Glacier Aluminium Private ... vs Guru Rajendra Metalloys India ...
2021 Latest Caselaw 13968 Guj

     C/SCA/8873/2017                             JUDGMENT DATED: 14/09/2021




             IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

               R/SPECIAL CIVIL APPLICATION NO. 8873 of 2017


FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE B.N. KARIA

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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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                   GLACIER ALUMINIUM PRIVATE LIMITED
                                Versus
                GURU RAJENDRA METALLOYS INDIA PVT. LTD.
==========================================================
Appearance:
MR AMAR N BHATT(160) for the Petitioner(s) No. 1
MR TIRTH NAYAK(8563) for the Petitioner(s) No. 1
MR TARAK DAMANI(6089) for the Respondent(s) No. 1
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    CORAM:HONOURABLE MR. JUSTICE B.N. KARIA

                             Date : 14/09/2021

                            ORAL JUDGMENT

Rule. Learned advocate Mr. Tarak Damani waives service of notice of rule for and on behalf of the respondent.

By preferring present petition, the petitioner has challenged the common order dated 31st March 2017 passed by the learned City Civil Court, Ahmedabad No. 26 below applications Exh. 21 and 27 in Summary Suit No. 1916 of

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2014 granting conditional leave to defend to the petitioner/original defendant on condition that petitioner shall deposit Rs. 36,23,853/- within six months before the Trial Court.

Brief facts of the present case may be summarized as under:

The respondent/plaintiff filed a suit on 12th August 2014 to recover an amount of Rs. 38,23,853/- with interest @ 18% p.a. from the defendant/petitioner before the City Civil Court at Ahmedabad. After filing of the suit on 12th August 2014 and before the service of the summons on the defendant on or about 25.02.20215, as per the averments made by the petitioner/defendant, petitioner made payment of Rs. 2 lakhs on 02.09.2014 through RTGS from Silvasa which according to the petitioner was full and final settlement. The petitioner raised several triable issues including issues of territorial jurisdiction, issue of interest which was claimed without any agreement and discharged by full and final settlement. However, the trial court passed the impugned order of granting conditional leave to defend the suit to the petitioner on a condition to deposit Rs. 36,23,853/- within six months before the Trial Court.

Heard learned advocates for the respective parties. It was submitted by learned advocate for the petitioner

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that however trial court has no territorial jurisdiction to hear and decide the suit, as no registered office or business within the local jurisdiction of the Ahmedabad City Civil Court was there, the trial court has committed grave error in granting conditional permission to leave to defend the suit. It was further submitted that the payment of Rs. 2 lacs was also made by the petitioner, and thereafter Rs. 2 lakhs through RTGS from Silvasa towards the full and final settlement. That, the impugned order passed by the trial court is contrary to the law and evidence on record, however, trial court has concluded that there are triable issues of territorial jurisdiction. That, the trial court has imposed such condition with regard to the payment of decree amount which is not permissible. While referring the invoices especially condition No. 3 produced at page no.31 of this petition, it was argued that interest @ 15% p.a. will be charged on all accounts unpaid after (NIL)days. That, there was no condition to charge the interest as observed by the learned trial court. That, in the affidavit in reply of the respondent in para 4.6 , it is stated that as per the agreed terms between the parties herein, the petitioner company was to make payment for the material within 30 days of the receipt of the material. That, in invoice there was no date fixed for making payment of the material by the petitioner. That, unconditional leave to defend was required to be granted by

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the trial court. That, once the trial court has concluded that there are triable issues, the court cannot impose such condition with regard to payment into court or furnishing of the security. In support of his arguments, learned advocate for the petitioner has relied upon the judgment reported in (2006) 8 Supreme Court Cases 25; (2017) 1 SCC 568 and judgment passed by learned division bench of this court in Special Civil Application No. 6350 of 2017. It is further argued that issue of interest is also triable issue and learned Judge has materially erred in granting conditional leave to defend the suit to the present petitioner. Hence, it was requested to allow this petitioner by quashing the impugned orders.

Per contra, learned advocate for the respondent has supported the impugned orders passed by the trial court. Referring the copy of the plaint, it is submitted that as per the three invoices as shown in the paragraph No.4, total amount of Rs. 42,30,288/- was to be paid by the defendant/petitioner. That, amount of Rs. 10,00,000/- plus Rs. 2,00,000/- was credited by the plaintiff in the suit and total amount was requested to be decreed of 38,23,853/- including the interest of Rs. 5,93,565/- . It is further submitted that the trial court has committed no error by granting unconditional leave to defend the suit to the petitioner by directing to deposit Rs. 36,23,853/-. That there is no dispute in respect of the

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principal amount to be paid by the defendant, which is claimed by the plaintiff. That, material was supplied by the plaintiff to the defendant as per the demand of the petitioner company and was utilized without any dispute raised in respect of the material. That, payment was not paid by the defendant of the aforesaid three invoices, and therefore, suit was filed for recovering the amount. False defence was raised by the defendant in respect of quality of goods. In reply dated 27 th December 2013 incorrect and concocted facts was contended. That, no error is committed by the learned trial court in granting unconditional leave to defend to the petitioner and hence, it was requested by learned advocate for the respondent to dismiss the present petition.

Having gone through the facts of the case, documents and submissions made by learned advocates for the respective parties, it appears that summary suit was filed by the plaintiff under Order XXXVII Rule 2 of the Code of Civil Procedure before the learned City Civil Court at Ahmedabad for recovery of Rs. 38, 23,853/- . As per the averments made in the plaint, Rs. 5 lakhs was demanded by way of interest and principal amount of Rs. 32,30,288/- was claimed by the plaintiff. It was also averred in para 7 of the plaint that Rs. 10 lakhs was deposited by the defendant by way of two different cheques at the office situated at Ahmedabad. It is also not dispute that

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thereafter, filing of the suit by the plaintiff Rs. 2 (Two) Lakh was deposited before serving of summons by the defendant in the account of the plaintiff with Axis Bank Of course, certain defence was raised by the defendant in the application that civil court has no territorial jurisdiction to entertain the suit and material supplied by the plaintiff was not up to the standard. It appears that certain complaints were also made by the petitioner/defendant in respect of the quality of the material and it was agreed that Rs.10,00,000/- (Rupees Ten Lakhs only) was paid by the defendants would be treated as material cost which was usable. That, full and final settlement was arrived at between the parties and Rs. 2 (Two) lacs was paid by the defendant through RTGS on 02.09.2014, and therefore, no amount was due to be paid by the defendant.

It was further submitted that there was no contract in respect of the interest and therefore, the claim made by the plaintiff to pay interest @ 15% was not legal and correct. The learned Judge of the trial court has observed in the order that in respect of the territory jurisdiction, triable issues were there, but however, registered office of the plaintiff at Ahmedabad as declared by the plaintiff on oath, prima facie, the court had jurisdiction as provided under Section 20(C) of the CPC. The court has also observed that the material ie., Aluminum Ignots was already received by the defendant as per the invoice no.

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810, 837 and 860, The cost of material supplied by the plaintiff was Rs. 12 lacs which was paid by the defendants. Three other invoices were also considered by the court which comes to Rs. 30,13,228/- which was to be paid by the defendants. In respect of inferior quality of the goods supplied by the plaintiffs and final settlement as well as Rs. 10 lacs paid by the defendants, which was to be treated by the material costs, no documents were produced by the defendants in support of his contentions.

In case of Defiance Knitting Industries (P) Limited versus Jay Arts, reported in (2006) 8 SCC 25, Hon'ble Apex Court has held in para 13 as under:

While giving leave to defend the suit the Court shall observe the following principles:

(a) If the Court is of opinion that the case raises a triable issue then leave to defend should ordinarily be granted unconditionally. See Milkhiram (India) Pvt. Ltd v. Chaman Lal Bros. [AIR 1965 SC 1698]. The question whether the defence raises a triable issue or not has to be ascertained by Court from the pleadings before it and the affidavits of parties.

(b) If the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defence to raise or that the defence intended to put by the defendant is frivolous or vexatious is may refuse leave to defend altogether. Kiran Mryace Dassi v. Dr. J. Challrjae [AIR 1949 Cal. 479]. (noted and approved in Mechalec's case (supra).

(c) In cases where the Court entertains a genuine doubt on the question as to whether the defence is genuine or sham or whether

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it raises a triable issue or not, the Court may impose conditions in granting leave to defend.

In case of IDBI Trusteeship Services Limited versus Hubtown Limited reported in (2017) 1 SCC 568, Hon'ble Apex Court has observed in para 17.1 and 17.2 as under:

(a) If the defendant satisfies the court that he has a substantial defence, ie., defence that is likely to succeed the palintiff 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 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.

(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.

The Division Bench of this Court in Special Civil Application No. 6350 of 2017 has observed that as a claim of interest being a triable issue, learned Judge ought to have

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granted unconditional leave to defend the suit.

It was held that learned Judge has materially erred in granting conditional leave to defend the suit to the defendants on depositing 50% of suit claim. Here ofcourse, in the invoices produced by the plaintiff in the suit, condition no.3 was blank in respect of interest @ 15% a/m. which was to be charged on all accounts unpaid after particular dates. In the affidavit filed by the respondent/plaintiff at page no. 79, it is said that as per agreed terms between the parties, the petitioner company has to make payment within 30 days from the date of receipt of the material which is not placed on record. The issue of territorial jurisdiction is also there which was observed by the learned trial court as the triable issue. The other contentions raised by the defendants in respect of quality of the material supplied to the defendants and full and final settlement or Rs. 10 lakhs paid by the defendants would be treated as full and final settlement can also be considered as triable issue. Considering the facts of the present case, the trial court has not committed patent error in granting conditional leave to defence the suit, however, depositing Rs. 36,23,856/- appears to be a some what harsh condition as the dispute of interest raised by the defendants also appears to be a triable issue in absence of any particular dates shown in the invoice at page no.31. Considering the peculiar facts of the present case, this court is

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of the view that the impugned order requires for modify in respect of the amount as ordered by the trial court directing the defendants to deposit Rs. 36,23,853/-.This court is of the view that the petitioner shall direct to deposit Rs. 25 lacs before the trial court within a period of four weeks from the date of passing of this order instead of Rs. 36,23,853/-. Accordingly this petition stands partly allowed and leave to defend the suit is granted with a condition to deposit an amount of Rs. 25 lacs by the petitioner within a period of four weeks from the date of passing of this order.

Rule is made absolute to the aforesaid extent.

(B.N. KARIA, J) K. S. DARJI