Madhya Pradesh High Court
Satish Gehlot Pro. Gehlot Agro ... vs Ms/ Krishna Irigation India Pvt.. ... on 23 August, 2023
Author: Pranay Verma
1
IN THE HIGH COURT OF MADHYA PRADESH
AT I N D O R E
BEFORE
HON'BLE SHRI JUSTICE PRANAY VERMA
MISC. PETITION No. 603 of 2023
BETWEEN:-
SATISH GEHLOT S/O MOHAN GEHLOT, PRO.
1. GEHLOT AGRO TRADERS, ANJAD NAKA WARD
NO. 10, BARWANI (MADHYA PRADESH)
GEHLOT AGRO TRADERS THROUGH
PROPRIOTOR SATISH GEHLOT S/O MAHEN
2.
GEHLOT ANJAD NAKA, WARD NO. 10,
BARWANI (MADHYA PRADESH)
.....PETITIONER
(BY SHRI YASHWANT PAGARE - ADVOCATE)
AND
M/S KRISHNA IRIGATION INDIA PVT. LTD.,
THROUGH DIRECTOR, SHRI UNNIKRISHNA
PALLAI S/O SHRI BHASKARAN PILLAI, AGED
ABOUT 52 YEARS, OCCUPATION: BUSINESS 309
MAN HERITAGE 6/2 TUKOGANJ HIGH COURT KE
PASS. DISTRICT INDORE (MADHYA PRADESH)
.....RESPONDENT
(BY SHRI VINAY SARAF, LEARNED SENIOR ADVOCATE WITH SHRI
SANJIL JAIN - ADVOCATE)
.................................................................................................................
Reserved on : 21.07.2023
Pronounced on : 23.08.2023
................................................................................................................
Signature Not Verified
Signed by: NEERAJ
SARVATE
Signing time: 23-08-2023
19:09:33
2
This petition having been heard and reserved for orders, coming
on for pronouncement this day, the court passed the following:
ORDER
1. By this petition preferred under Article 227 of the Constitution of India the
defendants/petitioners have challenged the order dated 10.01.2023 passed in RCS
No.175-B/2021 by the 11th Civil Judge, Senior Division, District Indore whereby
their application under Order 37 Rule 3(5) of the CPC for grant of leave to defend
the suit has been rejected.
2. The plaintiff/respondent has instituted a summary suit before the
Trial Court under the provisions of Order 37 of the CPC for recovery of
a sum of Rs.44,20,022/- from the defendants submitting that it is a
private limited company engaged in business of sale of PVC pipes and
drips sprinklers. It had supplied goods to the defendants on various
dates worth Rs.23,01,877/-. The defendants paid a sum of Rs.1,75,873/-
only and did not pay any further amount. For the total amount of
Rs.30,66,892/- due the defendants issued a cheque to plaintiff which
was dishonored on 07.06.2019 for insufficiency of funds. Notice was
issued to the defendants but no payment was made by them as a result
of which the suit has been filed.
3. Upon service of summons upon them, the defendants filed an
application under Order 37 Rule 3(5) of the CPC supported by an
affidavit for leave to defend the suit submitting that they do not know
Signature Not Verified
Signed by: NEERAJ
SARVATE
Signing time: 23-08-2023
19:09:33
the plaintiff and have never entered into any transaction with it. The
defendants have never been a dealer of plaintiff nor were appointed as
such by plaintiff. M/s. Noble Polymers Silvasa through Manager,
Madhu Kumar Acharya had contacted the defendants for supply of drip
irrigation and pipe fitting to it. On 15.06.2017 it had appointed the
defendants as its dealer. At that time as per policy of the said firm two
cheques were issued by defendants by way of security to it which were
blank and had only been signed. However, subsequently due to change
in policy by the State Government the defendants did not remain to be a
dealer. No goods had been purchased by defendants from M/s. Noble
Polymers which through its Manager Madhu Kumar Acharya has
colluded with plaintiff which with mala fide intention has instituted the
present suit on the basis of dishonour of cheques by filling and
presenting them before the Bank though no amount was payable
thereunder. The application was contested by plaintiff by filing its reply
to the same.
4. The application has been rejected by the trial Court by holding
that the cheques were issued by defendant No.1 Satish Gehlot and were
signed by him. Though defendants contend that M/s. Noble Polymers
had appointed them as a dealer and the cheques had been issued to it by
way of security but no document as regards appointment of defendants
as a dealer has been produced by them. The plaintiff had issued a notice
to defendants on 10.06.2019 after which complaint was made by them
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Signed by: NEERAJ
SARVATE
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to the Police on 11.08.2022 i.e. subsequent to institution of the suit
hence does not help them in any manner and appears to have been made
only for creating a ground for defence in the suit. The grounds as have
been taken by the defendants in their application do not appear to be
bona fide hence leave cannot be granted to them.
5. Learned counsel for the defendants/petitioners has submitted that
the defendants have given in detail the grounds in their application on
which leave to defend was sought for. Those grounds are quite
substantial in nature. The correctness of the averments made in the
application was not required to be proved at this stage itself which
would be a matter of evidence. For the present the defendants were only
required to prima facie show that they have substantial defence to offer.
The trial Court has illegally disbelieved their case for non-production of
documents by them. The matter has been decided by the trial Court on
merits itself which is impermissible.
6. Per contra, learned senior counsel for the plaintiff/respondent has
submitted that plaintiff had clarified in its reply that the defence raised
by the defendants was neither plausible nor probable. Defendants have
no substantial defence and have not raised any genuine triable issues
and the defence raised is frivolous and vexatious. It had been clarified
by way of the documents brought on record that the transactions of
defendants were with plaintiff itself and not with M/s. Noble Polymers.
The supply was made by plaintiff to defendants after purchasing the
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Signed by: NEERAJ
SARVATE
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goods from M/s. Nobel Polymers. There was no independent
transaction between the defendants and M/s. Nobel Polymers and the
transactions carried out by the Manager Madhu Kumar Acharya were
transactions of plaintiff and not of M/s. Nobel Polymers. No document
was filed by defendants to show any agreement with M/s. Nobel
Polymers. The Police report has been lodged by defendants only after
institution of the suit as an after thought and two years after issuance of
notice by plaintiff to them. Leave to defend has hence rightly been
denied by the trial Court. Reliance has been placed on the decision of
the Supreme Court in IDBI Trusteeship Services Limited V/s.
Hubtown Limited 2017 (1) SCC 568.
7. I have heard the learned counsel for the parties at length.
8. In IDBI Trusteeship Services Limited (supra) the principles on
which leave to defend is to be granted under Order 37 Rule 3(5) of the
CPC have been laid down as under :-
"17. Accordingly, the principles stated in para 8 of
Mechelec case [Mechelec Engineers & Manufacturers
v. Basic Equipment Corpn., (1976) 4 SCC 687] will
now stand superseded, given the amendment of Order
37 Rule 3 and the binding decision of four Judges in
Milkhiram case [Milkhiram (India) (P) Ltd. v.
Chamanlal Bros., AIR 1965 SC 1698 : (1966) 68 Bom
LR 36] , as follows:
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
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SARVATE
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unconditional leave to defend the suit.
17.2. If the defendant raises triable issues 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.
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."
9. As per the aforesaid dictum, leave to defend is to be granted
when the Court is satisfied that the defendant has a substantial defence,
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SARVATE
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that is, a defence that is likely to succeed or if the defendant raises
triable issues indicating that he has a fair or reasonable defence,
although not a positively good defence or raises triable issues though a
doubt may be left in the mind of the trial Judge about his good faith or
the genuineness of the triable issues or when the defendant raises a
defence which is plausible but improbable. It is only when defendant
has no substantial defence and/or raises no genuine triable issues and it
is found that the defence is frivolous and vexatious, that leave to defend
is to be refused. .
10. Thus, it is to be considered whether the defendants have raised
any triable issues in the present matter or that they have a substantial
defence. The ancillary question which needs consideration is as to
whether the defendants at the time of seeking leave to defend were
required to substantiate and prove the plea taken by them in their
application. The Supreme Court in the case of Santosh Kumar V/s.
Bhai Moolsingh AIR 1958 SC 321 has held that the test is to see
whether the defence raises a real issue and not a sham one, in the sense
that, if the facts alleged by the defendants are established, there would
be a good, or even a plausible, defence on those facts. The defendants
should raise an issue of fact, the truth and good faith of which could be
tested by going into the evidence. It has been observed that a defence
which on the face of it is clear would not become vague simply because
the evidence by which it is to be proved is not brought on file at the
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SARVATE
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time the defence is put in. The stage of proof can only come after the
defendant has been allowed to enter an appearance and defend the suit,
and that the nature of defence has to be determined at the time when the
affidavit is put in. At that stage all that the Court has to determine is
whether "if the facts alleged by the defendant are duly proved" they
will afford a good, or even a plausible, answer to plaintiff's claim. Once
the Court is satisfied about that, leave cannot be withheld and once
leave is granted the normal procedure of a suit so far as evidence and
proof go, obtains.
11. In Milkhiram (India) Privale Limited and another Vs.
Chamanlal Bros. AIR 1965 SC 1698 also the Supreme Court held that
whether the defence raises a triable issue or not has to be ascertained by
the Court from the pleadings before it and the affidavits of the parties
and it is not open to it to call for evidence at this stage.
12. In the instant case, in their application the defendants had
specifically stated that they had entered into an agreement with M/s.
Nobel Polymers for purchase of the goods and had issued blank
cheques in its favour by way of security. They had no direct dealings or
transactions with the plaintiff. M/s. Nobel Polymers in collusion with
plaintiff presented the cheques to the Bank for creating a ground for
institution of the suit. It was also stated that due to subsequent change
in policy by the State Government no goods were in fact supplied by
M/s. Nobel Polymers hence they are not liable for making any payment.
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Signed by: NEERAJ
SARVATE
Signing time: 23-08-2023
19:09:33
It was also stated that defendants acquired knowledge of the aforesaid
facts upon issuance of notice by plaintiff to them and thereafter lodged
the report with the Police albeit two years after the notice.
13. From a perusal of the averments of the entire application, it is
seen that defendants have shown that they have substantial defence in
the matter. Whether such defence is actually proved by them is not a
matter to be considered at the present stage but only after appreciation
of evidence to be led by the parties. At this stage the defendants were
not required to prove the defence as raised by them. Thay only had to
show that if the facts alleged by them are duly proved, they will afford a
good, or even a plausible, answer to plaintiff's claim. The trial Court has
illegally rejected the application by holding that defendants have not
produced any documents in support of the defence as sought to be
raised by them.
14. The contentions of plaintiff that the person with whom the
defendants state they had dealt with was an employee of plaintiff itself
and had carried out the transactions for plaintiff and not for alleged M/s.
Noble Polymers is also a matter to be adjudicated at the appropriate
stage and no finding in that regard is to be presently given. What has to
be seen is as to whether defendants have raised a substantial defence or
a triable issue and not whether they have proved the same. The trial
Court has hence illegally rejected the application of the defendants by
observing that they have not been able to substantiate the defences as
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SARVATE
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raised by them.
15. In my opinion, by way of their application, the defendants have
raised substantial defence i.e. a defence likely to succeed. The same is
in any case a triable issue raised by the defendants indicating that they
have a fair and reasonable defence although may not be a positively
good defence. There was no reason for the trial Court to have rejected
their application or even to have been left with a doubt about their good
faith or genuineness of the triable issue.
16. Thus, in view of the aforesaid discussion the impugned order
cannot be sustained and is hereby set aside. The application under Order
37 Rule 3(5) of the CPC filed by defendants is allowed and they are
granted leave to defend unconditionally. The petition is accordingly
allowed and disposed off.
(PRANAY VERMA)
JUDGE
ns
Signature Not Verified
Signed by: NEERAJ
SARVATE
Signing time: 23-08-2023
19:09:33
