Gujarat High Court
M/S Shree Shiv Shanker Ferro Alloys vs M/S Sapl Steel Llp on 12 February, 2024
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 2155 of 2024
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M/S SHREE SHIV SHANKER FERRO ALLOYS
Versus
M/S SAPL STEEL LLP
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Appearance:
MS NITA PANDIT, ADVOCATE for MR AR GUPTA(1262) for the Petitioner(s)
No. 1,2,3
for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE SANDEEP N. BHATT
Date : 12/02/2024
ORAL ORDER
1. The present petition is filed by the petitioners -
original defendants challenging the impugned order dated
29.12.2023 passed by the learned Chamber Judge, Court
No.24, City Civil Court, Ahmedabad, below summons for
judgment - Exhs.15/16 filed by the plaintiffs and leave to
defend - Exhs.26/27 filed by the defendants in Summary Suit
No.2080 of 2018, whereby the summons for judgment
Exhs.15/16 is hereby partly allowed and the application for
leave to defend Exhs.26/27 is also partly allowed and thereby
the defendants are permitted to defend the suit with a
condition to deposit 20% of the suit amount in the Court
within four weeks from the date of the impugned order and
thereafter file detailed written statement, failing which, the
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plaintiff shall entitle to move for a decree.
2. Heard learned advocate Ms.Nita Pandit for learned
advocate Mr.A.R. Gupta for the petitioners.
3. Learned advocate Ms.Pandit has submitted that
the petitioners have raised several contentions before the
learned trial Court, but the same are not specifically dealt
with by the learned trial Court. She has further submitted
that granting of interest without any written consensus
between the parties is not permissible and therefore,
unconditional leave to defend ought to have been granted by
the learned trial Court. She has further submitted that no
reasons are assigned by the learned trial Court as to why
20% of the suit amount is required to be deposited. She has
relied upon the judgment of the Division Bench of this Court
rendered on Special Civil Application No.6350 of 2017 dated
17.04.2017, more particularly paragraph 5.07 thereof. She has
submitted that the aspect of awarding the interest is a
triable issue and therefore, the learned trial Court has
committed an error in granting conditional leave to defend.
She, therefore, has submitted that this petition may be
allowed by quashing the impugned order passed by the
learned trial Court.
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4.1 I have heard the submissions made by learned
advocate for the petitioners. I have considered the averments
made in this petition along with the documents annexed to
this petition. I have perused the impugned order passed by
the learned trial Court. It transpires that prima facie, the
plaintiff - present respondent has filed the suit for recovery
of Rs.39,38,927/- with 18% interest, as the petitioners- who
are the original defendants have failed to pay the said
amount which is arising from the business transaction. The
plaintiff has filed the suit through its partner as summary
suit against the defendants' firm - M/s. Shree Shiv Shanker
Ferro Alloys and its partners with respect to the job work
done by the plaintiff - M/s. SAPL Steel LLP. In that suit,
the defendants appeared. It further transpires from the record
that last payment of Rs.5 lakhs was made by the defendants
to the plaintiff by way of RTGS on 05.05.2018. It also
transpires that after deducting Rs.5 lakhs, there was an
outstanding dues of Rs.34,98,578/-, for which, several requests
were made by the plaintiff to the defendants. Thereafter,
legal notice was also sent to the defendants, which was
replied by the defendants - present petitioners. Thereafter,
the suit is filed by the plaintiff for recovery of the business
dues. It transpires from the impugned order that pursuant to
the summons for judgment filed by the plaintiff, the present
petitioners have filed application for leave to defend. After
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considering and hearing the submissions made at the bar, the
learned trial Court has decided the said application and
permitted the defendants to defend the suit but with a
condition to deposit 20% of the suit amount in the Court
which will be kept in fixed deposit and it is subject to final
outcome of the suit, so that no any party may cause with
any prejudice. The order impugned is passed on 29.12.2023.
4.2 It is noted that though it is not produced along
with the petition, on inquiry, learned advocate for the
petitioners has submitted that thereafter, the petitioners have
applied for certified copy on 02.01.2024, which is provided by
the learned trial Court on 05.01.2024. Thereafter, the
application for extension of time is also given by the
petitioners on 24.01.2024, which is granted by the learned
trial Court vide order dated 29.01.2024 and thereby, further
time of ten days to deposit 20% of the suit amount is
granted. However, for the reasons best known to the
petitioners, the amount was not deposited in time. It further
transpires that the present petition is filed on 03.02.2024 and
on the very same day, the petitioners again filed an
application for an extension of time, which was rejected by
the learned trial Court vide an order passed below Exh.41.
Copy of the application/s and the order/s are taken on record.
Though such documents were not produced at the time of
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filing of this petition, with a view to record the correct facts
about the further development in the matter, this Court has
inquired with the learned advocate for the petitioners and
she has assured this Court to produce on record the same
after getting photocopy copy of the said documents. In any
case, after 03.02.2024, there is no extension of time.
Therefore, the present order, which is impugned, is required
to be complied with as it is and necessary consequences will
be followed.
4.3 Keeping these aspects in mind, the reasoning given
by the learned trial Court, which is discussed in detail, more
particularly in para-9 of the impugned order, whereby the
learned trial Court has found that it is undisputed fact that
the parties were involved with each other by way of job
work and the raw material was sent by the defendants, on
which job work was to be done by the plaintiff, and lastly
on 17.05.2018, the job work was done and the materials were
sent to the defendants. The learned trial Court has also
found that though the defendants have raised several
defences in the leave to defend application, the defendants
have not been able to produce any documentary evidence in
support of their contentions and mere photographs put up by
the defendants are not sufficient to believe that they have
incurred any loss. It also transpires that though the learned
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trial Court has not discussed in detail about the reasons for
imposing condition to deposit 20% of the suit amount, but it
transpires that the view taken by the learned trial Court,
after considering overall material available on the record and
pleadings of the parties and in the facts and circumstances of
the case, imposing condition to deposit 20% of the suit
amount is found reasonable for granting leave to defend.
While passing the impugned order, the learned trial Court
has also kept in mind the judgment of the Hon'ble Apex
Court passed in Mechelec Engineers and Manufacturers
versus Basic Equipment Corporation reported in AIR 1977 SC
577. The learned trial Court has reproduced the necessary
guideline, which is given in that judgment, which reads as
under :
"(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 Judgement 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 Judgement and the defendant is entitled
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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 had 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
Judgement 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
Judgement 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
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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."
4.4 Since the learned trial Court has considered the
pleadings broadly after considering the facts that the parties
are having some several business transactions and the only
dispute is regarding the inferior quality of goods, therefore,
the contention which is raised by the present petitioners that
the learned trial Court has not properly dealt with the
contentions raised in the leave to defend application cannot
be considered, as such the learned trial Court has broadly
considered such issues in proper perspective. However, the
learned trial Court has not given specific finding on such
issue, which would not give any entitlement to the present
petitioners to claim unconditional leave to defend when there
are some admitted transactions between the parties.
4.5 At this stage, it would be fruitful to refer to the
provisions of Order XXXVII Rule 1, 2 and 3 of the Code of
Civil Procedure, 1908, which read as under :
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" ORDER XXXVII Summary Procedure.
[1. Courts and classes of suits to which the
Order is to apply.--(1) This Order shall
apply to the following Courts, namely :--
(a) High Courts, City Civil Courts and
Courts of Small Causes; and
(b) other Courts:
Provided that in respect of the Courts
referred to in clause (b), the High Court
may, by notification in the Official Gazette,
restrict the operation of this Order only to
such categories of suits as it deems proper,
and may also, from time to time, as the
circumstances of the case may require, by
subsequent notification in the Official
Gazette, further restrict, enlarge or vary, the
categories of suits to be brought under the
operation of this Order as it deems proper.
(2) Subject to the provisions of sub-rule (1),
the Order applies to the following classes of
suits. namely:--
(a) suits upon bills of exchange, hundies and
promissory notes;
(b) suits in which the plaintiff seeks only to
recover a debt or liquidated demand in
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money payable by the defendant, with or
without interest, arising,--
(i) on a written contract; or
(ii) on an enactment, where the sum sought
to be recovered is a fixed sum of money or
in the nature of a debt other than a penalty;
or
(iii) on a guarantee, where the claim against
the principal is in respect of a debt or
liquidated demand only.]
[2. Institution of summary suits.--(1) A suit,
to which this Order applies, may if the
plaintiff desires to proceed hereunder, be
instituted by presenting a plaint which shall
contain,--
(a) a specific averment to the effect that the
suit is filed under this Order;
(b) that no relief, which does not fall within
the ambit of this rule, has been claimed in
the plaint; and
(c) the following inscription, immediately
below the number of the suit in the title of
the suit, namely :--
"(Under Order XXXVII of the Code of Civil
Procedure, 1908)."
(2) The summons of the suit shall be in
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Form No. 4 in Appendix B or in such other
Form as may, from time to time, be
prescribed.
(3) The defendant shall not defend the suit
referred to in sub-rule (1) unless he enters
an appearance and in default of his entering
an appearance the allegations in the plaint
shall be deemed to be admitted and the
plaintiff shall be entitled to a decree for any
sum, not exceeding the sum mentioned in the
summons, together with interest at the rate
specified, if any, up to the date of the decree
and such sum for costs as may be
determined by the High Court from time to
time by rules made in that behalf and such
decree may be executed forthwith.]
[3. Procedure for the appearance of defendant
--(1) In a suit to which this Order applies,
the plaintiff shall, together with the
summons under rule 2, serve on the
defendant a copy of the plaint and annexures
thereto and the defendant may, at any time
within ten days of such service, enter an
appearance either in person or by pleader
and, in either case, he shall file in Court an
address for service of notices on him.
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(2) Unless otherwise ordered, all summonses,
notices and other judicial processes, required
to be served on the defendant, shall be
deemed to have been duly served on him if
they are left at the address given by him for
such service.
(3) On the day of entering the appearance,
notice of such appearance shall be given by
the defendant to the plaintiff's pleader, or, if
the plaintiff sues in person, to the plaintiff
himself, either by notice delivered at or sent
by a pre-paid letter directed to the address
of the plaintiff's pleader or of the plaintiff,
as the case may be.
(4) If the defendant enters an appearance,
the plaintiff shall thereafter serve on the
defendant a summons for judgment in Form
No. 4A in Appendix B or such other Form
as may be prescribed from time to time,
returnable not less than ten days from the
date of service supported by an affidavit
verifying the cause of action and the amount
claimed and stating that in his belief there
is no defence to the suit.
(5) The defendant may, at any time within
ten days from the service of such summons
for judgment, by affidavit or otherwise
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disclosing such facts as may be deemed
sufficient to entitle him to defend, apply on
such summons for leave to defend such suit,
and leave to defend may be granted to him
unconditionally or upon such terms as may
appear to the Court or Judge to be just:
Provided that leave to defend shall not be
refused unless 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 be put
up by the defendant is frivolous or vexatious:
Provided further that, where a part of the
amount claimed by the plaintiff is admitted
by the defendant to be due from him, leave
to defend the suit shall not be granted
unless the amount so admitted to be due is
deposited by the defendant in Court.
(6) At the hearing of such summons for
judgment,--
(a) if the defendant has not applied for leave
to defend, or if such application has been
made and is refused, the plaintiff shall be
entitled to judgment forthwith; or
(b) if the defendant is permitted to defend as
to the whole or any part of the claim, the
Court or Judge may direct him to give such
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security and within such time as may be
fixed by the Court or Judge and that, on
failure to give such security within the time
specified by the Court or Judge or to carry
out such other directions as may have been
given by the Court or Judge, the plaintiff
shall be entitled to judgment forthwith.
(7) The Court or Judge may, for sufficient
cause shown by the defendant, excuse the
delay of the defendant in entering an
appearance or in applying for leave to defend
the suit.]"
4.6 Further, it would be fruitful to refer to the
observations made by the Hon'ble Apex Court in the case of
B.L.Kashyap and Sons Ltd., versus JMS Steels and Power
Corporation reported in (2022) 3 SCC 294 that, 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. It is also observed by the
Hon'ble Apex Court that even if there remains a reasonable
doubt about the probability of defence, sterner or higher
conditions could be imposed while granting leave.
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4.7 With reference to the reliance placed by the
learned advocate for the petitioners on the decision of the
Division Bench of this Court rendered in Special Civil
Application No.6350 of 2017, dated 17.04.2017 is concerned,
there is no dispute about the fact that the Court has
observed that if there is no agreement between the parties,
such suit by claiming the interest, unconditional leave to
defend ought to have been granted. However, considering the
facts of the present case, where it is undisputed fact that the
parties are doing business and there are business
transactions between the parties and it is also an undisputed
fact that the defendants are raising a defence by way of
showing dispute regarding inferior quality of goods, but there
is undisputed fact that some transactions have already been
taken place between the parties and they have business
relations. Therefore, the said decision will not help the
petitioners any further. The submission regarding triable issue
raised by the learned advocate for the petitioners is not
required to be considered at this stage. Therefore, considering
the practice prevailing under the Mercantile Law, the interest
with this claim in such transaction cannot be considered that
the plaintiff is not entitled to claim the interest, however, at
the conclusion of the trial, when the suit is now required to
be proceeded and if the defendants are failed to deposit 20%
amount, as directed by the learned trial Court, then all these
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aspects can be considered at the time of trial that how much
interest should be ordered to be paid, but prima facie, merely
asking interest in the summary suit, where admittedly the
dispute involves the parties who are having frequent
commercial transactions between them, contention raised by
the petitioners regarding interest part is not required to be
considered at this stage, considering the limited scope of
jurisdiction under Article 227 of the Constitution of India,
more particularly, in view of the decision of the Hon'ble Apex
Court in the case of M/s. Garment Craft versus Prakash
Chand Goel reported in (2022) 4 SCC 181.
4.8 Otherwise also, now by efflux of time, the
petitioners have not complied with the direction given by the
learned trial Court though time is not extended after
03.02.2024. It is noted that on one hand, the petitioners are
making application before the learned trial Court for
extension of time to deposit 20% of the suit amount, which
was granted by the learned trial Court once and on the
other hand, the petitioner was preparing the present petition,
which can be seen from the date of the second application
for extension of time i.e. 03.02.2024. The present petition is
filed on 03.02.2024. The conduct of the petitioners smack a
lot, but this Court would not like to stretch this issue any
further as there are ample other material available on record
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to decide this petition on merit. However, since the
petitioners have not deposited the amount as directed by the
learned trial Court till date, necessary consequences will be
followed.
5. In view of above and under the circumstances, the
learned trial Court has not committed any error while
passing the impugned order. There is no illegality or
perversity in the findings given by the learned trial Court
while passing the impugned order. The impugned order is
just, proper and legal. The present petition is therefore
required to be dismissed and is dismissed accordingly, with
no order as to costs.
(SANDEEP N. BHATT,J)
M.H. DAVE
