Jammu & Kashmir High Court - Srinagar Bench
M/S Shiraz Ahmad Dar Through Its Prop. ... vs Mohammad Ashraf Bhat on 8 October, 2024
Author: Javed Iqbal Wani
Bench: Javed Iqbal Wani
Regular
S. No. 21
HIGH COURT OF JAMMU & KASHMIR AND LADAKH
AT SRINAGAR
RFA 13/2022
CM(1995/2022) CM(1996/2022) CM(4885/2024)
M/S Shiraz Ahmad Dar through its Prop. Dar Shiraz
... Petitioner/Appellant(s)
Through: Mr. M. Sultan, Advocate
V/s
Mohammad Ashraf Bhat
... Respondent(s)
Through: Mr. F. A. Wani, Advocate
CORAM: HON'BLE MR. JUSTICE JAVED IQBAL WANI, JUDGE
ORDER
08-10-2024
1. The instant appeal is directed against judgement and decree dated
17th July 2019 passed by Additional District and Sessions Judge,
Srinagar (for short the trial court) in suit titled as "Mohammad
Ashraf Bhat vs. M/s Shiraz Dar".
2. The facts giving rise to the filing of the instant appeal reveal that the
plaintiff respondent herein filed a suit under Order 37 of the Civil
Procedure Code against the defendant appellant herein for recovery
of an amount of Rs 12,00,000/- along with interest at a rate of 18%
on the premise that the plaintiff respondent herein had paid the
amount in question to the defendant appellant herein as an advance
for the purpose of purchasing of a plot of land in the month of March
2017 in which the defendant appellant herein failed, as a
consequence whereof upon making a demand for return of the said
advance amount, the defendant appellant herein issued four cheques
amounting to Rs 12,00,000/- drawn in the name of J&K Bank,
Batamaloo, Srinagar favouring the plaintiff-respondent herein, and
that the said cheques had been issued by the defendant-appellant with
the condition and assurance that the same shall not be presented for
encashment by the plaintiff-respondent herein as the amount covered
by the cheques will be paid in cash by the defendant-appellant herein
to the plaintiff-respondent herein, and upon failure of the defendant-
appellant herein to pay the said amount of Rs.12,00,000/-, the
plaintiff-respondent herein instituted the suit in question.
3. After entertaining the suit supra and upon entering appearance
thereof, the defendant-appellant herein filed an application before the
trial court for seeking leave to defend the suit, in which application
while denying any transaction of him with the plaintiff-respondent
herein pertaining to the purchase of a plot of land, yet it came to be
stated therein the application that the plaintiff-respondent herein had
some dealings with one Mohammad Hanief on whose asking the
defendant-appellant issued the cheques in question to the plaintiff-
respondent herein, however, without filling in the amount and the
date in the said cheques, as the said cheques were issued by way of
security, stating further therein the said application that an amount of
Rs. 5.99 lacs in fact out of the claim outstanding amount of Rs.
12,00,000/- had been paid by the defendant-appellant herein to the
plaintiff-respondent herein, through bank transfer, cheque as well as
cash.
4. The trial court, upon considering the said application, after inviting
objections from the plaintiff-respondent herein in terms of order
dated 25th February 2019, allowed the same, however, with the
condition that the defendant-appellant herein shall deposit an amount
of Rs. 6.00 lacs before the court, or in the alternative furnish a cash
security of Rs. 6.00 lacs in the shape of bank guarantee before the
court within 30 days' time.
5. After passing of the order of grant of conditional leave supra dated
25th February 2019, the defendant appellant herein, instead of
complying with it, challenged the same before this court in OWP 467
of 2019, which petition came to be dismissed on 10th May 2019,
upholding the order under challenge dated 25th February 2019
whereafter the defendant appellant herein after dismissal of OWP
467 of 2019 supra did not appear before the trial court, consequent to
which the trial court passed the impugned judgment and decree
holding the plaintiff respondent herein entitled to the decree of
recovery of Rs.12.00 lacs along with interest at a rate of 18% with
cost of proceeding until its realization recoverable from the
defendant appellant herein.
6. Feeling aggrieved of the impugned judgment and decree judgment
dated 17th July 2019, the defendant appellant herein has maintained
the instant appeal on multiple grounds urged in the appeal.
Heard learned counsel for the parties and perused of the record.
7. According to Mr. M. Sultan, appearing counsel for the defendant
appellant herein, the trial court ought not to have passed the
impugned judgment and decree in favour of the plaintiff respondent
herein, for the entire amount of Rs. 12.00 lacs, in that, the defendant,
appellant had paid approximately an amount of Rs. 6,00 lacs to the
plaintiff respondent herein prior to the institution of the suit, details
of which payments were detailed out in the application seeking leave
to defend, filed by the defendant appellant herein before the trial
court and of which fact the trial court had taken cognizance while
passing the order of grant of leave dated 25th February 2019, while
recording a finding that the plaintiff respondent herein has admitted
to have received Rs. 5.99 lacs from the defendant appellant herein
leaving the outstanding recoverable amount to the tune of Rs. 6.00
lacs only.
8. On the contrary, the counsel for the plaintiff respondent herein would
submit that since the suit was not contested by the defendant
appellant herein before the trial court despite grant of leave to
defend, the counsel for the defendant appellant herein cannot thus set
up a defence that part payment out of recoverable amount stand paid
to the plaintiff respondent herein before this court in the instant
appeal.
9. Before proceeding to deal with the afforced rival submissions of the
appearing counsel for the parties, a reference to relevant provisions
of Order 37 Rule 3(5) of the Civil Procedure Court becomes
imperative hereunder:
ORDER XXXVII
SUMMARY PROCEDURE
[3. Procedure for the appearance of defendant--
(5) The defendant may, at any time within ten days from the
service of such summons for judgment, by affidavit or otherwise
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
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.
10. Under Order 37, Rule 3 (5) supra, a discretionary power has been
conferred upon a court to grant leave to a defendant to defend the
suit, which leave may be granted by the court unconditionally or
conditionally upon such terms as may appear to be just and proper.
The Apex Court in case titled as "Milkhiram (India) (P) Ltd. V.
Chamanlal Bros, reported in 1965 SC 1698", has held that while
exercising discretion under Order 37(3) a court has to form its own
tentative conclusion about the quality or nature of the defence and
determine the conditions upon which leave to defend may be granted
and if the court is of the opinion that the case raises a triable issue
then the leave shall be granted ordinarily unconditionally. The Apex
Court in case titled as "Mechelec Engineers and Manufacturers v.
Basic Equipment Corporation reported in (1976) 4 SCC 687" has
held that the power entrusted upon a court under Order 37(5) has to
be exercised reasonably and on sound judicial principles being a
discretionary power vested in a court. The Apex Court at para 8 of
the judgment supra has laid down the following:
"8. In Smt. Kiranmoyee Dassi & Anr. v. Dr. J. Chatterjee, 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:
"(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 Plain- tiff
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 se- cured 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".
Thus, what emanates from the above principles laid down
by the Apex court in the judgments supra, is that it is only in
cases which fall in clause (e) that an imposition of condition to
deposit an amount in the court before proceeding further is
justifiable, which clause provides that 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".
11. Keeping in mind the aforesaid provisions and principles of law and
reverting back to the case in hand, it is not in dispute that the trial court
granted conditional leave to the defendant appellant herein requiring
him to deposit an amount of Rs.6.00 lacs in the court or alternatively
deposit the same by way of a bank guarantee or demand draft, while in
explicit terms observing that the defence set up by the defendant
appellant herein seems to be illusory and sham. Although the trial court
in the said order of grant of leave also observed that the plaintiff
respondent herein has admitted to have received an amount of Rs. 5.99
lacs and that the rest of the amount of Rs. 6.00 lacs is payable by the
defendant appellant herein to the plaintiff respondent herein, yet perusal
of the objection filed by the plaintiff respondent herein to the
application seeking leave to defend filed by the defendant appellant
herein does not reveal such position whereby it could be said that the
plaintiff respondent herein has admitted to have received Rs. 5.99 lacs
from the defendant appellant herein. The observation made by the trial
court in this regard in the order of grant of leave is found to be factually
incorrect. Even otherwise, such an observation can safely be said to
have been recorded tentatively while exercising a discretionary power
and cannot be said to be a definite finding recorded in the suit. The
counsel for the defendant appellant herein thus under these
circumstances cannot seek or derive any support on the basis of said
observation made by the trial court in the order of grant of leave that
too while questioning the impugned judgment and decree having been
passed finally on account of failure of the defendant appellant herein to
adhere to the terms of the conditional leave. The defendant appellant
herein having abandoned the proceeding in the main suit and also failed
to prove the defence set up by him on the basis of which the defendant
appellant herein had been granted conditional leave by the trial court,
the defendant appellant herein cannot be permitted to fall back upon an
observation of the trial court made in the discretionary order of grant of
leave.
12. The trial court, thus, under these circumstances, cannot be said to have
faulted in the matter of passing of the impugned judgment and decree
for not having taken into account the aforesaid plea that the plaintiff has
admitted to have received Rs. 5.99 lacs out of the claimed amount of
Rs.12.00 lacs
It is significant to note here that in terms of clause (b) of Sub
Rule 6 of Rule 3 of Order 37 the defendant is permitted to defend the
suit and in case the defendant fails to comply with the order, the
plaintiff in law becomes entitled to a decree in his favour forthwith.
The said position has been laid down by the Apex court in case titled as
"Neebha Kapoor vs. Jayantilal Khandwala and others reported in
(2008) 3 SCC 770".
It is also relevant to mention here that Order 37 CPC has been
enacted with an underlying object of public policy for disposal of suits
as expeditiously as possible and prescribing timeframe therefor.
13. Furthermore, it would be unwise for this court to return any finding qua
the order of grant of leave passed by the trial court in favour of the
defendant appellant herein, in that, the validity of the said order as
noticed in the preceding paras stands already tested by this court in
earlier round of litigation instituted by the defendant appellant herein
while filing OWP 467 of 2019. Risking repetition, it is reiterated that
the said order of grant of leave passed by the trial court in favour of the
defendant appellant herein has been passed during the course of the
proceedings before the trial court and any observations made or any
finding recorded therein the said order cannot by any stretch of
imagination said to be a decision rendered by the trial court on the
merits of the case.
14. Viewed thus, what has been observed, considered and analysed
hereinabove, the appeal fails and is accordingly dismissed.
(JAVED IQBAL WANI)
JUDGE
Srinagar
08-10-2024
N Ahmad
Whether the order is speaking: Yes
Whether the order is reportable: Yes
