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2000 DIGILAW 246 (PNJ)

S. Kumar Synfabs Ltd. v. Bombay Saree Centre

2000-03-01

M.L.SINGHAL

body2000
JUDGMENT M. L. Singhal, J. - This is a Civil Revision filed by M/s. S. Kumar Synfabs Limited-plaintiff against the order dated 17.5.99 passed by Civil Judge, Senior Division, Chandigarh whereby he allowed the defendants permission to defend the suit unconditionally. Facts : 2. M/s. S. Kumar Synfabs Company Limited incorporated under the Companies Act filed suit under Order 37 of the Code of Civil Procedure, 1908 for the recovery of Rs. 12,69,591/- with future interest at the rate of 12 per cent per annum. It was alleged in the plaint that plaintiff-Company is engaged in the business of supplying textile goods to various cities throughout India. M/s Bombay Saree Centre defendant No. 1 is a partnership concern and Shri Janak Raj Gupta and others are its partners. On the request of the defendants, plaintiff Company direct as well as thorough its sister concern STM Fabrics and S. Kumar Company from time to time supplied textile goods of total sum of Rs. 12,36,876/-. Out of this amount, a total sum of Rs. 2,27,398/- towards incentive and security was adjusted leaving behind an outstanding liability of Rs. 10,09,478/- towards the plaintiff. On the demand of the outstanding amount by the plaintiff, the defendants wrote a letter dated 4.1.95 to the plaintiff Company confirming the outstanding amount of Rs. 10,09,478/- after deduction of incentive and security. Defendants agreed to send a demand draft. Cheque No. 081077 dated 6.1.96 for Rs. 9478/- drawn on Punjab National Bank, Chandigarh was sent to the plaintiff Company. Defendant firm requested the plaintiff Company vide their letter dated 5.1.96 that the remaining outstanding amount of Rs. 10 lacs plus Rs. 2,69,591/- as interest that accumulated upto March 31, 1997 would be paid in monthly instalments of Rs. 25000/- each. Defendant firm executed demand promisory note for a sum of Rs. 100000/- in favour of the plaintiff Company whereas they agreed to pay the amount with interest at the rate of 12 per cent per annum. 3. After appearance, defendants made application for leave to defend the suit. According to them, there are triable issues as according to annexure P/5 attached with the plaint, plaintiff had given a sum of Rs. 10 lacs as loan to the defendants on 2.1.95 while as per annexure P/1, loan was given on demand raised by the defendants vide letter dated 4.1.95. According to them, there are triable issues as according to annexure P/5 attached with the plaint, plaintiff had given a sum of Rs. 10 lacs as loan to the defendants on 2.1.95 while as per annexure P/1, loan was given on demand raised by the defendants vide letter dated 4.1.95. How is it possible that the loan was advanced earlier though demand for it was raised afterwards ? Defendants never took loan from the plaintiff. Defendant No.1 had been distributor of the textile goods supplied by the plaintiff. Besides defendant No.1, several other authorised dealers were appointed and it was agreed that incentives are to be given on the basis of the total sales made and such incentives were to be credited in the account of the defendants by the plaintiff since the authorised dealers had already deducted the amount of their respective claims but the plaintiff did not do so. Defendants wrote several letters to the plaintiff but to no effect. Security deposited by the dealers was not refunded by the plaintiff. A sum of Rs. 15000/- deposited by CITDC on supply of uniform cloth and claim of defective cloth etc. total amount being Rs. 3,58,195/- has not been credited. That amount is due from the plaintiff to the defendants. The suit is not within limitation and it does not fall within the provisions of Order 37 CPC since no loan was taken. 4. Civil Judge, Senior Division, Chandigarh gave permission to the defendants to defend the suit unconditionally as in his opinion triable issues are there and the pleas taken by the defendants appear to have substance and they are not frivolous and vexatious. 5. It has been submitted by learned counsel for the petitioner-plaintiff company that textile goods to the tune of Rs. 12,36,876/- had been supplied to the defendant firm by the plaintiff company out of which a sum of Rs. 2,27,398/- was adjusted towards incentive and security leaving behind a sum of Rs. 10,09,478/-. Vide their letter dated 4.1.1995 the defendant-respondents confirmed the outstanding amount after deduction of incentive and security and they had agreed to send demand draft for the same. On 6.1.96 Cheque No. 081077 for sum of Rs. 9478/- was received by the plaintiff company and the balance of Rs. 10 lacs was agreed to be paid in monthly instalments of Rs. On 6.1.96 Cheque No. 081077 for sum of Rs. 9478/- was received by the plaintiff company and the balance of Rs. 10 lacs was agreed to be paid in monthly instalments of Rs. 25,000/- alongwith interest at the rate of 12 per cent per annum. The defendants also executed a demand promisory note for a sum of Rs. 10 lacs in favour of the petitioner/plaintiff, whereby they agreed to repay the aforesaid amount alongwith interest at the rate of 12 per cent per annum. Even letter dated 13.2.1996 was acknowledged by the defendants vide their letter dated 16.2.1996 where it was confirmed that due to family problems and financial crisis the defendants were unable to make the payment. Balance amount of Rs. 10,09,478/- was admitted to be paid by the defendants. Their only plea was that certain amount of about Rs. 3.58 lacs was not adjusted towards incentive and security but they had not disputed the liability of the balance amount. In these circumstances, the defendants should not have been allowed leave to defend the suit. It was submitted that the Court could have allowed leave to the defendant to defend the suit if it had felt that the defendant had substantial defence to raise or defence intended to be put up by them was not frivolous or vexatious. He drew my attention to the provisions of Order 37 Rule 3 Sub-Rule 5 of the Code of Civil Procedure, which reads as follows : "3. Procedure for the appearance of defendant. He drew my attention to the provisions of Order 37 Rule 3 Sub-Rule 5 of the Code of Civil Procedure, which 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 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." 6. It was submitted that leave to defend could be allowed if the Court had felt that defendant had disclosed certain facts, which appear to be sufficient to entitle them to defend. It was held in M/s. Punjab Pen House v. M/s. Samrat Bicycle Ltd., AIR 1992 Delhi 1 that "when the goods are supplied through a bill on certain terms and conditions duly agreed to between the parties, there is no escape from the conclusion that it amounts to a written contract between the parties, and suit by plaintiff to recover money for price of goods sold and delivered is covered by Clause (2) (b) of Order 37 Rule 1 which applies to suit for recovery of debt or liquidated amount in money payable by the defendant arising on a written contract." M/s Punjab Pen House had filed suit against the defendant under Order 37 CPC on the allegations that the defendant had been purchasing goods on credit from the plaintiff from time to time and had also been making the payment of the bills. The defendant was alleged to have purchased goods by three different bills for a total amount of Rs. 6,17,945.80. The defendant was alleged to have purchased goods by three different bills for a total amount of Rs. 6,17,945.80. The defendant made part payment of these bills leaving a balance of Rs. 5,21,294.50 as on 30.7.1988. The defendant also issued cheque dated 23.7.1988 drawn on the Punjab National Bank, Asaf Ali Road towards further part payment. On presentation the cheque was dishonoured. Plaintiff claimed Rs. 6,70,478-50. Defendant made an application for grant of unconditional leave to defend the suit. It was alleged that the goods purported to be covered by the aforesaid bills were in fact never received by the defendant at its place of business namely Gauri Ganj where the plaintiff continues to make the supplies. Plaintiff had submitted duplicate bills at its registered office and had assured the defendant that the goods had been supplied at its factory site. It was on account of such an assurance of the plaintiff that the entry of the bills was made by the defendant at its head office subject to clarification and intimation from the factory site, if the goods covered by the aforesaid bills had been received or not. Defendant denied its liability to pay any amount to the plaintiff including sales-tax, legal notice charges or interest. On consideration of the letter dated 20.2.88 written by the defendant to the plaintiff, it was concluded that defendant had no plausible defence to the claim made by the plaintiff. Application for leave to defend was dismissed and the plaintiff was granted decree for recovery of Rs. 6,70,000/- with costs. 7. In this case, the defendant firm had acknowledged the receipt of textile goods by them from the plaintiff company. They had also acknowledged their liability to the tune of Rs. 12,36,876/- minus Rs. 2,27,398/-, which is credit balance towards incentive etc. and security deposit. There was thus acknowledgment of a total debit balance of Rs. 10,09,478/- payable by the defendant to the plaintiff company. There is also pronote executed by the defendant firm in favour of the plaintiff company. Defendant firm has claimed the absence of adjustment of a sum of Rs. 3,58,195/- due on account of incentive etc. Defendant should not have been allowed unconditional leave to defend the suit. Defendant should have been allowed to defend the suit only qua a sum of Rs. 3,58,195/- and that too on deposit of a sum of Rs. 9,11,396/-. 8. Defendant firm has claimed the absence of adjustment of a sum of Rs. 3,58,195/- due on account of incentive etc. Defendant should not have been allowed unconditional leave to defend the suit. Defendant should have been allowed to defend the suit only qua a sum of Rs. 3,58,195/- and that too on deposit of a sum of Rs. 9,11,396/-. 8. This revision is, therefore, accepted and the impugned order is set aside. Defendants are allowed leave to defend the suit provided they deposit a sum of Rs. 9,11,396/- in Court to be paid to the plaintiff Company within two months of the copy of receipt of this order. If this amount is deposited by the defendants, it shall be paid to the plaintiff company on their furnishing security to the satisfaction of the trial Court. Revision allowed.