayed for appropriate writ, order or direction

C/SCA/512/2019 JUDGMENT DATED: 13/09/2021

quashing and setting aside the impugned order dated

18.12.2018 below application for leave to defend at Exh.11

passed in Summary Civil Suit No.14 of 2014 by learned

Additional Senior Civil Court, Kalol.

3. The short facts leading to file present petition are under:

3.1 The Summary Civil Suit No.14 of 2014 was filed by the

respondent - original plaintiff against the present petitioner -

original defendant under Order 37 Rule 1-3 of the Code of

Civil Procedure for recovery of the amount of

Rs.12,65,217.64. In the said suit, the respondent - original

plaintiff has taken out summons for judgment at Exh.9 and

prayed to sign the judgment. In the application at Exh.9, it

was contended that he is the owner of M/s. Umiya Steel

Industries and that the parties to the suit have business

relationship since last more than 3 years. It was contended

that he is doing coating of the articles and for the said

purpose, he was raising regular bills to the petitioner -

original defendant. It was contended that from 1.7.2013 to

31.12.2013, he had raised powder coating bills for an amount

to the sum of Rs.11,65,217.94 which was duly received by the

petitioner - original defendant. It was contended that the

C/SCA/512/2019 JUDGMENT DATED: 13/09/2021

defendant was regularly making the payment, however,

despite demand followed by legal notice, the said amount has

not been paid and vague reply was given to his legal notice

and therefore, he was entitled for recovery of an amount of

Rs.11,65,217.64 alongwith interest of Rs.1,00,000 and total

amount of Rs.12,65,217.94.

3.2 On service of process of suit, the defendant has filed

application seeking leave to defend at Exh.11 and has

requested to permit him to contest the said suit

unconditionally. In the application for leave to defend, the

defendant raised several triable issues inter-alia contending

that whether there is any business relation between plaintiff

and defendant or not; whether there is privity of contract

between the plaintiff and defendant or not and whether the

plaintiff is entitled to recover alleged suit amount and

interest.

3.3 The learned Additional Senior Civil Judge, Kalol by his

order dated 18.12.2018 was pleased to permit the defendant

to defend the said suit after observing that there are triable

issues involved in the suit, however, imposed condition to

deposit 20% of the suit amount within 7 days. Thereafter, time

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was extended for further period of 30 days below application

Exh.52 on 18.12.2018.

3.4 Aggrieved and dissatisfied with the impugned order

below application at Exh.11, the petitioner - original

defendant has approached this Court by way of present

petition under Articles 226 and 227 of the Constitution of

India.

4. Heard learned advocate Mr. N.V.Gandhi for the

petitioner and learned advocate Mr. Keyur Vyas for the

respondent.

5. Mr. Gandhi, learned advocate appearing for the

petitioner has submitted that when consistent view is taken by

the Hon'ble Apex Court in relation to summary trials under

Order 37 of the Civil Procedure Code is that when a Court is

satisfied that a triable issue has been raised in defence of the

claim made on behalf of the plaintiff, unconditional leave has

to be granted to the defendant to contest the suit and no

direction could be given while granting such leave to the

defendant to deposit any amount by way of security. It is

further urged by learned advocate for the petitioner that sub-

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rule (5) of Rule-3 of Order 37 is important to this case in the

sense that it recognizes a dichotomy between a disputed claim

and admitted claim in a suit filed under Order 37 of the Code.

It is further submitted that as far as the disputed claim is

concerned, once the Court comes to a conclusion that there is

a triable issue, unconditional leave has to be given to the

defendant to defend the suit. Referring to the plaint, learned

advocate for the petitioner has submitted that the suit was

filed against the defendant namely, Dhirajbhai Narshibhai

Patel. Referring the bills from page No.37 onwards, it is

submitted that all the bills are issued in favour of M/s. Lancer

Laser Tech Limited, which is a proprietary firm, the said

company has not been joined as a defendnat in the summary

suit. He has further raised a question against maintainability

of the suit in absence of the company itself. He has submitted

that as there is triable issues, unconditional leave to defend

was required to be granted in favour of the defendant which

the learned trial Court has not taken into consideration and

hence, it was requested by learned advocate for the petitioner

to quash the impugned order passed below Exh.11 dated

18.12.2018 and permit the defendant to contest the suit

unconditionally as prayed for.

C/SCA/512/2019 JUDGMENT DATED: 13/09/2021

5.1 In support of his arguments, learned advocate for the

petitioner has relied upon the decisions in the case between

(i) Sudin Dilip Talaulikar v. Polycap Wires Pvt. Ltd. & Ors.

[AIR 2019) SC 3380]; (ii) State Bank of Hyderabad v. Rabo

Bank [AIR 2015 SC 3820]; (iii) Mechalec Engineers &

Manufacturers v. Basic Equipment Corporation [AIR 1977 SC

577] and (iv) Santosh Kumar v. Bhai Mool Singh [AIR 1958 SC

321].

6. From the other side, learned advocate Mr. Keyur Vyas

for the respondent has supported the order passed by the

Court below. Referring to the averments of the plaint and the

correspondence between the parties through their advocates

dated 3.4.2014 and 23.4.2014, it is submitted that in

connection with the business transactions carried out between

the plaintiff and the defendant, part payment was also made

by the defendant as per the terms and conditions, which is

undisputedly admitted in the notice. Once upon a time, it was

denied by the defendant that no amount was to be paid to the

plaintiff, however, without disclosing the bills, the first notice

was issued by the plaintiff. As per the averments made in the

reply to the notice dated 23.4.2014, defendant has stated that

payment was clearly made by the defendant, i.e. payment of

C/SCA/512/2019 JUDGMENT DATED: 13/09/2021

Rs.2,58,147/- was made on 21.3.2014. He has submitted that

no error is committed by the Court below by directing the

defendant to deposit 20% of the suit amount. He has also

referred to be bills produced on record.

6.1 In support of his arguments, learned advocate for the

defendant has relied upon the decisions in the case between

(i) STCI Finance Ltd. v. Cedar Infonet Pvt. Ltd. [2019 JX (SC)

692]; (ii) Sujata Shetty & Ors. v. Pushpendra R. Bansal [Civil

Appeal No.6120/2019]; (iii) Southern Sales & Service v.

Sauermilch Design & Handels Gmbh [2008 (14) SCC 457]; (iv)

Sify Limited v. First Flight Couriers Ltd. [2008 (4) SCC 246];

(v) Mechelec Engineers & Manufacturers v. Basic Equipment

Corporation [1976 (4) SCC 687]; (vi) Shree Corporation v.

M.D. Overseas Ltd. [2015 JX (GUJ) 1537]; (vii) Gujarat

Electricity Board v. Shiv Corporation [2012 JX (GUJ) 732] and

(viii) K.K.Arora v. Meghraj & Sons [1987 (1) GLR 427].

7. Having heard learned advocates for the respective

parties and upon considering the impugned order dated

18.12.2018 passed below application at Exh.11 in Summary

Suit No.14 of 2014, it appears that the main ground which

was contended in the leave to defend application was that

C/SCA/512/2019 JUDGMENT DATED: 13/09/2021

there was no privity of the contract between the parties. It

was further contended that the company of the defendant was

not joined as a party to the suit and therefore, the

maintainability of the suit was questioned by the defendant in

absence of company itself as a party to the proceedings. It

appears from the contents of the plaint filed by the original

plaintiff that there was business relation with the defendant

since last 3 years and whatever the articles were supplied to

the defendant, regular bills were also given to the defendant.

Account of the defendant was opened with the plaintiff and

was continued till filing of the suit. It was further averred in

the plaint that at an initial stage, the regular payment was

made by the defendant as per the bills. Power coating bills

were issued and supplied to the defendant from 1.7.2013 to

31.12.2013 and the signature of the defendant was also

obtained in the gate pass showing the receipt of the goods

supplied by the plaintiff. A demand of Rs.11,65,217/- was

made by the plaintiff for the bills from 1.7.2013 to 31.12.2013.

Frequent demand was made by the plaintiff and thereafter, on

21.3.2014 payment of Rs.2,58,000/- was made by the

defendant which was credited in the account. Thereafter,

notice was issued by the plaintiff which was replied evasively

by the defendant. Upon considering the correspondence in the

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form of notice issued by the plaintiff as well as reply of the

defendant through their advocates, it appears that there was

business transaction between the parties and as per the

statement made by the defendants, 14 job works of the goods

was supplied by the plaintiff, payment was made by the

defendant and as per the notice, payment of Rs.2,58,147/- was

made on 21.3.2014. It was further contended in the reply of

the notice that there was no due to be paid by the defendant.

No further contention was raised in the reply against the

notice issued by the plaintiff on 23.4.2014.

8. The application at Exh.11 was mainly opposed by the

defendant on the ground that there was no privity of the

contract between the plaintiff and the defendant. Further

contention was that there was no cause of action and there

are triable issues like whether there were business relation

between them or not; whether the plaintiff is entitled to

interest or not and therefore, it was prayed to grant

unconditional leave to defend the suit. From the averments

made in the plaint filed by the present plaintiff as well as

correspondence in form of notice and bills which are produced

at Exh.36 containing 71 bills in favour of M/s. Lancer Laser

Tech Ltd., this Court is of the opinion that the learned trial

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Court has not committed any error in granting leave to defend

conditionally to deposit 20% of the claim amount within 7

days from the date of the order which was thereafter

extended for a limited period.

9. In the judgment relied upon by the learned advocate for

the petitioner in the case between Sudin Dilip Talaulikar v.

Polycap Wires Pvt. Ltd. & Ors. [AIR 2019) SC 3380], it is

observed that, in a summary suit, if the defendant discloses

such facts of a prima facie fair and reasonable defence, the

court may grant unconditional leave to defend. In a suit filed

by the plaintiff the subjective satisfaction of the Court on basis

of the materials that may be placed before it. However, in an

appropriate case, if the court is satisfied of a plausible or

probable defence and which defence is not considered a sham

or moonshine, but yet leaving certain doubts in the mind of

the court, it may grant conditional leave to defend.

9.1 In the case between Mechalec Engineers &

Manufacturers v. Basic Equipment Corporation [AIR 1977 SC

577], Hon'ble Apex Court has laid down following principles

to be followed while granting permission to leave to defend:

C/SCA/512/2019 JUDGMENT DATED: 13/09/2021

""(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, shews 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".

9.2 In the case between Santosh Kumar v. Bhai Mool Singh

[AIR 1958 SC 321] relied upon by the learned advocate for the

plaintiff, it is observed that:-

"7. Now what we are examining here are laws of procedure. The spirit in which questions about procedure are to be approached and the manner in which rules relating to them are to be interpreted are laid down in Sangray Singh v. Election Tribunal, Kotah, Bhurey Lal Baya.

"Now a code of procedure must be regarded as such. It is procedure, something designed to facilitate justice and further its ends; not a penal enactment for punishment and penalties; not a, thing designed to trip people up. Too technical a construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against (provided always that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it.

C/SCA/512/2019 JUDGMENT DATED: 13/09/2021

Next, there must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them. Of course, there must be exceptions and where they are clearly defined they must be given effect to. But taken by and large, and subject to that proviso, our laws of procedure should be construed, wherever that is reasonably possible, in the light of that principle."

Applied to the present case, these observations mean that though the Court is given a discretion it must be exercised along judicial lines, and that in turn means, in consonance with the principles of natural justice that form the foundations of our laws. Those principles, so far as they touch the present matter, are well known and have been laid down and followed in numerous cases.

8. The decision most frequently referred to is a decision of the House of Lords in England where a similar rule prevails. It is Jacobs v. Booth's Distillery Company (1). Judgment was delivered in 1901. Their Lordships said that whenever the deferce raises a " triable issue", leave must be given, and later cases say that when that is the case it must be given unconditionally, otherwise the leave may be illusory. See, for example, Powszechny Bank Zwiazkowy W. Polsce v. Paros (2), in England and Sundaram Chettiar v. Valli Ammal (3) in India. Among other cases that adopt the " triable issue " test are Kiranmoyee Dassi v. J. Chatterjee and Gopala Rao v. Subba Rao (5).

9. The learned counsel for the plaintiff-respondent relied on Gopala Rao v. Subba Rao (5), Manohar Lal v. Nanhe Mal (6), and Shib Karan Das v. Mohammed Sadiq (7). All that we need say about them is that if the Court is of opinion that the defence is not bona fide, then it can impose conditions and is not tied down to refusing leave to defend. We agree with Varadachariar J. in the Madras case that the Court has this third course open to it in a suitable case. But it cannot reach the conclusion that the defence is not bona fide arbitrarily. It is as much bound by judicial rules and judicial procedure in reaching a conclusion of this kind as in any other matter. It is unnecessary no examine the facts of those cases because they are not in appeal before us. We are only concerned with the principle."

9.3 In the case between STCI Finance Ltd. v. Cedar Infonet

Pvt. Ltd. [2019 JX (SC) 692] relied on by the learned advocate

for the respondent, Hon'ble Apex Court has considered the

issue and confirmed the order passed by the learned trial

court granting the application for leave to defend

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conditionally. All the rights and contentions of the parties on

question of law and facts were kept open to be adjudicated

upon at the time of the suit.

9.4 In another matter, in the case between Southern Sales &

Service v. Sauermilch Design & Handels Gmbh [2008 (14)

SCC 457], Hon'ble Apex Court directed the defendant to

deposit 55% amount of the suit as a principal condition to

grant leave to defend the suit. Hon'ble Apex Court did not

warrant interference as the trial court has exercised its

jurisdiction under second proviso to sub-rule (5) of Rule 3 of

Order 37 of the Code. It was further observed that the earlier

concept of granting unconditional leave when a triable issue is

raised on behalf of the defendant, has been supplemented by

the addition of a mandate, which has been imposed on the

defendant, to deposit any amount as admitted before leave to

defend the suit can be granted. The question as to whether

leave to defend a suit can be granted or not is within the

discretionary powers of the High Court and it does not appear

to us that such discretion has been exercised erroneously or

with any irregularity which warrants interference by this

Court.

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9.5 Other decisions relied upon by the learned advocate for

the respondent - original plaintiff are on the same line

observing that grant of leave to defend with or without

consideration is within the discretion of the Court.

10. Considering the facts and circumstances of the case, this

Court is of the view that the learned trial Court has committed

no illegality in granting leave to defend application Exh.11 on

condition to deposit 20% of the claim amount in its order

dated 18.12.2018.

Therefore, in view of above, this petition is dismissed.

10.1 The petitioner - original defendant shall deposit the said

amount and comply with the order passed by the learned trial

Court dated 18.12.2018 within period of 4 weeks from the

date of receipt of this order.

10.2 It would be open for the parties to lead their evidence

before the learned trial Court and argue permissible defence.

Either side shall be permitted to request the learned trial

Court to expedite the suit.

With above observations and directions, present petition

C/SCA/512/2019 JUDGMENT DATED: 13/09/2021

is dismissed and accordingly stands disposed of. Rule is

discharged.

Sd/-

(B.N. KARIA, J) KAUSHIK D. CHAUHAN