Rajasthan High Court

M/S Honeywala Industries vs Arun Kumar Jhoshi S/O Sh. L. K. ... on 2 November, 2022

Bench: Mahendar Kumar Goyal

         HIGH COURT OF JUDICATURE FOR RAJASTHAN
                     BENCH AT JAIPUR

                   S.B. Civil Writ Petition No. 15670/2022

M/s Honeywala Industries, Old Industrial Area, Itarana Road, In-
Front Of Rajasthan Patrika Office, Proprietor Shri Vikram Jain S/o
Sh. Mahesh Chand Jain, R/o 46, Shantikunj, Alwar (Raj.)
                                                           ----Petitioner/Defendant
                                         Versus
Arun Kumar Jhoshi S/o Sh. L. K. Joshi, R/o 38 A, Madhuvan,
Alwar (Raj.)
                                                            ----Respondent/Plaintiff

For Petitioner(s)              :     Mr. Ajay Goyal
For Respondent(s)              :     Mr. Shriram Yadav

HON'BLE MR. JUSTICE MAHENDAR KUMAR GOYAL

Order

02/11/2022

This writ petition under Article 227 of the Constitution of

India assails the legality and validity of the order dated

13.09.2022 passed by the learned Additional District Judge No.3,

Alwar in Civil Suit No.34/35/19 whereby, an application filed by

the petitioner/defendant (for brevity, "the defendant") under

Order 37 Rule 3 (5) CPC seeking "leave to defend", has been

dismissed.

The relevant facts in brief are that the respondent/plaintiff

(for brevity, "the plaintiff") filed a suit for recovery of a sum of

Rs.13,06,042/- alongwith interest against the defendant stating

therein that he advanced a loan of rupees ten lac to the defendant

on 18.03.2015 through Cheque No.062902 with interest @

Rs.1.35% per month. It is averred that interest rate was varied

from time to time and some amount towards principal and/or

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interest was also paid by the defendant; but, an amount of

Rs.13,06,042/- is still due. The defendant filed an application

seeking "leave to defend" which has been dismissed by the

learned trial Court vide its order dated 13.09.2022, impugned

herein.

Learned counsel for the defendant, inviting attention of this

Court towards the averments of the plaint, would submit that the

suit filed by the plaintiff under the provisions of Order 37 CPC

itself is not maintainable as it is not covered under any of the

clauses therein. He submits that for determination as to whether

any sum is due against him, detailed enquiry including evidence of

the parties is required inasmuch as it is not based either on

promissory note or any acknowledgment or any other document

establishing his liability to pay the amount claimed in the suit.

Learned counsel submits that misconstruing the judgement of

Hon'ble Supreme Court of India in case of B.L. Kashyap and

Sons Limited Vs. M/s JMS Steels and Power Corporation &

Anr.: (2022) 3 SCC 294, the learned trial Court erred in

dismissing his application. He submits that since he has plausible

defence, he is entitled for unconditional "leave to defend". Learned

counsel, in support of his submissions, relies upon a judgement of

Hon'ble Delhi High Court in case of Ajay Shaw Vs. HDFC

Limited: AIRONLINE 2018 DEL 653. He, therefore, prays that

the writ petition be allowed, the order dated 13.09.2022 be

quashed and set aside and the application filed by the defendant

be allowed.

Per contra, learned counsel for the plaintiff submits that

objection of the defendant as to maintainability of the suit under

Order 37 CPC already stands rejected by the learned trial Court

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vide its order dated 06.03.2021 whereby, an application filed by

the defendant under Order 7 Rule 11 CPC was dismissed. He

submits that since the loan was advanced through a cheque, the

suit is maintainable under Order 37 CPC. Learned counsel submits

that in any case, even if the "leave to defend" is granted to the

defendant, a condition to furnish bank guarantee be imposed.

Heard. Considered.

Indisputably, the amount claimed in the suit is not based on

any document executed in between the parties or by the

defendant. Admitting that the loan was advanced to him, the

defendant has taken a categorical stand that entire loan amount

with interest has already been repaid and nothing remains due

against him. A perusal of the contents of plaint reveals that except

that the loan was advanced through a cheque and certain

payments have been made by the defendant through cheques

which the plaintiff claims mostly to be against interest component,

detailed enquiry would be required as to the rate of interest

applicable from time to time and also to adjudge veracity of the

defendant's defence that he has already repaid the entire amount.

It is trite law that grant of "leave to defend" is a rule and denial is

exception.

The Hon'ble Supreme Court has, in case of B.L. Kashyap

and Sons Limited (supra), held as under:-

"33. It is at once clear that even though in IDBI Trusteeship Services Ltd. Vs. Hubtown Ltd.: (2017) 1 SCC 568, this Court has observed that the principles stated in paragraph 8 of Mechelec Engineers' and Manufacturers Vs. Basic Equipment Corpn.: (1976) 4 SCC 687 shall stand superseded in the wake of amendment of Rule 3 of Order 37 but, on the core

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theme, the principles remain the same that grant of leave to defend (with or without conditions) is the ordinary rule; and denial of leave to defend is an exception. Putting it in other words, generally, the prayer for leave to defend is to be denied in such cases where the defendant has practically no defence and is unable to give out even a semblance of triable issues before the Court.

33.1. As noticed, if the defendant satisfies the Court that he has substantial defence i.e. a defence which is likely to succeed, he is entitled to unconditional leave to defend. In the second eventuality, where the defendant raises triable issues indicating a fair or bonafide or reasonable defence, albeit not a positively good defence, he would be ordinarily entitled to unconditional leave to defend. In the third eventuality, where the defendant raises triable issues, but it remains doubtful if the defendant is raising the same in good faith or about genuineness of the issues, the trial Court is expected to balance the requirements of expeditious disposal of commercial causes on one hand and of not shutting out triable issues by unduly severe orders on the other. Therefore, the trial Court may impose conditions both as to time or mode of trial as well as payment into the Court or furnishing security. In the fourth eventuality, where the proposed defence appear to be plausible but improbable, heightened conditions may be imposed as to the time or mode of trial as also of payment into the Court or furnishing security or both, which may extend to the entire principal sum together with just and requisite interest.

33.2. Thus, it could be seen that in the case of substantial defence, the defendant is entitled to unconditional leave; and even in the case of a triable

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issue on a fair and reasonable defence, the defendant is ordinarily entitled to unconditional leave to defend. In case of doubts about the intent of the defendant or genuineness of the triable issues as also the probability of defence, the leave could yet be granted but while imposing conditions as to the time or mode of trial or payment or furnishing security. Thus, even in such cases of doubts or reservations, denial of leave to defend is not the rule; but appropriate conditions may be imposed while granting the leave. It is only in the case where the defendant is found to be having no substantial defence and/or raising no genuine triable issues coupled with the Court's view that the defence is frivolous or vexatious that the leave to defend is to be refused and the plaintiff is entitled to judgment forthwith. Of course, in the case where any part of the amount claimed by the plaintiff is admitted by the defendant, leave to defend is not to be granted unless the amount so admitted is deposited by the defendant in the Court."

Their Lordships have, in case of IDBI Trusteeship Services

Ltd. Vs. Hubtown Ltd.: (2017) 1 SCC 568, held as under:-

"17. Accordingly, the principles stated in para 8 of Mechelec Engineers' and Manufacturers Vs. 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 (India) (P) Ltd. Vs. Chamanlal Bros., AIR 1965 SC 1698, 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 unconditional leave to defend the suit.

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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."

The Hon'ble Delhi High Court has, in case of Ajay Shaw

(supra), held as under:-

"11. From the aforesaid discussions, the following conclusions emerge:-

(i) Suits which are to be filed under Order XXXVII CPC, were as per the legislative intent, only those where the amount claimed in the suit is the same liquidated amount which arises as emerging/flowing directly from the written instrument which is the subject matter of the Order XXXVII suit, and, a civil court cannot under Order XXXVII CPC be called upon to look at various documents and various statements of accounts, spread over periods running into years, so as to determine how the amount due in the suit claimed is arrived at, and which amount is admittedly different from the amount contained in the written document(s).

(ii) The plaint in the present suit when it refers to the amount which is claimed in the suit of Rs. 1,06,89,531.40 does not make averments and refer to any specific document being the written contract between the parties containing this specific liquidated amount as due and payable by the defendants to the plaintiff.

(iii) Not only there is no cause of action pleaded in the plaint with respect to the amount of Rs. 1,06,89,531.40, even the figure of Rs.1,19,58,688.94 which is referred to in para 11 of the plaint is not

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supported by any written document as a liquidated amount being due and payable by the defendants to the plaintiff. Also, as stated above, not only there is no written contract containing this liquidated amount of Rs. 1,19,58,688.94, there is in fact not even a supporting statement of account where this figure is shown as the balance due at the foot of the account.

(iv) The plaintiff, in spite of a directly applicable judgment passed in an earlier suit of the plaintiff, holding that suits such as the present are not maintainable under Order XXXVII CPC, insists that suits such as the present be held as maintainable under Order XXXVII CPC, that such suits must be continued to be heard and decided under Order XXXVII CPC.

(v) The suit plaint leaves wide gaps with respect to averments required of co-relating the three separate amounts as stated in the plaint being the amounts of Rs.1,72,88,100/-, Rs.1,19,58,688.94/- and Rs,1,06,89,531.40/- as stated above.

(vi) The final figure of Rs.1,06,89,531.40/- claimed as being the suit amount is neither supported by any contract containing this liquidated amount stating that such amount is due and payable by the defendants to the plaintiff nor even a statement of account as to how this figure is the balance due at the foot of which account."

In the factual background of the case and in the backdrop of

the aforesaid judgements, this Court is of the considered view that

the learned trial Court erred in dismissing the application filed by

the defendant under Order 37 Rule 3 (5) CPC who is entitled for

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unconditional "leave to defend" inasmuch as it has plausible

defence.

The writ petition is allowed accordingly. The order dated

13.09.2022 is quashed and set aside and the application filed by

the defendant under Order 37 Rule 3(5) CPC seeking "leave to

defend" is allowed.

(MAHENDAR KUMAR GOYAL),J