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2001 DIGILAW 605 (PNJ)

Dhaliwal Trading Agency v. Varinder Singh

2001-05-28

M.L.SINGHAL

body2001
JUDGMENT M.L. Singhal, J. - Varinder Singh filed suit under Order 37 Rule 2 CPC for the recovery of Rs. 18,36,000/- i.e Rs. 18,00,000/- as principal plus Rs. 36,000/- as interest calculated @ 2% per month with effect from 25.10.1999 to 25.11.1999 on the allegations that Avtar Singh had issued cheque numbering 627074 dated 25.10.1999 for Rs. 9 lacs and that Dalbir Singh had issued cheque numbering 627073 dated 25.10.1999 for Rs. 9 lac as partners of the defendant No. 1 firm M/s. Dhaliwal Trading Agency, Doaraha Mandi. 2. M/s. Dhaliwal Trading Agency, Doaraha Mandi defendant No. 1 and Dalbir Singh defendant No. 2 filed an application under Section Order 37 Rule 3 CPC for leave to defend the suit unconditionally saying that M/s. Dhaliwal Trading Agency, Doaraha Mandi never took any loan from the plaintiff. No cheque was issued. Avtar Singh had expired on 6.5.1999, as such, question of issue of any cheque numbering 627074 by Avtar Singh could not arise. It was also alleged that there was no logic in issuing two cheques of the same date signed by two different persons. Had the defendants taken any loan from the plaintiff, they would have issued one cheque for Rs. 18 lac to the plaintiff. The account of the defendant firm was to be operated as per the partnership deed as agreed upon in the terms and conditions incorporated in the partnership deed and for that purpose the defendants had been keeping the cheque book signed by the partners so that the other partners could use it in their absence. It was alleged that the plaintiff, in connivance with some employee of the defendant firm had stolen the cheques and have filled in the cheques for such a huge amount and filed the present suit on false and frivolous grounds. Cheques bear signatures only whereas the entire cheques i.e. the name of the plaintiff and the amount has been filled in by some other person. Plaintiff in connivance with the employees of the defendants by fraudulent means succeeded in getting hold of the blank cheques and filed the present suit on false and frivolous grounds. Defendant has a good defence to make, as such, he should be allowed leave to defend the suit unconditionally. 3. Plaintiff in connivance with the employees of the defendants by fraudulent means succeeded in getting hold of the blank cheques and filed the present suit on false and frivolous grounds. Defendant has a good defence to make, as such, he should be allowed leave to defend the suit unconditionally. 3. Defendant No. 3 Kulwant Kaur wife of Dalbir Singh filed an application under Order 37 Rule 3 CPC seeking leave to defend the suit saying that earlier, the applicant was partner in firm M/s. Dhaliwal Trading Agency, Doaraha Mandi. Thereafter, she retired from the firm and a new partnership deed was executed on 1.4.1999 and the new partners were included in the firm. She has retired from the firm since 31.3.1999 and has no concern with the firm M/s. Dhaliwal Trading Agency, Doaraha Mandi and all the assets and liabilities of the firm were taken over by the continuing partners as the accounts were settled at that time and as such she is not necessary party in the suit. At the time when she was partner in the firm, the firm had not taken any loan from the plaintiff. 4. Vide order dated 8.6.2000, these applications were allowed subject to the condition that defendants 1 to 3 i.e. M/s. Dhaliwal Trading Agency, Doaraha Mandi, Dalbir Singh and Kulwant Kaur shall furnish bank guarantee to the tune of Rs. 18 lacs. M/s. Dhaliwal Trading Agency, Doaraha Mandi, Dalbir Singh and Kulwant Kaur have assailed this order through this revision and have prayed that they should have been allowed to defend the suit unconditionally. In M/s. Mechalec Engineers and Manufacturers v. M/s Basic Equipment Corporation, AIR 1977 SC 577, the Honble Supreme Court laid down the following principles to be followed while considering the question of granting leave to defend to the defendant :- (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 plaintiffs 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 condition as to the time or mode of trial but not as to the payment into the 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 protect the plaintiff by only allowing the defence to proceed if the amount claimed is paid into court or otherwise secure and give leave to the defendant on such condition and thereby show mercy to the defendant by enabling him to try to prove a defence." 5. Now the question arises whether on the facts pleaded in these applications for leave to defend, leave to defend should be given unconditionally or it should be given with some condition. It would bear repetition that defendants No. 1 and 2 i.e. M/s. Dhaliwal Trading Agency, Doaraha Mandi, and Dalbir Singh pleaded in their applications for leave to defend that the firm M/s. Dhaliwal Trading Agency, Doaraha Mandi never took any loan from the plaintiff. No cheque No. 627074 was issued by Avtar Singh as no cheque could be issued by Avtar Singh on 25.10.1999 when he had expired on 6.5.1999. No cheque No. 627074 was issued by Avtar Singh as no cheque could be issued by Avtar Singh on 25.10.1999 when he had expired on 6.5.1999. On record of the suit has been brought the death entry Annexure P-3 showing 6.5.1999 as the date of the death of Avtar Singh. It was also pleaded that if the firm had to take loan, there could have been one cheque of Rs. 18 lacs issued to the plaintiff. Why should have there been two cheques for Rs. 9 lacs each to the plaintiff by two different persons ? It was also pleaded that the defendants had been keeping the cheque books signed by the partners so that the other partners could use it in their absence and the plaintiff managed to steal some cheques in connivance with some employee of the defendant firm. As far as Kulwant Kaur is concerned, her stand is that she had ceased to be partner as on 31.3.1999 and a new partnership was formed on 1.4.1999. When she was partner of the firm, no loan was taken through the plaintiff. 6. Learned counsel for the respondent on the other hand submitted that there are cases in which it is not easy to show whether the defence is a genuine one or not, and, therefore, it is left to the discretion of the trial Court to form his own tentative conclusion about the quality or nature of the evidence and depending the condition upon which leave to defend may be granted. It was submitted that in Milkhiram (India) Private Ltd. and others v. Chamanlal Bros., AIR 1965 SC 1698, it was observed by the Honble Supreme Court that :- "It is indeed not easy to say in many cases whether the defence is a genuine one or not and therefore, it should be left to the discretion of the trial Judge who has experience of such matters to form his own tentative conclusion about the quality or nature of the defence and determine the conditions upon which leave to defend may be granted. If the Judge is of opinion that the case raises a triable issue, then leave should ordinarily be granted unconditionally. On the other hand, if he is of opinion that the defence raised is frivolous, or false, or sham, he should refuse leave to defend altogether. If the Judge is of opinion that the case raises a triable issue, then leave should ordinarily be granted unconditionally. On the other hand, if he is of opinion that the defence raised is frivolous, or false, or sham, he should refuse leave to defend altogether. The majority of cases, however, cannot be dealt with in a clear cut way. The Judge may entertain a genuine doubt whether the defence is genuine or sham or in other words whether it raises a triable issue or not. To meet such cases, by the amendment by the Bombay High Court to Order 37, Rule 2, even in cases where an apparently triable issue is raised the Judge may impose conditions in granting leave to defend. The matter is in the discretion of the trial Judge which discretion has to be exercised judiciously. Care has, however, to be taken that the object of the rule to assist the expeditious disposal of commercial causes is not defeated and at the same time real and genuine triable issues are not shut out by unduly severe orders as to deposit. It would be undesirable and inexpedient to lay down any rule of general application. 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 parties and it is not open to the Court to call for evidence at that stage. If upon consideration of material placed before the Court, it comes to the conclusion that the defence is a sham one or is fantastic or highly improbable an order putting the defendant upon terms before granting leave to defend would be justified. Even in cases where a defence is plausible but is improbable the court would be justified in concluding that the issue is not a triable issue and put the defendant on terms while granting leave to defend." 7. It was submitted that it was for the defendant to explain and show that the claim of the plaintiff in relation to the giving of loan by cheque was fictitious. In Mrs. Ramesh Rani v. Harsh Malhotra and others, 1993(3) PLJ 453 relying upon International Computers Consultants v. Home Computers Services (P) Limited, 1997(3) 117 PLR 10, it was held that once triable issues are raised with bona fide and firm defence, leave should be granted. In Mrs. Ramesh Rani v. Harsh Malhotra and others, 1993(3) PLJ 453 relying upon International Computers Consultants v. Home Computers Services (P) Limited, 1997(3) 117 PLR 10, it was held that once triable issues are raised with bona fide and firm defence, leave should be granted. But if the defence is frivolous or vexatious, leave should be refused. Where there is reasonable doubt and the Court feels it just and reasonable, the Court may impose such condition while granting the leave, as it may deem fit and proper. 8. In this case the defence taken by the defendants 1 to 3 could not be said to be false or frivolous on the face of it. Defence taken by defendants 1 to 3 did raise triable issues. As regards cheque No. 627074 dated 25.10.1999 issued by Avtar Singh, the defence raised was that Avtar Singh was dead on 6.5.1999 and as such he could not issue any cheque on 25.10.1999. In this context, the plea taken by them that the owners of the firm used to sign blank cheques for facilitating the operation of the account by each of the partners merits consideration. As regards other cheque bearing No. 627073 dated 25.10.1999 alleged to have been issued by Dalbir Singh, the defence taken was that no loan was taken by the firm from the plaintiff. As regards this cheque, leave to defend could not be given unconditionally. As regards cheque No. 627074 dated 25.10.1999 alleged to have been issued by Avtar Singh, leave to defend should have been given unconditionally. In the result, defendants are allowed to defend the suit on deposit of Rs. 5 lac cash in State Bank of India, Khanna in a fixed deposit for a period of one year and on furnishing security for the rest of the amount of Rs. 4.50 lacs. Amount of fixed deposit shall be deposited in the name of the court in the first instance for a period of one year, renewable thereafter for another period of one year and so on till the suit is disposed of. Fixed deposit shall enure till the disposal of the suit so that if plaintiffs suit is decreed, that amount becomes available to the plaintiff readily. Revision partly allowed. Revision partly allowed.