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2001 DIGILAW 789 (DEL)

VINOD KUMAR v. KESHAV ANAND

2001-12-20

A.K.SIKRI, J.D.KAPOOR

body2001
J. D. Kapoor ( 1 ) THE facts giving rise to the application for leave to contest moved by the defendant under Order 37 rule 3 (5) of Civil Procedure Code are as under ( 2 ) ON representation of the defendant that he was facing financial problems the plaintiff no. 1. advanced a loan of Rs. 6 lacs to him and the defendant on receipt of the said amount executed a receipt dated 5. 3. 97 and he also took a loan of Rs. 3 lacs from plaintiff no. 2 and in consideration of the receipt of the said amount, the defendant also executed the receipt dated 5. 3. 97. The defendant also handed over the original title deeds in respect of property bearing no. A-4/c--26, Janak Puri, New delhi and executed a deed of mortgage in respect thereof. ( 3 ) THE defendant agreed to pay a minimum instalment of rs. 10,000/- per month and had paid only two monthly instalments of Rs. 10,000. 00 and had not paid any amount after June, 1997 and according to the plaintiff the instant case is based upon the receipts as well as the agreement dated 5. 3. 97 and as such is covered under the provisions of Order 37 Rule 3 (5) Code of Civil Procedure. ( 4 ) THE defendant has at the outset raised the legal objection that the deed of mortgage by way of deposit of title deeds alleged to be executed by the defendant in favour of the plaintiff, makes the suit as a mortgage suit and, therefore, is covered under the provisions of Order 34 Code of Civil Procedure and not under 37 Code of Civil Procedure. Other facts disclosed by the defendant in the affidavit in support of leave to contest are as under:- 1) That the defendant has been subscribing chit funds run by Palvinder Singh and as per the traits of the chit fund business, the signatures of the persons at the time of taking the chit amounts are taken on revenue stamped blank papers and non judicial stamp and the said papers are now being fabricated by the plaintiff to play fraud upon the defendant and the Court. 2) That the defendant has never taken a loan nor has dealt with the plaintiff in any manner whatsoever. 3) The mortgage deed is in favour of three persons i. e. plaintiff nos. 2) That the defendant has never taken a loan nor has dealt with the plaintiff in any manner whatsoever. 3) The mortgage deed is in favour of three persons i. e. plaintiff nos. 1 and 2 and Palvinder Singh whereas only plaintiff nos. 1 and 2 have filed this suit and, therefore, the suit is bad for non-joinder of necessary party Palvinder Singh, the person with whom the defendant- has been subscribing the money and whose name also find mention in the said mortgage deed. 4) That even otherwise the amount of money alleged to have been given in cash is against the law as the law prohibits to make such huge payments in cash. 5) The plaintiffs are the Bank employees. Son of the defendant is also employed in the same bank. The instant suit has been filed in connivance with Palvinder singh who is in possession of the signatures of the defendant on various blank papers. 6) That said Palvinder Singh has filed a criminal complaint under Section 138 of the Negotiable instruments Act against the defendant wherein he has taken a contradictory stand that shares worth Rs. 7,70,000. 00 were to be taken from the defendant and the defendant assured the complainant that the delivery of the shares will be made within two days from the date of the payment. The defendant failed to deliver his shares pleading his inability as the price of the shares had gone up and it was not possible for him to give delivery of shares, the defendant assured the complainant that he will refund the amount of Rs. 7,70,000. 00 alongwith interest and requested for treating the amount of Rs. 7,70,000. 00 as loan. The defendant also issued receipt acknowledging the loan of rs. 7,70,000/ -. ( 5 ) ACCORDING to Mr. M. L. Khattar, learned counsel for the defendant it is apparent from the stand taken by palvinder Singh that he had given the said amount as quid pro quo for giving the shares and not as a loan but later on when the defendants expressed his inability to supply the shares; it was a mutual understanding that this amount be treated as loan. ( 6 ) ACCORDING to Mr. ( 6 ) ACCORDING to Mr. Khattar whatever transaction took place in this regard with regard to the chit fund it was between Palvinder Singh and the defendant and not between the plaintiff and the defendant and since the signatures of the defendant were obtained by Palvinder singh on various documents which were blank, undue advantage of the signatures of the defendant appearing on various documents is being taken with regard to the receipt as well as the mortgage deed by way of deposit of title deeds. It is on the behest of Sh. Palvinder Singh that the documents in question have ben fabricated and forged while using the signatures of the defendant procured by the said Sh. Palvinder Singh on blank papers, some of them were duly stamped at the time of taking the chit amount by the defendant from Sh. Palvinder Singh who has been running the business of chits to which the defendant has been the subscriber. ( 7 ) IT is contended by Mr. Rajat Aneja learned counsel for the plaintiffs that the cash receipts issued by the defendant are in the form of written contract which invite the applicability of provisions of Order 37 Code of Civil Procedure and therefore suit based on such receipts is perfectly maintainable. ( 8 ) IN support of this contention, Mr. Aneja has placed reliance upon Shri Kiranjit Singh Versus Shri Madan lal Khanna 1993 (27) DRJ wherein payment was made in respect of booking of Flat and thereafter plaintiff asked for refund of money. It was held that:- "10. I have perused the original receipts filed by the plaintiff alongwith the additional affidavit dated 16/08/1993. All these receipts have been executed by the defendant on 17/01/1989. Eight receipts are of Rs. 1,00,000. 00 each and 9th receipt is of Rs. 50,000. 00. Since the language of all the receipts except the amount is identical one of the receipt is reproduced hereinbelow:- "received WITH THANKS FROM MR. KIRANJIT SINGH S/o shri AMARJEET SINGH, RESIDENT OF A-13, NITI BAGH, new DELHI A SUM OF RS. 50,000. 00 (RUPEES FIFTY thousand ONLY) IN CASH ON ACCOUNT OF PROVISIONAL booking OF RESIDENTIAL FLAT AT PROPOSED RESIDENTIAL building AT 52/78, PUNJABI BAGH, NEW DELHI. THIS DOES NOT CONSTITUTE A FIRM BOOKING AND confers NO RIGHTS ON THE PAYER. FOR H. L. KHANNA (HUF) sd/- 17. 1. 1989 (M. L. KHANNA) general ATTORNEY. 50,000. 00 (RUPEES FIFTY thousand ONLY) IN CASH ON ACCOUNT OF PROVISIONAL booking OF RESIDENTIAL FLAT AT PROPOSED RESIDENTIAL building AT 52/78, PUNJABI BAGH, NEW DELHI. THIS DOES NOT CONSTITUTE A FIRM BOOKING AND confers NO RIGHTS ON THE PAYER. FOR H. L. KHANNA (HUF) sd/- 17. 1. 1989 (M. L. KHANNA) general ATTORNEY. " ( 9 ) FROM these receipts it is clear that the entire amount of Rs. 8,50,000. 00 was given by the plaintiff to the defendant on account of provisional booking of a residential flat on proposed residential building at 52/78, Punjabi bagh, New Delhi. Even in IA No. 6810/93 which was filed on behalf of the defendant under Order 37 rule 3 Sub-rule 5 of the Code seeking permission of this Court to contest the matter on merits unconditionally, the execution of these receipts has not been controverted by the defendant. From these receipts it is clear that these are in the nature of written contract and a suit to recover the liquidated. demand in money payable by the defendant on the basis of these receipts is maintainable under Order 37 of the code. The view i am taking is supported by a judgment of this court in Smt. Sushila Mehta vs. Bansi Lal Arora, ILR (1982) 1 Delhi 320. " 9. Another judgment relied upon by Mr. Aneja is m/s Punjab Pen House Versus M/s. Samrat Bicycle Ltd. AIR 1992 DELHI 1 wherein it was held 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 cl. (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. To fortify this view Mr. Aneja has also placed reliance upon 1993 DRJ volume-26 379. 10. It is contended by Mr. Aneja that Palvinder singh who has not been joined as a party in the present suit was issued a cheque by the defendant for the amount of Rs. To fortify this view Mr. Aneja has also placed reliance upon 1993 DRJ volume-26 379. 10. It is contended by Mr. Aneja that Palvinder singh who has not been joined as a party in the present suit was issued a cheque by the defendant for the amount of Rs. 8,70,000 which was dishonoured when presented to the bank and on the basis of this, a complaint was instituted by said Palvinder Singh before the learned Metropolitan magistrate. In the said plaint, Palvinder Singh had taken the stand that defendant assured the complainant-Palvinder singh that he would refund the amount of Rs. 7,70,000 along with interest and requested for treating the said sum as loan. The defendant also issued a receipt acknowledging the loan of Rs. 7,70,000. 00 and the defendant gave a cheque no. 720456 dated 12. 12. 1997 of Rs. 8. 70 lacs drawn on Punjab and Sind Bank, Janakpuri, New Delhi towards the refund of principal amount of Rs. 7,70,000. 00 and Rs. 1,00,000. 00 towards the lumpsum interest in repayment of loan. ( 10 ) ACCORDING to Mr. Aneja, the aforesaid contention or stand of the defendant belies the plea of the defendant that chit fund business was run amongst the parties and that too is not. supported by even a single document. On the other hand, original documents of the property bearing no. A4c/26, Janakpuri were delivered to the plaintiff in acknowledgement of the loan. In order to pay the loan amount, the defendant acknowledged the receipt of the loan amount and as such suit under Order 37 Code of Civil Procedure is very much maintainable. As regards non-joining of Palvinder Singh in the proceedings, it is contended by Mr. Aneja that there was no need to Join Palvinder Singh as the transaction between the plaintiff and the defendant was an independent transaction and the defendant had executed separate receipts acknowledging receipts of loan amount from the plaintiff. ( 11 ) IT is further contended that last but not the least, legal notice dated 24. 9. 1997 was served upon the defendant for paying the amount of loan taken by him but despite service of said notice, no amount was paid by the defendant nor did he reply to the same impliedly admitting contents thereof. ( 12 ) IN support of this contention, Mr. 9. 1997 was served upon the defendant for paying the amount of loan taken by him but despite service of said notice, no amount was paid by the defendant nor did he reply to the same impliedly admitting contents thereof. ( 12 ) IN support of this contention, Mr. Aneja has placed reliance upon 1980 Rajdhani Law Reporter N 44 in which it was held that where a person makes a serious allegations in the legal notice preceding institution of the suit and defendant does not reply to the same, in these circumstances, adverse inference ought to be drawn against him. ( 13 ) IT cannot be gainsaid that there is no hard and fast rule for grant or refusal of leave to defend. Every case has to be decided or examined on its own facts. If the facts set up by the defendant fail to disclose substantial defence or raise triable issues, leave should normally be refused. If the facts set up by the defendant disclose such defence which has fair chances of success or has potential to dislodge the case of the plaintiff, then the defendant is entitled to leave to contest. Though it is the discretion of the court either to refuse or grant leave and discretion should not be exercised arbitrarily, whimsically and capriciously. If the defendant tenor of defence raised by the defendant blows hot and cold and is self contradictory, he forfeits his right of leave to defend the suit. Nature of defence should be substantial and not frivolous. ( 14 ) AS is demonstrated from the facts disclosed by the defendant in the affidavit the defendant has on the one hand taken the plea that he has been subscribing chit funds run by Palvinder Singh and as per traits of the chit fund business, the signatures of the persons at the time of taking the chit amounts are taken on revenue stamped blank papers and non-judicial stamp papers and the the said papers are being fabricated by the plaintiffs to play fraud on the defendant, While on the other hand, he has taken different stand in the criminal case which has been filed by the Palvinder Singh on the dishonoured cheques issued by the defendant. The contents of the complaint unequivocally state that the cheques were issued by the defendant against the loan taken by him. The contents of the complaint unequivocally state that the cheques were issued by the defendant against the loan taken by him. ( 15 ) THE plea of the defendant that his signatures were obtained on blank papers is of beaten plea. Once a party executes a cash receipt, it binds itself by way of written contract. However, in the instant case, defendant has issued a cheque in favour of Palvinder Singh which itself show that he has taken a loan. On the same premise, defendant has no case which entitles him to leave to contest because of his having executed cash receipts. It appears that after having faced criminal proceedings initiated by Palvinder Singh, defendant did not issue cheques in favour of the plaintiffs against the loan taken by him. ( 16 ) IN these circumstances, defendant is not entitled to leave to contest on plea of chit fund and obtaining of his signatures by Palvinder Singh on blank papers etc. ( 17 ) THE application has no merit and is dismissed. As a consequence, suit is decreed for Rs. 10,44,000/ with cost along with pendente lite and future interest @ 24% per annum till realisation. Decree sheet be prepared accordingly.