Karnataka High Court

Metro Cash And Carry India Pvt Ltd vs Arambhan Hospitality Services ... on 7 April, 2022

Bench: K.S.Mudagal

                                        C.R.P.No.123/2021

                          1

   IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 7TH DAY OF APRIL 2022

                       BEFORE

       THE HON'BLE MRS. JUSTICE K.S.MUDAGAL             R
   CIVIL REVISION PETITION NO.123/2021 (IO)

BETWEEN:

METRO CASH & CARRY INDIA PVT. LTD.
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT
SY. NO.26/3, A BLOCK, WARD NO.9
INDUSTRIAL SUBURBS
SUBRAMANYANAGAR, BENGALURU - 560 005
RE.BY ITS HEAD FINANCE & CONTROLLING
MR.BADARI PRASAD T.S.                    ...PETITIONER

(BY SRI MRINAL SHANKAR, ADVOCATE FOR
    SRI DHARMENDRA CHATUR, ADVOCATE)

AND:

ARAMBHAN HOSPITALITY SERVICES LTD.
(FORMERLY KNOWN AS CAWASJI BEHRAMJI
CATERING SERVICES LTD.)
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE AT
NO.201/202 BENSTON, B WING
SHERLY RAJAN ROAD
BANDRA (W), MUMBAI - 400 050
ALSO AT NO.17, BAHUBALI BUILDING
CAWASJI PATEL STREET, FORT
MUMBAI - 400 001
REP.BY ITS MANAGING DIRECTOR              ...RESPONDENT

(BY SRI SIDDHARTH B MUCHANDI, ADVOCATE
    SRI RAMESH R.M., ADVOCATE &
    SRI HITESH D, ADVOCATE (ABSENT))
                                            C.R.P.No.123/2021

                             2

      THIS CIVIL REVISION PETITION IS FILED UNDER
SECTION 115 OF CPC PRAYING TO SET ASIDE THE ORDER
DATED 06.04.2021 PASSED BY THE XX ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE, BENGALURU ON I.A.II AND I.A.III IN
O.S.NO.3213/2017 ALLOWING I.A.NO.II FILED UNDER ORDER
XXXVII RULE 3 (5) READ WITH SECTION 151 OF CPC AND
I.A.NO.III FILED UNDER ORDER XXXVII R/W SECTION 151 OF
CPC

     THIS CIVIL REVISION PETITION COMING ON FOR
FURTHER HEARING THIS DAY, THE COURT THROUGH VIDEO
CONFERENCE MADE THE FOLLOWING:

                           ORDER

None appears for the respondent. Though learned

Counsel for the respondent filed retirement memo, the

postal acknowledgment in proof of service of notice of

retirement is not furnished. Therefore retirement memo is

rejected.

2. Heard the petitioner's Counsel.

3. Aggrieved by the order of the trial Court

granting leave to the respondent to defend the suit as

regular suit, the plaintiff in OS No.3213/2017 on the file of

XX-Additional City Civil and Sessions Judge, Bengaluru has

preferred this petition.

4. The petitioner filed O.S.No.3213/2017 against

the respondent as a summary suit seeking recovery of

Rs.49,56,840/-. For the purpose of convenience, the C.R.P.No.123/2021

parties will be referred to henceforth according to their

ranks before the trial Court.

5. The plaintiff's case in brief is as follows:

The plaintiff and the defendant had regular business

transactions towards supply of goods to the defendant.

The supply of goods was based on running Bills of

exchange by way of Invoices. The plaintiff supplied goods

worth Rs.38,37,952/- to the defendant under 106 Invoices

between 28.05.2015 to 01.06.2015 and those Bills were

outstanding. Therefore the plaintiff claimed Rs.37,77,606/-

towards principal due and Rs.11,79,234/- as interest on

the same.

6. The defendant on its appearance filed I.A.No.2

under Order XXXVII Rule 3(5) read with Section 151 of

CPC seeking leave to defend the suit and I.A.No.3 under

Order XXXVII read with Section 151 of CPC to try the suit

as a regular suit.

7. In the affidavits filed in support of the said

applications, the defendant claimed that the transactions

were based on several documents which were not C.R.P.No.123/2021

produced by the plaintiff and the suit does not lie in the

category of the summary suits.

8. The defendant in its additional affidavit

admitted the supply of the goods under the Bills of

exchange and claimed that out of the claim of the plaintiff,

it has paid Rs.1,87,295/-. The defendant also produced the

Bank statement to support its contention of payment of

Rs.1,87,295/-. The defendant claimed that E-mail

produced by the plaintiff was created one and plaintiff is

required to produce the original document etc.,

9. The plaintiff contested the applications. The

trial court on hearing the parties by the impugned order

allowed the applications and treated the suit as a regular

suit and granted leave to the defendant to defend the suit

by filing the written statement.

10. The trial Court arrived at such conclusion on

the following two grounds:

(i) The summary procedure in trial of the suit is

permissible only in the case involving Negotiable

Instruments and Contracts.

C.R.P.No.123/2021

(ii) The case of the plaintiff is based on Invoices.

The invoices are not contract.

11. Sri.Mrinal Shankar, learned Counsel for the

plaintiff assails the impugned order on the ground that

Invoices are contracts/bills of exchange and the trial Court

overlooked the admission of the defendant in the affidavit.

He further submits that in granting unconditional leave,

the trial Court has acted contrary to Order XXXVII Rule

3(5) CPC.

12. In support of his submission he relies upon the

following judgments:

i. Circutor Energy Management India Pvt.Ltd V.s Cipsa Tec India Pvt.Ltd and another1

ii. IDBI Trusteeship Services Limited V.s Hubtown Limited2

iii. M/s Panjab Pen House V.s M/s Samrat Bicycle Ltd3 iv. Bharat Forge Ltd V.s Onil Gulati4

v. Arambhan Hospitality Services Limited V.s Metro Cash & Carry India Private Limited5

CRP No.98/2015

(2017) 1 SCC 568

ILR 1990 (2) 549

2005 (83) DRJ 140

W.P.No.5164/2020 (GM-CPC) C.R.P.No.123/2021

13. The trial Court itself extracted the order

XXXVII Rule 1(2) of CPC which reads as follows:

"(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 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;

(iii) on a guarantee, Where the claim against the principal is in respect of a debt or liquidated demand only; or

(iv) suit for recovery of receivables instituted by any assignee of a receivable".

14. The reading of the above provision shows that

summary procedure under Order XXXVII Rule 1 of CPC

applies to the suits based on bills of exchange, promissory

notes or written contracts. Order XXXVII Rule 2(b)(i) of

CPC specifically deals with the case involving the written

contract.

15. The defendant in its affidavit filed in support of

I.A.Nos.2 and 3 as well as additional affidavit C.R.P.No.123/2021

unequivocally admitted that it bought the Goods from the

plaintiff on the sales Bills discounting facility based on the

invoices of the parties. The defendant itself admitted in the

affidavit that out of the amount covering such invoices,

Rs.1,87,295/- was paid to the plaintiff. Therefore there

was a clear admission that the transactions were based on

the Invoices.

16. In the judgments in M/S Panjab Pen House

and Bharat Forge Ltd's cases referred to supra it was held

that the invoices containing the terms of supply, the other

requisite terms and price for effecting the sale of goods

are the written contracts between the parties. Therefore

invoices are the documents of the contract.

17. In this case, the defendant itself admitted the

terms and conditions of invoices, supply of goods and

payment of part consideration. Therefore those documents

attracted the terms "written contract" contemplated in

Order XXXVII Rule 1(2)(b)(i) of CPC. Therefore the finding

of the trial Court that the invoice is neither bills of

exchange nor contract, therefore the suit does not fall

under the class of summary of the suit is erroneous.

C.R.P.No.123/2021

18. The grievance of the plaintiff is that such leave

should not have been unconditional, that too in the light of

the admission of the defendant in the additional affidavit.

19. Order XXXVII Rule 3(5) of CPC which is

relevant for the purpose of this case reads as follows:

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 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.

20. The second proviso to Order XXXVII Rule 3(5)

of CPC says that, if the defendant admits the claim, leave

to defend the suit shall not be granted unless the amount

so admitted to be due is deposited by the defendant in C.R.P.No.123/2021

Court. Whether there is such admission on the part of the

defendant is the question. In that regard, learned Counsel

for the plaintiff relies on para Nos.11 and 14 of the

affidavit of the defendant filed in support of I.A.No.2 and

para Nos.6 and 7 of the additional affidavit filed by the

defendant on 11.07.2018.

21. In para Nos.11 and 14 of the affidavit filed in

support of I.A.No.2, the defendant admitted that there was

supply of goods based on the invoices raised by the

defendant. The material admission with regard to the suit

claim is in para Nos.6 and 7 of the additional affidavit

which reads as follows:

6. I state that the plaintiff has claimed a sum of Rs.37,77,606/- on BOE dating from 28/05/14 to 01/06/15 out of which the defendant has paid Rs.1,87,295/- but the same has not been shown by the plaintiff. A statement showing the details of claim and payment made in this regard is herewith produced as Document No.1.

7. Thus, a total of Rs.1,87,295/- (Rupees One Lakh Eighty Seven Thousand Two Hundred and Ninety Five only) has been paid by the defendant and the plaintiff has not stated the said facts before this Hon'ble Court. The bank statements evidencing the payments are herewith produced as Document.No.2. The amounts claimed by the plaintiff and the payments made by defendant is shown in a tabular form as below:

Sl. Period Amount claimed Amount paid No. by plaintiff by defendant 1 28/05/14 Rs.37,77,606/- Rs.1,87,295/-

to 01/06/15 C.R.P.No.123/2021

22. Reading of the above paragraph shows that

the defendant admitted the transaction and claimed to

have paid part of the amount out of the suit claim. The

plaintiff filed another suit before the Commercial Court

against the defendant in COM.O.S.No.3211/2017. In that

case also similar application was filed. Treating such

statements as admission, the trial Court granted leave to

defend the case subject to deposit of a sum of Rs.3 Crores

where the suit claim was Rs.6,40,97,104/-.

23. The defendant challenged that order before

this Court in W.P.No.5164/2020 (GM-CPC). This Court by

order dated 28.04.2020 dismissed the Writ Petition. The

defendant challenged that order before Hon'ble Supreme

Court in Spl. Leave Petition(C) No.8115/2020. The Hon'ble

Supreme Court by the order dated 15.07.2020 dismissed

the said Spl. Leave Petition.

24. The Hon'ble Supreme Court In IDBI

Trusteeship Services Limited case referred to supra in

para No.17.6 of the judgment held that if any part of the

amount claimed by the plaintiff is admitted by the

defendant to be due from him, leave to defend the suit, C.R.P.No.123/2021