Madhya Pradesh High Court

Sandeep Alias Sonu Mangal vs Yash Kumar Goyal on 17 September, 2021

Author: Deepak Kumar Agarwal

       THE HIGH COURT OF MADHYA PRADESH 1
                      MP 2998 of 2021
      Sandeep alias Sonu Mangal vs. Yash Kumar Goyal

Gwalior, Dated :17/09/2021

      Heard through hybrid system of physical/virtual hearing.

      Shri PC Chandil, Counsel for the petitioner.

      Shri DD Bansal, Counsel for the caveator/ respondent.

      The present miscellaneous petition under Article 227 of

Constitution of India assails the order dated 23/08/2021 passed by

Second Additional District Judge, Gwalior in Civil Suit

No.18B/2020,whereby the application filed by petitioner/defendant

under Order 37 Rule 5 r/w Section 151 CPC has been allowed with

condition that petitioner/defendant shall deposit an amount of

Rs.20 lac in the Court within a period of one month and shall

further furnish a security of Rs.25 lac.

(2)   Facts

giving rise to the present petition, in short, are that

plaintiff/respondent filed a suit for recovery of Rs.44,56,000/-

pleading that he is a moneylender. It was pleaded that due to family

relationship, on 14/08/2017 defendant had borrowed Rs.15 lac

from plaintiff and executed a promissory note of Rs.1,30,000/- to

refund the amount on or before 14/06/2018. Defendant gave a

cheque of Rs.15 lac dated 14-04-2019 to plaintiff but when the said

cheque was presented in concerning Bank for encashment, the

same was dishonoured. It was pleaded that plaintiff is entitled to

receive Rs.15 lac with interest totalling Rs.16,89,000/- from

defendant. It is further pleaded that another Rs.15 lac was advanced THE HIGH COURT OF MADHYA PRADESH 2 MP 2998 of 2021 Sandeep alias Sonu Mangal vs. Yash Kumar Goyal

to defendant by executing a promissory note on 01/04/2016 for a

period from 02/04/2016 to 02/02/2017. The defendant did not

repay the said amount with interest to plaintiff till 02/02/2017 and

thereafter, on 02/08/2017 defendant executed another promissory

note to pay the amount by 02/08/2019 and also gave a cheque of

Rs.15 lac, dated 02/08/2019. When plaintiff presented the cheque

in concerning Bank, the same was also dishonoured and on

03/08/2019 cheque was returned back with an endorsement ''drawer

signature differs''. It was pleaded that plaintiff is entitled for

recovery of Rs.15 lacs and interest of Rs.1,15,000/- total

Rs.16,15,000/- from defendant. It was further pleaded that another

amount of Rs.10 lac was advanced to defendant on 14/08/2017 for

a period of eight months by executing a promissory note to refund

the same till 14/04/2018. Thereafter, defendant did not pay the

same as per the promissory note and a fresh promissory note was

also executed to pay the amount to plaintiff by 19/02/2019. Despite

various efforts made by the plaintiff, the defendant did not make

payment. It was pleaded that plaintiff is entitled for recovery of

Rs.10 lac with interest of Rs.1,52,000/-. Therefore, plaintiff filed a

suit against defendant for recovery of all the three transactions,

total amount of Rs.44,56,000/- including interest.

(3) On being served, defendant appeared before the trial Court

and filed an application under Order 37 Rule 5 r/w Section 151 THE HIGH COURT OF MADHYA PRADESH 3 MP 2998 of 2021 Sandeep alias Sonu Mangal vs. Yash Kumar Goyal

CPC on 05/10/2020, for granting leave to defend and contended

that plaint filed by respondent is not maintainable.

(4) It is submitted by Counsel for the petitioner that there was no

loan transaction between defendant and plaintiff and promissory

notes submitted by plaintiff are forged and fabricated because there

appears no signature of defendant. The executed promissory notes

are not properly stamped. Plaintiff ought to have produced the

original documents before the Court. Plaintiff has not complied

with the provisions of Money-Lending Act. Plaintiff has not filed

any original documents regarding Promissory Notes, Registration

of Moneylenders and Registration Certificate, etc, therefore, the

documents submitted by plaintiff are forged and fabricated. In

absence of original documents, a decree cannot be passed against

defendant. Although learned trial Court has allowed application

filed by defendant under Order 37 Rule 5 r/w Section 151 CPC but

imposed a very harsh condition that he shall deposit an amount of

Rs.20 lac within a period of one month and shall furnish a security

of Rs.25 lac. The learned trial Court has committed a grave error in

imposing such harsh condition upon defendant for granting leave to

defend. Therefore, the impugned order imposing a harsh condition

upon defendant for granting leave to defend is arbitrary, illegal and

the same deserves to be set aside. In such circumstances, the

learned trial Court should have granted leave to defendant to THE HIGH COURT OF MADHYA PRADESH 4 MP 2998 of 2021 Sandeep alias Sonu Mangal vs. Yash Kumar Goyal

defend unconditionally. The learned Counsel for defendant

submitted that when the defence is a good and valid one, then

conditions cannot be imposed. In support of his contention, he has

relied upon the judgment passed by Apex Court in the case of

Santosh Kumar Vs. Bhai Mool Singh, reported in AIR 1958, SC

321 in which it has been held as under:-

''Though the Court is given a discretion by O. 37, R.3(2) it must be exercised along judicial lines, and that in turn means, in consonance with the principles of natural justice that from the foundations of our laws. Those principles, so far as they touch the matter, are well known. Wherever the defence raises a ''triable issue'', leave must be given, and when that is the case it must be given unconditionally, otherwise the leave may be illusory. If the Court is of the opinion that the defence is not bona fide, then it can impose conditions and is not tied down to refusing leave to defend.

Where the defence is a good and valid one, conditions cannot be imposed. The power to impose conditions is only there to ensure that there be a speedy trial. If there is reason to believe that the defendant is trying to prolong the litigation and evade a speedy trial, then conditions can be imposed. But that conclusion cannot be reached simply because the defendant does not adduce his evidence even before he is told that he may defend then action.

(Emphasis supplied)

Further, the Counsel for the petitioner has relied upon the

judgment passed by Apex Court in the case of Neebha Kapoor vs.

Jayantilal Khandwala and Others, reported in (2008) 3 SCC 770

in which it has been held as under:-

THE HIGH COURT OF MADHYA PRADESH 5 MP 2998 of 2021 Sandeep alias Sonu Mangal vs. Yash Kumar Goyal

''For the purpose of obtaining a summary judgment in terms of Order 37 of the Code, ordinarily the original documents must be produced. Original documents are not available. The appellant, therefore, is obligated to prove the loss of documents. The High Court was of the opinion that it is a case where unconditional leave should be granted. The question is as to whether the defence of the respondents is ''moonshine'' or not was not a matter which required consideration of the High Court at that stage. A decree could not have been granted on the basis of even photostat copies of the documents.'' (Emphasis supplied)

(5) So far as the case law of Neebha Kapoor (supra) cited by

counsel for the petitioner is concerned, in that matter all the four

cheques having not been honoured and complaint petitions were

filed and all the original documents viz. promissory note and four

cheques were filed in the criminal court, were misplaced but this is

not a matter where cheques are misplaced. Therefore, the cases

relied upon by counsel for the petitioner would not come to the

rescue of the petitioner.

(6) On the other hand, Shri Bansal, learned Counsel for the

caveator argued that in different dates, the defendant had borrowed

money from the plaintiff. For this purpose, plaintiff has filed bank

statements before the Court. Looking to the amount due on the

defendant, the learned trial Court has rightly passed the impugned

order by imposing a condition that defendant shall deposit Rs.20

lac before the Court within a period of one month and shall also THE HIGH COURT OF MADHYA PRADESH 6 MP 2998 of 2021 Sandeep alias Sonu Mangal vs. Yash Kumar Goyal

furnish security of Rs.25 lac. The defendant anyhow wants to

prolong the matter/litigation and does not want to pay money

borrowed from plaintiff. Therefore, the present petition deserves to

be dismissed. In support of his contentions, the learned Counsel for

the caveator has relied on the decision of Apex Court in the IDBI

Trusteeship Services Limited vs. Hubtown Limited, reported in

(2017) 1 SCC 568, in which it has been held as under:-

''Leave to defend should be refused when the defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious. When any part of amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court.'

Further, the counsel for the caveator has also relied on the

judgment of Apex Court passed in the case of Sudin Dilip

Talaulikar Vs. Polycap Wires Private Limited and Others,

reported in (2019)7 SCC 577, in which it has been held as under

regarding granting leave principles:-

''12. In Hubtown Limited (supra), this Court has laid down the principles which should guide exercise of such discretion as follows :(SCC pp. 596-97, para 17) "...17.1. If the defendant satisfies the court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit.

17.2. If the defendant raises triable issues indicating that he has a fair or reasonable defence, THE HIGH COURT OF MADHYA PRADESH 7 MP 2998 of 2021 Sandeep alias Sonu Mangal vs. Yash Kumar Goyal

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.

17.3. Even if the defendant raises triable issues, if a doubt is left with the trial Judge about the defendant's good faith, or the genuineness of the triable issues, the trial Judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security.

17.4. If the defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires.

17.5. If the defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintiff is entitled to judgment forthwith.

17.6. 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, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in court."

(7) Now, it has to be seen, whether the condition imposed by the

trial Court with regard to deposit of Rs.20 lac and furnishing

security of Rs.25 lac, while allowing the application of defendant

under Order 37 Rule 5 r/w Section 151 CPC, is just or not ?

(8) On going through the impugned order, it emerges out that

defendant had issued various cheques of different dates in favour of THE HIGH COURT OF MADHYA PRADESH 8 MP 2998 of 2021 Sandeep alias Sonu Mangal vs. Yash Kumar Goyal

plaintiff for repayment of borrowed money of Rs.40 lac with

interest in terms of promissory notes executed between the parties

but the cheques were dishonoured. Plaintiff has produced bank

statements before the Court and it is clear from the bank statements

that said amount was borrowed by the defendant. Of course, the

defendant has produced a sale deed dated 14/07/2012 to establish

his case that he has purchased a plot from the plaintiff but the said

averment is lacking in the application filed by him under Order 37

Rule 5 r/w Section 151 CPC. Therefore, it does not go to show

from the application filed under Order 37 Rule 5 r/w Section 151

CPC that defence put forth by defendant is a good and valid one.

Under such circumstances, learned trial Court has rightly imposed