ANIL GUPTA v. SANT RAM DHUPER AND COMPANY — 1976 DIGILAW 134 (DEL)

M. S. JOSHI ( 1 ) ANIL Gupta filed a suit to recover Rs. 1,91,690. 65 from Messrs Sant Ram Dhuper and Co. , and its sole proprietor Sant Ram Dhuper under the provisions of 0. 37 of the Code of Civil Procedure on 25-5-1976. It was submitted by him that Sant Ram Dhuper had executed a promissory note on 16-6-1975 in favour of the plaintiff in the sum of Rs. L66,518 for consideration and this promissory note was to bear interest at the rate of 15 per cent per annum, payable with monthly rests. The defendants made no payments to meet their liability on demand, and by the 25th May, 1976, a sum of Rs. 25,172. 65 fell due as rest. Hence this, suit for Rs. 1,91,690. 65 with costs and future interest calculated at the rate of 1a per cent per annum with monthly rests. ( 2 ) ON receipt of the notice of the suit the defendants moved an application under R. 3 of O. 37 of the Code of Civil Procedure (I. A. No. 1434/76) for leave to appear and defend the suit. It was submitted that Yogesh C. Gupta, father of the plaintiff, had advanced a loan of Rs. 1,00,000 to defendant No. 1 on 3-8- 1970 and Rs. 6,000 on 17-11-1970 in the name of the plaintiff and this loan had been secured against pledge of diverse shares. The defendants paid back a sum of Rs. 70,000 to the plaintiff on 13-7- 1972 and received a sum of Rs. 48,500 on 5-9-1972 in his account from his father, as principal. The plaintiff claimed compound interest firstly at the rate of 1% per month with monthly rests and later at the rate of 1% per month so that on 15-6-1975 a sum of Rs. 1,66,518 was shown due to him in the account which the defendants were maintaining. On 16-6-1975 the plaintiff procured a promissory note for the said sum from the defendants through his father. The provisions of the Punjab Relief of Indebtedness Act, 1934, as amended up-to-date, were made applicable to the Union Territory of Delhi vide Government of India Notification dated 8-6-1956 and in consequence thereof certain changes were brought about in S. 3 of Usurious Loans Act, 1918. The provisions of the Punjab Relief of Indebtedness Act, 1934, as amended up-to-date, were made applicable to the Union Territory of Delhi vide Government of India Notification dated 8-6-1956 and in consequence thereof certain changes were brought about in S. 3 of Usurious Loans Act, 1918. Under the last mentioned provision a creditor cannot recover interest at a rate higher than 7% per annum simple interest or more than two per centum over the Bank rate, whichever is higher in the case of a secured loan or 12 per centum simple interest in the case of an unsecured loan. The loan advanced to the defendants had remained a secured loan for one year and thereafter it became unsecured loan although the plaintiff still had with him life policies of defendant No. 2 of the total value of Rs. 40,000 assigned in his favour as security. On 16-6-1975 the plaintiff could recover legally Rs. 84,500 as principal and Rs. 47,097 as interest, Rs. 1. 31,597 in all, and even if interest be calculated for the first year as well at 12% per annum the total sum due to him was Rs. 1. 36,597. The promissory note in suit was thus without consideration, except for Rupees 1,36,597. Moreover, under S. 30 of the Punjab Relief of Indebtedness Act the principle of damdupat was applicable to a debt advanced in Delhi and as such the plaintiff could not claim anything beyond double the amount of Rs. 84,500 i. e. Rs. 1,69,000. Therefore, issues of law and facts deserving to be tried arose in the case and the defendants were entitled to get leave to appear and defend the suit. ( 3 ) IN his reply the plaintiff did not offer any adequate answer to the two crucial points raised by the defendants. According to the defendants interest could be charged by the plaintiff for the first year of the loan at the rate of 7% per annum and subsequently at, the rate of 12% per annum because of the provisions of S. 3 of the Usurious Loans Act as amended by the Punjab Relief of Indebtedness Act and to this contention the plaintiff has responded by saying that the relevant paragraph contains pleadings relating to law and therefore needs no reply. There is again no definite denial to the defendants averment that the sum of Rs. 1. There is again no definite denial to the defendants averment that the sum of Rs. 1. 66,518 for which the promissory note was executed comprised interest calculated against the dictates of the law and all what has been said is that the sum stood in favour of the plaintiff against the defendants. Vide R. 4, Chapter XV of the Delhi High Court (Original Side) Rules the Court shall upon application by the defendant give leave to appear and to defend the suit, upon affidavits which disclose such facts as would make it incumbent on the holder to prove consideration, or such other facts as the Court may deem sufficient to su pport the application. It is not disputed that the affidavit submitted by the defendants does unravel facts as put on the plaintiff the burden of establishing not an inconsequential part of the consideration. In consequence the defendants must get the Court s permission to appear and defend the suit. At this stage when the defendants ask for leave to appear and defend the suit, the Court will not weigh the substance their defence embodies; that has to be done in its proper time. What is to be seen at such a moment is whether the affidavit put in by the defendant gives rise to a triable issue. If the plea put forward by him is real though just plausible he will be taken to have earned the leave. The defendant need not make out a case as should warrant a sure success in the end. It does not matter whether the defence is based on law or equity. There is no rigid rule as a matter of fact to guide the Courts where and why the leave is to be granted or refused. Each case has to seek its determination from its peculiar facts and circumstances. It was held by the Supreme Court in Santosh Kumar v. Bhai Mool Singh ( AIR 1958 SC 321 ), quoted for the defendants, that at the stage of leave 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 the plaintiff s claim and once the court is satisfied about that leave cannot be withheld. There can be no two opinions about this principle. There can be no two opinions about this principle. ( 4 ) THE counsel for the plaintiff contends that as per Cl. (b) of R. 4 referred to above leave to defend may be given unconditionally or subject to such terms as to payment into court, giving security, framing and recording issues or otherwise and the present one is a fit case where the defendants should be ordered to deposit in cash the sum of Rs. 1. 36,597 which they themselves concede was legally recoverable on the date of the execution of the promissory note and the amount of interest which accrued due to the plaintiff even at the rate suggested by them, apart from costs. The defendants counsel relies on Santosh Kumar s case ( AIR 1958 SC 321 ) (supra) again to urge that whenever leave is given it must be given unconditionally. It was so very recently laid down by the Supreme Court in the Regional Manager v. Pawan Kumar Dubey ( AIR 1976 SC 1766 ) that it is the rule deducible from the application of law to the facts and circumstances of a case which constitutes its ratio decidendi and not some conclusion based upon facts which may appear to be similar. Their Lordships observed further that one additional or different fact can make a world of difference between conclusions in two cases even when the same principles are applied in each case to similar facts. In Santosh Kumar s case the defendant alleged payment of the entire amount for which the promissory note was said to have been executed and a triable issue embracing whole of the consideration having been raised, the Court could grant him an unconditional leave with all the necessary justification. In the case before us the promissory note was for Rs. 1,66,518 and according to the defendants own showing it was executed for valid consideration at least to the extent of Rs. 1,36,597. The law has placed suits based on negotiable instruments, which carry a presumption as to their having been made or drawn for consideration, in a special class and -that because such matters deserve more expeditious processing. The rules enacted on the subject are so rigorous that unless the Court s leave is obtained the defendant is not entitled, what to speak of defending the suit to appear in the same. The Court has discretion as per Cl. The rules enacted on the subject are so rigorous that unless the Court s leave is obtained the defendant is not entitled, what to speak of defending the suit to appear in the same. The Court has discretion as per Cl. (b) of R. 4 of Chapter XV of the Original Side Rules of our High Court (the provision is analogous to R. 3 (2) of O. 37 of the Code of Civil Procedure) to grant the leave to defend unconditionally or hedge it round with appropriate conditions but this discretion has to be exercised on sound judicial principles. Had the defendants not been able to question the considerationfor the promissory note in suit to the extent of Rs. 30,000 or so they would have had no right to be heard and the suit should have been decreed on the assumption that all the allegations in the plaint had been admitted by them as correct. They have no doubt acquired a right to resist the suit by virtue of their challenge to a part of the consideration (less than one-fifth of the whole) but they have no defence to its major part and the ends of justice would enjoin that the admittedly tenable portion of the plaintiff s claim be not placed on par with the questioned one. When deciding the suit of Kiranmoyee Dassi v. J. Chatterjee (AIR 1949 Cal 479) S. R. Das J. (as he then was) laid down the following propositions as to when leave to defend should be given unconditionally or subject to terms : (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. (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 shows 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 plaintiff is entitled to leave to sign judgment, the Court may allow the defence to proceed if the amount claimed is paid into Court otherwise secured and give leave to the defendant on condition and thereby show mercy to the defendant by enabling him to try to prove a defence: The defendant s defence in respect of interest said to have been charged in excess may fall under category (a) or (b) of the aforesaid categories but for the rest of the suit amount which is undisputed they can have leave only on conditions specified in category (e) not otherwise. In the case reported in Jagdish Pershad v. Des Raj (ILR (1969) Delhi 6), decided by Dua, C. J. , (as his Lordship then was) the defendant had taken exception to a portion of the consideration for the promissory note. The Court accorded permission to defend the suit but required him to furnish adequate security for the amount which according to his own statement was unassailable. To my mind the same considerations should prevail here. The Court accorded permission to defend the suit but required him to furnish adequate security for the amount which according to his own statement was unassailable. To my mind the same considerations should prevail here. ( 5 ) I would, therefore, accept the defendants application and allow them to defend the suit, but this is subject to their furnishing security within one month to the satisfaction of the Registrar in the sum of Rs. 1,50,000 to cover the admitted portion of the consideration for the promissory note the interest accrued due thereon at the rate suggested by the defendants themselves and the costs of the suit. ( 6 ) THE case shall be listed before the Deputy Registrar for further directions on October 11, 1976.